MEMPHIS, Tenn., July 17 /PRNewswire-FirstCall/ -- National Commerce
Financial Corporation (NYSE: NCF) today announced record revenues and earnings
for the second quarter of 2002.
As of and for
Three Months Ended Six Months Ended
June 30, June 30,
% %
2002 2001 Increase 2002 2001 Increase
(dollars in thousands,
except per share data)
Total Assets $20,812.2 $17,952.7 15.9%
Total Loans 12,470.0 11,236.2 11.0%
Noninterest-Bearing
Deposits 2,052.0 1,518.8 35.1%
Core Deposits 12,487.5 10,292.5 21.3%
Total Deposits 14,139.8 11,984.8 18.0%
Revenues (TE) 285,892 247,469 15.5% 557,246 480,649 15.9%
Operating Cash
Earnings 91,920 76,500 20.2% 180,650 150,040 20.4%
Operating Cash EPS -
Diluted .44 .37 18.9% .87 .72 20.8%
OPERATING CASH EARNINGS
For the quarter ended June 30, 2002, operating cash earnings, defined as
net income adjusted for goodwill amortization, core deposit amortization and
non-recurring expenses, net of tax, were $91.9 million compared to $76.5
million for the same period a year earlier, an increase of 20.2 percent.
Operating cash earnings per diluted share were $.44 in second quarter 2002,
compared to $.37 per share in second quarter 2001, an 18.9 percent increase.
For the quarter ended June 30, 2002, the Company reported non-cash core
deposit amortization expense, net of tax, of $11.1 million. For the second
quarter of 2001, the Company reported non-cash goodwill and core deposit
amortization expense, net of tax, of $21.0 million. The reduction in non-cash
amortization expense is the result of a FASB accounting change that became
effective January 1, 2002, and which no longer allows companies to amortize
goodwill.
For the six months ended June 30, 2002, operating cash earnings were
$180.7 million compared to $150.0 million for the same period a year earlier,
an increase of 20.4 percent. Operating cash earnings per diluted share were
$.87 for the six months ended June 30, 2002, compared to $.72 per share for
the six months ended June 30, 2001, a 20.8 percent increase.
During the six months ended June 30, 2002, the Company reported non-cash
core deposit amortization and non-recurring merger-related expenses, net of
tax, of $21.7 million and $3.2 million, respectively. During the same period
of 2001, the Company reported non-cash goodwill and core deposit amortization
expense, net of tax, of $42.2 million.
"We are extremely pleased with our performance in the second quarter.
Our results exceeded Wall Street consensus estimates and clearly demonstrate
our ability to both deliver today and invest for tomorrow," said Ernest C.
Roessler, National Commerce's president and chief executive officer. "Despite
the effects of the lingering recession, our model which is focused on internal
revenue growth, asset quality, and expense control continues to deliver
earnings growth at a rate significantly faster than our peers. Second quarter
trends were very favorable with revenues growing double-digits both over the
last twelve months and on an annualized sequential basis. The growth was
driven by a pick up in loan demand, the continuing success of our deposit
gathering programs, and a strong increase in fee income. Additionally, we
made excellent progress during the quarter in minimizing our exposure to
future interest rate increases. The Company remains on track and well
positioned to meet our original cash earnings guidance for 2002 of $1.75 -
$1.80."
GAAP EARNINGS
For the quarter ended June 30, 2002, GAAP net income was $80.9 million,
compared to $55.5 million reported for the same period a year earlier, an
increase of 45.6 percent. GAAP net income per diluted share was $.39 for the
second quarter 2002 compared to $.27 in the second quarter of 2001, an
increase of 44.4 percent.
For the six months ended June 30, 2002, GAAP net income was $155.8
million, compared to $107.8 million reported for the same period a year
earlier, an increase of 44.5 percent. GAAP net income per diluted share for
the period was $.75 compared to $.52 in the second quarter of 2001, an
increase of 44.2 percent. In 2002, GAAP net income has benefited from the
elimination of goodwill amortization, a non-cash expense, due to the FASB
change noted above.
REVENUES
The Company's increase in earnings was driven by strong internal growth in
revenues (taxable equivalent net interest income plus non-interest income).
Revenues increased 15.5 percent over second quarter 2001 and 21.6 percent
annualized compared to first quarter 2002. Second quarter revenues totaled
$285.9 million, compared to $271.4 million in the first quarter and $247.5 in
the year-ago quarter. Taxable equivalent net interest income increased 13.4
percent year-over-year primarily as a result of a 14.9 percent increase in
average earning assets. Non-interest income increased 20.1 percent year-over-
year as a result of strong growth in deposit service charges, the Financial
Enterprises businesses and earnings from the investment in First Market Bank,
the Company's 49 percent-owned, Richmond, Virginia-based subsidiary.
EXPANSION
During the quarter, NCF opened 11 in-store branches in Atlanta as part of
the previously announced arrangement with The Kroger Co. to open a total of 30
in-store branches by December 31, 2003. The Company's proven convenience and
service-based de novo expansion strategy, supported by free checking and
Internet bill pay, is delivering results which are exceeding expectations.
Total deposits are currently $60 million and, through the first two months,
the average branch is generating deposits at a rate of $3 million per month.
The Company expects to open additional branches by year-end including one
traditional branch currently under construction that was purchased from
Wachovia during the second quarter.
LOANS
Loan growth improved during the second quarter of 2002 with end of period
total loans and leases increasing 6.8 percent annualized to $12.5 billion from
$12.3 billion in first quarter. Adjusting for acquisitions accounted for
using the purchase accounting method, average loans increased 1.9 percent
annualized compared to the first quarter and 2.4 percent over the year ago
quarter.
Average loans for the quarter were adversely affected by an increase in
the amount of payoffs from refinanced mortgage loans compared to the Company's
experience in 2001 and the continuing managed decline in the Company's State
Farm indirect auto portfolio. Excluding these two categories and loans
acquired in purchase acquisitions, average loan growth increased 8.7 percent
compared to second quarter 2001 and 8.3 percent annualized versus first
quarter 2002. First Market's average loans for the second quarter of 2002
increased to $452.2 million, up 26.2 percent from the year-ago quarter and
32.3 percent annualized from the first quarter 2002.
DEPOSITS
Internal deposit trends also remain very favorable as the Company
continues to offer its "Free Checking" product throughout the footprint.
Noninterest-bearing deposits, excluding deposits acquired through
acquisitions, continue to grow at a double-digit rate, increasing 23.6 percent
annualized versus first quarter and 20.9 percent compared to second quarter
2001. Average core deposits, excluding deposits acquired through
acquisitions, increased 4.6 percent to $10.6 billion in the second quarter
from $10.1 billion in second quarter 2001 and 2.8 percent annualized from
$10.5 billion in first quarter 2002. The accelerated growth of noninterest-
bearing deposits has allowed the Company to reduce the level of other higher
cost funding vehicles. First Market's average core deposits for the second
quarter of 2002 increased to $739.1 million, up 21.9 percent from the year-ago
quarter and 30.6 percent annualized from the first quarter 2002.
NET INTEREST MARGIN
The second quarter net interest margin was 4.33 percent, compared to 4.38
percent for second quarter 2001 and 4.39 percent in the first quarter of 2002.
The decline versus the prior quarter is primarily due to the full quarter
impact of the Wachovia branch acquisition, which occurred in the middle of the
first quarter and added approximately $1.4 billion in deposits and
approximately $450 million in loans. As a result of this transaction, the
Company's ratio of average loans to total average earning assets has
temporarily declined.
ASSET QUALITY
NCF's asset quality remains best in class with annualized net charge-offs
for the second quarter of .24 percent of average loans, representing less than
1 percent of tangible shareholders' equity plus the allowance for loan losses.
The net charge-off percentage was .17 percent of average loans in the year-ago
quarter and .26 percent in the first quarter. The provision for loan losses
in the second quarter of 2002 was $8.7 million, compared to $6.3 million for
second quarter 2001 and $5.5 million in first quarter. The allowance for loan
losses amounts to 1.30 percent of total net loans at June 30, 2002, compared
to 1.31 percent at March 31, 2002, and 1.30 percent at June 30, 2001.
Non-performing assets amounted to $55.1 million at June 30, 2002, or .44
percent of net loans plus other real estate, compared to $19.6 million at June
30, 2001, or .17 percent and $44.3 million at March 31, 2002, or .36 percent.
While non-performing assets have risen off of an extremely low base, the
Company's net charge-offs have consistently remained very low. Due to the
Company's sound underwriting practices and strong collateral positions,
significant charge-offs are not expected from the current non-performing
assets.
NON-INTEREST INCOME
Non-interest income, excluding investment securities gains, for the second
quarter increased 18.8 percent to $93.3 million from $78.5 million in the
second quarter of 2001 and 52.2 percent annualized from first quarter 2002.
The growth in non-interest income during the second quarter is primarily
related to deposit service charges and the capital markets business of the
Company's Financial Enterprises unit.
Financial Enterprises, comprised of NCF's transaction processing, trust
and asset management, consulting, broker/dealer and insurance businesses,
reported operating cash earnings of $9.5 million in the second quarter 2002,
up from $8.0 million in first quarter 2002.
NON-INTEREST EXPENSE
The Company continued to improve its operating leverage during the quarter
lowering the cash efficiency ratio to 46.47 percent from 46.54 percent in the
prior quarter and 47.53 percent in the second quarter of last year. Cash non-
interest expense (total non-interest expense less goodwill amortization, core
deposit amortization and non-recurring expenses) for second quarter 2002 was
$132.8 million, compared to $117.6 million for second quarter 2001 and $126.3
million for first quarter 2002. The banking cash efficiency ratio declined to
42.63 percent from 43.93 percent in second quarter 2001 and rose slightly from
42.23 percent in the first quarter, primarily due to expenses related to the
Atlanta expansion.
ABOUT NCF
National Commerce Financial Corporation is a diversified financial
services company with $21 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
Current Quarter Financial Highlights
(In Thousands Except Share and Per Share Data)
Three Months Ended % Change
Earnings and Earnings Per Share 06/30/2002 03/31/2002 Fav/(Unfav)
Revenues (TE) $ 285,892 271,354 5.4
GAAP net income $ 80,868 74,899 8.0
Non-recurring expenses,
after-tax -- 3,211 100.0
Operating GAAP earnings 80,868 78,110 3.5
Amortization of goodwill and
core deposit intangibles, net of
tax 11,052 10,620 (4.1)
Operating cash earnings $ 91,920 88,730 3.6
Average basic shares outstanding 206,368,053 205,745,885 .3
Average diluted shares
outstanding 208,978,097 208,287,199 .3
Basic EPS - GAAP $ .39 .36 8.3
Diluted EPS - GAAP .39 .36 8.3
Basic EPS - Operating GAAP .39 .38 2.6
Diluted EPS - Operating GAAP .39 .38 2.6
Basic EPS -Operating Cash .45 .43 4.7
Diluted EPS - Operating Cash .44 .43 2.3
Key Performance Ratios
Net interest margin 4.33 % 4.39
Cash efficiency ratio 46.47 46.54
Banking cash efficiency ratio 42.63 42.23
Cash return on average assets 1.82 1.84
Cash return on average tangible assets 1.95 1.97
Cash return on average equity 14.57 14.47
Cash return on average tangible equity 31.28 29.83
Asset Quality Ratios
Loan loss allowance to total loans 1.30 % 1.31
Net loans charged-off (annualized) to
average loans .24 .26
Nonperforming assets to loans and
foreclosed real estate .44 .36
Loan loss allowance to net charge-offs
(annualized) 5.53 x 5.05
Loan loss allowance to nonperforming
assets 2.93 3.61
Selected Average Balances
Assets $ 20,233,304 19,547,879 3.5
Tangible assets 18,881,879 18,266,619 3.4
Loans 12,335,537 12,108,855 1.9
Core deposits 12,405,823 11,733,235 5.7
Stockholders' equity 2,529,919 2,487,581 1.7
Tangible stockholders' equity 1,178,494 1,206,321 (2.3)
Selected Period End Balances
Assets $ 20,812,168 20,086,505 3.6
Tangible assets 19,469,081 18,726,573 4.0
Loans 12,470,030 12,264,784 1.7
Core deposits 12,487,536 12,568,334 (.6)
Stockholders' equity 2,596,386 2,502,225 3.8
Tangible stockholders' equity 1,253,299 1,142,293 9.7
Shares outstanding 206,417,264 206,163,422
Number of banking offices 466 445
Number of ATMs 554 533
Number of full-time equivalent
employees (FTE) 5,469 5,278
Capital Ratios
Average equity to average assets 12.50 % 12.73
Average tangible equity to average
tangible assets 6.24 6.60
Period-end tangible equity to period-end
tangible assets 6.44 6.10
Risk-based capital ratios:
Tier 1 capital 10.45 E 10.10
Total capital 11.60 E 11.30
Leverage ratio 7.75 E 7.68
E- Estimated
NATIONAL COMMERCE FINANCIAL CORPORATION
Current Quarter Financial Highlights
(In Thousands Except Share and Per Share Data)
Three Months Ended % Change
Earnings and Earnings Per Share
06/30/2002 06/30/2001 Fav/(Unfav)
Revenues (TE) 285,892 247,469 15.5
GAAP net income 80,868 55,535 45.6
Non-recurring expenses,
after-tax -- -- --
Operating GAAP earnings 80,868 55,535 45.6
Amortization of goodwill and
core deposit intangibles,
net of tax 11,052 20,965 47.3
Operating cash earnings 91,920 76,500 20.2
Average basic shares outstanding 206,368,053 205,433,029 .5
Average diluted shares
outstanding 208,978,097 207,891,271 .5
Basic EPS - GAAP .39 .27 44.4
Diluted EPS - GAAP .39 .27 44.4
Basic EPS - Operating GAAP .39 .27 44.4
Diluted EPS - Operating GAAP .39 .27 44.4
Basic EPS -Operating Cash .45 .37 21.6
Diluted EPS - Operating Cash .44 .37 18.9
Key Performance Ratios
Net interest margin 4.33 4.38
Cash efficiency ratio 46.47 47.53
Banking cash efficiency ratio 42.63 43.93
Cash return on average assets 1.82 1.74
Cash return on average tangible
assets 1.95 1.87
Cash return on average equity 14.57 12.66
Cash return on average tangible
equity 31.28 24.80
Asset Quality Ratios
Loan loss allowance to total loans 1.30 1.30
Net loans charged-off (annualized)
to average loans .24 .17
Nonperforming assets to loans and
foreclosed real estate .44 .17
Loan loss allowance to net charge-offs
(annualized) 5.53 7.75
Loan loss allowance to nonperforming
assets 2.93 7.44
Selected Average Balances
Assets 20,233,304 17,604,925 14.9
Tangible assets 18,881,879 16,419,104 15.0
Loans 12,335,537 11,142,888 10.7
Core deposits 12,405,823 10,138,381 22.4
Stockholders' equity 2,529,919 2,423,250 4.4
Tangible stockholders' equity 1,178,494 1,237,429 (4.8)
Selected Period End Balances
Assets 20,812,168 17,952,690 15.9
Tangible assets 19,469,081 16,784,227 16.0
Loans 12,470,030 11,236,246 11.0
Core deposits 12,487,536 10,292,517 21.3
Stockholders' equity 2,596,386 2,387,523 8.7
Tangible stockholders' equity 1,253,299 1,219,060 2.8
Shares outstanding 206,417,264 204,359,873
Number of banking offices 466 379
Number of ATMs 554 454
Number of full-time equivalent
employees (FTE) 5,469 4,766
Capital Ratios
Average equity to average assets 12.50 13.76
Average tangible equity to average
tangible assets 6.24 7.54
Period-end tangible equity to period-end
tangible assets 6.44 7.26
Risk-based capital ratios:
Tier 1 capital 10.45 9.86
Total capital 11.64 11.12
Leverage ratio 7.77 7.55
E-Estimated
NATIONAL COMMERCE FINANCIAL CORPORATION
Five Quarter Financial Highlights
(In Thousands Except Share and Per Share Data)
Three Months Ended
Earnings and Earnings
Per Share 06/30/2002 03/31/2002 12/31/2001 09/30/2001 06/30/2001
Revenues $ 285,892 271,354 274,528 252,165 247,469
GAAP net
income $ 80,868 74,899 59,860 57,611 55,535
Non-recurring
expenses,
after-tax -- 3,211 5,400 1,904 --
Operating GAAP
earnings 80,868 78,110 65,260 59,515 55,535
Amortization of
goodwill and
core deposit
intangibles,
net of tax 11,052 10,620 21,041 20,837 20,965
Operating cash
earnings $ 91,920 88,730 86,301 80,352 76,500
Average Basic
Shares
Outstanding 206,368,053 205,745,885 204,533,263 204,307,70 205,433,029
Average Diluted
Shares
Outstanding 208,978,097 208,287,199 206,807,357 206,723,011 207,891,271
Basic EPS -
GAAP $ .39 .36 .29 .28 .27
Diluted EPS
- GAAP .39 .36 .29 .28 .27
Basic EPS -
Operating GAAP .39 .38 .32 .29 .27
Diluted EPS -
Operating GAAP .39 .38 .32 .29 .27
Basic EPS -
Operating Cash .45 .43 .42 .39 .37
Diluted EPS -
Operating Cash .44 .43 .42 .39 .37
Key Performance Ratios
Net interest
margin 4.33 % 4.39 4.50 4.42 4.38
Cash efficiency
ratio 46.47 46.54 47.07 44.85 47.53
Banking cash
efficiency ratio 42.63 42.23 43.24 41.14 43.93
Cash return on
average assets 1.82 1.84 1.85 1.78 1.74
Cash return on
average tangible
assets 1.95 1.97 1.97 1.90 1.87
Cash return on
average equity 14.57 14.47 14.03 13.20 12.66
Cash return on
average tangible
equity 31.28 29.83 27.00 25.48 24.80
Asset Quality Ratios
Loan loss allowance
to total loans 1.30 % 1.31 1.31 1.31 1.30
Net loans charged-off
(annualized) to
average loans .24 .26 .25 .21 .17
Nonperforming assets to
loans and foreclosed
real estate .44 .36 .28 .21 .17
Loan loss allowance
to net charge-offs
(annualized) 5.53 x 5.05 5.26 6.19 7.75
Loan loss allowance
to nonperforming
assets 2.93 3.61 4.67 6.32 7.44
Selected Average Balances
Assets $ 20,233,304 19,547,879 18,531,539 17,899,618 17,604,925
Tangible
assets 18,881,879 18,266,619 17,358,286 16,734,682 16,419,104
Loans 12,335,537 12,108,855 11,773,105 11,370,853 11,142,888
Core
deposits 12,405,823 11,733,235 10,846,023 10,373,805 10,138,381
Stockholders'
equity 2,529,919 2,487,581 2,441,154 2,415,884 2,423,250
Tangible
stockholders'
equity 1,178,494 1,206,321 1,267,901 1,250,948 1,237,429
Selected Period End Balances
Assets $ 20,812,168 20,086,505 19,273,713 18,481,554 17,952,690
Tangible
assets 19,469,081 18,726,573 18,076,092 17,322,978 16,784,227
Loans 12,470,030 12,264,784 11,974,765 11,516,651 11,236,246
Core
deposits 12,487,536 12,568,334 11,253,445 10,615,568 10,292,517
Stockholders'
equity 2,596,386 2,502,225 2,455,331 2,414,864 2,387,523
Tangible
stockholders'
equity 1,253,299 1,142,293 1,257,710 1,256,288 1,219,060
Shares
outstanding 206,417,264 206,163,422 205,058,713 204,032,413 204,359,873
Number of banking
offices 466 445 407 393 379
Number of ATMs 554 533 483 466 454
Number of full-time
equivalent
employees (FTE) 5,469 5,278 4,935 4,809 4,766
Capital Ratios
Average equity to
average assets 12.50 % 12.73 13.17 13.50 13.76
Average tangible
equity to average
tangible assets 6.24 6.60 7.30 7.48 7.54
Period-end tangible
equity to period-end
tangible assets 6.44 6.10 6.96 7.25 7.26
Risk-based capital ratios:
Tier 1 capital 10.45 E 10.10 11.04 9.72 9.86
Total capital 11.60 E 11.30 12.25 10.97 11.12
Leverage ratio 7.75 E 7.68 8.65 7.59 7.55
E - Estimated
NATIONAL COMMERCE FINANCIAL CORPORATION
Year to Date Financial Highlights
(In Thousands Except Share and Per Share Data)
%
Six Months Ended $ Change Change
Earnings and Earnings Per
Share 06/30/2002 06/30/2001 Fav Fav
/(Unfav) /(Unfav)
Revenues (TE) $ 557,246 480,649 76,597 15.9
GAAP net income $ 155,767 107,825 47,942 44.5
Non-recurring expenses,
after-tax 3,211 -- 3,211 --
Operating GAAP earnings 158,978 107,825 51,153 47.4
Amortization of goodwill and
core deposit intangibles,
net of tax 21,672 42,215 (20,543) (48.7)
Operating cash earnings $ 180,650 150,040 30,610 20.4
Average Basic Shares
Outstanding 206,058,688 205,532,202
Average Diluted Shares
Outstanding 208,634,557 208,215,022
Basic EPS - GAAP $ .76 .52 .24 46.2
Diluted EPS - GAAP .75 .52 .23 44.2
Basic EPS - Operating GAAP .77 .52 .25 48.1
Diluted EPS - Operating GAAP .76 .52 .24 46.2
Basic EPS -Operating Cash .88 .73 .15 20.5
Diluted EPS - Operating Cash .87 .72 .15 20.8
Key Performance Ratios
Net interest margin 4.36 % 4.26
Cash efficiency ratio 46.50 47.32
Banking cash efficiency
ratio 42.43 43.58
Cash return on average
assets 1.83 1.72
Cash return on average
tangible assets 1.96 1.85
Cash return on average
equity 14.52 12.57
Cash return on average
tangible equity 30.55 25.04
Asset Quality Ratios
Loan loss allowance to total
loans 1.30 % 1.30
Net loans charged-off
(annualized) to average
loans .25 .19
Loan loss allowance to net
charge-offs (annualized) 5.30 x 6.79
Selected Average Balances
Assets $ 19,892,485 17,593,301 2,299,184 13.1
Tangible assets 18,575,949 16,394,125 2,181,824 13.3
Loans 12,222,822 11,088,400 1,134,422 10.2
Core deposits 12,071,386 10,024,784 2,046,602 20.4
Stockholders' equity 2,508,867 2,407,594 101,273 4.2
Tangible stockholders'
equity 1,192,331 1,208,418 (16,087) (1.3)
Capital Ratios
Average equity to average
assets 12.61 % 13.68
Average tangible equity to
average tangible assets 6.42 7.37
NATIONAL COMMERCE FINANCIAL CORPORATION
Current Quarter Consolidated Statements of Income
(In Thousands Except Share and Per Share Data)
Three Months Ended % Change
Income Statement 06/30/2002 03/31/2002 Fav/(Unfav)
Loan income (TE) $ 218,856 220,821 (.9)
Securities income (TE) 73,168 68,943 6.1
Other interest income (TE) 270 317 (14.8)
Total interest income (TE) 292,294 290,081 .8
Savings/NOW and money market expense 18,527 17,402 (6.5)
Jumbo and brokered CD expense 8,290 8,818 6.0
Consumer time deposit expense 45,046 48,614 7.3
Interest expense on deposits 71,863 74,834 4.0
Short-term borrowed funds expense 4,461 3,500 (27.5)
FHLB advances expense 22,626 23,189 2.4
Trust preferred securities and long-
term debt expense 2,474 2,481 .3
Total interest expense 101,424 104,004 2.5
Net interest income (TE) 190,870 186,077 2.6
Taxable equivalent adjustment 7,628 7,396 3.1
Net interest income 183,242 178,681 2.6
Provision for loan losses 8,713 5,514 (58.0)
Net interest income after provision 174,529 173,167 .8
Service charges on deposits 40,301 33,826 19.1
Other service charges and fees 10,583 9,205 15.0
Broker/dealer revenue 17,650 15,413 14.5
Asset management 13,488 12,900 4.6
Equity earnings from First Market
Bank 773 516 49.8
Other 10,533 10,697 (1.5)
Investment securities gains, net 1,694 2,720 (37.7)
Total noninterest income 95,022 85,277 11.4
Personnel 68,373 68,878 .7
Occupancy 12,209 10,977 (11.2)
Equipment 6,800 6,227 (9.2)
Goodwill amortization -- -- --
Core deposit amortization 18,118 17,410 (4.1)
Other 45,462 40,205 (13.1)
Conversion/merger expenses -- 4,940 100.0
Total noninterest expense 150,962 148,637 (1.6)
Income before income taxes 118,589 109,807 8.0
Income taxes 37,721 34,908 (8.1)
GAAP net income 80,868 74,899 8.0
Non-recurring conversion/merger
expenses, after-tax -- 3,211 100.0
Operating GAAP earnings 80,868 78,110 3.5
Amortization of goodwill and core
deposit, net of tax 11,052 10,620 (4.1)
Operating cash earnings $ 91,920 88,730 3.6
Average Common Shares Outstanding
Basic 206,368,053 205,745,885
Diluted 208,978,097 208,287,199
Earnings and Dividends Per Share
Basic GAAP $ .39 .36 8.3
Diluted GAAP .39 .36 8.3
Basic operating GAAP .39 .38 2.6
Diluted operating GAAP .39 .38 2.6
Basic operating cash .45 .43 4.7
Diluted operating cash .44 .43 2.3
Cash dividends .15 .15 --
NATIONAL COMMERCE FINANCIAL CORPORATION
Current Quarter Consolidated Statements of Income
(In Thousands Except Share and Per Share Data)
Three Months Ended % Change
Income Statement 06/30/2002 06/30/2001 Fav/(Unfav)
Loan income (TE) 218,856 242,174 (9.6)
Securities income (TE) 73,168 73,746 (.8)
Other interest income (TE) 270 974 (72.3)
Total interest income (TE) 292,294 316,894 (7.8)
Savings/NOW and money market expense 18,527 29,164 36.5
Jumbo and brokered CD expense 8,290 21,994 62.3
Consumer time deposit expense 45,046 62,849 28.3
Interest expense on deposits 71,863 114,007 37.0
Short-term borrowed funds expense 4,461 9,578 53.4
FHLB advances expense 22,626 23,688 4.5
Trust preferred securities and long-
term debt expense 2,474 1,270 (94.8)
Total interest expense 101,424 148,543 31.7
Net interest income (TE) 190,870 168,351 13.4
Taxable equivalent adjustment 7,628 6,874 11.0
Net interest income 183,242 161,477 13.5
Provision for loan losses 8,713 6,304 (38.2)
Net interest income after provision 174,529 155,173 12.5
Service charges on deposits 40,301 30,460 32.3
Other service charges and fees 10,583 9,064 16.8
Broker/dealer revenue 17,650 16,202 8.9
Asset management 13,488 13,382 .8
Equity earnings from First Market
Bank 773 498 55.2
Other 10,533 8,937 17.9
Investment securities gains, net 1,694 575 194.6
Total noninterest income 95,022 79,118 20.1
Personnel 68,373 62,447 (9.5)
Occupancy 12,209 9,159 (33.3)
Equipment 6,800 6,135 (10.8)
Goodwill amortization -- 12,046 100.0
Core deposit amortization 18,118 14,622 (23.9)
Other 45,462 39,891 (14.0)
Conversion/merger expenses -- -- --
Total noninterest expense 150,962 144,300 (4.6)
Income before income taxes 118,589 89,991 31.8
Income taxes 37,721 34,456 (9.5)
GAAP net income 80,868 55,535 45.6
Non-recurring conversion/merger
expenses, after-tax -- -- --
Operating GAAP earnings 80,868 55,535 45.6
Amortization of goodwill and core
deposit, net of tax 11,052 20,965 47.3
Operating cash earnings 91,920 76,500 20.2
Average Common Shares Outstanding
Basic 206,368,053 205,433,029
Diluted 208,978,097 207,891,271
Earnings and Dividends Per Share
Basic GAAP .39 .27 44.4
Diluted GAAP .39 .27 44.4
Basic operating GAAP .39 .27 44.4
Diluted operating GAAP .39 .27 44.4
Basic operating cash .45 .37 21.6
Diluted operating cash .44 .37 18.9
Cash dividends .15 .13 15.4
NATIONAL COMMERCE FINANCIAL CORPORATION
Five Quarter Consolidated Statements of Income
(In Thousands Except Share and Per Share Data)
Three Months Ended
Income Statement 06/30/2002 03/31/2002 12/31/2001 09/30/2001 06/30/2001
Loan income (TE) $ 218,856 220,821 228,452 237,958 242,174
Securities
income (TE) 73,168 68,943 67,676 71,610 73,746
Other interest
income (TE) 270 317 565 790 974
Total interest
income (TE) 292,294 290,081 296,693 310,358 316,894
Savings/NOW and
money market
expense 18,527 17,402 20,899 26,395 29,164
Jumbo and brokered
CD expense 8,290 8,818 9,044 16,210 21,994
Consumer time
deposit expense 45,046 48,614 53,457 59,452 62,849
Interest expense
on deposits 71,863 74,834 83,400 102,057 114,007
Short-term borrowed
funds expense 4,461 3,500 5,055 8,602 9,578
FHLB advances
expense 22,626 23,189 25,148 25,586 23,688
Trust preferred
securities and long-term
debt expense 2,474 2,481 1,223 1,180 1,270
Total interest
expense 101,424 104,004 114,826 137,425 148,543
Net interest
income (TE) 190,870 186,077 181,867 172,933 168,351
Taxable equivalent
adjustment 7,628 7,396 9,431 7,866 6,874
Net interest income 183,242 178,681 172,436 165,067 161,477
Provision for loan
losses 8,713 5,514 6,892 9,623 6,304
Net interest income
after provision 174,529 173,167 165,544 155,444 155,173
Service charges on
deposits 40,301 33,826 34,061 29,639 30,460
Other service charges
and fees 10,583 9,205 9,476 9,427 9,064
Broker/dealer
revenue 17,650 15,413 21,624 15,114 16,202
Asset management 13,488 12,900 12,498 11,422 13,382
Equity earnings from
First Market Bank 773 516 685 699 498
Other 10,533 10,697 11,565 10,343 8,937
Investment securities
gains, net 1,694 2,720 2,752 2,588 575
Total noninterest
income 95,022 85,277 92,661 79,232 79,118
Personnel 68,373 68,878 69,155 58,063 62,447
Occupancy 12,209 10,977 9,211 9,610 9,159
Equipment 6,800 6,227 5,797 6,399 6,135
Goodwill
amortization -- -- 12,060 12,060 12,046
Core deposit
amortization 18,118 17,410 14,722 14,389 14,622
Other 45,462 40,205 45,051 39,028 39,891
Conversion/merger
expenses -- 4,940 8,242 3,122 --
Total noninterest
expense 150,962 148,637 164,238 142,671 144,300
Income before income
taxes 118,589 109,807 93,967 92,005 89,991
Income taxes 37,721 34,908 34,107 34,394 34,456
GAAP net income 80,868 74,899 59,860 57,611 55,535
Non-recurring conversion
/merger expenses,
after-tax -- 3,211 5,400 1,904 --
Operating GAAP
earnings 80,868 78,110 65,260 59,515 55,535
Amortization of
goodwill and core
deposit, net of tax 11,052 10,620 21,041 20,837 20,965
Operating cash
earnings $ 91,920 88,730 86,301 80,352 76,500
Average Common Shares Outstanding
Basic 206,368,053 205,745,885 204,533,263 204,307,702 205,433,029
Diluted 208,978,097 208,287,199 206,807,357 206,723,011 207,891,271
Earnings and Dividends Per Share
Basic GAAP $ .39 .36 .29 .28 .27
Diluted GAAP .39 .36 .29 .28 .27
Basic operating GAAP .39 .38 .32 .29 .27
Diluted operating
GAAP .39 .38 .32 .29 .27
Basic operating cash .45 .43 .42 .39 .37
Diluted operating
cash .44 .43 .42 .39 .37
Cash dividends .15 .15 .15 .15 .13
NATIONAL COMMERCE FINANCIAL CORPORATION
Year to Date Consolidated Statements of Income
(In Thousands Except Share and Per Share Data)
Six Months Ended $ Change % Change
Fav Fav
Income Statement 06/30/2002 06/30/2001 /(Unfav) /(Unfav)
Loan income (TE) $ 439,677 491,529 (51,852) (10.5)
Securities income (TE) 142,111 152,797 (10,686) (7.0)
Other interest income (TE) 587 2,829 (2,242) (79.3)
Total interest income (TE) 582,375 647,155 (64,780) (10.0)
Savings/NOW and money market
expense 35,929 64,955 29,026 44.7
Jumbo and brokered CD expense 17,108 51,679 34,571 66.9
Consumer time deposit expense 93,660 127,532 33,872 26.6
Interest expense on deposits 146,697 244,166 97,469 39.9
Short-term borrowed funds
expense 7,961 25,409 17,448 68.7
FHLB advances expense 45,815 47,104 1,289 2.7
Trust preferred securities and
long-term debt expense 4,955 2,822 (2,133) (75.6)
Total interest expense 205,428 319,501 114,073 35.7
Net interest income (TE) 376,947 327,654 49,293 15.0
Taxable equivalent adjustment 15,024 14,044 980 7.0
Net interest income 361,923 313,610 48,313 15.4
Provision for loan losses 14,227 12,684 (1,543) (12.2)
Net interest income after
provision 347,696 300,926 46,770 15.5
Service charges on deposits 74,127 57,750 16,377 28.4
Other service charges and fees 19,788 17,800 1,988 11.2
Broker/dealer revenue 33,063 31,268 1,795 5.7
Asset management 26,388 27,264 (876) (3.2)
Equity earnings from First
Market Bank 1,289 832 457 54.9
Other 21,230 16,786 4,444 26.5
Investment securities gains, net 4,414 1,295 3,119 240.8
Total noninterest income 180,299 152,995 27,304 17.8
Personnel 137,251 122,347 (14,904) (12.2)
Occupancy 23,186 18,481 (4,705) (25.5)
Equipment 13,027 11,970 (1,057) (8.8)
Goodwill amortization -- 24,120 24,120 100.0
Core deposit amortization 35,528 29,664 (5,864) (19.8)
Other 85,667 74,627 (11,040) (14.8)
Conversion/merger expenses 4,940 -- (4,940) --
Total noninterest expense 299,599 281,209 (18,390) (6.5)
Income before income taxes 228,396 172,712 55,684 32.2
Income taxes 72,629 64,887 (7,742) (11.9)
GAAP net income 155,767 107,825 47,942 44.5
Non-recurring conversion/merger
expenses, after-tax 3,211 -- 3,211 --
Operating GAAP earnings 158,978 107,825 51,153 47.4
Amortization of goodwill and
core deposit, net of tax 21,672 42,215 (20,543) (48.7)
Operating cash earnings $ 180,650 150,040 30,610 20.4
Average Common Shares
Outstanding
Basic 206,058,688 205,532,202
Diluted 208,634,557 208,215,022
Earnings and Dividends Per Share
Basic GAAP $ .76 .52 .24 46.2
Diluted GAAP .75 .52 .23 44.2
Basic operating GAAP .77 .52 .25 48.1
Diluted operating GAAP .76 .52 .24 46.2
Basic operating cash .88 .73 .15 20.5
Diluted operating cash .87 .72 .15 20.8
Cash dividends .30 .26 .04 15.4
NATIONAL COMMERCE FINANCIAL CORPORATION
Current Quarter Operating Segment Statement of Income
(In Thousands)
% Change
Three Months Ended Fav/
06/30/2002 03/31/2002 (Unfav)
Traditional Banking
Net interest income (TE) $186,041 181,636 2.4
Provision for loan losses (8,713) (5,514) (58.0)
Noninterest income 53,665 46,809 14.6
Intangibles amortization (18,118) (17,410) (4.1)
Noninterest expense (102,175) (101,402) (.8)
Income before income taxes (TE) 110,700 104,119 6.3
Income taxes (39,298) (37,201) (5.6)
GAAP net income 71,402 66,918 6.7
Non-recurring expenses, after-tax - 3,211 (100.0)
Operating GAAP earnings 71,402 70,129 1.8
Amortization of goodwill and
core deposit intangibles, net of tax 11,052 10,620 4.1
Operating cash earnings $82,454 80,749 2.1
Financial Enterprises
Net interest income (TE) $4,829 4,441 8.7
Provision for loan losses -- -- --
Noninterest income 43,766 39,620 10.5
Intangibles amortization -- -- --
Noninterest expense (33,078) (30,977) (6.8)
Income before income taxes (TE) 15,517 13,084 18.6
Income taxes (6,051) (5,103) (18.6)
GAAP net income 9,466 7,981 18.6
Non-recurring expenses, after-tax -- -- --
Operating GAAP earnings 9,466 7,981 18.6
Amortization of goodwill and
core deposit intangibles, net of tax -- -- --
Operating cash earnings $9,466 7,981 18.6
Fully Consolidated
Net interest income (TE) $190,870 186,077 2.6
Provision for loan losses (8,713) (5,514) (58.0)
Noninterest income 95,022 85,277 11.4
Intangibles amortization (18,118) (17,410) (4.1)
Noninterest expense (132,844) (131,227) (1.2)
Income before income taxes (TE) 126,217 117,203 7.7
Income taxes (45,349) (42,304) (7.2)
GAAP net income 80,868 74,899 8.0
Non-recurring expenses, after-tax -- 3,211 (100.0)
Operating GAAP earnings 80,868 78,110 3.5
Amortization of goodwill and
core deposit intangibles, net of tax 11,052 10,620 4.1
Operating cash earnings $91,920 88,730 3.6
Note: Inter-segment eliminations are not separately presented.
NATIONAL COMMERCE FINANCIAL CORPORATION
Current Quarter Operating Segment Statement of Income
(In Thousands)
% Change
Three Months Ended Fav/
06/30/2002 06/30/2001 (Unfav)
Traditional Banking
Net interest income (TE) 186,041 163,629 13.7
Provision for loan losses (8,713) (6,304) (38.2)
Noninterest income 53,665 38,973 37.7
Intangibles amortization (18,118) (26,221) 30.9
Noninterest expense (102,175) (89,009) (14.8)
Income before income taxes (TE) 110,700 81,068 36.6
Income taxes (39,298) (34,757) (13.1)
GAAP net income 71,402 46,311 54.2
Non-recurring expenses, after-tax -- -- --
Operating GAAP earnings 71,402 46,311 54.2
Amortization of goodwill and
core deposit intangibles, net of tax 11,052 20,692 (46.6)
Operating cash earnings 82,454 67,003 23.1
Financial Enterprises
Net interest income (TE) 4,829 4,722 2.3
Provision for loan losses -- -- --
Noninterest income 43,766 40,781 7.3
Intangibles amortization -- (447) 100.0
Noninterest expense (33,078) (29,259) (13.1)
Income before income taxes (TE) 15,517 15,797 (1.8)
Income taxes (6,051) (6,573) 7.9
GAAP net income 9,466 9,224 2.6
Non-recurring expenses, after-tax -- -- --
Operating GAAP earnings 9,466 9,224 2.6
Amortization of goodwill and
core deposit intangibles, net of tax -- 273 (100.0)
Operating cash earnings 9,466 9,497 (.3)
Fully Consolidated
Net interest income (TE) 190,870 168,351 13.4
Provision for loan losses (8,713) (6,304) (38.2)
Noninterest income 95,022 79,118 20.1
Intangibles amortization (18,118) (26,668) 32.1
Noninterest expense (132,844) (117,632) (12.9)
Income before income taxes (TE) 126,217 96,865 30.3
Income taxes (45,349) (41,330) (9.7)
GAAP net income 80,868 55,535 45.6
Non-recurring expenses, after-tax -- -- --
Operating GAAP earnings 80,868 55,535 45.6
Amortization of goodwill and
core deposit intangibles, net of tax 11,052 20,965 (47.3)
Operating cash earnings 91,920 76,500 20.2
Note: Inter-segment eliminations are not separately presented.
NATIONAL COMMERCE FINANCIAL CORPORATION
Five Quarter Operating Segment Statements of Income
(In Thousands)
Three Months Ended
06/30/2002 03/31/2002 12/31/2001 09/30/2001 06/30/2001
Traditional Banking
Net interest income (TE) $186,041 181,636 177,273 168,033 163,629
Provision for loan
losses (8,713) (5,514) (6,892) (9,623) (6,304)
Noninterest income 53,665 46,809 46,109 41,127 38,973
Intangibles amortization (18,118) (17,410) (26,335) (26,001) (26,221)
Noninterest expense (102,175) (101,402) (104,822) (89,176) (89,009)
Income before income
taxes (TE) 110,700 104,119 85,333 84,360 81,068
Income taxes (39,298) (37,201) (36,614) (37,195) (34,757)
GAAP net income 71,402 66,918 48,719 47,165 46,311
Non-recurring expenses,
after-tax -- 3,211 5,400 1,904 --
Operating GAAP earnings 71,402 70,129 54,119 49,069 46,311
Amortization of goodwill
and
core deposit
intangibles, net of
tax 11,052 10,620 20,768 20,564 20,692
Operating cash earnings $82,454 80,749 74,887 69,633 67,003
Financial Enterprises
Net interest income (TE) $4,829 4,441 4,594 4,900 4,722
Provision for loan
losses -- -- -- -- --
Noninterest income 43,766 39,620 47,736 39,908 40,781
Intangibles amortization -- -- (447) (448) (447)
Noninterest expense (33,078) (30,977) (33,818) (28,849) (29,259)
Income before income
taxes (TE) 15,517 13,084 18,065 15,511 15,797
Income taxes (6,051) (5,103) (6,924) (5,065) (6,573)
GAAP net income 9,466 7,981 11,141 10,446 9,224
Non-recurring expenses,
after-tax -- -- -- -- --
Operating GAAP earnings 9,466 7,981 11,141 10,446 9,224
Amortization of goodwill
and core deposit
intangibles, net of
tax -- -- 273 273 273
Operating cash earnings $9,466 7,981 11,414 10,719 9,497
Fully Consolidated
Net interest income (TE) $190,870 186,077 181,867 172,933 168,351
Provision for loan
losses (8,713) (5,514) (6,892) (9,623) (6,304)
Noninterest income 95,022 85,277 92,661 79,232 79,118
Intangibles amortization (18,118) (17,410) (26,782) (26,449) (26,668)
Noninterest expense (132,844) (131,227) (137,456) (116,222) (117,632)
Income before income
taxes (TE) 126,217 117,203 103,398 99,871 96,865
Income taxes (45,349) (42,304) (43,538) (42,260) (41,330)
GAAP net income 80,868 74,899 59,860 57,611 55,535
Non-recurring expenses,
after-tax -- 3,211 5,400 1,904 --
Operating GAAP earnings 80,868 78,110 65,260 59,515 55,535
Amortization of goodwill
and core deposit
intangibles, net of
tax 11,052 10,620 21,041 20,837 20,965
Operating cash earnings $91,920 88,730 86,301 80,352 76,500
Note: Inter-segment eliminations are not separately presented.
NATIONAL COMMERCE FINANCIAL CORPORATION
Year to Date Operating Segment Statements of Income
(In Thousands)
Six Months Ended $ Change % Change
Fav Fav
06/30/2002 06/30/2001 /(Unfav) /(Unfav)
Traditional Banking
Net interest income (TE) $367,677 318,630 49,047 15.4
Provision for loan losses (14,227) (12,684) (1,543) 12.2
Noninterest income 100,474 75,194 25,280 33.6
Intangibles amortization (35,528) (52,889) 17,361 (32.8)
Noninterest expense (203,577) (171,629) (31,948) 18.6
Income before income taxes (TE) 214,819 156,622 58,197 37.2
Income taxes (76,499) (66,026) (10,473) 15.9
GAAP net income 138,320 90,596 47,724 52.7
Non-recurring expenses, after-tax 3,211 -- 3,211 --
Operating GAAP earnings 141,531 90,596 50,935 56.2
Amortization of goodwill and
core deposit intangibles, net of tax 21,672 41,669 (19,997) (48.0)
Operating cash earnings $163,203 132,265 30,938 23.4
Financial Enterprises
Net interest income (TE) $9,270 9,024 246 2.7
Provision for loan losses -- -- -- --
Noninterest income 83,386 79,114 4,272 5.4
Intangibles amortization -- (895) 895 (100.0)
Noninterest expense (64,055) (57,109) (6,946) 12.2
Income before income taxes (TE) 28,601 30,134 (1,533) (5.1)
Income taxes (11,154) (12,905) 1,751 (13.6)
GAAP net income 17,447 17,229 218 1.3
Non-recurring expenses, after-tax -- -- -- --
Operating GAAP earnings 17,447 17,229 218 1.3
Amortization of goodwill and
core deposit intangibles, net of tax -- 546 (546) (100.0)
Operating cash earnings $17,447 17,775 (328) (1.8)
Fully Consolidated
Net interest income (TE) $376,947 327,654 49,293 15.0
Provision for loan losses (14,227) (12,684) (1,543) 12.2
Noninterest income 180,299 152,995 27,304 17.8
Intangibles amortization (35,528) (53,784) 18,256 (33.9)
Noninterest expense (264,071) (227,425) (36,646) 16.1
Income before income taxes (TE) 243,420 186,756 56,664 30.3
Income taxes (87,653) (78,931) (8,722) 11.1
GAAP net income 155,767 107,825 47,942 44.5
Non-recurring expenses, after-tax 3,211 -- 3,211 --
Operating GAAP earnings 158,978 107,825 51,153 47.4
Amortization of goodwill and
core deposit intangibles, net of tax 21,672 42,215 (20,543) (48.7)
Operating cash earnings $180,650 150,040 30,610 20.4
Note: Inter-segment eliminations are not separately presented.
NATIONAL COMMERCE FINANCIAL CORPORATION
Current Quarter Average Balance Sheet
(In Thousands)
Three Months Ended %
Inc/
06/30/2002 03/31/2002 (Decr)
Assets
Cash and due from banks $436,473 472,661 (7.7)
Time deposits in other banks 22,411 28,133 (20.3)
Federal funds sold and
other short-term investments 21,187 28,898 (26.7)
Investment securities (1) 5,197,443 4,829,779 7.6
Trading securities 89,229 75,722 17.8
Loans:
Commercial 3,062,154 2,987,844 2.5
Construction and commercial real
estate 3,526,901 3,411,639 3.4
Mortgage 1,663,703 1,790,963 (7.1)
Consumer 3,880,490 3,717,714 4.4
Revolving credit 68,573 65,489 4.7
Lease financing 133,716 135,206 (1.1)
Total loans 12,335,537 12,108,855 1.9
Allowance for loan losses 160,711 157,676 1.9
Net loans 12,174,826 11,951,179 1.9
Bank owned life insurance 217,458 213,996 1.6
Investment in First Market Bank 25,317 24,722 2.4
Premises and equipment 247,739 230,541 7.5
Goodwill 1,070,724 1,010,192 6.0
Core deposit intangibles 280,701 271,068 3.6
Other assets 449,796 410,988 9.4
Total assets $20,233,304 19,547,879 3.5
Liabilities
Deposits:
Demand deposits (noninterest-
bearing) $1,923,408 1,746,302 10.1
Savings, NOW and money market
accounts 5,800,664 5,484,307 5.8
Jumbo and brokered certificates of
deposit 1,533,119 1,571,856 (2.5)
Time deposits 4,681,751 4,502,626 4.0
Total deposits 13,938,942 13,305,091 4.8
Short-term borrowings 1,124,318 971,252 15.8
FHLB advances 1,949,166 2,093,957 (6.9)
Trust preferred securities and long-
term debt 282,053 282,050 .0
Other liabilities 408,906 407,948 .2
Total liabilities 17,703,385 17,060,298 3.8
Stockholders' Equity
Common stock 412,736 411,492 .3
Additional paid-in capital 1,780,106 1,765,703 .8
Retained earnings 344,678 297,896 15.7
Accumulated other comprehensive
income (7,601) 12,490 (160.9)
Total stockholders' equity 2,529,919 2,487,581 1.7
Total liabilities and stockholders'
equity $20,233,304 19,547,879 3.5
(1) Average balances exclude the mark-to-market adjustment for Statement
of Financial Accounting Standards No. 115.
SOURCE National Commerce Financial Corporation
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