Centura Banks Inc. on Tuesday reported fourth quarter earnings of $1.05 per share, beating fourth quarter 1998 earnings by 17 cents but missing the consensus estimate by a penny.
For the year, the Rocky Mount, N.C., company earned $3.81 per share, just shy of Street's estimate of $3.83 but ahead of last year's $3.50.
Centura said earnings missed expectations in part because it held on to a larger than normal supply of cash just in case customers had year-2000 concerns.
"Our net interest margin declined 9 basis points from the third quarter as Centura relied on short-term borrowings to boost liquidity," explained Cecil W. Sewell, chairman and chief executive officer of the $9 billion-asset company. He said he expects the margin to return to a more normal level during the first three months of this year.
Mr. Sewell credited the company's improved performance over 1998 to its campaign to cut expenses. Centura's efficiency ratio was 56.93% for the fourth quarter, down from 62.25% for the same three months of 1998.
"We have been working diligently to effectively control expense growth, and that is being reflected in our decreased efficiency ratio," he said.
Credit quality also improved at Centura. Nonperforming assets were about 0.54% of loans on Dec. 31, an improvement from 0.72% at the end of the third quarter of 1999.
Despite missing estimates, analysts were upbeat about Centura's results.
"We believe the fourth quarter was marked by continued operating strength and improving credit quality," said John B. Moore Jr., an analyst at Wachovia Securities Inc. in Charlotte, N.C. Mr. Moore reiterated his "strong buy" rating on the stock after the earnings announcement.
Looking forward, the company said it remains on track to close its $608 million deal for Triangle Bancorp in Raleigh, N.C., during the first quarter of 2000. The in-market deal would give Centura $11 billion of assets and 228 branches in North Carolina, South Carolina, and Virginia.
Mr. Moore said he expects Centura will be able to cut up to 60% of Triangle's cost base, allowing the combined company to grow by about 12% next year.
Shares of Centura were trading at $39.625 at Tuesday's close, with no change.