ITEM 5. OTHER EVENTS
The purpose of this Current Report on Form 8-K is to file Southern
National Corporation's Quarterly Performance Summary for the first quarter
of 1996, including sections distributed to the media and a supplement
distributed to analysts.
EXHIBIT INDEX
Exhibit 99.1 Quarterly Performance Summary issued April 12, 1996.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
Southern National Corporation
Date: April 15, 1996 /s/ Sherry A. Kellett
Sherry A. Kellett
Executive Vice President and Controller
(Principal Accounting Officer)
<PAGE>
For Further Information:
ANALYSTS MEDIA
B. Gloyden Stewart, Jr. Scott E. Reed Bob Denham
Senior Vice President Senior Executive Vice President Vice President
Investor Relations Chief Financial Officer Public Relations
(919) 246-4219 (910) 733-3088 (910) 733-2202
April 12, 1996
FOR IMMEDIATE RELEASE
SOUTHERN NATIONAL REPORTS FIRST QUARTER EARNINGS
WINSTON-SALEM, N.C. -- Southern National Corporation reported net
income of $69.6 million for the first quarter ended March 31, 1996, reflecting
significant growth in recurring earnings of 19.6% compared to the first quarter
of 1995. On a per share basis, fully diluted net income was $.65, an increase
of 20.4% over recurring first quarter 1995 earnings per share of $.54. Returns
on average assets and average common equity were 1.40% and 17.86%, respectively.
Net income increased $82.0 million over the net loss of $12.3 million
recorded in the first quarter of 1995. This loss included $70.5 million in
nonrecurring charges on an after-tax basis resulting from the merger between
Southern National and BB&T.
In releasing earnings, John A. Allison, chairman and chief executive
officer of Southern National, said, "We are extremely pleased with the first
quarter results. Compared to the first quarter of 1995, noninterest income
increased 19.2% on a recurring basis, our net interest margin improved to 4.28%
from 4.14%, and our efficiency ratio was excellent at 54.3% compared to 58.8%
last year. While charge-offs were higher than last year, our asset quality
remained very good with net loan losses of .22% and nonperforming assets
of .36%.
MORE
<PAGE>
"The growth in noninterest income and a significant increase in
services owned per customer clearly indicate that BB&T's sales system is
being successfully executed throughout our branching network. By year end,
we expect to add customer representatives to our voice response network
creating a "call center." Our PC-based home banking product will be available
by the third quarter. BB&T's "loan by phone" system is being tested in several
of our regions and will soon be offered systemwide. In addition, we are in
negotiations to expand our ATM network to off-site locations, such as
convenience stores, fast food restaurants and grocery stores."
On March 29, 1996, Southern National announced plans to acquire
Regional Acceptance Corporation of Greenville, North Carolina in a transaction
valued at $167 million. This transaction will be accounted for as a pooling-of-
interests. Regional Acceptance specializes in indirect financing for consumer
purchases of mid-model and late-model used automobiles through 27 branch
offices in the Carolinas, Tennessee and Virginia. The acquisition provides
Southern National with an opportunity to expand its customer base while
receiving a premium for higher risk loans.
Southern National had consolidated assets of $20.2 billion,
consolidated loans of $14.1 billion and consolidated deposits of $15.2
billion at March 31, 1996. Through its subsidiaries in North Carolina,
South Carolina and Virginia, Southern National currently operates 437
banking offices in 220 cities and towns.
The common stock of Southern National Corporation is traded on the
New York Stock Exchange under the symbol SNB. The stock closed at $26.38 on
April 10.
#
Southern National's news releases are available at no charge through
PR Newswire's Company News On-Call facsimile service. For a menu of Southern
National's news releases or to retrieve a specific release call 800-758-5804,
extension 809325.
<PAGE>
<TABLE>
QUARTERLY PERFORMANCE SUMMARY B. Gloyden Stewart, Jr.
Southern National Corporation (NYSE:SNB) Senior Vice President (919) 246-4219
Page 3 Investor Relations (919) 246-4871
<CAPTION>
For the Three Months Ended Increase / (Decrease)
3/31/96 3/31/95 $ %
<S> <C> <C> <C> <C>
Interest income - taxable equivalent $ 391,850 $ 376,089 $ 15,761 4.2 %
Interest expense 190,139 185,816 4,323 2.3
Net interest income - taxable equivalent 201,711 190,273 11,438 6.0
Less: Taxable equivalent adjustment 8,068 7,452 616 8.3
Net interest income 193,643 182,821 10,822 5.9
Provision for loan & lease losses 10,500 7,000 3,500 50.0
Net interest income after provision for loan
& lease losses 183,143 175,821 7,322 4.2
Noninterest income 67,667 36,977 30,690 83.0
Noninterest expense 146,946 229,351 (82,405) (35.9)
Income (loss) before income taxes 103,864 (16,553) 120,417 NM
Provision for income taxes 34,254 (4,208) 38,462 NM
Net income (loss) $ 69,610 $ (12,345) 81,955 NM %
Primary earnings (loss) $ .67 $ (.13) $ 0.80 NM %
Fully diluted earnings (loss) .65 (.13) 0.78 NM
Weighted average shares - Primary 102,540,444 103,380,544
Fully diluted 106,315,683 108,424,625
Dividends paid on common shares $ .23 $ .20 $ .03 15.0 %
Return on average assets 1.40 % (.25) %
Return on average common equity 17.86 (3.87)
Return on average total equity 17.33 (3.33)
Net yield on earning assets (taxable equivalent) 4.28 4.14
Efficiency (taxable equivalent) * 54.3 58.8
For the Three Months Ended Increase / (Decrease)
3/31/96 3/31/95 $ %
Interest income - taxable equivalent $ 391,850 $ 376,089 $ 15,761 4.2 %
Interest expense 190,139 185,816 4,323 2.3
Net interest income - taxable equivalent 201,711 190,273 11,438 6.0
Less: Taxable equivalent adjustment 8,068 7,452 616 8.3
Net interest income 193,643 182,821 10,822 5.9
Provision for loan & lease losses 10,500 7,000 3,500 50.0
Net interest income after provision for
loan & lease losses 183,143 175,821 7,322 4.2
Noninterest income 67,667 56,764 10,903 19.2
Noninterest expense 146,946 145,958 988 .7
Income before income taxes 103,864 86,627 17,237 19.9
Provision for income taxes 34,254 28,440 5,814 20.4
Net income before nonrecurring items 69,610 58,187 11,423 19.6
Nonrecurring items -- 70,532 (70,532) (100.0)
Net income (loss) $ 69,610 $ (12,345) $ 81,955 NM %
Primary earnings $ .67 $ .55 $ 0.12 21.8 %
Fully diluted earnings .65 .54 0.11 20.4
Return on average assets 1.40 % 1.19 %
Return on average common equity 17.86 16.14
Return on average total equity 17.33 15.69
NOTES: * Excludes securities gains (losses) & foreclosed property expense for all periods and nonrecurring items for 1995.
NM - not meaningful.
</TABLE>
<PAGE>
<TABLE>
QUARTERLY PERFORMANCE SUMMARY B. Gloyden Stewart, Jr.
Southern National Corporation (NYSE:SNB) Senior Vice President (919) 246-4219
Page 4 Investor Relations (919) 246-4871
<CAPTION>
As of / For the Three Months Ended Increase / (Decrease)
3/31/96 3/31/95 $ %
End of period balances
<S> <C> <C> <C> <C>
Securities, at carrying value* $ 4,835,082 $ 5,228,225 $ (393,143) (7.5) %
Loans & leases* 14,059,126 13,373,094 686,032 5.1
Allowance for loan & lease losses 175,104 174,189 915 .5
Other earning assets 12,608 29,727 (17,119) (57.6)
Total earning assets 18,908,400 18,675,745 232,655 1.2
Total assets 20,174,126 19,892,682 281,444 1.4
Noninterest-bearing deposits 1,995,143 1,786,550 208,593 11.7
Interest-bearing deposits 13,168,170 12,744,120 424,050 3.3
Total deposits 15,163,313 14,530,670 632,643 4.4
Short-term borrowed funds 1,565,525 2,690,366 (1,124,841) (41.8)
Long-term debt 1,603,346 902,047 701,299 77.7
Total interest-bearing liabilities 16,337,041 16,336,533 508 --
Common equity 1,563,081 1,420,573 142,508 10.0
Preferred equity -- 74,143 (74,143) (100.0)
Total shareholders' equity $ 1,563,081 $ 1,494,716 $ 68,365 4.6 %
Average balances
Securities, at amortized cost* $ 4,957,943 $ 5,382,220 $ (424,277) (7.9) %
Loans & leases* 13,878,078 13,203,804 674,274 5.1
Other earning assets 17,560 46,815 (29,255) (62.5)
Total earning assets 18,853,581 18,632,839 220,742 1.2
Total assets 20,006,097 19,782,219 223,878 1.1
Noninterest-bearing deposits 1,798,323 1,686,262 112,061 6.6
Interest-bearing deposits 12,706,314 12,580,613 125,701 1.0
Total deposits 14,504,637 14,266,875 237,762 1.7
Short-term borrowed funds 2,108,860 2,866,363 (757,503) (26.4)
Long-term debt 1,511,577 905,484 606,093 66.9
Total interest-bearing liabilities 16,326,751 16,352,460 (25,709) (.2)
Common equity 1,554,144 1,429,493 124,651 8.7
Preferred equity 60,967 74,143 (13,176) (17.8)
Total shareholders' equity $ 1,615,111 $ 1,503,636 $ 111,475 7.4 %
NOTES: All items referring to loans & leases include loans held for sale & are net of unearned income.
Applicable ratios are annualized.
* Balances include the securitization of $354.9 million of loans during 1995. The first quarter 1995 average of
securitized loans was $35.7 million.
</TABLE>
<PAGE>
<TABLE>
QUARTERLY PERFORMANCE SUMMARY B. Gloyden Stewart, Jr.
Southern National Corporation (NYSE:SNB) Senior Vice President (919) 246-4219
Page 5 Investor Relations (919) 246-4871
<CAPTION>
As of / For the Quarter Ended
3/31/96 12/31/95 9/30/95 6/30/95 3/31/95
Interest income - taxable equivalent
<S> <C> <C> <C> <C> <C>
Interest & fees on loans & leases $ 311,016 $ 318,325 $ 316,711 $ 311,721 $ 295,197
Interest & dividends on securities 80,590 84,711 85,657 85,601 80,236
Interest on short-term investments 244 762 401 733 656
Total interest income - taxable
equivalent 391,850 403,798 402,769 398,055 376,089
Interest expense
Interest on deposits 140,488 142,056 142,779 142,180 130,134
Interest on short-term borrowed
funds 27,577 42,805 46,821 48,194 41,059
Interest on long-term debt 22,074 20,831 20,384 14,761 14,623
Total interest expense 190,139 205,692 209,984 205,135 185,816
Net interest income - taxable
equivalent 201,711 198,106 192,785 192,920 190,273
Less: Taxable equivalent adjustment 8,068 8,611 8,514 7,958 7,452
Net interest income 193,643 189,495 184,271 184,962 182,821
Provision for loan & lease losses 10,500 10,400 7,000 7,000 7,000
Net interest income after
provision for loan & lease losses 183,143 179,095 177,271 177,962 175,821
Noninterest income
Service charges on deposits 25,214 23,459 22,381 22,511 21,270
Mortgage banking activities 9,300 7,827 9,019 4,367 5,590
Trust revenue 4,674 5,151 4,483 4,715 4,280
General insurance commissions 6,189 3,815 3,479 4,163 4,115
Other nondeposit fees & commissions 16,910 15,179 15,271 14,632 15,787
Securities (losses) gains, net (8) 131 1,114 -- (19,845)
Other income 5,388 5,264 5,818 16,989 5,780
Total noninterest income 67,667 60,826 61,565 67,377 36,977
Noninterest expense
Personnel expense 73,666 69,453 73,171 75,343 124,233
Occupancy & equipment expense 24,963 24,436 25,438 27,729 29,555
Federal deposit insurance expense 3,355 4,114 2,901 7,975 8,005
Foreclosed property expense 744 910 524 1,034 700
Amortization of intangibles &
servicing rights 3,230 2,817 2,982 2,522 2,674
Other noninterest expense 40,988 36,971 39,727 45,300 64,184
Total noninterest expense 146,946 138,701 144,743 159,903 229,351
Income (loss) before income taxes 103,864 101,220 94,093 85,436 (16,553)
Provision for income taxes 34,254 31,130 31,613 27,528 (4,208)
Net income (loss) $ 69,610 $ 70,090 $ 62,480 $ 57,908 $ (12,345)
Primary earnings (loss) $ .67 $ .66 $ .59 $ .55 $ (.13)
Fully diluted earnings (loss) .65 .64 .57 .53 (.13)
Dividends paid on common shares .23 .23 .23 .20 .20
Book value per common share 15.13 15.52 14.87 14.60 13.90
NOTES: Fully diluted earnings per share, excluding nonrecurring items, were $.54 in first quarter 1995, $.55 in second quarter
1995, $.61 in third quarter 1995 & $.64 in fourth quarter 1995.
Certain prior quarter balances have been adjusted to reflect the adoption of SFAS No. 122, "Accounting for Mortgage
Servicing Rights."
</TABLE>
<PAGE>
<TABLE>
QUARTERLY PERFORMANCE SUMMARY B. Gloyden Stewart, Jr.
Southern National Corporation (NYSE:SNB) Senior Vice President (919) 246-4219
Page 6 Investor Relations (919) 246-4871
<CAPTION>
As of / For the Quarter Ended
3/31/96 12/31/95 9/30/95 6/30/95 3/31/95
End of period balances
<S> <C> <C> <C> <C> <C>
Securities, at carrying value* $ 4,835,082 $ 5,355,313 $ 5,379,645 $ 5,554,214 $ 5,228,225
Loans & leases* 14,059,126 13,812,485 14,045,637 13,767,610 13,373,094
Allowance for loan & lease losses 175,104 172,158 174,069 176,175 174,189
Other earning assets 12,608 120,149 9,310 42,923 29,727
Total earning assets 18,908,400 19,236,767 19,420,965 19,350,181 18,675,745
Total assets 20,174,126 20,492,929 20,676,073 20,663,614 19,892,682
Noninterest-bearing deposits 1,995,143 1,885,725 1,845,262 1,799,574 1,786,550
Interest-bearing deposits 13,168,170 12,798,331 12,589,778 12,536,982 12,744,120
Total deposits 15,163,313 14,684,056 14,435,040 14,336,556 14,530,670
Short-term borrowed funds 1,565,525 2,491,285 3,012,707 3,147,213 2,690,366
Long-term debt 1,603,346 1,383,935 1,305,282 1,312,464 902,047
Total interest-bearing
liabilities 16,337,041 16,673,551 16,907,767 16,996,659 16,336,533
Common equity 1,563,081 1,604,000 1,536,458 1,499,184 1,420,573
Preferred equity -- 70,063 70,689 71,785 74,143
Total shareholders' equity 1,563,081 1,674,063 1,607,147 1,570,969 1,494,716
Goodwill 39,948 41,252 42,574 43,989 44,892
Core deposit & other intangibles 7,809 8,278 8,750 9,258 11,351
Total intangibles 47,757 49,530 51,324 53,247 56,243
Mortgage servicing rights 21,786 18,265 14,245 7,850 5,249
Negative goodwill 43,851 45,410 46,969 48,529 50,088
Average balances
Securities, at amortized cost* $ 4,957,943 $ 5,321,514 $ 5,452,924 $ 5,466,584 $ 5,382,220
Loans & leases* 13,878,078 13,915,553 13,889,121 13,543,229 13,203,804
Other earning assets 17,560 52,218 31,033 47,557 46,815
Total earning assets 18,853,581 19,289,285 19,373,078 19,057,370 18,632,839
Total assets 20,006,097 20,439,534 20,609,158 20,250,286 19,782,219
Noninterest-bearing deposits 1,798,323 1,889,603 1,705,197 1,700,458 1,686,262
Interest-bearing deposits 12,706,314 12,332,095 12,506,069 12,605,342 12,580,613
Total deposits 14,504,637 14,221,698 14,211,266 14,305,800 14,266,875
Short-term borrowed funds 2,108,860 2,930,923 3,201,200 3,219,920 2,866,363
Long-term debt 1,511,577 1,376,756 1,309,932 910,946 905,484
Total interest-bearing liabilities 16,326,751 16,639,774 17,017,201 16,736,208 16,352,460
Common equity 1,554,144 1,574,242 1,518,167 1,466,777 1,429,493
Preferred equity 60,967 70,176 71,463 73,652 74,143
Total shareholders' equity 1,615,111 1,644,418 1,589,630 1,540,429 1,503,636
Risk-based capital:
Tier 1 $ 1,516,412 $ 1,593,366 $ 1,549,420 $ 1,495,054 $ 1,432,677
Total 1,673,170 1,746,645 1,715,171 1,664,728 1,588,705
Risk-based capital ratios:
Tier 1 12.1 % 13.0 % 12.0 % 11.3 % 11.5 %
Total 13.4 14.3 13.3 12.6 12.7
Leverage capital ratio 7.6 7.8 7.5 7.4 7.3
Return on average assets 1.40 % 1.36 % 1.20 % 1.15 % (.25) %
Return on average common equity 17.86 17.35 16.00 15.48 (3.87)
Return on average total equity 17.33 16.91 15.59 15.08 (3.33)
Net yield on earning assets
(taxable equivalent) 4.28 4.07 3.95 4.06 4.14
Efficiency (taxable equivalent) ** 54.3 53.2 54.5 57.9 58.8
Equity as a percentage of total
assets end of period 7.7 8.2 7.8 7.6 7.5
Average earning assets as a
percentage of average total assets 94.2 94.4 94.0 94.1 94.2
Average loans & leases as a percentage
of average deposits 95.7 97.8 97.7 94.7 92.5
NOTES: All items referring to loans & leases include loans held for sale & are net of unearned income.
Applicable ratios are annualized.
* Balances include the securitization of $354.9 million of loans during 1995. The average of securitized loans for the
full year 1995 was $82.7 million.
** Excludes securities gains (losses) & foreclosed property expense for all periods & nonrecurring items for 1995.
Certain prior quarter balances have been adjusted to reflect the adoption of SFAS No. 122, "Accounting for Mortgage
Servicing Rights."
</TABLE>
<PAGE>
<TABLE>
QUARTERLY PERFORMANCE SUMMARY B. Gloyden Stewart, Jr.
Southern National Corporation (NYSE:SNB) Senior Vice President (919) 246-4219
Page 7 Investor Relations (919) 246-4871
<CAPTION>
As of / For the Quarter Ended
3/31/96 12/31/95 9/30/95 6/30/95 3/31/95
Allowance For Loan & Lease Losses
<S> <C> <C> <C> <C> <C>
Beginning balance $ 172,158 $ 174,069 $ 176,175 $ 174,189 $ 171,734
Provision for loan & lease losses 10,500 10,400 7,000 7,000 7,000
Charge-offs (10,599) (15,128) (11,875) (8,378) (7,094)
Recoveries 3,045 2,817 2,769 3,364 2,549
Ending balance $ 175,104 $ 172,158 $ 174,069 $ 176,175 $ 174,189
Nonperforming Assets
Nonaccrual loans & leases $ 64,796 $ 61,489 $ 62,763 $ 48,927 $ 48,451
Foreclosed real estate 4,938 6,868 6,981 8,759 11,239
Other foreclosed property 2,662 2,817 2,717 1,518 691
Nonperforming assets $ 72,396 $ 71,174 $ 72,461 $ 59,204 $ 60,381
Loans 90 days or more past due
& still accruing $ 28,249 $ 29,094 $ 26,909 $ 30,335 $ 21,653
Asset Quality Ratios
Nonaccrual loans & leases as a
percentage of total loans
& leases .46 % .45 % .45 % .36 % .36 %
Nonperforming assets as a
percentage of:
Total assets .36 .35 .35 .29 .30
Loans & leases plus
foreclosed property .51 .51 .52 .43 .45
Net charge-offs as a percentage of
average loans & leases .22 .35 .26 .15 .14
Allowance for loan & lease losses
as a percentage of loans & leases 1.25 1.25 1.24 1.28 1.30
Ratio of allowance for loan &
lease losses to:
Net charge-offs 5.76 x 3.52 x 4.82 x 8.76 x 9.45 x
Nonaccrual loans & leases 2.70 2.80 2.77 3.60 3.60
Unrealized (depreciation)
appreciation on securities
available for sale, net
of tax $ (1,088) $ 31,167 $ 8,321 $ 9,055 $ (26,956)
Common stock prices (daily
close) High 29.75 27.00 27.13 24.13 22.38
Low 25.88 25.63 23.63 19.88 18.88
End of Period 27.75 26.25 26.25 24.00 19.88
Weighted average shares -
Primary 102,540,444 104,756,961 104,367,957 103,523,801 103,380,544
Fully diluted 106,315,683 109,101,185 109,202,178 108,774,906 108,424,625
End of period shares outstanding 103,343,520 103,357,440 103,323,683 102,709,306 102,182,679
End of period offices 437 441 447 452 530
NOTES: All items referring to loans & leases include loans held for sale & are net of unearned income.
Applicable ratios are annualized.
Certain prior quarter balances have been adjusted to reflect the adoption of SFAS No. 122, "Accounting for Mortgage
Servicing Rights."
</TABLE>
<PAGE>
<TABLE>
QUARTERLY PERFORMANCE SUMMARY B. Gloyden Stewart, Jr.
Southern National Corporation (NYSE:SNB) Senior Vice President (919) 246-4219
Page 8 Investor Relations (919) 246-4871
<CAPTION>
For the Quarter Ended
3/31/96 12/31/95 9/30/95 6/30/95 3/31/95
<S> <C> <C> <C> <C> <C>
Interest income:
Securities* 6.50 % 6.32 % 6.23 % 6.28 % 6.05 %
Loans & leases 9.00 9.08 9.05 9.23 9.07
Other earning assets 5.59 5.79 5.13 6.18 5.68
Total earning assets* 8.34 8.31 8.25 8.38 8.19
Interest expense:
Interest-bearing deposits 4.45 4.57 4.53 4.52 4.20
Short-term borrowed funds 5.26 5.79 5.80 6.00 5.81
Long-term debt 5.87 6.00 6.17 6.50 6.55
Total interest-bearing liabilities 4.68 4.90 4.90 4.92 4.61
Net yield on earning assets 4.28 % 4.07 % 3.95 % 4.06 % 4.14 %
NOTES: *Yields calculated based on securities at amortized cost.
Certain prior quarter balances have been adjusted to reflect the adoption of SFAS No. 122, "Accounting for Mortgage
Servicing Rights."
</TABLE>
<TABLE>
As of
3/31/96
<CAPTION>
Notional Receive Pay Unrealized
Type Amount Rate Rate Gains (Losses)
<S> <C> <C> <C> <C>
Receive fixed swaps $ 75,000 7.43 % 5.82 % $ 574
Pay fixed swaps 326,009 5.49 5.54 (516)
Basis swaps 250,000 5.60 5.51 (3,020)
Total $ 651,009 5.76 % 5.56 % $ (2,962)
</TABLE>
<TABLE>
<CAPTION>
One Year One to After
Contractual Maturity Schedule Total or Less Five Years Five Years
<S> <C> <C> <C> <C>
Receive fixed swaps $ 75,000 $ 15,000 $ 60,000 $ --
Pay fixed swaps 326,009 20,012 301,422 4,575
Basis swaps 250,000 -- 250,000 --
Total $ 651,009 $ 35,012 $ 611,422 $ 4,575
</TABLE>
