MEMPHIS, Tenn., Oct. 17 /PRNewswire-FirstCall/ -- National Commerce
Financial Corporation (NYSE: NCF) today announced record revenues and earnings
for the third quarter and year-to-date 2002. For the quarter ended September
30, 2002, operating cash earnings, defined as net income adjusted for goodwill
amortization, core deposit amortization and non-recurring expenses, net of
tax, were $93.7 million compared to $80.4 million for the same period a year
earlier, an increase of 16.6 percent. Operating cash earnings per diluted
share were $.45 in third quarter 2002, compared to $.39 per share in third
quarter 2001, a 15.4 percent increase.
For the nine months ended September 30, 2002, operating cash earnings were
$274.3 million compared to $230.4 million for the same period a year earlier,
an increase of 19.1 percent. Operating cash earnings per diluted share were
$1.32 for the nine months ended September 30, 2002, compared to $1.11 per
share for the nine months ended September 30, 2001, an 18.9 percent increase.
"While the economy has remained sluggish, NCF's investment in high growth
metropolitan markets is paying off," said Ernest C. Roessler, National
Commerce Financial's president and chief executive officer. "Through hard
work and being positioned in the right markets, NCF continues to grow loans
faster than peers while maintaining favorable asset quality. As we continue
to operate in a challenging economic environment, intangibles such as these
will be the differentiator, allowing us to continue to outperform. As we
round out the year, we will be focused on improving our efficiency and
capitalizing on our recent expansion into Atlanta. To date, our Atlanta
results are well ahead of schedule and we expect this dynamic market to be a
strong catalyst entering 2003."
GAAP EARNINGS
For the quarter ended September 30, 2002, GAAP net income was
$83.0 million, compared to $57.6 million reported for the same period a year
earlier, an increase of 44.0 percent. GAAP net income per diluted share was
$.40 for the third quarter 2002 compared to $.28 in the third quarter of 2001,
an increase of 42.9 percent.
For the nine months ended September 30, 2002, GAAP net income was
$238.7 million, compared to $165.4 million reported for the same period a year
earlier, an increase of 44.3 percent. GAAP net income per diluted share for
the period was $1.14 compared to $.80 in 2001, an increase of 42.5 percent.
In 2002, GAAP net income has benefited from the elimination of goodwill
amortization, a non-cash expense, due to a required change in the accounting
for goodwill which was effective January 1, 2002.
REVENUES
Total revenues, excluding investment securities gains, for the third
quarter of 2002 were $291.6 million or $1.40 per diluted share, a 15.7%
increase over third quarter 2001 revenues per share of $1.21 and an annualized
increase of 11.8% over second quarter 2002 revenues of $1.36 per share. Third
quarter taxable equivalent net interest income was $193.3 million or $.93 per
share in 2002, an increase of 10.7 percent and 8.8 percent annualized compared
to third quarter 2001 and second quarter 2002 per share results. Non-interest
income, excluding investment securities gains, was $98.3 million or $.47 per
share for the third quarter of 2002, an increase of 27.0 percent and 17.8
percent annualized, respectively, over third quarter 2001 and second quarter
2002 per share amounts. Securities gains for third quarter 2002 were $5.1
million.
Taxable equivalent net interest income rose in the third quarter as a
result of continued loan growth across the footprint, offset by a declining
net interest margin. Average loans increased 8.6 percent annualized to $12.6
billion from $12.3 billion in second quarter 2002. Commercial, construction
and commercial real estate, and consumer loans experienced annualized growth
of 13.3 percent, 10.7 percent, and 6.2 percent respectively. Excluding the
managed decline of the State Farm indirect auto portfolio, consumer loans grew
9.3 percent annualized while average total loans grew 9.6 percent annualized
over second quarter 2002. Third quarter end of period total loans were
$12.7 billion.
Non-interest income growth, excluding investment securities gains, for the
third quarter was driven largely by increases in bank service charges on
deposits, mortgage banking revenues, earnings at First Market Bank, the
Company's 49 percent owned, Richmond, Virginia-based savings bank, and
continued strong performance in the capital markets business of the Company's
Financial Enterprises unit. Financial Enterprises, comprised of NCF's
transaction processing, asset management and consulting businesses, reported
operating cash earnings of $9.2 million in the third quarter 2002, down from
$9.5 million in second quarter 2002, primarily as a result of declines in its
market sensitive businesses.
First Market Bank, which is accounted for using the equity method of
accounting, continues to perform very well. During the quarter, average loans
increased to $473.8 million, up 32.2 percent from the year ago quarter and
19.1 percent annualized from the second quarter. First Market's average
deposits for the third quarter of 2002 increased to $764.2 million, up 26.0
percent from the year ago quarter and 13.6 percent annualized from the second
quarter.
NET INTEREST MARGIN
Consistent with industry trends, the net interest margin in the third
quarter declined due to a lower interest rate environment. The net interest
margin for the quarter was 4.27 percent, a decline of 6 basis points from the
second quarter of 2002. During the quarter, the average earning asset yield
declined 21 basis points from 6.63 percent in second quarter 2002 to 6.42
percent in third quarter while the average cost of interest bearing
liabilities declined 18 basis points from 2.65 percent in second quarter 2002
to 2.47 percent in third quarter. The Company continues to experience double-
digit growth in non-interest bearing deposits, helping to lower its overall
cost of funds.
Over the past year, the Company has made significant progress in
positioning its balance sheet for rising rates. The Company's balance sheet
is slightly asset sensitive, with the expectation that rising interest rates
will result in a small increase to earnings.
ASSET QUALITY
NCF continues to demonstrate that conservative lending policies and strong
collateral positions lead to superior asset quality. Third quarter 2002
annualized net charge-offs were .29 percent of average loans compared to .24
percent in the second quarter. Non-performing assets were .50 percent of end
of period loans plus foreclosed real estate and other repossessed assets at
September 30, 2002, down from .53 percent at June 30, 2002. Third quarter net
charge-offs represent less than 1 percent of tangible shareholders' equity.
Excluding approximately $3.2 million in net charge-offs during the quarter
from the Company's aircraft portfolio, which were offset by securities gains,
annualized net charge-offs were only .19 percent of average loans. Fourth
quarter annualized net chargeoffs are expected to return to the Company's
targeted range of .20 percent to .25 percent.
The allowance for loan losses at September 30, 2002 was $163.3 million or
1.28 percent of total loans, within the Company's targeted range of 1.25
percent to 1.35 percent. The current allowance provides a coverage level of
4.44 times annualized net charge-offs and 5.51 times nonperforming loans, each
significantly above industry levels. During the quarter, the provision for
loan losses exceeded net charge-offs by $1.7 million.
EFFICIENCY
The Company's cash efficiency ratio was 46.90 percent for the third
quarter, compared to 46.47 percent in the prior quarter and 44.85 percent in
the third quarter of last year. Cash non-interest expense (total non-interest
expense less goodwill amortization, core deposit amortization and non-
recurring expenses) for third quarter 2002 was $139.2 million, compared to
$113.1 million for third quarter 2001 and $132.8 million for second quarter
2002. The banking cash efficiency ratio increased to 42.66 percent from
41.14 percent in third quarter 2001 and from 42.63 percent in the second
quarter. The Company's efficiency ratio has been negatively impacted by the
current economy and its recent expansion initiatives.
EXPANSION
During the quarter, NCF announced plans which will expedite the expansion
of its banking presence in the Atlanta metropolitan area by entering into an
agreement to purchase 15 traditional or "hub" branches from Wachovia and to
assume Wachovia's lease obligations for seven additional branches. These 22
branches complement the Company's existing and planned in-store, or "spoke"
branches, and will give National Bank of Commerce (NBC), the Company's banking
subsidiary, the fifth largest branch presence in Atlanta by the end of 2003
with 61 branches opened or under development. Using its proven hub-and-spoke
de novo expansion model, the Company is focusing its efforts on capturing a
five percent share of the $57 billion deposit market within five years.
Supplemental financial tables are available on the Company's website at
http://www.ncfcorp.com/releases.cfm.
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
Fav/
Earnings and Earnings Per Share 09/30/2002 06/30/2002 (Unfav)
Revenues (TE) $296,670 285,892 3.8
GAAP net income $82,977 80,868 2.6
Non-recurring expenses, after-tax -- -- --
Operating GAAP earnings 82,977 80,868 2.6
Amortization of goodwill and
core deposit intangibles, net of tax 10,679 11,052 3.4
Operating cash earnings $93,656 91,920 1.9
Average basic shares outstanding 206,258,720 206,368,053 (.1)
Average diluted shares outstanding 208,328,301 208,978,097 (.3)
Basic EPS - GAAP $.40 .39 2.6
Diluted EPS - GAAP .40 .39 2.6
Basic EPS - Operating GAAP .40 .39 2.6
Diluted EPS - Operating GAAP .40 .39 2.6
Basic EPS -Operating Cash .45 .45 --
Diluted EPS - Operating Cash .45 .44 2.3
Key Performance Ratios
Net interest margin 4.27% 4.33
Cash efficiency ratio 46.90 46.47
Banking cash efficiency ratio 42.66 42.63
Cash return on average assets 1.80 1.82
Cash return on average tangible
assets 1.92 1.95
Cash return on average equity 14.26 14.57
Cash return on average tangible
equity 29.22 31.28
Asset Quality Ratios
Loan loss allowance to total loans 1.28% 1.30
Net loans charged-off (annualized) to
average loans .29 .24
Nonperforming assets to loans plus
foreclosed real
estate and other repossessed assets .50 .53
Loan loss allowance to net charge-
offs (annualized) 4.44 x 5.53
Loan loss allowance to nonperforming
loans 5.51 5.30
Selected Average Balances
Assets $20,639,674 20,233,304 2.0
Tangible assets 19,304,887 18,881,879 2.2
Loans 12,600,075 12,335,537 2.1
Core deposits 12,358,788 12,405,823 (.4)
Stockholders' equity 2,606,497 2,529,919 3.0
Tangible stockholders' equity 1,271,710 1,178,494 7.9
Selected Period End Balances
Assets $20,943,731 20,812,168 .6
Tangible assets 19,617,548 19,469,081 .8
Loans 12,740,563 12,470,030 2.2
Core deposits 12,566,599 12,487,536 .6
Stockholders' equity 2,639,513 2,596,386 1.7
Tangible stockholders' equity 1,313,330 1,253,299 4.8
Shares outstanding 205,767,938 206,417,264
Number of banking offices 472 466
Number of ATMs 550 554
Number of full-time equivalent
employees (FTE) 5,402 5,469
Capital Ratios
Average equity to average assets 12.63% 12.50
Average tangible equity to average
tangible assets 6.59 6.24
Period-end tangible equity to period-
end tangible assets 6.69 6.44
Risk-based capital ratios:
Tier 1 capital 10.70 E 10.49
Total capital 11.90 E 11.69
Leverage ratio 7.80 E 7.76
E - Estimated
NATIONAL COMMERCE FINANCIAL CORPORATION
Current Quarter Financial Highlights
(In Thousands Except Share and Per Share Data)
%
Three Months Ended Change
Fav/
Earnings and Earnings Per Share 09/30/2002 09/30/2001 (Unfav)
Revenues (TE) 296,670 252,165 17.6
GAAP net income 82,977 57,611 44.0
Non-recurring expenses, after-tax -- 1,904 100.0
Operating GAAP earnings 82,977 59,515 39.4
Amortization of goodwill and
core deposit intangibles, net of tax 10,679 20,837 48.7
Operating cash earnings 93,656 80,352 16.6
Average basic shares outstanding 206,258,720 204,307,702 1.0
Average diluted shares outstanding 208,328,301 206,723,011 .8
Basic EPS - GAAP .40 .28 42.9
Diluted EPS - GAAP .40 .28 42.9
Basic EPS - Operating GAAP .40 .29 37.9
Diluted EPS - Operating GAAP .40 .29 37.9
Basic EPS -Operating Cash .45 .39 15.4
Diluted EPS - Operating Cash .45 .39 15.4
Key Performance Ratios
Net interest margin 4.27 4.42
Cash efficiency ratio 46.90 44.85
Banking cash efficiency ratio 42.66 41.14
Cash return on average assets 1.80 1.78
Cash return on average tangible assets 1.92 1.90
Cash return on average equity 14.26 13.20
Cash return on average tangible equity 29.22 25.48
Asset Quality Ratios
Loan loss allowance to total loans 1.28 1.31
Net loans charged-off (annualized) to
average loans .29 .21
Nonperforming assets to loans plus
foreclosed real
estate and other repossessed assets .50 .24
Loan loss allowance to net charge-offs
(annualized) 4.44 6.19
Loan loss allowance to nonperforming
loans 5.51 9.73
Selected Average Balances
Assets 20,639,674 17,899,618 15.3
Tangible assets 19,304,887 16,734,682 15.4
Loans 12,600,075 11,370,853 10.8
Core deposits 12,358,788 10,373,805 19.1
Stockholders' equity 2,606,497 2,415,884 7.9
Tangible stockholders' equity 1,271,710 1,250,948 1.7
Selected Period End Balances
Assets 20,943,731 18,481,554 13.3
Tangible assets 19,617,548 17,322,978 13.2
Loans 12,740,563 11,516,651 10.6
Core deposits 12,566,599 10,615,568 18.4
Stockholders' equity 2,639,513 2,414,864 9.3
Tangible stockholders' equity 1,313,330 1,256,288 4.5
Shares outstanding 205,767,938 204,032,413
Number of banking offices 472 393
Number of ATMs 550 466
Number of full-time equivalent
employees (FTE) 5,402 4,809
Capital Ratios
Average equity to average assets 12.63 13.50
Average tangible equity to average
tangible assets 6.59 7.48
Period-end tangible equity to period-
end tangible assets 6.69 7.25
Risk-based capital ratios:
Tier 1 capital 10.70 E 9.72
Total capital 11.90 E 10.97
Leverage ratio 7.80 E 7.59
E - Estimated
NATIONAL COMMERCE FINANCIAL CORPORATION
Year to Date Financial Highlights
(In Thousands Except Share and Per Share Data)
%
Nine Months Ended $ Change Change
Earnings and Earnings Per Fav/ Fav/
Share 09/30/2002 09/30/2001 (Unfav) (Unfav)
Revenues (TE) $853,916 732,814 121,102 16.5
GAAP net income $238,744 165,436 73,308 44.3
Non-recurring expenses,
after-tax 3,211 1,904 1,307 68.6
Operating GAAP earnings 241,955 167,340 74,615 44.6
Amortization of goodwill and
core deposit intangibles,
net of tax 32,351 63,052 (30,701) (48.7)
Operating cash earnings $274,306 230,392 43,914 19.1
Average Basic Shares
Outstanding 206,126,098 205,119,550
Average Diluted Shares
Outstanding 208,531,349 207,712,220
Basic EPS - GAAP $1.16 .81 .35 43.2
Diluted EPS - GAAP 1.14 .80 .34 42.5
Basic EPS - Operating GAAP 1.17 .82 .35 42.7
Diluted EPS - Operating GAAP 1.16 .81 .35 43.2
Basic EPS -Operating Cash 1.33 1.12 .21 18.8
Diluted EPS - Operating Cash 1.32 1.11 .21 18.9
Key Performance Ratios
Net interest margin 4.33% 4.32
Cash efficiency ratio 46.64 46.47
Banking cash efficiency
ratio 42.51 43.25
Cash return on average
assets 1.82 1.74
Cash return on average
tangible assets 1.95 1.87
Cash return on average
equity 14.43 12.78
Cash return on average
tangible equity 30.08 25.19
Asset Quality Ratios
Loan loss allowance to total
loans 1.28% 1.31
Net loans charged-off
(annualized) to average
loans .26 .20
Loan loss allowance to net
charge-offs (annualized) 5.01 x 6.71
Selected Average Balances
Assets $20,144,291 17,696,543 2,447,748 13.8
Tangible assets 18,821,605 16,508,906 2,312,699 14.0
Loans 12,349,955 11,183,577 1,166,378 10.4
Core deposits 12,168,241 10,142,405 2,025,836 20.0
Stockholders' equity 2,541,768 2,410,397 131,371 5.5
Tangible stockholders'
equity 1,219,082 1,222,760 (3,678) (.3)
Capital Ratios
Average equity to average
assets 12.62% 13.62
Average tangible equity to
average tangible assets 6.48 7.41
SOURCE National Commerce Financial Corporation
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Related links:
http://www.ncfcorp.com
CONTACT:
Tim Schools of National Commerce Financial
Corporation, +1-901-523-3087
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