MEMPHIS, Tenn., Jan. 17 /PRNewswire/ -- National Commerce Financial
Corporation (NYSE: NCF) today announced record fourth quarter and year end
earnings.
Fourth Quarter Financial Highlights
-- Operating cash EPS of $.42 up $.03 vs. third quarter
-- Operating cash return on tangible equity of 27.00 percent
-- Total revenue increased 8.5 percent vs. third quarter
-- Net-interest margin improved 8 basis points vs. third quarter
-- Annualized net loan charge-offs of .25 percent
-- Banking cash efficiency ratio of 42.55 percent
OPERATING CASH EARNINGS
For the quarter ended December 31, 2001, NCF's operating cash earnings,
defined as net income adjusted for goodwill amortization, core deposit
amortization and non-recurring expenses, net of tax, were $86.3 million
compared to $66.6 million in the fourth quarter of 2000, an increase of
29.6 percent. Operating cash earnings per diluted share were $.42 in fourth
quarter 2001, compared to $.32 per share in fourth quarter 2000, a
31.3 percent increase.
On an operating cash basis, the Company's annualized return on average
tangible assets and return on average tangible shareholders' equity were
1.97 percent and 27.00 percent, respectively, for the fourth quarter of 2001.
These compared with 2000 fourth quarter returns of 1.62 percent and
22.86 percent, respectively.
For the year ended December 31, 2001, NCF's operating cash earnings were
$316.7 million compared to $193.9 million for the year ended December 31,
2000, an increase of 63.3 percent. Operating cash earnings per diluted share
were $1.53 for the year ended December 31, 2001, compared to $1.22 per share
for the year ended December 31, 2000, a 25.4 percent increase.
On an operating cash basis, the Company's annualized return on average
tangible assets and return on average tangible shareholders' equity were
1.89 percent and 25.66 percent respectively, for the year 2001. These
compared with 2000 returns for the same period of 1.65 percent and
23.15 percent, respectively.
"I am delighted with our performance in the fourth quarter and for the
full year of 2001," noted Ernest C. Roessler, president and chief executive
officer of NCF. "The fourth quarter marked the end of the first full calendar
year of operations following a very successful merger of equals transaction.
Our 2001 cash earnings were in line with aggressive targets set at the
beginning of the year. We achieved these results with strong top-line revenue
growth, fueled by a combination of steady loan growth considering a weak
economy, a net interest margin which expanded each quarter during the year and
over 35% growth in revenues of our Financial Enterprises unit. We also
improved our cash efficiency compared to the prior year and maintained our
relative advantage to peers on credit quality metrics with net charge-offs of
only 21 basis points. Our momentum now carries us into 2002, which will see
several exciting growth initiatives come to fruition, including our de novo
expansion into Atlanta, our in-store banking rollout in South Carolina, and
the soon to be completed acquisition of 37 Wachovia/First Union branches. At
the same time, the management team has once again committed to industry
leading earnings per share growth targets as a component of our incentive
compensation plan. I have every confidence that our outstanding group of
associates will meet this challenge as they have in past years."
For the quarter and year ended December 31, 2001, the Company reported
non-recurring expenses, net of tax, of $5.4 million and $7.3 million,
respectively, consisting primarily of conversion and integration costs
associated with the acquisitions of First Vantage, SouthBanc and the divested
branches of Wachovia. For the quarter and year ended December 31, 2000, the
Company reported non-recurring expenses, net of tax, of $53.6 million and
$100.7 million, respectively, consisting of unrealized losses on interest rate
swaps and conversion and merger-related costs associated with the Company's
merger of equals with CCB Financial Corporation.
OPERATING GAAP EARNINGS
For the quarter and year ended December 31, 2001, NCF's operating
earnings, defined as net income adjusted for non-recurring expenses, net of
tax, were $65.3 million and $232.6 million, compared to $45.2 million and
$146.0 million, respectively, reported for the same periods a year earlier.
Operating earnings per diluted share were $.32 and $1.12, compared to $.22 and
$.92, respectively, per diluted share in the same periods of 2000.
GAAP NET INCOME
For the quarter and year ended December 31, 2001, NCF's GAAP net income
was $59.9 million and $225.3 million, compared to a net loss of $8.4 million
and net income of $45.3 million, respectively, reported for the same periods a
year earlier. GAAP net income per diluted share was $.29 for the fourth
quarter 2001 compared to a net loss per diluted share of $.04 in the fourth
quarter of 2000. GAAP net income per diluted share for the year 2001 was
$1.09 compared to $.28 for the year 2000.
BALANCE SHEET TRENDS
Consolidated assets totaled $19.3 billion at December 31, 2001, up
9.0 percent from $17.7 billion at December 31, 2000. During the fourth
quarter of 2001, NCF's average loans and leases increased to $11.8 billion,
compared to $10.9 billion for the fourth quarter of 2000 and $11.4 billion in
third quarter 2001. Average deposits increased to $12.1 billion in the fourth
quarter of 2001 from $11.8 billion in fourth quarter 2000 and $11.9 billion in
third quarter 2001. Excluding approximately $327 million of average loans and
$335 million of average deposits attributable to the third and fourth quarter
2001 acquisitions of First Vantage and SouthBanc, average loans and average
core deposits increased 4.8 percent and 8.5 percent, respectively, over the
year ago quarter and at annualized rates of 5.0 percent and 8.2 percent,
respectively, over third quarter 2001.
NET INTEREST INCOME
Net interest income, on a taxable equivalent basis, was $181.9 million in
the fourth quarter of 2001, compared to $157.7 million for the fourth quarter
of 2000, an increase of 15.3 percent. The fourth quarter net interest margin
was 4.50 percent, compared to 4.09 percent for fourth quarter 2000 and
4.42 percent in third quarter 2001. The cost of interest-bearing liabilities
decreased from 4.01 percent in third quarter 2001 to 3.24 percent in fourth
quarter 2001, while the taxable equivalent yield on earning assets decreased
from 7.91 percent to 7.32 percent.
NON-INTEREST INCOME AND EXPENSE
Non-interest income (excluding securities gains and losses) totaled
$89.9 million in fourth quarter 2001 versus $69.4 million for fourth quarter
2000, an increase of 29.5 percent. Strong increases were experienced in
deposit service charges, mortgage banking and institutional broker/dealer
revenues.
Non-interest expenses, excluding non-recurring expenses, for the fourth
quarter 2001 were $156.0 million, compared to $142.7 million in fourth quarter
2000 and $139.5 million in third quarter 2001. Personnel cost increases were
due primarily to higher commissions tied to broker/dealer and mortgage banking
revenue growth and higher incentive compensation and other employee benefit
costs. Other expense increases were in professional fees and marketing costs
associated with the Company's deposit gathering campaigns.
The Company's cash efficiency ratio, the ratio of non-interest expenses,
excluding intangibles amortization and non-recurring expenses, to net
revenues, was 47.07 percent for the fourth quarter 2001, compared to
50.76 percent for fourth quarter 2000 and 44.85 percent for third quarter
2001. The banking cash efficiency ratio was 42.55 percent in the fourth
quarter of 2001 compared to 47.00 percent for fourth quarter 2000 and
40.44 percent in third quarter 2001.
Financial Enterprises, comprised of NCF's transaction processing, trust
and asset management, consulting, broker/dealer and insurance businesses,
earned net income of $11.0 million for the fourth quarter of 2001 as compared
to $7.4 million for the fourth quarter of 2000, an increase of 48.6 percent.
PROVISION FOR LOAN LOSSES
The provision for loan losses in the fourth quarter of 2001 was
$6.9 million, compared to $5.3 million for fourth quarter 2000. Annualized
net charge-offs for the fourth quarter of 2001 were .25 percent of average
loans, compared to .19 percent of average loans in the year-ago quarter and
.21 percent in the third quarter of 2001.
NON-PERFORMING LOANS AND ASSETS
Non-performing assets amounted to $33.5 million at December 31, 2001 or
.28 percent of net loans plus other real estate, compared to $12.9 million at
December 31, 2000 or .12 percent and $23.8 million at September 30, 2001 or
.21 percent. Non-performing assets plus loans past due 90 days or more, were
$82.0 million or .68 percent of net loans plus other real estate at December
31, 2001, compared to $41.5 million at December 31, 2000 or .38 percent and
$56.2 million at September 30, 2001 or .49 percent. The loan loss reserve
amounts to 1.31 percent of total net loans at December 31, 2001 and 4.67 times
non-performing assets.
ABOUT NCF
National Commerce Financial Corporation is a diversified financial
services company with $19.3 billion in assets. NCF, headquartered in Memphis,
TN, with its operations headquarters in Durham, NC, is a sales and marketing
organization that delivers select financial and consulting services through a
national network of banking affiliates operating in 14 of the nation's fastest
growing metropolitan areas and non-banking affiliates.
FORWARD-LOOKING STATEMENTS
These statements constitute forward-looking statements (within the meaning
of the Private Securities Litigation Reform Act of 1995), which involve
significant risks and uncertainties. A variety of factors could cause actual
results and experience to differ materially from the anticipated results or
other expectations expressed in such forward-looking statements.
NCF does not assume any obligation to update these forward-looking
statements or to update the reasons why actual results could differ from those
projected in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to
competition from both financial and non-financial institutions; changes in
interest rates, deposit flows, loan demand and real estate values; changes in
legislation or regulation; changes in accounting principles, policies or
guidelines; the timing and occurrence (or non-occurrence) of transactions and
events that may be subject to circumstances beyond the control of NCF; and
other economic, competitive, governmental, regulatory and technological
factors affecting NCF specifically or the banking industry or economy
generally.
NATIONAL COMMERCE FINANCIAL CORPORATION
Financial Summary
Unaudited
(In Thousands Except Share and Per Share Data)
Three Months Ended
12/31 09/30 6/30 3/31 12/31
Income Statement 2001 2001 2001 2001 2001
Loan income (TE) $228,452 237,958 242,174 249,355 258,241
Securities income (TE) 67,676 71,610 73,746 79,051 81,206
Other interest income (TE) 565 790 974 1,855 1,504
Total interest income
(TE) 296,693 310,358 316,894 330,261 340,951
Savings/NOW and money
market expense 20,899 26,395 29,164 35,791 38,193
Jumbo and brokered CD
expense 9,044 16,210 21,994 29,685 34,250
Consumer time deposit
expense 53,457 59,452 62,849 64,683 63,706
Interest expense on
deposits 83,400 102,057 114,007 130,159 136,149
Short-term borrowed funds
expense 5,055 8,602 9,578 15,831 17,849
FHLB advances expense 25,148 25,586 23,688 23,416 27,586
Trust preferred securities
and long-term debt
expense (6) 1,223 1,180 1,270 1,552 1,647
Total interest expense 114,826 137,425 148,543 170,958 183,231
Net interest income (TE) 181,867 172,933 168,351 159,303 157,720
Taxable equivalent
adjustment 9,431 7,866 6,874 7,170 6,878
Net interest income 172,436 165,067 161,477 152,133 150,842
Provision for loan losses 6,892 9,623 6,304 6,380 5,317
Net interest income after
provision 165,544 155,444 155,173 145,753 145,525
Service charges on
deposits 34,061 29,639 30,460 27,290 26,063
Other service charges and
fees 9,476 9,427 9,064 8,736 9,823
Trust and employee benefit
plan income 12,498 11,422 13,382 13,882 13,977
Broker/dealer revenue and
other commissions 21,624 15,114 16,202 15,066 10,751
Other 12,250 11,042 9,435 8,183 8,773
Investment securities
gains (losses) 2,752 2,588 575 720 (141)
Total noninterest
income 92,661 79,232 79,118 73,877 69,246
Personnel 69,155 58,063 62,447 59,900 60,626
Occupancy 9,211 9,610 9,159 9,322 9,661
Equipment 5,797 6,399 6,135 5,835 7,263
Goodwill amortization 12,060 12,060 12,046 12,074 12,060
Core deposit amortization 14,722 14,389 14,622 15,042 15,461
Other (6) 45,051 39,028 39,891 34,064 37,668
Losses on interest rate
swaps (1) - - - 672 57,221
Conversion/merger
expenses (2) 8,242 3,122 - - 25,892
Total noninterest
expense 164,238 142,671 144,300 136,909 225,852
Income before income taxes 93,967 92,005 89,991 82,721 (11,081)
Income taxes 34,107 34,394 34,456 30,431 (2,669)
GAAP net income 59,860 57,611 55,535 52,290 (8,412)
Non-recurring items,
after-tax (1) (2) 5,400 1,904 - - 53,567
Operating GAAP earnings
(3) 65,260 59,515 55,535 52,290 45,155
Amortization of goodwill
and core deposit, net of
tax 21,041 20,837 20,965 21,250 21,491
Operating cash earnings
(3) $86,301 80,352 76,500 73,540 66,646
Cash Earnings Per Share and Ratios
Operating cash earnings (1) (2) (3):
Basic earnings per share $.42 .39 .37 .36 .32
Diluted earnings per share .42 .39 .37 .35 .32
Return on average tangible
assets (3) 1.97 % 1.90 1.87 1.82 1.62
Return on average tangible
equity (3) 27.00 25.48 24.80 25.29 22.86
Cash net income (3):
Basic earnings per share $.40 .38 .37 .36 .06
Diluted earnings per share .39 .38 .37 .35 .06
Return on average tangible
assets (3) 1.85 % 1.86 1.87 1.82 .32
Return on average tangible
equity (3) 25.31 24.88 24.80 25.29 4.49
NATIONAL COMMERCE FINANCIAL CORPORATION
Financial Summary
Unaudited
(In Thousands Except Share and Per Share Data)
Three Months Ended
GAAP Earnings Per Share and Ratios 12/31/2001 09/30/2001
Operating GAAP earnings (1) (2) (3):
Basic earnings per share $.32 .29
Diluted earnings per share .32 .29
Return on average tangible assets (3) 1.49 % 1.41
Return on average tangible equity (3) 20.42 18.88
GAAP net income:
Basic earnings per share $.29 .28
Diluted earnings per share .29 .28
Return on average tangible assets (3) 1.37 % 1.37
Return on average tangible equity (3) 18.73 18.27
Return on average assets 1.28 1.28
Return on average equity 9.73 9.46
Average tangible equity to average
tangible assets (3) 7.30 7.48
Cash Efficiency Ratios
As a percentage of average tangible
assets (3) (excluding non-recurring
items (1) (2) and amortization of
intangibles):
Noninterest income 2.12 % 1.88
Personnel expense 1.58 1.38
Occupancy and equipment expense .34 .38
Other operating expense 1.03 .93
Noninterest expense 2.95 2.69
Net overhead (noninterest exp. -
noninterest inc.) .83 % .81
Noninterest expense as a percentage
of net interest income (TE) and other
income (excluding non-recurring items
(1) (2) and amortization of intangibles) 47.07 % 44.85
Average Balances
Assets $18,531,539 17,899,618
Tangible assets (3) 17,358,286 16,734,682
Loans (all domestic) (4):
Commercial 2,839,398 2,754,651
Construction and commercial real
estate 3,262,322 3,071,879
Mortgage 1,853,465 1,775,924
Consumer 3,619,796 3,569,413
Revolving credit 60,938 61,125
Lease financing 137,186 137,861
Total loans 11,773,105 11,370,853
Investment securities (5) 4,191,085 4,103,249
Earning assets (5) 16,127,220 15,609,871
Goodwill 923,549 911,204
Core deposit premium 249,704 253,732
Deposits:
Demand deposits (noninterest-bearing) 1,595,390 1,491,593
Savings/NOW and money market
accounts 5,017,308 4,657,037
Jumbo and brokered CD's 1,301,824 1,504,141
Consumer time deposits 4,233,325 4,225,175
Total deposits 12,147,847 11,877,946
Short-term borrowed funds 1,105,663 1,047,314
FHLB advances 2,273,482 2,090,236
Trust preferred securities and
long-term debt (6) 121,149 82,015
Interest-bearing liabilities (6) 14,052,751 13,605,918
Stockholders' equity 2,441,154 2,415,884
Tangible stockholders' equity (3) 1,267,901 1,250,948
Three Months Ended
GAAP Earnings Per Share and Ratios 6/30/2001 3/31/2001 12/31/2000
Operating GAAP earnings (1) (2) (3):
Basic earnings per share .27 .25 .22
Diluted earnings per share .27 .25 .22
Return on average tangible assets (3) 1.36 1.30 1.10
Return on average tangible equity (3) 18.00 17.99 15.49
GAAP net income:
Basic earnings per share .27 .25 (.04)
Diluted earnings per share .27 .25 (.04)
Return on average tangible assets (3) 1.36 1.30 (.20)
Return on average tangible equity (3) 18.00 17.99 (2.89)
Return on average assets 1.27 1.21 (.19)
Return on average equity 9.19 8.87 (1.39)
Average tangible equity to average
tangible assets (3) 7.54 7.20 7.10
Cash Efficiency Ratios
As a percentage of average tangible
assets (3) (excluding non-recurring
items (1) (2) and amortization of
intangibles):
Noninterest income 1.93 1.83 1.69
Personnel expense 1.53 1.48 1.48
Occupancy and equipment expense .37 .38 .41
Other operating expense .97 .86 .92
Noninterest expense 2.87 2.72 2.81
Net overhead (noninterest exp. -
noninterest inc.) .94 .89 1.12
Noninterest expense as a percentage of
net interest income (TE) and other income
(excluding non-recurring items (1) (2)
and amortization of intangibles) 47.53 47.09 50.76
Average Balances
Assets 17,604,925 17,581,548 17,568,713
Tangible assets (3) 16,419,104 16,368,869 16,328,607
Loans (all domestic) (4):
Commercial 2,689,381 2,656,499 2,625,855
Construction and commercial real
estate 2,950,444 2,889,249 2,750,605
Mortgage 1,814,964 1,785,875 1,791,150
Consumer 3,493,513 3,509,229 3,559,848
Revolving credit 61,235 62,211 68,753
Lease financing 133,351 130,244 128,881
Total loans 11,142,888 11,033,307 10,925,092
Investment securities (5) 4,090,134 4,204,465 4,326,002
Earning assets (5) 15,371,113 15,430,752 15,391,415
Goodwill 918,208 930,169 942,307
Core deposit premium 267,613 282,510 297,799
Deposits:
Demand deposits
(noninterest-bearing) 1,417,129 1,284,045 1,394,011
Savings/NOW and money market
accounts 4,525,169 4,455,858 4,343,972
Jumbo and brokered CD's 1,696,004 2,031,238 2,158,017
Consumer time deposits 4,196,083 4,170,022 3,951,793
Total deposits 11,834,385 11,941,163 11,847,793
Short-term borrowed funds 984,703 1,179,763 1,158,326
FHLB advances 1,878,033 1,544,128 1,716,218
Trust preferred securities and
long-term debt (6) 82,016 89,222 89,306
Interest-bearing liabilities (6) 13,362,008 13,470,231 13,417,632
Stockholders' equity 2,423,250 2,391,764 2,399,718
Tangible stockholders' equity (3) 1,237,429 1,179,085 1,159,612
NATIONAL COMMERCE FINANCIAL CORPORATION
Financial Summary
Unaudited
(In Thousands Except Share and Per Share Data)
As Of And For The Three Months Ended
Allowance For Loan Losses 12/31/2001 9/30/2001 6/30/2001
Beginning balance $150,487 145,659 144,039
Provision for loan losses 6,892 9,623 6,304
Additions from acquired
institutions 6,519 1,331 -
Recoveries 2,015 1,637 1,671
Charge-offs (9,512) (7,763) (6,355)
Ending balance $156,401 150,487 145,659
Net charge-offs by loan type:
Commercial $1,679 729 519
Construction and commercial
real estate 103 3 30
Secured by real estate 938 485 21
Consumer 3,904 3,848 3,556
Revolving credit 577 218 354
Lease financing 296 843 204
Total net charge-offs $7,497 6,126 4,684
Non-Performing and Risk Assets
Nonaccrual loans $22,800 15,466 11,780
Foreclosed real estate 10,687 8,347 7,787
Nonperforming assets 33,487 23,813 19,567
Restructured loans - - -
Ninety days past due and accruing 48,553 32,426 29,397
Risk assets $82,040 56,239 48,964
Asset Quality Ratios
Net charge-offs to average loans
(annualized) .25 % .21 .17
Nonperforming assets to loans and
foreclosed real estate .28 .21 .17
Risk assets to loans and
foreclosed real estate .68 .49 .44
Loan loss allowance to
nonperforming assets 4.67 x 6.32 7.44
Loan loss allowance to risk
assets 1.91 2.68 2.97
Loan loss allowance to total
loans 1.31 % 1.31 1.30
Share and Per Share Data
Common shares outstanding 205,058,713 204,032,413 204,359,873
Weighted average shares
outstanding:
Basic 204,533,263 204,307,702 205,433,029
Diluted 206,807,357 206,723,011 207,891,271
Cash dividends $.15 .15 .13
Book value 11.97 11.84 11.68
Closing stock price (7) 25.30 26.10 24.37
High stock price for the quarter 26.10 27.05 25.55
Low stock price for the quarter 22.29 22.00 22.15
Net Interest Income Ratios
Yield on earning assets 7.32 % 7.91 8.26
Cost of interest-bearing
liabilities (6) 3.24 4.01 4.46
Net interest margin (6) 4.50 4.42 4.38
Interest rate spread (6) 4.08 3.90 3.80
Other Period-End Information
Number of offices 407 393 379
Intangible asset - goodwill $946,157 909,541 910,421
Intangible asset - deposit base
premium 251,464 249,035 258,042
Mortgage servicing rights 6,523 6,009 6,590
Cash dividends 30,671 30,687 26,706
NATIONAL COMMERCE FINANCIAL CORPORATION
Financial Summary
Unaudited
(In Thousands Except Share and Per Share Data)
As Of And For The Three Months Ended
Allowance For Loan Losses 3/31/2001 12/31/2000
Beginning balance 143,614 143,510
Provision for loan losses 6,380 5,317
Additions from acquired institutions - -
Recoveries 2,052 1,321
Charge-offs (8,007) (6,534)
Ending balance 144,039 143,614
Net charge-offs by loan type:
Commercial 743 432
Construction and commercial real estate 29 23
Secured by real estate 452 631
Consumer 4,545 3,485
Revolving credit 89 634
Lease financing 97 8
Total net charge-offs 5,955 5,213
Non-Performing and Risk Assets
Nonaccrual loans 10,977 7,219
Foreclosed real estate 5,512 5,652
Nonperforming assets 16,489 12,871
Restructured loans 2,224 2,232
Ninety days past due and accruing 21,682 26,362
Risk assets 40,395 41,465
Asset Quality Ratios
Net charge-offs to average loans
(annualized) .22 .19
Nonperforming assets to loans and
foreclosed real estate .15 .12
Risk assets to loans and foreclosed
real estate .36 .38
Loan loss allowance to nonperforming
assets 8.74 11.16
Loan loss allowance to risk assets 3.57 3.46
Loan loss allowance to total loans 1.30 1.30
Share and Per Share Data
Common shares outstanding 205,487,104 205,246,098
Weighted average shares outstanding:
Basic 205,632,478 205,334,106
Diluted 208,544,880 207,800,709
Cash dividends .13 .13
Book value 11.66 11.52
Closing stock price (7) 24.81 24.75
High stock price for the quarter 27.44 25.19
Low stock price for the quarter 21.56 17.65
Net Interest Income Ratios
Yield on earning assets 8.64 8.83
Cost of interest-bearing liabilities (6) 5.15 5.43
Net interest margin (6) 4.14 4.09
Interest rate spread (6) 3.49 3.40
Other Period-End Information
Number of offices 377 378
Intangible asset - goodwill 922,481 934,467
Intangible asset - deposit base
premium 273,665 287,707
Mortgage servicing rights 7,139 7,688
Cash dividends 26,774 26,689
NATIONAL COMMERCE FINANCIAL CORPORATION
Financial Summary
Unaudited
(In Thousands Except Share and Per Share Data)
Years Ended December 31
Income Statement 2001 2000
Loan income (TE) $957,939 698,614
Securities income (TE) 292,083 252,185
Other interest income (TE) 4,184 10,490
Total interest income (TE) 1,254,206 961,289
Savings/NOW and money market expense 112,249 100,231
Jumbo and brokered CD expense 76,933 111,748
Consumer time deposit expense 240,441 152,454
Interest expense on deposits 429,623 364,433
Short-term borrowed funds expense 39,066 69,577
FHLB advances expense 97,838 77,912
Trust preferred securities and long-
term debt expense (6) 5,225 5,282
Total interest expense 571,752 517,204
Net interest income (TE) 682,454 444,085
Taxable equivalent adjustment 31,341 23,313
Net interest income 651,113 420,772
Provision for loan losses 29,199 16,456
Net interest income after provision 621,914 404,316
Service charges on deposits 121,450 68,766
Other service charges and fees 36,703 29,919
Trust and employee benefit plan
income 51,184 32,964
Broker/dealer revenue and other
commissions 68,006 28,816
Other 40,910 24,517
Investment securities gains, net 6,635 4,509
Total noninterest income 324,888 189,491
Personnel 249,565 160,136
Occupancy 37,302 27,251
Equipment 24,166 17,367
Goodwill amortization 48,240 26,884
Core deposit amortization 58,775 34,536
Other (6) 158,034 99,839
Losses on interest rate swaps (1) 672 77,227
Conversion/merger expenses (2) 11,364 70,657
Total noninterest expense 588,118 513,897
Income before income taxes 358,684 79,910
Income taxes 133,388 34,600
GAAP net income 225,296 45,310
Non-recurring items, after-tax (1)(2) 7,304 100,664
Operating GAAP earnings (3) 232,600 145,974
Amortization of goodwill and core
deposit, net of tax 84,093 47,951
Operating cash earnings (3) $316,693 193,925
Cash Earnings Per Share and Ratios
Operating cash earnings (1) (2) (3):
Basic earnings per share $1.55 1.23
Diluted earnings per share 1.53 1.22
Return on average tangible assets (3) 1.89 % 1.65
Return on average tangible equity (3) 25.66 23.15
Cash net income (3):
Basic earnings per share $1.51 .59
Diluted earnings per share 1.49 .59
Return on average tangible assets (3) 1.85 % .80
Return on average tangible equity (3) 25.07 11.13
NATIONAL COMMERCE FINANCIAL CORPORATION
Financial Summary
Unaudited
(In Thousands Except Share and Per Share Data)
Years Ended December 31
GAAP Earnings Per Share and
Ratios 2001 2000
Operating GAAP earnings (1) (2) (3):
Basic earnings per share $1.13 .93
Diluted earnings per share 1.12 .92
Return on average tangible assets (3) 1.39 % 1.25
Return on average tangible equity (3) 18.85 17.42
GAAP net income:
Basic earnings per share $1.10 .29
Diluted earnings per share 1.09 .28
Return on average tangible assets (3) 1.35 % .39
Return on average tangible equity (3) 18.26 5.41
Return on average assets 1.26 .37
Return on average equity 9.32 2.98
Average tangible equity to average
tangible assets (3) 7.38 7.15
As of December 31 YTD Averages
Balance Sheet Data 2001 2000 2001 2000
Assets $19,273,713 17,745,792 17,907,012 12,401,982
Tangible assets (3) 18,076,092 16,523,618 16,723,001 11,717,558
Loans (all domestic) (4):
Commercial 2,900,346 2,658,406 2,735,537 1,819,694
Construction and
commercial real estate 3,361,232 2,831,228 3,044,574 1,470,729
Mortgage 1,912,345 1,791,033 1,807,656 1,131,717
Consumer 3,602,013 3,533,471 3,548,349 2,888,527
Revolving credit 61,731 65,053 61,373 37,958
Lease financing 137,098 129,228 134,688 78,695
Total loans 11,974,765 11,008,419 11,332,177 7,427,320
Available for sale
securities 3,611,706 2,401,526 - -
Held to maturity
securities - book value 900,750 2,016,795 - -
Total investment
securities (5) 4,512,456 4,418,321 4,147,077 3,401,937
Trading securities 197,214 74,417 67,389 40,064
Earning assets (5) 16,767,426 15,585,912 15,636,578 11,033,301
Goodwill 946,157 934,467 920,738 520,525
Core deposit premium 251,464 287,707 263,273 163,899
Deposits:
Demand deposits
(noninterest-bearing) 1,732,146 1,366,178 1,448,014 930,713
Savings/NOW and money
market accounts 5,230,621 4,474,114 4,665,363 2,960,959
Jumbo and brokered CD's 1,366,034 2,006,741 1,630,949 1,824,706
Consumer time deposits 4,290,684 4,132,598 4,206,377 2,441,904
Total deposits 12,619,485 11,979,631 11,950,703 8,158,282
Short-term borrowed
funds 1,141,617 1,212,903 1,079,070 1,159,814
FHLB advances 2,306,554 1,649,055 1,948,861 1,247,613
Trust preferred securities
and long-term debt (6) 282,018 89,301 93,656 72,529
Interest-bearing
liabilities (6) 14,617,528 13,564,712 13,624,276 9,707,525
Stockholders' equity 2,455,331 2,364,838 2,418,149 1,522,217
Fair value adjustment
for FAS 115 included
in stockholders' equity 12,744 22,793 27,536 (4,495)
Tangible stockholders'
equity (3) 1,257,710 1,142,664 1,234,138 837,793
Years Ended December 31
Allowance For Loan Losses 2001 2000
Beginning balance $143,614 59,597
Provision for loan losses 29,199 16,456
Addition from acquired institutions 7,850 82,228
Recoveries 7,375 5,016
Charge-offs (31,637) (19,683)
Ending balance $156,401 143,614
Net charge-offs to average loans .21 % .20
NATIONAL COMMERCE FINANCIAL CORPORATION
Financial Summary
Unaudited
(In Thousands Except Share and Per Share Data)
Years Ended December 31
Cash Efficiency Ratios 2001 2000
As a percentage of average tangible
assets (3) (excluding non-recurring
items (1) (2) and amortization of
intangibles):
Noninterest income 1.94 % 1.62
Personnel expense 1.49 1.37
Occupancy and equipment expense .37 .38
Other operating expense .95 .85
Noninterest expense 2.81 2.60
Net overhead (noninterest expense -
noninterest income) .87 % .98
Noninterest expense as a percentage
of net interest income (TE) and other income
(excluding non-recurring items (1) (2)
and amortization of intangibles) 46.63 % 48.08
Share and Per Share Data
Weighted average shares outstanding:
Basic 204,971,774 157,387,415
Diluted 207,484,145 159,254,404
Cash dividends per share $.56 .48
Net Interest Income Ratios
Yield on earning assets 8.02 % 8.71
Cost of interest-bearing liabilities (6) 4.20 5.33
Net interest margin (6) 4.36 4.02
Interest rate spread (6) 3.82 3.38
(1) Certain swap contracts that the Corporation entered into during 2000
did not qualify for hedge accounting and were marked to market through the
income statement instead of other comprehensive gains and losses. These swap
contracts were terminated in the first quarter of 2001. The losses on swap
contracts incurred in 2000 are considered to be non-recurring expenses.
(2) Merger and conversion expenses incurred in the third and fourth
quarters of 2001 were related to the Corporation's acquisition of First
Vantage and SouthBanc and the pending acquisition of the divested branches of
Wachovia; 2000 merger expenses were related to the Corporation's merger with
CCB Financial Corporation. After-tax merger expense totaled $1.9 million and
$5.4 million in the third and fourth quarters of 2001 and $15.8 million in the
fourth quarter of 2000. These expenses are considered to be non-recurring.
(3) The Corporation defines cash net income as GAAP net income adjusted
for the after-tax impact of goodwill and core deposit amortization. Operating
GAAP earnings and operating cash earnings, respectively, are defined as GAAP
net income and cash net income, adjusted for the after-tax cash impact of
non-recurring expenses discussed in (1) and (2) above. Average tangible
assets and equity for the periods are determined as average total assets or
stockholders' equity, respectively, less average unamortized goodwill and core
deposit premium.
(4) Loan balances by category are presented in accordance with the
Corporation's internal classification system which uses the purpose of the
borrowing to determine the reporting category.
(5) Average balances exclude the mark to market adjustment for Statement
of Accounting Standards No. 115.
(6) The Corporation's trust preferred securities were previously
considered mezzanine capital and were not included in liabilities nor was the
related interest expense included in the net interest margin. With the
issuance of $200 million of trust preferred securities in the fourth quarter
of 2001, the Corporation reclassed the previously outstanding trust preferred
securities balances and the related interest expense to be included in
interest-bearing liabilities and interest expense.
(7) NYSE symbol: NCF
NATIONAL COMMERCE FINANCIAL CORPORATION
Average Balances and Net Interest Income Analysis
Three Months Ended December 31, 2001 and 2000
(Taxable Equivalent Basis-In Thousands) (1)
2001
Interest Average
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans (2) $ 11,773,105 228,452 7.71 %
U.S. Treasury and agency
obligations (3) 3,167,743 47,801 6.04
States and political subdivision
obligations 154,339 4,454 11.54
Other securities 869,003 14,504 6.68
Trading securities 90,714 917 4.04
Federal funds sold and other
short-term investments 43,272 318 2.92
Time deposits in other banks 29,044 247 3.37
Total earning assets (3) 16,127,220 296,693 7.32
Non-earning assets:
Cash and due from banks 430,220
Premises and equipment 209,935
Goodwill 923,549
Core deposit premium 249,704
All other assets, net 590,911
Total assets $ 18,531,539
Interest-bearing liabilities:
Savings and time deposits $ 10,552,457 83,400 3.14 %
Short-term borrowed funds 1,105,663 5,055 1.81
FHLB advances 2,273,482 25,148 4.39
Trust preferred securities and
long-term debt 121,149 1,223 4.05
Total interest-bearing
liabilities 14,052,751 114,826 3.24
Other liabilities and stockholders'
equity:
Demand deposits 1,595,390
Other liabilities 442,244
Stockholders' equity 2,441,154
Total liabilities and
stockholders' equity $ 18,531,539
Net interest income and net interest
margin (4) $ 181,867 4.50 %
Interest rate spread (5) 4.08 %
2000
Interest Average
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans (2) 10,925,092 258,241 9.41
U.S. Treasury and agency
obligations (3) 3,245,000 57,846 7.13
States and political subdivision
obligations 188,203 3,791 8.06
Other securities 892,799 18,772 8.41
Trading securities 54,926 797 5.81
Federal funds sold and other
short-term investments 45,090 819 7.22
Time deposits in other banks 40,305 685 6.78
Total earning assets (3) 15,391,415 340,951 8.83
Non-earning assets:
Cash and due from banks 416,709
Premises and equipment 200,416
Goodwill 942,307
Core deposit premium 297,799
All other assets, net 320,067
Total assets 17,568,713
Interest-bearing liabilities:
Savings and time deposits 10,453,782 136,149 5.18
Short-term borrowed funds 1,158,326 17,849 6.13
FHLB advances 1,716,218 27,586 6.39
Trust preferred securities and
long-term debt 89,306 1,647 7.38
Total interest-bearing
liabilities 13,417,632 183,231 5.43
Other liabilities and stockholders'
equity:
Demand deposits 1,394,011
Other liabilities 357,352
Stockholders' equity 2,399,718
Total liabilities and
stockholders' equity 17,568,713
Net interest income and net interest
margin (4) 157,720 4.09
Interest rate spread (5) 3.40
(1) The taxable equivalent basis is computed using 35% federal and
applicable state tax rates in 2001 and 2000.
(2) The average loan balances include non-accruing loans. Loan fees of
$5,055,000 and $5,006,000 for 2001 and 2000, respectively, are
included in interest income.
(3) The average balances for debt and equity securities exclude the
effect of their mark-to-market adjustment, if any.
(4) Net interest margin is computed by dividing net interest income by
total earning assets.
(5) Interest rate spread equals the earning asset yield minus the
interest-bearing liability rate.
NATIONAL COMMERCE FINANCIAL CORPORATION
Average Balances and Net Interest Income Analysis
Years Ended December 31, 2001 and 2000
(Taxable Equivalent Basis-In Thousands) (1)
2001
Interest Average
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans (2) $ 11,332,177 957,939 8.45 %
U.S. Treasury and agency
obligations (3) 2,997,402 205,741 6.87
States and political subdivision
obligations 165,652 13,729 8.29
Equity securities and other
securities (3) 984,023 69,383 7.05
Trading account securities 67,389 3,230 4.79
Federal funds sold and other
short-term investments 62,065 2,927 4.72
Time deposits in other banks 27,870 1,257 4.51
Total earning assets 15,636,578 1,254,206 8.02
Non-earning assets:
Cash and due from banks 401,214
Premises and equipment 205,401
Goodwill 920,738
Core deposit premium 263,273
All other assets, net 479,808
Total assets $ 17,907,012
Interest-bearing liabilities:
Savings and time deposits $ 10,502,689 429,623 4.09 %
Short-term borrowed funds 1,079,070 39,066 3.62
FHLB advances 1,948,861 97,838 5.02
Trust preferred securities and
long-term debt 93,656 5,225 5.58
Total interest-bearing
liabilities 13,624,276 571,752 4.20
Other liabilities and stockholders'
equity:
Demand deposits 1,448,014
Other liabilities 416,573
Stockholders' equity 2,418,149
Total liabilities and
stockholders' equity $ 17,907,012
Net interest income and net interest
margin (4) $682,454 4.36 %
Interest rate spread (5) 3.82 %
2000
Interest Average
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans (2) 7,427,320 698,614 9.41
U.S. Treasury and agency
obligations (3) 2,488,612 177,307 7.12
States and political subdivision
obligations 158,693 12,815 8.08
Equity securities and other
securities (3) 754,632 59,581 7.90
Trading account securities 40,064 2,482 6.19
Federal funds sold and other
short-term investments 136,043 8,893 6.54
Time deposits in other banks 27,937 1,597 5.72
Total earning assets 11,033,301 961,289 8.71
Non-earning assets:
Cash and due from banks 293,618
Premises and equipment 123,688
Goodwill 520,525
Core deposit premium 163,899
All other assets, net 266,951
Total assets 12,401,982
Interest-bearing liabilities:
Savings and time deposits 7,227,569 364,433 5.04
Short-term borrowed funds 1,159,814 69,577 6.00
FHLB advances 1,247,613 77,912 6.24
Trust preferred securities and
long-term debt 72,529 5,282 7.28
Total interest-bearing
liabilities 9,707,525 517,204 5.33
Other liabilities and stockholders'
equity:
Demand deposits 930,713
Other liabilities 241,527
Stockholders' equity 1,522,217
Total liabilities and
stockholders' equity 12,401,982
Net interest income and net interest
margin (4) 444,085 4.02
Interest rate spread (5) 3.38
(1) The taxable equivalent basis is computed using 35% federal and
applicable state tax rates in 2001 and 2000.
(2) The average loan balances include non-accruing loans. Loan fees of
$20,838,000 and $14,235,000 for 2001 and 2000, respectively, are
included in interest income.
(3) The average balances for debt and equity securities exclude the effect
of their mark-to-market adjustment, if any.
(4) Net interest margin is computed by dividing net interest income by
total earning assets.
(5) Interest rate spread equals the earning asset yield minus the
interest-bearing liability rate.
SOURCE National Commerce Financial Corporation
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