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, 1997
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 6, 1997, the latest practicable date, Central Fidelity
Banks, Inc. had 57,399,946 shares of its Common Stock outstanding.
This is the only class of outstanding shares.
<PAGE>
<TABLE>
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30,1997
<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 16-24
PART II. OTHER INFORMATION
Item 6.Exhibits and Reports on Form 8-K 25
SIGNATURES 26
EXHIBIT INDEX 27
</TABLE>
<PAGE>
PART I
-----------
FINANCIAL INFORMATION
-----------------------------------------
CENTRAL FIDELITY BANKS, INC.
ITEM 1. FINANCIAL STATEMENTS
The consolidated balance sheet as of September 30, 1997, the
statement of consolidated income, the statement of consolidated cash
flows and the statement of changes in consolidated shareholders' equity
for the nine-month period ended September 30, 1997 and 1996 are
unaudited and do not include all of the information included in the
Company's annual financial statements filed on Form 10-K with the
Securities and Exchange Commission. 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, 1997
are not necessarily indicative of the results that may be expected for the
year ending December 31, 1997. 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, 1996 which is the source of the Company's balance sheet as of that
date.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
Central Fidelity Banks, Inc. and Subsidiaries
- ------------------------------------------------------------------
(In thousands, except share data)
<CAPTION>
September 30, December 31,
1997 1996
<S> <C> <C>
- ------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------
Cash and due from banks $298,752 $304,661
Temporary investments:
Federal funds sold and securities purchased
under agreements to resell 39,377 96,515
Other money market investments 50,000 50,000
Trading account securities 6,538 4,061
- ------------------------------------------------------------------
Total temporary investments 95,915 150,576
- ------------------------------------------------------------------
Assets available for sale:
Securities 2,725,064 3,069,624
Loans 28,226 26,085
- ------------------------------------------------------------------
Total assets available for sale 2,753,290 3,095,709
- ------------------------------------------------------------------
Loans 6,964,541 6,690,751
Allowance for loan losses (110,000) (110,000)
- ------------------------------------------------------------------
Net loans 6,854,541 6,580,751
- ------------------------------------------------------------------
Accrued interest receivable 62,268 61,819
Premises and equipment, net 165,390 157,119
Due from customers on acceptances 15,032 11,009
Other assets 205,479 178,716
- ------------------------------------------------------------------
Total assets $10,450,667 $10,540,360
- ------------------------------------------ ========== ==========
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES 1997 1996
<S> <C> <C>
- ------------------------------------------------------------------
Deposits:
Demand $1,211,889 $1,189,808
Savings and other time 6,209,603 6,393,420
Certificates of deposit $100,000 and over 397,813 488,226
- ------------------------------------------------------------------
Total deposits 7,819,305 8,071,454
- ------------------------------------------------------------------
Borrowings:
Federal funds purchased and securities sold
under agreements to repurchase 1,073,794 907,875
Other short-term borrowings 58,823 72,274
Federal Home Loan Bank borrowings 309,686 400,080
Long-term debt 249,418 150,324
Capitalized lease obligations 6,994 7,334
- ------------------------------------------------------------------
Total borrowings 1,698,715 1,537,887
- ------------------------------------------------------------------
Dividends payable 13,715 13,059
Accrued interest payable 31,529 29,160
Bank acceptances outstanding 15,032 11,009
Accounts payable and accrued liabilities 32,385 31,292
- ------------------------------------------------------------------
Total liabilities 9,610,681 9,693,861
- ------------------------------------------------------------------
SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------
Preferred stock, none issued -- --
Common stock, par value $5 per share, authorized
100,000,000 shares, shares issued: 57,245,209
and 59,378,319, respectively 286,226 296,892
Capital surplus 119,933 171,926
Unamortized deferred compensation (614) --
Retained earnings 421,478 368,457
Unrealized gains on securities available
for sale, net of income taxes 12,963 9,224
- ------------------------------------------------------------------
Total shareholders' equity 839,986 846,499
- ------------------------------------------------------------------
Total liabilities and shareholders'
equity $10,450,667 $10,540,360
- ------------------------------------------ ========== ==========
- ------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CONSOLIDATED INCOME
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>
- -----------------------------------------------------------------------------------
(In thousands, except share and per share 1997 1996 1997 1996
- -----------------------------------------------------------------------------------
Income From Earning Assets
- -----------------------------------------------------------------------------------
Interest and fees on loans $156,644 $144,103 $457,020 $422,638
Interest on securities available for sale:
U.S. Government and agencies 28,155 32,753 88,035 102,770
States and political subdivisions 1,152 1,386 3,752 4,284
Other 16,874 17,599 49,697 55,076
Interest on loans available for sale 331 135 879 677
Interest on money market investments 1,840 996 4,121 3,876
Interest on trading account securities 109 63 243 97
- -----------------------------------------------------------------------------------
Total income from earning assets 205,105 197,035 603,747 589,418
- -----------------------------------------------------------------------------------
Interest Expense
- -----------------------------------------------------------------------------------
Interest on deposits 77,573 80,754 233,441 241,488
Interest on federal funds purchased and securities
sold under agreements to repurchase 15,108 11,815 38,431 36,686
Interest on other short-term borrowings 786 842 2,317 2,774
Interest on medium-term notes -- 91 -- 3,932
Interest on Federal Home Loan Bank
borrowings 4,694 6,386 16,434 18,815
Interest on long-term debt 4,398 2,559 10,803 7,594
Interest on capitalized lease obligations 157 166 475 504
- -----------------------------------------------------------------------------------
Total interest expense 102,716 102,613 301,901 311,793
- -----------------------------------------------------------------------------------
Net interest income 102,389 94,422 301,846 277,625
Provision for loan losses 12,412 11,062 39,977 32,013
- -----------------------------------------------------------------------------------
Net income from earning assets 89,977 83,360 261,869 245,612
- -----------------------------------------------------------------------------------
Noninterest Income
- -----------------------------------------------------------------------------------
Trust income 4,819 4,181 14,111 12,949
Deposit fees and charges 10,641 9,349 31,332 28,170
Profits (losses) on securities available for sale and
trading account securities 939 (196) 2,820 (197)
Other income 10,012 7,959 27,916 21,950
- -----------------------------------------------------------------------------------
Total noninterest income 26,411 21,293 76,179 62,872
- -----------------------------------------------------------------------------------
Noninterest Expense
- -----------------------------------------------------------------------------------
Personnel expense 39,316 35,211 114,240 104,050
Occupancy and equipment expense 12,730 11,504 37,402 34,370
FDIC insurance expense 385 729 1,179 2,063
Other real estate expense 731 403 1,361 1,711
Special SAIF assessment -- 6,412 -- 6,412
Other expense 16,143 13,797 45,493 39,984
- -----------------------------------------------------------------------------------
Total noninterest expense 69,305 68,056 199,675 188,590
- -----------------------------------------------------------------------------------
Earnings
- -----------------------------------------------------------------------------------
Income before income taxes 47,083 36,597 138,373 119,894
Income tax expense 15,417 11,465 45,132 37,972
- -----------------------------------------------------------------------------------
Net income $31,666 $25,132 $93,241 $81,922
- ----------------------------------------- ======= ======= ======= =======
Earnings Per Share
- -----------------------------------------------------------------------------------
Net income $0.56 $0.42 $1.62 $1.37
Average shares outstanding 56,951,984 59,586,194 57,692,069 59,888,903
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CONSOLIDATED CASH FLOWS
- -----------------------------------------------------------------------
Central Fidelity Banks, Inc. and Subsidiaries
(In thousands) For the nine months ended September 30,
<CAPTION>
1997 1996
<S> <C> <C>
- -----------------------------------------------------------------------
OPERATING ACTIVITIES
- -----------------------------------------------------------------------
Net income $93,241 $81,922
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 39,977 32,013
Depreciation of premises and equipment 13,395 12,140
Net amortization of premium and accretion of discount
on securities available for sale (1,131) (632)
Gains on securities available for sale (2,065) (398)
Deferred income taxes (2,828) (1,517)
Increase in trading account securities (2,477) (7,154)
Originations of loans available for sale (100,208) (90,079)
Purchases of loans available for sale (66,901) (69,866)
Proceeds from sales of loans available for sale 165,040 167,952
(Increase) decrease in accrued interest
receivable (449) 5,348
Increase (decrease) in accrued interest payable 2,369 (7,606)
Other, net (26,504) (6,765)
- -----------------------------------------------------------------------
Net cash provided by operating activities 111,459 115,358
- -----------------------------------------------------------------------
INVESTING ACTIVITIES
- -----------------------------------------------------------------------
Purchases of securities available for sale (472,748) (281,782)
Proceeds from sales of securities available for
sale 270,848 194,067
Proceeds from maturities and repayments of securities
available for sale 555,408 524,209
Net increase in loans (321,085) (347,512)
Purchases of premises and equipment (22,647) (15,395)
Proceeds from the disposition of premises and
equipment 1,212 1,519
Proceeds from the disposition of foreclosed
properties 8,957 7,917
- -----------------------------------------------------------------------
Net cash provided by investing activities 19,945 83,023
- -----------------------------------------------------------------------
FINANCING ACTIVITIES
- -----------------------------------------------------------------------
Net increase (decrease) in demand, interest checking
and regular savings deposits (15,079) 114,892
Net increase (decrease) in money market accounts 60,118 (6,087)
Net decrease in consumer certificates (206,775) (159,218)
Net increase (decrease) in certificates of deposit
$100,000 and over (90,413) 31,274
Net increase (decrease) in short-term borrowings 152,468 (74,749)
Proceeds from medium-term notes and FHLB borrowings 80,506 101,000
Payments on medium-term notes and FHLB borrowings (170,900) (299,950)
Proceeds from long-term debt 99,134 --
Payments on long-term debt and capitalized lease
obligations (469) (355)
Proceeds from issuance of common stock 20,077 9,213
Common stock purchased (83,554) (38,283)
Cash in lieu of fractional shares for stock split -- (78)
Cash dividends (39,564) (37,150)
- -----------------------------------------------------------------------
Net cash used by financing activities (194,451) (359,491)
- -----------------------------------------------------------------------
Decrease in cash and cash equivalents (63,047) (161,110)
Cash and cash equivalents at beginning of year 451,176 571,314
- -----------------------------------------------------------------------
Cash and cash equivalents at end of period $388,129 $410,204
- --------------------------------------------------- ======== ========
- -----------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY
Central Fidelity Banks, Inc. and Subsidiaries
<CAPTION> Unrealized
Gains (Losses)
Unamortized on Securities Total
(In thousands) Common Common Capital Deferred Retained Available Shareholders'
For the nine months ended September 30, 1997 Shares Stock Surplus Compensation Earnings for Sale Equity
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Balance at beginning of period 40,193 $200,964 $195,151 $-- $406,567 $23,865 $826,547
Net income -- -- -- -- 81,922 -- 81,922
Common stock issued under Plans 406 2,034 7,179 -- -- -- 9,213
Common stock purchased (1,296) (6,484) (31,799) -- -- -- (38,283)
Cash dividends declared on common stock -- -- -- -- (38,221) -- (38,221)
Common stock issued for 3-for-2 stock
split 19,890 99,452 -- -- (99,530) -- (78)
Change in unrealized losses on securities available
for sale, net of income taxes of $14,05 -- -- -- -- -- (26,101) (26,101)
- --------------------------------------------------------------------------------------------------------------------
Balance at end of period 59,193 $295,966 $170,531 $-- $350,738 ($2,236) $814,999
- ----------------------------------------- ====== ======== ======== ======= ======== ======== ========
For the nine months ended September 30, 1997
- --------------------------------------------------------------------------------------------------------------------
Balance at beginning of period 59,378 $296,892 $171,926 $-- $368,457 $9,224 $846,499
Net income -- -- -- -- 93,241 -- 93,241
Common stock issued under Plans 824 4,122 15,955 -- -- -- 20,077
Grant of shares of restricted stock awards 32 158 660 (818) -- -- --
Amortization of deferred compensation -- -- -- 204 -- -- 204
Common stock purchased (2,989) (14,946) (68,608) -- -- -- (83,554)
Cash dividends declared on common stock -- -- -- -- (40,220) -- (40,220)
Change in unrealized gains on securities available
for sale, net of income taxes of $2,013 -- -- -- -- -- 3,739 3,739
- --------------------------------------------------------------------------------------------------------------------
Balance at end of period 57,245 $286,226 $119,933 ($614)$421,478 $12,963 $839,986
- ----------------------------------------- ====== ======== ======== ======= ======== ======== ========
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<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 1997 1996 Change 1997 1996 Change
- --------------------------------------------------------------------------------------------------------------------
Results Of Operations
- --------------------------------------------------------------------------------------------------------------------
Net interest income (tax-equivalent basis) $103,901 $96,246 8.0 % $306,687 $283,030 8.4 %
Provision for loan losses 12,412 11,062 12.2 39,977 32,013 24.9
Noninterest income 26,411 21,293 24.0 76,179 62,872 21.2
Noninterest expense 69,305 68,056 1.8 199,675 188,590 5.9
Net income 31,666 25,132 26.0 93,241 81,922 13.8
Per Share Data
- --------------------------------------------------------------------------------------------------------------------
Net income $0.56 $0.42 33.3 % $1.62 $1.37 18.2 %
Book value 14.68 13.77 6.6 14.68 13.77 6.6
Average Daily Balance
- --------------------------------------------------------------------------------------------------------------------
Assets $10,459,182 $10,322,912 1.3 % $10,387,395 $10,381,674 0.1 %
Loans 6,972,180 6,533,058 6.7 6,851,509 6,433,458 6.5
Earning assets 9,913,958 9,812,041 1.0 9,855,478 9,865,781 (0.1)
Deposits 7,862,615 7,894,381 (0.4) 7,915,395 7,841,468 0.9
Shareholders' equity 824,223 810,104 1.7 818,826 813,016 0.7
Common shares 56,951,984 59,586,194 (4.4) 57,692,069 59,888,903 (3.7)
Balance At Quarter-End
- --------------------------------------------------------------------------------------------------------------------
Assets $10,450,667 $10,496,954 (0.4)% $10,450,667 %10,496,954 (0.4)%
Loans 6,992,767 6,618,909 5.6 6,992,767 6,618,909 5.6
Earning assets 9,813,746 9,912,507 (1.0) 9,813,746 9,912,507 (1.0)
Deposits 7,819,305 7,966,759 (1.9) 7,819,305 7,966,759 (1.9)
Shareholders' equity 839,986 814,999 3.1 839,986 814,999 3.1
Common shares 57,245,209 59,193,194 (3.3) 57,245,209 59,193,194 (3.3)
Key Performance Ratios (Basis point change)
- --------------------------------------------------------------------------------------------------------------------
Return on average assets 1.21 % 0.97 % 0.24 1.20 % 1.05 % 0.15
Return on average shareholders' equity 15.37 12.41 2.96 15.18 13.44 1.74
Net interest margin (tax-equivalent basis) 4.16 3.90 0.26 4.16 3.83 0.33
Efficiency 53.00 57.46 (4.46) 52.18 54.00 (1.82)
Allowance for loan losses as a percentage
of loans 1.57 1.66 (0.09) 1.57 1.66 (0.09)
Equity to total assets 8.04 7.76 0.28 8.04 7.76 0.28
Risk-based capital 14.05 13.07 0.98 14.05 13.07 0.98
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCK PERFORMANCE AND DIVIDENDS
- --------------------------------------------------------------------------------------------------------------------
Common Stock Prices
-------------------------------------------------- Dividend
1997 1996 Per Share
- --------------------------------------------------------------------------------------------------------------------
High Low High Low 1997 1996
- --------------------------------------------------------------------------------------------------------------------
First Quarter $30.25 $25.13 $23.00 $21.09 $.22 $.20
Second Quarter 39.50 27.25 23.67 22.00 .24 .22
Third Quarter 45.00 35.25 25.38 21.50 .24 .22
Fourth Quarter 27.50 24.00 .22
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
AVERAGE BALANCES AND INTEREST RATES
(TAXABLE EQUIVALENT BASIS)
Central Fidelity Banks, Inc. and Subsidiaries
- ----------------------------------------------------------------------------------------------------
<CAPTION>
(In thousands) For the three months ended
September 30, 1997 1996
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
- ----------------------------------------------------------------------------------------------------
Assets
- ----------------------------------------------------------------------------------------------------
Interest-earning assets:
Loans:
Commercial and commercial
real estate $2,264,680 $48,006 8.41 % $2,081,736 $43,659 8.34 %
Construction 343,889 8,503 9.81 294,214 6,960 9.41
Residential real estate 1,638,753 30,984 7.50 1,602,458 29,642 7.36
Consumer second mortgage 887,459 21,204 9.48 698,694 16,859 9.60
Installment 979,592 21,144 8.56 1,039,487 22,157 8.48
Bank card 842,407 27,531 12.97 809,769 25,588 12.57
- ----------------------------------------------------------- ----------------------
6,956,780 157,372 8.97 6,526,358 144,865 8.83
Assets available for sale:
Securities:
U.S. Government and agencies 1,727,925 28,155 6.46 2,025,772 32,753 6.43
States and political
subdivisions 82,556 1,746 8.46 102,667 2,129 8.29
Other 1,002,120 17,059 6.75 1,059,851 17,835 6.69
- ----------------------------------------------------------- ----------------------
2,812,601 46,960 6.62 3,188,290 52,717 6.58
Loans 15,400 331 8.52 6,700 135 8.03
- ----------------------------------------------------------- ----------------------
2,828,001 47,291 6.63 3,194,990 52,852 6.58
Money market investments 126,240 1,840 5.78 87,016 1,075 4.92
Trading account securities 2,937 114 15.38 3,677 67 7.28
- ----------------------------------------------------------- ----------------------
Total interest-earning
assets 9,913,958 $206,617 8.27 % 9,812,041 $198,859 8.06 %
- --------------------------------------------- ======== ----------- ========
Noninterest-earning assets:
Cash and due from banks 258,423 242,099
Premises and equipment, net 164,521 154,728
Other assets 232,280 224,044
Allowance for loan losses (110,000) (110,000)
- ---------------------------------------------------- ------------------
Total assets $10,459,182 $10,322,912
- ----------------------------------========== ==========
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity 1997 1996
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Interest checking $718,436 $3,574 1.97 % $693,084 $3,534 2.03 %
Regular savings 721,406 4,800 2.64 734,568 4,900 2.65
Consumer certificates 3,773,175 52,645 5.54 4,003,860 56,902 5.65
Money market accounts 1,050,243 10,581 4.00 1,037,907 10,285 3.94
Certificates of deposit $100,000
and over 433,329 5,973 5.47 374,448 5,133 5.45
Federal funds purchased
and repos 1,133,542 15,108 5.29 933,726 11,815 5.03
Other short-term borrowings 47,088 786 6.63 68,450 842 4.89
Medium-term notes -- -- -- -- 91 --
Federal Home Loan Bank borrowings 312,701 4,694 5.96 404,000 6,386 6.29
Long-term debt 249,420 4,398 6.99 150,344 2,559 6.77
Capitalized lease obligations 7,035 157 8.82 7,474 166 8.84
- ----------------------------------------------------------- ----------------------
Total interest-bearing
liabilities 8,446,375 $102,716 4.82 % 8,407,861 $102,613 4.86 %
- --------------------------------------------- ======== ----------- ========
Noninterest-bearing liabilities:
Demand deposits 1,166,026 1,050,514
Other 22,558 54,433
- ---------------------------------------------------- ------------------
Total noninterest-bearing
liabilities 1,188,584 1,104,947
Shareholders' equity 824,223 810,104
- ---------------------------------------------------- ------------------
Total liabilities and
shareholders' equity $10,459,182 $10,322,912
- ----------------------------------========== ==========
Net interest earnings $103,901 $96,246
- ---------------------------------- ======== ========
Net interest spread 3.45 % 3.20 %
- ---------------------------------- ==== ====
Net interest margin 4.16 % 3.90 %
- ---------------------------------- ==== ====
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
AVERAGE BALANCES AND INTEREST RATES
(TAXABLE EQUIVALENT BASIS)
Central Fidelity Banks, Inc. and Subsidiaries
- ----------------------------------------------------------------------------------------------------
<CAPTION>
(In thousands) For the nine months ended
September 30, 1997 1996
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
- ----------------------------------------------------------------------------------------------------
Assets
- ----------------------------------------------------------------------------------------------------
Interest-earning assets:
Loans:
Commercial and commercial
real estate $2,206,393 $137,462 8.33 % $2,042,236 $127,517 8.34 %
Construction 329,644 23,870 9.68 289,543 20,510 9.46
Residential real estate 1,628,977 92,012 7.55 1,604,600 88,251 7.35
Consumer second mortgage 832,360 59,281 9.52 657,836 47,756 9.70
Installment 1,004,784 64,607 8.60 1,037,174 66,153 8.52
Bank card 835,830 81,941 13.11 790,043 74,857 12.66
- ----------------------------------------------------------- ----------------------
6,837,988 459,173 8.98 6,421,432 425,044 8.84
Assets available for sale:
Securities:
U.S. Government and agencies 1,812,142 88,035 6.50 2,118,075 102,770 6.48
States and political
subdivisions 90,349 5,717 8.44 106,228 6,588 8.27
Other 1,001,930 50,399 6.73 1,103,679 55,516 6.72
- ----------------------------------------------------------- ----------------------
2,904,421 144,151 6.64 3,327,982 164,874 6.62
Loans 13,521 879 8.69 12,026 677 7.52
- ----------------------------------------------------------- ----------------------
2,917,942 145,030 6.65 3,340,008 165,551 6.62
Money market investments 96,932 4,121 5.68 102,283 4,116 5.38
Trading account securities 2,616 264 13.49 2,058 112 7.28
- ----------------------------------------------------------- ----------------------
Total interest-earning
assets 9,855,478 $608,588 8.26 % 9,865,781 $594,823 8.05 %
- --------------------------------------------- ======== ----------- ========
Noninterest-earning assets:
Cash and due from banks 257,513 249,112
Premises and equipment, net 161,946 154,086
Other assets 222,458 222,695
Allowance for loan losses (110,000) (110,000)
- ---------------------------------------------------- ------------------
Total assets $10,387,395 $10,381,674
- ----------------------------------========== ==========
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity 1997 1996
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Interest checking $720,801 $10,816 2.01 % $688,203 $10,419 2.02 %
Regular savings 726,147 14,360 2.64 736,368 14,786 2.68
Consumer certificates 3,842,293 159,278 5.54 4,067,229 173,651 5.70
Money market accounts 1,035,215 30,717 3.97 1,041,766 30,832 3.95
Certificates of deposit $100,000
and over 451,209 18,270 5.41 289,569 11,800 5.44
Federal funds purchased and repos 983,363 38,431 5.23 960,879 36,686 5.10
Other short-term borrowings 54,984 2,317 5.63 75,663 2,774 4.90
Medium-term notes -- -- -- 87,328 3,932 6.01
Federal Home Loan Bank borrowings 363,295 16,434 6.05 397,990 18,815 6.31
Long-term debt 208,760 10,803 6.92 150,359 7,594 6.75
Capitalized lease obligations 7,151 475 8.88 7,584 504 8.88
- ----------------------------------------------------------- ----------------------
Total interest-bearing
liabilities 8,393,218 $301,901 4.81 % 8,502,938 $311,793 4.90 %
- --------------------------------------------- ======== ----------- ========
Noninterest-bearing liabilities:
Demand deposits 1,139,730 1,018,333
Other 35,621 47,387
- ---------------------------------------------------- ------------------
Total noninterest-bearing
liabilities 1,175,351 1,065,720
Shareholders' equity 818,826 813,016
- ---------------------------------------------------- ------------------
Total liabilities and
shareholders' equity $10,387,395 $10,381,674
- ----------------------------------========== ==========
Net interest earnings $306,687 $283,030
- ---------------------------------- ======== ========
Net interest spread 3.45 % 3.15 %
- ---------------------------------- ==== ====
Net interest margin 4.16 % 3.83 %
- ---------------------------------- ==== ====
- ----------------------------------------------------------------------------------------------------
</TABLE>
<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) 1997 1996 1997 1996
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Balance at beginning of period $110,000 $110,000 $110,000 $110,000
Provision charged to expense 12,412 11,062 39,977 32,013
- --------------------------------------------------------------------------------------------
122,412 121,062 149,977 142,013
Loans charged off:
Commercial and commercial real estate 529 175 5,346 2,607
Construction -- 500 92 1,120
Residential real estate 204 100 493 391
Installment 4,009 5,143 12,978 15,004
Bank card 11,061 8,730 32,876 24,978
- --------------------------------------------------------------------------------------------
Total charge-offs 15,803 14,648 51,785 44,100
- --------------------------------------------------------------------------------------------
Recoveries of loans previously charged off:
Commercial and commercial real estate 815 713 2,597 2,062
Construction 125 158 659 1,291
Residential real estate 5 4 9 8
Installment 1,410 1,806 5,488 6,142
Bank card 1,036 905 3,055 2,584
- --------------------------------------------------------------------------------------------
Total recoveries 3,391 3,586 11,808 12,087
- --------------------------------------------------------------------------------------------
Net charge-offs 12,412 11,062 39,977 32,013
- --------------------------------------------------------------------------------------------
Balance at end of period $110,000 $110,000 $110,000 $110,000
- -------------------------------------------- ======== ======== ======== ========
Average loans $6,972,180 $6,533,058 $6,851,509 $6,433,458
Loans at period-end $6,992,767 $6,618,909 $6,992,767 $6,618,909
Ratio of provision for loan losses to
average loans 0.71% 0.68% 0.78% 0.66%
Ratio of net charge-offs to average loans 0.71% 0.68% 0.78% 0.66%
Ratio of allowance for loan losses to loans
at period-end 1.57% 1.66% 1.57% 1.66%
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
NONPERFORMING ASSETS AND PAST-DUE LOANS
Central Fidelity Banks, Inc. and Subsidiaries
- ---------------------------------------------------------------------------------
(In thousands)
<CAPTION> September 30, December 31,
1997 1996 1996
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------
Nonperforming Assets
- ---------------------------------------------------------------------------------
Nonaccrual loans:
Land acquisition, land development
or construction:
Commercial $3,636 $4,127 $3,912
Residential 7,423 12,776 12,060
Residential real estate 7,781 6,272 6,100
Commercial real estate 13,904 10,628 8,480
Commercial and industrial 7,273 9,409 8,020
- ---------------------------------------------------------------------------------
Total nonaccrual loans 40,017 43,212 38,572
- ---------------------------------------------------------------------------------
Restructured loans -- -- --
- ---------------------------------------------------------------------------------
Total nonperforming loans 40,017 43,212 38,572
- ---------------------------------------------------------------------------------
Foreclosed properties:
Land and developed lots:
Commercial 1,934 2,553 2,010
Residential 9,311 7,943 7,917
Residential real estate 3,088 3,409 4,448
Commercial real estate -- 567 1,081
Other -- 60 --
- ---------------------------------------------------------------------------------
Total foreclosed properties 14,333 14,532 15,456
- ---------------------------------------------------------------------------------
Total nonperforming assets $54,350 $57,744 $54,028
- --------------------------------------------- ======= ======= =======
Ratio of nonperforming assets to
loans and foreclosed properties 0.78% 0.87% 0.80%
- ---------------------------------------------------------------------------------
Past-due Loans (90 days or more and still accruing)
- ---------------------------------------------------------------------------------
Commercial and construction $4,144 $1,666 $2,451
Residential real estate 6,663 7,158 7,508
Installment 4,005 5,105 5,795
Bank card 10,683 8,432 10,192
- ---------------------------------------------------------------------------------
Total past-due loans $25,495 $22,361 $25,946
- --------------------------------------------- ======= ======= =======
- ---------------------------------------------------------------------------------
</TABLE>
<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.
Results of Operations
- -----------------------------
Net income for the first nine months ended September 30, 1997 was
$93.2 million, 13.8% higher than the $81.9 million earned in the first nine
months of 1996. On a per share basis, net income increased 18.2% to
$1.62 from $1.37.
On a tax-equivalent basis, net interest income for the nine months
ended September 30, 1997 was $306.7 million, an 8.4% increase from the
net interest income earned in the corresponding 1996 period. The net
interest margin was 4.16% for the nine months ended September 30,
1997, up 33 basis points from 3.83% during the same period in 1996. The
growth in net interest income and net interest margin during the first nine
months of 1997 were the result of the higher yield on earning assets and a
reduced cost of interest-bearing liabilities. For the first nine months of
1997, average earning assets declined $10.3 million and interest earned
on earning assets increased $13.8 million, or 2.3% from the level recorded
in the first nine months of 1996. The decline in average earning assets
was due primarily to the lower levels in securities available for sale and
money market investments during the first nine months of 1997. The yield
on average earning assets increased 21 basis points. The average
interest-bearing liabilities declined $109.7 million, or 1.3% from the nine
months ended September 30, 1996. Interest expense on interest-bearing
liabilities declined $9.9 million to $301.9 million, or 3.2% from the
corresponding 1996 period. The rate of interest-bearing liabilities
declined 9 basis points.
For the nine-month period ended September 30, 1997, the Company's
interest rate swap activities resulted in declines in interest income of
$435,000 and interest expense of $1,327,000 compared to declines of
$1,468,000 in interest income and $1,054,000 in interest expense for the
corresponding period in 1996. The Company's interest rate swap
activities produced an increase in net interest income of $892,000 for the
nine months ended September 30, 1997 and reduction in net interest
income of $414,000 for the same period in 1996.
The provision for loan losses was $40.0 million for the nine months
ended September 30, 1997 compared with $32.0 million recorded for the
corresponding period in 1996. The increase in the provision was
prompted by a higher level of net charge-offs. The higher levels of net
charge-offs for the first nine months of 1997 resulted principally from
continued losses in consumer portfolios and a $3.7 million nonrecurring
loss in the commercial loan portfolio.
Noninterest income totaled $76.2 million for the nine months ended
September 30, 1997 compared with $62.9 million for the same period in
1996, representing an increase of 21.2%. The increase resulted from
growth in deposit fees and other charges, profits on securities available
for sale and trading account securities, increases in mutual funds and
annuity sales as well as increased ATM charges.
Noninterest expense grew 5.9% to $199.7 million for the first nine
months of 1997 compared with the same period in 1996. The growth in
noninterest expense was due primarily to higher personnel, occupancy
and equipment costs.
Balance Sheet
- --------------------
Total assets as of September 30, 1997 were $10.5 billion, flat from the
level of total assets at the end of 1996. Total loans at September 30, 1997
were $7.0 billion, an increase of 4.1% from the balance at December 31,
1996, as a result of the increase in the commercial and consumer
mortgage loan portfolios. Total deposits were $7.8 billion at September
30, 1997, a 3.1% decline from $8.1 billion at December 31, 1996. At
September 30, 1997, long-term debt increased $99.1 million to $249.4
million. In April 1997, Central Fidelity Capital Trust I (the "Trust"), a
consolidated subsidiary, issued $100.0 million of Floating Rate Capital
Pass-through Securities (the "Capital Securities") which bear interest at
LIBOR plus 1.00% and are due in 2027. The Trust invested the proceeds
of the Capital Securities together with $3.1 million paid by the Company
for the for the Trust's Common Securities in $103.1 million of the Company's
Junior Junior Subordinated Debt Securities. The Junior Subordinated Debt
Securities, which bear interest at LIBOR plus 1.00% and are due in 2027,
constitute the sole asset of the Trust. The Company has fully and
unconditionally guaranteed all of the Trust's obligations under the Capital
Securities. Additionally, the Capital Securities qualify for inclusion in
Tier 1 capital under the current risk-based capital guidelines. Shareholders'
equity at September 30, 1997 was $840.0 million, or 8.0% of total assets,
as compared to $846.5 million, or 8.0% of total assets, at December 31,
1996. The decline in shareholders' equity was due primarily to the
acquisition and retirement of shares under the Company's Stock
Repurchase Program. Book value per share increased from $14.26 at
December 31, 1996 to $14.68 at September 30, 1997, representing an
increase of 2.9%.
The return on average total assets during the first nine months of 1997
was 1.20% compared to 1.05% for the comparable 1996 period. The
return on average shareholders' equity was 15.18% versus 13.44% in
1996.
Asset Quality
- -----------------
Nonperforming assets as of September 30, 1997 were $54.4 million, or
.52% of total assets, compared to $54.0 million or .51% of total assets at
December 31, 1996 and $57.7 million or .55% of total assets at
September 30, 1996. At September 30, 1997, nonperforming assets were
.78% of loans and foreclosed properties, compared to .80% at December
31, 1996 and .87% at September 30, 1996.
The allowance for loan losses was $110.0 million at September 30,
1997, December 31, 1996 and September 30, 1996. At September 30,
1997, the allowance for loan losses was 1.57% of loans, compared to
1.64% at December 31, 1996 and 1.66% at September 30, 1996. At
September 30, 1997, the allowance for loan losses was 2.02x to
nonperforming assets, compared to 2.04x at December 31, 1996 and
1.90x at September 30, 1996. Net loan charge-offs for the three months
ended September 30, 1997 were $12.4 million, representing .71% of
average loans on an annualized basis. Net loan charge-offs were $11.9
million or .71% of average loans for the three months ended December
31, 1996 and $11.1 million or .68% of average loans for the three months
ended September 30, 1996.
The allowance for loan losses represents management's estimate of
an amount adequate to absorb potential 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 addition 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.
Capital Resources
- -------------------------
At September 30, 1997, the Company's risk-based capital and
leverage ratios exceeded the Federal Reserve's minimum guidelines. At
September 30, 1997, the Company's Tier 1 and total risk-based capital
were $870.7 million and $1.1 billion, as compared to $778.2 million and
$1.0 billion at December 31, 1996, and $756.9 million and $1.0 billion at
September 30, 1996, respectively. The ratios of Tier 1 and total
risk-based capital to risk-weighted assets were 10.92% and 14.05% at
September 30, 1997, compared to 10.09% and 13.29% at year-end 1996,
and 9.86% and 13.07% at September 30, 1996, respectively. At
September 30, 1997, the Company's leverage ratio was 8.37%,
compared to 7.57% at December 31, 1996 and 7.38% at September 30,
1996. At September 30, 1997, the Bank's total risk-based capital and
leverage ratios were 12.95 and 7.52%, respectively.
Based upon the risk-based capital and leverage requirements,
Central Fidelity's capital structure places it well above the Federal
Reserve Board's minimum guidelines and in the well capitalized
category when measured against FDIC criteria. The Company will
continue to review and monitor the asset mix and pricing, and other areas
determined to be most affected by these capital requirements.
During the nine months ended September 30, 1997, the Company
purchased and retired 2,989,000 shares of its common stock under a
Stock Repurchase Program that was terminated on June 24, 1997. The
aggregate payment during the period for such shares amounted to
$83,554,000 . Of the 2,989,000 shares purchased during the period,
2,000,000 shares were acquired under an accelerated stock repurchase
program entered into on May 1, 1997 for a preliminary payment of
$55,810,000 subject to final settlement. The final settlement on the
accelerated repurchase was made on October 21, 1997 for an additional
payment of $26,668,000.
Off-Balance-Sheet Derivatives
- ------------------------------------------
In the context of its asset/liability management, the Company is a
limited end-user of off-balance-sheet financial derivatives as a
cost-efficient vehicle for managing interest rate sensitivity. 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.
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. Any
change in market value fluctuation generally corresponds to market
fluctuation in the underlying asset or liability being hedged. 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 thresholds of credit risk.
The Company has also entered into a limited 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
- ------------------------------
On June 23, 1997, Central Fidelity entered into a definitive Agreement
and Plan of Merger with Wachovia Corporation ("Wachovia"), providing
for the merger, of Central Fidelity with, and into, Wachovia. Wachovia is
the 20th largest banking company in the United States based on total
assets with dual headquarters in Winston-Salem, North Carolina and
Atlanta, Georgia. The agreement has been approved by the boards of
directors of both companies and is subject to the approval of the
shareholders of the Company and appropriate regulatory agencies. The
merger is expected to be accounted for as a pooling of interests and will
result in a tax-free exchange of .63 of a share of Wachovia's common stock
stock for each share of common stock of Central Fidelity. In addition, the
Company entered into a Stock Option Agreement dated June 24, 1997,
granting Wachovia the option to purchase approximately 19.9% of the
Company's outstanding shares of common stock under certain
circumstances.
On June 10, 1997, Wachovia announced that it had reached
a definitive agreement to merge with Jefferson Bankshares, Inc., a
Virginia corporation, headquartered in Charlottesville, Virginia, which
operates principally in the Charlottesville, Tidewater, Richmond,
Fredericksburg and Shenandoah Valley markets of Virginia. The
merger of Jefferson Bankshares, Inc. with and into Wachovia was
closed as of October 31, 1997.
<PAGE>
<TABLE>
SUMMARY OF INTEREST RATE SWAPS
Central Fidelity Banks, Inc. and Subsidiaries
- --------------------------------------------------------------------------------------------------------
The weighted average variable rates are based upon the contractual rates in effect at September 30, 1997:
(In thousands) September 30, 1997
<CAPTION>
Average Year-To-Date
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 medium-term
borrowings -- -- -- -- ($183) --
Securities available for sale -- -- -- -- (263) --
Fixed rate commercial loans -- -- -- -- (118) --
- ------------------------------------------------ -------------- -------------
Total pay fixed/receive variable -- -- -- -- (564) --
- ------------------------------------------------ -------------- -------------
Receive fixed/pay variable:
Fixed rate subordinated debt $150,000 7.10 % 5.82 % (1) 5.13 1,510 $5,318
Variable rate commercial loans -- -- -- -- (54) --
- ------------------------------------------------ -------------- -------------
Total receive fixed/pay
variable 150,000 7.10 5.81 5.38 1,456 5,318
- ------------------------------------------------ -------------- -------------
Total company hedging swaps $150,000 7.10 % 5.81 % 5.38 $892 $5,318
- ----------------------------------======== ======== ========
- --------------------------------------------------------------------------------------------------------
Customer Hedging Swaps
- --------------------------------------------------------------------------------------------------------
Pay fixed/receive variable $4,500 5.55 % (1) 9.11 % 0.56 $501 ($204)
Receive fixed/pay variable 4,500 9.20 5.55 (1) 0.56 (498) 207
- ------------------------------------------------ -------------- -------------
Total customer hedging swaps $9,000 7.37 % 7.33 % 0.56 $3 $3
- ----------------------------------======== ======== ========
The weighted average variable rates are based upon the contractual rates in effect at September 30, 1996:
(In thousands) September 30, 1996
- --------------------------------------------------------------------------------------------------------
Company Hedging Swaps
- --------------------------------------------------------------------------------------------------------
Pay fixed/receive variable:
Variable rate medium-term
borrowings $50,000 5.63 % (1) 6.42 % 0.71 ($193) ($211)
Securities available for sale 12,972 5.80 (2) 9.00 1.99 (653) (374)
Fixed rate commercial loans 22,406 5.59 (1) 6.84 2.93 (207) (196)
- ------------------------------------------- -------------- -------------
Total pay fixed/receive
variable 85,378 5.65 6.92 1.49 (1,053) (781)
- ------------------------------------------- -------------- -------------
Receive fixed/pay variable:
Fixed rate subordinated debt 150,000 7.10 5.54 (1) 6.13 1,674 3,029
Fixed rate medium-term borrowings -- -- -- -- (427) --
Variable rate commercial loans 100,000 4.77 5.63 (1) 0.31 (608) (610)
- ------------------------------------------- -------------- -------------
Total receive fixed/pay
variable 250,000 6.17 5.57 3.80 639 2,419
- ------------------------------------------- -------------- -------------
Total company hedging swaps $335,378 6.03 % 5.92 % 3.21 ($414) $1,638
- ----------------------------------======== ======== ========
- --------------------------------------------------------------------------------------------------------
Customer Hedging Swaps
- --------------------------------------------------------------------------------------------------------
Pay fixed/receive variable $4,500 5.48 % (1) 9.11 % 1.56 $495 ($331)
Receive fixed/pay variable 4,500 9.20 5.48 (1) 1.56 (492) 338
- ------------------------------------------------ -------------- -------------
Total customer hedging swaps $9,000 7.34 % 7.29 % 1.56 $3 $7
- ----------------------------------======== ======== ========
- --------------------------------------------------------------------------------------------------------
(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.
</TABLE>
<PAGE>
<TABLE>
INTEREST RATE SWAPS - NOTIONAL AMOUNT ROLLFORWARD
Central Fidelity Banks, Inc. and Subsidiaries
- -------------------------------------------------------------------
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, $72,150 $250,000 $322,150
New swaps -- -- --
Terminated swaps (21,886) -- (21,886)
Matured swaps (50,000) (100,000) (150,000)
Amortization of swaps (264) -- (264)
- -------------------------------------------------------------------
Ending balance, September
30, 1997 $-- $150,000 $150,000
- ------------------------------- ======== ======== ========
Customer Swaps:
Beginning balance, January 1, $4,500 $4,500 $9,000
New swaps -- -- --
Terminated swaps -- -- --
Matured swaps -- -- --
Amortization of swaps -- -- --
- -------------------------------------------------------------------
Ending balance, September
30, 1997 $4,500 $4,500 $9,000
- ------------------------------- ======== ======== ========
- -------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
EXPECTED MATURITIES OF INTEREST RATE SWAPS
Central Fidelity Banks, Inc. and Subsidiaries
- ----------------------------------------------------------------------------------------------------
<CAPTION>
Due After One After Two After Three After Four
Within Through Through Through Through After
(In Thousands) September 30, 1997One Year Two Years Three Year Four Years Five Years Five Years Total
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Company Hedging Swaps
- ----------------------------------------------------------------------------------------------------
Receive fixed/pay variable:
Notional amount -- -- -- -- -- $150,000 $150,000
Weighted average pay rate:
Contractual rate* -- -- -- -- -- 5.74% 5.74%
Forward yield curve** -- -- -- -- -- 6.35% 6.35%
Weighted average receive rate -- -- -- -- -- 7.10% 7.10%
- ----------------------------------------------------------------------------------------------------
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* -- 5.82% -- -- -- -- 5.82%
Forward yield curve** -- 5.55% -- -- -- -- 5.55%
Receive fixed/pay variable:
Notional amount -- $4,500 -- -- -- -- $4,500
Weighted average pay rate:
Contractual rate* -- 5.82% -- -- -- -- 5.82%
Forward yield curve** -- 5.55% -- -- -- -- 5.55%
Weighted average receive rate -- 9.20% -- -- -- -- 9.20%
- ----------------------------------------------------------------------------------------------------
* The weighted average variable rates are based upon the contractual rates in effect at September 30, 1997.
** The weighted average variable rates are projected based upon the implied forward yield curve from
date of analysis through maturity.
</TABLE>
<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:
There were no reports on Form 8-K filed during the third
quarter ended September 30, 1997.
<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 Vice President and Treasurer
(Principal Financial Officer)
/s/ James F. Campbell
James F. Campbell
Senior Vice President & Controller
(Principal Accounting Officer)
Date: November 12, 1997
<PAGE>
EXHIBIT INDEX
------------------------
Exhibit No. Description
- ----------- ------------------
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
<PAGE>
<TABLE>
EXHIBIT 11
CENTRAL FIDELITY BANKS, INC. AND SUBSIDIAR
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(In thousands)
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
1997 1996 1997 1996
------ ------ ---- ----
<S> <C> <C> <C> <C>
Earnings:
Net income $31,666 $25,132 $93,241 $81,922
======= ======= ======= =======
Shares:
Weighted average number of common shares used
in computing primary earnings per share 56,952 59,586 57,692 59,889
Dilutive stock options - based on treasury stock
method 1,596 1,065 1,524 997
------------------------------------------
Weighted average number of common shares used
in computing fully diluted earnings per
share 58,548 60,651 59,216 60,886
======= ======= ======= =======
Earnings per share:
Primary earnings per share $0.56 $0.42 $1.62 $1.37
Fully diluted earnings per share $0.54 $0.41 $1.57 $1.35
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000276235
<NAME> CENTRAL FIDELITY BANKS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 298,752
<INT-BEARING-DEPOSITS> 50,000
<FED-FUNDS-SOLD> 39,377
<TRADING-ASSETS> 6,538
<INVESTMENTS-HELD-FOR-SALE> 2,725,064
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 6,992,767
<ALLOWANCE> 110,000
<TOTAL-ASSETS> 10,450,667
<DEPOSITS> 7,819,305
<SHORT-TERM> 1,132,617
<LIABILITIES-OTHER> 92,661
<LONG-TERM> 566,098
0
0
<COMMON> 286,226
<OTHER-SE> 553,760
<TOTAL-LIABILITIES-AND-EQUITY> 10,450,667
<INTEREST-LOAN> 457,899
<INTEREST-INVEST> 141,484
<INTEREST-OTHER> 4,364
<INTEREST-TOTAL> 603,747
<INTEREST-DEPOSIT> 233,441
<INTEREST-EXPENSE> 301,901
<INTEREST-INCOME-NET> 301,846
<LOAN-LOSSES> 39,977
<SECURITIES-GAINS> 2,820
<EXPENSE-OTHER> 199,675
<INCOME-PRETAX> 138,373
<INCOME-PRE-EXTRAORDINARY> 138,373
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,241
<EPS-PRIMARY> 1.62
<EPS-DILUTED> 1.57
<YIELD-ACTUAL> 4.11
<LOANS-NON> 40,017
<LOANS-PAST> 25,495
<LOANS-TROUBLED> 136
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 110,000
<CHARGE-OFFS> 51,785
<RECOVERIES> 11,808
<ALLOWANCE-CLOSE> 110,000
<ALLOWANCE-DOMESTIC> 110,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
