<PAGE>
PART I
------
FINANCIAL INFORMATION
---------------------
CENTRAL FIDELITY BANKS, INC.
ITEM 1. FINANCIAL STATEMENTS
The consolidated balance sheet as of March 31, 1994 and 1993;
the statement of consolidated income for the three-month period
ended March 31, 1994 and 1993 and the statement of consolidated cash
flows for the three-month period ended March 31, 1994 and 1993 are
unaudited and do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the
three-month period ended March 31, 1994 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1994. For further information, refer to the consolidated
financial statements and footnotes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993 which is the
source of the Company's balance sheet as of that date.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
- - ----------------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In Thousands)
<CAPTION>
March 31, December 31,
1994 1993 1993
<S> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------
ASSETS
- - ----------------------------------------------------------------------------------------------------
Cash and due from banks $218,115 $184,485 $264,531
Temporary investments:
Federal funds sold and securities purchased
under agreements to resell 88,680 264,900 193,131
Interest-bearing deposits in other banks 75,000 -- --
Trading account securities 1,262 798 1,505
- - ---------------------------------------------------------------- ---------- ---------- ----------
Total temporary investments 164,942 265,698 194,636
- - ---------------------------------------------------------------- ---------- ---------- ----------
Assets available for sale:
Securities 3,647,658 10,630 4,100,106
Loans 4,829 10,109 37,773
- - ---------------------------------------------------------------- ---------- ---------- ----------
Total assets available for sale 3,652,487 20,739 4,137,879
- - ---------------------------------------------------------------- ---------- ---------- ----------
Investment securities -- 3,963,948 --
Total loans 4,990,207 4,000,893 4,774,736
Allowance for loan losses (110,000) (101,800) (105,000)
- - ---------------------------------------------------------------- ---------- ---------- ----------
Net loans 4,880,207 3,899,093 4,669,736
- - ---------------------------------------------------------------- ---------- ---------- ----------
Accrued interest receivable 61,184 65,502 65,754
Premises and equipment, net 146,392 146,097 146,933
Due from customers on acceptances 15,083 20,711 16,923
Other assets 147,570 164,692 165,892
- - ---------------------------------------------------------------- ---------- ---------- ----------
Total assets $9,285,980 $8,730,965 $9,662,284
- - ---------------------------------------------------------------- ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET (Continued)
<CAPTION>
LIABILITIES
<S> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------
Deposits:
Demand $899,964 $808,132 $926,917
Savings and other time 5,324,760 5,349,740 5,291,413
Certificates of deposit $100,000 and over 283,421 460,009 437,686
- - ---------------------------------------------------------------- ---------- ---------- ----------
Total deposits 6,508,145 6,617,881 6,656,016
- - ---------------------------------------------------------------- ---------- ---------- ----------
Short-term borrowings:
Federal funds purchased and securities sold
under agreements to repurchase 1,218,139 936,874 1,457,341
Other short-term borrowings 628,866 239,090 438,413
- - ---------------------------------------------------------------- ---------- ---------- ----------
Total short-term borrowings 1,847,005 1,175,964 1,895,754
- - ---------------------------------------------------------------- ---------- ---------- ----------
Dividends payable 10,940 9,641 9,752
Accrued interest payable 23,967 23,017 25,148
Bank acceptances outstanding 15,083 20,711 16,923
Accounts payable and accrued liabilities 38,164 96,983 172,651
Long-term debt 151,468 158,415 151,389
Capitalized lease obligations 8,430 9,146 8,514
- - ---------------------------------------------------------------- ---------- ---------- ----------
Total liabilities 8,603,202 8,111,758 8,936,147
- - ---------------------------------------------------------------- ---------- ---------- ----------
SHAREHOLDERS' EQUITY
- - ----------------------------------------------------------------------------------------------------
Preferred stock, none issued -- -- --
Common stock, par value $5 per share, shares authorized
1994-100,000,000; 1993-50,000,000, shares issued
39,078,277, 38,565,114 and 39,022,790, respectively 195,391 192,826 195,114
Capital surplus 178,360 168,779 177,921
Retained earnings 325,600 257,602 307,249
- - ---------------------------------------------------------------- ---------- ---------- ----------
Total shareholders' equity before unrealized gains (losses) 699,351 619,207 680,284
- - ---------------------------------------------------------------- ---------- ---------- ----------
Unrealized gains (losses) on securities available for sale (16,573) -- 45,853
- - ---------------------------------------------------------------- ---------- ---------- ----------
Total shareholders' equity 682,778 619,207 726,137
- - ---------------------------------------------------------------- ---------- ---------- ----------
Total liabilities and shareholders' equity $9,285,980 $8,730,965 $9,662,284
- - ---------------------------------------------------------------- ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CONSOLIDATED INCOME
- - ----------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In thousands, except share and per share data)
<CAPTION>
For the three months
ended March 31,
1994 1993
<S> <C> <C>
- - ----------------------------------------------------------------------------------------------
Income From Earning Assets
- - ----------------------------------------------------------------------------------------------
Interest and fees on loans $99,599 $86,718
Interest on securities available for sale 54,244 680
Interest on loans available for sale 367 --
Interest on investment securities -- 65,394
Interest on money market investments 667 1,497
Interest on trading account securities 12 3
- - ------------------------------------------------------------------- ------- -------
Total income from earning assets 154,889 154,292
- - ------------------------------------------------------------------- ------- -------
Interest Expense
- - ----------------------------------------------------------------------------------------------
Interest on deposits 54,348 61,464
Interest on federal funds purchased and securities
sold under agreements to repurchase 9,676 7,134
Interest on other short-term borrowings 4,531 870
Interest on long-term debt 1,787 2,024
Interest on capitalized lease obligations 187 202
- - ------------------------------------------------------------------- ------- -------
Total interest expense 70,529 71,694
- - ------------------------------------------------------------------- ------- -------
Net interest income 84,360 82,598
Provision for loan losses 10,117 18,821
- - ------------------------------------------------------------------- ------- -------
Net income from earning assets 74,243 63,777
- - ------------------------------------------------------------------- ------- -------
Noninterest Income
- - ----------------------------------------------------------------------------------------------
Trust income 3,589 3,479
Deposit fees and charges 8,409 8,287
Profits on securities available for sale and
trading account securities 6,430 3,155
Other income 16,913 5,923
- - ------------------------------------------------------------------- ------- -------
Total noninterest income 35,341 20,844
- - ------------------------------------------------------------------- ------- -------
Noninterest Expense
- - ----------------------------------------------------------------------------------------------
Personnel expense 32,122 27,472
Occupancy and equipment expense 11,176 9,383
FDIC insurance expense 3,728 3,812
Other real estate expense 6,303 1,353
Other expense 12,734 8,545
- - ------------------------------------------------------------------- ------- -------
Total noninterest expense 66,063 50,565
- - ------------------------------------------------------------------- ------- -------
Earnings
- - ----------------------------------------------------------------------------------------------
Income before income taxes 43,521 34,056
Income tax expense 14,230 9,929
- - ------------------------------------------------------------------- ------- -------
Net income $29,291 $24,127
- - ------------------------------------------------------------------- ======= =======
Earnings Per Share
- - ----------------------------------------------------------------------------------------------
Net income $0.75 $0.63
Average shares outstanding 39,054,284 38,526,534
- - ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CONSOLIDATED CASH FLOWS
- - ------------------------------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In Thousands) For the three months ended March 31,
<CAPTION>
1994 1993
<S> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
- - ------------------------------------------------------------------------------------------------------------------
Net income $29,291 $24,127
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Provision for loan losses 10,117 18,821
Depreciation of premises and equipment 3,817 3,409
Net amortization of premium and accretion of discount on investment securities
and securities available for sale 1,543 2,342
Gains on securities available for sale (7,377) (3,276)
Deferred income taxes (4,392) 19
Decrease in accrued interest receivable 4,570 2,607
Increase (decrease) in accrued interest payable (1,181) 6,157
(Increase) decrease in trading account securities 243 (54)
Other, net (80,426) 98,051
- - --------------------------------------------------------------------------------------- ---------- ----------
Net cash provided (used) by operating activities (43,795) 152,203
- - --------------------------------------------------------------------------------------- ---------- ----------
INVESTING ACTIVITIES
- - ------------------------------------------------------------------------------------------------------------------
Purchases of securities available for sale (572,418) --
Proceeds from sales of securities available for sale 723,975 236,423
Proceeds from maturities and repayments of securities available for sale 210,685 1,299
Purchases of investment securities -- (214,854)
Proceeds from sales of investment securities -- 108,515
Proceeds from maturities and repayments of investment securities -- (202,125)
Net increase in loans (188,352) (108,451)
Purchases of premises and equipment (3,470) (2,086)
Proceeds from the disposition of premises and equipment 163 12
Proceeds from the disposition of other real estate owned 3,006 1,258
- - --------------------------------------------------------------------------------------- ---------- ----------
Net cash provided (used) by investing activities 173,589 (180,009)
- - --------------------------------------------------------------------------------------- ---------- ----------
FINANCING ACTIVITIES
- - ------------------------------------------------------------------------------------------------------------------
Net increase in demand, interest checking and regular savings deposits 7,404 19,187
Net increase (decrease) in money market accounts 9,923 (53,600)
Net increase (decrease) in consumer certificates (10,933) 57,400
Net decrease in certificates of deposit $100,000 and over (154,265) (77,559)
Net decrease in short-term borrowings (48,749) (25,778)
Proceeds from long-term debt 100 --
Payments on long-term debt and capitalized lease obligations (105) (213)
Proceeds from issuance of common stock 716 2,892
Cash dividends (9,752) (8,078)
- - --------------------------------------------------------------------------------------- ---------- ----------
Net cash used by financing activities (205,661) (85,749)
- - --------------------------------------------------------------------------------------- ---------- ----------
Decrease in cash and cash equivalents (75,867) (113,555)
Cash and cash equivalents at beginning of year 457,662 562,940
- - --------------------------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents at end of period $381,795 $449,385
- - --------------------------------------------------------------------------------------- ========== ==========
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CENTRAL FIDELITY BANKS, INC.
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The purpose of this discussion is to address information about
the Company's financial condition and results of operations which is
not otherwise apparent from the consolidated financial statements and
tables included in this report. Reference should be made to those
statements and tables and other selected financial data presented
elsewhere in this report for an understanding of the following
discussion and analysis.
Results of Operations
---------------------
Net income for the first three months of 1994 was $29.3 million,
21.4% higher than the $24.1 million earned in the first three months
of 1993. On a per share basis, net income increased 19.0% to $.75
from $.63.
On a tax-equivalent basis, net interest income for the three
months increased 1.2% to $86.3 million from $85.3 million in the
corresponding 1993 period. The net interest margin was 4.05% for the
three months ended March 31, 1994, down twenty-six basis points from
4.31% during the same period in 1993. The lower growth in net
interest income and the decline in net interest margin during the
three-month period were impacted by the generally lower interest rate
environment.
The provision for loan losses was $10.1 million for the three
months ended March 31, 1994 compared with $18.8 million recorded for
the corresponding period in 1993.
Noninterest income totalled $35.3 million for the first three
months of 1994 compared with $20.8 million for the 1993 level,
representing an increase of 69.5%. The growth in noninterest income
was primarily driven by $3.3 million higher profits on securities
available for sale and $11.4 million gain on the sale of $80.3
million out of state affinity credit card program which resulted from
the expiration of a five-year contract with a national organization.
Noninterest expense for the first three months of 1994 increased
30.6% to $66.1 million compared to the same period in 1993. The
increase was due primarily to several nonrecurring charges including
the recognition of certain postemployment costs necessitated by SFAS
112; the write-off of various software systems and $6.5 million
additional other real estate expense to reflect current appraised
values.
Total assets as of March 31, 1994 were $9.3 billion, an increase
of 6.4% from March 31, 1993. Total loans at March 31, 1994 were $5.0
billion, or 24.5% higher than at March 31, 1993, reflecting the solid
growth in all loan categories except real estate construction loans.
Total deposits were $6.5 billion at March 31, 1994, a decline of 1.7%
from March 31, 1993, reflecting low core deposit growth as a result
of low interest rates combined with a substantial reduction in
certificates of deposit in excess of $100,000. Shareholders' equity
at March 31, 1994 was $699.4 million, or 7.5% of total assets. At
March 31, 1993, shareholders' equity was $619.2 million, or 7.1% of
total assets. The book value per share grew 11.5% from $16.06 at
March 31, 1993 to $17.90 at March 31, 1994.
The return on average total assets during the first three months
of 1994 was 1.28% compared to 1.13% for the comparable 1993 period.
The return on average shareholders' equity improved to 16.98% versus
15.81% in 1993.
Asset Quality
-------------
Nonperforming assets as of March 31, 1994 were $117.7 million,
or 1.27% of total assets, compared to $132.1 million or 1.37% at
December 31, 1993 and $112.3 million or 1.29% of total assets at
March 31, 1993.
The allowance for loan losses at March 31, 1994 was $110.0
million or, 2.20% of loans, compared to $105.0 million or 2.18% of
loans at December 31, 1993 and $101.8 million or 2.54% at March 31,
1993. Net loan charge-offs for the three months ended March 31, 1994
were $5.1 million, representing .42% of average loans on an
annualized basis compared to $5.4 million or .47% for the three
months ended December 31, 1993 and $18.8 million or 1.89% for the
three months ended March 31, 1993.
The allowance for loan losses represents management's estimate
of an amount adequate in relation to the risk of future losses
inherent in the loan portfolio. In assessing the adequacy of the
allowance, management relies predominately on its ongoing review of
the loan portfolio, which is undertaken both to ascertain whether
there are probable losses to be charged off and to assess the risk
characteristics of the portfolio in the aggregate. Among other
factors, management considers the Company's loan loss experience, the
amount of past-due and nonperforming loans, current and anticipated
economic conditions, and the estimated current values of collateral
securing loans in assessing the level of the allowance for loan
losses.
While it is the Company's policy to charge off in the current
period loans in which a loss is considered probable, there are
additional risks of future losses which cannot be quantified
precisely or attributed to particular loans or classes of loans.
Because these risks include the state of the economy as well as
conditions affecting individual borrowers, management's judgment of
the allowance is necessarily approximate and imprecise. It is also
subject to regulatory examinations and determinations as to adequacy,
which may take into account such factors as the methodology used to
calculate the allowance for loan losses and the size of the allowance
for loan losses in comparison to a peer group identified by the
regulatory agencies.
Capital Resources
-----------------
The Company's risk-based capital and leverage ratios exceeded
the Federal Reserve's minumum guidelines at March 31, 1994. At March
31, 1994, the Company's total risk-based capital was $891.5 million,
as compared to $870.4 million at year-end 1993 and $809.4 million at
March 31, 1993. The ratio of total risk-based capital to
risk-weighted assets was 15.01% at March 31, 1994 compared to 14.88%
and 13.49% at December 31, 1993 and March 31, 1993, respectively. At
March 31, 1994, the Company's leverage ratio was 7.31%, compared to
7.10% and 6.88% at December 31, 1993 and March 31, 1993,
respectively. At March 31, 1994, the Bank's total risk-based capital
and leverage ratios were 14.33% and 6.86%, respectively.
<PAGE>
PART II
-------
OTHER INFORMATION
-----------------
CENTRAL FIDELITY BANKS, INC.
ITEM 6. Exhibits and Reports on Form 8-K.
A. Exhibits:
11. Statement re computation of per share earnings - filed
herewith.
B. Reports on Form 8-K:
A report on Form 8-K was filed on March 16, 1994 reporting
certain management contracts.
<PAGE>
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 thereunto duly authorized.
CENTRAL FIDELITY BANKS, INC.
-----------------------------------
(Registrant)
Date: May 12, 1994 /s/ James F. Campbell
-----------------------------------
James F. Campbell
Senior Vice President & Controller
(duly authorized officer)
Date: May 12, 1994 /s/ Charles W. Tysinger
-----------------------------------
Charles W. Tysinger
Corporate Executive Officer
and Treasurer
(principal financial officer)
<PAGE>
<TABLE>
EXHIBIT 11
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(In Thousands)
<CAPTION>
For the Three Months
Ended March 31,
--------------------
1994 1993
---- ----
<S> <C> <C>
Earnings:
Net income $29,291 $24,127
======== ========
Shares:
Weighted average number of common shares used
in computing primary earnings per share 39,054 38,527
Dilutive stock options - based on treasury stock
method 762 929
-------- --------
Weighted average number of common shares used
in computing fully diluted earnings per share 39,816 39,456
======== ========
Earnings per share:
Primary earnings per share $0.75 $0.63
Fully diluted earnings per share $0.74 $0.61
</TABLE>
