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): April 14, 2000
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CENTURA BANKS, INC.
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(Exact name of registrant as specified in charter)
North Carolina 1-10646 56-1688522
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(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
134 North Church Street, Rocky Mount, North Carolina 27804
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(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (252) 454-4400
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N/A
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(Former name or former address, if changed since last report)
Exhibit Index on Page 4.
<PAGE>
Item 5. Other Events
On April 14, 2000, Centura Banks, Inc. ("Centura") announced earnings for the
three months ended March 31, 2000. Net income for the first quarter was $8.0
million or $0.20 per diluted share, including $39.4 million of merger-related
charges incurred as a result of the February 18, 2000 merger with Triangle
Bancorp, Inc. This compares with 1999's first quarter net income of $27.2
million or $0.67 per diluted share, also including merger-related charges
totaling $8.4 million related to the first quarter 1999 merger with First
Coastal Bankshares, Inc. Excluding these merger-related charges, diluted
earnings per share for the three months ended March 31, 2000 and 1999 were $0.90
and $0.80 per diluted share, respectively.
A press release is attached as Exhibit 99.
This press release may contain various forward-looking statements that involve
risks and uncertainties that could cause actual results to differ from
estimates. A discussion of the various factors, including factors beyond
Centura's control, that could cause Centura's results to differ materially from
those expressed in such forward-looking statements is included in Centura's Form
10-K for the year ended December 31, 1999 as filed with the Securities and
Exchange Commission.
Item 7. Financial statements and Exhibits.
The exhibit listed in the Exhibit Index is filed herewith as part of this
Current Report on Form 8-K.
<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.
CENTURA BANKS, INC.
Registrant
Date: April 14, 2000 By: /s/ Steven Goldstein
Steven Goldstein
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Sequential
Page
Exhibit Description of Exhibit Number
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99 Press release dated April 14, 2000 5
EX-99
For Immediate Release
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April 14, 2000
For more information: Steven J. Goldstein
Chief Financial Officer
Centura Banks, Inc.
(252) 454-8356
[email protected]
CENTURA BANKS INC. REPORTS FIRST-QUARTER EARNINGS OF $0.90 PER
DILUTED SHARE, BEFORE MERGER-RELATED CHARGES
INTEGRATION OF TRIANGLE BANCORP ON TRACK, EXPENSE REDUCTIONS AHEAD OF SCHEDULE
ROCKY MOUNT, N.C., April 14, 2000 - Centura Banks Inc. (NYSE: CBC) today
announced first-quarter 2000 earnings of $36.0 million, or $0.90 per diluted
share before merger-related charges related to the merger with Triangle Bancorp
Inc., which was completed February 18, 2000. Earnings included a $5.5 million
gain on the required sale of branches related to the Triangle acquisition, which
was approximately equal to the reduction in net interest income from Triangle's
investment portfolio. Centura is currently restructuring this investment
portfolio to eliminate its negative effect on future period earnings. Net income
totaled $8.0 million, or $0.20 per diluted share, after pre-tax merger-related
charges of $39.4 million.
Earnings for the period ended March 31, 2000 compared with net income
of $0.80 per diluted share before merger-related items for the same quarter a
year ago and $0.89 for the fourth quarter of 1999. Results for 1999 have been
restated to include combined results of Centura and Triangle.
"Financially, we expected this to be a messy quarter due to a number of
merger-related charges that make meaningful comparisons difficult," said Cecil
W. Sewell, chief executive officer. "The points to take away from all this,
however, are that we are ahead of plan for a 55 percent reduction in overall
costs related to the acquisition, and that we are on target to begin showing
more meaningful comparisons in terms of household retention and revenue growth
as the second quarter progresses."
<PAGE>
"During the second quarter, we expect to incur an additional $10
million to $20 million in merger-related charges," Sewell said. "This means we
anticipate meeting or beating our original projections of $60 million in charges
associated with the merger."
First-quarter merger-related charges of $39.4 million included $15.1
million in losses related to the sales of certain investment securities incurred
as a result of restructuring the investment portfolio acquired with Triangle.
"These portfolio losses had the effect of compressing Centura's net interest
margin in the first quarter," Sewell noted. "We expect our net interest margin
to return to more normal levels in the second quarter as we complete the process
of restructuring the portfolio through the repositioning of certain securities.
We expect this process to be completed by mid-second quarter."
The net interest margin for the first quarter of 2000 was 4.07 percent
versus 4.17 percent for the comparable prior year quarter and 4.20 percent for
the fourth quarter of 1999. The impact of the Triangle investment portfolio on
the first-quarter margin was approximately 8 to 10 basis points.
At March 31, 2000, nonperforming assets totaled $37.2 million,
representing 0.49 percent of total loans and foreclosed properties. This
compared with $35.8 million and 0.48 percent, respectively, at December 31,
1999, and $48.5 million and 0.68 percent, respectively, for March 31, 1999.
During the first quarter, Centura added approximately $3.2 million of Triangle
loans to nonaccrual in order to adopt Centura's internal loan policies.
Commenting on second-quarter initiatives, Michael S. Patterson,
chairman, said: "Centura's goal in the second quarter is customer retention. We
not only want to retain and grow our relationship with the 66,000 new households
added through the Triangle acquisition, but with customers in every town and
city where we do business. Because of our unique customer-information database,
Centura is well positioned to identify each customer's financial needs and use
our wide array of products and services to offer an appropriate financial
solution that makes a difference."
About Centura
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With assets of more than $11 billion and deposits exceeding $7 billion,
Centura Banks Inc. provides a complete line of banking, investment, insurance,
leasing and asset
2
<PAGE>
management services to individuals and businesses in North Carolina, South
Carolina and Virginia. Centura's broad range of financial solutions is provided
through more than 255 full-service financial offices and Centura Highway, the
bank's multifaceted customer access system that includes telephone banking, an
extensive ATM network, PC banking, online bill payment and the Bank's suite of
Internet products and services. Additional information may be found on Centura's
Web site at www.centura.com.
This press release may contain various forward-looking statements.
These forward-looking statements involve risks and uncertainties and actual
results could differ from those described. A discussion of the various factors,
including factors beyond Centura's control, that could cause Centura's actual
results to differ materially from those expressed in such forward-looking
statements is included in Centura's filings with the Securities and Exchange
Commission.
3
<PAGE>
FINANCIAL HIGHLIGHTS
CENTURA BANKS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended March 31,
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(Dollars in thousands, except per share data) 2000 1999 Change
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<S> <C> <C> <C>
EARNINGS
Interest income $ 215,432 $ 195,196 10.4 %
Interest expense 110,624 93,910 17.8
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Net interest income 104,808 101,286 3.5
Provision for loan losses 5,975 7,581 (21.2)
Noninterest income 28,269 42,694 (33.8)
Noninterest expense 110,642 94,450 17.1
Income taxes 8,425 14,770 (43.0)
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Net income $ 8,035 $ 27,179 (70.4)%
============================================================================================================================
Net interest income, taxable equivalent $ 107,738 $ 104,090 3.5 %
============================================================================================================================
PER COMMON SHARE
Earnings per share - basic $ 0.20 $ 0.68 (70.6)%
Earnings per share - diluted 0.20 0.67 (70.1)
Cash dividends paid 0.32 0.25 28.0
Book value per share 21.72 21.62 0.5
Closing market price 45.813 58.188 (21.3)
SELECTED FINANCIAL DATA (A)
Earnings per share - diluted 0.90 0.80 12.5 %
Return on average assets 1.28 1.22 6 bp
Return on average equity 16.81 15.39 142
FINANCIAL RATIOS
Return on average assets 0.29 % 1.01 % (72)bp
Return on average equity 3.76 12.83 (907)
Average equity to average assets 7.59 7.90 (31)
AVERAGE BALANCES
Assets $ 11,333,016 $ 10,867,921 4.3 %
Earning assets 10,408,008 9,956,354 4.5
Loans 7,547,933 7,251,050 4.1
Investment securities 2,774,077 2,660,714 4.3
Noninterest-bearing deposits 1,105,151 1,117,106 (1.1)
Core deposits 6,975,082 6,858,689 1.7
Total deposits 7,819,217 7,635,382 2.4
Interest-bearing liabilities 9,256,578 8,732,898 6.0
Shareholders' equity 860,095 859,055 0.1
PERIOD END BALANCES
Assets $ 11,206,613 $ 10,868,485 3.1 %
Earning assets 10,256,509 9,923,680 3.4
Loans 7,594,907 7,245,615 4.8
Investment securities 2,607,341 2,639,865 (1.2)
Noninterest-bearing deposits 1,174,585 1,154,915 1.7
Core deposits 6,956,145 6,935,133 0.3
Total deposits 7,752,991 7,735,672 0.2
Shareholders' equity 861,381 860,716 0.1
SELECTED BALANCES EXCLUDING DIVESTITURES (B)
Assets 11,252,182 10,723,558 4.9 %
Loans 7,477,297 7,118,845 5.0
Deposits 7,579,705 7,312,895 3.6
===================================================================================================================================
</TABLE>
bp- Change is measured as difference in basis points.
(A) Calculation excludes $39.4 million of merger-related charges for 2000.
Included in the merger-related charges for 2000 were $15.1 million in
losses related to sales of certain investment securities incurred as a
result of restructuring the investment portfolio acquired with the
Triangle merger. 1999 excludes $8.4 million of merger-related items.
(B) Excludes average balances related to offices divested on February 18,
2000 and offices to be divested in April 2000.
All prior period financial data has been restated for the February 18, 2000
merger with Triangle Bancorp, Inc. which was accounted for as a
pooling-of-interests.
<PAGE>
OTHER FINANCIAL DATA
CENTURA BANKS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended March 31,
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(Dollars in thousands) 2000 1999 Change
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<S> <C> <C> <C>
SHARES OUTSTANDING
Average basic 39,598,371 39,799,866 (0.5)%
Average diluted 39,926,443 40,575,764 (1.6)
Outstanding at period end 39,662,141 39,819,661 (0.4)
COMPOSITION RATIOS (A)
Earning assets to total assets 91.84 % 91.61 % 23 bp
Loans to earning assets 72.52 72.83 (31)
Interest-bearing liabilities to earning assets 88.94 87.71 123
Loans to total deposits 96.53 94.97 156
Noninterest-bearing deposits to total deposits 14.13 14.63 (50)
ALLOWANCE FOR LOAN LOSSES (AFLL)
Beginning balance $ 95,500 $ 91,894 3.9 %
Provision for loan losses 5,975 7,581 (21.2)
Allowance of acquired financial institutions - 605 -
Charge-offs (6,515) (7,226) (9.8)
Recoveries 2,490 967 157.5
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Net charge-offs (4,025) (6,259) (35.7)
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Ending balance $ 97,450 $ 93,821 3.9 %
============================================================================================================================
Net charge-offs to average loans(C) 0.22 % 0.36 % (14)bp
COMPOSITION OF RISK ASSETS
Nonperforming loans $ 32,372 $ 41,071 (21.2)%
Foreclosed property 4,789 7,473 (35.9)
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Nonperforming assets $ 37,161 $ 48,544 (23.4)%
============================================================================================================================
ASSET QUALITY RATIOS (D)
Nonperforming assets to:
Loans and foreclosed property(B) 0.49 % 0.68 % (19)bp
Total assets 0.33 0.45 (12)
Nonperforming loans to total loans(B) 0.43 0.58 (15)
Allowance for loan losses to total loans(B) 1.29 1.31 (2)
Allowance for loan losses to nonperforming loans 3.01 x 2.28 x 73
===================================================================================================================================
</TABLE>
bp- Change is measured as difference in basis points.
(A) Balance sheet amounts used in calculations are based on average balances.
(B) Excludes mortgage loans held-for-sale of $29.0 million and $109.5 million
at March 31, 2000 and 1999, respectively.
(C) Excludes mortgage loans held-for-sale, on average, of $67.9 million and
$127.7 million for the three months ended March 31, 2000 and 1999,
respectively.
(D) Balance sheet amounts used in calculations are based on period end
balances.
All prior period financial data has been restated for the February 18, 2000
merger with Triangle Bancorp, Inc. which was accounted for as a
pooling-of-interests.
<PAGE>
OTHER FINANCIAL DATA, continued
CENTURA BANKS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------------------------------------
As a Percent of
Average Assets (A)
-------------------------
(Dollars in thousands) 2000 1999 Change 2000 1999
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<S> <C> <C> <C> <C> <C>
NONINTEREST INCOME
Service charges on deposit accounts $ 15,355 $ 14,994 2.4 % 0.55 % 0.56 %
Credit card and related fees 2,071 1,924 7.6 0.07 0.07
Insurance and brokerage commissions 7,167 6,301 13.7 0.25 0.24
Other service charges, commissions and fees 3,645 3,088 18.0 0.13 0.12
Fees for trust services 2,751 2,439 12.8 0.10 0.09
Mortgage income 3,705 7,751 (52.2) 0.13 0.29
Negative goodwill amortization 334 334 - 0.01 0.01
Operating lease income, net 699 1,814 (61.5) 0.03 0.07
Other noninterest income 7,397 3,274 125.9 0.26 0.11
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Noninterest income, excluding securities
transactions 43,124 41,919 2.9 1.53 1.56
Securities gains (losses), net (14,855) 775 (2,016.8) (0.53) 0.03
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Total noninterest income $ 28,269 $ 42,694 (33.8)% 1.00 % 1.59 %
===================================================================================================================================
NONINTEREST EXPENSE
Salaries and overtime $ 35,618 $ 36,145 (1.5)% 1.26 % 1.35 %
Fringe benefits and other personnel costs 8,148 8,381 (2.8) 0.29 0.31
Occupancy 6,453 6,315 2.2 0.23 0.24
Equipment 6,148 6,787 (9.4) 0.22 0.25
Foreclosed real estate losses and related
operating expense 662 437 51.5 0.02 0.02
Marketing 1,479 2,297 (35.6) 0.05 0.09
Fees for outsourced services 4,369 3,959 10.4 0.16 0.15
Professional and legal fees 3,084 3,495 (11.8) 0.11 0.13
Other administrative 2,970 2,798 6.2 0.11 0.10
FDIC insurance 438 411 6.6 0.02 0.02
Deposit intangible and goodwill amortization 3,153 3,350 (5.9) 0.11 0.13
Office supplies, postage and telephone 6,373 5,986 6.5 0.23 0.22
Merger-related expenses 24,338 6,858 254.9 0.86 0.26
Other operating 7,409 7,231 2.5 0.27 0.26
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $ 110,642 $ 94,450 17.1 % 3.93 % 3.52 %
===================================================================================================================================
OTHER PERFORMANCE RATIOS
Pretax operating profit margin (B)(D) 38.83 % 36.18 % 265 bp
Efficiency ratio (C)(D) 57.12 % 59.67 % (255)bp
Net interest income analysis-taxable equivalent:
Selected average yields/rates:
Loans 8.94 % 8.62 % 32 bp
Taxable securities 6.63 6.24 39
Tax-exempt securities 7.75 8.02 (27)
Short-term investments 5.18 5.46 (28)
- -----------------------------------------------------------------------------------------------------------------------------------
Interest-earning assets 8.29 7.99 30
===================================================================================================================================
Total interest-bearing deposits 4.39 4.07 32
Borrowed funds 5.68 4.86 82
Long-term debt 6.06 5.68 38
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Total interest-bearing liabilities 4.78 4.34 44
- -----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.51 3.65 (14)
Net interest margin 4.07 4.17 (10)
===================================================================================================================================
</TABLE>
bp- Change is measured as difference in basis points.
(A) Data presented is annualized.
(B) Sum of income before taxes plus the taxable equivalent adjustment divided
by the sum of taxable equivalent net interest income plus noninterest
income.
(C) Noninterest expense divided by sum of taxable equivalent net interest
income plus noninterest income.
(D) Calculation excludes merger-related expenses.
All prior period financial data has been restated for the February 18, 2000
merger with Triangle Bancorp, Inc. which was accounted for as a
pooling-of-interests.
<PAGE>
QUARTERLY FINANCIAL TRENDS
CENTURA BANKS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
2000 1999
---------- ------------------------------------------------------ 1st Qtr 00
First Fourth Third Second First vs.
(Dollars in thousands, except per share data) Quarter Quarter Quarter Quarter Quarter 4th Qtr 99
- -------------------------------------------------------- ------------------------------------------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL SUMMARY (A)
Assets $ 11,333,016 $ 11,244,033 $ 11,065,694 $ 10,972,828 $ 10,867,921 0.8 %
Earning assets 10,408,008 10,311,262 10,164,652 10,054,104 9,956,354 0.9
Loans 7,547,933 7,437,430 7,390,172 7,344,293 7,251,050 1.5
Investment securities 2,774,077 2,820,815 2,722,460 2,671,440 2,660,714 (1.7)
Total deposits 7,819,217 7,864,788 7,770,777 7,717,245 7,635,382 (0.6)
Interest-bearing liabilities 9,256,578 9,066,703 8,897,333 8,799,616 8,732,898 2.1
Shareholders' equity 860,095 861,593 869,562 865,538 859,055 (0.2)
Total market capitalization (period end) 1,817,042 1,742,779 1,649,174 2,241,137 2,317,007 4.3
Net income 8,035 35,549 31,953 35,656 27,179 (77.4)
PROFITABILITY/PERFORMANCE SUMMARY(A)
Pretax operating profit margin(B) 38.83 % 38.07 % 33.11 % 37.09 % 36.18 % 76 bp
Efficiency ratio(B) 57.12 55.94 56.65 57.36 59.67 119
Net interest margin 4.07 4.20 4.27 4.22 4.17 (13)
Return on average assets 0.29 1.25 1.15 1.30 1.01 (96)
Return on average equity 3.76 16.37 14.58 16.52 12.83 (1,261)
Average equity to average assets 7.59 7.66 7.86 7.89 7.90 (7)
PER SHARE SUMMARY
Earnings per share - basic $ 0.20 $ 0.90 $ 0.80 $ 0.90 $ 0.68 (77.8)%
Earnings per share - diluted 0.20 0.89 0.79 0.88 0.67 (77.5)
Cash dividends paid 0.32 0.30 0.29 0.29 0.25 6.7
Book value per share 21.72 21.77 21.74 21.44 21.62 (0.2)
Closing market price 45.813 44.125 41.375 56.375 58.188 3.8
KEY INTANGIBLE ASSETS (C)
Goodwill $ 131,514 $ 134,851 $ 138,334 $ 141,332 $ 143,702 (2.5) %
Mortgage servicing rights 35,076 35,916 36,979 42,993 40,482 (2.3)
ASSET QUALITY SUMMARY(C)
Nonperforming assets $ 37,161 $ 35,836 $ 46,871 $ 65,219 $ 48,544 3.7 %
Allowance for loan losses 97,450 95,280 93,701 96,125 93,821 2.3
Nonperforming assets to total assets 0.33 % 0.31 % 0.42 % 0.59 % 0.45 % 2 bp
Allowance for loan losses to total loans(D) 1.29 1.28 1.28 1.32 1.31 1
Net charge-offs to average loans (D) 0.22 0.39 0.98 0.33 0.36 (17)
============================================================================================================================
</TABLE>
bp- Change is measured as difference in basis points.
(A) Balance sheet amounts are based on average balances unless otherwise noted.
(B) Calculation excludes merger-related expenses.
(C) Balance sheet amounts are based on period end balances unless otherwise
noted.
(D) Excludes mortgage loans held-for-sale.
All prior period financial data has been restated for the February 18, 2000
merger with Triangle Bancorp, Inc. which was accounted for as a
pooling-of-interests.
