UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the quarterly period ended September 30, 2000
or
[ ] Transition Report Pursuant to Section 13 or
15(d) of the Securities and Exchange Act of 1934
For the transition period from __________ to ________
Commission File Number: 1-10646
<TABLE>
<CAPTION>
<S> <C>
CENTURA BANKS, INC.
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(Exact name of registrant as specified in its charter)
North Carolina 56-1688522
--------------------------------------------------------------------------------
(State of Incorporation) (IRS Employer Identification No.)
134 North Church Street, Rocky Mount, North Carolina 27804
--------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
(252) 454-4400
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last report)
</TABLE>
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.
[X] Yes [ ] No
As of October 31, 2000, Centura Banks, Inc. had 39,528,502 shares of Common
Stock, no par value, outstanding.
Exhibit Index on sequential page number 30.
<PAGE>
CENTURA BANKS, INC.
FORM 10-Q
INDEX
Page
----
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -
September 30, 2000, September 30, 1999, and December 31, 1999 4
Consolidated Statements of Income -
Three and nine months ended September 30, 2000 and 1999 5
Consolidated Statement of Shareholders' Equity -
Nine months ended September 30, 2000 6
Consolidated Statements of Cash Flows -
Nine months ended September 30, 2000 and 1999 7
Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-26
Item 3. Quantitative and Qualitative Disclosures about Market Risk 27
Part II.OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 28
SIGNATURES 29
2
<PAGE>
CENTURA BANKS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statement of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
3
<PAGE>
CONSOLIDATED BALANCE SHEETS
CENTURA BANKS, INC. AND SUBSIDIARIES
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
----------------------------- ----------------
(In thousands, except share data) 2000 1999 1999
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 318,464 $ 298,249 $ 356,416
Due from banks, interest-bearing 18,169 52,754 39,279
Federal funds sold 12,613 9,571 28,686
Investment securities:
Available for sale (cost of $2,556,836, $2,722,569
and $2,794,678, respectively) 2,536,545 2,670,923 2,727,514
Held to maturity (fair value of $49,783,
$122,049 and $114,521, respectively) 49,425 121,286 114,574
Loans 7,688,712 7,322,504 7,442,238
Less allowance for loan losses 104,036 93,701 95,500
---------------------------------------------------------------------------------------------------------------------
Net loans 7,584,676 7,228,803 7,346,738
Mortgage loans held for sale 59,207 70,682 86,532
Bank premises and equipment 148,396 159,008 159,300
Other assets 661,550 561,515 527,643
---------------------------------------------------------------------------------------------------------------------
Total assets $ 11,389,045 $ 11,172,791 $ 11,386,682
=====================================================================================================================
LIABILITIES
Deposits:
Demand, noninterest-bearing $ 1,136,869 $ 1,181,071 $ 1,136,119
Interest-bearing 5,818,627 5,779,330 5,882,744
Time deposits over $100 738,732 824,896 878,189
---------------------------------------------------------------------------------------------------------------------
Total deposits 7,694,228 7,785,297 7,897,052
Borrowed funds 1,591,983 1,453,826 1,601,238
Long-term debt 1,039,837 930,556 904,354
Other liabilities 143,903 136,379 124,303
---------------------------------------------------------------------------------------------------------------------
Total liabilities 10,469,951 10,306,058 10,526,947
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 25,000,000 shares
authorized; none issued - - -
Common stock, no par value,
100,000,000 shares authorized; shares issued
and outstanding of 39,878,329; 39,859,180;
and 39,496,410, respectively 289,906 299,977 278,689
Common stock acquired by ESOP - (43) (28)
Retained earnings 647,049 599,754 623,870
Unearned compensation (4,450) - -
Accumulated other comprehensive loss (13,411) (32,955) (42,796)
---------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 919,094 866,733 859,735
---------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 11,389,045 $ 11,172,791 $ 11,386,682
=====================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
CENTURA BANKS, INC. AND SUBSIDIARIES
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ------------------------
(In thousands, except share and per share data) 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $ 181,580 $ 160,434 $ 524,533 $ 468,758
Investment securities:
Taxable 43,281 40,499 127,124 116,576
Tax-exempt 555 1,409 2,409 4,354
Short-term investments 665 738 2,584 1,702
Mortgage loans held for sale 1,463 1,667 4,044 6,404
----------------------------------------------------------------------------------------------------------------------------------
Total interest income 227,544 204,747 660,694 597,794
----------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits 80,132 67,436 228,331 198,158
Borrowed funds 25,784 17,019 71,474 50,231
Long-term debt 17,393 13,685 48,330 37,722
----------------------------------------------------------------------------------------------------------------------------------
Total interest expense 123,309 98,140 348,135 286,111
----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 104,235 106,607 312,559 311,683
Provision for loan losses 6,960 16,006 24,855 31,934
----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 97,275 90,601 287,704 279,749
NONINTEREST INCOME
Service charges on deposit accounts 15,723 16,251 47,071 47,175
Credit card and related fees 2,603 2,816 6,724 6,673
Other service charges, commissions and fees 9,183 9,532 29,120 28,746
Fees for trust services 2,549 2,586 8,058 7,768
Mortgage income 17,912 7,594 27,160 21,696
Gain on sale of subsidiary - 4,893 - 4,893
Other noninterest income 5,314 4,342 21,128 16,559
Securities losses, net (13,068) (1,633) (36,873) (623)
----------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 40,216 46,381 102,388 132,887
NONINTEREST EXPENSE
Personnel 45,016 43,631 132,492 129,809
Occupancy 6,112 6,213 18,343 18,554
Equipment 6,255 7,020 18,284 21,091
Foreclosed real estate losses and related
operating expense 409 615 1,515 1,338
Merger-related and other significant charges - - 28,516 6,858
Other operating 27,625 31,036 89,183 91,717
----------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 85,417 88,515 288,333 269,367
----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 52,074 48,467 101,759 143,269
Income taxes 18,071 16,514 38,798 48,481
----------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 34,003 $ 31,953 $ 62,961 $ 94,788
==================================================================================================================================
NET INCOME PER COMMON SHARE
Basic $ 0.85 $ 0.80 $ 1.58 $ 2.38
Diluted 0.85 0.79 1.57 2.34
==================================================================================================================================
AVERAGE COMMON SHARES OUTSTANDING
Basic 39,896,138 39,798,446 39,760,138 39,789,052
Diluted 40,094,135 40,397,894 40,033,407 40,473,206
==================================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
5
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
CENTURA BANKS, INC. AND SUBSIDIARIES
Nine months ended September 30, 2000
<TABLE>
<CAPTION>
Common
Common Stock Stock
--------------------------- Acquired Retained Unearned
Shares Amount by ESOP Earnings Compensation
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Dollars in thousands)
Balance, December 31, 1999 39,496,410 $ 278,689 $ (28) $ 623,870 $ -
Comprehensive Income:
Net income - - - 62,961 -
Change in unrealized gains/losses on
securities, net of tax - - - - -
Comprehensive Income - - - - -
Common stock issued:
Stock option plans and stock awards 274,907 4,579 - - -
Restricted stock, net 128,003 5,291 - - (4,450)
Repurchases of common stock (36,000) (1,361)
Cash dividends declared, $1.00 per share - - - (39,797) -
Other 15,009 2,708 28 15 -
---------------------------------------------------------------------
Balance, September 30, 2000 39,878,329 $ 289,906 $ - $ 647,049 $ (4,450)
=====================================================================
Accumulated Other
Comprehensive Income (Loss)
-------------------------------------------
Unrealized Gains/ Minimum Total
(Losses) on Securities Pension Shareholders'
Available for Sale Liability Equity
----------------------------------------------------------
<S> <C> <C> <C>
(Dollars in thousands)
Balance, December 31, 1999 $ (42,794) $ (2) $ 859,735
Comprehensive Income:
Net income - - 62,961
Change in unrealized gains/losses on
securities, net of tax 29,385 - 29,385
------------
Comprehensive Income - - 92,346
Common stock issued:
Stock option plans and stock awards - - 4,579
Restricted stock, net - - 841
Repurchases of common stock (1,361)
Cash dividends declared, $1.00 per share - - (39,797)
Other - - 2,751
----------------------------------------------------------
Balance, September 30, 2000 $ (13,409) $ (2) $ 919,094
==========================================================
See accompanying notes to consolidated financial statements.
</TABLE>
6
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Centura Banks, Inc. and Subsidiaries
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
(Dollars in thousands) 2000 1999
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 62,961 $ 94,788
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 24,855 31,934
Depreciation on assets under operating leases 5,614 11,247
Depreciation and amortization, excluding depreciation on assets under operating leases 30,397 35,732
Deferred income tax (benefit) expense (552) 6,436
Loan fees deferred, net 717 2,488
Bond discount accretion and premium amortization, net (815) 4,331
Losses on sales of investment securities 36,873 623
Gain on sales of equipment under lease - (2,821)
Write-off of fixed assets 2,573 -
Gain on sale of subsidiary - (4,893)
Gain on sale of mortgage servicing rights (14,776) (3,392)
Proceeds from sales of mortgage loans held for sale 308,376 742,524
Originations, net of principal repayments, of mortgage loans held for sale (326,205) (653,223)
Decrease in accrued interest receivable (12,588) (2,244)
Increase in accrued interest payable 4,448 239
Net change in other assets and other liabilities (21,982) (79,045)
------------- ----------
Net cash provided by operating activities 99,896 184,724
------------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans (225,266) (282,614)
Purchases of:
Securities available for sale (1,133,636) (848,275)
Securities held to maturity - (26,777)
Premises and equipment (24,385) (15,464)
Other (80,000) (20,000)
Proceeds from:
Sales of securities available for sale 1,122,346 181,086
Maturities and issuer calls of securities available for sale 267,638 494,943
Maturities and issuer calls of securities held to maturity 10,584 62,633
Sales of foreclosed real estate 6,809 7,446
Dispositions of premises and equipment 11,793 5,595
Dispositions of equipment used in leasing activities - 7,369
Cash received from sale of mortgage servicing rights 13,417 8,295
Other - 542
Cash acquired, net of cash paid, in mergers and acquisitions 107,146 3,105
------------- ----------
Net cash provided/(used) by investing activities 76,446 (422,116)
------------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits (341,154) 43,925
Net decrease in borrowed funds (9,255) (10,794)
Proceeds from issuance of long-term debt 485,500 253,637
Repayment of long-term debt (349,989) (57,253)
Cash dividends paid (39,797) (33,045)
Proceeds from issuance of common stock, net 4,579 4,860
Repurchases of common stock (1,361) (9,738)
------------- ----------
Net cash (used)/provided by financing activities (251,477) 191,592
------------- ----------
Decrease in cash and cash equivalents (75,135) (45,800)
Cash and cash equivalents at January 1 424,381 406,374
------------- ----------
Cash and cash equivalents at September 30 $ 349,246 $ 360,574
============= ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the nine months for:
Interest $ 343,687 $ 285,872
Income taxes 28,544 19,226
Noncash transactions:
Stock issued in purchase acquisitions and other stock issuances, net 8,102 12,563
Change in unrealized securities gains (losses), net 46,873 (65,544)
Income tax benefit from exercise of employee stock options 1,539 1,303
Loans transferred to foreclosed property 6,910 5,510
============= ==========
See accompanying notes to consolidated financial statements.
</TABLE>
7
<PAGE>
CENTURA BANKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited consolidated financial statements include
the accounts of Centura Banks, Inc. ("Centura") and its wholly-owned
subsidiaries, Centura Bank (the "Bank"), Centura Capital Trust I, Triangle
Capital Trust, and NCS Mortgage Lending Company. Centura Bank also has various
wholly-owned subsidiaries. During the third quarter, Centura Card Bank, a
Georgia-based entity, was established as a subsidiary of the Bank. The interim
financial statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") for interim financial statements and with the
instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by GAAP for complete financial
statements. Because the accompanying consolidated financial statements do not
include all of the information and footnotes required by GAAP, they should be
read in conjunction with the audited financial statements and accompanying
footnotes in Centura's Annual Report on Form 10-K for the year ended December
31, 1999. Operating results for the nine and three month periods ended September
30, 2000 are not necessarily indicative of the results that may be expected for
the full year.
All significant intercompany transactions are eliminated in
consolidation and all adjustments considered necessary for a fair presentation
of the results for the interim periods presented have been included (such
adjustments are normal and recurring in nature). All prior period financial
information has been restated to include historical information for companies
acquired in transactions accounted for as poolings-of-interests.
Certain items reported in prior periods have been reclassified to
conform to current period presentation. Such reclassifications had no impact on
net income or shareholders' equity.
Note 2: Mergers and Acquisitions
The following table summarizes activity for merger-related charges
through September 30, 2000 related to the first quarter 2000 merger with
Triangle Bancorp, Inc. and the first quarter 1999 merger with First Coastal
Bankshares, Inc.:
<TABLE>
<CAPTION>
------------------------------------------- ------------- -------------- ------------- ------------- -----------
Initial Liability Liability Amount
accrued balance accrued utilized in Remaining
(in thousands) liability 12/31/99 in 2000* 2000 Balance
------------------------------------------- ------------- -------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Severance, change in control and $ 770 $ 424 $ 7,582 $ 7,027 $ 979
other employee-related costs
Write-off of unrealizable assets 1,259 200 634 834 --
Non-employee related contract terminations 2,071 317 1,483 850 950
Professional costs 1,683 -- 10,122 10,122 --
Other merger-related charges 1,075 -- 7,022 6,004 1,018
------------------------------------------- ------------- -------------- ------------- ------------- -----------
Merger-related charges $6,858 $ 941 $26,843 $ 24,837 $2,947
=========================================== ============= ============== ============= ============= ===========
</TABLE>
* Does not include $1.7 million for fixed asset write-offs incurred as a
result of the unexpected Hannaford in-store closings.
On September 21, 2000, Centura purchased four branches from Wachovia
Corporation, enhancing Centura's presence in western North Carolina, a growing
market. Centura assumed approximately $5.9 million in loans and $138.3 million
in deposits. Goodwill and core deposit premiums of approximately $21.6 million
were recorded as a result of the acquisition.
8
<PAGE>
Note 3: Net Income Per Share
Basic earnings per common share is calculated by dividing net income by
the weighted-average number of common shares outstanding during each period.
Diluted earnings per common share is based on the weighted-average number of
common shares outstanding during each period plus the maximum dilutive effect of
common stock issuable upon exercise of stock options which totaled 273,269
shares and 684,154 shares for the nine months ended September 30, 2000 and 1999,
respectively.
Note 4: Commitments and Contingencies
Centura Bank is a co-defendant in two actions (the "Staton Cases") in
the Superior Court of Forsyth County, North Carolina, which were filed in 1996
and have been consolidated for discovery. The plaintiffs are Philip A.R. Staton,
Ingeborg Staton, Mercedes Staton, and trusts created by Ingeborg Staton and
Mercedes Staton. They allege that Centura Bank breached its duties and committed
other violations of law as depository of substantial sums of money allegedly
converted by the personal and financial advisors of the owners of such money and
in connection with the creation of charitable trusts established with a portion
of the funds. No claim for a specific amount of monetary damages was made in the
cases until 1999. Plaintiffs seek compensatory, punitive or treble damages in
amounts that are material to Centura and its subsidiaries taken as a whole.
In 1999, Ingeborg Staton, Mercedes Staton and trusts created by
Ingeborg Staton and Mercedes Staton filed a motion to amend their complaint in
the Staton Cases to add allegations of fraudulent concealment, violation of the
Bank Bribery Act, and negligent supervision of employees. Centura Bank filed a
response opposing the proposed amendments. The movants thereupon filed a new
action (the "1999 Case") in Forsyth County, North Carolina Superior Court
asserting those claims against Centura Bank, certain of its named current and
former officers and persons described as "one or more John Does and one or more
Jane Does" who are identified in the complaint as current or former directors of
the Bank.
In a separate and related case, also instituted in 1996 in the Superior
Court of Forsyth County, North Carolina by Piedmont Institute of Pain Management
and three physicians associated with it (the "PIPM Case"), Centura Bank is
alleged to have provided the plaintiffs with false information regarding the
establishment and funding of a medical clinic by failing to exercise reasonable
care or competence in obtaining such information, and to have committed other
violations of law. Plaintiffs seek specific performance or recovery of money
damages in an amount that is material to Centura and its subsidiaries taken as a
whole.
By consent of the parties, the 1999 Case has been consolidated with the
Staton Cases and the PIPM Case for pretrial purposes. Although Centura and
Centura Bank believe that Centura Bank has meritorious defenses to all claims
asserted in each of the Staton Cases, the 1999 Case and the PIPM Case, and
Centura Bank intends to defend each case vigorously, no assurance can be given
regarding the risk or range of possible loss, if any.
Various other legal proceedings against Centura and its subsidiaries
have arisen from time to time in the normal course of business. Management
believes liabilities arising from these proceedings, if any, will have no
material adverse effect on the financial position or results of operations of
Centura or its subsidiaries, taken as a whole.
9
<PAGE>
Note 5: Segment Information
Refer to Centura's Annual Report on Form 10-K for the year ended
December 31, 1999 for information with respect to Centura's policies for
defining and accounting for its segments. Financial information by segment for
the three months ended September 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
2000
---------------------------------------------------------------------------------
(In thousands) Retail Treasury Other Total Adjustments Consolidated
----------------------------------- ------------ ----------- ------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 160,835 $ 57,235 $ 7,060 $ 225,130 $ 2,414 (A) $ 227,544
Interest expense 81,257 35,370 909 117,536 5,773 (A) 123,309
Funds transfer pricing allocation 14,303 (17,400) (3,044) (6,141) 6,141 (B) ---
----------------------------------- ------------ ----------- ------------ ------------- --------------- -------------
Net interest income 93,881 4,465 3,107 101,453 2,782 104,235
Provision for loan losses 4,766 --- 1,427 6,193 767 (C) 6,960
----------------------------------- ------------ ----------- ------------ ------------- --------------- -------------
Net interest income after
provision for loan losses 89,115 4,465 1,680 95,260 2,015 97,275
Noninterest income 30,711 257 13,676 44,644 (4,428)(A) 40,216
Noninterest expense 67,842 2,560 8,789 79,191 6,226 (A) 85,417
----------------------------------- ------------ ----------- ------------ ------------- --------------- -------------
Income before income taxes 51,984 2,162 6,567 60,713 (8,639) 52,074
Income tax expense/(benefit) 8,290 (1,369) 5,969 12,890 5,181 (C) 18,071
----------------------------------- ------------ ----------- ------------ ------------- --------------- -------------
Net income $ 43,694 $ 3,531 $ 598 $ 47,823 $(13,820) $ 34,003
=================================== ============ =========== ============ ============= =============== =============
Period-end assets $6,861,366 $3,183,855 $225,256 $10,270,477 $1,118,568(D) $ 11,389,045
1999
---------------------------------------------------------------------------------
(In thousands) Retail Treasury Other Total Adjustments Consolidated
----------------------------------- ------------ ----------- ------------ ------------- --------------- -------------
Interest income $ 138,863 $ 52,926 $ 10,228 $ 202,017 $ 2,730 (A) $ 204,747
Interest expense 69,840 25,147 1,030 96,017 2,123 (A) 98,140
Funds transfer pricing allocation 17,284 (17,618) (5,112) (5,446) 5,446 (B) ---
----------------------------------- ------------ ----------- ------------ ------------- --------------- -------------
Net interest income 86,307 10,161 4,086 100,554 6,053 106,607
Provision for loan losses 17,859 --- 616 18,475 (2,469)(C) 16,006
----------------------------------- ------------ ----------- ------------ ------------- --------------- -------------
Net interest income after
provision for loan losses 68,448 10,161 3,470 82,079 8,522 90,601
Noninterest income 29,903 477 14,056 44,436 1,945 (A) 46,381
Noninterest expense 67,718 5,556 9,940 83,214 5,301 (A) 88,515
----------------------------------- ------------ ----------- ------------ ------------- --------------- -------------
Income before income taxes 30,633 5,082 7,586 43,301 5,166 48,467
Income tax expense 8,635 1,501 2,232 12,368 4,146 (C) 16,514
----------------------------------- ------------ ----------- ------------ ------------- --------------- -------------
Net income $ 21,998 $ 3,581 $ 5,354 $ 30,933 $ 1,020 $ 31,953
=================================== ============ =========== ============ ============= =============== =============
Period-end assets $6,550,569 $3,275,268 $383,623 $10,209,460 $ 963,331 (D) $ 11,172,791
</TABLE>
(A) Reconciling item reflects adjustments that are necessary to reconcile to
consolidated totals, including merger-related charges.
(B) Reconciling item relates to the elimination of funds transfer pricing
credits and charges.
(C) Reconciling item adjusts balances from cash basis to accrual method of
accounting.
(D) Reconciling item relates to assets not allocated to segments including
premises and equipment, cash and due from banks, and certain other assets.
10
<PAGE>
CENTURA BANKS, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations For the Nine Months Ended September 30, 2000
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
A number of the statements in this Form 10-Q concerning Centura Banks,
Inc. ("Centura" or the "Company") and its wholly-owned subsidiaries, Centura
Bank (the "Bank"), Centura Capital Trust I, Triangle Capital Trust and NCS
Mortgage Lending Company ("NCS"), are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, including
statements regarding Centura's plans, goals, objectives, expectations,
projections, estimates, and intentions. One can identify these forward-looking
statements by the use of words such as "expects," "plans," "believes," "will,"
"estimates," "intends," "projects," "goals," and other words of similar meaning.
One can identify them by the fact that they do not relate strictly to historical
or current facts. These forward-looking statements involve significant risks and
uncertainties and are subject to change based on various factors, many of which
are beyond Centura's control. Factors that might cause such a difference
include, but are not limited to (i) customer and deposit attrition, or loss of
revenue, following completed mergers may be greater than expected; (ii)
competitive pressure in the banking industry may increase significantly; (iii)
changes in the interest rate environment may reduce margins; (iv) general
economic conditions, either nationally or regionally, may be less favorable than
expected, resulting in, among other things, credit quality deterioration and the
possible impairment of collectibility of loans; (v) the impact of changes in
monetary and fiscal policies, laws, rules and regulations; (vi) the impact of
the Gramm-Leach-Bliley Act of 1999; (vii) changes in business conditions and
inflation; and (viii) other risks and factors identified in Centura's filings
with the Securities and Exchange Commission and other regulatory bodies.
Centura cautions that the foregoing list of important factors is not
exclusive. Additional information with respect to factors that may cause actual
results to differ materially from those contemplated by such forward-looking
statements is included in Centura's current and subsequent filings with the
Securities and Exchange Commission. Centura does not undertake to update any
forward-looking statement that may be made from time to time by or on behalf of
Centura.
GENERAL
The following discussion and analysis is presented to assist in the
understanding and evaluation of the financial condition and results of
operations of Centura. Centura is a bank holding company operating primarily in
North Carolina, South Carolina and Virginia. Through Centura Bank and its
subsidiaries, Centura seeks to not only become the primary provider of financial
services for each of its customers but to also deliver the services through
convenient channels including more than 245 full-service financial offices
and Centura Highway, Centura's multifaceted customer access system that includes
telephone banking, an extensive ATM network, PC banking, on-line bill payment
and a suite of Internet products and services.
Centura's common stock is traded on the New York Stock Exchange under
the symbol "CBC." Percentage calculations contained herein have been calculated
based upon actual, not rounded, results.
11
<PAGE>
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
EARNINGS SUMMARY
Net income for the nine months ended September 30, 2000 totaled $98.7
million or $2.46 per diluted share, excluding merger-related and other
significant charges of $50.7 million incurred principally as a result of the
February 18, 2000 merger with Triangle Bancorp, Inc. ("Triangle"). Included in
these charges were merger-related charges of $26.9 million, $22.1 million in
losses on securities sales incurred as a result of restructuring Triangle's
investment portfolio and $1.7 million of fixed asset write-offs resulting from
the unexpected Hannaford in-store closings. Net income for the comparable period
in 1999 was $100.8 million or $2.49 per diluted share, excluding merger-related
charges of $8.4 million incurred in connection with the combination of First
Coastal Bankshares, Inc. ("First Coastal") and Centura on March 26, 1999.
Including merger-related and other significant charges, net income and diluted
earnings per share were $63.0 million and $1.57, respectively, for the nine
months ended September 30, 2000, compared with $94.8 million and $2.34,
respectively, for the comparable 1999 period. Other key factors responsible for
Centura's results of operations are discussed throughout Management's Discussion
and Analysis below.
INTEREST-EARNING ASSETS
Interest-earning assets, consisting primarily of loans and investment
securities, averaged $10.3 billion for the nine months ended September 30, 2000,
an increase of $238.8 million or 2.4 percent over the average balance for the
first nine months of 1999. Growth in the commercial and variable consumer loan
portfolios accounted for the majority of the increase. This increase was
slightly offset by decreases in the leasing portfolio and mortgage loans held
for sale.
For additional information on average interest-earning assets, refer to
the discussion below, Table 3, "Net Interest Income Analysis-Taxable Equivalent
Basis," and Table 8, "Net Interest Income and Volume/Rate Analysis, Taxable
Equivalent Basis."
Loans
Loans represent the largest component of interest-earning assets. Loans
ended the period at $7.7 billion, up $246.5 million or 3.3 percent over the 1999
year-end balance. Activity in the loan portfolio through September 30, 2000
reflects required divestitures of approximately $74.5 million divested in
connection with the merger with Triangle as well as the September 2000
acquisition of $5.9 million in loans from Wachovia Corporation.
On average, the loan portfolio grew 4.8 percent to average $7.6 billion
for the first nine months of 2000 compared with $7.2 billion averaged for the
same period in 1999. Excluding the impact of the above mentioned acquisitions
and divestitures, the loan portfolio grew 6.4 percent on average. Table 1
provides a summary of the loan portfolio and mix percentages as of September 30,
2000, September 30, 1999 and December 31, 1999. Average loan growth was driven
primarily by volume generated in the commercial and consumer loan portfolios. On
average, commercial loans increased $271.6 million between the two nine-month
periods while consumer loans (equity lines, installment loans, and other credit
line loans) were higher, on average, by $222.6 million. The leasing portfolio,
on average, declined $162.7 million, driven by the continued decreased emphasis
on the product, normal amortization and payoffs.
Taxable equivalent interest income earned on the loan portfolio for the
nine months ended September 30, 2000 and 1999 totaled $525.6 million and $469.9
million, respectively. The growth in interest income on loans was driven mainly
by rate variances, which drove $33.8 million of the increase while volume
variances generated $21.9 million. Overall, the loan portfolio yielded 9.17
percent for the first nine months of 2000 compared with 8.62 percent for the
first nine months of 1999 and 8.75 percent for 1999's full year.
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Investment Securities
The investment portfolio provides Centura with a source of earnings and
liquidity. The investment portfolio consists predominantly of securities of the
US Government and its agencies and other high grade, fixed income securities. At
September 30, 2000 and December 31, 1999, investment securities totaled $2.6
billion and $2.8 billion, respectively. For the nine months ended September 30,
2000, the investment portfolio averaged $2.6 billion, declining 2.8 percent from
the comparable period for 1999.
The available for sale ("AFS") investment portfolio is used as a part
of Centura's asset/liability management strategy and may be sold in response to
changes in interest rates, changes in prepayment risk, the need to manage
regulatory capital and other factors. This portfolio is carried at fair value
with unrealized gains or losses recorded, net of tax, in accumulated other
comprehensive income. The fair value of the AFS portfolio at September 30, 2000
was $2.5 billion and included unrealized losses of $20.3 million. This compares
with the December 31, 1999 fair value of $2.7 billion and $67.2 million in
unrealized losses. The decline in unrealized losses was mainly due to
restructuring of the AFS investment portfolio during the first three quarters of
2000 and favorable interest rate movements. In the second quarter of 2000,
Centura incurred losses of $22.1 million related to the restructuring of
Triangle's investment portfolio, undertaken to conform the interest rate risk
position of the Triangle investment portfolio to the overall risk position of
Centura. In the third quarter, Centura performed a second restructuring which
resulted in realizing losses totaling $13.1 million.
The held to maturity ("HTM") investment portfolio declined $65.1
million between December 31, 1999 and September 30, 2000 to total $49.4 million
for the current period-end. This decline primarily resulted from scheduled
maturities in the portfolio and management's election under Statement of
Financial Accounting Standards No. 115 ("SFAS 115") to transfer $55.4 million
from the HTM portfolio acquired with the Triangle merger to the AFS portfolio.
Unrealized losses on the transferred securities of $708,000 were recorded as a
separate component of shareholders' equity on the date of transfer.
FUNDING SOURCES
Funding sources include deposits, short-term borrowings and long-term
debt. Funding sources averaged $10.2 billion for the nine-month period ended
September 30, 2000, increasing $281.8 million over the $10.0 billion averaged
for the nine months ended September 30, 1999.
Deposits
Total deposits, whose major categories include money market accounts,
savings accounts, individual retirement accounts, time deposits and transaction
accounts, ended the period at $7.7 billion compared with $7.9 billion and $7.8
billion at December 31, 1999 and September 30, 1999, respectively. For the nine
months ended September 30, 2000 and 1999, total deposits remained relatively
unchanged, averaging $7.7 billion. The deposit portfolio balance was impacted by
divestitures totaling approximately $307.0 million that occurred in February and
April 2000, divested in response to regulatory requirements associated with the
Triangle merger. Also impacting the deposit balance was the assumption of $138.3
million in deposits from Wachovia Corporation, completed in September 2000.
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Table 2 details average balances for the deposit portfolio and the mix
of deposits for the nine months ended September 30, 2000 and 1999. On average,
money market accounts grew $117.4 million or 7.4 percent. This growth was
partially offset by declines in savings and transaction accounts of $91.6
million and $83.1 million, respectively. Total interest paid on deposits and the
cost of funds on deposits for the nine months ended September 30, 2000 and 1999,
influenced by changes in the portfolio mix and the interest rate environment,
were $228.3 million and 4.66 percent compared with $198.2 million and 4.03
percent, respectively. As shown in Table 8, the increase of $30.2 million in
interest expense paid on deposits between periods was driven principally by rate
variances, which increased expense by $27.8 million, followed by volume
variances which contributed $2.4 million to expense.
Other Funding Sources
Management continues to utilize alternative funding sources in addition
to traditional deposits to fund balance sheet growth. Alternative short-term
borrowed funds principally include Federal funds purchased, securities sold
under repurchase agreements and master notes. On average, short-term borrowed
funds averaged $1.6 billion for the nine months ended September 30, 2000, an
increase of $180.0 million over the same period for 1999. Period-end short-term
borrowings also totaled $1.6 billion at September 30, 2000 compared to $1.6
billion and $1.5 billion at December 31, 1999 and September 30, 1999,
respectively. The growth in average short-term borrowings principally stems from
loan growth modestly exceeding deposit growth. As a result, there was an
increase in the usage of repurchase agreements, whose average balance grew $94.8
million between periods, followed by an increase of $56.1 million in the average
balance for Federal funds purchased. The cost of funds for short-term debt
increased 122 basis points to 5.98 percent when comparing the first nine months
of 2000 with the first nine months of 1999, a result of rising interest rates.
From a rate/volume perspective, as shown in Table 8, changes in the rate
environment accounted for $14.2 million of the $21.2 million increase in
short-term borrowing expense followed by volume variances which contributed $7.1
million.
Long-term debt consists predominantly of FHLB advances, capital
securities and subordinated bank notes and averaged $1.0 billion for the period
ended September 30, 2000 compared with $852.0 million averaged in the prior
year. As with short-term borrowed funds, the increase was a result of loan
growth modestly exceeding deposit growth. As of September 30, 2000 and 1999,
long-term debt was $1.0 billion and $930.6 million, respectively. The increase
was mainly driven by additional FHLB borrowings, which were up $109.0 million
over the prior year. The cost of funds for long term debt increased 51 basis
points to 6.35 percent for year-to-date 2000 compared with 5.84 percent for
year-to-date 1999. The increase in cost of funds on long-term debt is
attributable to repricing variable rate debt combined with rising interest
rates. From a rate/volume perspective, as shown in Table 8, volume variances
contributed $7.0 million to the $10.6 million increase in long term borrowing
expense followed by changes in the rate environment which accounted for $3.6
million.
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income for the nine months ended September 30, 2000 and
1999 was $312.6 million and $311.7 million, respectively. On a taxable
equivalent basis, net interest income declined $698,000 to total $320.1 million
for the nine months ended September 30, 2000 compared to $320.8 million earned
in the prior year. As shown in Table 8, the decrease in net interest income,
taxable equivalent, was driven by rate variances which created a $1.2 million
decrease. This decrease was partially offset by a $504,000 favorable volume
variance.
The net interest margin, taxable equivalent, for year-to-date 2000 was
4.08 percent compared with 4.22 percent for 1999. Pressure on the net interest
margin largely resulted from Centura's liability sensitive balance sheet
configuration, gradual changes in the deposit mix, including the Triangle
deposit divestitures, targeted retail deposit product pricing to ensure
retention of Triangle's high value customers and Centura's investment in
bank-owned life insurance. The margin for 2000 was also unfavorably impacted by
the fourth quarter 1999 share repurchase program.
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ASSET QUALITY AND ALLOWANCE FOR LOAN LOSSES (AFLL)
As of September 30, 2000 and December 31, 1999, the AFLL was $104.0
million and $95.5 million, respectively, or 1.35 percent and 1.28 percent,
respectively, of total loans outstanding. The AFLL continues to adequately cover
nonperforming loans ("NPL's"), providing coverage at 2.14 times and 3.25 times
the nonperforming loan balance at September 30, 2000 and December 31, 1999,
respectively.
Total nonperforming assets ("NPA's"), including NPL's and foreclosed
properties, were $54.6 million at September 30, 2000 representing an $18.8
million increase over prior year which was driven by an increase in commercial
and industrial and loans secured by real estate, with no concentration in any
one industry. As a percentage of total assets, NPA's were 0.48 percent at
September 30, 2000 and 0.31 percent at December 31, 1999.
Excluding the impact of the $11.8 million charge-off in 1999 for Pluma,
Inc., an Eden, North Carolina based manufacturer and distributor of fleece and
jersey sportswear, net charge-offs declined $2.1 million between comparable
periods totaling $16.3 million and $18.4 million for the nine months ended
September 30, 2000 and 1999, respectively. Net charge-offs, including Pluma,
were $30.2 million for the nine months September 30, 1999. Net charge-offs to
average loans were 0.29 percent and 0.34 percent for year-to-date September 30,
2000 and 1999, respectively, excluding Pluma. With the Pluma charge-off, net
charge-offs to average loans were 0.56 percent for the nine months ended
September 30, 1999. Commercial and industrial net charge-offs, excluding Pluma,
accounted for the majority of the decline, decreasing $4.7 million between
periods. Also contributing to the overall decrease in net charge-offs was an
increase in recoveries of $2.1 million between periods, primarily due to
receiving a recovery of $1.3 million in the first quarter of 2000 related to the
Pluma credit. The remaining difference in the net charge-off change was spread
across the various loan categories.
The provision for loan losses included in the year-to-date 2000 results
of operations totaled $24.9 million compared with $31.9 million recorded in
1999. The decrease in the provision was mainly due to recording $8.9 million in
expense in 1999 as a result of losses related to Pluma. The amount provided for
in 2000 includes $5.0 million of additional loan loss provision recorded in
order to align the credit risk management methodologies of Triangle with those
of Centura. Similarly, of the amount recorded in 1999, $1.5 million of
additional provision was recorded as a result of the merger with First Coastal.
Management believes the AFLL is adequate based upon its current
judgment, evaluation, and analysis of the loan portfolio. Centura continuously
monitors overall credit quality and manages its credit processes, including
loans in past due and nonaccrual status. The AFLL represents management's
estimate of an amount adequate to provide for probable incurred losses in the
loan portfolio. However, there are risks of additional losses that cannot be
quantified precisely or attributed to particular loans or classes of loans.
Because those risks include general economic trends as well as conditions
affecting individual borrowers, management's judgment of the AFLL is necessarily
approximate and imprecise. The AFLL is also subject to regulatory examinations
and determinations as to adequacy, which may take into account such factors as
the methodology used to calculate the AFLL and the size of the AFLL in
comparison to peer banks identified by the regulatory agencies. No assurances
can be given that the ongoing evaluation of the loan portfolio in light of
economic conditions and other factors then prevailing will not require
significant future additions to the AFLL, thus adversely affecting the operating
results of Centura.
In addition to nonperforming assets and past due loans shown in Table
5, management has identified approximately $40.0 million in loans that are
currently performing in accordance with contractual terms that management
believes may become nonperforming during the remaining term of the loan. See
"Cautionary Note Regarding Forward-Looking Statements."
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NONINTEREST INCOME AND EXPENSE
Noninterest income for the nine months ended September 30, 2000,
excluding gains and losses on sales of investment securities, totaled $139.3
million, up $5.8 million from the $133.5 million earned for the nine months
ended September 30, 1999. As a percentage on total revenues (defined as the sum
of net interest income, taxable equivalent plus noninterest income), noninterest
income, before securities gains and losses, was 30.3 percent and 29.4 percent
for year-to-date 2000 and 1999, respectively. Sales of investment securities
resulted in net realized losses of $36.9 million for 2000 compared with net
realized losses of $623,000 for 1999. The increase in realized losses was mainly
the result of restructuring both the Triangle and Centura investment portfolios.
In the second quarter of 2000, Centura incurred losses of $22.1 million related
to the restructuring of the Triangle portfolio. During the third quarter of
2000, Centura restructured portions of its own investment portfolio, taking
advantage of the current interest rate environment to replace lower yielding
securities which resulted in realized losses of $13.1 million.
Service charges on deposit accounts, comprising approximately 33.8
percent of noninterest income before gains and losses on sales of investment
securities, represents Centura's largest source of noninterest income. Service
charges on deposits remained flat between periods despite divesting
approximately 18 percent of Triangle's deposit base. Mortgage income for the
nine months ended September 30, 2000 was $27.2 million compared to $21.7 million
earned in 1999. Mortgage income is primarily comprised of mortgage loan sale
income, origination fees, and servicing income. Mortgage loan sale income
increased $8.3 million, principally the result of recognizing a $13.1 million
net gain on the sale of approximately $2.1 billion or 85 percent of Centura's
mortgage servicing portfolio. NCS, purchased in the first quarter of 2000,
contributed an additional $2.2 million in mortgage loan sale income. Included in
1999's loan sale income were gains as a result of balance sheet restructuring
totaling $2.2 million and gains of $3.4 million related to the sale of the
Ginnie Mae servicing portfolio. Mortgage loan origination fees earned
year-to-date 2000, unfavorably affected by lower origination volume, declined
$4.6 million when compared to year-to-date 1999.
Included in current period other noninterest income are gains of $10.2
million received on the sale of branches required by the Federal Reserve and
Department of Justice to be divested as a result of the merger with Triangle.
Mitigating this gain were approximately $4.9 million of write-downs and losses
on investments classified in other assets and losses on sales of securities from
the investment portfolio, other than those losses associated with the Triangle
investment portfolio restructuring. Also impacting other noninterest income was
the sale of CLG in 1999, which resulted in a decline in revenues of
approximately $2.5 million that CLG generated from its miscellaneous leasing
activities. The gain on sale of CLG in the prior year, a component of other
noninterest income, generated a gain of $4.9 million. Operating lease income,
directly impacted by the third quarter 1999 sale of CLG, Inc. ("CLG"), Centura's
former technology leasing subsidiary, declined $3.6 million between 1999 and
2000.
Excluding merger-related and other significant charges of $28.5 million
and $6.9 million for the nine months ended September 30, 2000 and 1999,
respectively, noninterest expenses declined $2.7 million or 1.0 percent.
Personnel related expenses rose $2.7 million. Included in 2000's personnel costs
are incremental salary expenses related to the addition of the newly acquired
NCS employees, the filling of previously vacant positions, an increase in 401(k)
expense as a result of management's decision to increase the employer matching
contribution and an increase in incentive compensation accruals. Favorably
impacting personnel expense in 2000 were the third quarter 1999 sale of CLG, and
efficiencies realized from the merger with Triangle. Professional fees, which
included fees totaling approximately $1.4 million paid for Year 2000 remediation
during 1999, declined $912,000. Fees for outsourced services, a volume driven
expense, rose $1.3 million while losses other than loans also increased, rising
$720,000. Marketing and equipment expenses declined $1.9 million and $2.8
million, respectively. The remaining difference was spread across various other
noninterest expense categories.
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INCOME TAX EXPENSE
Income tax expense recorded for the nine months ended September 30,
2000 was $38.8 million compared to $48.5 million in the prior year period. For
the nine months ended September 30, 2000, the effective tax rate was 38.13
percent, impacted by certain merger-related charges which were not tax
deductible. This compares with an effective tax rate of 33.84 percent for the
nine months ended September 30, 1999.
EQUITY AND CAPITAL RESOURCES
Shareholders' equity as of September 30, 2000 was $919.1 million
compared to $859.7 million at December 31, 1999. The change in equity between
the two periods was influenced by the retention of earnings, the exercise of
stock options, share repurchases, and changes in unrealized gains or losses on
AFS securities. Also impacting the equity balance was the payment of dividends
to shareholders which totaled $39.8 million for the first nine months of 2000
compared with $33.0 million paid for the same period in 1999. Unrealized losses
on available for sale securities, net of tax, were $13.4 million and $33.0
million at September 30, 2000 and December 31, 1999, respectively. As of
September 30, 2000 and December 31, 1999, the ratio of shareholders' equity to
period-end assets was 8.07 percent and 7.55 percent, respectively. During the
third quarter of 2000, Centura's Board of Directors authorized a share
repurchase program of up to 1.5 million shares of Centura common stock, with the
total purchase price not to exceed $67.5 million. As of September 30, 2000,
Centura repurchased 36,000 shares for a price of $1.4 million. Subsequent to
September 30, 2000 and through the date of this filing, Centura repurchased an
additional 351,500 shares for a price of $12.8 million.
Centura's capital ratios are greater than minimums required by
regulatory guidelines. It is Centura's intent to maintain an optimal capital and
leverage mix within the regulatory framework while providing a basis for future
growth. At September 30, 2000, Centura had the required capital levels to
qualify as well capitalized with total capital of $1.1 billion and Tier 1
capital of $910.2 million. See Table 6 for a summary of Centura's capital
ratios.
LIQUIDITY
Centura's liquidity management objective is to meet maturing debt
obligations, fund loan commitments and deposit withdrawals, and manage
operations on a cost-effective basis. Management believes that sufficient
resources are available to meet Centura's liquidity objective through its debt
maturity structure, holdings of liquid assets, and access to the capital markets
through a variety of funding vehicles.
Centura's traditional funding sources include established Federal funds
lines with major banks, advances from the FHLB, repurchase agreements, proceeds
from matured investments, principal repayments on loans, and core deposit
growth. Centura also has an unsecured bank note facility for institutional
investors. In addition, Centura accepts Eurodeposits, has a master note
commercial paper facility, and offers brokered CD's.
Management is not aware of any events or uncertainties that are
reasonably likely to have a material effect on Centura's liquidity, capital
resources, or operations. In addition, management is not aware of any pending
regulatory developments or proposals, which, if implemented, would have a
material effect on Centura.
ASSET/LIABILITY AND INTEREST RATE RISK MANAGEMENT
Market risk is the risk of loss from adverse changes in market prices
and rates. Centura's market risk primarily stems from interest rate risk, the
potential economic loss due to future changes in interest rates, which is
inherent in lending and deposit gathering activities. Centura's objective is to
manage the mix of interest-sensitive assets and liabilities to minimize interest
rate risk and stabilize the net interest margin and the market value of equity
while optimizing profit potential.
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Centura's Asset/Liability Management Committee seeks to maintain a
general balance between interest-sensitive assets and liabilities to insulate
net interest income and shareholders' equity from significant adverse changes in
market interest rates. Mismatches in interest rate repricings of assets and
liabilities arise from the interaction of customer business needs and Centura's
discretionary asset and liability management activities. Exposure to changes in
the level and direction of interest rates is managed by adjusting the
asset/liability mix through the use of various interest rate risk management
products, including derivative financial instruments.
Off-balance sheet derivative financial instruments, such as interest
rate swaps, interest rate floor and cap arrangements and interest rate futures
and option contracts ("swaps", "floors", "caps", "futures" and "options,"
respectively), are an integral part of Centura's interest rate risk management
activities. Centura has principally utilized interest rate swaps. Swaps are used
to manage interest rate risk, reduce funding costs, and allow Centura to utilize
diversified funding sources. Floors are used to protect certain designated
variable rate financial instruments from adverse repricing effects in the event
of a decreasing rate environment. Caps are used to protect certain designated
financial instruments from adverse repricing effects of an increasing rate
environment. Options provide the right, but not the obligation, to put or call
securities back to a third party at an agreed upon price under the specific
terms of each agreement. Table 7, "Off-Balance Sheet Derivative Financial
Instruments," summarizes Centura's off-balance sheet derivative financial
positions at September 30, 2000. On-balance sheet and off-balance sheet
financial instruments are managed on an integrated basis as part of Centura's
overall asset/liability management function. The value of any single component
of the on-balance sheet or off-balance sheet position should not be viewed
independently. Centura does not use derivative instruments in a speculative
manner.
SUMMARY RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
Net income was $34.0 million or $0.85 per diluted share for the quarter
ended September 30, 2000 compared to $32.0 million or $0.79 per diluted share
earned during the third quarter of 1999. For third quarter 2000, the return on
average assets and average equity were 1.20 percent and 15.00 percent
respectively, compared with third quarter 1999 ratios of 1.15 percent and 14.58
percent, respectively.
Comparing current year and prior year third quarters, the net interest
margin fell 19 basis points to 4.06 percent. Pressure on the net interest margin
largely resulted from Centura's liability sensitive balance sheet configuration,
gradual changes in the deposit mix, including the Triangle deposit divestitures,
targeted retail deposit product pricing to ensure retention of Triangle's high
value customers and Centura's investment in bank-owned life insurance. The
margin for 2000 was also unfavorably impacted by the fourth quarter 1999 share
repurchase program.
Net charge-offs for the third quarter of 2000 were $6.2 million or 0.32
percent of average loans compared with third quarter 1999 net charge-offs of
$18.0 million, representing 0.98 percent of average loans. Excluding the
aforementioned charge-off for Pluma of $11.8 million, net charge-offs to average
loans would have been 0.34 percent for the quarter ended September 30, 1999.
Commercial and industrial net charge-offs declined approximately $13.4 million
between comparable quarters, mainly the result of the Pluma charge-off.
Offsetting this decline were increases in net charge-offs in the leasing, credit
card, and loans secured by real estate portfolios. The provision for loan losses
decreased $9.0 million between comparable periods, resulting in total provision
expense of $7.0 million for the third quarter of 2000. The decrease was
primarily the result of the recognition of additional provision expense during
the third quarter of 1999 in anticipation of losses related to the Pluma credit.
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Noninterest income, before securities losses, increased $5.3 million to
total $53.3 million for the quarter ended September 30, 2000 as compared to
$48.0 million earned for the quarter ended September 30, 1999. The growth in
noninterest income was driven by an increase of $10.3 million in mortgage
income, reflecting a $13.1 million net gain on the sale of Centura's mortgage
servicing portfolio. During the third quarter of 2000, Centura sold
approximately $2.1 billion or 85 percent of its mortgage servicing portfolio.
Excluding the gain on sale of servicing in 2000 and the 1999 $3.4 million gain
on sale of Ginnie Mae mortgage servicing rights, mortgage income between
quarters was up approximately $600,000. Leasing income was down $1.3 million
between quarters, largely due to the sale of CLG in the third quarter of 1999.
Other noninterest income, also impacted by the CLG sale, declined $2.6 million
between quarters as 1999 reflected the $4.9 million gain on sale of CLG. Other
noninterest income in the current period also reflects an increase of $2.1
million in income recorded for the increase in the cash surrender value of life
insurance policies.
Losses on sales of securities for third quarter 2000 were up $11.4
million over third quarter 1999 to total $13.1 million. During the third quarter
of 2000, Centura restructured portions of its investment portfolio, taking
advantage of the current interest rate environment to replace lower yielding
securities.
Noninterest expenses totaled $85.4 million and $88.5 million for the
quarters ended September 30, 2000 and 1999, respectively. The decline between
comparable periods was generally experienced across all categories with the
greatest savings in equipment, marketing and office supplies expenses, declining
$765,000, $866,000, and $681,000, respectively. Personnel expenses were up $1.4
million quarter to quarter, reflecting incremental costs related to the addition
of the newly acquired NCS employees, the filling of previously vacant positions,
an increase in 401(k) expense as a result of management's decision to increase
the employer matching contribution and an increase in incentive compensation
accruals. Favorably impacting third quarter 2000 personnel expenses were the
sale of CLG in 1999 and efficiencies realized from the merger with Triangle.
OUTLOOK FOR FUTURE PERIODS
The primary drivers for the 2001 financial results are: 1) loan growth
in the range of 5% to 7%, 2) deposit growth in the range of 2% to 3%, 3) a net
interest margin that is fairly stable and comparable to current levels, 4)
noninterest income and expense growth in the range of 4% to 6%, and 5) net
charge-offs as a percentage of average loans ranging between 30 bps and 35 bps.
Strong asset quality, revenue growth and an improved efficiency ratio will
remain a management focus. As a follower of EVA, Centura will continue to
aggressively manage its capital levels as evidenced by the share repurchase
program announced September 26, 2000 and, accordingly, such capital management
programs may result in slight downward pressure on the net interest margin. In
light of current market conditions, Centura may consider additional
repositioning of its investment portfolio during the fourth quarter.
CURRENT ACCOUNTING ISSUES
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended by SFAS 137 and SFAS 138
(collectively, "SFAS 133"). SFAS 133 is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000, and accordingly, Centura is required
to adopt SFAS 133 on January 1, 2001.
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SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, depending on the type of hedge transaction. For fair value hedge
transactions hedging changes in the fair value of an asset, liability, or firm
commitment, changes in the fair value of the derivative instrument will
generally be offset in the income statement by changes in the hedged item's fair
value. For cash flow hedge transactions hedging the variability of cash flows
related to a variable-rate asset, liability, or a forecasted transaction,
changes in the fair value of the derivative instrument will be reported in other
comprehensive income. The gains and losses on the derivative instrument that are
reported in other comprehensive income will be reclassified to earnings in the
periods in which earnings are impacted by the variability of the cash flows of
the hedged item. For hedge transactions of net investments in foreign
operations, changes in fair value of the derivative instrument will be recorded
in the cumulative translation adjustment account within equity. The ineffective
portion of all hedges will be recognized in current period earnings. For
derivatives that do not meet the hedge accounting criteria and, therefore, do
not qualify for hedge accounting, they will be accounted for at fair value with
changes in fair value recorded in the income statement.
Had Centura adopted SFAS 133 on October 1, 2000, Centura estimates
that the net of tax, cumulative effect transition adjustment would be
immaterial. Any transition adjustment recorded would result from recognizing
upon adoption of SFAS 133 the fair values of hedged items and the related
hedges. Also impacting the transition adjustment are other risk management
instruments that Centura does not plan to designate as hedges under SFAS 133 or
which do not meet the SFAS 133 hedge criteria. These instruments will be
recorded on the balance sheet at fair value with changes in fair value recorded
as part of the transition adjustment. Centura also has foreign exchange
contracts in which each customer contract is covered exactly with a contract to
a dealer. These contracts will be recorded on the balance sheet at fair value.
The transition adjustment estimate is based on amounts, positions, and market
conditions that existed at September 30, 2000. The actual impact of adopting
SFAS 133 on January 1, 2001 and the resulting transition adjustment could be
materially different due to changes in market conditions as well as various
other discretionary factors.
In September of 2000, the FASB issued SFAS No. 140 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
a replacement of FASB Statement No. 125" ("SFAS 140"). This statement replaces
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." It revises the standard for accounting for
securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but it carries over most of SFAS's No. 125's
provisions without reconsideration. Centura does not expect the adoption of SFAS
140 to have a material impact on the financial statements. Centura will adopt
this statement on January 1, 2001.
20
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TABLE 1
-----------------------------------------------------------------------------------------------------------------------------------
LOAN PORTFOLIO
September 30, 2000 September 30, 1999 December 31, 1999
--------------------------------------------------------------------------------------------
(Dollars in thousands) Balance % of Total Balance % of Total Balance % of Total
-----------------------------------------------------------------------------------------------------------------------------------
Commercial, financial and agricultural $2,050,025 26.7% $1,400,184 19.1% $1,759,546 23.6%
Commercial mortgage 1,417,598 18.4 1,782,935 24.3 1,554,234 20.9
Real estate construction 1,002,997 13.0 978,413 13.4 942,719 12.7
-------------------------------------------------------------------------------------------
Commercial loan portfolio 4,470,620 58.1 4,161,532 56.8 4,256,499 57.2
Consumer 569,565 7.4 569,799 7.8 587,590 7.9
Residential mortgage 2,314,164 30.1 2,175,866 29.7 2,214,522 29.8
Leases 230,884 3.0 317,632 4.3 292,672 3.9
Other 103,479 1.4 97,675 1.4 90,955 1.2
----------------------------------------------------------------------------------------------------------------------------------
Total loans $7,688,712 100.0% $7,322,504 100.0% $7,442,238 100.0%
==================================================================================================================================
Residential mortgage servicing-
Centura Portfolio $727,855 $3,560,056 $2,968,999
Residential mortgage servicing
portfolio for others - subservicing* 2,417,255 520,639 184,001
==================================================================================================================================
* For the mortgage servicing rights sold in the third quarter of 2000, Centura will subservice those loans through approximately
April of 2001.
TABLE 2
-----------------------------------------------------------------------------------------------------------------------------------
AVERAGE DEPOSIT MIX FOR THE NINE MONTHS ENDED
September 30, 2000 September 30, 1999
----------------------------------------------------------------
(Dollars in thousands) Balance % of Total Balance % of Total
---------------------------------------------------------------------------------------------------------------
Demand, noninterest bearing $ 1,118,159 14.6% $ 1,141,089 14.8%
Interest checking 895,430 11.7 955,575 12.4
Money market 1,700,007 22.2 1,582,638 20.5
Savings 259,810 3.4 351,443 4.6
---------------------------------------------------------------------------------------------------------------
Time deposits:
Certificates of deposit < $100,000 2,470,294 32.2 2,404,383 31.2
Certificates of deposit > $100,000 790,021 10.3 817,906 10.6
IRA 427,905 5.6 455,263 5.9
---------------------------------------------------------------------------------------------------------------
Total time deposits 3,688,220 48.1 3,677,552 47.7
---------------------------------------------------------------------------------------------------------------
Total average deposits $ 7,661,626 100.0% $ 7,708,297 100.0%
===============================================================================================================
</TABLE>
21
<PAGE>
TABLE 3
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME ANALYSIS - TAXABLE EQUIVALENT BASIS
Three months ended Three months ended
September 30, 2000 September 30, 1999
------------------------------------------------------------------------------------
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Loans $ 7,631,191 $ 181,933 9.39% $ 7,305,302 $ 160,977 8.68%
Taxable securities 2,606,201 45,037 6.91 2,656,452 42,437 6.39
Tax-exempt securities 36,465 855 9.38 112,616 2,187 7.77
Short-term investments 35,661 665 7.30 52,020 738 5.55
Mortgage loans held for sale 57,411 1,463 10.19 84,870 1,667 7.86
---------------- --------- ------------- ----------
Interest-earning assets, gross 10,366,929 229,953 8.76 10,211,260 208,006 8.05
Net unrealized losses on
available for sale securities (43,282) (46,608)
Other assets, net 938,054 901,042
---------------- -------------
Total assets $ 11,261,701 $ 11,065,694
================ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest checking $ 871,998 $ 3,290 1.50% $ 941,605 $ 2,929 1.23%
Money market 1,710,295 20,391 4.74 1,642,877 16,097 3.89
Savings 238,925 745 1.24 325,644 1,213 1.48
Time 3,644,744 55,706 6.08 3,707,423 47,197 5.05
---------------- --------- ------------- ----------
Total interest-bearing deposits 6,465,962 80,132 4.93 6,617,549 67,436 4.04
Borrowed funds 1,628,297 25,784 6.20 1,379,660 17,019 4.83
Long-term debt 1,020,305 17,393 6.67 900,124 13,685 5.95
---------------- --------- ------------- ----------
Interest-bearing liabilities 9,114,564 123,309 5.35 8,897,333 98,140 4.36
Demand, noninterest-bearing 1,118,636 1,153,228
Other liabilities 126,305 145,571
Shareholders' equity 902,196 869,562
---------------- -------------
Total liabilities and
shareholder's equity $ 11,261,701 $ 11,065,694
================ =============
Interest rate spread 3.41% 3.69%
Net yield on interest-
earning assets $ 10,366,929 $ 106,644 4.06% $ 10,211,260 $ 109,866 4.25%
================ ========= ============= ==========
Taxable equivalent adjustment $ 2,409 $ 3,259
========= ==========
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TABLE 3, Continued
-----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME ANALYSIS - TAXABLE EQUIVALENT BASIS
Nine months ended Nine months ended
September 30, 2000 September 30, 1999
----------------------------------------------------------------------------------------
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Loans $ 7,570,230 $ 525,611 9.17% $ 7,220,563 $ 469,895 8.62%
Taxable securities 2,612,650 132,293 6.75 2,584,340 122,141 6.30
Tax-exempt securities 58,790 3,671 8.33 114,098 6,735 7.87
Short-term investments 61,292 2,584 5.54 45,021 1,702 4.99
Mortgage loans held for sale 56,389 4,044 9.56 108,453 6,404 7.87
---------------- ------------ ------------ --------
Interest-earning assets, gross 10,359,351 668,203 8.54 10,072,475 606,877 8.00
Net unrealized losses on
available for sale securities (61,388) (13,340)
Other assets, net 929,731 910,406
---------------- ------------
Total assets $ 11,227,694 $ 10,969,541
================ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest checking $ 895,430 $ 9,353 1.40% $ 955,575 $ 8,537 1.19%
Money market 1,700,007 57,946 4.55 1,582,638 45,386 3.83
Savings 259,810 2,653 1.36 351,443 4,125 1.57
Time 3,688,220 158,379 5.74 3,677,552 140,110 5.09
---------------- ------------ ------------ --------
Total interest-bearing deposits 6,543,467 228,331 4.66 6,567,208 198,158 4.03
Borrowed funds 1,571,390 71,474 5.98 1,391,374 50,231 4.76
Long-term debt 1,000,389 48,330 6.35 851,970 37,722 5.84
---------------- ------------ ------------ --------
Interest-bearing liabilities 9,115,246 348,135 5.07 8,810,552 286,111 4.32
Demand, noninterest-bearing 1,118,159 1,141,089
Other liabilities 116,995 153,141
Shareholders' equity 877,294 864,759
---------------- ------------
Total liabilities and
shareholder's equity $ 11,227,694 $ 10,969,541
================ ============
Interest rate spread 3.47% 3.68%
Net yield on interest-
earning assets $ 10,359,351 $ 320,068 4.08% $ 10,072,475 $ 320,766 4.22%
================ ============ ============ ========
Taxable equivalent adjustment $ 7,509 $ 9,083
============ =========
</TABLE>
23
<PAGE>
Table 4
<TABLE>
<CAPTION>
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------------
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
At and for the nine months At and for the year ended
ended September 30, ended December 31,
--------------------------------------------------------------------------
(Dollars in thousands) 2000 1999 1999
-----------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses at beginning of period $ 95,500 $ 91,894 $ 91,894
Allowance related to loans sold and subsidiary sale - (556) (556)
Allowance for acquired loans - 605 605
Provision for loan losses 24,855 31,934 40,828
Loans charged off (20,982) (32,742) (41,044)
Recoveries on loans previously charged off 4,663 2,566 3,773
-----------------------------------------------------------------------------------------------------------------------------------
Net charge-offs (16,319) (30,176) (37,271)
-----------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses at end of period $ 104,036 $ 93,701 $ 95,500
===================================================================================================================================
Loans at period-end $ 7,688,712 $ 7,322,504 $7,442,238
Average loans 7,570,230 7,220,563 7,258,979
Nonperforming loans 48,631 41,577 29,415
Allowance for loan losses to total loans 1.35% 1.28% 1.28%
Net charge-offs to average loans 0.29 0.56 0.52
Allowance for loan losses to nonperforming loans 2.14x 2.25x 3.25x
===================================================================================================================================
TABLE 5
-----------------------------------------------------------------------------------------------------------------------------------
NONPERFORMING ASSETS AND PAST DUE LOANS
September 30, December 31,
--------------------------------------------------------------------------
(Dollars in thousands) 2000 1999 1999
-----------------------------------------------------------------------------------------------------------------------------------
Nonperforming loans $ 48,631 $ 41,577 $ 29,415
Foreclosed property 6,000 5,294 6,421
-----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 54,631 $ 46,871 $ 35,836
===================================================================================================================================
Nonperforming assets to:
Loans and foreclosed property 0.71% 0.64% 0.48%
Total assets 0.48 0.42 0.31
===================================================================================================================================
Accruing loans past due ninety days or greater $ 9,902 $ 13,407 $ 14,366
===================================================================================================================================
</TABLE>
24
<PAGE>
TABLE 6
<TABLE>
<CAPTION>
<S> <C> <C> <C>
----------------------------------------------------------------------------------------
CAPITAL RATIOS
Tier I Capital Total Capital Tier I Leverage
September 30, 2000 10.2% 12.5% 8.2%
December 31, 1999 10.3 12.8 7.9
September 30, 1999 10.4 12.9 8.1
Minimum requirement 4.0 8.0 3.0-5.0
</TABLE>
TABLE 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------
OFF-BALANCE SHEET DERIVATIVE FINANCIAL INSTRUMENTS
(dollars in thousands)
Interest rate swap agreements at September 30, 2000 are summarized below:
Weighted Average Rate Weighted Avg.
During the Quarter Remaining Estimated
Notional ----------------------- Contractual Fair Value
(Dollars in thousands) Amount Received Paid Term (Years) Gain (Loss)
-------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
Corporation pays fixed/receives floating $ 430,700 6.73% 5.86% 2.1 $ 6,693
Corporation pays variable/receives fixed 840,240 7.44 7.54 3.8 (4,771)
------------------------------------------------------------------------
Total interest rate swaps $ 1,270,940 $ 1,922
========================================================================
Interest rate SWAP indexes are generally tied to LIBOR and Prime.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Interest rate cap and floor agreements at September 30, 2000 are summarized below:
Weighted Average
Remaining Estimated
Notional Average Current Index Contractual Carrying Fair Value
(Dollars in thousands) Amount Rate * Rate Term (Years) Value Gain (Loss)
-----------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE FLOORS
LIBOR - 3 Month $ 80,000 5.69% 6.81 1.3 $ 226 $ 30
Prime 50,000 7.75 9.50 0.6 49 3
Constant Maturity Treasury 50,000 5.10 5.80 0.6 68 3
--------------------------------------------------------------------------------------
$ 180,000 $ 343 $ 36
======================================================================================
INTEREST RATE CAPS
LIBOR - 1 month $ 10,868 7.76% 6.62% 0.7 $ 2 $ -
LIBOR - 3 month 22,000 7.00 6.81 3.0 300 165
--------------------------------------------------------------------------------------
$ 32,868 $ 302 $ 165
======================================================================================
* Average rate represents the average of the strike rates above or below which Centura will receive payments on the
outstanding cap or floor agreements.
</TABLE>
25
<PAGE>
TABLE 8
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AND VOLUME/RATE ANALYSIS
TAXABLE EQUIVALENT BASIS
Nine months ended Three months ended
September 30, 2000 and 1999 September 30, 2000 and 1999
------------------------------------------- ---------------------------------------------
Income/ Variance Income/ Variance
Expense Attributable to Expense ttributable to
(Dollars in thousands) Variance Volume Rate Variance Volume Rate
------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Loans $ 55,716 $ 21,881 $ 33,835 $ 20,956 $ 6,438 $ 14,518
Taxable securities 10,152 1,351 8,801 2,600 (815) 3,415
Tax-exempt securities (3,064) (3,433) 369 (1,332) (1,714) 382
Short-term investments 882 669 213 (73) (269) 196
Mortgage loans held for sale (2,360) (3,530) 1,170 (204) (623) 419
------------------------------------------------------------------------------------------------------------------------------
Total interest income 61,326 16,938 44,388 21,947 3,017 18,930
INTEREST EXPENSE
Interest-bearing deposits:
Interest checking 816 (562) 1,378 361 (228) 589
Money market 12,560 3,545 9,015 4,294 683 3,611
Savings (1,472) (982) (490) (468) (290) (178)
Time 18,269 408 17,861 8,509 (810) 9,319
------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 30,173 2,409 27,764 12,696 (645) 13,341
Borrowed funds 21,243 7,060 14,183 8,765 3,405 5,360
Long-term debt 10,608 6,965 3,643 3,708 1,943 1,765
------------------------------------------------------------------------------------------------------------------------------
Total interest expense 62,024 16,434 45,590 25,169 4,703 20,466
------------------------------------------------------------------------------------------------------------------------------
Net interest income, TE $ (698) $ 504 $ (1,202) $ (3,222) $ (1,686) $ (1,536)
==============================================================================================================================
The change in interest due to both rate and volume has been allocated proportionately to volume variance and rate
variance based on the relationship of the absolute dollar change in each.
</TABLE>
26
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There has been no material change in Centura's exposure to market risk
since December 31, 1999 as described in Item 7A of Centura's Annual Report on
Form 10-K for the year ended December 31, 1999. Mergers accounted for as
pooling-of-interests did not materially impact Centura's market risk.
27
<PAGE>
CENTURA BANKS, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
<S> <C>
Exhibit
Number Description of Exhibit
------------- -----------------------------------------------------------------------------------
27.1 Financial Data Schedule
27.2 Financial Data Schedule- (Restated for pooling-of-interests with Triangle Bancorp,
Inc.)
------------- -----------------------------------------------------------------------------------
</TABLE>
(b) Reports on Form 8-K:
(1) A report on Form 8-K dated July 5, 2000 was filed under Item 5, Other
Events, indicating Centura's announcement on July 5, 2000 of its
preliminary estimate of earnings for the quarter ended June 30, 2000.
(2) A report on Form 8-K dated July 13, 2000 was filed under Item 5, Other
Events, indicating Centura's announcement on July 13, 2000 of earnings
for the quarter ended June 30, 2000.
(3) A report on Form 8-K dated September 26, 2000 was filed under Item 5,
Other Events, indicating Centura's announcement on September 26, 2000
that its Board of Directors has authorized a share repurchase program of
up to 1,500,000 shares of Centura common stock.
28
<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: November 14, 2000 By: /s/ Steven J. Goldstein
-----------------------
Steven J. Goldstein
Chief Financial Officer
29
