UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended June 30, 1994
Commission File Number: 0-12358
CCB FINANCIAL CORPORATION
(Exact name of issuer as specified in charter)
North Carolina 56-1347849
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
111 Corcoran Street, Post Office Box 931, Durham, NC 27702
(Address of principal executive offices)
Registrant's telephone number, including area code (919)683-7777
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $5 Par value 9,516,379
(Class of Stock) (Shares outstanding
as of July 31, 1994)
<PAGE>
CCB FINANCIAL CORPORATION
FORM 10-Q
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1994, December 31, 1993 and June 30, 1993 3
Consolidated Statements of Income
Three Months Ended June 30, 1994 and 1993 and Six
Months Ended June 30, 1994 and 1993 4
Consolidated Statements of Shareholders' Equity
Six Months Ended June 30, 1994 and 1993 5
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1994 and 1993 6
Notes to Consolidated Financial Statements
Six Months Ended June 30, 1994 and 1993 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CCB Financial Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1994 1993 1993
<S> <C> <C> <C>
Assets:
Cash and due from banks $ 131,225,916 191,332,445 147,678,143
Time deposits in other banks 10,237,101 35,431,738 22,417,075
Federal funds sold and other
short-term investments 129,283,831 169,286,165 137,565,990
Investment securities:
Available for sale (market
values of $554,527,778
and $563,187,727) 554,527,778 553,292,393 --
Held for investment (market
values of $67,363,716,
$68,553,264 and
$610,912,638) 65,621,403 64,126,134 590,114,187
Loans and lease financing
(notes 2 and 4) 2,277,645,040 2,159,489,054 1,851,017,200
Less reserve for loan and
lease losses (note 3) 28,321,328 26,963,334 23,198,004
Net loans and lease
financing 2,249,323,712 2,132,525,720 1,827,819,196
Premises and equipment 41,574,908 42,597,185 42,199,384
Other assets (note 4) 88,656,917 69,050,959 66,990,580
Total assets $ 3,270,451,566 3,257,642,739 2,834,784,555
Liabilities:
Deposits:
Demand (non-interest
bearing) $ 405,103,523 421,432,974 359,097,116
Savings and NOW accounts 406,379,065 420,344,480 372,410,254
Money market accounts 813,311,829 778,606,879 687,528,112
Jumbo time deposits 178,529,353 172,034,160 155,234,134
Consumer time deposits 999,905,445 1,024,352,268 926,021,149
Total deposits 2,803,229,215 2,816,770,761 2,500,290,765
Federal funds purchased and
securities sold under
agreements to repurchase 37,031,331 25,526,966 27,314,748
Other short-term borrowed
funds 13,071,635 16,202,362 30,862,152
Long-term debt 75,781,599 78,698,073 31,794,029
Other liabilities 81,774,913 69,440,814 32,399,491
Total liabilities 3,010,888,693 3,006,638,976 2,622,661,185
Shareholders' equity:
Serial preferred stock.
Authorized 5,000,000 shares;
none issued -- -- --
Common stock of $5 par value.
Authorized 30,000,000
shares; 9,516,379, 9,517,277
and 8,445,398 shares issued 47,581,895 47,586,385 42,226,990
Additional paid-in capital 83,332,593 83,349,012 55,831,078
Retained earnings 137,024,896 124,922,331 114,427,849
Unrealized gain (loss) on
investment securities
available for sale (4,880,375) (835,677) (362,547)
Less: Unearned common stock
held by management
recognition plans (3,496,136) (4,018,288) --
Total shareholders' equity 259,562,873 251,003,763 212,123,370
Total liabilities and
shareholders' equity $ 3,270,451,566 3,257,642,739 2,834,784,555
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CCB Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30
1994 1993
Interest income:
Interest and fees on loans and leases $ 48,071,611 36,810,842
Interest and dividends on investment
securities:
U.S. Treasury 5,146,091 4,166,342
U.S. Government agencies and corporations 2,688,903 1,699,153
States and political subdivisions
(primarily tax exempt) 846,540 829,282
Equity securities 410,854 482,239
Interest on time deposits in other banks 311,459 84,543
Interest on federal funds sold and other
short-term investments 1,046,542 1,084,432
Total interest income 58,522,000 45,156,833
Interest expense:
Deposits 20,707,858 17,000,400
Federal funds purchased and securities sold
under agreements to repurchase 238,693 159,093
Other short-term borrowed funds 71,040 79,502
Long-term debt 1,391,788 655,544
Total interest expense 22,409,379 17,894,539
Net interest income 36,112,621 27,262,294
Provision for loan and lease losses (note 3) 2,223,500 1,700,000
Net interest income after provision for loan
and lease losses 33,889,121 25,562,294
Other income:
Service charges on deposit accounts 4,819,207 4,393,963
Trust and custodian fees 1,812,118 1,512,825
Insurance commissions 687,625 426,375
Merchant discount 869,559 678,768
Other service charges and fees 690,267 464,128
Other 1,103,869 539,008
Investment securities gains (losses) 701 166,259
Total other income 9,983,346 8,181,326
Other expenses:
Personnel expense 14,383,934 12,700,096
Net occupancy expense 2,199,706 1,879,010
Equipment expense 2,045,414 1,936,159
Other operating expenses 10,494,604 7,257,123
Total other expenses 29,123,658 23,772,388
Income before income taxes and cumulative
changes in accounting principles 14,748,809 9,971,232
Income taxes 5,001,483 3,328,430
Income before cumulative changes in
accounting principles 9,747,326 6,642,802
Cumulative changes in accounting
principles (note 5) - -
Net income $ 9,747,326 6,642,802
Income per share (note 6):
Income before cumulative changes in
accounting principles:
Primary $ 1.02 .83
Fully diluted 1.02 .78
Net income:
Primary 1.02 .83
Fully diluted 1.02 .78
Weighted average shares outstanding:
Primary 9,516,379 8,042,997
Fully diluted 9,516,379 8,798,041
Continued
CCB Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME, Continued
Six Months Ended June 30,
1994 1993
Interest income:
Interest and fees on loans and leases $ 92,282,769 69,729,884
Interest and dividends on investment
securities:
U.S. Treasury 9,268,549 8,264,817
U.S. Government agencies and corporations 5,184,337 2,930,102
States and political subdivisions
(primarily tax exempt) 1,722,536 1,662,170
Equity securities 1,046,798 1,642,046
Interest on time deposits in other banks 607,218 84,543
Interest on federal funds sold and other
short-term investments 2,278,435 1,267,514
Total interest income 112,390,642 85,581,076
Interest expense:
Deposits 40,297,577 31,939,692
Federal funds purchased and securities sold
under agreements to repurchase 386,803 285,676
Other short-term borrowed funds 133,010 204,246
Long-term debt 2,782,453 1,181,224
Total interest expense 43,599,843 33,610,838
Net interest income 68,790,799 51,970,238
Provision for loan and lease losses (note 3) 3,475,000 2,700,000
Net interest income after provision for loan
and lease losses 65,315,799 49,270,238
Other income:
Service charges on deposit accounts 9,470,666 8,506,050
Trust and custodian fees 3,624,242 3,025,650
Insurance commissions 1,480,189 900,708
Merchant discount 1,706,960 1,348,392
Other service charges and fees 1,326,840 927,507
Other 2,669,917 1,236,159
Investment securities gains (losses) 44,552 204,845
Total other income 20,323,366 16,149,311
Other expenses:
Personnel expense 29,098,151 24,679,732
Net occupancy expense 4,442,674 3,629,363
Equipment expense 4,387,728 3,818,510
Other operating expenses 20,304,681 13,877,790
Total other expenses 58,233,234 46,005,395
Income before income taxes and cumulative
changes in accounting principles 27,405,931 19,414,154
Income taxes 9,212,883 6,419,630
Income before cumulative changes in
accounting principles 18,193,048 12,994,524
Cumulative changes in accounting
principles (note 4) - (1,371,234)
Net income $ 18,193,048 11,623,290
Income per share (note 6):
Income before cumulative changes in
accounting principles:
Primary $ 1.91 1.64
Fully diluted 1.91 1.55
Net income:
Primary 1.91 1.47
Fully diluted 1.91 1.39
Weighted average shares outstanding:
Primary 9,516,394 7,926,403
Fully diluted 9,516,394 8,689,575
See accompanying notes to consolidated financial statements.
<PAGE>
CCB Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Six Months Ended June 30, 1994 and 1993
<TABLE>
<CAPTION>
Unrealized
Gain
(Loss) on
Investment
Additional Securities Management Total
Common Paid-In Retained Available Recognition Shareholders'
Stock Capital Earnings for Sale Plans Equity
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 1993 $ 38,895,530 44,095,683 107,454,940 (600,877) - 189,845,276
Net income - - 11,623,290 - - 11,623,290
Conversion of subordinated
debentures 3,980,015 16,966,907 - - - 20,946,922
Stock issued pursuant to
restricted stock plan,
net of forfeitures 11,155 97,365 - - - 108,520
Shares issued for
acquisitions 1,590,290 8,891,123 - - - 10,481,413
Purchase and retirement
of shares (2,250,000) (14,220,000) - - - (16,470,000)
Cash dividends ($.60
per share) - - (4,650,381) - - (4,650,381)
Revaluation of marketable
equity securities - - - 238,330 - 238,330
Balance June 30, 1993 $ 42,226,990 55,831,078 114,427,849 (362,547) - 212,123,370
Balance December 31, 1993 $ 47,586,385 83,349,012 124,922,331 (835,677) (4,018,288) 251,003,763
Mark to market adjustment,
net of applicable income
taxes - - - 6,263,318 - 6,263,318
Balance January 1, 1994 47,586,385 83,349,012 124,922,331 5,427,641 (4,018,288) 257,267,081
Net income - - 18,193,048 - - 18,193,048
Forfeitures of stock issued
pursuant to restricted
stock plan (4,490) (16,419) - - - (20,909)
Earned portion of manage-
ment recognition plans - - - - 522,152 522,152
Cash dividends ($.64
per share) - - (6,090,483) - - (6,090,483)
Change in unrealized gains
(losses), net of applic-
able income taxes - - - (10,308,016) - (10,308,016)
Balance June 30, 1994 $ 47,581,895 83,332,593 137,024,896 (4,880,375) (3,496,136) 259,562,873
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CCB Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Operating activities:
Net income $ 18,193,048 11,623,290
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 3,121,202 2,638,834
Provision for loan and lease losses 3,475,000 2,700,000
Deferred income taxes - (2,001,418)
Net gain on sales of investment securities (44,553) (204,845)
Net amortization and accretion on
investment securities 2,508,811 3,145,049
Amortization of intangibles and other assets 1,661,403 1,081,559
Accretion of negative goodwill (1,700,586) (180,000)
Increase in accrued interest receivable (4,063,896) (1,294,592)
Decrease in accrued interest payable (2,782,209) (1,604,442)
Increase in other assets (13,602,963) (125,439)
Increase (decrease) in other liabilities 16,418,677 (6,535,047)
Vesting of shares held by management
recognition plans 522,152 -
Issuance of restricted stock, net of forfeitures (20,909) 108,520
Other 6,234 258,330
Net cash provided by operating activities 23,691,411 9,609,799
Investing activities:
Proceeds from maturities and issuer calls
of investment securities held for investment 2,832,903 220,335,778
Proceeds from sales of investment securities
acquired in purchase acquisitions - 19,527,330
Purchases of investment securities held
for investment (4,332,252) (282,580,913)
Proceeds from sales of investment securities 116,778,688 -
available for sale
Proceeds from maturities and issuer calls of
investment securities available for sale 253,821,590 -
Purchases of investment securities available
for sale (381,310,057) -
Cash acquired, net of cash paid, in
purchase acquisitions - 136,374,691
Net decrease (increase) in loans and
leases receivable (120,505,759) (51,363,848)
Purchases of premises and equipment (2,098,925) (3,599,905)
Net cash provided (used) by investing activities (134,813,812) 38,693,133
Financing activities:
Net decrease in deposit accounts (13,541,546) (31,232,128)
Net increase in federal funds purchased and
securities sold under agreements to repurchase 11,504,365 2,046,491
Net increase (decrease) in other short-term
borrowed funds (3,130,727) 10,475,577
Proceeds from issuance of long-term debt 3,500,000 4,657,878
Repayments of long-term debt (6,422,708) (956,690)
Issuance of stock from acquisitions, net - 10,481,413
Purchase and retirement of common stock - (16,470,000)
Cash dividends (6,090,483) (4,650,381)
Net cash used by financing activities (14,181,099) (25,647,840)
Net increase (decrease) in cash and cash
equivalents (125,303,500) 22,655,092
Cash and cash equivalents at January 1 396,050,348 285,006,116
Cash and cash equivalents at June 30 $ 270,746,848 307,661,208
Supplemental disclosure of cash flow information:
Interest paid during the year $ 46,382,052 34,465,570
Income taxes paid during the year $ 7,495,800 6,975,533
See accompanying notes to consolidated financial statements.
<PAGE>
CCB Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Six Months Ended June 30, 1994 and 1993
(1) Consolidation
The consolidated financial statements include the accounts and results
of operations of CCB Financial Corporation (the Corporation) and its
wholly-owned subsidiaries, Central Carolina Bank and Trust Company
(CCB), CCB Savings Bank of Lenoir, Inc., SSB, Graham Savings Bank,
Inc., SSB and Central Carolina Bank - Georgia. The consolidated
financial statements also include the accounts and results of
operations of CCB Investment and Insurance Service Corporation,
Southland Associates, Inc., CCBDE and 1st Home Mortgage Acceptance
Corporation, wholly-owned subsidiaries of CCB. All significant
intercompany accounts are eliminated in consolidation.
(2) Loans and Lease Financing
A summary of loans and lease financing at June 30, 1994 and 1993 follows:
1994 1993
Commercial, financial and
agricultural $ 422,662,547 383,936,928
Real estate-construction 267,447,438 188,928,823
Real estate-mortgage 1,155,011,338 908,183,200
Instalment loans to individuals 223,532,158 188,106,435
Credit card receivables 182,959,385 161,260,053
Lease financing 29,656,430 23,806,846
Gross loans and lease financing 2,281,269,296 1,854,222,285
Less unearned income 3,624,256 3,205,085
Total loans and lease financing $ 2,277,645,040 1,851,017,200
(3) Reserve for Loan and Lease Losses
Following is a summary of the reserve for loan and lease losses for
the six months ended June 30, 1994 and 1993:
1994 1993
Balance at beginning of year $ 26,963,334 19,026,764
Provision charged to operations 3,475,000 2,700,000
Recoveries of loans and leases
previously charged-off 695,817 794,879
Loan and lease losses charged
to reserve (2,812,823) (2,823,639)
Reserves related to acquisitions - 3,500,000
Balance at June 30 $ 28,321,328 23,198,004
(4) Risk Assets
Following is a summary at June 30, 1994 and 1993 (in thousands):
1994 1993
Nonaccrual loans and lease financing $ 13,164 10,480
Other real estate acquired through
loan foreclosures 5,996 9,273
Accruing loans and lease financing
90 days or more past due 2,181 3,928
Restructured loans and lease
financing - 104
Total risk assets $ 21,341 23,785
<PAGE>
(5) Accounting Changes
The cumulative changes in accounting principles reflect the adoption
of Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions", which
resulted in a one-time net charge of $2,271,234 ($3,736,834 pre-tax)
in recognition of the entire Accumulated Postretirement Benefit
Obligation, and adoption of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes", which resulted in a
one-time benefit of $900,000. Both Statements were adopted on January 1,
1993.
(6) Per Share Data
Primary income per share is computed based on the weighted average
number of common shares outstanding during each period. Fully diluted
income per share is computed based on the weighted average number of
common shares outstanding and common shares issuable upon full
conversion of convertible debt (which was fully converted or redeemed
at June 30, 1993). In this computation, interest expense on
convertible debt, net of applicable income taxes, is added back to
income as if the debt was converted into common stock at the beginning
of the period.
(7) Contingencies
Certain legal claims have arisen in the normal course of business,
which, in the opinion of management and counsel, will have no material
adverse effect on the financial position of the Corporation or its
subsidiaries.
(8) Management Opinion
The financial statements in this report are unaudited. In the opinion
of management, all adjustments (none of which were other than normal
accruals) necessary for a fair presentation of the financial position
and results of operations for the periods presented have been
included.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The purpose of this discussion and analysis is to aid in the
understanding and evaluation of financial conditions and changes
therein and results of operations of CCB Financial Corporation (the
"Corporation") and its wholly-owned subsidiaries, Central Carolina
Bank and Trust Company ("CCB"), CCB Savings Bank of Lenoir, Inc., SSB
("CCB Savings"), Graham Savings Bank, Inc., SSB ("Graham Savings") and
Central Carolina Bank-Georgia ("CCB-Ga.") (collectively "the Banks"),
and CCB's wholly-owned subsidiaries, CCB Investment and Insurance
Service Corporation, CCBDE, 1st Home Mortgage Acceptance Corporation
and Southland Associates, Inc. for the three and six months ended June
30, 1994 and 1993. This discussion and analysis is intended to
complement the unaudited financial statements and footnotes and the
supplemental financial data appearing elsewhere in this Form 10-Q, and
should be read in conjunction therewith.
Results of Operations - Three Months Ended June 30, 1994 and 1993.
Net income for the three months ended June 30, 1994 amounted to
$9,747,000, an increase of $3,104,000 or 46.7% over the same period in
1993. Primary income per share was $1.02 in 1994, a $.19 increase over
the 1993 period. On a fully diluted basis, income per share was also
$1.02, which represented a $.24 increase over the 1993 period.
Returns on average assets and average shareholders' equity were 1.20%
and 15.13%, respectively, compared to 1.05% and 13.26% in the 1993
period.
Average Balance Sheets and Net Interest Income Analysis on a taxable
equivalent basis for each of the periods are included in this
discussion as Table 1. Average earning assets increased by
$680,625,000 or 29.1% over the 1993 period which was due primarily to
the Corporation's financial institution acquisitions consummated in
the second through fourth quarters of 1993. Second quarter increases
in overall interest rates and attendant increases in earning asset
yields increased the net interest margin from 4.85% in the second
quarter of 1993 to 4.96% in 1994. Net interest income on a taxable
equivalent basis increased $9,065,000 or 32.0%.
The provision for loan and lease losses was increased to $2,223,000
from $1,700,000 in 1993 due to the increase in outstanding loans and
lease financing. The reserve for loan and lease losses to loans and
lease financing outstanding was 1.24% at June 30, 1994 and 1.25% at
June 30, 1993. Net 1994 loan and lease charge-offs amounted to
$839,000 or .15% of average loans and lease financing compared to .22%
in 1993.
<PAGE>
Other income increased $1,802,000 in the second quarter of 1994 to
$9,983,000 compared to 1993's $8,181,000. The increase was due in
part to a $426,000 increase in service charges on deposit accounts
resulting from increased volume, $261,000 increase in insurance
commissions from increased volume of annuity sales and $667,000 of
negative goodwill accretion from the acquisition of financial
institutions in 1993.
Other expenses in the 1994 period increased by $5,352,000 or 22.5%
from the 1993 period. The largest increases were experienced in
personnel expense and other expenses. The increase in personnel
expense was due to growth from the 1993 acquisitions of financial
institutions. Despite the $1,684,000 increase in personnel expense, a
comparison of assets per employee shows improvement from $1.59 million
of assets per employee at June 30, 1993 to $2.07 million per employee
at June 30, 1994. Other expenses increased due to $415,000 of goodwill
amortization, $484,000 of deposit insurance based on the increased
level of deposits, $431,000 increased donations and other depositor
expenses resulting from the financial institutions acquisitions and
general increases in expenses resulting from a 28.4% increase in
average assets from June 1993's level. The effective income tax rate
was 33.91% in 1994 compared to 33.38% in the same period of 1993.
Results of Operations - Six Months Ended June 30, 1994 and 1993.
Income before cumulative changes in accounting principles totaled
$18,193,000 for the six months ended June 30, 1994 compared to
$12,995,000 for the same period in 1993. Income before cumulative
changes in accounting principles per share were $1.91 for the six
months ended June 30, 1994 compared to $1.64 for 1993. Net income for
the six months ended June 30, 1994 amounted to $18,193,000, an
increase of $6,570,000 or 56.5% over the same period in 1993. Primary
income per share was $1.91 in 1994, a $.27 increase over the 1993
period. On a fully diluted basis, income per share was also $1.91,
which represented a $.52 increase over the 1993 period. Returns of
net income on average assets and average shareholders' equity were
1.14% and 14.38%, respectively, compared to .98% and 11.95% in the
1993 period.
Average Balance Sheets and Net Interest Income Analysis on a taxable
equivalent basis for each of the six month periods are included in
this discussion as Table 2. Average earning assets increased by
$788,656,000 or 35.7% over the 1993 period which was due primarily to
the Corporation's financial institution acquisitions consummated in
the second through fourth quarters of 1993. Lower interest rates
during the six months ended June 30, 1994 resulted in a net interest
margin of 4.79% compared to 4.93% for the same period in 1993. Net
interest income on a taxable equivalent basis increased $17,180,000 or
31.8% from 1993's level.
<PAGE>
Table 1
CCB FINANCIAL CORPORATION
Average Balances and Net Interest Income Analysis
Three Months Ended June 30, 1994 and 1993
(Taxable Equivalent Basis-In Thousands) (1)
</TABLE>
<TABLE>
<CAPTION>
1994 1993
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Loans and lease financing(2) $ 2,222,213 48,120 8.69 % 1,695,530 36,876 8.72
U.S. Treasury and agency
obligations 586,831 8,492 5.80 415,625 6,317 6.10
State and political
subdivision obligations 50,105 1,304 10.44 44,201 1,290 11.71
Equity securities 22,916 427 7.47 24,677 496 8.06
Federal funds sold and other
short-term investments 112,277 1,090 3.89 145,981 1,119 3.07
Time deposits in other banks 27,653 329 4.77 15,356 84 2.19
Total earning assets 3,021,995 59,762 7.93 2,341,370 46,182 7.91
Non-earning assets:
Cash and due from banks 139,296 132,291
Premises and equipment 43,284 38,338
All other assets, net 46,443 20,557
Total assets $ 3,251,018 2,532,556
Interest bearing liabilities:
Savings and time deposits $ 2,400,503 20,708 3.46 % 1,875,229 17,001 3.64
Federal funds purchased and
securities sold under
agreements to repurchase 35,839 239 2.67 33,158 160 1.94
Other short-term borrowed
funds 10,839 71 2.63 14,537 79 2.18
Long-term debt 77,472 1,392 7.21 34,172 655 7.69
Total interest bearing
liabilities 2,524,653 22,410 3.56 1,957,096 17,895 3.67
Other liabilities and
shareholders' equity:
Demand deposits 392,454 338,187
Other liabilities 75,492 36,310
Shareholders' equity 258,419 200,963
Total liabilities and
shareholders' equity $ 3,251,018 2,532,556
Net interest income and net
interest margin (3) $ 37,352 4.96 % 28,287 4.85
Interest rate spread (4) 4.37 % 4.24
</TABLE>
(1) The taxable equivalent basis is computed using 35% federal and 7.83%
state tax rates in 1994 and 34% federal and 7.91% state tax rates in 1993
where applicable.
(2) The average loan and lease financing balances include non-accruing
loans and lease financing. Loan fees of $2,424,000 and $2,183,000 for
1994 and 1993, respectively, are included in interest income.
(3) Net interest margin is computed by dividing net interest income by
total earning assets.
(4) Interest rate spread equals the earning asset yield minus the interest
bearing liability rate.
<PAGE>
The provision for loan and lease losses was increased to $3,475,000
from $2,700,000 in 1993 due to the increase in outstanding loans and
lease financing. Net 1994 loan and lease charge-offs amounted to
$2,117,000 or .19% (annualized) of average loans and lease financing
compared to .26% (annualized) in 1993.
Other income increased $4,174,000 during the first six months of 1994
to $20,323,000 compared to 1993's $16,149,000. The increase was due
in part to a $965,000 increase in service charges on deposit accounts
resulting from increased volume, $579,000 increase in insurance
commissions from increased volume of annuity sales and $1,520,000 of
negative goodwill accretion from the acquisition of financial
institutions in 1993.
Other expenses in the 1994 period increased by $12,228,000 or 26.6%
from the 1993 period. As discussed previously, increases were
experienced in personnel expense due to the 1993 acquisitions of
financial institutions. Other expenses increased $6,427,000 due to
telecommunication expense increases of $608,000, donations and other
depositor expense increases of $934,000 related to the acquisitions of
financial institutions in 1993, a $443,000 increase in expenses
related to write-downs of real estate acquired under foreclosure,
$1,032,000 of goodwill and other intangible asset amortization,
$1,037,000 of deposit insurance based on the increased level of
deposits and general increases in expenses resulting from a 34.6%
increase in average assets from June 1993's level. The effective
income tax rate was 33.62% in 1994 compared to 33.07% in the same
period of 1993.
Financial Condition
Total assets have increased slightly, .4%, from year-end 1993 but
have increased $435,667,000 since June 30, 1993 due to acquisitions
of financial institutions and internal growth. Virtually all of the
increase occurred in interest-earning assets. Average assets have
increased from $2,694,973,000 for the year ended December 31, 1993
to $3,251,018,000 for the three months ended June 30, 1994 and
compare to $2,532,556,000 for the three months ended June 30, 1993.
<PAGE>
CCB FINANCIAL CORPORATION
Average Balances and Net Interest Income Analysis
Six Months Ended June 30, 1994 and 1993
(Taxable Equivalent Basis-In Thousands) (1)
<TABLE>
<CAPTION>
1994 1993
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Loans and lease financing (2) $ 2,189,573 92,376 8.51 % 1,602,608 69,883 8.79
U.S. Treasury and agency
obligations 558,752 15,662 5.65 393,881 12,084 6.19
State and political
subdivision obligations 50,252 2,652 10.64 43,851 2,585 11.89
Equity securities 35,553 1,102 6.25 21,279 802 7.60
Federal funds sold and other
short-term investments 134,118 2,376 3.57 140,808 2,205 3.16
Time deposits in other banks 30,513 644 4.26 7,678 84 2.21
Total earning assets 2,998,761 114,812 7.72 2,210,105 87,643 8.00
Non-earning assets:
Cash and due from banks 140,656 129,296
Premises and equipment 43,096 36,807
All other assets, net 39,713 17,287
Total assets $ 3,222,226 2,393,495
Interest bearing liabilities:
Savings and time deposits $ 2,390,490 40,298 3.40 % 1,766,071 31,940 3.65
Federal funds purchased and
and securities sold under
agreements to repurchase 33,242 387 2.35 29,862 286 1.93
Other short-term borrowed
funds 11,220 133 2.39 17,065 204 2.41
Long-term debt 77,373 2,782 7.25 30,593 1,181 7.78
Total interest bearing
liabilities 2,512,325 43,600 3.50 1,843,591 33,611 3.68
Other liabilities and
shareholders' equity:
Demand deposits 381,286 324,338
Other liabilities 73,498 29,483
Shareholders' equity 255,117 196,083
Total liabilities and
shareholders' equity $ 3,222,226 2,393,495
Net interest income and net
interest margin (3) $ 71,212 4.79 % 54,032 4.93
Interest rate spread (4) 4.22 % 4.32
</TABLE>
(1) The taxable equivalent basis is computed using 35% federal and 7.83%
state tax rates in 1994 and 34% federal and 7.91% state tax rates in 1993
where applicable.
(2) The average loan and lease financing balances include non-accruing
loans and lease financing. Loan fees of $4,367,000 and $3,500,000
for 1994 and 1993, respectively, are included in interest income.
(3) Net interest margin is computed by dividing net interest income by
total earning assets.
(4) Interest rate spread equals the earning asset yield minus the interest
bearing liability rate.
<PAGE>
At June 30, 1994, risk assets (consisting of nonaccrual loans and
lease financing, foreclosed real estate, restructured loans and
lease financing and accruing loans 90 days or more past due)
amounted to approximately $21,341,000 or .94% of outstanding loans
and lease financing and foreclosed real estate. This compares to
approximately $23,252,000 or 1.07% and $23,785,000 or 1.28% at
December 31, 1993 and June 30, 1993, respectively. The reserve for
loan and lease losses to risk assets was 1.33x at June 30, 1994
compared to 1.16x at December 31, 1993 and .98x at June 30, 1993.
Effective January 1, 1994, the Corporation adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS 115). Under SFAS
115, debt securities and equity securities are segregated into
three categories for accounting and reporting purposes. Debt and
equity securities that the Corporation has the positive intent and
ability to hold until maturity are classified as held for
investment and reported at amortized cost. Debt and equity
securities that are bought and held principally for the purpose of
selling them in the near term are classified as trading securities
and reported at fair value, with unrealized gains and losses
included in earnings. Debt and equity securities not classified as
either held for investment or as trading securities are classified
as available for sale securities and reported at fair value, with
unrealized gains and losses excluded from earnings and reported in
a separate component of shareholders' equity. After adjusting for
changes in market value during the second quarter, this component
of shareholders' equity totals $(4,880,000) at June 30, 1994.
Investment securities to be held until maturity are classified as
such and will continue to be recorded at amortized cost.
The Corporation's capital position has historically been strong as
evidenced by the Corporation's ratios of average shareholders'
equity to average total assets of 7.95% and 7.94% for the three
months ended June 30, 1994 and 1993, respectively. Furthermore,
the Corporation and the Banks continue to maintain higher capital
ratios than required under regulatory guidelines. Due to the
retention of earnings and the public offerings of common stock and
qualifying debt late in 1993, the Corporation's and Banks' capital
ratios are returning to their pre-acquisition levels.
<PAGE>
The chart below shows that the Corporation and the Banks
significantly exceed all risk-based capital requirements at June
30, 1994.
June 30, December 31, June 30, Regulatory
Ratio 1994 1993 1993 Minimums
Tier 1 Capital 4.00%
Corporation 10.12% 9.93% 8.91%
CCB 9.16 9.12 9.85
CCB Savings 20.46 17.87 -
Graham Savings 35.30 34.16 -
CCB-Ga. 28.00 30.42 -
Total Capital 8.00
Corporation 12.57 12.86 10.00
CCB 11.19 11.21 10.96
CCB Savings 22.40 19.67 -
Graham Savings 37.00 35.90 -
CCB-Ga. 28.84 31.26 -
Leverage 4.00
Corporation 7.55 8.50 7.59
CCB 7.04 7.47 8.43
CCB Savings 9.33 8.59 -
Graham Savings 17.43 16.64 -
CCB-Ga. 18.46 35.35 -
The Corporation has increased its annual cash dividends consistently
over the past 30 years, increasing to $.32 per share for the three
months ended June 30, 1994 from $.30 per share for the same period in
1993. Book value increased 8.6% to $27.28 per share at June 30, 1994
from 1993's level of $25.12.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits
Exhibit 3 - Articles of Amendment to the Restated Charter of the
Registrant
(b). Reports on Form 8-K
None.
<PAGE>
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.
CCB FINANCIAL CORPORATION
Registrant
Date: August 10, 1994 /S/ Ernest C. Roessler
Ernest C. Roessler
President and Chief Executive Officer
Date: August 10, 1994 /S/ W. Harold Parker, Jr.
W. Harold Parker, Jr.
Senior Vice President and Controller
(Chief Accounting Officer)
<PAGE>
ARTICLES OF AMENDMENT TO THE RESTATED CHARTER
OF
CCB FINANCIAL CORPORATION
The undersigned corporation hereby submits these
Articles of Amendment for the purpose of amending its
Restated Charter:
1. The name of the corporation is CCB Financial
Corporation.
2. The following amendment to the Restated Charter of
the corporation was adopted by its shareholders on the 5th
day of April, 1994, in the manner prescribed by Chapter 55
of the General Statutes of North Carolina:
Article 4 of the Restated Charter of the corporation
hereby is amended by deleting the first sentence and
inserting in lieu thereof the following sentence:
"The total number of shares of capital stock
which the Corporation has authority to issue
is 35,000,000, of which 30,000,000 shall be
common stock, $5.00 par value, and 5,000,000
shall be serial preferred stock."
3. The number of shares of the corporation
outstanding at the time of such adoption was 9,516,379; the
number of votes entitled to be cast thereon was 9,516,379;
and the number of votes indisputably represented at the
meeting of shareholders was 6,102,809.
4. The number of votes cast for such amendment was
5,826,776; and the number of votes cast against such
amendment was 179,177.
This the 2nd day of May, 1994.
CCB FINANCIAL CORPORATION
By: /s/ Ernest C. Roessler
Ernest C. Roessler, President
Prepared by and return to:
Brian Thomas Atkinson
For the firm of
Ward and Smith, P.A.
Suite 2400
Two Hannover Square
Fayetteville Street Mall
Raleigh, North Carolina 27601
Telephone: (919) 836-1800
