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): January 7, 1998
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CENTURA BANKS, INC.
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(Exact name of registrant as specified in charter)
North Carolina 1-10646 56-1688522
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(State of Incorporation) (Commission File Number)(IRS Employer Identification No.)
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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: (919) 977-4400
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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.
t:\brass\sec\/8K\8-K.doc
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Item 5. Other Events
On January 7, 1998, Centura Banks, Inc. ("Centura") announced earnings for the
year ended December 31, 1997. Centura's net income for 1997 was $83.1 million,
an increase fo 21.9 percent over 1996. (14.7 percent without the one-time SAIF
assessment in 1996.) Diluted earnings per share increased to $3.15 compared to
$2.60 the prior year. ($2.76 without SAIF.) 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: January 7, 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 January 7, 1998 5
For Immediate Release
January 7, 1998
For more information: Steven J. Goldstein
Centura Bank
(919)977-8356
[email protected]
CENTURA BANK ANNOUNCES RECORD EARNINGS FOR 1997
ROCKY MOUNT, N.C. - Centura Banks Inc. (NYSE: CBC) today reported
record profitability in the fourth quarter and for the year ended December 31,
1997. Centura's net income for 1997 was $83.1 million, an increase of 21.9
percent over 1996. (14.7 percent without the one-time Savings Association
Insurance Fund (SAIF) charge in 1996.) Diluted earnings per share rose to $3.15
compared to $2.60 the prior year. ($2.76 without SAIF.)
For the fourth quarter diluted earnings per share were 89 cents, return
on assets was 1.33 percent, and return on equity was 17.53 percent, compared to
70 cents, 1.19 percent and 15.61 percent, respectively, for fourth quarter 1996.
Return on assets for the year was 1.26 percent, and return on equity was
16.28 percent. Asset quality in 1997 continued to exceed industry standards,
with net charge-offs at 0.25 percent of total loans, and non-performing loans at
0.52 percent of total loans.
Noninterest income for 1997 increased 16.2 percent to $117.2 million,
led by growing revenue from insurance, securities and leasing services; as well
as more traditional banking sources, including mortgage origination and
servicing, service charges on deposits and loan fees. Core balance sheet growth
was strong for the year, with loans increasing to $4.6 billion, 11.6 percent
higher than 1996, and deposits rising 13.3 percent to $5.4 billion, while the
net interest margin remained stable at 4.56 percent for 1997 compared to 4.66
percent for 1996.
"The disciplined execution of our business plan to aggressively grow
and expand the franchise and continued leverage of our investment in technology
were critical to our earnings success in 1997," said Cecil W. Sewell, Centura
chairman and chief executive officer. "During the year we acquired or opened 34
financial centers, significantly grew our insurance business, expanded into the
Virginia market, formalized an agreement to enter the South Carolina market and
posted record earnings for the fourth quarter and the year. We could not be more
pleased."
In 1997 Centura acquired 19 banking offices, most notably 13 offices as
a result of the Branch Banking and Trust merger with United Carolina Bank, and
five from NationsBank. Also during the year Centura significantly invested in
its in-store initiative, opening 12 full-service financial offices in Hannaford
supermarkets, including five in the Hampton Roads region of Virginia, and
Wal-Mart and K-Mart retail outlets. The 12 new in-store financial offices are
among 22 opened in the past 16 months, representing an aggressive effort to
pursue in-store banking as part of Centura's overall strategy to deliver money
management services at times and locations that are most convenient to
customers.
Early in 1997 Centura formed a Capital Markets Group to offer clients
more complex funding and investment alternatives by providing direct access to
money and capital markets and non-traditional sources of capital. Based in
Charlotte, the group primarily services clients in North and South Carolina and
Virginia.
In the fall of 1997 Centura significantly expanded its insurance
capabilities by acquiring two North Carolina insurance agencies, Betts & Company
and Moore & Johnson, and forming an alliance with Travelers Insurance Co. The
Moore & Johnson merger is expected to consummate at the end of January. As part
of Centura's long-term strategy to provide customers with a full range of
financial services, the additions to Centura Insurance Services will provide
increased insurance choices for customers at more competitive rates. Customers
will have the option of highly personalized service or the ease and convenience
of a toll-free hot line to Travelers for more routine insurance needs.
In December of 1997 Centura signed a definitive agreement to acquire
Pee Dee State Bank, headquartered in Timmonsville, South Carolina. The
acquisition marks Centura's initial foray into the South Carolina market, an
important strategic move for the company as it aggressively expands into
attractive new markets.
With assets of $7.1 billion, Centura provides a complete line of
banking, investment, leasing, insurance and trust services to individuals and
businesses throughout North Carolina and the Hampton Roads region of Virginia.
Services are provided through 192 financial service centers, including 20
full-service locations in Hannaford supermarkets; more than 300 ATMs at
financial centers, Wal-Mart stores and Sam's outlets; Centura Highway; Centura's
Internet site; and through Quicken(R), Quickbooks(R), Microsoft(R) Money and
BankNOW(TM), the leading online money management software packages. Additional
information about Centura is available on its website at www.centura.com.
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FINANCIAL HIGHLIGHTS
CENTURA BANKS, INC. AND SUBSIDIARIES
3 Months 3 Months Year Ended Year Ended
Ended Dec 31 Ended Dec 31 December 31 December 31
(In thousands, except share and per share data) 1997 1996 Change 1997 1996 Change
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EARNINGS
Interest income $ 137,136 $ 123,095 11.4% $ 515,089 $ 469,760 9.6%
Interest expense 66,041 57,011 15.8 247,184 219,676 12.5
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Net interest income 71,095 66,084 7.6 267,905 250,084 7.1
Provision for loan losses 3,849 2,746 40.2 13,418 9,596 39.8
Noninterest income 34,117 27,303 25.0 117,221 100,847 16.2
Noninterest expense 67,033 61,860 8.4 246,230 233,981 5.2
Income taxes 10,826 10,246 5.7 42,420 39,203 8.2
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Net income $ 23,504 $ 18,535 26.8% $ 83,058 $ 68,151 21.9%
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Net interest income, taxable equivalent $ 73,000 $ 67,738 7.8% $ 275,632 $ 256,109 7.6%
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PER COMMON SHARE
Earnings per share-basic $ 0.91 0.72 26.4% $ 3.22 $ 2.66 21.1%
Earnings per share-diluted 0.89 0.70 27.1 3.15 2.60 21.2
Cash dividends paid 0.27 0.25 8.0 1.06 1.00 6.0
Book value 20.82 18.51 12.5 20.82 18.51 12.5
Closing market price 69.000 44.625 54.6 69.000 44.625 54.6
FINANCIAL RATIOS
Return on average assets 1.33% 1.19% 14 bp 1.26% 1.14% 12 bp
Return on average shareholders' equity 17.53 15.61 192 16.28 15.02 126
Average equity to average assets 7.58 7.62 (4) 7.73 7.62 11
AVERAGE BALANCES
Assets $ 7,016,355 $ 6,197,670 13.2% $ 6,601,084 $ 5,956,290 10.8%
Earning assets 6,416,636 5,703,321 12.5 6,055,606 5,484,974 10.4
Loans 4,562,210 4,181,963 9.1 4,309,064 4,014,391 7.3
Investment securities 1,824,878 1,491,008 22.4 1,715,801 1,436,215 19.5
Noninterest-bearing deposits 783,938 690,111 13.6 717,506 647,245 10.9
Core deposits 4,784,855 4,368,319 9.5 4,512,153 4,101,773 10.0
Total deposits 5,240,681 4,723,099 11.0 4,899,453 4,505,449 8.7
Interest-bearing liabilities 5,603,768 4,944,155 13.3 5,286,057 4,765,846 10.9
Shareholders' equity 531,935 472,484 12.6 510,330 453,746 12.5
PERIOD END BALANCES
Assets $ 7,125,430 $ 6,293,972 13.2% $ 7,125,430 $ 6,293,972 13.2%
Earning assets 6,458,063 5,720,001 12.9 6,458,063 5,720,001 12.9
Loans 4,586,582 4,109,454 11.6 4,586,582 4,109,454 11.6
Investment securities 1,828,056 1,577,880 15.9 1,828,056 1,577,880 15.9
Noninterest-bearing deposits 816,475 721,029 13.2 816,475 721,029 13.2
Core deposits 4,892,847 4,386,616 11.5 4,892,847 4,386,616 11.5
Total deposits 5,364,925 4,733,069 13.3 5,364,925 4,733,069 13.3
Shareholders' equity 538,336 475,235 13.3 538,336 475,235 13.3
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bp Change is measured as difference in basis points.
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OTHER FINANCIAL DATA
CENTURA BANKS, INC. AND SUBSIDIARIES
3 Months 3 Months Year Ended Year Ended
Ended Dec 31 Ended Dec 31 December 31 December 31
(In thousands, except share data) 1997 1996 Change 1997 1996 Change
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SHARES OUTSTANDING
Average basic 25,854,971 25,727,599 0.5% 25,798,324 25,605,621 0.8%
Average diluted 26,413,005 26,449,289 (0.1) 26,331,392 26,261,830 0.3
Outstanding at period end 25,862,375 25,668,524 0.8 25,862,375 25,668,524 0.8
COMPOSITION RATIOS*
Earning assets to assets 91.45% 92.02% (57)bp 91.74% 92.09% (35)bp
Loans to earning assets 71.10 73.33 (223) 71.16 73.19 (203)
Interest-bearing liabilities to earning assets 87.33 86.69 64 87.29 86.89 40
Loans to total deposits 87.05 88.54 (149) 87.95 89.10 (115)
Noninterest-bearing deposits to total deposits 14.96 14.61 35 14.64 14.37 27
ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 62,282 $ 60,329 3.2% $ 58,715 $ 55,070 6.6%
Provision for loan losses 3,849 2,746 40.2 13,418 9,596 39.8
Allowance of acquired financial institutions 723 ---- 100.0 3,133 1,240 152.7
Charge-offs (3,898) (4,995) (22.0) (14,425) (10,408) 38.6
Recoveries 1,323 635 108.3 3,438 3,217 6.9
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Net charge-offs (2,575) (4,360) (40.9) (10,987) (7,191) 52.8
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Ending balance $ 64,279 $ 58,715 9.5% $ 64,279 $ 58,715 9.5%
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Net charge-offs to average 0.22% 0.41% (19)bp 0.25% 0.18% 7 bp
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COMPOSITION OF RISK ASSETS
Nonaccrual loans $ 23,722 $ 18,713 26.8%
Restructured loans 0 497 (100.0)
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Nonperforming loans 23,722 19,210 23.5
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Foreclosed property 4,155 3,663 13.4
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Nonperforming assets $ 27,877 $ 22,873 21.9%
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ASSET QUALITY RATIOS** Nonperforming assets to:
Loans and foreclosed property 0.61% 0.56% 5 bp
Total assets 0.39 0.36 3
Nonperforming loans to total loans 0.52 0.47 5
Allowance for loan losses to total loans 1.40 1.43 (3)
Allowance for loan losses to nonperforming loans 2.71x 3.06x (35)
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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.
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OTHER FINANCIAL DATA, continued
CENTURA BANKS, INC. AND SUBSIDIARIES
Three Months Endeded Dec 31 Year Ended December 31
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As a Percent of As a Percent of
Average Assets# Average Assets
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(Dollars in thousands) 1997 1996 Change 1997 1996 1997 1996 Change 1997 1996
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NONINTEREST INCOME
Service charges on deposit accounts $11,115 $ 9,401 18.2% 0.63% 0.60% $ 40,703 $ 34,758 17.1% 0.62% 0.58%
Credit card and related fees 1,922 1,391 38.2 0.11 0.09 6,643 4,979 33.4 0.10 0.08
Insurance & brokerage commissions 3,945 2,948 33.8 0.22 0.19 14,031 11,097 26.4 0.21 0.19
Other service charges, commissions and fees 2,245 1,947 15.3 0.13 0.12 7,925 5,926 33.7 0.12 0.10
Fees for trust services 2,007 1,900 5.6 0.11 0.12 7,737 6,841 13.1 0.12 0.11
Mortgage income 3,300 2,591 27.4 0.19 0.17 11,568 11,486 0.7 0.18 0.19
Negative goodwill amortization 334 334 0.0 0.02 0.02 1,337 1,337 0.0 0.02 0.02
Operating lease fees 3,293 3,226 2.1 0.19 0.21 11,872 12,745 (6.9) 0.18 0.21
Other noninterest income 5,855 3,449 69.8 0.32 0.22 15,269 9,880 54.5 0.23 0.18
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Noninterest income, excluding securities
transactions 34,016 27,187 25.1 1.92 1.74 117,085 99,049 18.2 1.78 1.66
Securities gains (losses), net 101 116 (12.9) 0.01 0.01 136 1,798 (92.4) 0.00 0.03
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Total noninterest income $34,117 $27,303 25.0% 1.93% 1.75% $117,221 $100,847 16.2% 1.78% 1.69%
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NONINTEREST EXPENSE
Salaries and overtime $25,523 $24,115 5.8% 1.44% 1.55% $ 92,508 $ 88,411 4.6% 1.40% 1.48%
Fringe benefits and other personnel costs 4,581 4,892 (6.4) 0.26 0.31 21,117 21,256 (0.7) 0.32 0.36
Occupancy 3,397 3,209 5.9 0.19 0.21 13,796 12,657 9.0 0.21 0.21
Equipment 5,712 5,437 5.1 0.32 0.35 21,632 19,556 10.6 0.33 0.33
Foreclosed real estate losses and related
operating expense 386 299 29.1 0.02 0.02 1,373 756 81.6 0.02 0.01
Marketing 2,881 2,730 5.5 0.16 0.18 9,080 7,549 20.3 0.14 0.13
Fees for outsourced services 1,965 1,017 93.2 0.11 0.07 6,758 2,166 212.0 0.10 0.04
Professional fees 5,050 4,436 13.8 0.29 0.28 17,375 12,423 39.9 0.26 0.21
Other administrative 2,406 2,267 6.1 0.14 0.15 8,555 8,544 0.1 0.13 0.14
FDIC insurance 344 (4) --- 0.02 0.00 1,304 10,197 (87.2) 0.02 0.17
Deposit intangible and goodwill amortization 2,073 1,343 54.4 0.12 0.09 6,520 5,034 29.5 0.10 0.08
Office supplies, postage and telephone 4,185 4,243 (1.4) 0.24 0.27 16,702 16,188 3.2 0.25 0.27
Depreciation on leased equipment 1,902 1,357 40.2 0.11 0.09 7,247 7,944 (8.8) 0.11 0.13
Other operating 6,628 6,519 1.7 0.37 0.40 22,263 21,300 4.5 0.34 0.37
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Total noninterest expense $67,033 $61,860 8.4% 3.79% 3.97% $246,230 $233,981 5.2% 3.73% 3.93%
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OTHER PERFORMANCE RATIOS
Pretax operating profit margin + 33.83% 32.02% 181 bp 33.91% 31.76% 215 bp
Efficiency ratio*** 62.58% 65.09% (251)bp 62.68% 65.55% (287)bp
Net interest income analysis-taxable equivalent:
Selected average yields/rates:
Loans 9.33% 9.34% (1)bp 9.43% 9.45% (2)bp
Taxable securities 6.70 6.65 5 6.64 6.48 16
Tax-exempt securities 9.06 8.99 7 8.93 8.87 6
Short-term investments 4.99 5.43 (44) 5.36 5.20 16
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Interest-earning assets 8.58 8.63 (5) 8.64 8.67 (3)
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Total interest-bearing deposits 4.38 4.35 3 4.40 4.38 2
Borrowed funds 5.32 5.25 7 5.30 5.17 13
Long-term debt 6.64 6.47 17 6.68 6.32 36
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Total interest-bearing liabilities 4.66 4.59 7 4.68 4.61 7
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Interest rate spread 3.92 4.04 (12) 3.96 4.06 (10)
Net interest margin 4.51 4.66 (15) 4.56 4.66 (10)
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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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QUARTERLY FINANCIAL TRENDS
CENTURA BANKS, INC. AND SUBSIDIARIES
1997 1996 4th Qtr 97
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Fourth Third Second First Fourth vs.
(Dollars in thousands) Quarter Quarter Quarter Quarter Quarter 3rd Qtr 97
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FINANCIAL SUMMARY *
Assets $ 7,016,355 $ 6,738,633 $ 6,453,981 $ 6,184,718 $ 6,197,670 4.1%
Earning assets 6,416,636 6,177,675 5,926,035 5,692,783 5,703,321 3.9
Loans 4,562,210 4,372,404 4,188,811 4,107,133 4,181,963 4.3
Investment securities 1,824,878 1,771,094 1,710,960 1,552,675 1,491,008 3.0
Total deposits 5,240,681 4,967,064 4,725,511 4,657,405 4,723,099 5.5
Interest-bearing liabilities 5,603,768 5,391,079 5,185,562 4,955,541 4,944,155 3.9
Stockholders' equity 531,935 519,175 501,027 488,609 472,484 2.5
Total market capitalization (period end) 1,784,504 1,425,753 1,183,788 1,004,335 1,145,458 25.2
Net income 23,504 21,700 19,980 17,874 18,535 8.3
PROFITABILITY/PERFORMANCE SUMMARY *
Pretax operating profit margin + 33.83% 35.03% 34.31% 32.37% 32.02% (120)bp
Efficiency ratio *** 62.58 61.47 62.32 64.47 65.09 111
Net interest margin # 4.51 4.46 4.52 4.58 4.66 5
Return on average assets # 1.33 1.28 1.24 1.17 1.19 5
Return on average equity # 17.53 16.58 16.00 14.84 15.61 95
Equity to assets (average) 7.58 7.70 7.76 7.90 7.62 (12)
PER SHARE SUMMARY
Earnings per share - basic $ 0.91 $ 0.84 $ 0.78 $ 0.69 $ 0.72 8.3%
Earnings per share - diluted 0.89 0.82 0.76 0.68 0.70 8.5
Cash dividends paid 0.27 0.27 0.27 0.25 0.25 0.0
Book value per share 20.82 20.45 19.46 19.08 18.51 1.8
Closing market price 69.000 55.0625 45.875 39.000 44.625 25.3
KEY INTANGIBLE ASSETS **
Goodwill $ 104,222 $ 95,012 $ 61,833 $ 63,122 $ 64,411 9.7%
Deposit base premium 1,886 2,015 2,143 2,272 2,401 (6.4)
Mortgage servicing rights 28,238 28,275 23,028 21,481 21,046 (0.1)
ASSET QUALITY SUMMARY **
Nonperforming assets $ 27,877 $ 28,633 $ 27,740 $ 26,768 $ 22,873 (2.6)%
Allowance for loan losses 64,279 62,282 59,206 58,762 58,715 3.2
Nonperforming assets to total assets 0.39% 0.42% 0.42% 0.42% 0.36% (3)bp
Allowance for loan losses to loans 1.40 1.38 1.40 1.42 1.43 2
Net charge-offs to average loans # 0.22 0.26 0.26 0.28 0.41 (4)
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bp Change is measured as difference in basis points.
* Balance sheet amounts are based on average balances unless otherwise noted.
** Balance sheet amounts are based on period end balances unless otherwise noted.
*** Noninterest expense divided by sum of noninterest income plus net interest income, taxable equivalent basis.
+ 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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