-----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, EzeZ9r530bUajgb3e2+gh2SFU9YVejhb9kYLSiVvSAcBNhF2OrJgpAesz7iobXAg 6oaVHLrt8FM8MFoWbNL6IQ== 0000931763-01-000780.txt : 20010410 0000931763-01-000780.hdr.sgml : 20010410 ACCESSION NUMBER: 0000931763-01-000780 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 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: 1595119 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 June 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 -- 111,059,797 shares as of August 1, 2000 PART I. FINANCIAL INFORMATION Item 1. Financial Statements NATIONAL COMMERCE BANCORPORATION Consolidated Balance Sheets (In Thousands)
June 30 Dec. 31 2000 1999 ----------- ------------ (unaudited) ASSETS Cash and cash equivalents: Interest-bearing deposits with other banks $ 36,342 $ 23,051 Cash and non-interest bearing deposits 207,840 181,999 Federal funds sold and securities purchased under agreements to resell 34,550 61,058 ----------- ----------- Total cash and cash equivalents 278,732 266,108 ----------- ----------- Securities: Available-for-sale 656,163 578,528 Held-to-maturity 1,926,151 1,763,752 ----------- ----------- Total securities 2,582,314 2,342,080 ----------- ----------- Trading account securities 37,660 30,294 Loans, net of unearned discounts 4,266,967 4,095,465 Less allowance for loan losses 62,064 62,555 ----------- ----------- Net loans 4,204,903 4,032,910 ----------- ----------- Premises and equipment, net 51,431 51,055 Broker/dealer customer receivables 26,274 25,047 Other assets 257,574 204,414 ----------- ----------- Total assets $ 7,438,888 $ 6,951,908 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits: Non-interest bearing deposits $ 511,963 $ 458,326 Interest-bearing deposits 4,233,425 4,147,054 ----------- ----------- Total deposits 4,745,388 4,605,380 Short-term borrowings 1,175,354 883,038 Accounts payable and accrued liabilities 119,600 102,288 Federal Home Loan Bank advances 754,927 732,886 Long-term debt 6,372 6,372 ----------- ----------- Total liabilities 6,801,641 6,329,964 ----------- ----------- Capital trust pass-through securities 49,915 49,909 Stockholders' equity: Common stock 218,621 219,474 Additional paid-in capital 78,958 108,783 Retained earnings 297,186 247,728 Accumulated other comprehensive loss (7,433) (3,950) ----------- ----------- Total stockholders' equity 587,332 572,035 ----------- ----------- Total liabilities and stockholders' equity $ 7,438,888 $ 6,951,908 =========== ===========
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 six months ended June 30 ended June 30 -------------------------- -------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Interest income: Loans $ 92,892 $ 75,861 $ 181,597 $ 149,556 Securities: Taxable 40,296 34,434 78,993 67,402 Non-taxable 3,427 3,139 6,510 6,371 Trading account securities 520 632 996 1,281 Deposits at bank 400 340 680 710 Other 495 1,140 1,984 1,996 --------- --------- --------- --------- Total interest income 138,030 115,546 270,760 227,316 --------- --------- --------- --------- Interest expense: Deposits 49,743 38,905 96,816 76,677 Federal Home Loan Bank advances 12,636 9,801 24,985 19,050 Long-term debt 92 91 184 181 Federal funds purchased and securities sold under agreements to repurchase and other short-term borrowings 15,538 8,098 26,644 16,096 --------- --------- --------- --------- Total interest expense 78,009 56,895 148,629 112,004 --------- --------- --------- --------- Net interest income 60,021 58,651 122,131 115,312 Provision for loan losses 2,030 3,988 4,217 6,530 --------- --------- --------- --------- Net interest income after provision for loan losses 57,991 54,663 117,914 108,782 --------- --------- --------- --------- Other income: Trust service income 2,344 2,662 4,707 5,237 Service charges on deposits 7,388 5,133 13,843 10,110 Other service charges and fees 6,966 5,427 12,888 10,253 Broker/dealer revenue 3,301 4,892 7,699 10,323 Securities gains (losses) 249 (2,135) 327 (2,116) Other 5,909 8,592 11,104 12,449 --------- --------- --------- --------- Total other income 26,157 24,571 50,568 46,256 --------- --------- --------- --------- Other expenses: Salaries and employee benefits 19,392 19,844 39,643 39,504 Occupancy expense 3,834 3,436 7,364 6,839 Furniture and equipment expense 2,068 2,001 4,047 3,818 Other 18,387 15,619 38,397 29,203 --------- --------- --------- --------- Total other expenses 43,681 40,900 89,451 79,364 --------- --------- --------- --------- Income before income taxes 40,467 38,334 79,031 75,674 Income taxes 12,736 12,607 24,825 24,722 --------- --------- --------- --------- Net income $ 27,731 $ 25,727 $ 54,206 $ 50,952 ========= ========= ========= ========= Basic net income per share of common stock $ .25 $ .24 $ .49 $ .48 Diluted net income per share of common stock $ .25 $ .23 $ .49 $ .47 Dividends per share of common stock $ .105 $ .09 $ .21 $ .18
See notes to consolidated financial statements. 2 NATIONAL COMMERCE BANCORPORATION Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30 --------------------------- 2000 1999 ---- ---- (In Thousands) Operating activities: Net income $ 54,206 $ 50,952 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for loan losses 4,217 6,530 Provision for depreciation and amortization 4,536 5,852 Amortization of security premiums and accretion of discounts, net (345) 201 Deferred income taxes (credit) (4,443) 615 (Increase) decrease in trading account securities (7,366) (19,929) Realized securities (gains) losses (327) 2,116 (Increase) decrease in broker/dealer customer receivables (1,227) (34,586) (Increase) decrease in other assets (49,614) (26,104) Increase (decrease) in accounts payable and accrued expenses 20,798 97,853 --------- --------- Net cash provided by (used in) operating activities 20,435 83,500 --------- --------- Investing activities: Proceeds from the maturities of securities 34,068 168,949 Proceeds from sales of securities 0 63,828 Purchases of securities (278,982) (514,821) Net (increase) decrease in loans (176,210) (247,103) Purchase of premises and equipment (4,009) (8,555) --------- --------- Net cash provided by (used in) investing activities (425,133) (537,702) --------- --------- Financing activities: Net increase (decrease) in demand deposits, NOW accounts and savings accounts (73,052) (180,655) Net increase (decrease) in certificates of deposit 213,060 344,037 Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase 292,316 111,731 Increase (decrease) in Federal Home Loan Bank advances 22,041 46,492 Proceeds from exercise of stock options 2,182 1,690 Issuance of common stock 776 81,626 Repurchases of common stock (17,167) (10,726) Cash dividends paid (22,834) (19,478) --------- --------- Net cash provided by (used in) financing activities 417,322 374,717 --------- --------- Increase (decrease) in cash and cash equivalents 12,624 (79,485) Cash and cash equivalents at beginning of period 266,108 338,787 --------- --------- Cash and cash equivalents at end of period $ 278,732 $ 259,302 ========= =========
See notes to consolidated financial statements. 3 NATIONAL COMMERCE BANCORPORATION Notes to Consolidated Financial Statements June 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 first quarter, 2000, the Company acquired Piedmont Bancorp, Inc. of Hillsborough, North Carolina. These acquisitions, 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. Reported results do not include the results of CCB Financial Corporation, with whom the Company merged on July 5, 2000 in a merger of equals transaction accounted for using the pooling-of-interests method, and the results of FMT Holdings, Inc. which the Company acquired by merger on July 27, 2000 in a transaction accounted for using the pooling-of-interests method. Note B - Segment Information The Company operates three principal lines of business. The commercial banking segment 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. The retail 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. Retail banking also offers various deposit products that are designed for customers' saving and transaction needs. The other financial services segment includes investment management, non-deposit based funding, interest rate risk management, transaction processing, in-store consulting/licensing, securities brokerage and specialty leasing. 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. Interest income for tax-exempt loans and securities is adjusted to a taxable equivalent basis. Each segment's balance sheet is adjusted to reflect its net funding position. Assets are increased if excess funds are provided; liabilities are increased if funds are needed to support assets. Each segment's net interest income is affected by the internal transfer rate assigned to its net funding position, which rate is equivalent to the Company's average external cost of funds. Interest income for tax-exempt loans and securities is adjusted to a taxable equivalent basis. Expenses for centrally provided services such as deposit servicing, data processing, technology and loan servicing and underwriting are allocated to each segment based upon various statistical information. Other indirect costs, such as management 4 overhead and corporate support, are also allocated to each segment based upon various statistical information. The portion of the provision for loan losses that is not related to specific net charge-offs is allocated to the segment based upon loan growth. There are no significant intersegment revenues. Performance is assessed primarily on net interest margin by the chief operating decision makers. The following tables (in thousands of dollars) present condensed income statements on a fully taxable equivalent basis and average assets for each reportable segment.
Quarter Ended June 30, 2000: Other Commercial Retail Financial Banking Banking Services Total ----------- ----------- ----------- ----------- Net interest income $ 14,419 $ 25,762 $ 24,001 $ 64,182 Provision for loan losses (552) (1,231) (247) (2,030) ----------- ----------- ----------- ----------- Net interest income after provision 13,867 24,531 23,754 62,152 Non-interest income 823 4,022 21,312 26,157 Non-interest expense (4,199) (12,968) (26,514) (43,681) ----------- ----------- ----------- ----------- Net income before taxes 10,491 15,585 18,552 44,628 Income taxes (3,973) (5,901) (7,023) (16,897) ----------- ----------- ----------- ----------- Net income $ 6,518 $ 9,684 $ 11,529 $ 27,731 =========== =========== =========== =========== Average assets $ 1,069,039 $ 3,458,437 $ 2,843,824 $ 7,371,300 Quarter Ended June 30, 1999: Other Commercial Retail Financial Banking Banking Services Total ----------- ----------- ----------- ----------- Net interest income $ 13,343 $ 33,773 $ 14,891 $ 62,007 Provision for loan losses 245 (4,094) (139) (3,988) ----------- ----------- ----------- ----------- Net interest income after provision 13,588 29,679 14,752 58,019 Non-interest income 1,310 5,583 17,678 24,571 Non-interest expense (4,431) (19,436) (17,033) (40,900) ----------- ----------- ----------- ----------- Net income before taxes 10,467 15,826 15,397 41,690 Income taxes (4,009) (6,059) (5,895) (15,963) ----------- ----------- ----------- ----------- Net income $ 6,458 $ 9,767 $ 9,502 $ 25,727 =========== =========== =========== =========== Average assets $ 1,109,230 $ 2,702,509 $ 2,669,160 $ 6,480,899 Six Months Ended June 30, 2000: Other Commercial Retail Financial Banking Banking Services Total ----------- ----------- ----------- ----------- Net interest income $ 29,378 $ 52,984 $ 48,029 $ 130,391 Provision for loan losses (751) (3,156) (310) (4,217) ----------- ----------- ----------- ----------- Net interest income after provision 28,627 49,828 47,719 126,174 Non-interest income 1,727 6,902 41,939 50,568 Non-interest expense (8,511) (23,512) (57,428) (89,451) ----------- ----------- ----------- ----------- Net income before taxes 21,843 33,218 32,230 87,291 Income taxes (8,281) (12,593) (12,211) (33,085) ----------- ----------- ----------- ----------- Net income $ 13,562 $ 20,625 $ 20,019 $ 54,206 =========== =========== =========== =========== Average assets $ 1,060,695 $ 3,416,519 $ 2,820,698 $ 7,297,913
5
Six Months Ended June 30, 1999: Other Commercial Retail Financial Banking Banking Services Total ----------- ----------- ----------- ----------- Net interest income $ 29,179 $ 65,767 $ 27,106 $ 122,052 Provision for loan losses (641) (5,653) (236) (6,530) ----------- ----------- ----------- ----------- Net interest income after provision 28,538 60,114 26,870 115,522 Non-interest income 2,070 9,770 34,416 46,256 Non-interest expense (8,604) (39,729) (31,031) (79,364) ----------- ----------- ----------- ----------- Net income before taxes 22,004 30,155 30,255 82,414 Income taxes (8,400) (11,512) (11,550) (31,462) ----------- ----------- ----------- ----------- Net income $ 13,604 $ 18,643 $ 18,705 $ 50,952 =========== =========== =========== =========== Average assets $ 1,054,321 $ 2,647,601 $ 2,614,253 $ 6,316,175
Note C - Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended Six Months Ended June 30 June 30 --------------------- --------------------- In Thousands, Except Per Share Data 2000 1999 2000 1999 -------- -------- -------- -------- Numerator: Net income $ 27,731 $ 25,731 $ 54,206 $ 50,952 ======== ======== ======== ======== Denominator: Denominator for basic earnings per share - weighted average shares 109,425 107,477 109,608 106,739 Dilutive potential common shares - Employee stock options 1,300 2,256 1,389 2,187 -------- -------- -------- -------- Denominator for diluted earnings per share - adjusted weighted average and assumed conversions 110,725 109,733 110,997 108,926 ======== ======== ======== ======== Basic earnings per share $ .25 $ .25 $ .49 $ .48 Diluted earnings per share $ .25 $ .25 $ .49 $ .47
Note D - Comprehensive Income During the second quarter of 2000 and 1999, total comprehensive income amounted to $26,940,000 and $25,932,000 respectively. The year-to-date total comprehensive income for 2000 and 1999 was $50,723,000 and $48,962,000 respectively. Note E - Business Combination with CCB Financial Corporation On July 5, 2000, the Company consummated a merger with CCB Financial Corporation. After consummation of the strategic merger of equals with CCB, the Company now has approximately $16 billion in assets and approximately 400 branch banking offices and 220 ATMS in 9 southeastern states. The following unaudited pro forma data summarizes the three-month and six-month combined results of operations of the Company and CCB as if the merger had been effective for all periods presented. The pro-forma data does not reflect any impact of expected merger related charges or any related cost savings resulting from the merger. 6
For the three For the six months ended months ended June 30 June 30 ------------------------------- ------------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Net interest income $ 143,933 $ 142,376 $ 287,558 $ 279,895 Net income $ 59,533 $ 77,812 $ 119,186 $ 136,790 Basic net income per share $ .29 $ .38 $ .58 $ .67 Diluted - operating EPS $ .32 $ .27 $ .62 $ .56 Non-recurring items (.03)(b) .10(a) (.05)(b) .10(a) ----------- ----------- ----------- ----------- Diluted - reported EPS $ .29 $ .37 $ .57 $ .66 =========== =========== =========== ===========
(a) represents CCB's sale of credit card receivables (b) represents one-time charges related to acquisitions 7 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. These acquisitions, 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. All per share data is adjusted to reflect all stock dividends and stock splits declared. On July 5, 2000, the Company merged with CCB Financial Corporation, with the Company as the surviving entity. Because the merger occurred after June 30, 2000, the historical financial statements included in this report do not give effect to the merger, nor does this discussion give effect to the merger. 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, interest costs and income, and "Year 2000" remediation efforts, 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 following the Company's merger with CCB Financial Corporation and competition in the Company's markets. 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 June 30, 2000 and December 31, 1999 consolidated balance sheets. In the asset section, total loans, net of unearned discounts, increased by $172 million or 4.2% compared to December 31, 1999 levels. Commercial loans increased by $15 million or 2.2%, real estate construction loans increased by $19 million or 6.7%, and real estate mortgage loans increased by $152 million or 8.8% reflecting current demand. Consumer loans decreased $17 million or 1.3%. Securities increased by $240 million or 10.3% from year-end 1999. Securities held to maturity increased by $162 million or 9.2%, and securities available for sale increased by $78 million or 13.4%, reflecting current portfolio investment strategies, and current market conditions. Federal funds sold and securities purchased under agreements to resell 8 decreased by $27 million or 43.4% from December 31, 1999 levels, reflecting levels of activity of correspondent banks at June 30, 2000. Trading account securities increased by $7 million or 24.3% 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 increased $1 million or 4.9%. In the liability section, total deposits increased by $140 million or 3.0%, principally as a result of a $174 million or 12.5% increase in certificates of deposit greater than $100,000, a $39 million or 4.0% increase in certificates of deposit less than $100,000 and a $54 million or 11.7% increase in non-interest-bearing deposits. This increase was partially offset by a $108 million or 8.9% decrease in money market savings accounts, and a $20 million or 4.7% decrease in money market checking accounts. Federal funds purchased and securities sold under agreements to repurchase increased $292 million or 33.1% 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 $22 million or 3.0% from December 31, 1999. This increase is principally the result of asset/liability management decisions related to the current interest rate environment. Results of Operations Three Months Ended June 30 2000, Compared to Three Months Ended June 30, 1999 Net income was $27,731,000 for the second quarter of 2000 a 7.8% increase over the $25,727,000 for the same period a year earlier. Diluted earnings per share were $.25, compared to $.24 per share in 1999, up 4.2%. Basic earnings per share were $.25, compared to $.24 per share in 1999, up 4.2%. Net interest income, the difference between interest earned on loans and investments and interest paid on interest-bearing liabilities, increased by $2,175,000 or 3.5% for the second quarter of 2000, compared to second quarter 1999. This increase reflects a $23,289,000 or 19.6% increase in total interest income that more than offsets a $21,114,000 or 37.1% increase in interest expense. Interest income increased in 2000 due to an increase of $868,852,000 or 14.3% in total average earning assets, and an increase in the yield on average earning assets from 7.87% in the second quarter of 1999 to 8.25% in the second quarter of 2000. The increased volume of earning assets increased interest income by approximately $17,038,000 while the increased yield increased interest income by approximately $6,251,000. Interest expense increased in the second quarter of 2000, reflecting an increase in average interest-bearing liabilities of $775,000 or 14.5% and an increase in the cost of interest-bearing liabilities from 4.28% to 5.14%. The increase in the rate paid on interest-bearing liabilities increased interest expense by approximately $12,841,000 and the increase in average outstandings increased interest expense by approximately $8,273,000. The net interest margin (taxable equivalent net interest income as a percentage of average earning assets) was 3.72% in second quarter 1999, compared to 4.10% in second quarter of 1999. The provision for loan losses in the second quarter of 2000 was $2,030,000, versus $3,988,000 for the second quarter of 1999. Net charge-offs were $2,023,000, or .19% of average net loans, compared to $1,999,000 or .23% of average net loans in 1999. The allowance for loan losses totaled $62,064,000 at June 30, 2000, representing 1.45% of quarter-end net loans, compared to $59,050,000 or 1.45% of quarter-end net loans at March 31, 2000. 9 Following is a comparison of non-earning assets and loans past due 90 days or more for the quarters ended June 30, 2000, March 31, 2000, and June 30, 1999 (dollars in thousands):
6-30-00 3-31-00 6-30-99 ------- ------- ------- Non-accrual loans $1,377 $1,207 $1,601 Renegotiated loans 0 0 0 Other real estate 1,309 272 1,200 ------ ------ ------ Total non-earning assets $2,686 $1,479 $2,801 ====== ====== ====== Loans past due 90 days or more $6,142 $5,037 $4,395 Percentage of total loans .14% .12% .12%
Non-interest income, excluding securities transactions, totaled $25,908,000 for the quarter, a decrease of $798,000, or 3.0%, from last year's second quarter. Securities gains totaled $249,000 in second quarter, 1999, compared to a loss of $2,135,000 in 1999. Non-interest expenses (excluding the provision for loan losses) decreased by $136,000 or .3% in second quarter, 2000. The Company's return on average assets and return on average equity were 1.50% and 19.02% respectively, for second quarter of 2000. These compared with 1999 second quarter returns of 1.59% and 21.27%, respectively. Six Months Ended June 30, 2000, Compared to Six Months Ended June 30, 1999 For the six months ended June 30, 2000, net income totaled $54,206,000, a 6.4% increase over the $50,952,000 for the first six months of 1999. Diluted earnings per share were $.49, compared to $.47 for the same period in 1999, a 4.3% increase. Basic earnings per share were $.49 compared to $.48 in 1999, a 2.1% increase. For the six-month period, return on average assets and return on average stockholders' equity were 1.49% and 18.62% respectively. These compared with 1999 six month returns of 1.61% and 22.14%. Net interest income increased by $8,339,000 or 6.8% for the first six months of 2000. This increase reflects a $44,964,000 or 19.2% increase in total interest income that more than offsets a $36,625,000 or 32.7% increase in interest expense. Interest income increased in 2000 due to an increase of $953,158,000 or 16.1% in total average earning assets and an increase in the yield on average earning assets from 7.99% in 1999 to 8.18% in 2000. The increased volume of earning assets increased interest income by approximately $37,777,000, and the increased yield increased interest income by approximately $7,187,000. Interest expense increased in the first six months of 2000 reflecting an increase in average interest-bearing liabilities of $865,373,000 or 16.6%, with the cost of interest-bearing liabilities increasing from 4.34% to 4.93% in 2000. The increase in average outstandings increased interest expense by approximately $18,638,000 and the increased rate increased interest expense by approximately $17,987,,000. The net interest margin was 3.82% in the first six months of 2000, compared to 4.17% in the first six months of 1999. The provision for loan losses for the first six months of 2000 was $4,217,000, versus $6,530,000 for the first six months of 1999. Net charge-offs were $4,708,000, or .11% of average net loans compared to $4,022,000, or .12% of average net loans in 1999. Non-interest income, excluding securities transactions, totaled $50,241,000 for the first six months of 2000 compared to a total of $48,372,000 for the first six months of 1999, an increase of 3.9%. Included in 1999 is a $4,009,000 pre-tax gain from the sale of branches. Adjusting for this gain, non-interest income increased 13.2% over 1999. Securities gains totaled $327,000 in 2000, compared to a 10 loss of $2,116,000 in 1999. Non-interest expenses (excluding the provision for loan losses) increased by $2,405,000 or 3.0% for the first six 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 realized stockholders' equity increased by $15,297,000 from December 31, 1999. Retained earnings accounted for the majority of the increase. Through June 30, 2000, 9.3 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 June 30, 2000.
6-30-00 3-31-00 6-30-99 ------- ------- ------- Total capital to risk-weighted assets 13.87% 13.74% 15.02% Tier I capital to risk-weighted assets 12.62% 12.50% 13.77% Tier I capital to assets (leverage ratio) 8.45% 8.48% 9.37%
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK No significant changes since December 31, 1999. See Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations." 11 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the Company's Annual Meeting of Shareholders held April 26, 2000, the following proposals were approved by the shareholders of the Company: The following individuals were elected to serve as directors of the Company for terms that expire at the Annual Meeting of Shareholders to held in 2003: John D. Canale III; R. Lee Jenkins; W. Neely Mallory, Jr.; James E. McGehee, Jr.; William R. Reed, Jr.; and G. Mark Thompson. (81,405,586 shares in favor of the slate of directors; 500,077 withheld; and 8,581,473 exceptions.) The appointment of Ernst & Young LLP as auditors of the Company for 2000 was ratified. (90,105,967 shares in favor; 285,615 against; and 95,454 abstained). The proposal to increase by 4,000,000 shares the total number of shares of the Company's Common Stock for which options to purchase may be granted pursuant to the Company's 1994 Stock Plan as Amended and Restated was approved. (80,802,883 shares in favor; 9,407,330 against; and 276,823 abstained). At the Company's Special Shareholders Meeting held June 29, 2000, the following proposals were approved by the shareholders of the Company: The Agreement and Plan of Merger dated as of March 17, 2000 by and between CCB Financial Corporation and the Company and the amendment to the NCBC charter to increase the number of authorized shares of NCBC common stock from 175,000,000 to 400,000,000 were approved. (74,791,705 shares in favor; 896,062 shares against; and 367,961 shares abstained). The proposal to amend the 1994 Stock Plan to increase the limitation on the number of shares of the Company's common stock for which options may be granted to an employee in any given year from 60,000 to 200,000, and in the case of the Company's Chairman and Chief Executive Officer from 100,000 to 400,000 was approved (62,118,972 shares in favor; 13,425,616 against; and 511,140 abstained). Item 6. Exhibits and Reports on Form 8-K a. Exhibits 3.1 Charter of National Commerce Bancorporation as amended and restated filed as Exhibit 3.1 to the Registrant's Form 8-K dated July 11, 2000 (File No. 0-6094) and incorporated herein by reference. 10.21 Amendment to National Commerce Bancorporation 1994 Stock Plan 10.22 Employment Agreement entered into as of March 17, 2000, effective as of July 5, 2000, by and among National Bank of Commerce, National Commerce Bancorporation and Thomas M. Garrott 10.23 Employment Agreement dated as of March 17, 2000, effective as of July 5, 2000, by and between National Commerce Bancorporation and Ernest C. Roessler 10.24 Employment Agreement dated as of March 17, 2000, effective as of July 5, 2000, by and between National Commerce Bancorporation and William R. Reed, Jr. 10.25 Employment Agreement dated as of March 17, 2000, effective as of July 5, 2000, by and between National Commerce Bancorporation and Richard L. Furr 10.26 Employment Agreement dated as of March 17, 2000, effective as of July 5, 2000, by and between National Commerce Bancorporation and Lewis E. Holland 10.27 Employment Agreement dated as of March 17, 2000, effective as of July 5, 2000, by and between National Commerce Bancorporation and J. Scott Edwards 12 10.28 Employment Agreement dated as of March 17, 2000, effective as of July 5, 2000, by and between National Commerce Bancorporation and Sheldon M. Fox 10.29 Employment Agreement dated as of March 17, 2000, effective as of July 5, 2000, by and between National Commerce Bancorporation and David T. Popwell 10.30 Employment Agreement dated as of March 17, 2000, effective as of July 5, 2000, by and between National Commerce Bancorporation and Tom W. Scott 10.31 Change of Control Agreement dated as of July 5, 2000, effective upon a Change of Control, by and between National Commerce Bancorporation and Ernest C. Roessler 10.32 Change of Control Agreement dated as of July 5, 2000, effective upon a Change of Control, by and between National Commerce Bancorporation and William R. Reed, Jr. 10.33 Change of Control Agreement dated as of July 5, 2000, effective upon a Change of Control, by and between National Commerce Bancorporation and Richard L. Furr 10.34 Change of Control Agreement dated as of July 5, 2000, effective upon a Change of Control, by and between National Commerce Bancorporation and Lewis E. Holland 10.35 Change of Control Agreement dated as of July 5, 2000, effective upon a Change of Control, by and between National Commerce Bancorporation and J. Scott Edwards 10.36 Change of Control Agreement dated as of July 5, 2000, effective upon a Change of Control, by and between National Commerce Bancorporation and Sheldon M. Fox 10.37 Change of Control Agreement dated as of July 5, 2000, effective upon a Change of Control, by and between National Commerce Bancorporation and David T. Popwell 10.38 Change of Control Agreement dated as of July 5, 2000, effective upon a Change of Control, by and between National Commerce Bancorporation and Tom W. Scott 27. Financial Data Schedule b. Reports on Form 8-K A current report on Form 8-K dated June 20, 2000 was filed under Item 5 - Other Events discussing the approval of the merger with CCB Financial Corporation by The Board of Governors of the Federal Reserve System. A current report on Form 8-K dated July 5, 2000 was filed under Item 5 - Other Events reporting the consummation of the CCB merger. 13 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) By /s/ Mark A. Wendel --------------------------------- Mark A. Wendel Senior Vice President and Chief Accounting Officer (Authorized Officer) (Chief Accounting Officer) Date April 4, 2001 ------------- 14 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
9 1,000 6-MOS 6-MOS DEC-31-2000 DEC-31-1999 JAN-01-2000 JAN-01-1999 JUN-30-2000 JUN-30-1999 207,840 172,457 36,342 23,007 34,550 63,838 37,660 82,666 656,163 753,423 1,926,151 1,696,891 1,811,414 1,639,168 4,266,967 3,719,854 62,064 58,389 7,438,888 6,737,423 4,745,388 4,450,268 1,887,684 718,414 119,600 180,166 48,969 792,878 587,332 545,794 0 0 0 0 0 0 7,438,888 6,737,423 181,597 149,556 85,503 73,773 3,660 3,987 270,760 227,316 96,816 76,677 51,813 35,327 122,131 115,312 4,217 6,530 327 (2,116) 89,451 79,364 79,031 75,674 79,031 75,674 0 0 0 0 58,969 50,952 .49 .48 .49 .47 3.72 4.10 1,377 1,601 6,142 4,395 0 0 0 483 62,555 55,881 6,556 6,190 1,848 2,168 62,064 58,389 62,064 58,389 0 0 0 0
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