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 March 31, 1995
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 9,029,495
(Class of Stock) (Shares outstanding
as of May 10, 1995)
<PAGE>
CCB FINANCIAL CORPORATION
FORM 10-Q
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1995, December 31, 1994 and
March 31, 1994 3
Consolidated Statements of Income
Three Months Ended March 31, 1995 and 1994 4
Consolidated Statements of Shareholders' Equity
Three Months Ended March 31, 1995 and 1994 5
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1995 and 1994 6
Notes to Consolidated Financial Statements
Three Months Ended March 31, 1995 and 1994 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
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>
March 31, December 31, March 31,
1995 1994 1994
<S> <C> <C> <C>
Assets:
Cash and due from banks $ 152,022,943 173,154,769 163,116,008
Time deposits in other banks 25,675,663 18,531,964 35,154,507
Federal funds sold and other
short-term investments 140,000,000 155,000,000 119,321,659
Investment securities:
Available for sale 503,417,779 509,444,623 605,238,338
Held for investment (market values
$83,548,560, $82,358,439 and
$66,892,642) 81,524,884 82,673,102 64,008,926
Loans and lease financing (notes 2
and 4) 2,576,005,968 2,508,511,286 2,161,401,949
Less reserve for loan and lease
losses(note 3) 32,503,288 31,282,853 26,936,626
Net loans and lease financing 2,543,502,680 2,477,228,433 2,134,465,323
Premises and equipment 44,298,432 42,909,115 42,805,748
Other assets (note 4) 80,527,320 89,244,399 74,502,663
Total assets $3,570,969,701 3,548,186,405 3,238,613,172
Liabilities:
Deposits:
Demand (non-interest bearing) $ 415,268,783 430,468,049 375,521,546
Savings and NOW accounts 403,693,606 429,010,106 434,592,625
Money market accounts 982,623,658 948,949,167 794,652,010
Jumbo time deposits 297,719,553 256,269,856 172,302,944
Consumer time deposits 979,851,327 967,473,362 1,008,948,568
Total deposits 3,079,156,927 3,032,170,540 2,786,017,693
Federal funds purchased, master
notes and securities sold
under agreements to repurchase 38,409,699 42,274,061 31,338,589
Other short-term borrowed funds 33,390,094 69,266,636 12,984,952
Long-term debt 70,449,155 77,039,067 78,460,490
Other liabilities 82,462,526 76,045,504 72,159,932
Total liabilities 3,303,868,401 3,296,795,808 2,980,961,656
Shareholders' equity:
Serial preferred stock. Authorized
5,000,000 shares; none issued -- -- --
Common stock of $5 par value.
Authorized 30,000,000 shares;
9,100,895, 9,108,895
and 9,516,379 shares issued 45,504,475 45,544,475 47,581,895
Additional paid-in capital 69,851,250 70,112,344 83,332,593
Retained earnings 158,910,157 150,976,788 130,322,812
Unrealized gain (loss) on investment
securities available for sale,
net of applicable taxes (4,454,673) (12,272,325) 171,428
Less: Unearned common stock held by
management recognition plans (2,709,909) (2,970,685) (3,757,212)
Total shareholders' equity 267,101,300 251,390,597 257,651,516
Total liabilities and
shareholders' equity $3,570,969,701 3,548,186,405 3,238,613,172
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CCB Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three months ended
March 31,
1995 1994
<S> <C> <C>
Interest income:
Interest and fees on loans and leases $ 59,133,968 44,211,158
Interest and dividends on investment
securities:
U.S. Treasury 5,055,138 3,241,360
U.S. Government agencies and
corporations 3,241,360 2,495,434
States and political subdivisions
(primarily tax-exempt) 1,079,260 875,996
Equity and other securities 426,017 635,944
Interest on time deposits in other banks 451,494 295,759
Interest on federal funds sold and
other short-term investments 2,101,163 1,231,893
Total interest income 71,488,400 53,868,642
Interest expense:
Deposits 28,620,947 19,589,719
Federal funds purchased, master notes
and securities sold under
agreements to repurchase 472,113 148,110
Other short-term borrowed funds 900,202 61,970
Long-term debt 1,221,088 1,390,665
Total interest expense 31,214,350 21,190,464
Net interest income 40,274,050 32,678,178
Provision for loan and
lease losses (note 3) 2,030,000 1,251,500
Net interest income after provision
for loan and lease losses 38,244,050 31,426,678
Other income:
Service charges on deposit accounts 5,081,059 4,651,459
Trust and custodian fees 1,607,614 1,812,124
Insurance commissions 444,770 792,564
Merchant discount 1,038,772 837,401
Other service charges and fees 709,253 636,573
Other 2,363,235 1,566,048
Investment securities gains (losses), net (1,326,057) 43,851
Total other income 9,918,646 10,340,020
Other expenses:
Personnel 16,407,159 14,714,217
Net occupancy 2,216,882 2,242,968
Equipment 2,089,929 2,342,314
Other 10,987,733 9,810,077
Total other expenses 31,701,703 29,109,576
Income before income taxes 16,460,993 12,657,122
Income taxes 5,430,600 4,211,400
Net income $ 11,030,393 8,445,722
Net income per share $ 1.21 .89
Weighted average shares outstanding 9,108,804 9,516,408
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CCB Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Months Ended March 31, 1995 and 1994
<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 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 - - 8,445,722 - - 8,445,722
Transactions pursuant to
restricted stock
plan, net (4,490) (16,419) - - - (20,909)
Earned portion of
management recognition
plans - - - - 261,076 261,076
Cash dividends ($.32
per share) - - (3,045,241) - - (3,045,241)
Change in unrealized
losses,
net of applicable
income taxes - - - (5,256,213) - (5,256,213)
Balance March 31, 1994 $ 47,581,895 83,332,593 130,322,812 171,428 (3,757,212) 257,651,516
Balance January 1, 1995 $ 45,544,475 70,112,344 150,976,788 (12,272,325) (2,970,685) 251,390,597
Net income - - 11,030,393 - - 11,030,393
Stock options exercised 820 4,674 - - - 5,494
Earned portion of
management recognition
plans - - - - 260,776 260,776
Purchase and retirement
of shares (40,820) (265,768) - - - (306,588)
Cash dividends ($.34
per share) - - (3,097,024) - - (3,097,024)
Change in unrealized
losses,
net of applicable
income taxes - - - 7,817,652 - 7,817,652
Balance March 31, 1995 $ 45,504,475 69,851,250 158,910,157 (4,454,673) (2,709,909) 267,101,300
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CCB Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Operating activities:
Net income $ 11,030,393 8,445,722
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,515,980 1,550,755
Provision for loan and lease losses 2,030,000 1,251,500
Net (gain) loss on sales of investment securities 1,326,057 (43,851)
Net amortization and accretion on investment
securities 1,314,261 1,133,368
Amortization of intangibles and other assets 883,055 658,830
Accretion of negative goodwill (838,953) (853,129)
Increase in accrued interest receivable (1,428,891) (1,367,535)
Decrease in accrued interest payable (112,257) (151,189)
Decrease (increase) in other assets 4,450,867 (6,366,966)
Increase in other liabilities 7,389,205 5,337,992
Vesting of shares held by management
recognition plans 260,776 261,076
Transactions pursuant to restricted stock
plan, net - (20,909)
Other 538 3,360
Net cash provided by operating activities 27,821,031 9,839,024
Investing activities:
Proceeds from maturities and issuer calls of
investment securities held for investment 1,711,899 1,467,480
Purchases of investment securities held
for investment (576,723) (1,346,034)
Proceeds from sales of investment securities
available for sale 61,273,791 42,257,269
Proceeds from maturities and issuer calls of
investment securities available for sale 18,906,818 166,783,508
Purchases of investment securities available
for sale (64,009,696) (260,958,654)
Net increase in loans and leases receivable (68,466,865) (3,296,410)
Purchases of premises and equipment (2,905,297) (1,759,318)
Net cash used by investing activities (54,066,073) (56,852,159)
Financing activities:
Net increase (decrease) in deposit accounts 46,986,387 (30,753,068)
Net increase (decrease) in federal funds
purchased, master notes and securities
sold under agreements to repurchase (3,864,362) 5,811,623
Net decrease in other short-term borrowed funds (35,876,542) (3,217,410)
Proceeds from issuance of long-term debt 952,000 3,500,000
Repayments of long-term debt (7,542,450) (3,740,943)
Exercise of stock options 5,494 -
Purchase and retirement of common stock (306,588) -
Cash dividends (3,097,024) (3,045,241)
Net cash provided by financing activities (2,743,085) (31,445,039)
Net decrease in cash and cash equivalents (28,988,127) (78,458,174)
Cash and cash equivalents at January 1 346,686,733 396,050,348
Cash and cash equivalents at March 31 $ 317,698,606 317,592,174
Supplemental disclosure of cash flow information:
Interest paid during the period $ 31,326,607 21,341,653
Income taxes paid during the period $ 343,647 41,187
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CCB Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Three Months Ended March 31, 1995 and 1994
(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"), 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 March 31, 1995 and 1994
follows:
1995 1994
Commercial, financial and
agricultural $ 461,884,845 382,055,524
Real estate-construction 356,498,793 237,181,184
Real estate-mortgage 1,310,988,859 1,129,430,178
Instalment loans to individuals 233,155,185 213,099,801
Credit card receivables 184,920,487 177,210,181
Lease financing 32,524,576 25,539,028
Gross loans and lease financing 2,579,972,746 2,164,515,896
Less unearned income 3,966,778 3,113,947
Total loans and lease financing $ 2,576,005,968 2,161,401,949
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan", which requires that creditors value all specifically
reviewed loans for which it is probable that the creditors will be unable to
collect all amounts due according to the terms of the loan agreement at
either the present value of expected cash flows discounted at the loan's
effective interest rate, or if more practical, the market price or value of
collateral. The FASB also issued SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures", that amends SFAS
No. 114 to allow a creditor to use existing methods for recognizing interest
income on an impaired loan and by requiring additional disclosures about how
a creditor recognizes interest income related to impaired loans.
Effective January 1, 1995, the provision of SFAS No. 114 and No. 118 were
adopted by the Corporation. The adoption of these Standards required no
increase to the reserve for loan and lease losses and no impact on net income
in the first quarter of 1995. At March 31, 1995, impaired loans amounted to
$4,494,000. The related reserve for loan and lease losses on these loans
amounted to $1,842,000.
(3) Reserve for Loan and Lease Losses
Following is a summary of the reserve for loan and lease losses for the
three months ended March 31, 1995 and 1994:
1995 1994
Balance at beginning of year $ 31,282,853 26,963,334
Provision charged to operations 2,030,000 1,251,500
Recoveries of loans and leases
previously charged-off 374,548 366,598
Loan and lease losses charged to
reserve (1,184,113) (1,644,806)
Balance at September 30 $32,503,288 26,936,626
<PAGE>
(4) Risk Assets
Following is a summary of risk assets at March 31, 1995 and 1994 (in
thousands):
1995 1994
Nonaccrual loans and lease financing $ 8,499 11,817
Other real estate acquired through
loan foreclosures 2,563 7,382
Accruing loans and lease financing
90 days or more past due 1,699 1,991
Restructured loans and lease financing - -
Total risk assets $ 12,761 21,190
(5) 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.
(6) 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.
(7) Merger
On November 7, 1994, the Corporation announced that it had entered into a
definitive agreement to merge with Security Capital Bancorp ("Security
Capital") of Salisbury, North Carolina. Security Capital is a $1.2
billion bank holding company operating 46 offices located in the south
central and western Piedmont regions of North Carolina. Under the terms
of the definitive agreement, the Corporation will issue .50 shares of its
common stock in exchange for each share of common stock of Security
Capital in a tax-free exchange. The merger will be accounted for as a
pooling of interests. Shareholder and regulatory approvals for the
merger have been obtained and the merger is anticipated to close on May
19, 1995.
<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 the financial condition and changes
therein and the results of operations of CCB Financial Corporation (the
"Corporation") and its wholly-owned subsidiaries, Central Carolina Bank
and Trust Company ("CCB"), 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 months ended
March 31, 1995 and 1994. 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.
On February 3, 1995, the Corporation's wholly-owned subsidiary, CCB
Savings Bank of Lenoir, Inc., SSB was merged with and into CCB and its
branch offices are being operated as CCB offices.
On November 7, 1994, the Corporation announced that it had entered into a
definitive agreement to merge with Security Capital Bancorp ("Security
Capital") of Salisbury, North Carolina. Under the terms of the definitive
agreement, the Corporation will issue .50 shares of its common stock in
exchange for each share of common stock of Security Capital in a tax-free
exchange which will be accounted for as a pooling of interests.
Shareholder and regulatory approvals for the merger have been obtained
and the merger is anticipated to close on May 19, 1995.
Results of Operations
Net income for the three months ended March 31, 1995 amounted to
$11,030,000, an increase of $2,585,000 or 30.6% over the same period in
1994. Net income per share was $1.21 in 1995, a $.32 per share or 36.0%
increase over the 1994 period. Returns on average assets and average
shareholders' equity were 1.26% and 17.64%, respectively, compared to
1.07% and 13.60% in the 1994 period.
Average Balance Sheets and Net Interest Income Analyses on a taxable
equivalent basis for each of the periods are included in Table 1.
Average earning assets increased by $345,617,000 or 11.6% over the 1994
period due to internal growth. First quarter increases in overall
interest rates combined with shifts in the mix of earning assets toward
higher yielding assets increased the net interest margin from 4.62% in
1994 to 5.08% in 1995. Net interest income on a taxable equivalent basis
<PAGE>
increased $8,041,000 or 23.7% due to both increased volume of earning
assets and increased interest rate spreads.
The provision for loan and lease losses for the first quarter was
increased to $2,030,000 from $1,252,000 in 1994 due to growth in
outstanding loans and lease financing. The reserve for loan and lease
losses to loans and lease financing outstanding was 1.26% at March 31,
1995 and 1.25% at March 31, 1994. First quarter 1995 net loan and lease
charge-offs amounted to $810,000 or .13% (annualized) of average loans
and lease financing compared to $1,278,000 or .24% (annualized) in 1994.
Excluding securities gains (losses), other income increased in the first
quarter of 1995 to $11,245,000 compared to 1994's $10,296,000. The
increase was due primarily to recognition of $880,000 of gains on early
retirement of the Corporation's subordinated notes. As a result of first
quarter 1995's modest increase in noninterest income and the $344,391,000
increase in average assets, noninterest income excluding securities gains
and losses as a percentage of average assets for the three months ended
March 31, 1995 has decreased slightly to 1.29% from the 1.31% earned in
the same period of 1994. Losses on sales of securities available for
sale amounted to $1,326,000 in 1995 versus gains of $44,000 in 1994. The
1995 sales were comprised of U.S. Treasury obligations which were sold as
part of management's repositioning of the securities portfolio to improve
liquidity and interest-sensitivity. Total noninterest income as a
percentage of average assets for the three months ended March 31, 1995
decreased to 1.14% from the 1.31% earned in the same period of 1994.
The following schedule presents noninterest income and expense as a
percentage of average assets for the three months ended March 31, 1995
and 1994:
1995 1994
Noninterest income (1) 1.14% 1.31
Personnel expense 1.88 1.87
Occupancy and equipment expense .49 .58
Other operating expense 1.26 1.25
Noninterest expense 3.63 3.70
Net overhead 2.49 2.39
(1) Includes net gains (losses) on investment securities sales.
<PAGE>
Table 1
CCB FINANCIAL CORPORATION
Average Balances and Net Interest Income Analyses
Three Months Ended March 31, 1995 and 1994
(Taxable Equivalent Basis-In Thousands) (1)
<TABLE>
<CAPTION>
1995 1994
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) $ 2,539,474 59,320 9.44 % 2,156,573 44,256 8.32
U.S. Treasury and agency
obligations (3) 526,392 8,983 6.82 530,360 7,171 5.48
States and political
subdivision obligations 66,898 1,667 10.11 50,400 1,348 10.85
Equity securities and other
securities (3) 24,760 440 7.11 48,330 675 5.66
Federal funds sold and other
short-term investments 135,066 2,227 6.69 156,201 1,286 3.34
Time deposits in other banks 28,295 479 6.87 33,404 314 3.81
Total earning assets 3,320,885 73,116 8.89 2,975,268 55,050 7.50
Non-earning assets:
Cash and due from banks 141,302 142,031
Premises and equipment 43,963 42,907
All other assets, net 31,356 32,909
Total assets $ 3,537,506 3,193,115
Interest-bearing liabilities:
Savings and time deposits $ 2,635,829 28,622 4.40 % 2,380,365 19,590 3.34
Federal funds purchased,
master notes and securities
sold under agreements to
repurchase 40,825 472 4.69 30,616 148 1.96
Other short-term borrowed funds 62,881 900 5.81 11,605 62 2.17
Long-term debt 71,362 1,221 6.84 77,271 1,390 7.30
Total interest-bearing
liabilities 2,810,897 31,215 4.50 2,499,857 21,190 3.44
Other liabilities and
shareholders' equity:
Demand deposits 391,785 369,994
Other liabilities 81,243 71,486
Shareholders' equity 253,581 251,778
Total liabilities and $ 3,537,506 3,193,115
shareholders' equity
Net interest income and net
interest margin (4) $ 41,901 5.08 % 33,860 4.62
Interest rate spread (5) 4.39 % 4.06
</TABLE>
(1) The taxable equivalent basis is computed using 35% federal and 7.75%
state tax rates in 1995 and 35% federal and 7.83% state tax rates in 1994
where applicable.
(2) The average loan and lease financing balances include non-accruing
loans and lease financing. Loan fees of $2,120,000 and $1,943,000 for
1995 and 1994, respectively, are included in interest income.
(3) The average balances for debt and equity securities exclude the
effect of their mark-to-market adjustment, if any, for Financial
Accounting Standards No. 115.
(4) Net interest margin is computed by dividing net interest income by
total earning assets.
(5) Interest rate spread equals the earning asset yield minus the
interest bearing liability rate.
<PAGE>
Other expenses in the 1995 period increased by $2,591,000 or 8.9% from
the 1994 period. Personnel expense increased $1,693,000 due to an
approximately 5% increase in base salaries, equating to a $510,000
increase; a $823,000 decrease in the amount of personnel costs deferred
through loan originations and a $166,000 increase in employee insurance
expense. Despite the $1,693,000 increase in personnel expense, assets
per employee improved from $2.06 million at March 31, 1994 to $2.29
million per employee at March 31, 1995. During the first quarter of
1995, the Corporation incurred $695,000 of expense related primarily to
write-downs of real estate acquired under foreclosure; this expense
category totaled $86,000 for the first quarter of 1994. Advertising and
other marketing expenses increased $524,000 due in part to a new
advertising campaign. Noninterest expense as a percentage of average
assets has improved from 3.70% for the three months ended March 31, 1994
to 3.63% for the same period in 1995. The effective income tax rate was
32.99% in 1995 compared to 33.27% in the same period of 1994.
As a result of the above, net overhead (noninterest expense less
noninterest income) as a percentage of average assets increased to 2.49%
for the three months ended March 31, 1995 from 2.39% for the same period
in 1994. The Corporation's efficiency ratio (noninterest expense as a
percentage of taxable equivalent net interest income and other income)
dramatically improved from 65.86% for the three months ended March 31,
1994 to 61.18% for the same period in 1995. The improvements were due to
continued implementation of cost-saving strategies and efficiencies.
Expenses related to the merger between the Corporation and Security
Capital are being deferred until consummation of the transaction.
Financial Condition
Total assets have increased $332,357,000 or 10.26% from March 1994 but
have increased only $22,783,000 or 1.0% since December 31, 1994.
Virtually all of the increase occurred in interest-earning assets.
Average assets have increased from $2,975,268,000 for the three months
ended March 31, 1994 to $3,320,885,000 for the 1995 period.
At March 31, 1995, 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
$12,761,000 or .49% of outstanding loans and lease financing and
foreclosed real estate. This compares to approximately $21,190,000 or
.98% and $13,983,000 or .56% at March 31, 1994 and December 31, 1994,
respectively. Risk assets as of March 31, 1995 are at their lowest level
since 1989. The reserve for loan and lease losses to risk assets was
2.55x at March 31, 1995 compared to 1.27x at March 31, 1994 and 2.24x at
<PAGE>
December 31, 1994. While this ratio has improved significantly during
the periods presented as a result of the Corporation's credit risk
management policies and general improvements in the economy, management
has chosen to keep the reserve for loan and lease losses at a targeted
level of at least 1.25% of outstanding loans due to historical experience
with credit risk cycles.
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 7.17% and 7.89% for the three months ended March
31, 1995 and 1994, respectively. The 1995 ratio has decreased from the
prior year's due in part to the Corporation's repurchase and retirement
of $15,837,000 of common stock during the fourth quarter of 1994 and the
first quarter of 1995. In addition, $7,015,000 of qualifying subordinated
debt was retired during the first quarter of 1995. The Corporation and
the Banks continue to maintain higher capital ratios than required under
regulatory guidelines.
The chart below illustrates that the Corporation and the Banks
significantly exceed all risk-based capital requirements at March 31,
1995. Capital ratios of Graham Savings decreased significantly during
the first quarter of 1995 due to a return of capital to the Corporation
in the form of a dividend while still exceeding the risk-based capital
requirements.
March December March Regulatory
Ratio 31, 1995 31, 1994 31, 1994 Minimums
Tier 1 Capital 4.00%
Corporation 8.84% 8.85% 10.21%
CCB 8.82 8.48 9.33
Graham Savings 18.45 37.70 33.90
CCB-Ga. 23.22 23.05 27.73
Total Capital 8.00
Corporation 11.15 11.47 13.13
CCB 10.69 10.37 11.40
Graham Savings 20.24 39.40 35.59
CCB-Ga. 23.86 23.70 28.48
Leverage 4.00
Corporation 7.10 6.97 7.38
CCB 7.10 6.84 6.88
Graham Savings 9.42 18.53 16.91
CCB-Ga. 36.98 36.14 16.66
The Corporation has increased its annual cash dividends consistently over
the past 30 years, increasing to $.34 per share for the three months
ended March 31, 1995 from $.32 per share for the same period in 1994.
Book value per share increased 8.4% to $29.35 at March 31, 1995 from
1994's level of $27.07.
<PAGE>
Pending Merger
On November 7, 1994, the Corporation announced that it had entered into a
definitive agreement to merge with Security Capital which is a $1.2
billion bank holding company operating 46 offices located in the south
central and western Piedmont regions of North Carolina. Security
Capital's four bank subsidiaries are Security Capital Bank and OMNIBANK,
SSB, both located in Salisbury, North Carolina; Citizens Savings, SSB,
Concord, North Carolina; and Home Savings Bank, SSB, Kings Mountain,
North Carolina. As of or for the three months ended March 31, 1995,
Security Capital had an equity to assets ratio of 10.65%, non-performing
assets as a percentage of total assets of .45%, and a return on average
equity of approximately 12.54%. Net income for the first quarter of 1995
totaled $3,869,000 or $.33 per share compared to $3,462,000 or $.30 per
share for the 1994 period. Security Capital's efficiency ratio was
54.48% for the first quarter of 1995.
Under the terms of the definitive agreement, the Corporation will issue
.50 shares of its common stock in exchange for each share of common stock
of Security Capital in a tax-free exchange. The merger, which is based
on a fixed exchange ratio, will be accounted for as a pooling of
interests. As part of the transaction, CCB announced that it anticipated
repurchasing up to 9% of the common shares of stock issued in the merger.
The Corporation plans to effect these open market repurchases prior to
the completion of the transaction. As of March 31, 1995, 416,069 shares
with a repurchase price totaling $15,837,000 had been repurchased and
retired. The merger transaction is expected to be consummated on May 19,
1995.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits
Exhibit 22 - Report regarding matters submitted to vote of security
holders at Special Meeting on March 16, 1995.
(b). Reports on Form 8-K
An amendment to a report on Form 8-K dated July 1, 1983 was filed
under item 5 on January 30, 1995.
A report on Form 8-K dated February 24, 1995 was filed under items 5
and 7.
<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: May 12, 1995 /S/ Ernest C. Roessler
Ernest C. Roessler
President and Chief Executive Officer
Date: May 12, 1995 /S/ W. Harold Parker, Jr.
W. Harold Parker, Jr.
Senior Vice President and Controller
(Chief Accounting Officer)
<PAGE>
SPECIAL MEETING OF THE SHAREHOLDERS OF
CCB FINANCIAL CORPORATION
MARCH 16, 1995
Report of Inspectors of Election
on Quorum and Voting Results
The undersigned have been duly appointed Inspectors of
Election at the Annual Meeting of the Shareholders of CCB
Financial Corporation, held this 16th day of March, 1995 do
hereby report as follows:
Report on Quorum
Pursuant to such appointment, we executed our Oaths of
Office and duly delivered the same to the Secretary of the
Corporation.
We inspected the list of shareholders of CCB Financial
Corporation and certify that the number of shares issued,
outstanding and entitled to vote at such meeting was
9,108,895.
We also certify that there were at least 6,999,482 shares of
CCB Financial Corporation stock represented as follows:
Description Number of Shares Percentage
Outstanding and entitled to vote 9,108,895 100.00%
Voting in Person and by Proxy 6,999,482 76.84%
Report on Election
We received and tallied votes cast in person and by proxy
"For," "Against" and "Abstained" regarding the Board of
Directors Proposal No. 1 and we certified the results as
follows:
Shares Voting on Proposal No. 1
Description Number of Share Percentage
Outstanding and entitled to vote 9,108,895 100.00%
Option
"For" 6,464,519 70.97%
"Against" 346,300 .80%
"Abstained" 59,024 .65%
Non Voted Shares 2,239,052 24.58%
Total Shares Accounted For 9,108,895 100.00%
<PAGE>
Inspectors of Election Report
Special Shareholders' Meeting
3/16/95
Shares Voting on Proposal No. 2
Description Number of Shares Percentage
Outstanding and entitled to vote 9,108,895 100.00%
Option
"For" 6,396,572 70.22%
"Against" 544,832 5.98%
"Abstain" 58,077 .64%
Non Voted Shares 2,109,414 23.16%
Total Shares Accounted For 9,108,895 100.00%
Witness our signatures this 16th day of March, 1995.
/s/ James E. Shaw
James E. Shaw
/s/ S. Benton Stone
S. Benton Stone
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statemetns as of and for the three months ended March 31,
1995 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000714612
<NAME> CCB FINANCIAL CORPORATION
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