-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WOP2KlyzUItEFpaonQ0Tl2GJyTmVaUq47i+aoEYtK7Urdg/WpJuZROhdOK8yTY9s PHAbFLVAShKQOZvKpH5krQ== 0000931763-01-000778.txt : 20010410 0000931763-01-000778.hdr.sgml : 20010410 ACCESSION NUMBER: 0000931763-01-000778 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20010404 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL COMMERCE BANCORPORATION CENTRAL INDEX KEY: 0000101844 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 620784645 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-06094 FILM NUMBER: 1595117 BUSINESS ADDRESS: STREET 1: ONE COMMERCE SQ CITY: MEMPHIS STATE: TN ZIP: 38150 BUSINESS PHONE: 9014156416 MAIL ADDRESS: STREET 1: ONE COMMERCE SQ CITY: MEMPHIS STATE: TN ZIP: 38150 FORMER COMPANY: FORMER CONFORMED NAME: UNITED TENNESSEE BANCSHARES CORP DATE OF NAME CHANGE: 19780820 FORMER COMPANY: FORMER CONFORMED NAME: UNITED TENNESSEE BANSHARES CORP DATE OF NAME CHANGE: 19780525 10-Q/A 1 0001.txt FORM 10-Q/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 Commission file number 0-6094 ------ NATIONAL COMMERCE BANCORPORATION -------------------------------- (Exact name of registrant as specified in its charter) Tennessee 62-0784645 --------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) One Commerce Square Memphis, Tennessee 38150 ------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code - (901)523-3434 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $2 par value -- 205,397,217 shares as of November 1, 2000 PART I. FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements -------------------- NATIONAL COMMERCE BANCORPORATION Consolidated Balance Sheets -------------------------------- (In Thousands) Sept 30 Dec. 31 2000 1999 ------------ ------------ (unaudited) ASSETS ------ Cash and cash equivalents: Interest-bearing deposits with other banks $ 65,170 $ 86,071 Cash and non-interest bearing deposits 412,286 482,050 Federal funds sold and securities purchased under agreements to resell 128,410 61,058 ------------ ------------ Total cash and cash equivalents 605,866 629,179 ------------ ------------ Securities: Available-for-sale 2,406,954 2,179,366 Held-to-maturity 1,954,143 1,837,122 ------------ ------------ Total securities 4,361,097 4,016,488 ------------ ------------ Trading account securities 41,879 30,294 Loans, net of unearned discounts 10,903,330 10,049,649 Less allowance for loan losses 143,510 139,821 ------------ ------------ Net loans 10,759,820 9,909,828 ------------ ------------ Premises and equipment, net 170,532 164,913 Broker/dealer customer receivables 17,591 25,047 Other assets 509,384 359,700 ------------ ------------ Total assets $ 16,466,169 $ 15,135,449 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities: Deposits: Non-interest bearing deposits $ 1,384,555 $ 1,291,715 Interest-bearing deposits 10,345,945 10,030,690 ------------ ------------ Total deposits 11,730,500 11,322,405 Short-term borrowings 1,299,652 1,112,708 Accounts payable and accrued liabilities 280,156 192,751 Federal Home Loan Bank advances 1,794,375 1,128,823 Long-term debt 39,357 39,357 ------------ ------------ Total liabilities 15,144,040 13,796,044 ------------ ------------ Capital trust pass-through securities 49,918 49,909 Stockholders' equity: Common stock 410,373 413,415 Additional paid-in capital 87,824 142,432 Retained earnings 779,752 751,320 Accumulated other comprehensive loss (5,738) (17,671) ------------ ------------ Total stockholders' equity 1,272,211 1,289,496 ------------ ------------ Total liabilities and stockholders' equity $ 16,466,169 $ 15,135,449 ============ ============ See notes to consolidated financial statements. 1 NATIONAL COMMERCE BANCORPORATION Consolidated Statements of Income ---------------------------------- (Unaudited) (In Thousands, Except per Share Data)
For the three months For the nine months ended Sept 30 ended Sept 30 ---------------------- --------------------- 2000 1999 2000 1999 --------- --------- --------- --------- Interest income: Loans $ 240,363 $ 199,905 $ 688,548 $ 583,628 Securities: Taxable 69,195 61,795 201,486 176,569 Non-taxable 4,430 4,257 12,981 12,841 Trading account securities 656 532 1,652 1,813 Deposits at bank 882 824 3,220 2,439 Other 2,130 2,311 4,958 8,419 --------- --------- --------- --------- Total interest income 317,656 269,624 912,845 785,709 --------- --------- --------- --------- Interest expense: Deposits 127,984 100,103 359,018 289,285 Federal Home Loan Bank advances 24,352 14,476 65,675 40,258 Long-term debt 650 651 1,947 1,949 Federal funds purchased and securities sold under agreements to repurchase and other short-term borrowings 20,843 9,930 54,820 29,858 --------- --------- --------- --------- Total interest expense 173,829 125,160 481,460 361,350 --------- --------- --------- --------- Net interest income 143,827 144,464 431,385 424,359 Provision for loan losses 5,098 7,665 15,576 21,682 --------- --------- --------- --------- Net interest income after provision for loan losses 138,729 136,799 415,809 402,677 --------- --------- --------- --------- Other income: Trust service income 6,251 5,045 17,673 15,631 Service charges on deposits 25,755 21,313 72,856 60,943 Other service charges and fees 8,695 6,395 23,803 19,741 Broker/dealer revenue 9,024 7,028 24,512 23,523 Securities gains (losses) (33) (125) 1,391 (1,712) Other 22,059 11,429 49,574 42,997 Gain on sale of credit card receivables 0 0 0 32,837 --------- --------- --------- --------- Total other income 71,751 51,085 189,809 193,960 --------- --------- --------- --------- Other expenses: Salaries and employee benefits 53,890 53,878 163,665 161,363 Occupancy expense 9,579 8,133 26,174 23,363 Furniture and equipment expense 6,672 6,584 19,739 24,182 Other 53,847 30,859 127,170 91,368 Conversion/merger expenses 86,205 0 92,252 0 --------- --------- --------- --------- Total other expenses 210,193 99,454 429,000 300,276 --------- --------- --------- --------- Income before income taxes 287 88,430 176,618 296,361 Income taxes 10,412 28,915 67,553 100,941 --------- --------- --------- --------- Net income ($ 10,125) $ 59,515 $ 109,065 $ 195,420 ========= ========= ========= ========= Basic net income (loss) per share of common stock ($.05) $.29 $.53 $.95 Diluted net income (loss) per share of common stock ($.05) $.28 $.53 $.94 Dividends per share of common stock $.13 $.10 $.35 $.30
See notes to consolidated financial statements. 2 NATIONAL COMMERCE BANCORPORATION Consolidated Statements of Cash Flows ------------------------------------- (Unaudited)
For the Nine Months Ended Sept 30 -------------------------- 2000 1999 ----------- ----------- (In Thousands) Operating activities: Net income $ 109,065 $ 195,420 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for loan losses 15,576 21,682 Provision for depreciation and amortization 14,197 22,441 Amortization of security premiums and accretion 194 240 of discounts, net (Increase) decrease in loans held for sale (19,739) (71,747) (Increase) decrease in trading account securities (11,585) 44,014 Realized securities (gains) losses (1,391) 1,712 Net (gain) loss on sale of credit card receivables 0 (32,837) (Increase) decrease in other assets (87,091) (69,014) Increase (decrease) in other liabilities 98,294 49,813 ----------- ----------- Net cash provided by (used in) operating activities 117,520 161,724 ----------- ----------- Investing activities: Proceeds from the maturities of securities 137,821 676,967 Proceeds from sales of securities 1,403,904 384,217 Purchases of securities (1,865,275) (1,347,173) Net (increase) decrease in loans (849,407) (946,958) Purchase of premises and equipment (14,647) (27,921) Proceeds from sale of mortgage loans held for sale 0 419,330 Purchase of bank owned life insurance (70,000) 0 ----------- ----------- Net cash provided by (used in) investing activities (1,257,604) (841,538) ----------- ----------- Financing activities: Net increase (decrease) in deposits 408,095 267,401 Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase 186,944 (116,774) Repayments of long-term debt 9 (6) Increase (decrease) in Federal Home Loan Bank advances 665,552 253,797 Proceeds from exercise of stock options 4,904 4,001 Issuance of common stock 6,050 81,309 Repurchases of common stock (82,626) (65,383) Cash dividends paid (72,157) (60,588) ----------- ----------- Net cash provided by (used in) financing activities 1,116,771 363,757 ----------- ----------- Increase (decrease) in cash and cash equivalents (23,313) (316,057) Cash and cash equivalents at beginning of period 629,179 926,261 ----------- ----------- Cash and cash equivalents at end of period $ 605,866 $ 610,204 =========== ===========
See notes to consolidated financial statements. 3 NATIONAL COMMERCE BANCORPORATION -------------------------------- Notes to Consolidated Financial Statements ------------------------------------------ September 30, 2000 ------------------ (Unaudited) --------- Note A - Basis of Presentation - ------------------------------ The consolidated balance sheet at December 31, 1999 has been derived from the audited financial statements at that date. The accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting only of normally recurring accruals) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The statements should be read in conjunction with the summary of accounting policies and notes to consolidated financial statements included in the Registrant's annual report for the year ended December 31, 1999. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted in accordance with the rules of the Securities and Exchange Commission. During third quarter, 1999, the Company acquired First Financial Corporation of Mt. Juliet, Tennessee, and Nashville-based Southeastern Mortgage of Tennessee. During second quarter, 2000, the Company acquired Piedmont Bancorp, Inc. of Hillsborough, North Carolina. On July 5, 2000 the Company merged with CCB Financial Corporation in a merger of equals transaction. Each of the foregoing transactions which were accounted for using the pooling-of-interest method, are incorporated into reported results. For comparative purposes, all prior-year results are restated to include these acquisitions. The Company also acquired FMT Holdings, Inc. on July 27, 2000, which was accounted for as an immaterial pooling. Note B - Mergers and Merger Related Costs - ----------------------------------------- Net interest income, non-interest revenue and net income as previously reported individually by National Commerce Bancorporation (NCBC) and CCB Financial Corporation (CCBF) and for the combined company for the three and nine month periods ended September 30, 2000, and reflected below:
3 months ended Nine months ended September 30 September 30 -------------- ----------------- 2000 1999 2000 1999 ---- ---- ---- ---- Net interest income: NCBC $143,827 $ 61,719 $265,958 $177,031 CCBF(1) 0 82,745 165,427 247,328 -------- -------- -------- -------- Combined $143,827 $144,646 $431,385 $424,359 ======== ======== ======== ======== Non-interest income: NCBC $ 71,751 $ 22,536 $122,319 $ 67,982 CCBF(1) 0 28,549 67,490 125,978 -------- -------- -------- -------- Combined $ 71,751 $ 51,085 $189,809 $193,960 ======== ======== ======== ======== Net-income (loss): NCBC $(10,125) $ 27,970 $ 44,085 $ 78,038 CCBF(1) 0 31,545 64,980 117,382 -------- -------- -------- -------- Combined $(10,125) $ 59,515 $109,065 $195,420 ======== ======== ======== ========
(1) The 2000 amounts reflect the results of operations from January 1, 2000 through June 30, 2000. The results from July 1, 2000 to September 30, 2000 are included in the NCBC amounts. NCBC expects to incur approximately $110 million total pretax merger expenses in connection with the CCBF merger, of which $86.2 million was incurred during the third quarter, 2000. In addition, the Company incurred $6.0 pretax merger-related expenses in connection with the acquisition of the former Piedmont Bancorp. of Hillsborough, NC and the consolidation of American Federal Bank, FSB, a South Carolina banking subsidiary, into Central Carolina Bank and Trust Company. The components of the cost are shown below:
3 months ended 9 months ended Sept. 30, 2000 Sept. 30, 2000 -------------- -------------- (In Thousands) Merger & integration costs: Severance costs $ 5,359 $ 6,430 Employee retention costs 294 594 Restricted stock acceleration 925 1,469 Change-in-control related costs 41,734 43,241 Other costs accrued 3,734 3,734 ------- ------- Total personnel-related 52,046 55,468 Investment banking and other transaction costs 15,510 16,023 Occupancy & equipment writedowns - 600 Systems and operations conversions 8,291 9,612 Securities losses fron balance sheet restructuring 10,358 10,358 ------- ------- Total merger and integration costs 86,205 92,061 ------- ------- Other merger-related charges: Other merger-related charges - 191 ------- ------- Total other merger-related charges 0 191 ------- ------- Total merger-related charges $86,205 $92,252 ======= ======= Accrued restructuring charges: Balance at beginning of period - - Provision charged to operating expense $86,205 $92,252 Cash outlays (72,671) (78,118) Non-cash writedowns (4,059) (4,659) ------- ------- Balance at end of period $ 9,475 $ 9,475 ======= =======
Severance and personnel related costs include severance payments under the Company's change in control severance plan, employee relocations expenses, retention bonuses, accelerating vesting of long-term incentive compensation and change in control payments under employee agreements with certain officers. The Company has identified cost savings in connection with the CCB Financial Corporation merger of $6 million for the year 2000, $45 million for the year 2000 and $50 million for the year 2002. As discussed in the second paragraph of Managment's Discussion and Analysis, actual cost savings may differ from the amounts identified. Note C - Segment Information - ---------------------------- Before the merger of equals transaction with CCB Financial Corporation, former management segregated business into three segments: commercial banking, retail banking and other financial services. Following the merger, management has redefined the business and considers itself to operate two principal lines: traditional banking and financial enterprises. The traditional banking segment includes sales and distribution of financial products and services to individuals. These products and services include loan products such as residential mortgages, home equity lending, automobile and other personal financing needs. Traditional banking also offers various deposit products that are designed for customers' saving and transaction needs. The traditional banking segment also includes lending and related financial services provided to large and medium-sized corporations. Included among these services are several specialty services such as real estate finance, asset based lending and residential construction lending. Traditional banking also includes management of the investment portfolio and non-deposit based funding. The Financial Enterprises segment includes trust services and investment management, transaction processing, in-store consulting/licensing and institutional broker/dealer activities. The accounting policies of the individual segments are the same as those of the Company described in Note A. Transactions between business segments are conducted at fair value and are eliminated for reporting consolidated financial position and results of operations. There are no significant intersegment revenues. Interest income for tax-exempt loans and securities is adjusted to a taxable equivalent basis. The following tables (in thousands of dollars) present condensed income statements on a fully taxable equivalent basis and average assets for each reportable segment. 4 Quarter Ended September 30, 2000:
Traditional Financial Banking Enterprises Total ----------- ----------- ----- Net interest income $ 148,795 $ 2,731 $ 151,526 Provision for loan losses (5,098) 0 (5,098) ---------- -------- ----------- Net interest income after provision 143,697 2,731 146,428 Non-interest income 42,709 29,042 71,751 Non-interest expense (189,389) (20,804) (210,193) ----------- -------- ----------- Net income before taxes (2,983) 10,969 7,986 Income taxes (loss) (13,822) (4,289) (18,111) ----------- -------- ----------- Net income (loss) $ (16,805) $ 6,680 $ (10,125) =========== ======== =========== Average assets $15,733,285 $424,270 $16,157,555 Quarter Ended September 30, 1999: Traditional Financial Banking Enterprises Total ----------- ----------- ----------- Net interest income $ 150,358 $ 1,865 $ 152,223 Provision for loan losses (7,665) 0 (7,665) ----------- -------- ----------- Net interest income after provision 142,693 1,865 144,558 Non-interest income 35,585 15,500 51,085 Non-interest expense (89,196) (10,258) (99,454) ----------- -------- ----------- Net income before taxes 89,082 7,107 96,189 Income taxes (33,889) (2,785) (36,674) ----------- -------- ----------- Net income $ 55,193 $ 4,322 $ 59,515 =========== ======== =========== Average assets $14,216,993 $345,848 $14,562,841 Nine Months Ended September 30, 2000: Traditional Financial Banking Enterprises Total ----------- ----------- ----------- Net interest income $ 448,334 $ 7,349 $ 455,683 Provision for loan losses (15,576) 0 (15,576) ----------- -------- ----------- Net interest income after provision 432,758 7,349 440,107 Non-interest income 124,718 65,091 189,809 Non-interest expense (383,565) (45,435) (429,000) ----------- -------- ----------- Net income before taxes 173,911 27,005 200,916 Income taxes (81,297) (10,554) (91,851) ----------- -------- ----------- Net income $ 92,614 $ 16,451 $ 109,065 =========== ======== =========== Average assets $15,509,913 $368,771 $15,878,684 Nine Months Ended September 30, 1999: Traditional Financial Banking Enterprises Total ----------- ----------- ----------- Net interest income $ 441,914 $ 4,994 $ 446,908 Provision for loan losses (21,682) 0 (21,682) ----------- -------- ----------- Net interest income after provision 420,232 4,994 425,676 Non-interest income 144,927 49,033 193,960 Non-interest expense (268,467) (31,809) (300,276)
5
----------- -------- ----------- Net income before taxes 296,692 22,218 318,910 Income taxes (114,804) (8,686) (123,490) ----------- -------- ----------- Net income $ 181,888 $ 13,532 $ 195,420 =========== ======== =========== Average assets $13,891,062 $312,018 $14,203,080
Note D - Earnings Per Share - --------------------------- The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended Nine Months Ended September 30 September 30 ------------------- ------------------ In Thousands, Except Per Share Data 2000 1999 2000 1999 ---- ---- ---- ---- Numerator: Net income (loss) $(10,125) $ 59,515 $109,065 $195,420 ======== ======== ======== ======== Denominator: Denominator for basic earnings per share - weighted average shares 205,466 206,832 205,419 205,633 Dilutive potential common shares - Employee stock options 1,864 2,975 1,974 3,077 -------- -------- -------- -------- Denominator for diluted earnings per share - adjusted weighted average and assumed conversions 207,330 209,807 207,393 208,710 ======== ======== ======== ======== Basic earnings (loss) per share $ (.05) $ .29 $ .53 $ .95 Diluted earnings (loss) per share $ (.05) $ .28 $ .53 $ .94
Note E - Comprehensive Income - ----------------------------- During the third quarter of 2000 and 1999, total comprehensive income amounted to $7,109,000 and $54,557,000 respectively. The year-to-date total comprehensive income for 2000 and 1999 was $120,996,000 and $175,060,000 respectively. 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ----------------------------------------------------------------------- The purpose of this discussion is to focus on important factors affecting the Company's financial condition and results of operations. Reference should be made to the consolidated financial statements (including the notes thereto) set forth in this report for an understanding of the following discussion and analysis. In this discussion, net interest income and net interest margin are presented on a fully taxable equivalent basis. During third quarter, 1999, the Company acquired First Financial Corporation of Mt. Juliet, Tennessee, and Nashville-based Southeastern Mortgage of Tennessee. During second quarter, 2000, the Company acquired Piedmont Bancorp, Inc. of Hillsborough, North Carolina. On July 5, 2000 the Company merged with CCB Financial Corporation in a merger of equals transaction. Each of the foregoing transactions which were accounted for using the pooling-of-interests method, are incorporated into reported results. For comparative purposes, all prior-year results are restated to include these acquisitions. The Company also acquired PMT Holdings, Inc. on July 27, 2000, which was accounted for as an immaterial pooling. The Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe harbor for forward-looking statements made by or on behalf of the Company. All statements in this Quarterly Report on Form 10-Q that are not historical facts or that express expectations or projections with respect to future matters are "forward-looking statements" for the purpose of the safe harbor provided by the Act. The Company cautions readers that such "forward-looking statements," including, without limitation, those relating to future business initiatives and prospects, revenues, working capital, liquidity, capital needs, and interest costs and income, wherever they occur in this document or in other statements attributable to the Company, are necessarily estimates reflecting the best judgment of the Company's senior management. Such statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the "forward-looking statements." Such "forward-looking statements" should, therefore be considered in light of various important factors, including those set forth in this document. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include significant fluctuations in interest rates, inflation, economic recession, significant changes in the federal and state legal and regulatory environment, significant underperformance in the Company's portfolio of outstanding loans, difficulty in integrating the operations of the Company and CCB Financial Corporation, lower than expected cost savings and failure to achieve anticipated synergies following the Company's merger with CCB Financial Corporation, competition in the Company's markets from both financial and non-financial institutions, including institutions moving into the Company's markets for the first time through mergers and acquisitions. Other factors set forth from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission should also be considered. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. Financial Condition - ------------------- Following is a comparison of the September 30, 2000 and December 31, 1999 consolidated balance sheets. In the asset section, total loans, net of unearned discounts, increased by $854 million or 8.5% compared to December 31, 1999 levels. Commercial loans decreased by $154 million or 11.1%, real estate construction loans increased by $389 million or 27.1%, real estate mortgage loans increased by $658 million or 12.8% reflecting current demand. Consumer loans decreased $71 million or 3.5%, primarily due to the termination of an automobile loan referral program from State Farm insurance agents. Securities increased by $344 million or 8.6% from year-end 1999. Securities held to maturity increased by $117 million or 6.4%, and securities available for sale increased by $228 million or 10.4%, reflecting current portfolio investment strategies, and current market conditions. 7 Federal funds sold and securities purchased under agreements to resell increased by $67 million or 110.3% from December 31, 1999 levels, reflecting levels of activity of correspondent banks at September 30, 2000. Trading account securities increased by $12 million or 38.2% from year-end 1999 levels. This increase reflects the trading activity generated by NBC Capital Markets Group, Inc., the Company's broker/dealer subsidiary, which fluctuates from time to time. Broker/dealer customer receivables decreased $7 million or 29.8%. In the liability section, total deposits increased by $408 million or 3.6%, principally as a result of a $301 million or 16.6% increase in certificates of deposit greater than $100,000, a $136 million or 3.7% increase in certificates of deposit less than $100,000 and a $92 million or 7.2% increase in non-interest- bearing deposits. This increase was partially offset by a $46 million or 1.5% decrease in money market savings accounts, and a $71 million or 4.7% decrease in money market checking accounts. Federal funds purchased and securities sold under agreements to repurchase increased $187 million or 16.8% from year-end 1999 levels. This category of liabilities fluctuates with the availability of overnight funds purchased from downstream correspondent banks. Federal Home Loan Bank advances increased $665 million or 59.0% from December 31, 1999. This increase is principally the result of asset/liability management decisions related to funding loan growth in the current interest rate environment. Results of Operations - --------------------- Three Months Ended September 30, 2000, Compared to Three Months Ended September 30, 1999 - -------------------------------------------------------------------------------- Net loss was $10,125,000 for the third quarter of 2000 compared to $59,515,000 net income for the same period a year earlier. Diluted earnings (loss) per share were ($.05), compared to $.28 per share in 1999. Basic earnings (loss) per share were ($.05), compared to $.29 per share in 1999. During the quarter, the Company incurred non-recurring expenses of $86.2 million in connection with the CCB Financial Corporation merger. The after-tax cost of $68.8 million amounted to $.33 per diluted share. Net income, before non-recurring expenses, was $66,317,000, an 11.4% increase over the $59,515,000 reported for the third quarter of 1999. Diluted earnings per share before non-recurring expenses was $.32 compared to $.28 in third quarter of 1999. Basic earnings per share were $.32 compared to $.29 for third quarter 1999. Net interest income, the difference between interest earned on loans and investments and interest paid on interest-bearing liabilities, decreased by $637,000 or .5% for the third quarter of 2000, compared to third quarter 1999. This decrease reflects a $47,972,000 or 17.3% increase in total interest income that was offset by a $48,669,000 or 38.9% increase in interest expense. Interest income increased in 2000 due to an increase of $1,462,000,000 or 10.6% in total average earning assets, and an increase in the yield on average earning assets from 8.08% in the third quarter of 1999 to 8.49% in the third quarter of 2000. The increased volume of earning assets increased interest income by approximately $29,463,000 while the increased yield increased interest income by approximately $18,509,000. Interest expense increased in the third quarter of 2000, reflecting an increase in average interest-bearing liabilities of $1,545,000,000 or 13.2% and an increase in the cost of interest-bearing liabilities from 4.29% to 5.22%. The increase in the rate paid on interest- bearing liabilities increased interest expense by approximately $32,133,000 and the increase in average outstandings increased interest expense by approximately $16,536,000. The net interest margin (taxable equivalent net interest income as a percentage of average earning assets) was 3.96% in third quarter 2000, compared to 4.39% in third quarter of 1999. 8 The provision for loan losses in the third quarter of 2000 was $5,098,000, versus $7,665,000 for the third quarter of 1999. Net charge-offs were $4,748,000, or .18% of average net loans, compared to $3,619,000 or .15% of average net loans in 1999. The allowance for loan losses totaled $143,510,000 at September 30, 2000, representing 1.32% of quarter-end net loans, compared to $143,160,000 or 1.36% of quarter-end net loans at June 30, 2000 and $135,248,000 or 1.41% of quarter-end net loans at September 30, 1999. Following is a comparison of non-earning assets and loans past due 90 days or more for the quarters ended September 30, 2000, June 30, 2000, and September 30, 1999 (dollars in thousands): 9-30-00 6-30-00 9-30-99 ------- ------- ------- Non-accrual loans $26,432 $28,292 $22,165 Renegotiated loans 2,235 2,237 714 Other real estate 4,366 5,062 3,166 ------- ------- ------- Total non-earning assets $33,033 $35,591 $26,045 ======= ======= ======= Percentage of total loans .31% .34% .28% Loans past due 90 days or more $7,949 $7,025 $6,989 Percentage of total loans .07% .07% .07% Non-interest income, excluding securities transactions, totaled $71,784,000 for the quarter, an increase of $20,574,000, or 40.2%, from last year's third quarter. Securities losses totaled $33,000 in third quarter, 2000, compared to a loss of $125,000 in third quarter 1999. Non-interest expenses (excluding the provision for loan losses) increased by $98,415,000 or 99.0% in third quarter, 2000. Non-recurring expenses related to the CCB Financial Corporation merger were $86.2 million. The Company also had $7.2 million in expense from FMT Holding, Inc., which was acquired during the third quarter, 2000. The Company's return on average assets and return on average equity were 1.63% and 20.26% respectively, for third quarter of 2000 before non- recurring expenses. These compared with 1999 third quarter returns of 1.62% and 18.78%, respectively. Nine Months Ended September 30, 2000, Compared to Nine Months Ended September 30, 1999 - -------------------------------------------------------------------------------- Net income was $109,065,000 for the first nine months of 2000 a 44.2% decrease over the $195,420,000 income for the same period a year earlier. Diluted earnings per share were $.53, compared to $.94 per share in 1999, down 43.6%. Basic earnings per share were $.53, compared to $.95 per share in 1999, down 44.2%. In addition to the expenses related to the CCB merger, the Company had non- recurring expenses of $.02 per diluted share in connection with the acquisition of the former Piedmont Bancorp. of Hillsborough, North Carolina and the consolidation of American Federal Bank, FSB, a South Carolina banking subsidiary, into Central Carolina Bank and Trust Company. During the second quarter of 1999, the Company reported a non-recurring gain of $.10 per diluted share on the sale of consumer credit card receivables. Net income, before non-recurring items, was $193,984,000, a 10.5% increase over the $175,485,000 reported for the same period of 1999. Diluted earnings per share before non-recurring items was $.94 compared to $.84 in 1999. Basic earnings per share were $.94 compared to $.85 in 1999. For the nine-month period, return on average assets and return on average stockholders' equity were 1.63% and 19.89% respectively before non-recurring items. These compared with 1999 nine month returns of 1.65% and 19.72% before non-recurring items. Net interest income increased by $8,775,000 or 2.0% for the first nine months of 2000. This increase reflects a $128,885,000 or 15.9% increase in total interest income that more than offsets a $120,110,000 or 33.2% increase in interest expense. Interest income increased in 2000 due to an increase of $1,552,000,000 or 11.6% in total average earning assets and an increase in the yield on average earning assets 9 from 8.06% in 1999 to 8.38% in 2000. The increased volume of earning assets increased interest income by approximately $95,539,000, and the increased yield increased interest income by approximately $35,346,000. Interest expense increased in the first nine months of 2000 reflecting an increase in average interest-bearing liabilities of $1,550,000,000 or 13.5%, with the cost of interest-bearing liabilities increasing from 4.23% to 4.96% in 2000. The increase in average outstandings increased interest expense by approximately $24,179,000 and the increased rate increased interest expense by approximately $95,931,000. The net interest margin was 4.07% in the first nine months of 2000, compared to 4.45% in the first nine months of 1999. The provision for loan losses for the first nine months of 2000 was $15,576,000, versus $21,682,000 for the first nine months of 1999. Net charge-offs were $11,087,000, or .15% of average net loans compared to $13,530,000, or .19% of average net loans in 1999. Non-interest income, excluding securities transactions, totaled $188,418,000 for the first nine months of 2000 compared to a total of $195,672,000 for the first nine months of 1999, a decrease of 3.7%. Included in 1999 is a $32,837,000 pre-tax gain from the sale of consumer credit card receivables. Included in 2000 is $8.0 million pretax income from FMT Holdings, Inc., which was acquired during third quarter 2000. Adjusting for these items, non-interest income increased 10.77% over 1999. Securities gains totaled $1,391,000 in 2000, compared to a loss of $1,712,000 in 1999. Non-interest expenses (excluding the provision for loan losses) increased by $108,718,000 or 36.2% for the first nine months of 2000. Excluding the non-recurring items already mentioned and $7.2 million in expense from FMT Holdings, Inc., which was acquired during third quarter 2000, non interest expense increased $9,313,000 or 3.1% for the first nine months of 2000. Increased employment and occupancy expenses relating to new products and locations, and increased promotional expenses of new loan and deposit gathering campaigns were the primary reasons for the increase. Liquidity and Capital Resources - ------------------------------- Interest-bearing bank balances, federal funds sold, trading account securities, and securities available for sale are the principal sources of short- term asset liquidity. Other sources of short-term liquidity include federal funds purchased and repurchase agreements, credit lines with other banks, and borrowings from the Federal Reserve Bank and the Federal Home Loan Bank. Maturing loans and securities are the principal sources of long-term asset liquidity. Total stockholders' equity decreased by $17,285,000 from December 31, 1999. Common stock and additional paid-in capital accounted for the majority of the decrease. Through September 30, 2000, 9.8 million shares had been repurchased and cancelled under a stock repurchase program initiated in January, 1996, extended in December, 1997 and December, 1999. The following capital ratios do not include the effect of FAS No. 115 or FAS No. 133 on Tier I capital, total capital, or total risk-weighted assets. As indicated in the following table, the Company and its banking subsidiaries exceeded all minimum required capital ratios for well-capitalized institutions at September 30, 2000. 9-30-00 6-30-00 9-30-99 ------- ------- ------- Total capital to risk-weighted assets 12.06% 13.87% 13.84% Tier I capital to risk-weighted assets 10.69% 12.62% 12.32% Tier I capital to assets (leverage ratio) 7.93% 8.45% 8.80% Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ---------------------------------------------------------- Market risk reflects the risk of economic loss resulting from adverse changes in market price and interest rates. This risk of loss can be reflected in diminished current market values and/or reduced potential net interest income in future periods. After the merger of equals transaction with the former CCB Financial Corporation, NCBC's market risk continues to result primarily from interest rate risk inherent in its lending and deposit-taking activities. The structure of NCBC's loan and deposit portfolios is such that a significant rise or decline in interest rates may adversely impact net market values and net interest income. Responsibility for monitoring interest rate risk rests with the asset/liability committee (ALCO), comprised of senior management. ALCO regularly reviews NCBC's interest rate risk position and adopts balance sheet strategies that are intended to optimize net interest income while maintaining market risk within a set of Board-approved guidelines. NCBC is not subject to currency exchange risk nor commodity price risk. 10 PART II. OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K --------------------------------- a. Exhibits 27. Financial Data Schedule b. Reports on Form 8-K SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NATIONAL COMMERCE BANCORPORATION (Registrant) /s/ Mark A. Wendel ------------------------------------- Mark A. Wendel Senior Vice President and Chief Accounting Officer (Authorized Officer) (Chief Accounting Officer) Date April 4, 2001 ------------- 11 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
9 1,000 9-MOS 9-MOS DEC-31-2000 DEC-31-1999 JAN-01-2000 JAN-01-1999 SEP-30-2000 SEP-30-1999 207,840 391,468 36,342 142,699 34,550 76,037 37,660 18,723 2,406,954 2,157,459 1,954,143 1,784,818 1,863,902 1,713,466 10,903,330 9,577,040 62,064 135,248 16,466,169 14,565,916 11,730,500 11,014,051 2,279,652 720,576 324,001 239,245 820,748 1,257,660 1,272,211 1,269,745 0 0 0 0 0 0 16,466,169 14,565,916 688,548 583,628 214,467 189,410 9,830 12,671 912,845 785,709 359,018 289,285 122,442 72,065 431,385 424,359 15,576 21,682 1,391 (1,712) 429,000 300,276 176,618 296,361 176,618 296,361 0 0 0 0 121,469 195,420 .53 .95 .53 .94 4.07 4.39 26,432 22,165 7,949 6,989 0 0 0 0 139,821 129,063 17,138 19,013 5,251 5,483 143,510 135,248 143,510 135,248 0 0 0 0
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