First Combined Quarter Following CCB Merger
MEMPHIS, Tenn., Oct. 18 /PRNewswire/ --
National Commerce Bancorporation (Nasdaq: NCBC) today announced record third
quarter operating earnings. During the period, NCBC completed its "merger of
equals" with the former CCB Financial Corporation of Durham, North Carolina.
The merger was accounted for as a pooling-of-interests and all prior period
results are restated. In addition, during the period, NCBC completed its
acquisition of First Mercantile Trust of Memphis, Tennessee, ("First
Mercantile").
For the quarter ended September 30, 2000, NCBC diluted earnings per share,
before non-recurring expenses ("operating earnings"), were $.32, compared to
$.28 per share in the same quarter of 1999, a 14.3 percent increase. Net
income, before non-recurring expenses, was $66.3 million, an 11.4 percent
increase over the $59.5 million reported for the same period a year earlier.
Including non-recurring expenses, NCBC incurred a net loss for the quarter of
$.01 per diluted share.
During the third quarter of 2000, NCBC incurred non-recurring expenses of
$86.2 million in connection with the CCB merger. The after-tax cost of
$68.8 million amounted to $.33 per diluted share. During the second quarter
of 2000, NCBC incurred non-recurring expenses of $.02 per diluted share in
connection with the acquisition of the former Piedmont Bancorp, Inc. of
Hillsborough, North Carolina and the consolidation of American Federal Bank,
FSB, its South Carolina banking subsidiary, into Central Carolina Bank and
Trust Company, its North Carolina banking subsidiary. During the second
quarter of 1999, NCBC reported a non-recurring gain of $.10 per diluted share
on the sale of consumer credit card receivables. The non-recurring expenses
and gain have been excluded from operating results discussed below.
The Company's annualized return on average assets and return on average
stockholders' equity were 1.63 percent and 20.26 percent respectively, for the
third quarter. These compared with 1999 third quarter returns of 1.62 percent
and 18.78 percent.
For the nine months ended September 30, 2000, net operating income totaled
$194.0 million, a 10.5 percent increase over the $175.5 million earned for the
first nine months of 1999. Diluted operating earnings per share were $.94,
compared to $.84 for the same period in 1999, an 11.9 percent increase.
Diluted earnings per share for the nine months ended September 30, 2000, after
non-recurring expenses, were $0.59. For the nine-month period, return on
average assets was 1.63 percent, compared to 1.65 percent for 1999, while
return on average stockholders' equity was 19.92 percent, compared to
19.78 percent a year earlier.
Consolidated assets totaled $16.5 billion at September 30, 2000, up
13.8 percent from the year earlier total of $14.5 billion. During the third
quarter of 2000, NCBC's average loans and leases increased to $10.8 billion,
growing at a rate of 15.2 percent over the third quarter of 1999. Average
deposits grew 5.8 percent to $11.6 billion during the third quarter of 2000
compared to the year-ago quarter.
"I am pleased we were able to deliver solid operating earnings for the
quarter in spite of a difficult revenue environment," noted Ernest C.
Roessler, president and chief executive officer of NCBC. "Fee income growth
helped balance pressure on our net interest margin which appears to be
stabilizing. In addition, loan production continues to be robust while our
credit quality remains outstanding. Equally as important, we made substantial
progress on our merger integration during the quarter. We have identified
over 92 percent of the cost savings we expected to achieve and have obtained
commitments from management for the last 8 percent. Our systems conversions
are on track, with the first conversion successfully completed last week for
North Carolina. Finally, our team continues to work well together in sharing
best practices and identifying revenue opportunities."
NET INTEREST EARNINGS
Net interest earnings, on a taxable equivalent basis, were $151.5 million
in the third quarter of 2000, compared to $152.2 million for the corresponding
period in 1999, a .5 percent decrease. The third quarter net interest margin
was 3.96 percent, compared to 4.39 percent for third quarter 1999. The cost
of interest-bearing liabilities increased from 4.29 percent in third quarter
1999 to 5.22 percent in 2000, while the taxable equivalent yield on earning
assets increased from 8.08 percent to 8.49 percent.
NON-INTEREST INCOME AND EXPENSE
Non-interest income (excluding securities gains and losses) totaled
$71.8 million versus $51.2 million for third quarter 1999, an increase of
40.2 percent. Strong increases were experienced in deposit service charges,
transaction processing fees, trust, retail brokerage and broker/dealer
revenues. Excluding $8.0 million in fees from First Mercantile, non-interest
income (excluding securities gains and losses) increased 24.6 percent over the
year-ago quarter.
Non-interest expenses for the third quarter 2000, before non-recurring
charges, were $111.7 million, compared to $99.5 million in 1999, an increase
of 12.3 percent. Excluding $7.2 million in expenses from First Mercantile,
non-interest expenses increased by 5.0 percent over the comparable prior year
period. The Company's efficiency ratio, the ratio of non-interest expenses to
net revenues, was 50.00 percent for the quarter.
Financial Enterprises, comprised of NCBC's transaction processing, trust
and asset management, consulting and capital markets businesses, earned net
income of $6.8 million for the third quarter of 2000 as compared to
$4.3 million for the third quarter of 1999 and $5.2 million for the second
quarter of 2000. $.5 million of the increase resulted from the operations of
First Mercantile. Excluding First Mercantile, Financial Enterprises' net
income rose from the third quarter of 1999 by 45.1 percent and over the second
quarter of 2000 by 20.0 percent (80.0 percent annualized).
PROVISION FOR LOAN LOSSES
The provision for loan losses in the third quarter of 2000 was
$5.1 million, compared to $7.7 million for the third quarter 1999. Annualized
net charge-offs for the third quarter of 2000 were .18 percent of average
loans, compared to .15 percent of average loans in the year-ago quarter.
NON-PERFORMING LOANS AND ASSETS
Non-performing loans and assets totaled $30.8 million (.28 percent of net
loans) at September 30, 2000, compared to $25.3 million at September 30, 1999
(.26 percent of net loans) and $33.3 million at June 30, 2000 (.31 percent of
net loans). The loan loss reserve amounts to 1.32 percent of total net loans
at September 30, 2000.
Loans past due 90 days or more were $7.9 million, or .07 percent of net
loans at September 30, 2000, compared to $7.0 million, or .07 percent of net
loans, at September 30, 1999 and June 30, 2000.
ABOUT NCBC
On July 5, 2000, National Commerce Bancorporation and CCB Financial
Corporation closed their previously announced merger of equals. The new
company, called National Commerce Bancorporation, has $16.5 billion in assets
and nearly 400 locations in nine Southeastern states. NCBC, 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 affiliates 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.
NCBC 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 NCBC; and
other economic, competitive, governmental, regulatory and technological
factors affecting NCBC specifically or the banking industry or economy
generally.
NATIONAL COMMERCE BANCORPORATION
Financial Summary
Unaudited
(In thousands except share and per share data)
Three Months Ended
9-30-00 6-30-00 3-31-00 12-31-99 9-30-99
Income Statement
Loan
income (TE) 243,717 233,803 221,500 218,828 203,101
Securities
income (TE) 77,946 77,009 73,236 67,528 69,317
Other interest
income (TE) 3,692 2,473 3,767 4,034 4,965
Total interest
income (TE) 325,355 313,285 298,503 290,390 277,383
Savings/NOW
expense 14,696 14,100 14,027 14,065 13,507
Money market
account
expense 23,613 22,836 21,632 20,375 18,942
CD's $100
or more 33,172 29,835 27,361 23,014 21,989
CD's less
than $100 56,503 51,928 49,316 48,762 45,665
Total interest
on deposits 127,984 118,699 112,336 106,216 100,103
FHLB advances 24,352 21,674 19,641 15,689 14,476
Long-term
debt expense 650 648 649 653 651
Fed funds and
other
short-term
debt expense 20,843 20,024 13,960 10,455 9,930
Total interest
expense 173,829 161,045 146,586 133,013 125,160
Net interest
income (TE) 151,526 152,240 151,917 157,377 152,223
Taxable
equivalent
adjustment 7,699 8,307 8,292 8,015 7,759
Net interest
income 143,827 143,933 143,625 149,362 144,464
Provision for
loan losses 5,098 6,194 4,284 7,835 7,665
Net interest
income after
provision 138,729 137,739 139,341 141,527 136,799
Service
charges on
deposits 25,755 24,786 22,315 22,839 21,313
Other service
charges
and fees 8,695 8,075 7,033 6,989 6,395
Trust income 6,251 5,836 5,586 5,464 5,045
Sales and
insurance
commission
(broker/dealer) 9,024 7,070 8,418 7,375 7,028
Accretion of
negative
goodwill 839 839 839 839 839
Other 21,220 14,047 11,790 11,056 10,590
Investment
securities
gains
(losses) (33) 1,136 288 1,086 (125)
Total
non-interest
income 71,751 61,789 56,269 55,648 51,085
Personnel
expense 53,890 55,374 54,401 54,817 53,878
Occupancy 9,579 8,452 8,143 8,258 8,133
Equipment 6,672 6,605 6,462 6,892 6,584
Foreclosed
property
expense 118 153 122 166 123
Deposit and
other
insurance 373 807 649 789 761
Amortization
of intangible
assets 1,483 1,361 1,317 1,323 1,272
Other 39,549 30,281 30,951 30,992 28,703
Conversion /
merger
expense (a) 86,205 6,047 1,150
Total
noninterest
expense 197,869 109,080 102,045 104,387 99,454
Income before
income taxes 12,611 90,448 93,565 92,788 88,430
Income taxes 15,095 29,106 30,958 31,054 28,915
Net income
(loss) (2,484) 61,342 62,607 61,734 59,515
Per share data
Income before
non-recurring
items (a)
-basic 0.32 0.32 0.30 0.30 0.29
Income before
non-recurring
items (a)
-diluted 0.32 0.32 0.30 0.30 0.28
Net income
(loss)
- basic (0.01) 0.30 0.30 0.30 0.29
Net income
(loss)
- diluted (0.01) 0.30 0.30 0.29 0.28
Cash dividends 0.13 0.11 0.11 0.11 0.10
Book value 6.30 6.75 6.63 6.52 6.40
Closing
stock
price (b) 19.94 16.06 18.50 22.69 21.97
High stock
price for
the quarter 20.13 19.94 22.69 26.44 23.88
Low stock price
for the
quarter 15.25 16.06 15.50 21.50 20.50
Three Months Ended
9-30-00 6-30-00 3-31-00 12-31-99 9-30-99
Ratios
Income before
non-recurring
items(a):
Return on
average
assets 1.63% 1.64% 1.62% 1.66% 1.62%
Return on
average
equity 20.26% 20.22% 19.29% 19.05% 18.78%
Net interest
margin 3.96% 4.07% 4.18% 4.43% 4.39%
Average equity
to average
assets 8.06% 8.11% 8.41% 8.72% 8.63%
Operating Efficiency Ratios
As a percentage
of average
assets
(excluding
non-recurring
items (a)):
Noninterest
income 1.78 1.55 1.45 1.49 1.40
Personnel
expense 1.33 1.39 1.40 1.47 1.48
Occupancy and
equipment
expense 0.40 0.38 0.38 0.41 0.40
Other operating
expense 1.03 0.82 0.85 0.89 0.85
Noninterest
expense 2.76 2.58 2.63 2.77 2.73
Net overhead
(noninterest
exp
-noninterest
inc.) 0.99 1.03 1.18 1.28 1.33
Noninterest
expense as a
percentage of
net interest
income(TE)
and other
income
(excluding
non-recurring
items(a)) 50.00% 48.40% 49.08% 48.71% 48.89%
Average
Balances
Assets 16,162,403 15,953,122 15,523,543 14,917,595 14,562,841
Loans
(all
domestic)(c):
Commercial,
financial,
agri
-cultural 2,140,789 2,090,266 2,052,917 2,039,517 2,023,991
Real estate
- construc
-tion 2,630,574 2,497,690 2,341,952 2,228,082 2,099,923
Real
estate
- mortgage 3,073,976 2,984,937 2,870,110 2,767,688 2,488,336
Consumer 2,792,641 2,821,616 2,804,391 2,746,210 2,641,433
Lease
financing 139,546 127,892 113,751 106,960 101,991
Unearned
income (18,622) (14,985) (12,921) (12,192) (11,185)
Loans, net
of
unearned 10,758,904 10,507,416 10,170,200 9,876,265 9,344,489
Investment
securities:
Taxable(d) 4,090,183 4,065,662 3,943,684 3,678,968 3,783,517
Tax-exempt 284,913 288,236 280,190 267,013 281,902
Earning
assets(d) 15,224,855 15,048,988 14,625,332 14,091,792 13,762,981
Deposits:
Demand
deposits
(non
-interest
-bearing) 1,308,075 1,333,438 1,267,381 1,309,984 1,317,611
Money market
checking 1,166,005 1,209,095 1,203,058 1,181,414 1,167,188
Savings 130,031 133,360 133,150 134,189 141,063
Money market
savings 3,068,316 3,104,926 3,093,097 3,135,212 3,065,353
Cert. of
dep
under
$100 3,803,210 3,753,145 3,750,718 3,664,745 3,561,354
Cert. of
dep $100
and over 2,099,425 1,999,609 1,992,208 1,812,470 1,692,324
Total
deposits 11,575,062 11,533,573 11,439,612 11,238,014 10,944,893
Fed funds
and other
short-term
borrowed
funds 1,358,935 1,376,642 1,078,696 855,925 882,323
Long-term
debt 39,357 39,357 39,357 39,413 39,431
FHLB
advances 1,574,516 1,374,139 1,385,430 1,197,858 1,145,891
Interest-
bearing
liabil-
ities 13,239,792 12,990,273 12,675,715 12,021,223 11,694,727
Share-
holders'
equity(e) 1,302,332 1,293,830 1,305,451 1,300,231 1,257,108
Share Data(e)
Common
shares
out-
standing 205,186,627 203,129,378 205,565,951 206,707,298 206,695,939
Weighted
average
shares
outstanding:
Basic 205,465,735 204,302,402 206,487,150 207,588,376 206,831,542
Diluted 207,329,521 206,310,675 208,606,669 210,312,345 209,806,522
Three Months Ended
9-30-00 6-30-00 3-31-00 12-31-99 9-30-99
Reserve for
loan losses
Beginning
balance 143,160 140,234 139,821 135,248 131,202
Provision for
loan losses 5,098 6,194 4,284 7,835 7,665
Addition from
acquired
institution 886
Recoveries 1,846 1,796 1,611 2,096 1,855
Charge-offs (6,594) (5,064) (5,482) (6,244) (5,474)
Ending
balance 143,510 143,160 140,234 139,821 135,248
Ending balance
comprised of:
Nonaccrual
loans 26,432 28,292 25,952 15,950 22,165
Foreclosed
real estate 4,366 5,062 1,874 3,143 3,166
Total
nonperforming
assets 30,798 33,354 27,826 19,093 25,331
Restructured
loans 2,235 2,237 2,241 2,251 714
Ninety days
past due
and accruing 7,949 7,025 8,515 9,025 6,989
Total risk
assets 40,982 42,616 38,582 30,369 33,034
Asset Quality Ratios
Total risk assets to:
Loans, net
of unearned
and foreclosed
real estate 0.38% 0.41% 0.38% 0.31% 0.35%
Total assets 0.25% 0.27% 0.25% 0.20% 0.23%
Loan loss
reserve to
total risk
assets 3.50 3.36 3.63 4.60 4.09
Net
charge-offs
to average
loans
(annualized) 0.18% 0.12% 0.15% 0.17% 0.15%
Loan loss
reserve/avg.
loans, net
of unearned 1.33% 1.36% 1.38% 1.42% 1.45%
Other Information
Number of
offices 378 380 375 369 366
Intangible
assets:
Goodwill 37,198 38,363 37,507 30,695 28,071
Deposit base
premium 10,994 11,311 11,628 11,889 12,195
Mortgage
servicing
rights 2,159 2,316 2,497 2,686 2,829
Negative
goodwill 9,654 10,493 11,332 12,171 13,010
Cash dividends 26,714 22,641 22,802 22,886 21,210
Nine Months Ended September 30
Increase (Decrease)
2000 1999 Amount %
Income Statement
Loan income (TE) 699,020 592,638 106,382 18.0%
Securities income (TE) 228,191 195,998 32,193 16.4%
Other interest income (TE) 9,932 19,622 (9,690) -49.4%
Total interest income (TE) 937,143 808,258 128,885 15.9%
Savings/NOW expense 42,823 41,103 1,720 4.2%
Money market
account expense 68,081 52,512 15,569 29.6%
Large CD expense 90,368 59,999 30,369 50.6%
Consumer time
deposit expense 157,746 135,671 22,075 16.3%
Total interest
on deposits 359,018 289,285 69,733 24.1%
Fed funds and
other short-term debt 54,820 29,858 24,962 83.6%
FHLB advances 65,675 40,258 25,417 63.1%
Long-term debt 1,947 1,949 (2) -0.1%
Total interest expense 481,460 361,350 120,110 33.2%
Net interest income (TE) 455,683 446,908 8,775 2.0%
Taxable equivalent
adjustment 24,298 22,549 1,749 7.8%
Net interest income 431,385 424,359 7,026 1.7%
Provision for loan losses 15,576 21,682 (6,106) -28.2%
Net interest income
after provision 415,809 402,677 13,132 3.3%
Service charges
on deposits 72,856 60,943 11,913 19.5%
Other service
charges and fees 23,803 19,741 4,062 20.6%
Trust income 17,673 15,631 2,042 13.1%
Sales and insurance
commission
(broker/dealer) 24,512 23,523 989 4.2%
Accretion of
negative goodwill 2,517 2,517 0 0.0%
Other 47,057 40,480 6,577 16.2%
Gain on sale of credit
card receivables 0 32,837 (32,837) -100.0%
Investment securities
gains (losses) 1,391 (1,712) 3,103 -181.3%
Total non-interest income 189,809 193,960 (4,151) -2.1%
Personnel expense 163,665 161,363 2,302 1.4%
Occupancy 26,174 23,363 2,811 12.0%
Equipment 19,739 18,087 1,652 9.1%
Foreclosed property expense 392 489 (97) -19.8%
Deposit and other insurance 1,829 2,283 (454) -19.9%
Amortization of
intangible assets 4,161 3,323 838 25.2%
Other 100,782 91,368 9,414 10.3%
Conversion / merger
expenses(a) 92,252 0
Total noninterest expense 408,994 300,276 16,466 5.5%
Income before income taxes 196,624 296,361 (7,485) -2.5%
Income taxes 75,155 100,941 (25,786) -25.5%
Net income 121,469 195,420 18,301 9.4%
Per share data
Income before
non-recurring
items (a)-basic 0.94 0.85 0.09 10.7%
Income before
non-recurring
items (a)-diluted 0.94 0.84 0.09 11.2%
Net income - basic 0.59 0.95 (0.36) -37.8%
Net income - diluted 0.59 0.94 (0.35) -37.4%
Cash dividends 0.35 0.30 0.05 16.7%
Nine months ended Sept 30
Ratios 2000 1999
Income before
non-recurring items(a):
Return on average assets 1.63% 1.65%
Return on average equity 19.92% 19.78%
Net interest margin 4.07% 4.45%
Average equity to
average assets 8.19% 8.35%
As of Sept. 30 Averages YTD
Balance sheet data 2000 1999 2000 1999
Assets 16,466,169 14,524,910 15,880,346 14,203,080
Loans(all domestice)(c): 0
Commercial 2,167,764 2,032,658 2,094,791 1,939,643
Constructions and
commercial real estate 2,714,420 2,149,114 2,490,572 2,006,406
Mortgage 3,093,836 2,569,876 2,976,394 2,383,863
Consumer 2,798,779 2,732,565 2,806,207 2,647,821
Lease financing 145,323 104,640 127,099 93,850
Unearned income (6,796) (11,813) (14,846) (10,871)
Total loans 10,913,326 9,577,040 10,480,217 9,060,712
Investment securities(d) 4,359,651 3,942,277 4,276,907 4,038,007
Earning assets(d) 15,499,887 13,756,776 14,967,065 13,414,599
Deposits: 0
Demand deposits
(non-interest-bearing) 1,384,555 1,295,866 1,302,964 1,314,645
Savings/NOW accounts 2,046,354 2,061,566 2,065,315 2,110,474
Money market accounts 2,336,997 2,299,021 2,348,318 2,250,786
Large CD's 2,114,400 1,776,819 2,030,565 1,532,733
Consumer time deposits 3,848,194 3,580,779 3,769,056 3,523,749
Total deposits 11,730,500 11,014,051 11,516,218 10,732,387
Short-term
borrowed funds 1,307,638 665,860 1,271,631 917,135
Long-term debt 39,357 39,429 69,357 39,436
FHLB advances 1,794,375 1,289,738 1,445,004 1,045,019
Interest-bearing
liabilities 13,479,330 11,734,218 12,969,246 11,419,335
Shareholders'
equity(e) 1,292,211 1,269,745 1,300,537 1,186,277
Other comprehensive
income, net of
taxes adjustment (18,144) (5,541) (24,509) 6,845
Reserve for loan losses
Beginning balance 139,821 129,063
Provision for loan losses 15,576 21,682
Addition from
acquired institution (1,967)
Recoveries 5,251 5,483
Charge-offs (17,138) (19,013)
Ending balance 143,510 135,248
Net charge-offs to
average loans (annualized) 0.15 0.19
Nine months Ended Sept 30
2000 1999
Operating Efficiency Ratios
As a percentage of average assets
(excluding non-recurring
items (a):
Noninterest income 1.20 1.13
Personnel expense 1.03 1.14
Occupancy and
equipment expense 0.29 0.29
Other operating expense 0.67 0.69
Noninterest expense 1.99 2.11
Net overhead (noninterest
exp-noninterest inc.) 0.80 0.98
Noninterest expense as
a percentage of
net interest income(TE)
and other income
(excluding non-recurring
items(a)) 49.18 49.25
Share Data(e)
Common shares
outstanding 205,186,627 206,695,939
Weighted average
shares outstanding:
Basic 205,418,601 205,632,669
Diluted 207,393,275 208,709,988
(a) Non-recurring expenses incurred in the third quarter of 2000
($68.8 million after tax) related to the merger of the Company with CCB
Financial Corporation. Non-recurring expenses incurred in the second
quarter of 2000 ($3.7 million after-tax) related to the acquisition of
Piedmont Bancorp and the merger of American Federal Bank, FSB into Central
Carolina Bank and Trust Company. Non-recurring expenses incurred in the
fourth quarter of 1999 ($0.7 million after tax) related to acquisition of
First Financial Corporation and Southeastern Mortgage of Tennessee. Also
in 1999, a one time gain ($19.9 million after tax) was realized on the
sale of credit card receivables.
(b) Nasdaq symbol:NCBC
(c) Loan balances by category in accordance with the Corporation's
internal classification system which uses the purpose of the borrowing to
determine the reporting category.
(d) Average balances exclude the mark-to-market adjustment for Statement
of Financial Standards No. 115 and cash flow hedging adjustment for
Statement of Financial Standards No. 133.
(e) Under a previously announced stock repurchase plan the Company has
repurchased 1,414,325 shares of its common stock during 2000 and 1,051,500
shares during the year ended December 31, 1999. The average cost of the
shares repurchased was $18.13 and $21.74 per share for 2000 and 1999,
respectively.
SOURCE National Commerce Bancorporation
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