01—Abstract
Summary
Summary of the 10-K filed March 17, 1997. Cited figures are marked; the original filing is the authoritative source.
This 10-K for fiscal 1996 was filed on March 17, 1997 by Southern National Corporation (NYSE: SNB), a multi-bank holding company headquartered in Winston-Salem, North Carolina.
The filing names Southern National, not Truist Financial Corp. Southern National later became part of BB&T and, through the 2019 BB&T-SunTrust merger, the lineage of Truist. The company operates through Branch Banking and Trust Company subsidiaries in North Carolina, South Carolina and Virginia. Reported 1996 net income rose to $283.7 milliona, or $2.54 per fully diluted share, from $186.3 million in 1995.
The 1995 figure was depressed by about $76 millionb in after-tax merger and securities-restructuring charges. Excluding a roughly $33 million pre-tax SAIF special assessment, management reports 1996 net income of about $304.9 million, or $2.73 per fully diluted share. Return on average assets was 1.38% and return on average common equity was 17.21%.
Balance sheet growth was modest. Total assets reached $21.2 billionc and deposits $15.0 billion, while net loans and leases grew about 4.5% as reported (about 10.1% excluding $1.2 billion of mortgage securitizations). Noninterest income rose 28.7% to $297.4 million, driven by service charges, agency insurance commissions and mortgage banking.
Noninterest expense fell 4.0% to $654.1 milliond, but this reflects the absence of 1995 merger costs. Asset quality was stable: nonperforming assets were 0.38% of total assets, net charge-offs were 0.32% of average loans (up from 0.24%), and the allowance covered 1.26% of loans. Capital remained strong, with a Tier 1 risk-based ratio of 11.7%, total risk-based capital of 14.7% and a leverage ratio of 8.0%, all well above regulatory minimums.
The main forward-looking items are pending acquisitions. The planned pooling-of-interests merger with United Carolina Bancshares, valued at about $985 million and paid in 1.135 Southern National shares per UCB share, was expected to close by the end of the second quarter of 1997, subject to approval.
Other pending deals included Fidelity Financial Bankshares (a purchase), Refloat/Sheffield Financial and Phillips Factors. The company's stated strategy is to build a community-bank franchise through in-market and niche acquisitions, grow fee income toward 30% of revenues, and maintain a 1.25% target return on assets.
02—Key points
Key Highlights
- Net income of $283.7 million in 1996 (up 52% from $186.3 million in 1995), or $2.54 per fully diluted share versus $1.62 in 1995, with a one-time SAIF special assessment of about $33 million pre-tax weighing on 1996 results.
- Return on average assets of 1.38% and return on average common equity of 17.21%, against a management target ROA of 1.25%.
- Total assets of $21.2 billion and total deposits of $15.0 billion at year-end 1996, with the net loan and lease portfolio at about $14.4 billion.
- Noninterest income rose 28.7% to $297.4 million, while noninterest expense fell 4.0% to $654.1 million as 1995 merger-related costs did not recur.
- Asset quality held steady: nonperforming assets were 0.38% of total assets, the allowance was 1.26% of loans, and net charge-offs rose to 0.32% from 0.24%, mainly in consumer lending.
- Capital was strong, with Tier 1 risk-based capital of 11.7%, total risk-based capital of 14.7% and a leverage ratio of 8.0%, all above regulatory minimums. The quarterly dividend was raised 17.4% to $0.27, and 1996 dividends totaled $1.00 per share.
- Pending pooling-of-interests merger with United Carolina Bancshares (about $985 million in value) was expected to close by mid-1997, alongside purchase acquisitions of Regional Acceptance (completed September 1996, about $167 million) and Fidelity Financial Bankshares.
03—Questions
Frequently Asked Questions
Is this filing from Truist Financial Corp, and how is it related to Truist today?
No. The filing is from Southern National Corporation (NYSE: SNB), headquartered in Winston-Salem, North Carolina, and is dated March 17, 1997. Southern National merged with BB&T Financial Corporation in 1995, and the combined company later became BB&T. BB&T merged with SunTrust in 2019 to form Truist Financial Corporation, so this filing is part of Truist's historical lineage rather than a Truist filing.
How did 1996 earnings compare with 1995, and what distorted the comparison?
Net income was $283.7 million in 1996 versus $186.3 million in 1995, and fully diluted EPS was $2.54 versus $1.62. The 1995 result included about $108 million of pre-tax merger costs and $19.8 million of securities losses, and the 1996 result included a roughly $33 million SAIF special assessment. Excluding the SAIF charge, 1996 net income would have been about $304.9 million, or $2.73 per fully diluted share.
What is the status of the pending United Carolina Bancshares merger?
Southern National and United Carolina Bancshares announced a merger agreement on November 4, 1996. UCB shareholders would receive 1.135 Southern National shares for each UCB share, valuing the deal at about $985 million based on November 1, 1996 prices. It is structured as a pooling of interests and was expected to close by the end of the second quarter of 1997, subject to regulatory and shareholder approvals.
Are there signs of credit stress in the loan portfolio?
Credit quality was stable overall but showed some pressure. Nonperforming assets were $80.2 million, or 0.38% of total assets, up slightly from 0.37%. Net charge-offs rose to 0.32% of average loans from 0.24%, mainly from consumer lending. Management said the 0.32% level was within reasonable historical norms, and it noted higher-than-expected losses at Regional Acceptance's used-auto finance business, which it did not expect to be material.
How strong is the company's capital position and what are its dividend and buyback practices?
Capital is strong. At year-end 1996, Tier 1 risk-based capital was 11.7% (minimum 4%), total risk-based capital was 14.7% (minimum 8%), and the leverage ratio was 8.0% (minimum 3%). Book value per common share rose to $15.82. The quarterly dividend was raised 17.4% to $0.27, totaling $1.00 for 1996, a payout ratio of about 39%. The company also redeemed 6.8 million common shares in 1996, including shares used to convert its preferred stock.
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