<PAGE>
PART I
------
FINANCIAL INFORMATION
---------------------
CENTRAL FIDELITY BANKS, INC.
ITEM 1. FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 1994 and 1993;
the statement of consolidated income for the three-month and
six-month periods ended June 30, 1994 and 1993 and the
statement of consolidated cash flows for the six-month period
ended June 30, 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 and six-month periods
ended June 30, 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>
June 30, December 31,
1994 1993 1993
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------
Cash and due from banks $268,322 $218,052 $264,531
Temporary investments:
Federal funds sold and securities purchased
under agreements to resell 265,652 201,000 193,131
Interest-bearing deposits in other banks -- 50,000 --
Trading account securities 1,574 1,834 1,505
- ---------------------------------------------------------------- ---------- ---------- ----------
Total temporary investments 267,226 252,834 194,636
- ---------------------------------------------------------------- ---------- ---------- ----------
Assets available for sale:
Securities 3,442,817 16,921 4,100,106
Loans 1,046 18,582 37,773
- ---------------------------------------------------------------- ---------- ---------- ----------
Total assets available for sale 3,443,863 35,503 4,137,879
- ---------------------------------------------------------------- ---------- ---------- ----------
Investment securities -- 4,135,137 --
Total loans 5,362,092 4,194,680 4,774,736
Allowance for loan losses (110,000) (101,800) (105,000)
- ---------------------------------------------------------------- ---------- ---------- ----------
Net loans 5,252,092 4,092,880 4,669,736
- ---------------------------------------------------------------- ---------- ---------- ----------
Accrued interest receivable 61,488 71,919 65,754
Premises and equipment, net 146,143 145,767 146,933
Due from customers on acceptances 13,020 12,537 16,923
Other assets 188,626 170,936 165,892
- ---------------------------------------------------------------- ---------- ---------- ----------
Total assets $9,640,780 $9,135,565 $9,662,284
- ---------------------------------------------------------------- ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET (Continued)
<CAPTION>
LIABILITIES
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Deposits:
Demand $947,184 $885,786 $926,917
Savings and other time 5,301,717 5,279,101 5,291,413
Certificates of deposit $100,000 and over 459,079 549,523 437,686
- ---------------------------------------------------------------- ---------- ---------- ----------
Total deposits 6,707,980 6,714,410 6,656,016
- ---------------------------------------------------------------- ---------- ---------- ----------
Borrowings:
Federal funds purchased and securities sold
under agreements to repurchase 1,256,264 1,097,091 1,457,341
Other short-term borrowings 70,293 24,034 26,913
Medium-term notes 561,500 411,500 411,500
Federal Home Loan Bank borrowings 141,200 -- --
Long-term debt 151,459 158,406 151,389
Capitalized lease obligations 8,344 8,939 8,514
- ---------------------------------------------------------------- ---------- ---------- ----------
Total borrowings 2,189,060 1,699,970 2,055,657
- ---------------------------------------------------------------- ---------- ---------- ----------
Dividends payable 10,961 9,679 9,752
Accrued interest payable 26,614 22,502 25,148
Bank acceptances outstanding 13,020 12,537 16,923
Accounts payable and accrued liabilities 32,869 36,761 172,651
- ---------------------------------------------------------------- ---------- ---------- ----------
Total liabilities 8,980,504 8,495,859 8,936,147
- ---------------------------------------------------------------- ---------- ---------- ----------
SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------
Preferred stock, none issued -- -- --
Common stock, par value $5 per share, authorized
100,000,000 shares, shares issued: 39,147,632,
38,722,638 and 39,022,790, respectively 195,738 193,613 195,114
Capital surplus 178,932 171,852 177,921
Retained earnings 344,222 274,241 307,249
- ---------------------------------------------------------------- ---------- ---------- ----------
Total shareholders' equity before unrealized gains (losses) 718,892 639,706 680,284
- ---------------------------------------------------------------- ---------- ---------- ----------
Unrealized gains (losses) on securities available for sale (58,616) -- 45,853
- ---------------------------------------------------------------- ---------- ---------- ----------
Total shareholders' equity 660,276 639,706 726,137
- ---------------------------------------------------------------- ---------- ---------- ----------
Total liabilities and shareholders' equity $9,640,780 $9,135,565 $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 For the six months
ended June 30, ended June 30,
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
1994 1993 1994 1993
- -----------------------------------------------------------------------------------------------------------------------
Income From Earning Assets
- -----------------------------------------------------------------------------------------------------------------------
Interest and fees on loans $106,404 $88,360 $206,003 $175,078
Interest on securities available for sale:
U.S. Government and agencies 40,153 69 81,849 540
States and political subdivisions 2,170 -- 4,162 --
Other 11,274 87 21,476 296
Interest on loans available for sale 18 -- 385 --
Interest on investment securities:
U.S. Government and agencies -- 36,215 -- 68,386
States and political subdivisions -- 2,328 -- 4,677
Other -- 27,980 -- 58,854
Interest on money market investments 1,320 1,257 1,987 2,754
Interest on trading account securities 7 10 19 13
- ------------------------------------------------------------------- ------- ------- -------- -------
Total income from earning assets 161,346 156,306 315,881 310,598
- ------------------------------------------------------------------- ------- ------- -------- -------
Interest Expense
- -----------------------------------------------------------------------------------------------------------------------
Interest on deposits 55,878 60,248 110,226 121,712
Interest on federal funds purchased and securities
sold under agreements to repurchase 12,136 8,162 21,812 15,296
Interest on other short-term borrowings 436 163 657 328
Interest on medium-term notes 6,291 1,959 10,601 2,664
Interest on Federal Home Loan Bank borrowings 743 -- 743 --
Interest on long-term debt 2,076 1,920 3,863 3,944
Interest on capitalized lease obligations 184 198 371 400
- ------------------------------------------------------------------- ------- ------- -------- -------
Total interest expense 77,744 72,650 148,273 144,344
- ------------------------------------------------------------------- ------- ------- -------- -------
Net interest income 83,602 83,656 167,608 166,254
Provision for loan losses 2,304 12,513 12,421 31,334
- ------------------------------------------------------------------- ------- ------- -------- -------
Net income from earning assets 81,298 71,143 155,187 134,920
- ------------------------------------------------------------------- ------- ------- -------- -------
Noninterest Income
- -----------------------------------------------------------------------------------------------------------------------
Trust income 3,573 3,313 7,162 6,792
Deposit fees and charges 8,837 8,562 17,246 16,849
Profits (losses) on securities available for sale
and trading account securities 264 (111) 7,048 3,044
Other income 6,435 6,063 23,348 11,986
- ------------------------------------------------------------------- ------- ------- -------- -------
Total noninterest income 19,109 17,827 54,804 38,671
- ------------------------------------------------------------------- ------- ------- -------- -------
Noninterest Expense
- -----------------------------------------------------------------------------------------------------------------------
Personnel expense 31,023 26,481 63,145 53,953
Occupancy and equipment expense 9,857 9,894 21,033 19,277
FDIC insurance expense 3,773 3,349 7,501 7,161
Other real estate expense 1,006 1,282 7,309 2,635
Other expense 10,864 9,926 23,598 18,471
- ------------------------------------------------------------------- ------- ------- -------- -------
Total noninterest expense 56,523 50,932 122,586 101,497
- ------------------------------------------------------------------- ------- ------- -------- -------
Earnings
- -----------------------------------------------------------------------------------------------------------------------
Income before income taxes 43,884 38,038 87,405 72,094
Income tax expense 14,301 11,721 28,531 21,650
- ------------------------------------------------------------------- ------- ------- -------- -------
Net income $29,583 $26,317 $58,874 $50,444
- ------------------------------------------------------------------- ======= ======= ======== =======
Earnings Per Share
- -----------------------------------------------------------------------------------------------------------------------
Net income $0.76 $0.68 $1.51 $1.31
Average shares outstanding 39,114,067 38,663,148 39,084,341 38,595,218
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CONSOLIDATED CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In Thousands) For the six months ended June 30,
<CAPTION>
1994 1993
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
- ------------------------------------------------------------------------------------------------------------------
Net income $58,874 $50,444
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Provision for loan losses 12,421 31,334
Depreciation of premises and equipment 7,605 6,911
Net amortization of premium and accretion of discount on investment securities
and securities available for sale 2,534 6,393
Gains on securities available for sale (7,377) (3,292)
Deferred income taxes (4,546) (755)
Increase in trading account securities (69) (1,090)
(Increase) decrease in accrued interest receivable 4,266 (3,810)
Increase in accrued interest payable 1,466 5,642
Other, net (104,403) 26,759
- --------------------------------------------------------------------------------------- ---------- ----------
Net cash provided (used) by operating activities (29,229) 118,536
- --------------------------------------------------------------------------------------- ---------- ----------
INVESTING ACTIVITIES
- ------------------------------------------------------------------------------------------------------------------
Purchases of securities available for sale (789,562) (212,625)
Proceeds from sales of securities available for sale 920,671 239,430
Proceeds from maturities and repayments of securities available for sale 370,301 2,507
Purchases of investment securities -- (610,770)
Proceeds from maturities and repayments of investment securities -- 329,201
Net increase in loans (561,218) (322,496)
Purchases of premises and equipment (7,077) (5,158)
Proceeds from the disposition of premises and equipment 216 240
Proceeds from the disposition of other real estate owned 5,900 5,802
- --------------------------------------------------------------------------------------- ---------- ----------
Net cash used by investing activities (60,769) (573,869)
- --------------------------------------------------------------------------------------- ---------- ----------
FINANCING ACTIVITIES
- ------------------------------------------------------------------------------------------------------------------
Net increase in demand, interest checking and regular savings deposits 37,405 126,204
Net increase (decrease) in money market accounts 10,677 (108,109)
Net increase (decrease) in consumer certificates (17,511) 11,907
Net increase in certificates of deposit $100,000 and over 21,393 11,955
Net increase (decrease) in short-term borrowings (157,697) 330,883
Proceeds from medium-term notes and FHLB borrowings 291,200 --
Proceeds from long-term debt 100 --
Payments on long-term debt and capitalized lease obligations (200) (429)
Proceeds from issuance of common stock 1,635 6,752
Cash dividends (20,692) (17,718)
- --------------------------------------------------------------------------------------- ---------- ----------
Net cash provided by financing activities 166,310 361,445
- --------------------------------------------------------------------------------------- ---------- ----------
Increase (decrease) in cash and cash equivalents 76,312 (93,888)
Cash and cash equivalents at beginning of year 457,662 562,940
- --------------------------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents at end of period $533,974 $469,052
- --------------------------------------------------------------------------------------- ========== ==========
- ------------------------------------------------------------------------------------------------------------------
</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 six months of 1994 was $58.9 million,
16.7% higher than the $50.4 million earned in the first six
months of 1993. On a per share basis, net income increased
15.3% to $1.51 from $1.31.
On a tax-equivalent basis, net interest income for the six
months increased modestly to $171.6 million from the
corresponding 1993 period. The net interest margin was 3.94%
for the six months ended June 30, 1994, down twenty-eight
basis points from 4.22% during the same period in 1993. The
lower growth in net interest income and the decline in net
interest margin during the six-month period were impacted by
the generally lower interest rate environment.
The provision for loan losses was $12.4 million for the six
months ended June 30, 1994 compared with $31.3 million
recorded for the corresponding period in 1993.
Noninterest income totalled $54.8 million for the first six
months of 1994 compared with $38.7 million for the 1993 level.
This 41.7% growth in noninterest income was primarily due to
higher profits on securities available for sale, gains on sale
of out of state affinity credit card program and general fee
categories.
Noninterest expense for the first six months of 1994 increased
20.8% to $122.6 million compared to the same period in 1993,
due primarily to higher costs relating to personnel, employee
benefit and incentive program and expenses associated with
foreclosed properties.
Balance Sheet
- -------------
Total assets as of June 30, 1994 were $9.6 billion, an
increase of 5.5% from June 30, 1993. Total loans at June 30,
1994 were $5.4 billion, or 27.3% higher than at June 30, 1993,
reflecting strong demand for both consumer and commercial loan
categories. Total deposits were $6.7 billion at June 30, 1994,
which were virtually unchanged from June 30, 1993 as a result
of a modest growth in core deposits being negated by lower
levels of certificates of deposit in excess of $100,000.
Shareholders' equity at June 30, 1994 was $718.9 million, or
7.5% of total assets. At June 30, 1993, shareholders' equity
was $639.7 million, or 7.0% of total assets. The book value
per share grew 11.1% from $16.52 at June 30, 1993 to $18.36 at
June 30, 1994.
The return on average total assets during the first six months
of 1994 was 1.27% compared to 1.16% for the comparable 1993
period. The return on average shareholders' equity improved to
16.79% in 1994 versus 16.22% in 1993.
Asset Quality
- -------------
Nonperforming assets as of June 30, 1994 were $103.5 million,
or 1.07% of total assets, compared to $132.1 million or 1.37%
at December 31, 1993 and $112.4 million or 1.23% of total
assets at June 30, 1993. The lower level of nonperforming
assets was attributable to the gradual improvement in real
estate markets throughout Virginia and the success of specific
problem loan resolution programs.
The allowance for loan losses at June 30, 1994 was $110.0
million or, 2.05% of loans, compared to $105.0 million or
2.18% of loans at December 31, 1993 and $101.8 million or
2.42% at June 30, 1993. Net loan charge-offs for the six
months ended June 30, 1994 were $7.4 million, representing
.29% of average loans on an annualized basis compared to $76.3
million or 1.80% for the year ended December 31, 1993 and
$31.3 million or 1.55% for the six months ended June 30, 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 minimum guidelines at June 30, 1994. At
June 30, 1994, the Company's total risk-based capital was
$915.1 million, as compared to $870.4 million at year-end 1993
and $832.0 million at June 30, 1993. The ratio of total
risk-based capital to risk-weighted assets was 14.65% at June
30, 1994 compared to 14.88% and 13.59% at December 31, 1993
and June 30, 1993, respectively. At June 30, 1994, the
Company's leverage ratio was 7.27%, compared to 7.10% and
6.84% at December 31, 1993 and June 30, 1993, respectively. At
June 30, 1994, the Bank's total risk-based capital and
leverage ratios were 14.00% and 6.84%, respectively.
<PAGE>
PART II
-------
OTHER INFORMATION
-----------------
CENTRAL FIDELITY BANKS, INC.
ITEM 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Shareholders was held on May 11, 1994.
At said meeting, as set forth in the Registrant's definitive
proxy material for the meeting, one director in Class 2 and
five directors comprising Class 3 were elected to serve until
the 1996 and 1997 Annual Meeting of Shareholders,
respectively, and until their successors are elected and
qualified.
The results of the voting were as follows:
Nominee for election as # of shares voting Percent of Votes
Class 2 director: For Withheld Cast For
- ------------------------ --- -------- ----------------
T. Justin Moore, Jr. 32,086,570 219,828 99.3%
Nominees for election as # of shares voting Percent of Votes
Class 3 directors: For Withheld Cast For
- ------------------------ --- -------- ----------------
James F. Betts 32,152,216 154,182 99.5%
Phyllis L. Cothran 32,097,646 208,752 99.3%
Robert L. Freeman 32,134,998 171,400 99.5%
G. Bruce Miller 32,147,787 158,611 99.5%
Kenneth S. White 32,152,319 154,079 99.5%
The results of the voting by brokers were as follows:
Nominee for election as # of shares voting Proxies
Class 2 director: For Withheld not received
- ------------------------ --- -------- ------------
T. Justin Moore, Jr. 18,901,764 36,287 2,979,578
Nominees for election as # of shares voting Proxies
Class 3 directors: For Withheld not received
- ------------------------ --- -------- ------------
James F. Betts 18,902,864 35,187 2,979,578
Phyllis L. Cothran 18,895,320 42,731 2,979,578
Robert L. Freeman 18,896,706 41,345 2,979,578
G. Bruce Miller 18,901,363 36,688 2,979,578
Kenneth S. White 18,902,964 35,087 2,979,578
<PAGE>
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:
There were no reports on Form 8-K filed during the second
quarter ended June 30, 1994.
<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: August 11, 1994 /s/ James F. Campbell
-----------------------------------
James F. Campbell
Senior Vice President & Controller
(duly authorized officer)
Date: August 11, 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 For the Six Months
ended June 30, ended June 30,
-------------------- -------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings:
Net income $29,583 $26,317 $58,874 $50,444
======== ======== ======== ========
Shares:
Weighted average number of common shares used
in computing primary earnings per share 39,114 38,663 39,084 38,595
Dilutive stock options - based on treasury stock
method 856 850 809 880
-------- -------- -------- --------
Weighted average number of common shares used
in computing fully diluted earnings per share 39,970 39,513 39,893 39,475
======== ======== ======== ========
Earnings per share:
Primary earnings per share $0.76 $0.68 $1.51 $1.31
Fully diluted earnings per share $0.74 $0.67 $1.48 $1.28
</TABLE>
