TRANSMITTAL LETTER
Central Fidelity Banks, Inc.
1021 East Cary Street
Richmond, Virginia 23219
(804) 782-4000
November 13, 1995
BY EDGAR SYSTEM
- ---------------
Securities and Exchange Commission
450 Fifth Street
Washington, D. C. 20549-1004
Attn: Filing Desk
Re: Central Fidelity Banks, Inc. Form 10-Q Filing
- ---------------------------------------------------
Ladies and Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934,
we are transmitting herewith the attached Form 10-Q for the quarter
ended September 30, 1995.
Sincerely,
Central Fidelity Banks, Inc.
/s/ Vivian Y. Woo
Vivian Y. Woo
Vice President and Assistant Controller
Enclosure
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
Commission file number 0-8829
CENTRAL FIDELITY BANKS, INC.
(Exact name of registrant as specified in its charter)
Virginia 54-1091649
(State of incorporation) (I.R.S. Employer
Identification No.)
1021 East Cary Street 23219
Richmond, Virginia (Zip Code)
(Address of principal executive offices)
(804) 782-4000
(Registrant's telephone number, including area code)
Central Fidelity Banks, Inc. (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
As of November 8, 1995, the latest practicable date, Central
Fidelity Banks, Inc. had 40,101,831 shares of its Common Stock
outstanding. This is the only class of outstanding shares.
1
<PAGE>
<TABLE>
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheet . . . . . . . . . . . . . . 4-5
Statement of Consolidated Income . . . . . . . . . . . 6
Statement of Consolidated Cash Flows . . . . . . . . . 7
Statement of Changes in Consolidated Shareholders'
Equity . . . . . . . . . . . . . . . . . . . . . . 8
Supplemental Data to Financial Statements:
Consolidated Financial Highlights. . . . . . . . . . . 9
Average Balances and Interest Rates (Taxable
Equivalent Basis) for the three months ended
September 30, 1995 . . . . . . . . . . . . . . . . 10-11
Average Balances and Interest Rates (Taxable
Equivalent Basis) for the nine months ended
September 30, 1995 . . . . . . . . . . . . . . . . 12-13
Selected Loan Loss Data. . . . . . . . . . . . . . . . 14
Nonperforming Assets and Past-due Loans. . . . . . . . 15
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . 16-24
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 25
SIGNATURES 26
EXHIBIT INDEX 27
</TABLE>
2
<PAGE>
PART I
------
FINANCIAL INFORMATION
---------------------
CENTRAL FIDELITY BANKS, INC.
ITEM 1. FINANCIAL STATEMENTS
The consolidated balance sheet as of September 30, 1995; the
statement of consolidated income for the three-month and nine-month
periods ended September 30, 1995 and 1994; the statement of
consolidated cash flows and the statement of changes in consolidated
shareholders' equity for the nine-month period ended September 30,
1995 and 1994 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 nine-month periods ended September
30, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995. 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, 1994, which is the source of the
Company's balance sheet as of that date.
3
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In thousands, except share data)
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------
Cash and due from banks $300,676 $274,813
Temporary investments:
Federal funds sold and securities purchased
under agreements to resell 160,814 196,859
Trading account securities 1,066 1,417
- ---------------------------------------------------------------------- ----------- -----------
Total temporary investments 161,880 198,276
- ---------------------------------------------------------------------- ----------- -----------
Assets available for sale:
Securities 3,835,000 3,486,381
Loans 8,035 2,186
- ---------------------------------------------------------------------- ----------- -----------
Total assets available for sale 3,843,035 3,488,567
- ---------------------------------------------------------------------- ----------- -----------
Total loans 6,139,071 5,769,907
Allowance for loan losses (110,000) (110,000)
- ---------------------------------------------------------------------- ----------- -----------
Net loans 6,029,071 5,659,907
- ---------------------------------------------------------------------- ----------- -----------
Accrued interest receivable 66,628 59,933
Premises and equipment, net 151,999 147,177
Due from customers on acceptances 17,522
13,663
Other assets 175,548 211,836
- ---------------------------------------------------------------------- ----------- -----------
Total assets $10,746,359 $10,054,172
- ---------------------------------------------------------------------- =========== ===========
</TABLE>
4
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET (Continued)
<CAPTION>
LIABILITIES
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
Deposits:
Demand $985,353 $953,655
Savings and other time 6,568,031 6,026,393
Certificates of deposit $100,000 and over 281,407 247,196
- ---------------------------------------------------------------------- ----------- -----------
Total deposits 7,834,791 7,227,244
- ---------------------------------------------------------------------- ----------- -----------
Borrowings:
Federal funds purchased and securities sold
under agreements to repurchase 1,207,777 1,040,870
Other short-term borrowings 75,766 61,998
Medium-term notes 252,250 561,500
Federal Home Loan Bank borrowings 343,200 236,500
Long-term debt 150,397 150,440
Capitalized lease obligations 7,886 8,167
- ---------------------------------------------------------------------- ----------- -----------
Total borrowings 2,037,276 2,059,475
- ---------------------------------------------------------------------- ----------- -----------
Dividends payable 11,987 11,001
Accrued interest payable 35,212 36,211
Bank acceptances outstanding 17,522 13,663
Accounts payable and accrued liabilities 25,638 83,506
- ---------------------------------------------------------------------- ----------- -----------
Total liabilities 9,962,426 9,431,100
- ---------------------------------------------------------------------- ----------- -----------
SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------
Preferred stock, none issued -- --
Common stock, par value $5 per share, authorized
100,000,000 shares, shares issued: 39,962,614
and 39,324,228, respectively 199,813 196,621
Capital surplus 191,072 180,458
Retained earnings 392,544 348,219
Unrealized gains (losses) on securities available
for sale, net of income taxes 504 (102,226)
- ---------------------------------------------------------------------- ----------- -----------
Total shareholders' equity 783,933 623,072
- ---------------------------------------------------------------------- ----------- -----------
Total liabilities and shareholders' equity $10,746,359 $10,054,172
- ---------------------------------------------------------------------- =========== ===========
- -------------------------------------------------------------------------------------------------------
</TABLE>
5
<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 nine
months
ended September 30, ended September
30,
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- ----
1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------------
- ----
Income From Earning Assets
- -------------------------------------------------------------------------------------------------------------------
- ----
Interest and fees on loans $134,215 $114,896 $390,351
$320,899
Interest on securities available for sale:
U.S. Government and agencies 42,540 39,033 126,653
120,882
States and political subdivisions 1,840 2,026 5,564
6,188
Other 17,283 13,256 47,166
34,732
Interest on loans available for sale 132 14 242
399
Interest on money market investments 815 1,875 3,425
3,862
Interest on trading account securities 8 6 46
25
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Total income from earning assets 196,833 171,106 573,447
486,987
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Interest Expense
- -------------------------------------------------------------------------------------------------------------------
- ----
Interest on deposits 84,059 63,855 235,024
174,081
Interest on federal funds purchased and securities
sold under agreements to repurchase 13,866 10,035 44,089
31,847
Interest on other short-term borrowings 880 461 2,368
1,118
Interest on medium-term notes 3,723 7,228 15,619
17,829
Interest on Federal Home Loan Bank borrowings 5,636 2,454 14,852
3,197
Interest on long-term debt 2,729 2,312 8,260
6,175
Interest on capitalized lease obligations 176 183 532
554
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Total interest expense 111,069 86,528 320,744
234,801
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Net interest income 85,764 84,578 252,703
252,186
Provision for loan losses 8,704 3,900 17,352
16,321
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Net income from earning assets 77,060 80,678 235,351
235,865
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Noninterest Income
- -------------------------------------------------------------------------------------------------------------------
- ----
Trust income 3,878 3,558 10,808
10,720
Deposit fees and charges 8,762 8,826 25,964
26,072
Profits (losses) on securities available for sale and
trading account securities 2,164 (4,363) 2,522
2,685
Other income 5,893 7,529 19,014
30,877
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Total noninterest income 20,697 15,550 58,308
70,354
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Noninterest Expense
- -------------------------------------------------------------------------------------------------------------------
- ----
Personnel expense 32,125 30,937 98,415
94,082
Occupancy and equipment expense 11,025 10,293 31,925
31,326
FDIC insurance expense 1,713 3,708 9,685
11,209
Other real estate expense 233 51 2,566
7,360
Other expense 12,107 10,931 34,975
34,529
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Total noninterest expense 57,203 55,920 177,566
178,506
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Earnings
- -------------------------------------------------------------------------------------------------------------------
- ----
Income before income taxes 40,554 40,308 116,093
127,713
Income tax expense 13,002 12,909 36,797
41,440
- ------------------------------------------------------------------- ------- ------- ------- ----
- ---
Net income $27,552 $27,399 $79,296
$86,273
- ------------------------------------------------------------------- ======= ======= =======
=======
Earnings Per Share
- -------------------------------------------------------------------------------------------------------------------
- ----
Net income $0.69 $0.70 $2.00
$2.21
Average shares outstanding 39,911,379 39,207,086 39,676,165
39,125,706
- -------------------------------------------------------------------------------------------------------------------
- ----
</TABLE>
6
<PAGE>
<TABLE>
STATEMENT OF CONSOLIDATED CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In Thousands) For the nine months ended September 30,
<CAPTION>
1995 1994
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
- ------------------------------------------------------------------------------------------------------------------
Net income $79,296 $86,273
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 17,352 16,321
Depreciation of premises and equipment 11,845 11,414
Net amortization of premium and accretion of discount on securities
available for sale (5,091) 1,530
Gains on securities available for sale (2,959) (3,197)
Deferred income taxes 3,477 (4,713)
Decrease in trading account securities 351 1,164
Originations of loans available for sale (55,955) (351)
Purchases of loans available for sale (26,566) (8,418)
Proceeds from sales of loans available for sale 76,549 44,243
(Increase) decrease in accrued interest receivable (6,695) 5,731
Increase (decrease) in accrued interest payable (1,807) 2,480
Other, net (49,010) (40,445)
- --------------------------------------------------------------------------------------- ---------- ----------
Net cash provided by operating activities 40,787 112,032
- --------------------------------------------------------------------------------------- ---------- ----------
INVESTING ACTIVITIES
- ------------------------------------------------------------------------------------------------------------------
Purchases of securities available for sale (765,462) (1,549,091)
Proceeds from sales of securities available for sale 286,409 1,508,998
Proceeds from maturities and repayments of securities available for sale 296,530 451,099
Net increase in loans (388,196) (836,323)
Purchases of premises and equipment (14,729) (11,125)
Proceeds from the disposition of premises and equipment 214 255
Proceeds from the disposition of other real estate owned 8,645 14,252
Net cash received in acquisition 413,022 --
- --------------------------------------------------------------------------------------- ---------- ----------
Net cash used by investing activities (163,567) (421,935)
- --------------------------------------------------------------------------------------- ---------- ----------
FINANCING ACTIVITIES
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in demand, interest checking and regular savings deposits 21,144 (85,451)
Net increase (decrease) in money market accounts 59,082 (18,831)
Net increase in consumer certificates 40,539 808,155
Net increase (decrease) in certificates of deposit $100,000 and over 34,211 (202,403)
Net increase (decrease) in short-term borrowings 180,675 (429,346)
Proceeds from medium-term notes and FHLB borrowings 106,700 337,800
Payments on medium-term notes and FHLB borrowings (309,250) --
Proceeds from long-term debt -- 100
Payments on long-term debt and capitalized lease obligations (324) (1,297)
Proceeds from issuance of common stock 13,806 3,299
Cash dividends (33,985) (31,653)
- --------------------------------------------------------------------------------------- ---------- ----------
Net cash provided by financing activities 112,598 380,373
- --------------------------------------------------------------------------------------- ---------- ----------
Increase (decrease) in cash and cash equivalents (10,182) 70,470
Cash and cash equivalents at beginning of year 471,672 457,662
- --------------------------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents at end of period $461,490 $528,132
- --------------------------------------------------------------------------------------- ========== ==========
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------
- ----
Central Fidelity Banks, Inc. and Subsidiaries
<CAPTION> Unrealized
Gains (Losses)
on Securities
Total
(In thousands) Common Common Capital Retained Available
Shareholders'
For the nine months ended September 30, 1994 Shares Stock Surplus Earnings for Sale
Equity
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- ----
Balance at beginning of period 39,023 $195,114 $177,921 $307,249 $45,853
$726,137
Net income -- -- -- 86,273 --
86,273
Common stock issued under Plans 242 1,209 2,090 -- --
3,299
Cash dividends declared on common stock -- -- -- (32,893) --
(32,893)
Change in unrealized gains on securities
available for sale, net of income taxes
of $66,254 -- -- -- -- (123,043)
(123,043)
- ----------------------------------------------- ------ -------- -------- -------- -------- ----
- ----
Balance at end of period 39,265 $196,323 $180,011 $360,629 ($77,190)
$659,773
- ----------------------------------------------- ====== ======== ======== ======== ========
========
For the nine months ended September 30, 1995
- -------------------------------------------------------------------------------------------------------------------
- ----
Balance at beginning of period 39,324 $196,621 $180,458 $348,219 ($102,226)
$623,072
Net income -- -- -- 79,296 --
79,296
Common stock issued under Plans 639 3,192 10,614 -- --
13,806
Cash dividends declared on common stock -- -- -- (34,971) --
(34,971)
Change in unrealized losses on securities
available for sale, net of income taxes
of $55,316 -- -- -- -- 102,730
102,730
- ----------------------------------------------- ------ -------- -------- -------- -------- ----
- ----
Balance at end of period 39,963 $199,813 $191,072 $392,544 $504
$783,933
- ----------------------------------------------- ====== ======== ======== ======== ========
========
- -------------------------------------------------------------------------------------------------------------------
- ----
</TABLE>
8
<PAGE>
<TABLE>
CONSOLIDATED FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------
- ---------
Central Fidelity Banks, Inc. and Subsidiaries
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
<S> <C> <C> <C> <C> <C>
<C>
- -------------------------------------------------------------------------------------------------------------------
- ---------
(In thousands, except share and per share data) 1995 1994 Change 1995 1994
Change
- -------------------------------------------------------------------------------------------------------------------
- ---------
Results Of Operations
- -------------------------------------------------------------------------------------------------------------------
- ---------
Net interest income (tax-equivalent basis) $87,682 $86,538 1.3 % $258,526 $258,097
0.2 %
Provision for loan losses 8,704 3,900 123.2 17,352 16,321
6.3
Noninterest income 20,697 15,550 33.1 58,308 70,354
(17.1)
Noninterest expense 57,203 55,920 2.3 177,566 178,506
(0.5)
Net income 27,552 27,399 0.6 79,296 86,273
(8.1)
Per Share Data
- -------------------------------------------------------------------------------------------------------------------
- ---------
Net income $0.69 $0.70 (1.4)% $2.00 $2.21
(9.5)%
Book value 19.62 16.80 16.8 19.62 16.80
16.8
Key Performance Ratios
- -------------------------------------------------------------------------------------------------------------------
- ---------
Return on average assets 1.06 % 1.14 % (7.0)% 1.04 % 1.23 %
(15.4)%
Return on average shareholders' equity 14.28 16.50 (13.5) 14.42 16.97
(15.0)
Net interest margin (tax-equivalent basis) 3.54 3.77 (6.1) 3.59 3.88
(7.5)
Efficiency 53.64 52.48 2.2 55.68 52.54
6.0
Allowance for loan losses as a percentage of loans 1.79 1.97 (9.1) 1.79 1.97
(9.1)
Equity to total assets 7.29 6.64 9.8 7.29 6.64
9.8
Risk-based capital 13.24 14.29 (7.3) 13.24 14.29
(7.3)
Average Daily Balance
- -------------------------------------------------------------------------------------------------------------------
- ---------
Assets $10,368,193 $9,600,949 8.0 % $10,132,757 $9,386,732
7.9 %
Loans 6,040,321 5,486,852 10.1 5,930,025 5,200,927
14.0
Earning assets 9,829,092 9,112,864 7.9 9,631,527 8,891,717
8.3
Deposits 7,785,793 7,002,380 11.2 7,465,678 6,705,392
11.3
Shareholders' equity 771,990 664,073 16.3 733,163 677,978
8.1
Shares outstanding 39,911,379 39,207,086 1.8 39,676,165 39,125,706
1.4
Balance At Quarter-End
- -------------------------------------------------------------------------------------------------------------------
- ---------
Assets $10,746,359 $9,935,012 8.2 % $10,746,359 $9,935,012
8.2 %
Loans 6,147,106 5,597,410 9.8 6,147,106 5,597,410
9.8
Earning assets 10,143,986 9,373,660 8.2 10,143,986 9,373,660
8.2
Deposits 7,834,791 7,157,486 9.5 7,834,791 7,157,486
9.5
Shareholders' equity 783,933 659,773 18.8 783,933 659,773
18.8
Shares outstanding 39,962,614 39,264,615 1.8 39,962,614 39,264,615
1.8
- -------------------------------------------------------------------------------------------------------------------
- ---------
COMMON STOCK PERFORMANCE AND DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------
- ---------
Common Stock Prices
-------------------------------------------------
Dividends
1995 1994 Per
Share
-----------------------------------------------------------------
- -------
High Low High Low 1995
1994
-----------------------------------------------------------------
- -------
First Quarter $27.25 $24.25 $30.25 $27.00 $.28
$.28
Second Quarter 30.50 25.25 34.00 28.25 .30
.28
Third Quarter 33.50 29.25 34.50 30.25 .30
.28
Fourth Quarter 31.00 23.75
.28
- -------------------------------------------------------------------------------------------------------------------
- ---------
</TABLE>
9
<PAGE>
<TABLE>
AVERAGE BALANCES AND INTEREST RATES
(TAXABLE EQUIVALENT BASIS)
- ----------------------------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In thousands) For the three months ended September 30,
<CAPTION> 1995 1994
- ----------------------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Assets
- ----------------------------------------------------------------------------------------------------------------
Interest-earning assets:
Loans:
Commercial and commercial real estate $1,902,013 $41,404 8.64 % $1,870,850 $37,868 8.03 %
Construction 307,672 7,321 9.44 298,354 6,686 8.89
Residential real estate 1,585,383 28,794 7.21 1,453,531 26,004 7.10
Consumer second mortgage 583,103 14,524 9.88 526,612 12,339 9.30
Installment 997,413 21,638 8.61 797,415 15,313 7.62
Bank card 655,842 21,447 12.97 538,557 17,569 12.94
- ----------------------------------------------- ----------- -------- ---------- --------
6,031,426 135,128 8.89 5,485,319 115,779 8.37
Assets available for sale:
Securities:
U.S. Government and agencies 2,587,081 42,540 6.52 2,512,946 39,033 6.16
States and political subdivisions 133,848 2,753 8.23 156,999 3,057 7.79
Other 1,012,173 17,372 6.81 791,200 13,300 6.67
- ----------------------------------------------- ----------- -------- ---------- --------
3,733,102 62,665 6.66 3,461,145 55,390 6.35
Loans 8,895 132 5.89 1,533 14 3.71
- ----------------------------------------------- ----------- -------- ---------- --------
3,741,997 62,797 6.66 3,462,678 55,404 6.35
Money market investments 55,078 815 5.87 164,462 1,875 4.52
Trading account securities 591 11 7.72 405 8 8.06
- ----------------------------------------------- ----------- -------- ---------- --------
Total interest-earning assets 9,829,092 $198,751 8.02 % 9,112,864 $173,066 7.53 %
- ----------------------------------------------- ----------- ======== ---------- ========
Noninterest-earning assets:
Cash and due from banks 280,095 276,151
Premises and equipment, net 150,252 145,646
Other assets 218,754 176,288
Allowance for loan losses (110,000) (110,000)
- ----------------------------------------------- ----------- ----------
Total assets $10,368,193 $9,600,949
- ----------------------------------------------- =========== ==========
</TABLE>
10
<PAGE>
<TABLE>
Liabilities and Shareholders' Equity 1995 1994
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Interest checking $670,439 $3,895 2.31 % $655,792 $3,856 2.33 %
Regular savings 746,713 5,267 2.80 828,194 5,865 2.81
Consumer certificates 4,103,607 59,911 5.79 3,238,406 41,265 5.06
Money market accounts 1,066,468 11,255 4.19 998,813 8,558 3.40
Certificates of deposit $100,000 and over 255,458 3,731 5.79 364,981 4,311 4.69
Federal funds purchased and repos 966,669 13,866 5.69 909,074 10,035 4.38
Other short-term borrowings 65,720 880 5.32 44,776 461 4.10
Medium-term notes 252,250 3,723 5.86 562,006 7,228 5.10
Federal Home Loan Bank borrowings 343,200 5,636 6.51 168,046 2,454 5.80
Long-term debt 150,401 2,729 7.20 150,727 2,312 6.08
Capitalized lease obligations 7,918 176 8.78 8,301 183 8.75
- ----------------------------------------------- ----------- -------- ---------- --------
Total interest-bearing liabilities 8,628,843 $111,069 5.11 % 7,929,116 $86,528 4.33 %
- ----------------------------------------------- ----------- ======== ---------- ========
Noninterest-bearing liabilities:
Demand deposits 943,108 916,194
Other 24,252 91,566
- ----------------------------------------------- ----------- ----------
Total noninterest-bearing liabilities 967,360 1,007,760
Shareholders' equity 771,990 664,073
- ----------------------------------------------- ----------- ----------
Total liabilities and shareholders' equity $10,368,193 $9,600,949
- ----------------------------------------------- =========== ==========
Net interest earnings $87,682 $86,538
- ----------------------------------------------- ======== ========
Net interest spread 2.91 % 3.20 %
- ----------------------------------------------- ======= =======
Net interest margin 3.54 % 3.77 %
- ----------------------------------------------- ======= =======
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
AVERAGE BALANCES AND INTEREST RATES
(TAXABLE EQUIVALENT BASIS)
- ----------------------------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In thousands) For the nine months ended September 30,
<CAPTION> 1995 1994
- ----------------------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Assets
- ----------------------------------------------------------------------------------------------------------------
Interest-earning assets:
Loans:
Commercial and commercial real estate $1,887,727 $122,887 8.70 % $1,815,419 $107,130 7.89 %
Construction 313,604 22,872 9.75 291,859 17,196 7.88
Residential real estate 1,578,324 85,300 7.23 1,336,927 71,806 7.18
Consumer second mortgage 570,163 41,493 9.73 496,820 34,566 9.30
Installment 946,123 58,429 8.26 736,390 41,894 7.61
Bank card 629,259 62,127 13.20 515,776 50,763 13.16
- ----------------------------------------------- ----------- -------- ---------- -------
5,925,200 393,108 8.87 5,193,191 323,355 8.32
Assets available for sale:
Securities:
U.S. Government and agencies 2,563,308 126,653 6.61 2,664,059 120,882 6.07
States and political subdivisions 134,989 8,343 8.24 163,205 9,518 7.78
Other 925,212 47,434 6.85 736,349 34,846 6.33
- ----------------------------------------------- ----------- -------- ---------- -------
3,623,509 182,430 6.73 3,563,613 165,246 6.20
Loans 4,825 242 6.70 7,736 399 6.90
- ----------------------------------------------- ----------- -------- ---------- -------
3,628,334 182,672 6.73 3,571,349 165,645 6.20
Money market investments 76,962 3,425 5.95 126,545 3,862 4.08
Trading account securities 1,031 65 8.46 632 36 7.63
- ----------------------------------------------- ----------- -------- ---------- -------
Total interest-earning assets 9,631,527 $579,270 8.04 % 8,891,717 $492,898 7.41 %
- ----------------------------------------------- ----------- ======== ---------- ========
Noninterest-earning assets:
Cash and due from banks 270,657 272,614
Premises and equipment, net 148,046 145,535
Other assets 192,527 186,866
Allowance for loan losses (110,000) (110,000)
- ----------------------------------------------- ----------- ----------
Total assets $10,132,757 $9,386,732
- ----------------------------------------------- =========== ==========
</TABLE>
12
<PAGE>
<TABLE>
Liabilities and Shareholders' Equity 1995 1994
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Interest checking $654,684 $11,432 2.33 % $668,740 $11,943 2.39 %
Regular savings 745,357 15,623 2.80 864,447 18,185 2.81
Consumer certificates 3,885,891 165,509 5.69 2,912,959 108,551 4.98
Money market accounts 1,025,479 32,173 4.19 1,014,443 23,956 3.16
Certificates of deposit $100,000 and over 241,598 10,287 5.69 345,025 11,446 4.44
Federal funds purchased and repos 1,012,053 44,089 5.82 1,141,436 31,847 3.73
Other short-term borrowings 58,614 2,368 5.40 41,800 1,118 3.58
Medium-term notes 347,566 15,619 6.01 529,632 17,829 4.50
Federal Home Loan Bank borrowings 299,790 14,852 6.62 73,749 3,197 5.80
Long-term debt 150,414 8,260 7.34 151,189 6,175 5.46
Capitalized lease obligations 8,013 532 8.87 8,386 554 8.84
- ----------------------------------------------- ----------- -------- ---------- --------
Total interest-bearing liabilities 8,429,459 $320,744 5.09 % 7,751,806 $234,801 4.05 %
- ----------------------------------------------- ----------- ======== ---------- ========
Noninterest-bearing liabilities:
Demand deposits 912,669 899,778
Other 57,466 57,170
- ----------------------------------------------- ----------- ----------
Total noninterest-bearing liabilities 970,135 956,948
Shareholders' equity 733,163 677,978
- ----------------------------------------------- ----------- ----------
Total liabilities and shareholders' equity $10,132,757 $9,386,732
- ----------------------------------------------- =========== ==========
Net interest earnings $258,526 $258,097
- ----------------------------------------------- ======== ========
Net interest spread 2.95 % 3.36 %
- ----------------------------------------------- ======= =======
Net interest margin 3.59 % 3.88 %
- ----------------------------------------------- ======= =======
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
SELECTED LOAN LOSS DATA
- -------------------------------------------------------------------------------------------------------------------
- --
Central Fidelity Banks, Inc. and Subsidiaries
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
- -------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- -
Balance at beginning of period $110,000 $110,000 $110,000
$105,000
Provision charged to expense 8,704 3,900 17,352
16,321
- -------------------------------------------------------------- ----------- ----------- ----------- ----------
- -
118,704 113,900 127,352
121,321
Loans charged off:
Commercial and commercial real estate 1,010 1,422 3,532
6,601
Construction 214 276 286
1,336
Residential real estate 73 58 167
100
Installment 3,616 1,324 9,421
3,705
Bank card 6,569 3,843 18,351
10,846
- -------------------------------------------------------------- ----------- ----------- ----------- ----------
- -
Total charge-offs 11,482 6,923 31,757
22,588
- -------------------------------------------------------------- ----------- ----------- ----------- ----------
- -
Recoveries of loans previously charged off:
Commercial and commercial real estate 843 1,359 5,911
3,050
Construction 110 151 2,988
3,456
Residential real estate 4 1 13
19
Installment 1,143 902 3,283
2,602
Bank card 678 610 2,210
2,140
- -------------------------------------------------------------- ----------- ----------- ----------- ----------
- -
Total recoveries 2,778 3,023 14,405
11,267
- -------------------------------------------------------------- ----------- ----------- ----------- ----------
- -
Net charge-offs 8,704 3,900 17,352
11,321
- -------------------------------------------------------------- ----------- ----------- ----------- ----------
- -
Balance at end of period $110,000 $110,000 $110,000
$110,000
- -------------------------------------------------------------- =========== =========== ===========
===========
Average loans $6,040,321 $5,486,852 $5,930,025
$5,200,927
Loans at period-end $6,147,106 $5,597,410 $6,147,106
$5,597,410
Ratio of provision for loan losses to average loans 0.58% 0.28% 0.39%
0.42%
Ratio of net charge-offs to average loans 0.58% 0.28% 0.39%
0.29%
Ratio of allowance for loan losses to loans at period-end 1.79% 1.97% 1.79%
1.97%
- -------------------------------------------------------------------------------------------------------------------
- --
</TABLE>
14
<PAGE>
<TABLE>
NONPERFORMING ASSETS AND PAST-DUE LOANS
- ---------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In thousands)
<CAPTION> September 30, December 31,
1995 1994 1994
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
Nonperforming Assets
- ---------------------------------------------------------------------------------------
Nonaccrual loans:
Land acquisition, land development
or construction:
Commercial $6,104 $12,176 $7,766
Residential 16,910 19,202 14,162
Residential real estate 5,093 4,963 4,987
Commercial real estate 11,044 24,209 26,962
Commercial and industrial 10,414 10,434 13,657
- ----------------------------------------- ------- -------- -------
Total nonaccrual loans 49,565 70,984 67,534
- ----------------------------------------- ------- -------- -------
Restructured loans -- -- --
- ----------------------------------------- ------- -------- -------
Total nonperforming loans 49,565 70,984 67,534
- ----------------------------------------- ------- -------- -------
Foreclosed properties:
Land and developed lots:
Commercial 2,830 4,841 5,032
Residential 12,147 15,271 13,699
Residential real estate 2,237 4,675 3,307
Commercial real estate 723 800 722
- ----------------------------------------- ------- -------- -------
Total foreclosed properties 17,937 25,587 22,760
- ----------------------------------------- ------- -------- -------
Total nonperforming assets $67,502 $96,571 $90,294
- ----------------------------------------- ======= ======== =======
Ratio of nonperforming assets to
loans and foreclosed properties 1.09% 1.72% 1.56%
- ---------------------------------------------------------------------------------------
Past-due Loans (90 days or more and still accruing)
- ---------------------------------------------------------------------------------------
Commercial and construction $849 $1,460 $1,195
Residential real estate 5,057 1,290 2,255
Installment 3,401 1,022 2,028
Bank card 6,319 4,200 5,562
- ----------------------------------------- ------- -------- -------
Total past-due loans $15,626 $7,972 $11,040
- ----------------------------------------- ======= ======== =======
- ---------------------------------------------------------------------------------------
</TABLE>
15
<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 nine months ended September 30, 1995 was
$79.3 million, 8.1% lower than the $86.3 million earned in the nine
months of 1994. On a per share basis, net income declined 9.5% to
$2.00 from $2.21. The declines in net income and net income per share
were due primarily to higher funding costs in 1995 when compared to
the corresponding 1994 period.
On a tax-equivalent basis, net interest income for the nine
months ended September 30, 1995 was $258.5 million, a slight increase
from the net interest income earned in the corresponding 1994
period. The net interest margin was 3.59% for the nine months ended
September 30, 1995, down twenty-nine basis points from 3.88% during
the same period in 1994. The declines in net interest income and net
interest margin during the nine-month period in 1995 were impacted by
the high funding costs. While average earning assets grew $739.8
million, or 8.3%, average interest-bearing liabilities increased
$677.7 million, or 8.7%, over the same period in 1994. Income earned
on earning assets grew $86.4 million, or 17.5%, and interest expense
on interest-bearing liabilities increased $85.9 million, or 36.6%,
over the comparable period in 1994. The increase in the yield on
average earning assets of 63 basis points was mitigated by an
increase of 104 basis points in the cost of interest-bearing
liabilities.
For the nine-month period ended September 30, 1995, interest
income on the Company's interest rate swap activities declined $1.7
million and interest expense on such activities increased by $1.5
million compared to a $2.2 million increase in interest income and a
decrease of $3.7 million in interest expense for the corresponding
1994 period. The Company's interest rate swap activities reduced net
interest income for the nine months ended September 30, 1995 by $3.2
million and increased net interest income for the first nine months of
1994 by $5.9 million.
16
The provision for loan losses was $17.4 million for the nine
months ended September 30, 1995 compared with $16.3 million recorded
for the corresponding period in 1994.
Noninterest income totalled $58.3 million for the nine months
ended September 30, 1995 compared with $70.4 million for the same
period in 1994, representing a decline of 17.1%. The decline in
noninterest income was primarily due to the nonrecurring $11.4
million gain on the sale of the out-of-state affinity credit card
portfolio in 1994. Excluding this item, noninterest income had a
modest decline of 1.1% in 1995.
Noninterest expense for the nine months ended September 30, 1995
was $177.6 million. It was basically flat when compared to $178.5
million for the same period in 1994. Personnel, occupancy and
equipment, and other expenses grew by modest amounts. Other real
estate expense declined by 65.1%, resulting primarily from
approximately 30% reductions experienced in foreclosed properties.
The decline of 13.6% in FDIC insurance expense is the result of the
lowered deposit insurance assessment.
Balance Sheet
- -------------
Total assets as of September 30, 1995 were $10.7 billion, up
6.9% from year-end 1994's level. Total loans at September 30, 1995
were $6.1 billion, or 6.5% higher than at December 31, 1994,
resulting from growth in consumer and residential real estate loans.
Total deposits were $7.8 billion at September 30, 1995, representing
an increase of 8.4% from December 31, 1994. The major component of
the increase consisted of approximately $450,000,000 of deposits
acquired from Household Bank, f.s.b., a subsidiary of Household
International, Inc. headquartered in Chicago, Illinois. On June 9,
1995, this acquisition resulted in the addition of twelve branches
located in Northern Virginia. Shareholders' equity at September 30,
1995 was $783.9 million, or 7.3% of total assets. At December 31,
1994, shareholders' equity was $623.1 million, or 6.2% of total
assets. Book value per share grew 23.9% from $15.84 at December 31,
1994 to $19.62 at September 30, 1995. Excluding the impact of
unrealized gains and losses on securities available for sale
adjustment, shareholders' equity was $783.4 million, or 7.3% of total
assets at September 30, 1995, and $725.3 million, or 7.2% of total
assets at December 31, 1994. Book value per share was $19.60 at
September 30, 1995, a 6.3% growth from $18.44 at December 31, 1994.
During the first nine months of 1995, the return on average
total assets was 1.04% compared to 1.23% for the comparable 1994
period and the return on average shareholders' equity was 14.42%
versus 16.97% in 1994.
17
Asset Quality
- -------------
Nonperforming assets as of September 30, 1995 were $67.5
million, or .63% of total assets, compared to $90.3 million or .90%
at December 31, 1994 and $96.6 million or .97% of total assets at
September 30, 1994. At September 30, 1995, nonperforming assets were
1.09% of loans and foreclosed properties, compared to 1.56% at
December 31, 1994 and 1.72% at September 30, 1994. The lower level of
nonperforming assets was primarily a result of continued improvement
in real estate markets.
The allowance for loan losses at September 30, 1995, December
31, 1994 and September 30, 1994 was $110.0 million. At September 30,
1995, the allowance for loan losses was 1.79% of loans, compared to
1.91% at December 31, 1994 and 1.97% at September 30, 1994. At
September 30, 1995, the allowance for loan losses to nonperforming
assets was 163.0%, compared to 121.8% at December 31, 1994 and 113.9%
at September 30, 1994. Net loan charge-offs for the three months
ended September 30, 1995 were $8.7 million, representing .58% of
average loans on an annualized basis compared to $8.0 million or .57%
for the three months ended December 31, 1994 and $3.9 million or .28%
for the three months ended September 30, 1994. The Company has
identified approximately $10 million in secured real estate related
loans as having the potential of becoming nonperforming loans. These
loans are currently performing in accordance with their contractual
terms, but there is concern about the borrowers' ability to continue
to comply with the present loan terms, including repayment. The
Company is experiencing increased delinquency and charge-off rates in
the consumer loan area of its loan portfolio. This is a reflection of
trends that the banking industry, in general, is experiencing. As a
result, underwriting criteria have been strengthened and loan
collection efforts have been enhanced.
The allowance for loan losses represents management's estimate
of an amount adequate to absorb potential future losses inherent in
the loan portfolio. In assessing the adequacy of the allowance,
management relies predominately on its ongoing review of the lending
process and 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 for 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 its
adequacy.
18
Capital Resources
- -----------------
The Company's risk-based capital and leverage ratios exceeded
the Federal Reserve's minimum guidelines at September 30, 1995. At
September 30, 1995, the Company's total risk-based capital was $959.2
million, as compared to $928.4 million at year-end 1994 and $937.7
million at September 30, 1994. The ratio of total risk-based capital
to risk-weighted assets was 13.24% at September 30, 1995 compared to
13.85% and 14.29% at December 31, 1994 and September 30, 1994,
respectively. At September 30, 1995, the Company's leverage ratio was
6.97%, compared to 7.04% at December 31, 1994 and 7.37% at September
30, 1994. At September 30, 1995, the Bank's total risk-based capital
and leverage ratios were 12.78% and 6.62%, respectively.
Off-Balance-Sheet Derivatives
- -----------------------------
Interest rate swaps have been the main derivative instrument
used to modify the repricing characteristics of various balance
sheet assets and liabilities. The interest rate swaps entered into
by the Company are essentially commitments to participate in cash
settlements with a counterparty at various future dates as agreed to
in the swap contract. These cash settlements result from movements
in interest rates and are based on differences in specific rate
indexes as applied to the notional principal amount of the
contract.
The Company employed financial derivatives in its strategy of
increasing liability sensitivity, which boosted earnings in an
environment of declining interest rates. The Company entered into
interest rate swaps to receive a fixed rate of interest and pay a
variable rate. In the implementation of this strategy, the use of
off-balance-sheet derivatives was limited compared to the size of
various on-balance-sheet instruments, namely fixed rate securities
and short-term borrowings, which were the predominant vehicles for
pursuing liability sensitivity.
Market values of derivatives transactions fluctuate based upon
movements in the underlying financial indices such as interest
rates. Market values are monitored on a monthly basis through
external pricing mechanisms and then tested by using internal
calculations. The Company's objective measurement system together
with risk limits and timely reporting to senior management help to
mitigate the possibility of any gain or loss recognition on the
Company's interest rate swaps. In the event that a derivative
product were terminated prior to its contractual maturity, it is the
Company's policy to recognize the resulting gain or loss over the
remaining life of the underlying hedged asset or liability.
19
Financial derivatives may expose the Company to credit risk to
the extent of the fair value gain of an instrument, should the
counterparty default on its obligation to perform. The Company
seeks to reduce credit risk by dealing only with highly rated
counterparties and by setting exposure limits based on independent
industry ratings from the major rating agencies and other relevant
criteria. Furthermore, the Company uses bilateral netting
agreements and collateral arrangements to reduce credit risk.
Collateral is delivered by either party when the fair value of the
transaction exceeds established thresholds of credit risk.
The Company has also entered into a small number of interest
rate swap agreements to accommodate the needs of commercial
customers. In order to offset the interest rate risk of customer
swaps, the Company has executed offsetting transactions with third
parties.
The Company intends to continue using off-balance-sheet
financial derivatives as a limited end-user in the prudent
management of interest rate sensitivity.
Recent Developments
- -------------------
In September 1995, the FDIC reduced the insurance rates that it
assessed its member institutions whose deposits were insured by the
Bank Insurance Fund ("BIF") from $.28 per $100 of deposits to $.04
per $100. Under consideration, at present, in the Congress are
proposals to recapitalize the Savings Association Insurance Fund
("SAIF"). There is a proposal, among others, to levy a one-time
assessment on those deposits that Commercial Banks have which were
assumed from former Savings and Loan Institutions that were members
of the SAIF. The Bank had, at September 30, 1995, approximately $1.2
billion of its deposits insured by the SAIF.
20
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
- -----
Summary of Interest Rate Swaps
The weighted average variable rates are based upon the contractual rates in effect at September 30, 1995:
(In thousands) September 30, 1995
<CAPTION>
9 months ended
9/30/95
Notional Weighted Average Rate Maturity Interest
Unrecognized
Amount Receive Pay In Years Income/(Expense) Gains
(Losses)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- -----
Company Hedging Swaps
- -------------------------------------------------------------------------------------------------------------------
- -----
Pay fixed/receive variable:
Variable rate deposits $50,000 5.84%(1) 6.42% 1.70 $186
($418)
Variable rate medium-term borrowings -- -- -- -- (45)
- --
Securities available for sale 22,804 6.41 (3) 9.00 3.99 (35)
(934)
Fixed rate commercial loans 25,838 5.85 (2) 6.83 3.93 (146)
(583)
- ---------------------------------------- -------- ------ ---
- ----
Total pay fixed/receive variable 98,642 5.98 7.12 2.82 (40)
(1,935)
- ---------------------------------------- -------- ------ ---
- ----
Pay variable/receive fixed:
Fixed rate subordinated debt 150,000 7.10 5.88 (2) 7.13 1,018
6,215
Fixed rate medium-term borrowings 200,000 5.14 5.91 (2) 1.55 (2,720)
(1,636)
Variable rate commercial loans 100,000 4.77 5.94 (2) 1.31 (1,481)
(1,730)
- ---------------------------------------- -------- ------ ---
- ----
Total pay variable/receive fixed 450,000 5.71 5.90 3.36 (3,183)
2,849
- ---------------------------------------- -------- ------ ---
- ----
Total company hedging swaps $548,642 5.76% 6.12% 3.26 ($3,223)
$914
- ---------------------------------------- ======== ======
=======
- -------------------------------------------------------------------------------------------------------------------
- -----
Customer Hedging Swaps
- -------------------------------------------------------------------------------------------------------------------
- -----
Pay fixed/receive variable $4,000 5.85%(2) 9.57% 2.59 --
($450)
Pay variable/receive fixed 4,000 9.62 5.85 (2) 2.59 --
455
- ---------------------------------------- -------- ------ ---
- ----
Total customer hedging swaps $8,000 7.74% 7.71% 2.59 $6
$5
- ---------------------------------------- ======== ======
=======
- -------------------------------------------------------------------------------------------------------------------
- -----
(1) Variable rate is tied to U.S. Treasury bill rate.
(2) Variable rate is tied to London Inter-Bank Offered Rate (LIBOR) with designated 3-month maturity.
(3) Variable rate is tied to London Inter-Bank Offered Rate (LIBOR) with designated 1-month maturity plus 60 basis
point
</TABLE>
21
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
- -------
Summary of Interest Rate Swaps
The weighted average variable rates are based upon the contractual rates in effect at September 30, 1994:
(In thousands) September 30, 1994
<CAPTION>
9 months ended
9/30/94
Notional Weighted Average Rate Maturity Interest
Unrecognized
Amount Receive Pay In Years Income/(Expense) Gains
(Losses)
<S> <C> <C> <C> <C> <C>
<C>
- -------------------------------------------------------------------------------------------------------------------
- -------
Company Hedging Swaps
- -------------------------------------------------------------------------------------------------------------------
- -------
Pay fixed/receive variable:
Variable rate deposits $75,000 4.91%(1) 5.37% 0.58 ($1,051)
($247)
Variable rate medium-term borrowings 50,000 5.06 (2) 6.42 2.71 (164)
721
Fixed rate commercial loans 26,776 4.88 (2) 6.82 4.93 (96)
260
- ---------------------------------------- ---------- ------ -
- ------
Total pay fixed/receive variable 151,776 4.95 5.97 2.05 (1,311)
734
- ---------------------------------------- ---------- ------ -
- ------
Pay variable/receive fixed:
Fixed rate subordinated debt 150,000 7.10 4.88 (2) 8.13 3,175
(5,686)
Fixed rate medium-term borrowings 400,000 4.87 4.89 (2) 1.92 1,702
(10,004)
Variable rate commercial loans 300,000 5.18 5.21 (2) 1.08 2,296
(5,557)
- ---------------------------------------- ---------- ------ -
- ------
Total pay variable/receive fixed 850,000 5.37 5.00 2.72 7,173
(21,247)
- ---------------------------------------- ---------- ------ -
- ------
Total company hedging swaps $1,001,776 5.31% 5.15% 2.62 $5,862
($20,513)
- ---------------------------------------- ========== ======
=======
- -------------------------------------------------------------------------------------------------------------------
- -------
Customer Hedging Swaps
- -------------------------------------------------------------------------------------------------------------------
- -------
Pay fixed/receive variable $9,000 4.72%(2) 6.87% 2.52 --
$610
Pay variable/receive fixed 9,000 6.92 4.72 (2) 2.52 --
(602)
- ---------------------------------------- ---------- ------ -
- ------
Total customer hedging swaps $18,000 5.82% 5.80% 2.52 $3
$8
- ---------------------------------------- ========== ======
=======
- -------------------------------------------------------------------------------------------------------------------
- -------
(1) Variable rate is tied to U.S. Treasury bill rate.
(2) Variable rate is tied to London Inter-Bank Offered Rate (LIBOR) with designated 3-month maturity.
</TABLE>
22
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
- ----
Interest Rate Swaps - Notional Amount Rollforward
Pay fixed/ Pay variable/ Total
(In thousands) receive receive All
<CAPTION> variable fixed Swaps
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- ----
Notional Amount
- -------------------------------------------------------------------------------------------------------------------
- ----
Company Swaps:
Beginning balance, January 1, 1995 $126,548 $850,000
$976,548
New swaps 25,000 --
25,000
Terminated swaps -- --
- --
Matured swaps (50,000) (300,000)
(350,000)
Amortization of swaps (2,906) (100,000)
(102,906)
- ------------------------------------------ -------- -------- ------
- ----
Ending balance, September 30, 1995 $98,642 $450,000
$548,642
- ------------------------------------------ ======== ========
==========
Customer Swaps:
Beginning balance, January 1, 1995 $9,000 $9,000
$18,000
New swaps -- --
- --
Terminated swaps (5,000) (5,000)
(10,000)
Matured swaps -- --
- --
Amortization of swaps -- --
- --
- ------------------------------------------ -------- -------- ------
- ----
Ending balance, September 30, 1995 $4,000 $4,000
$8,000
- ------------------------------------------ ======== ========
==========
- -------------------------------------------------------------------------------------------------------------------
- ----
</TABLE>
23
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
- ---
Expected Maturities of Interest Rate Swaps
<CAPTION>
Due After One After Two After Three After Four
Within Through Through Through Through After
(In thousands) September 30, 1995 One Year Two Years Three Years Four Years Five Years Five Years Total
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Company Hedging Swaps
- -------------------------------------------------------------------------------------------------------------------
Pay fixed/receive variable:
Notional amount $9,404 $61,645 $7,814 $18,413 $156 $1,210 $98,642
Weighted average pay rate 8.22% 6.74% 8.46% 7.33% 7.30% 7.30% 7.12%
Weighted average receive rate:
Contractual rate * 6.21% 5.91% 6.27% 5.97% 5.88% 5.88% 5.98%
Forward yield curve ** 6.12% 5.99% 6.41% 6.52% 6.63% 6.39% 6.14%
Receive fixed/pay variable:
Notional amount $200,000 $100,000 -- -- -- $150,000 $450,000
Weighted average pay rate:
Contractual rate * 5.91% 5.94% -- -- -- 5.88% 5.90%
Forward yield curve ** 5.85% 5.92% -- -- -- 6.68% 6.14%
Weighted average receive rate 5.14% 4.77% -- -- -- 7.10% 5.71%
- -------------------------------------------------------------------------------------------------------------------
Customer Hedging Swaps
- -------------------------------------------------------------------------------------------------------------------
Pay fixed/receive variable:
Notional amount -- -- $4,000 -- -- -- $4,000
Weighted average pay rate -- -- 9.57% -- -- -- 9.57%
Weighted average receive rate:
Contractual rate * -- -- 5.85% -- -- -- 5.85%
Forward yield curve ** -- -- 6.11% -- -- -- 6.11%
Receive fixed/pay variable:
Notional amount -- -- $4,000 -- -- -- $4,000
Weighted average pay rate:
Contractual rate * -- -- 5.85% -- -- -- 5.85%
Forward yield curve ** -- -- 6.11% -- -- -- 6.11%
Weighted average receive rate -- -- 9.62% -- -- -- 9.62%
- -------------------------------------------------------------------------------------------------------------------
* The weighted average variable rates are based upon the contractual rates in effect at September 30, 1995.
** The weighted average variable rates are projected based upon the implied forward yield curve from date of
analysis through maturity.
</TABLE>
24
<PAGE>
PART II
-------
OTHER INFORMATION
-----------------
CENTRAL FIDELITY BANKS, INC.
ITEM 6. Exhibits and Reports on Form 8-K.
A. Exhibits:
Exhibit 11 - Statement re computation of per share earnings
27 - Financial data schedule
B. Reports on Form 8-K:
Reports on Form 8-K were filed on July 18 and September 21,
1995, respectively, announcing (i) the results of its operations for the
three month and six month periods ended June 30, 1995 and (ii) that the
Board of Directors of the Registrant, at a regularly scheduled meeting
on September 13, 1995, adopted a resolution restating, in its entirety,
Section 1.2 of the Registrant's Restated By-Laws.
25
<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)
/s/ Charles W. Tysinger
Charles W. Tysinger
Corporate Executive Officer and Treasurer
(Principal Financial Officer)
/s/ James F. Campbell
James F. Campbell
Senior Vice President & Controller
(Principal Accounting Officer)
Date: November 13, 1995
26
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
27
<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 Nine Months
ended September 30, ended September 30,
-------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings:
Net income $27,552 $27,399 $79,296 $86,273
======== ======== ======== ========
Shares:
Weighted average number of common shares used
in computing primary earnings per share 39,911 39,207 39,676 39,126
Dilutive stock options - based on treasury stock
method 689 785 599 800
-------- -------- -------- --------
Weighted average number of common shares used
in computing fully diluted earnings per share 40,600 39,992 40,275 39,926
======== ======== ======== ========
Earnings per share:
Primary earnings per share $0.69 $0.70 $2.00 $2.21
Fully diluted earnings per share $0.68 $0.69 $1.97 $2.16
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000276235
<NAME> CENTRAL FIDELITY BANKS
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<S> <C>
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<COMMON> 199,813
0
0
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</TABLE>
