SECURITES 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 6, 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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<CAPTION>
<S> <C> <C>
(State of Incorporation) (Commission File Number) (IRS Employer Identification No.)
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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.
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Item 5. Other Events
On July 6, 1998, Centura Banks, Inc. ("Centura") announced earnings for the
three and six month periods ended June 30, 1998. Centura's net income increased
20.4 percent to $24.1 million or $0.89 per diluted share for the three months
ended June 30, 1998 versus $20.0 million or $0.76 per diluted share for the
comparable quarter last year. Net income increased to 46.5 million or $1.74 per
diluted share for the six months ended June 30, 1998 compared to $37.9 million
or $1.44 per diluted share for the comparable six 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.
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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 6, 1998 By: /s/ Steven Goldstein
Steven Goldstein
Chief Financial Officer
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EXHIBIT INDEX
Sequential
Page
Exhibit Description of Exhibit Number
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99 Press release dated July 6, 1998 5
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For Immediate Release
July 6, 1998
For More Information: Steven Goldstein
Chief Financial Officer
252-454-8356
[email protected]
CENTURA BANKS INC. REPORTS 20% INCREASE IN 2nd QUARTER EARNINGS
ROCKY MOUNT, N.C. - Centura Banks Inc. (NYSE:CBC) today announced that
net income for the second quarter of 1998 increased 20.4 percent to $24.1
million, compared to $20.0 million for the comparable quarter in 1997. Diluted
earnings per share increased to $0.89 in the second quarter of 1998 compared to
$0.76 in the same quarter last year.
Centura's strong results for the second quarter of 1998 produced a
return on average equity of 16.50 percent and a return on average assets of 1.28
percent, compared to prior year ratios of 16.00 percent and 1.24 percent,
respectively.
For the first half of 1998, net income increased 22.9 percent to $46.5
million, or $1.74 per diluted share from $1.44 for the same period last year.
Also, return on average assets was 1.28 percent, while return on average equity
rose 97 basis points to 16.40 percent.
Centura maintained momentum in the second quarter of 1998, increasing
earnings by 7.0 percent over first quarter. These results were led by a 6.1
percent increase in noninterest revenue, principally in fees from financial
services business lines, mortgage income and deposit fees.
"Second quarter results reflect the continuing successful
implementation of Centura's strategic plan," said Cecil W. Sewell, Centura
chairman and chief executive officer. "Higher
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loan volumes and the substantial increase in noninterest income are the
direct result of the development of targeted financial services and
alternative delivery channels that address the needs of our customers."
Since year end 1997, loans have grown 7.8 percent to $4.9 billion
which, when coupled with a stable net interest margin, have contributed to total
revenue growth for the first half of 1998. Without loans acquired through
Centura's merger in March with Pee Dee State Bank, loans have grown an
annualized 11.6 percent this year, principally in commercial loans.
During the quarter Centura opened an additional five financial offices
in Hannaford supermarkets, bringing the total number of supermarket offices to
30. Also during this period Centura agreed to purchase four in-store financial
offices in Kroger supermarkets in Winston-Salem and Kernersville.
With assets of $7.6 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. Centura offers its customers a variety of delivery channels,
including over 200 financial services offices; more than 300 ATMs; its Centura
Highway telephone banking center; Centura's Internet site; and through leading
online money management software packages.
Additional information about Centura's financial performance, products
and services is available on its website at www.centura.com.
#####
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FINANCIAL HIGHLIGHTS
CENTURA BANKS, INC. AND SUBSIDIARIES
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<CAPTION>
3 Months 3 Months 6 Months 6 Months
Ended June 30 Ended June 30 Ended June 30 Ended June 30
(Dollars in thousands, except per share data) 1998 1997 Change 1998 1997 Change
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<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Interest income $ 144,042 $ 126,266 14.1% $ 280,763 $ 246,109 14.1%
Interest expense 69,624 60,800 14.5 135,723 116,758 16.2
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Net interest income 74,418 65,466 13.7 145,040 129,351 12.1
Provision for loan losses 3,635 3,189 14.0 7,028 6,083 15.5
Noninterest income 33,500 25,307 32.4 65,083 49,374 31.8
Noninterest expense 68,061 57,107 19.2 132,773 114,221 16.2
Income taxes 12,168 10,497 15.9 23,791 20,567 15.7
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Net income $ 24,054 $ 19,980 20.4% $ 46,531 $ 37,854 22.9%
===============================================================================================================================
Net interest income, taxable equivalent $ 76,235 $ 67,470 13.0% $ 148,657 $ 133,047 11.7%
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PER COMMON SHARE
Earnings per share-basic $ 0.91 $ 0.78 16.7% $ 1.77 $ 1.47 20.4%
Earnings per share-diluted 0.89 0.76 17.1 1.74 1.44 20.8
Cash dividends paid 0.29 0.27 7.4 0.56 0.52 7.7
Book value 22.22 19.46 14.2 22.22 19.46 14.2
Closing market price 62.500 45.875 36.2 62.500 45.875 36.2
FINANCIAL RATIOS
Return on average assets # 1.28% 1.24% 4 bp 1.28% 1.21% 7 bp
Return on average shareholders' equity # 16.50 16.00 50 16.40 15.43 97
Average equity to average assets 7.77 7.76 1 7.78 7.83 (5)
AVERAGE BALANCES
Assets $ 7,530,503 $ 6,453,981 16.7% $ 7,351,843 $ 6,320,093 16.3%
Earning assets 6,839,222 5,926,035 15.4 6,689,460 5,810,053 15.1
Loans 4,905,005 4,188,811 17.1 4,783,111 4,148,198 15.3
Investment securities 1,909,105 1,710,960 11.6 1,878,236 1,632,254 15.1
Noninterest-bearing deposits 829,482 684,472 21.2 802,722 671,295 19.6
Core deposits 4,956,388 4,364,613 13.6 4,895,496 4,337,694 12.9
Total deposits 5,439,886 4,725,511 15.1 5,384,360 4,691,646 14.8
Interest-bearing liabilities 6,000,169 5,185,562 15.7 5,865,955 5,071,187 15.7
Shareholders' equity 584,778 501,027 16.7 572,243 494,852 15.6
PERIOD END BALANCES
Assets $ 7,599,722 $ 6,669,028 14.0% $ 7,599,722 $ 6,669,028 14.0%
Earning assets 6,883,098 6,092,168 13.0 6,883,098 6,092,168 13.0
Loans 4,943,174 4,243,868 16.5 4,943,174 4,243,868 16.5
Investment securities 1,914,486 1,806,095 6.0 1,914,486 1,806,095 6.0
Noninterest-bearing deposits 922,050 764,390 20.6 922,050 764,390 20.6
Core deposits 5,069,962 4,460,541 13.7 5,069,962 4,460,541 13.7
Total deposits 5,550,183 4,821,036 15.1 5,550,183 4,821,036 15.1
Shareholders' equity 589,530 502,049 17.4 589,530 502,049 17.4
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bp Change is measured as difference in basis points.
# Data presented is annualized.
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OTHER FINANCIAL DATA
CENTURA BANKS, INC. AND SUBSIDIARIES
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<CAPTION>
3 Months 3 Months Six Months Six Months
Ended June 30 Ended June 30 Ended June 30 Ended June 30
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<S> <C> <C> <C> <C> <C> <C>
SHARES OUTSTANDING
Average basic 26,557,371 25,764,988 3.1% 26,271,426 25,746,872 2.0%
Average diluted 27,066,440 26,254,773 3.1 26,794,923 26,247,782 2.1
Outstanding at period end 26,536,602 25,804,633 2.8 26,536,602 25,804,633 2.8
COMPOSITION RATIOS *
Earning assets to assets 90.82% 91.82% (100)bp 90.99% 91.93% (94)bp
Loans to earning assets 71.72 70.68 104 71.50 71.40 10
Interest-bearing liabilities to earning assets 87.73 87.50 23 87.69 87.28 41
Loans to total deposits 90.17 88.64 153 88.83 88.42 41
Noninterest-bearing deposits to total deposits 15.25 14.48 77 14.91 14.31 60
ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 66,828 $ 58,762 13.7% $ 64,279 $ 58,715 9.5%
Provision for loan losses 3,635 3,189 14.0 7,028 6,083 15.5
Allowance of acquired financial institutions - - - 2,068 - -
Charge-offs (4,554) (3,639) 25.1 (8,398) (7,256) 15.7
Recoveries 1,082 894 21.0 2,014 1,664 21.0
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Net charge-offs (3,472) (2,745) 26.5 (6,384) (5,592) 14.2
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Ending balance $ 66,991 $ 59,206 13.1% $ 66,991 $ 59,206 13.1%
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Net charge-offs to average loans # 0.28% 0.26% 2 bp 0.27% 0.27% - bp
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COMPOSITION OF RISK ASSETS
Nonperforming loans 30,022 $ 24,001 25.1%
Foreclosed property 3,396 3,739 (9.2)
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Nonperforming assets 33,418 $ 27,740 20.5%
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ASSET QUALITY RATIOS **
Nonperforming assets to:
Loans and foreclosed property 0.68% 0.65% 3 bp
Total assets 0.44 0.42 2
Nonperforming loans to total loans 0.61 0.57 4
Allowance for loan losses to total loans 1.36 1.40 (4)
Allowance for loan losses to nonperforming loans 2.23 x 2.47 x (24)
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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.
# Data presented is annualized.
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OTHER FINANCIAL DATA, continued
CENTURA BANKS, INC. AND SUBSIDIARIES
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<CAPTION>
3 Months As a Percent of 6 Months As a Percent of
Ended June 30 Average Assets# Ended June 30 Average Assets#
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(Dollars in thousands) 1998 1997 Change 1998 1997 1998 1997 Change 1998 1997
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NONINTEREST INCOME
Service charges on deposit accounts $ 11,537 $ 9,632 19.8% 0.61 0.60% $ 22,123 $ 18,844 17.4% 0.61% 0.60%
Credit card and related fees 1,762 1,476 19.4 0.09 0.09 3,594 2,770 29.7 0.10 0.09
Insurance and brokerage commissions 4,849 3,537 37.1 0.26 0.22 10,264 6,781 51.4 0.28 0.22
Other service charges, commissions and fees 2,590 1,862 39.1 0.14 0.12 4,757 3,561 33.6 0.13 0.11
Fees for trust services 2,400 1,950 23.1 0.13 0.12 4,500 3,900 15.4 0.12 0.12
Mortgage income 4,608 2,794 64.9 0.24 0.17 7,825 5,467 43.1 0.22 0.17
Negative goodwill amortization 335 335 0.0 0.02 0.02 669 669 0.0 0.02 0.02
Operating lease fees, net 2,005 847 136.7 0.11 0.05 3,710 1,966 88.7 0.10 0.06
Other noninterest income 3,487 2,906 20.0 0.18 0.18 7,412 5,542 33.7 0.20 0.19
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Noninterest income, excluding securities
transactions 33,573 25,339 32.5 1.78 1.57 64,854 49,500 31.0 1.78 1.58
Securities gains (losses), net (73) (32) 128.1 - - 229 (126) (281.7) 0.01 -
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Total noninterest income $ 33,500 $ 25,307 32.4% 1.78% 1.57% $ 65,083 $ 49,374 31.8% 1.79% 1.58%
====================================================================================================================================
NONINTEREST EXPENSE
Salaries and overtime $ 27,187 $ 22,017 23.5% 1.45% 1.37% $ 52,410 $ 43,593 20.2% 1.44% 1.39%
Fringe benefits and other personnel costs 6,098 5,139 18.7 0.32 0.32 12,109 11,320 7.0 0.33 0.36
Occupancy 3,888 3,443 12.9 0.21 0.21 7,710 6,781 13.7 0.21 0.22
Equipment 5,292 5,300 (0.2) 0.28 0.33 10,520 10,465 0.5 0.29 0.33
Foreclosed real estate losses and related
operating expense 166 398 (58.3) 0.01 0.02 594 722 (17.7) 0.02 0.02
Marketing 2,325 2,123 9.5 0.12 0.13 4,650 4,146 12.2 0.13 0.13
Fees for outsourced services 3,176 2,141 48.3 0.17 0.13 6,071 3,673 65.3 0.17 0.12
Professional fees 2,787 3,459 (19.4) 0.15 0.22 6,124 6,553 (6.6) 0.17 0.21
Other administrative 2,433 1,976 23.1 0.13 0.12 4,890 4,017 21.7 0.13 0.13
FDIC insurance 342 323 5.9 0.02 0.02 703 639 10.0 0.02 0.02
Deposit intangible and goodwill amortization 2,228 1,418 57.1 0.12 0.09 4,441 2,836 56.6 0.12 0.09
Office supplies, postage and telephon 5,283 4,065 30.0 0.28 0.25 9,644 8,571 12.5 0.26 0.27
Other operating 6,856 5,305 29.2 0.37 0.34 12,907 10,905 18.4 0.35 0.35
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Total noninterest expense $ 68,061 $ 57,107 19.2% 3.63% 3.55% $132,773 $ 114,221 16.2% 3.64% 3.64%
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OTHER PERFORMANCE RATIOS
Pretax operating profit margin + 34.66% 35.01% (35)bp 34.59% 34.05% 54 bp
Efficiency ratio *** 62.02% 61.55% 47 bp 62.12% 62.61% (49)bp
Net interest income analysis-taxable equivalent:
Selected average yields/rates:
Loans 9.24% 9.41% (17)bp 9.25% 9.36% (11)bp
Taxable securities 6.61 6.67 (6) 6.64 6.62 2
Tax-exempt securities 8.97 8.91 6 8.93 8.86 7
Short-term investments 5.43 5.56 (13) 5.23 5.47 (24)
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Interest-earning assets 8.51 8.62 (11) 8.51 8.59 (8)
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Total interest-bearing deposits 4.32 4.43 (11) 4.35 4.40 (5)
Borrowed funds 5.25 5.21 4 5.27 5.09 18
Long-term debt 6.51 6.51 - 6.65 6.36 29
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Total interest-bearing liabilities 4.64 4.69 (5) 4.65 4.63 2
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Interest rate spread 3.87 3.93 (6) 3.86 3.96 (10)
Net interest margin 4.43 4.52 (9) 4.43 4.55 (12)
==========================================================================================================================
bp Change is measured as difference in basis points.
*** Noninterest expense divided by sum of taxable equivalent net interest income plus noninterest income.
+ Sum of income before taxes plus the taxable equivalent adjustment divided by the sum of taxable equivalent
net interest income plus noninterest income.
# Data presented is annualized.
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<CAPTION>
1998 1997 2nd Qtr 98
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Second First Fourth Third Second vs.
(Dollars in thousands, except per share data) Quarter Quarter Quarter Quarter Quarter 1st Qtr 98
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<S> <C> <C> <C> <C> <C> <C>
FINANCIAL SUMMARY *
Assets $ 7,530,503 $ 7,171,199 $ 7,016,355 $ 6,738,633 $ 6,453,981 5.0%
Earning assets 6,839,222 6,538,033 6,416,636 6,177,675 5,926,035 4.6
Loans 4,905,005 4,659,863 4,562,210 4,372,404 4,188,811 5.3
Investment securities 1,909,105 1,847,024 1,824,878 1,771,094 1,710,960 3.4
Total deposits 5,439,886 5,328,216 5,240,681 4,967,064 4,725,511 2.1
Interest-bearing liabilities 6,000,169 5,730,250 5,603,768 5,391,079 5,185,562 4.7
Shareholders' equity 584,778 559,568 531,935 519,175 501,027 4.5
Total market capitalization (period end) 1,658,538 1,892,382 1,784,504 1,425,753 1,183,788 (12.4)
Net income 24,054 22,477 23,504 21,700 19,980 7.0
PROFITABILITY/PERFORMANCE SUMMARY *
Pretax operating profit margin + 34.66% 34.52% 34.44% 35.58% 35.01% 14 bp
Efficiency ratio *** 62.02 62.22 61.90 60.87 61.55 (20)
Net interest margin # 4.43 4.43 4.51 4.46 4.52 -
Return on average assets # 1.28 1.27 1.33 1.28 1.24 1
Return on average equity # 16.50 16.29 17.53 16.58 16.00 21
Equity to assets (average) 7.77 7.80 7.58 7.70 7.76 (3)
PER SHARE SUMMARY
Earnings per share - basic $ 0.91% $ 0.87% $ 0.91% $ 0.84% $ 0.78 4.6%
Earnings per share - diluted 0.89 0.85 0.89 0.82 0.76 4.7
Cash dividends paid 0.29 0.27 0.27 0.27 0.27 7.4
Book value per share 22.22 21.62 20.82 20.45 19.46 2.8
Closing market price 62.5000 71.2500 69.0000 55.0625 45.8750 (12.3)
KEY INTANGIBLE ASSETS **
Goodwill $ 105,204 $ 107,293 $ 106,108 $ 97,027 $ 63,976 (1.9)%
Mortgage servicing rights 29,917 28,147 28,238 28,275 23,028 6.3
ASSET QUALITY SUMMARY **
Nonperforming assets $ 33,418 $ 33,199 $ 27,877 $ 28,633 $ 27,740 0.7%
Allowance for loan losses 66,991 66,828 64,279 62,282 59,206 0.2
Nonperforming assets to total assets 0.44% 0.44% 0.39% 0.42% 0.42% - bp
Allowance for loan losses to total loans 1.36 1.38 1.40 1.38 1.40 (2)
Net charge-offs to average loans # 0.28 0.25 0.22 0.26 0.26 3
====================================================================================================================================
bp Change is measured as difference in basis points.
* Balance sheet amounts are based on average balances unless otherwise noted.
** Balance sheet amounts are based on period end balances unless otherwise noted.
*** Noninterest expense divided by sum of taxable equivalent net interest income plus noninterest income.
+ Sum of income before taxes plus the taxable equivalent adjustment divided by the sum of taxable equivalent
net interest income plus noninterest income.
# Data presented is annualized.
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