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 June 30, 1996
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 report 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 August 8, 1996, the latest practicable date, Central Fidelity
Banks, Inc. had 59,664,896 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 JUNE 30, 1996
<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) 10-13
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 16-25
PART II. OTHER INFORMATION
Item 6.Exhibits and Reports on Form 8-K 26
SIGNATURES 27
EXHIBIT INDEX 28
</TABLE>
2
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PART I
-----------
FINANCIAL INFORMATION
-----------------------------------------
CENTRAL FIDELITY BANKS, INC.
ITEM 1. FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 1996, the statement of
consolidated income for the three-month and six-month periods ended
June 30, 1996 and 1995, the statement of consolidated cash flows and the
statement of changes in consolidated shareholders' equity for the
six-month period ended June 30, 1996 and 1995 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, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. 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, 1995 which is the source of the Company's balance
sheet as of that date.
3
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<TABLE>
CONSOLIDATED BALANCE SHEET
- ------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In thousands, except share data)
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
- ------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------
Cash and due from banks $256,100 $338,580
Temporary investments:
Federal funds sold and securities purchased
under agreements to resell 158,814 157,734
Other money market investments 25,000 75,000
Trading account securities 1,205 422
- ------------------------------------------------------------------
Total temporary investments 185,019 233,156
- ------------------------------------------------------------------
Assets available for sale:
Securities 3,254,216 3,629,887
Loans 14,397 15,653
- ------------------------------------------------------------------
Total assets available for sale 3,268,613 3,645,540
- ------------------------------------------------------------------
Total loans 6,459,896 6,301,160
Allowance for loan losses (110,000) (110,000)
- ------------------------------------------------------------------
Net loans 6,349,896 6,191,160
- ------------------------------------------------------------------
Accrued interest receivable 65,535 67,436
Premises and equipment, net 155,466 152,879
Due from customers on acceptances 13,860 18,741
Other assets 197,040 163,482
- ------------------------------------------------------------------
Total assets $10,491,529 $10,810,974
- ------------------------------------------ ========== ==========
</TABLE>
4
<TABLE>
<CAPTION> June 30, December 31,
LIABILITIES 1996 1995
<S> <C> <C>
- ------------------------------------------------------------------
Deposits:
Demand $1,089,147 $1,037,906
Savings and other time 6,498,634 6,599,645
Certificates of deposit $100,000 and over 376,279 348,347
- ------------------------------------------------------------------
Total deposits 7,964,060 7,985,898
- ------------------------------------------------------------------
Borrowings:
Federal funds purchased and securities sold
under agreements to repurchase 950,231 1,041,951
Other short-term borrowings 105,491 88,045
Medium-term notes -- 252,250
Federal Home Loan Bank borrowings 404,000 350,700
Long-term debt 150,350 150,386
Capitalized lease obligations 7,543 7,746
- ------------------------------------------------------------------
Total borrowings 1,617,615 1,891,078
- ------------------------------------------------------------------
Dividends payable 13,135 12,052
Accrued interest payable 31,500 37,911
Bank acceptances outstanding 13,860 18,741
Accounts payable and accrued liabilities 42,835 38,747
- ------------------------------------------------------------------
Total liabilities 9,683,005 9,984,427
- ------------------------------------------------------------------
SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------
Preferred stock, none issued -- --
Common stock, par value $5 per share, authorized
100,000,000 shares, shares issued: 59,708,622
and 40,192,879, respectively 298,543 200,964
Capital surplus 180,899 195,151
Retained earnings 338,664 406,567
Unrealized gains (losses) on securities available
for sale, net of income taxes (9,582) 23,865
- ------------------------------------------------------------------
Total shareholders' equity 808,524 826,547
- ------------------------------------------------------------------
Total liabilities and shareholders'
equity $10,491,529 $10,810,974
- ------------------------------------------ ========== ==========
- ------------------------------------------------------------------
</TABLE>
5
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<TABLE>
STATEMENT OF CONSOLIDATED INCOME
- ------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
(In thousands, except share and per share 1996 1995 1996 1995
- ------------------------------------------------------------------------------------------
Income From Earning Assets
- ------------------------------------------------------------------------------------------
Interest and fees on loans $139,955 $130,719 $279,424 $256,136
Interest on securities available for sale:
U.S. Government and agencies 33,806 41,865 70,017 84,113
States and political subdivisions 1,397 1,836 2,898 3,724
Other 18,675 15,005 37,477 29,230
Interest on loans available for sale 300 77 542 110
Interest on money market investments 1,312 1,630 2,880 3,263
Interest on trading account securities 21 20 34 38
- ------------------------------------------------------------------------------------------
Total income from earning assets 195,466 191,152 393,272 376,614
- ------------------------------------------------------------------------------------------
Interest Expense
- ------------------------------------------------------------------------------------------
Interest on deposits 79,398 78,294 160,734 150,965
Interest on federal funds purchased and securities
sold under agreements to repurchase 12,170 15,261 24,871 30,223
Interest on other short-term borrowings 955 761 1,932 1,488
Interest on medium-term notes 1,341 5,193 3,841 11,896
Interest on Federal Home Loan Bank borrowings 6,292 4,940 12,429 9,216
Interest on long-term debt 2,533 2,709 5,035 5,531
Interest on capitalized lease obligations 168 177 338 356
- ------------------------------------------------------------------------------------------
Total interest expense 102,857 107,335 209,180 209,675
- ------------------------------------------------------------------------------------------
Net interest income 92,609 83,817 184,092 166,939
Provision for loan losses 10,644 3,344 20,951 8,648
- ------------------------------------------------------------------------------------------
Net income from earning assets 81,965 80,473 163,141 158,291
- ------------------------------------------------------------------------------------------
Noninterest Income
- ------------------------------------------------------------------------------------------
Trust income 4,473 3,507 8,768 6,930
Deposit fees and charges 9,458 8,676 18,821 17,202
Profits (losses) on securities available for sale and
trading account securities (157) (158) (1) 358
Other income 6,764 7,453 13,399 13,121
- ------------------------------------------------------------------------------------------
Total noninterest income 20,538 19,478 40,987 37,611
- ------------------------------------------------------------------------------------------
Noninterest Expense
- ------------------------------------------------------------------------------------------
Personnel expense 34,523 33,359 68,839 66,290
Occupancy and equipment expense 11,320 10,499 22,866 20,900
FDIC insurance expense 680 4,069 1,334 7,972
Other real estate expense 421 1,812 1,308 2,333
Other expense 13,301 12,197 26,484 22,868
- ------------------------------------------------------------------------------------------
Total noninterest expense 60,245 61,936 120,831 120,363
- ------------------------------------------------------------------------------------------
Earnings
- ------------------------------------------------------------------------------------------
Income before income taxes 42,258 38,015 83,297 75,539
Income tax expense 13,449 11,991 26,507 23,795
- ------------------------------------------------------------------------------------------
Net income $28,809 $26,024 $56,790 $51,744
- ------------------------------------------ ======= ======= ======= =======
Earnings Per Share
- ------------------------------------------------------------------------------------------
Net income $0.48 $0.44 $0.95 $0.87
Average shares outstanding 59,791,822 59,478,665 60,041,921 59,331,497
- ------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
STATEMENT OF CONSOLIDATED CASH FLOWS
- ----------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In thousands) For the six months ended June 30,
<CAPTION>
1996 1995
<S> <C> <C>
- ----------------------------------------------------------------------
OPERATING ACTIVITIES
- ----------------------------------------------------------------------
Net income $56,790 $51,744
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 20,951 8,648
Depreciation of premises and equipment 7,974 7,912
Net amortization of premium and accretion of discount
on securities available for sale (357) (3,867)
Gains on securities available for sale (367) (633)
Deferred income taxes (932) 2,386
(Increase) decrease in trading account securities (782) 491
Originations of loans available for sale (69,658) (15,588)
Purchases of loans available for sale (54,864) (9,681)
Proceeds from sales of loans available for sale 125,735 20,222
(Increase) decrease in accrued interest receivable 1,901 (478)
Increase (decrease) in accrued interest payable (6,411) 271
Other, net (13,632) (49,182)
- ----------------------------------------------------------------------
Net cash provided by operating activities 66,348 12,245
- ----------------------------------------------------------------------
INVESTING ACTIVITIES
- ----------------------------------------------------------------------
Purchases of securities available for sale (212,296) (330,458)
Proceeds from sales of securities available for
sale 190,744 181,471
Proceeds from maturities and repayments of securities
available for sale 346,492 158,675
Net increase in loans (183,715) (225,258)
Purchases of premises and equipment (11,478) (9,002)
Proceeds from the disposition of premises and
equipment 1,595 10
Proceeds from the disposition of foreclosed
properties 6,494 4,158
Net cash received in acquisition -- 413,022
- ----------------------------------------------------------------------
Net cash provided by investing activities 137,836 192,618
- ----------------------------------------------------------------------
FINANCING ACTIVITIES
- ----------------------------------------------------------------------
Net increase (decrease) in demand, interest checking and
regular savings deposits (565,122) 43,898
Net increase in money market accounts 587,699 90,877
Net increase (decrease) in consumer certificates (72,347) 12,188
Net increase in certificates of deposit $100,000
and over 27,932 73,438
Net decrease in short-term borrowings (74,274) (196,032)
Proceeds from medium-term notes and FHLB borrowings 101,000 106,700
Payments on medium-term notes and FHLB borrowings (299,950) (309,250)
Payments on long-term debt and capitalized lease
obligations (239) (218)
Proceeds from issuance of common stock 8,162 9,823
Common stock purchased (24,287) --
Cash in lieu of fractional shares for stock split (78) --
Cash dividends (24,080) (22,074)
- ----------------------------------------------------------------------
Net cash used by financing activities (335,584) (190,650)
- ----------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents (131,400) 14,213
Cash and cash equivalents at beginning of
year 571,314 496,672
- ----------------------------------------------------------------------
Cash and cash equivalents at end of period $439,914 $510,885
- -------------------------------------------------- ======== ========
- ----------------------------------------------------------------------
</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 six months ended June 30, 1995 Shares Stock Surplus Earnings for Sale Equity
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Balance at beginning of period 39,324 $196,621 $180,458 $348,219 ($102,226) $623,072
Net income -- -- -- 51,744 -- 51,744
Common stock issued under Plans 466 2,329 7,494 -- -- 9,823
Cash dividends declared on common stock -- -- -- (22,984) -- (22,984)
Change in unrealized losses on securities available
for sale, net of income taxes of $55,186 -- -- -- -- 102,489 102,489
- --------------------------------------------------------------------------------------------------------
Balance at end of period 39,790 $198,950 $187,952 $376,979 $263 $764,144
- ----------------------------------------- ====== ======== ======== ======== ======== ========
For the six months ended June 30, 1996
- --------------------------------------------------------------------------------------------------------
Balance at beginning of period 40,193 $200,964 $195,151 $406,567 $23,865 $826,547
Net income -- -- -- 56,790 -- 56,790
Common stock issued under Plans 339 1,696 6,466 -- -- 8,162
Common stock purchased (713) (3,569) (20,718) -- -- (24,287)
Cash dividends declared on common stock -- -- -- (25,163) -- (25,163)
Common stock issued for 3-for-2 stock
split 19,890 99,452 -- (99,530) -- (78)
Change in unrealized gains on securities available
for sale, net of income taxes of $18,010 -- -- -- -- (33,447) (33,447)
- --------------------------------------------------------------------------------------------------------
Balance at end of period 59,709 $298,543 $180,899 $338,664 ($9,582) $808,524
- ----------------------------------------- ====== ======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
CONSOLIDATED FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
(In thousands, except share and per
share data) 1996 1995 Change 1996 1995 Change
- --------------------------------------------------------------------------------------------------------------------------
Results Of Operations
- --------------------------------------------------------------------------------------------------------------------------
Net interest income (tax-equivalent basis) $94,429 $85,754 10.1 % $187,673 $170,844 9.9 %
Provision for loan losses 10,644 3,344 218.3 20,951 8,648 142.3
Noninterest income 20,538 19,478 5.4 40,987 37,611 9.0
Noninterest expense 60,245 61,936 (2.7) 120,831 120,363 0.4
Net income 28,809 26,024 10.7 56,790 51,744 9.8
Per Share Data
- --------------------------------------------------------------------------------------------------------------------------
Net income $0.48 $0.44 9.1 % $0.95 $0.87 9.2 %
Book value 13.54 12.80 5.8 13.54 12.80 5.8
Average Daily Balance
- --------------------------------------------------------------------------------------------------------------------------
Assets $10,354,771 $10,083,542 2.7 % $10,411,632 $10,013,345 4.0 %
Loans 6,430,354 5,935,458 8.3 6,383,111 5,873,964 8.7
Earning assets 9,849,691 9,589,061 2.7 9,892,947 9,531,109 3.8
Deposits 7,809,802 7,407,987 5.4 7,814,721 7,302,967 7.0
Shareholders' equity 806,493 748,179 7.8 814,471 713,750 14.1
Shares outstanding 59,791,822 59,478,665 0.5 60,041,921 59,331,497 1.2
Balance At Quarter-End
- --------------------------------------------------------------------------------------------------------------------------
Assets $10,491,529 $10,418,141 0.7 % $10,491,529 $10,418,141 0.7 %
Loans 6,474,293 5,992,974 8.0 6,474,293 5,992,974 8.0
Earning assets 9,913,528 9,774,941 1.4 9,913,528 9,774,941 1.4
Deposits 7,964,060 7,900,216 0.8 7,964,060 7,900,216 0.8
Shareholders' equity 808,524 764,144 5.8 808,524 764,144 5.8
Shares outstanding 59,708,622 59,681,450 -- 59,708,622 59,681,450 --
Key Performance Ratios (Basis point change)
- --------------------------------------------------------------------------------------------------------------------------
Return on average assets 1.11 % 1.03 % 0.08 1.09 % 1.03 % 0.06
Return on average shareholders' equity 14.29 13.91 0.38 13.95 14.50 (0.55)
Net interest margin (tax-equivalent basis) 3.86 3.59 0.27 3.81 3.61 0.20
Efficiency 51.97 57.05 (5.08) 52.27 56.72 (4.45)
Allowance for loan losses as a percentage
of loans 1.70 1.84 (0.14) 1.70 1.84 (0.14)
Equity to total assets 7.71 7.33 0.38 7.71 7.33 0.38
Risk-based capital 13.18 13.45 (0.27) 13.18 13.45 (0.27)
- --------------------------------------------------------------------------------------------------------------------------
Common Stock Performance and Dividends
- --------------------------------------------------------------------------------------------------------------------------
Common Stock Prices
----------------------------------------------------- Dividend
1996 1995 Per Share
- ------------------------------------------------------------------ ------------------------- -------------------------
High Low High Low 1996 1995
- ---------------------------------------------------- ------------ ----------- ------------ ------------ -----------
First Quarter $23.00 $21.09 $18.17 $16.17 $.20 $.19
Second Quarter 23.67 22.00 20.33 16.83 .22 .20
Third Quarter 22.33 19.50 .20
Fourth Quarter 22.83 20.33 .20
- --------------------------------------------------------------------------------------------------------------------------
Stock Split Information
On May 8, 1996, the Board of Directors of the Company declared a 3-for-2 stock split in the form of a dividend payable on
to shareholders of record May 20, 1996. The number of outstanding shares, earnings and dividends per share, and common stock
have been adjusted to reflect this transaction.
</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 June 30,
<CAPTION> 1996 1995
- -------------------------------------------------------------------------------------------------------------
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 $2,050,472 $41,768 8.19 % $1,894,595 $41,768 8.84 %
Construction 289,195 7,055 9.81 320,617 8,016 10.03
Residential real estate 1,603,913 29,827 7.48 1,582,828 28,448 7.21
Consumer second mortgage 652,335 15,775 9.73 569,981 13,793 9.71
Installment 1,027,479 21,736 8.51 940,463 19,199 8.19
Bank card 790,534 24,610 12.52 623,045 20,416 13.14
- ----------------------------------------------------------------- ------------------------
6,413,928 140,771 8.83 5,931,529 131,640 8.90
Assets available for sale:
Securities:
U.S. Government and agencies 2,095,747 33,806 6.49 2,528,230 41,865 6.64
States and political subdivisions 103,353 2,150 8.32 133,823 2,755 8.23
Other 1,116,839 18,839 6.78 904,484 15,006 6.65
- ----------------------------------------------------------------- ------------------------
3,315,939 54,795 6.65 3,566,537 59,626 6.71
Loans 16,426 300 7.33 3,929 77 7.80
- ----------------------------------------------------------------- ------------------------
3,332,365 55,095 6.65 3,570,466 59,703 6.71
Money market investments 101,866 1,392 5.50 85,790 1,719 8.04
Trading account securities 1,532 28 7.40 1,276 27 8.46
- ----------------------------------------------------------------- ------------------------
Total interest-earning assets 9,849,691 $197,286 8.06 % 9,589,061 $193,089 8.08 %
- --------------------------------------------------- ======== ------------ ========
Noninterest-earning assets:
Cash and due from banks 237,764 272,524
Premises and equipment, net 154,547 147,398
Other assets 222,769 184,559
Allowance for loan losses (110,000) (110,000)
- --------------------------------------------------- ------------
Total assets $10,354,771 $10,083,542
- --------------------------------------- ========== ==========
</TABLE>
10
<TABLE>
<CAPTION> 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Interest checking $687,025 $3,452 2.02 % $650,277 $3,796 2.34 %
Regular savings 741,120 4,904 2.66 735,394 5,140 2.80
Consumer certificates 4,077,137 57,813 5.70 3,869,046 55,321 5.74
Money market accounts 1,030,805 10,048 3.92 1,007,227 10,743 4.28
Certificates of deposit $100,000
and over 240,118 3,181 5.33 231,673 3,294 5.70
Federal funds purchased and repos 961,981 12,170 5.09 1,027,026 15,261 5.96
Other short-term borrowings 78,825 955 4.87 54,970 761 5.55
Medium-term notes 86,519 1,341 6.23 334,668 5,193 6.22
Federal Home Loan Bank borrowings 403,446 6,292 6.27 296,853 4,940 6.67
Long-term debt 150,357 2,533 6.78 150,412 2,709 7.23
Capitalized lease obligations 7,592 168 8.90 8,016 177 8.87
- ----------------------------------------------------------------- ------------------------
Total interest-bearing liabilites8,464,925 $102,857 4.89 % 8,365,562 $107,335 5.15 %
- --------------------------------------------------- ======== ------------ ========
Noninterest-bearing liabilities:
Demand deposits 1,033,597 914,370
Other 49,756 55,431
- --------------------------------------------------- ------------------
Total noninterest-bearing
liabilities 1,083,353 969,801
Shareholders' equity 806,493 748,179
- --------------------------------------------------- ------------------
Total liabilities and
shareholders' equity $10,354,771 $10,083,542
- --------------------------------------- ========== ==========
Net interest earnings $94,429 $85,754
- --------------------------------------- ======== ========
Net interest spread 3.17 % 2.93 %
- --------------------------------------- ==== ====
Net interest margin 3.86 % 3.59 %
- --------------------------------------- ==== ====
- -------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
AVERAGE BALANCES AND INTEREST RATES
(TAXABLE EQUIVALENT BASIS)
- -------------------------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In thousands) For the six months ended June 30,
1996 1995
<CAPTION> ----------------------------------------------------------------------
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 $2,022,268 $83,858 8.34 % $1,880,466 $81,483 8.74 %
Construction 287,182 13,550 9.49 316,620 15,551 9.90
Residential real estate 1,605,683 59,498 7.45 1,574,736 56,506 7.24
Consumer second mortgage 637,183 30,897 9.75 563,585 26,969 9.65
Installment 1,036,005 43,996 8.54 920,053 36,791 8.06
Bank card 780,071 49,269 12.70 615,747 40,680 13.32
- ----------------------------------------------------------------- ------------------------
6,368,392 281,068 8.88 5,871,207 257,980 8.86
Assets available for sale:
Securities:
U.S. Government and agencies 2,164,734 70,017 6.50 2,551,225 84,113 6.65
States and political subdivisions 108,029 4,459 8.26 135,569 5,590 8.25
Other 1,125,833 37,681 6.73 881,010 29,233 6.69
- ----------------------------------------------------------------- ------------------------
3,398,596 112,157 6.64 3,567,804 118,936 6.72
Loans 14,719 542 7.40 2,757 110 8.01
- ----------------------------------------------------------------- --------------------------
3,413,315 112,699 6.64 3,570,561 119,046 6.72
Money market investments 110,000 3,041 5.56 88,086 3,439 7.87
Trading account securities 1,240 45 7.28 1,255 54 8.63
- ----------------------------------------------------------------- --------------------------
Total interest-earning assets 9,892,947 $396,853 8.07 % 9,531,109 $380,519 8.05 %
- --------------------------------------------------- ======== ------------ ========
Noninterest-earning assets:
Cash and due from banks 252,657 265,859
Premises and equipment, net 153,762 146,924
Other assets 222,266 179,453
Allowance for loan losses (110,000) (110,000)
- --------------------------------------------------- ------------
Total assets $10,411,632 $10,013,345
- --------------------------------------- ========== ==========
</TABLE>
12
<TABLE>
<CAPTION> 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Interest checking $685,736 $6,885 2.02 % $646,676 $7,537 2.35 %
Regular savings 737,278 9,886 2.70 744,668 10,356 2.80
Consumer certificates 4,099,262 116,749 5.73 3,775,227 105,598 5.64
Money market accounts 1,043,716 20,547 3.96 1,004,644 20,918 4.20
Certificates of deposit $100,000
and over 246,664 6,667 5.44 234,554 6,556 5.64
Federal funds purchased and repos 974,605 24,871 5.13 1,035,121 30,223 5.89
Other short-term borrowings 79,310 1,932 4.90 55,002 1,488 5.45
Medium-term notes 131,473 3,841 5.87 396,014 11,896 6.06
Federal Home Loan Bank borrowings 394,952 12,429 6.33 277,725 9,216 6.69
Long-term debt 150,366 5,035 6.73 150,421 5,531 7.42
Capitalized lease obligations 7,639 338 8.90 8,061 356 8.92
- ----------------------------------------------------------------- --------------------------
Total interest-bearing liabilites8,551,001 $209,180 4.92 % 8,328,113 $209,675 5.08 %
- --------------------------------------------------- ======== ------------ ========
Noninterest-bearing liabilities:
Demand deposits 1,002,065 897,198
Other 44,095 74,284
- --------------------------------------------------- ------------
Total noninterest-bearing
liabilities 1,046,160 971,482
Shareholders' equity 814,471 713,750
- --------------------------------------------------- ------------------
Total liabilities and
shareholders' equity $10,411,632 $10,013,345
- --------------------------------------- ========== ==========
Net interest earnings $187,673 $170,844
- --------------------------------------- ======== ========
Net interest spread 3.15 % 2.97 %
- --------------------------------------- ==== ====
Net interest margin 3.81 % 3.61 %
- --------------------------------------- ==== ====
- -------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
SELECTED LOAN LOSS DATA
- ---------------------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
<CAPTION>
For the three For the six
ended J ended June
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
(In thousands) 1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------
Balance at beginning of period $110,000 $110,000 $110,000 $110,000
Provision charged to expense 10,644 3,344 20,951 8,648
- ---------------------------------------------------------------------------------------------
120,644 113,344 130,951 118,648
Loans charged off:
Commercial and commercial real estate 893 1,071 2,432 2,522
Construction 120 72 620 72
Residential real estate 153 44 291 94
Installment 5,215 2,553 9,861 5,805
Bank card 8,668 6,634 16,248 11,782
- ---------------------------------------------------------------------------------------------
Total charge-offs 15,049 10,374 29,452 20,275
- ---------------------------------------------------------------------------------------------
Recoveries of loans previously charged off:
Commercial and commercial real estate 679 3,090 1,349 5,068
Construction 431 2,021 1,133 2,878
Residential real estate 2 3 4 9
Installment 2,436 1,078 4,336 2,140
Bank card 857 838 1,679 1,532
- ---------------------------------------------------------------------------------------------
Total recoveries 4,405 7,030 8,501 11,627
- ---------------------------------------------------------------------------------------------
Net charge-offs 10,644 3,344 20,951 8,648
- ---------------------------------------------------------------------------------------------
Balance at end of period $110,000 $110,000 $110,000 $110,000
- --------------------------------------------- ======== ======== ======== ========
Average loans $6,430,354 $5,935,458 $6,383,111 $5,873,964
Loans at period-end $6,474,293 $5,992,974 $6,474,293 $5,992,974
Ratio of provision for loan losses to
average loans 0.66% 0.23% 0.66% 0.29%
Ratio of net charge-offs to average loans 0.66% 0.23% 0.66% 0.29%
Ratio of allowance for loan losses to loans
at period-end 1.70% 1.84% 1.70% 1.84%
- ---------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
NONPERFORMING ASSETS AND PAST-DUE LOANS
- ---------------------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In thousands)
<CAPTION> JuneDecember 31,
1996 1995 1995
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------
Nonperforming Assets
- ---------------------------------------------------------------------------------
Nonaccrual loans:
Land acquisition, land development
or construction:
Commercial $5,975 $6,342 $6,236
Residential 14,802 19,265 16,784
Residential real estate 5,909 4,061 4,655
Commercial real estate 10,370 14,495 11,825
Commercial and industrial 9,576 11,397 9,263
- ---------------------------------------------------------------------------------
Total nonaccrual loans 46,632 55,560 48,763
- ---------------------------------------------------------------------------------
Restructured loans -- -- --
- ---------------------------------------------------------------------------------
Total nonperforming loans 46,632 55,560 48,763
- ---------------------------------------------------------------------------------
Foreclosed properties:
Land and developed lots:
Commercial 2,556 3,506 2,742
Residential 8,077 12,796 10,370
Residential real estate 3,072 3,548 3,318
Commercial real estate 568 822 706
- ---------------------------------------------------------------------------------
Total foreclosed properties 14,273 20,672 17,136
- ---------------------------------------------------------------------------------
Total nonperforming assets $60,905 $76,232 $65,899
- --------------------------------------------- ======= ======= =======
Ratio of nonperforming assets to
loans and foreclosed properties 0.94% 1.27% 1.04%
- ---------------------------------------------------------------------------------
Past-due Loans (90 days or more and still accruing)
- ---------------------------------------------------------------------------------
Commercial and construction $3,348 $959 $1,159
Residential real estate 5,787 3,985 7,941
Installment 4,734 2,042 4,028
Bank card 7,446 6,271 7,855
- ---------------------------------------------------------------------------------
Total past-due loans $21,315 $13,257 $20,983
- --------------------------------------------- ======= ======= =======
- ---------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
CENTRAL FIDELITY BANKS, INC.
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
This discussion is intended to provide information about the
Company's financial condition and results of operations which may not
be readily 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. All per share amounts have been restated to
reflect the 3-for-2 stock split paid June 14, 1996 to shareholders of
record May 20, 1996.
Results of Operations
- -----------------------------
Net income for the first six months ended June 30, 1996 was $56.8
million, 9.8% higher than the $51.7 million earned in the first six months
of 1995. On a per share basis, net income increased 9.2% to $.95 from
$.87. The increases in net income and net income per share were due
primarily to higher earning assets and lower liability costs when
compared to the corresponding 1995 period.
On a tax-equivalent basis, net interest income for the six months
ended June 30, 1996 was $187.7 million, a 9.9% increase from the net
interest income earned in the corresponding 1995 period. The net
interest margin was 3.81% for the six months ended June 30, 1996, up
20 basis points from 3.61% during the same period in 1995. The growth
in net interest income and net interest margin during the first half of 1996
were impacted by the higher yield on earning assets and a reduced
cost of interest-bearing liabilities. For the first six months of 1996,
average earning assets grew $361.8 million from the level recorded in
the first six months of 1995, or 3.8%. This growth produced $16.3 million
additional income, an increase of 4.3% from the first six months of 1995.
The yield on average earning assets increased a modest 2 basis
points. Average interest-bearing liabilities increased $222.9 million, or
2.7% from the six months ended June 30, 1995, interest expense
declined slightly to $209.2 million from the corresponding 1995 period,
and the cost of interest-bearing liabilities declined 16 basis points.
16
For the six-month period ended June 30, 1996, the Company's
interest rate swap activities resulted in declines in interest income of
$1,020,000 and interest expense of $616,000 compared to a $1,376,000
decrease in interest income and a $1,357,000 increase in interest
expense for the corresponding period in 1995. The Company's interest
rate swap activities resulted in reductions of net interest income of
$404,000 for the six months ended June 30, 1996 and $2,733,000 for the
same period in 1995.
The provision for loan losses was $21.0 million for the six months
ended June 30, 1996 compared with $8.6 million recorded for the
corresponding period in 1995. The increase in the provision resulted
from a higher level of net charge-offs due to lower commercial and
commercial real estate and construction loan recoveries and higher
levels of losses in both consumer installment and bank card loans
when compared to the first six months of 1995. Commercial and
commercial real estate and construction loan recoveries of $2.5 million
in the first six months of 1996 compared unfavorably with $7.9 million in
the prior year. Higher levels of net loan charge-offs for the first six
months of 1996 resulted principally from an accelerating trend of
consumer bankruptcies in both bank card and installment loan
portfolios.
Noninterest income totalled $41.0 million for the six months ended
June 30, 1996 compared with $37.6 million for the same period in 1995,
representing an increase of 9.0%. The growth in noninterest income
was primarily driven by higher trust income, growth in deposit fees and
charges and other miscellaneous fee categories.
Noninterest expense was basically flat for the first six months of 1996
compared with the same period in 1995. Higher personnel, occupancy
and equipment, and other expenses were offset by lower FDIC
insurance premiums and other real estate expenses.
Balance Sheet
- --------------------
Total assets as of June 30, 1996 were $10.5 billion, a decrease from
year-end 1995's $10.8 billion level. Total loans at June 30, 1996 were
$6.5 billion, or 2.5% higher than at December 31, 1995, representing
growth primarily in both the commercial and consumer loan
categories. Total deposits were $8.0 billion at June 30, 1996, flat from
December 31, 1995's level. Shareholders' equity at June 30, 1996 was
$808.5 million, or 7.7% of total assets. At December 31, 1995,
shareholders' equity was $826.5 million, or 7.6% of total assets. The
book value per share declined from $13.71 at December 31, 1995 to
$13.54 at June 30, 1996. Excluding the impact of unrealized gains and
losses on securities available for sale adjustment, shareholders'
equity was $818.1 million, or 7.8% of total assets at June 30, 1996, and
$802.7 million, or 7.4% of total assets at December 31, 1995. The book
17
value per share on this basis was $13.70 at June 30, 1996, a 2.9%
growth from $13.31 at December 31, 1995.
The return on average total assets during the first six months of 1996
was 1.09% compared to 1.03% for the comparable 1995 period. The
return on average shareholders' equity was 13.95% versus 14.50% in
1995.
Asset Quality
- -----------------
Nonperforming assets as of June 30, 1996 were $60.9 million, or
.58% of total assets, compared to $65.9 million or .61% of total assets
at December 31, 1995 and $76.2 million or .73% of total assets at June
30, 1995. At June 30, 1996, nonperforming assets were .94% of loans
and foreclosed properties, compared to 1.04% at December 31, 1995
and 1.27% at June 30, 1995. The lower level of nonperforming assets
was primarily a result of overall improved quality in the loan portfolio.
The allowance for loan losses was $110.0 million at June 30, 1996,
December 31, 1995 and June 30, 1995. At June 30, 1996, the allowance
for loan losses was 1.70% of loans, compared to 1.74% at December
31, 1995 and 1.84% at June 30, 1995. At June 30, 1996, the allowance
for loan losses to nonperforming assets was 180.6%, compared to
166.9% at December 31, 1995 and 144.3% at June 30, 1995. Net loan
charge-offs for the three months ended June 30, 1996 were $10.6
million, representing .66% of average loans on an annualized basis
compared to $9.4 million or .60% for the three months ended
December 31, 1995 and $3.3 million or .23% for the three months
ended June 30, 1995.
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
- -------------------------
Central Fidelity National Bank (the "Bank"), the principal subsidiary
of Central Fidelity Banks, Inc., is subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory -
and possibly additional discretionary - actions by regulators that, if
undertaken, could have a direct material effect on the Bank's financial
statements. Under capital adequacy guidelines and the regulatory
framework for Prompt Corrective Action ("PCA"), the Bank must meet
specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Bank's capital
amounts and classification are also subject to qualitative judgments
by the regulators about components, risk weightings, and other
factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Bank to maintain minimum ratios (set forth in the
table below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to
average assets (as defined). Management believes, as of June 30,
1996, that the Bank meets all capital adequacy requirements to which
it is subject.
As of the most recent notification from the Office of the Comptroller
of the Currency, the Bank's primary regulator, categorized the Bank as
well capitalized under the regulatory framework for PCA. To be
categorized as well capitalized the Bank must maintain minimum total
risk-based, Tier I risk-based, Tier I leverage ratios as set forth in the
table. The Bank's category is determined solely for the purposes of
applying PCA and that category may not constitute an accurate
representation of the Bank's overall financial condition or prospects.
There are no conditions or events since that notification that
management believes have changed the Bank's capital adequacy
category.
The regulatory framework for PCA is applicable only to banks and
not to bank holding companies and their non-bank subsidiaries.
19
<TABLE>
<CAPTION> Minimum Ratio
To Be considered
For Capital Well Capitalized
Actual Adequacy Under
(Dollars in thousands) Amount Ratio Purposes PCA Provisions
<S> <C> <C> <C> <C>
-------------------------------------------
As of June 30, 1996
Total Risk-Weighted Assets:
Consolidated $7,601,011 -- -- --
Subsidiary Bank $7,600,352 -- -- --
Total Average Assets:
Consolidated $10,293,336 -- -- --
Subsidiary Bank $10,262,255 -- -- --
Total Capital (to Risk-Weighted Assets):
Consolidated $1,001,869 13.18% 8.0% N/A
Subsidiary Bank $970,458 12.77% 8.0% 10.0%
Tier I Capital (to Risk-Weighted Assets):
Consolidated $756,671 9.95% 4.0% N/A
Subsidiary Bank $725,268 9.54% 4.0% 6.0%
Tier I Capital (to Average Assets):
Consolidated $756,671 7.35% 4.0% N/A
Subsidiary Bank $725,268 7.07% 4.0% 5.0%
As of June 30, 1995
Total Risk-Weighted Assets:
Consolidated $6,950,407 -- -- --
Subsidiary Bank $6,929,678 -- -- --
Total Average Assets:
Consolidated $10,017,554 -- -- --
Subsidiary Bank $9,983,928 -- -- --
Total Capital (to Risk-Weighted Assets):
Consolidated $935,055 13.45% 8.0% N/A
Subsidiary Bank $890,474 12.85% 8.0% 10.0%
Tier I Capital (to Risk-Weighted Assets):
Consolidated $697,889 10.04% 4.0% N/A
Subsidiary Bank $653,567 9.43% 4.0% 6.0%
Tier I Capital (to Average Assets):
Consolidated $697,889 6.97% 4.0% N/A
Subsidiary Bank $653,567 6.55% 4.0% 5.0%
</TABLE>
20
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 typical interest rate swaps entered into by the
Company are 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 utilizes financial derivatives in its strategy of
managing liability sensitivity. In the implementation of this strategy, the
use of off-balance-sheet derivatives is limited compared to the size of
various on-balance-sheet instruments.
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
likelihood of any material gain or loss recognition on the Company's
interest rate swaps. In the event that a derivative product is 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.
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 credit
risk thresholds.
21
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.
22
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------
Summary of Interest Rate Swaps
The weighted average variable rates are based upon the contractual rates in effect at June 30, 1996:
(In thousands) June 30, 1996
<CAPTION>
Average Year-To-Date
Notional Weighted Average Rate Maturity Interest Unrecognized
Amount Receive Pay In YearIncome/(Expense)Gains (Losses)
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Company Hedging Swaps
- --------------------------------------------------------------------------------------------------------
Pay fixed/receive variable:
Variable rate medium-term
borrowings $50,000 5.55 % (1) 6.42 % 0.96 ($101) ($244)
Securities available for sale 14,422 5.77 (2) 9.00 2.24 (545) (438)
Fixed rate commercial loans 22,655 5.52 (1) 6.84 3.19 (135) (228)
- ------------------------------------------------ -------------- -------------
Total pay fixed/receive
variable 87,077 5.58 6.96 1.75 (781) (910)
- ------------------------------------------------ -------------- -------------
Receive fixed/pay variable:
Fixed rate subordinated debt 150,000 7.10 5.50 (1) 6.38 1,144 2,167
Fixed rate medium-term borrowings -- -- -- -- (427) --
Variable rate commercial loans 100,000 4.77 5.82 (1) 0.56 (340) (857)
- ------------------------------------------------ -------------- -------------
Total receive fixed/pay
variable 250,000 6.17 5.63 4.05 377 1,310
- ------------------------------------------------ -------------- -------------
Total company hedging swaps $337,077 6.01 % 5.97 % 3.46 ($404) $400
- ----------------------------------======== ======== ========
- --------------------------------------------------------------------------------------------------------
Customer Hedging Swaps
- --------------------------------------------------------------------------------------------------------
Pay fixed/receive variable $4,500 5.45 % (1) 9.11 % 1.81 $328 ($256)
Receive fixed/pay variable 4,500 9.20 5.45 (1) 1.81 (326) 263
- ------------------------------------------------ -------------- -------------
Total customer hedging swaps $9,000 7.32 % 7.28 % 1.81 $2 $7
- ----------------------------------======== ======== ========
The weighted average variable rates are based upon the contractual rates in effect at June 30, 1995:
(In thousands) June 30, 1995
- --------------------------------------------------------------------------------------------------------
Company Hedging Swaps
- --------------------------------------------------------------------------------------------------------
Pay fixed/receive variable:
Variable rate medium-term
borrowings $50,000 5.51 % (1) 4.98 % 0.04 $225 $136
Variable rate deposits 50,000 6.00 (3) 6.42 1.96 (52) (472)
Securities available for sale 24,439 6.66 (2) 9.00 4.24 (70) (1,093)
Fixed rate commercial loans 26,087 6.19 (1) 6.83 4.35 (87) (627)
- ------------------------------------------------ -------------- -------------
Total pay fixed/receive
variable 150,526 5.98 6.43 2.07 16 (2,056)
- ------------------------------------------------ -------------- -------------
Receive fixed/pay variable:
Fixed rate subordinated debt 150,000 7.10 6.13 (1) 7.38 656 5,857
Fixed rate medium-term borrowings200,000 5.14 6.14 (1) 1.81 (2,186) (2,803)
Variable rate commercial loans 100,000 4.77 6.06 (1) 1.56 (1,219) (2,025)
- ------------------------------------------------ -------------- -------------
Total receive fixed/pay
variable 450,000 5.71 6.12 3.61 (2,749) 1,029
- ------------------------------------------------ -------------- -------------
Total company hedging swaps $600,526 5.78 % 6.20 % 3.22 ($2,733) ($1,027)
- ----------------------------------======== ======== ========
- --------------------------------------------------------------------------------------------------------
Customer Hedging Swaps
- --------------------------------------------------------------------------------------------------------
Pay fixed/receive variable $4,000 6.01 % (1) 9.57 % 2.84 $601 ($407)
Receive fixed/pay variable 4,000 9.62 6.01 (1) 2.84 (599) 412
- ------------------------------------------------ -------------- -------------
Total customer hedging swaps $8,000 7.82 % 7.79 % 2.84 $2 $5
- ----------------------------------======== ======== ========
- --------------------------------------------------------------------------------------------------------
(1) Variable rate is tied to London Inter-Bank Offered Rate (LIBOR) with designated 3-month maturity.
(2) Variable rate is tied to London Inter-Bank Offered Rate (LIBOR) with designated 1-month maturity plus
60 basis points.
(3) Variable rate is tied to U.S. Treasury bill rate.
</TABLE>
23
<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,
1996 $96,814 $450,000 $546,814
New swaps 50,000 -- 50,000
Terminated swaps -- -- --
Matured swaps (50,000) (200,000) (250,000)
Amortization of swaps (9,737) -- (9,737)
- -------------------------------------------------------------------
Ending balance, June 30, 1996 $87,077 $250,000 $337,077
- ------------------------------- ======== ======== ========
Customer Swaps:
Beginning balance, January 1,
1996 $4,000 $4,000 $8,000
New swaps 500 500 1,000
Terminated swaps -- -- --
Matured swaps -- -- --
Amortization of swaps -- -- --
- -------------------------------------------------------------------
Ending balance, June 30, 1996 $4,500 $4,500 $9,000
- ------------------------------- ======== ======== ========
- -------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------
Expected Maturities of Interest Rate Swaps
<CAPTION>
Due After OneAfter Two AfterThree After Four
Within Through Through Through Through After
(In thousands) June 30, 1996 One Year Two YearsThree YearFour YearsFive YearsFive Years Total
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Company Hedging Swaps
- ----------------------------------------------------------------------------------------------------
Pay fixed/receive variable:
Notional amount $56,832 $12,469 $5,442 $11,084 $1,250 -- $87,077
Weighted average pay rate 6.68% 8.00% 7.70% 6.85% 7.03% -- 6.96%
Weighted average receive rate:
Contractual rate* 5.57% 5.62% 5.63% 5.55% 5.50% -- 5.58%
Forward yield curve** 5.71% 6.10% 6.35% 6.53% 6.67% -- 5.92%
Receive fixed/pay variable:
Notional amount $100,000 -- -- -- -- $150,000 $250,000
Weighted average pay rate:
Contractual rate* 5.82% -- -- -- -- 5.50% 5.63%
Forward yield curve** 5.75% -- -- -- -- 6.91% 6.45%
Weighted average receive rate 4.77% -- -- -- -- 7.10% 6.17%
- ----------------------------------------------------------------------------------------------------
Customer Hedging Swaps
- ----------------------------------------------------------------------------------------------------
Pay fixed/receive variable:
Notional amount -- $4,500 -- -- -- -- $4,500
Weighted average pay rate -- 9.11% -- -- -- -- 9.11%
Weighted average receive rate:
Contractual rate* -- 5.45% -- -- -- -- 5.45%
Forward yield curve** -- 6.21% -- -- -- -- 6.21%
Receive fixed/pay variable:
Notional amount -- $4,500 -- -- -- -- $4,500
Weighted average pay rate:
Contractual rate* -- 5.45% -- -- -- -- 5.45%
Forward yield curve** -- 6.21% -- -- -- -- 6.21%
Weighted average receive rate -- 9.20% -- -- -- -- 9.20%
- ----------------------------------------------------------------------------------------------------
* The weighted average variable rates are based upon the contractual rates in effect at June 30, 19
** The weighted average variable rates are projected based upon the implied forward yield curve from
date of analysis through maturity.
</TABLE>
25
<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:
Report on Form 8-K was filed on May 8, 1996 announcing that
the Company's Board of Directors approved a 3-for-2 stock split-up in
the form of a dividend payable on June 14, 1996 to shareholders of
record May 20, 1996. In addition, an increase of 10% in the quarterly cash
dividend of $.22 a share was declared payable July 1, 1996 to
shareholders of record June 14, 1996.
26
<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: August 12, 1996
27
<PAGE>
EXHIBIT INDEX
------------------------
Exhibit No. Description
- ----------- ------------------
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
28
<PAGE>
<TABLE>
EXHIBIT 11
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARY
STATEMENT RE COMPUTATION OF PER SHARE EARN
(In thousands)
<CAPTION>
For the Three Moths For the Six Months
Ended June 30, Ended June 30,
-------------------- --------------------
1996 1995 1996 1995
------ ------ ---- ----
<S> <C> <C> <C> <C>
Earnings:
Net income $28,809 $26,024 $56,790 $51,744
======= ======= ======= =======
Shares:
Weighted average number of common shares used
in computing primary earnings per share 59,792 59,478 60,042 59,331
Dilutive stock options - based on treasury stock
method 931 906 962 832
------------------------------------------
Weighted average number of common shares used
in computing fully diluted earnings per 60,723 60,384 61,004 60,163
======= ======= ======= =======
Earnings per share:
Primary earnings per share $0.48 $0.44 $0.95 $0.87
Fully diluted earnings per share $0.47 $0.43 $0.93 $0.86
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000276235
<NAME> CENTRAL FIDELITY BANKS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 256,100
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 183,814
<TRADING-ASSETS> 1,205
<INVESTMENTS-HELD-FOR-SALE> 3,254,216
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 6,474,293
<ALLOWANCE> 110,000
<TOTAL-ASSETS> 10,491,529
<DEPOSITS> 7,964,060
<SHORT-TERM> 1,055,722
<LIABILITIES-OTHER> 101,330
<LONG-TERM> 561,893
0
0
<COMMON> 298,543
<OTHER-SE> 509,981
<TOTAL-LIABILITIES-AND-EQUITY> 10,491,529
<INTEREST-LOAN> 279,966
<INTEREST-INVEST> 110,392
<INTEREST-OTHER> 2,914
<INTEREST-TOTAL> 393,272
<INTEREST-DEPOSIT> 160,734
<INTEREST-EXPENSE> 209,180
<INTEREST-INCOME-NET> 184,092
<LOAN-LOSSES> 20,951
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 120,831
<INCOME-PRETAX> 83,297
<INCOME-PRE-EXTRAORDINARY> 83,297
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,790
<EPS-PRIMARY> .95
<EPS-DILUTED> .93
<YIELD-ACTUAL> 3.73
<LOANS-NON> 46,632
<LOANS-PAST> 21,315
<LOANS-TROUBLED> 457
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 110,000
<CHARGE-OFFS> 29,452
<RECOVERIES> 8,501
<ALLOWANCE-CLOSE> 110,000
<ALLOWANCE-DOMESTIC> 110,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
