MEMPHIS, Tenn., May 15 /PRNewswire/ --
National Commerce Financial Corporation (Nasdaq: NCBC) announced today
that it will restate its financial statements to reflect purchase accounting
treatment for all of its business combinations since 1997. The company action
was proposed by management and accepted by the company's audit committee
following a thorough review by the company of the use of the
pooling-of-interests method of accounting by the former National Commerce
Bancorporation for business combinations consummated in 1998, 1999 and 2000,
including its July 2000 merger of equals with the former CCB Financial
Corporation. That review was prompted by comments and questions from the
Securities and Exchange Commission arising from its routine review of the
company's recent SEC filings. The company also announced that it will file a
Form 12b-25 (Notification of Late Filing) tomorrow with the SEC, providing for
an automatic extension in the filing of the company's Form 10-Q for the first
quarter of 2001, and that its Form 10-Q, including the effect of the
restatements will be filed as soon as practicable.
(Photo: http://www.newscom.com/cgi-bin/prnh/20010510/NCBCLOGO )
The company said that it requires additional time to calculate accurately
the effect of the restatement. While such restatement will have a material
adverse effect on reported and future GAAP earnings, it will have an
insignificant effect on National Commerce Financial's future cash earnings per
share or cash flows from operations. National Commerce Financial will
continue to be a well-capitalized company with a strong balance sheet. In
addition, under the Financial Accounting Standards Board's current proposal on
Accounting for Business Combinations, the company would not be required to
amortize goodwill and would only periodically measure goodwill for impairment.
The company will record on its balance sheet and amortize over varying
periods intangible assets, including goodwill and core deposit premiums.
Amortization of these intangibles would materially adversely affect GAAP
earnings over the useful lives of the related assets, but would not
significantly affect future cash earnings per share or cash flow. As stated
above, if the FASB adopts as proposed its Standard of Accounting for Business
Combinations, goodwill amortization will be discontinued upon such adoption.
The company's review of its use of the pooling of interests method of
accounting arose out of a routine SEC review of a Form S-3 (Selling
Shareholder Registration), incorporating the company's annual report on Form
10-K for the year ended December 31, 1999, and its quarterly report on Form
10-Q for the quarter ended September 30, 2000. The SEC questioned whether the
company's stock repurchase program disqualified the company from using the
pooling-of-interests method of accounting for the CCB merger and eight much
smaller mergers since 1997. In addition, the company discovered that certain
stock option and restricted stock grants by the former National Commerce
Bancorporation occurring shortly before or simultaneously with announcement of
the CCB merger might be violations of technical pooling rules. At issue are
complex technical provisions in Accounting Principles Board Opinion 16 and
later interpretative literature governing certain stock transactions within
two years prior to initiation of a business combination accounted for as a
pooling of interests. It was these questions that led to management's review
and prompted its decision to restate the company's financial statements. The
company has taken action to rescind certain transactions related to the
restricted stock and stock options referenced above.
In its review, the SEC has also requested information regarding the
company's loan loss reserves for the periods reflected in such financial
statements. The company believes that its reserves are within industry norms.
The completion date for the SEC review of these loan loss reserves has not yet
been established.
Upon filing its 10-Q for the quarter ended March 31, 2001, the company
will announce the time for an investor conference call.
BACKGROUND:
National Commerce Financial Corporation (formerly National Commerce
Bancorporation) has $16.6 billion in assets and nearly 400 locations in nine
southeastern states. National Commerce Financial, headquartered in Memphis,
Tenn., with its operations headquarters in Durham, N.C., is a sales and
marketing organization that delivers select financial and consulting services
through a national network of banking 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. National
Commerce Financial Corporation 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 National
Commerce Financial Corporation; and other economic, competitive, governmental,
regulatory and technological factors affecting National Commerce Financial
Corporation specifically or the banking industry or economy generally.
SOURCE National Commerce Financial Corporation
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Related links:
http://www.ncfcorp.com
Photo Notes:
NewsCom:
http://www.newscom.com/cgi-bin/prnh/20010510/NCBCLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, 888-776-6555 or 201-369-3467
CONTACT:
M.J.A. "Jekka" Pinckney of National Commerce
Financial Corporation, 901-523-3525
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