FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission file number 1-6580
March 31, 1994
FIRST VIRGINIA BANKS, INC.
(Exact name of registrant as specified in its charter)
Virginia 54-0497561
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
6400 Arlington Boulevard
Falls Church, Virginia 22042-2336
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code
(703) 241-4000
Indicate by check mark whether the registrant (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. Yes __X__ No_____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
On April 29, 1994, there were 32,424,128 shares of common
stock outstanding.
This report contains a total of 19 pages.
1
<PAGE>
INDEX
Page
---------
PART I - Financial Information
Item 1. Financial Statements.
Consolidated Balance Sheets - March 31,
1994 and 1993 and December 31, 1993 3/ 4
Consolidated Statements of Income - Three
months ended March 31, 1994
and 1993 5/ 6
Consolidated Statements of Cash Flows - Three
months ended March 31, 1994 and 1993 7
Consolidated Statements of Shareholders'
Equity - Three months ended March 31, 1994
and 1993 8
Notes to Consolidated Financial Statements 8/10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10/15
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature 16
Exhibit 11 - Statement re: Computation of
Per Share Earnings 17
Exhibit 15 - Independent Accountants' Review
Report from Ernst & Young 18
Exhibit 15A - Letter of Acknowledgement from
Ernst & Young, Independent Accountants 19
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31 December 31 March 31
1994 1993 1993
---------- ---------- ----------
(In thousands)
ASSETS
Cash and noninterest-bearing
deposits in banks $ 284,633 $ 326,136 $ 364,667
Federal funds sold and securities purchased
under agreements to resell 255,000 235,000 308,268
---------- ---------- ----------
Total cash and cash equivalents 539,633 561,136 672,935
---------- ---------- ----------
Mortgage loans held for sale 41,186 69,173 27,172
Investment securities - held to maturity:
U.S. Government & its agencies 1,897,625 1,904,717 1,818,423
State and municipal obligations 235,288 235,363 237,895
Other 33,927 35,954 35,468
---------- ---------- ----------
Total investment securities (market
values of $2,170,642, $2,228,818
and $2,171,340) 2,166,840 2,176,034 2,091,786
---------- ---------- ----------
Loans 4,486,188 4,345,780 4,216,274
Deduct: Unearned income (336,326) (327,635) (345,851)
Allowance for loan losses (50,312) (50,927) (50,456)
---------- ---------- ----------
Net loans 4,099,550 3,967,218 3,819,967
---------- ---------- ----------
Premises and equipment 139,948 137,007 136,933
Other assets 130,051 126,315 129,589
---------- ---------- ----------
Total Assets $7,117,208 $7,036,883 $6,878,382
========== ========== ==========
3
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CONSOLIDATED BALANCE SHEETS (Continued) (Unaudited)
March 31 December 31 March 31
1994 1993 1993
---------- ---------- -----------
(In thousands)
LIABILITIES
Deposits:
Noninterest-bearing $1,039,564 $1,039,933 $ 978,370
Interest-bearing:
Transaction accounts 1,302,273 1,294,867 1,223,668
Money market accounts 730,801 724,462 765,754
Savings deposits 1,357,558 1,325,943 1,253,948
Certificates of deposit:
Large denomination 161,689 165,360 158,887
Other 1,570,705 1,585,824 1,664,413
---------- ---------- ----------
Total deposits 6,162,590 6,136,389 6,045,040
Interest, taxes and other liabilities 70,808 56,126 67,589
Short-term borrowings and securities sold under
agreements to repurchase 169,981 151,859 132,695
Long-term indebtedness 4,452 1,008 1,101
---------- ---------- ----------
Total Liabilities 6,407,831 6,345,382 6,246,425
---------- ---------- ----------
SHAREHOLDERS' EQUITY
Preferred stock, $10 par value 796 805 816
Common stock, $1 par value 32,424 32,444 32,396
Capital Surplus 67,559 68,406 67,421
Retained Earnings 608,598 589,846 531,324
---------- ---------- ----------
Total Shareholders' Equity 709,377 691,501 631,957
---------- ---------- ----------
Total Liabilities and Shareholders' Equity $7,117,208 $7,036,883 $6,878,382
========== ========== ==========
See notes to consolidated financial statements
4
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CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended
March 31
1994 1993
------- -------
(In thousands, except per share data)
Interest income:
Interest and fees on loans $87,765 $89,958
Interest on mortgage loans
held for sale 834 587
Income on investment
securities - held to maturity:
U.S. Government & its agencies 29,044 30,415
State and municipal
obligations 2,996 3,532
Other 429 556
Income from federal funds sold
and securities purchased
under agreements to resell 1,870 1,828
------- -------
Total interest income 122,938 126,876
------- -------
Interest expense:
Deposits:
Transaction accounts 7,172 7,872
Money market accounts 4,532 5,222
Savings deposits 9,006 9,013
Certificates of deposit:
Large denomination 1,483 1,621
Other 15,093 16,902
Short-term borrowings 1,031 813
Long-term indebtedness 129 78
------- -------
Total interest expense 38,446 41,521
------- -------
Net interest income 84,492 85,355
Provision for loan losses 461 2,189
------- -------
Net interest income after provision
for loan losses 84,031 83,166
------- -------
5
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CONSOLIDATED STATEMENTS OF INCOME (Continued) (Unaudited)
Three Months Ended
March 31
1994 1993
------- -------
(In thousands, except per share data)
Net interest income after provision
for loan losses 84,031 83,166
------- -------
Other income:
Service charges on deposit
accounts 8,905 8,182
Insurance premiums and
commissions 1,632 1,623
Credit card service charges
and fees 2,548 2,508
Trust services 1,226 1,182
Income from other customer
services 3,947 4,271
Securities gains before
an income tax provision
of $341 in 1994 974 1
Other 1,783 1,799
------- -------
Total other income 21,015 19,566
------- -------
Other expenses:
Salaries and employee benefits 34,697 32,701
Occupancy 4,837 4,502
Equipment 4,856 4,792
FDIC assessment 3,397 3,337
Other 14,516 14,770
------- -------
Total other expenses 62,303 60,102
------- -------
Income before income taxes 42,743 42,630
Provision for income taxes 13,927 13,410
------- -------
NET INCOME $28,816 $29,220
======= =======
Net income per share of common stock $.89 $.90
See notes to consolidated financial statements
6
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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
March 31
1994 1993
-------- --------
(In thousands)
Net cash provided by operating activities $ 29,362 $ 38,098
Investing activities:
Proceeds from the maturity of investment securities 164,635 170,431
Proceeds from the sale of investment securities 1,806 -
Purchase of investment securities (159,849) (102,107)
Net increase in loans (132,746) (89,175)
Net decrease in mortgages held for sale 27,987 32,933
Purchases of premises and equipment (6,609) (3,456)
Sales of premises and equipment 804 38
Goodwill and other intangible assets acquired (325) (766)
Other 16,611 9,486
-------- --------
Net cash provided (used) by investing activities (87,686) 17,384
-------- --------
Financing activities:
Net increase in deposits 26,201 31,294
Net increase (decrease) in short-term borrowings 18,122 (17,986)
Proceeds from long-term borrowing 3,722 -
Principal payments on long-term borrowings (278) (4,126)
Cash dividends - common, $.31 and $.26 per share (10,057) (8,368)
Cash dividends - preferred (13) (14)
Cash dividends paid by a bank prior to its acquisition - (110)
Stock purchased and retired (1,093) -
Proceeds from issuance of common stock 217 379
-------- --------
Net cash provided by financing activities 36,821 1,069
-------- --------
Net increase (decrease) in cash and cash
equivalents (21,503) 56,551
Cash and cash equivalents at beginning of year 561,136 616,384
-------- --------
Cash and cash equivalents at end of period $539,633 $672,935
======== ========
See notes to consolidated financial statements
7
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
Three Months Ended
March 31
1994 1993
-------- --------
(In thousands)
Balance at beginning of year $691,501 $607,399
Increase attributable to an acquired bank - 3,453
Net income 28,816 29,220
Common stock purchased and retired (1,093) -
Issuance of common stock for the dividend reinvestment
plan, stock options and stock appreciation rights 217 379
-------- --------
719,441 640,451
-------- --------
Deduct dividends declared:
Preferred stock 13 13
Common stock, $.31 and $.26 per share 10,051 8,371
Dividends paid by a bank prior to its acquisition - 110
-------- --------
10,064 8,494
-------- --------
Balance at end of period $709,377 $631,957
======== ========
See notes to consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The foregoing unaudited consolidated financial statements include the
accounts of the Corporation and all of its subsidiaries. The Corporation's
subsidiaries are predominantly engaged in banking. Foreign banking activities
and operations other than banking are not significant. All material
intercompany transactions and accounts have been eliminated. The consolidated
financial statements include all adjustments (consisting only of normal
recurring accruals) which, in the opinion of management, are necessary for a
fair presentation of the results of operations for each of the periods.
Certain amounts previously reported in 1993 have been reclassified for
comparative purposes.
8
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses was (in thousands):
Three Months Ended
March 31
1994 1993
------- -------
Balance at beginning of period $50,927 $49,340
Balance of an acquired bank - 259
Provision charged to operating
expense 461 2,189
------- -------
51,388 51,788
Less:
Loans charged off, net of
recoveries of $988 and $1,069 1,076 1,332
------- -------
Balance at March 31 $50,312 $50,456
======= =======
Percentage of net charge-offs to
average loans .11% .14%
Percentage of allowance for loan
losses to period-end loans 1.21 1.30
Percentage of nonperforming assets
to period-end loans .64 .82
3. FEDERAL INCOME TAX
The reconciliation of income tax computed at the federal statutory tax
rates to provision for income tax is as follows (dollars in thousands):
Three Months Ended
March 31
1994 1993
------------- -------------
Amount Percent Amount Percent
------- ----- ------- -----
Statutory rate $14,960 35.0% $14,494 34.0%
Nontaxable interest on
municipal obligations (1,333)(3.1) (1,480)(3.5)
Other items 300 .7 396 1.0
------- ---- ------- ----
Effective rate $13,927 32.6% $13,410 31.5%
======= ==== ======= ====
9
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. PREFERRED STOCK
There are 3,000,000 shares of preferred stock, par value $10.00 per
share, authorized. The following four series of cumulative convertible stock
were outstanding:
March 31 December 31 March 31
Series Dividends 1994 1993 1993
--------- --------- ------- ----------- --------
A 5% 24,482 24,673 25,671
B 7% 9,590 10,110 10,110
C 7% 13,964 13,964 13,968
D 8% 31,582 31,712 31,900
------ ------ ------
79,618 80,459 81,649
====== ====== ======
5. COMMON STOCK
There are 60,000,000 shares of common stock, par value $1.00 per
share, authorized and 32,424,000, 32,444,000 and 32,396,000 shares were
outstanding at March 31, 1994, December 31, 1993 and March 31, 1993,
respectively. Options to purchase 329,763 shares of common stock and 11,250
stock appreciation rights were outstanding on March 31, 1994. A total of
1,125,727 shares of common stock were reserved at March 31, 1994: 115,237 for
conversion of preferred stock, 622,513 for stock options and stock
appreciation rights and 387,977 for bank acquisitions.
6. EARNINGS PER SHARE
Earnings per share of common stock for the three months ended
March 31, after giving effect to dividends on preferred stock of $13,000 in
1994 and 1993 are based on 32,537,000 and 32,509,000 average shares,
respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net income in the first quarter totaled $28,816,000 or $.89 per share,
down 1% from the record earnings in the first quarter of 1993 of $29,220,000,
or $.90 per share and unchanged from the $.89 earned in the previous quarter.
Earnings remained at a high level and produced a return on average assets of
1.64% and a 16.47% return on average shareholders' equity, as compared to the
1.68% and 17.81%, respectively, earned for all of 1993. These levels place
First Virginia near the top of all high-performing banks in the country.
The net interest margin during the first quarter was unchanged from the
5.28% achieved in the previous quarter, as the decline in the cost of funds
offset a decline in the yield on earning assets due to lower interest rates
as compared to the first quarter of 1993. During the latter part of the
quarter, interest rates began to rise rapidly as the Federal Reserve moved to
10
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increase rates in an effort to cool down the economy and avoid an increase in
the inflation rate. While the Corporation still anticipates some further
compression in the net interest margin, these pressures should begin to abate
in the second half of the year if interest rates continue to increase, as the
Corporation is slightly asset sensitive and should benefit from an increase
in rates.
Credit quality remained high at First Virginia as the net charge-off
ratio declined three basis points to .11%, and loan delinquencies remained at
historically low levels. Nonperforming assets continued to decline and
amounted to $26.482 million or .64% of outstanding loans at the end of the
first quarter as compared to the $31.756 million or .82% of loans at the end
of the previous year's first quarter. Due to the low levels of net charge-
offs, delinquencies and nonperforming assets, the Corporation lowered its
target level for the allowance for loan losses to 1.21% as compared to the
1.27% level at the end of 1993. As a result, the provision for loan loss
expense declined 79% or $1.728 million as compared to the first quarter of
1993. The allowance covers net charge-offs 11.7 times and represents 190% of
nonperforming assets at March 31, 1994. A summary of nonperforming assets and
90 day delinquencies at March 31, 1994 and 1993, were (in thousands):
1994 1993
------- -------
Nonaccruing loans $17,553 $21,308
Restructured loans 2,268 2,278
Foreclosed real estate 6,661 6,873
In-substance foreclosures -- 1,297
------- -------
Total $26,482 $31,756
======= =======
Percentage of total loans .64% .82%
======= =======
Loans past due 90 days or more $ 3,675 $ 4,310
======= =======
Percentage of total loans .09% .11%
======= =======
Loan demand began rising very strongly in mid-quarter after slowing in
January and early February due to extremely harsh weather. Automobile and
home equity loan production achieved record volumes for the quarter, and by
quarter-end, loans had increased at a 13.1% annualized rate as compared to
the end of the previous quarter. Average loans increased 6.0% as compared to
the first quarter of 1993, although installment loans had increased 11.2%.
Commercial loan demand is still moderately weak with competition for good,
high-quality loans very intense and, as a result, these loans declined 4.7%.
The only exception to this overall weakness in commercial loans was in floor
plan financing of inventory to automobile dealers which increased 13.5%. The
increase in interest rates slowed real estate lending slightly with
refinancing activity beginning to decline from the record levels of 1992 and
1993, and, as a result, this category of loans was down 1.6% as compared to
the first quarter of 1993.
Average deposits increased 3.2% to $6.111 billion as compared to $5.920
billion in the previous year's first quarter and were relatively unchanged
from the $6.110 billion in average deposits during the fourth quarter of
1993. The first quarter is historically the seasonal low in deposit activity
for the Corporation, and we were pleased with the growth during the period.
11
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The banking industry continued to come under pressure from the competition of
mutual funds and the stock market, as some consumers sought higher potential
yields from nonbanking sources. By quarter-end, however, large declines in
prices in the stock and bond markets resulted in negative yields in those
areas and the Corporation's insured deposit products became much more
attractive to consumers. The Corporation's extensive branch system and
reputation for safety and high-quality service produces a high proportion of
its deposits in low-cost core areas. Transaction accounts increased 9.4% as
compared to the first quarter of 1993, and represented 37.8% of total
deposits while traditional consumer savings accounts increased 9.3% and
represented 21.8% of total average deposits. Despite the recent increase in
the interest rate level, the Corporation's deposit costs have remained
unchanged due to its reliance on core consumer deposits. Less than 3% of the
Corporation's deposits come from large denomination certificates of deposit,
and the majority of those certificates are from consumers with high levels of
savings.
Noninterest income increased 7.4%, as compared to the previous year's
first quarter, but was down slightly from the fourth quarter of 1993 when the
Corporation sold a package of mortgage servicing rights. Service charges on
deposit accounts increased 8.8% due to an increase in the number of accounts
and by a slight increase in price of some service fee categories. Activity in
a number of noninterest fee areas slowed due to the harsh weather but resumed
to normal growth levels by quarter-end. During the quarter, the Corporation
elected to dispose of its remaining investment in equity securities and this
produced a securities gain of $974,000 as compared to virtually no gain in
the 1993 first quarter and a $679,000 gain in the fourth quarter when the
Corporation sold some additional equity securities.
Noninterest expense rose 3.7%, as compared to the first quarter of 1993
but was down slightly as compared to the previous quarter. The previous
quarter had included higher amounts for the write-off of mortgage serving
rights due to faster-than-anticipated payoffs on serviced mortgage loans.
Occupancy expense increased 7.4% primarily due to higher utility expense
caused by the cold weather. Advertising increased $738,000 due to heavy
promotional expenses related to a very successful home equity loan campaign.
Most other categories of expense were stable or increased slightly,
consistent with inflation.
During the first quarter, the Corporation adopted Financial Accounting
Standards Board Statement No. 115 "Accounting for Certain Investments in Debt
and Equity Securities." The statement requires that investments be classified
in one of three categories. Trading securities are those securities which are
bought and held primarily for the purpose of sale in the near term and are
accounted for at market value with any gain or loss included in earnings.
Held-to-maturity securities are those which a company has the positive intent
and ability to hold to maturity and are accounted for at amortized cost.
Available-for-sale securities include all other securities and are accounted
for at market value with all unrealized gains and losses excluded from
earnings, but they are reported as a separate component of shareholders'
equity. The Corporation's policy is to hold all securities to maturity and
because it has the ability to do so, all of its securities have been
classified in the held-to-maturity category. Accordingly, no adjustment has
been made to either earnings or shareholders' equity for changes in the
market value of the Corporation's securities. The Corporation does not hold
any derivative instruments nor does it engage in hedging or swap
arrangements. The investment portfolio is composed of moderately short-lived
securities with an average life of two years and is laddered in such a way
that approximately an equal amount comes due every month.
12
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The Corporation's provision for income taxes increased 4%, as compared
to the previous year's first quarter, primarily due to an increase in the
federal income tax rate from 34% to 35%. Also contributing to the increase in
taxes was a continuation of the decline in the level of tax-exempt securities
as a proportion of total investments and interest income because changes in
tax laws since 1982 have reduced the attractiveness and availability of these
types of securities to the Corporation.
Shareholders' equity grew 12% to $709 million and book value per share
of common stock also increased 12% to $21.85. The increase in capital
exceeded the growth in assets, and, as a result, the Corporation's Tier I
leverage ratio increased 75 basis points to 9.91%. During the first quarter,
the Corporation announced a program to repurchase up to 1,000,000 shares of
its common stock over the next year. The Corporation purchased and retired
29,100 shares during the first quarter.
13
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AVERAGE BALANCES AND INTEREST RATES (Unaudited)
(Dollar amounts in thousands)
Three Months Ended March 31
1994
------------------------------
Interest
Average Income/
Balance Expense Rate
---------- --------- -------
Interest-earning assets:
Investment securities:
U.S. Government & its agencies $1,911,790 $ 29,044 6.16%
State and municipal obligations
(Fully taxable-equivalent basis) 231,257 4,347 7.52
Other (Fully taxable-equivalent basis) 30,841 429 5.57
---------- --------
Total investment securities 2,173,888 33,820 6.29
---------- --------
Loans, net of unearned income:
Installment 2,855,558 62,769 8.80
Real estate 620,314 13,963 9.00
Other (Fully taxable-equivalent basis) 576,931 11,076 7.79
---------- --------
Total loans 4,052,803 87,808 8.69
---------- --------
Mortgages held for sale 52,099 834 6.40
Federal funds sold and securities
purchased under agreements to resell 236,454 1,870 3.21
---------- --------
Total earning assets and income $6,515,244 124,332 7.67
========== --------
Interest-bearing liabilities:
Transaction accounts $1,290,755 7,172 2.25
Money-market accounts 723,447 4,532 2.54
Savings deposits 1,334,699 9,006 2.74
Certificates of deposit:
Large denomination 163,734 1,483 3.67
Other 1,580,107 15,093 3.87
---------- --------
Total interest-bearing deposits 5,092,742 37,286 2.97
Short-term borrowings 163,424 1,031 2.56
Notes and mortgages 3,824 129 13.45
---------- --------
Total interest-bearing liabilities
and interest expense $5,259,990 38,446 2.96
========== --------
Net interest income and net interest margin $ 85,886 5.28%
========
Other average balances:
Demand deposits $1,018,954
Common shareholders' equity 699,056
Total shareholders' equity 699,858
Total assets 7,040,625
14
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AVERAGE BALANCES AND INTEREST RATES (Unaudited)
(Dollar amounts in thousands)
Three Months Ended March 31
1993
------------------------------
Interest
Average Income/
Balance Expense Rate
---------- --------- -------
Interest-earning assets:
Investment securities:
U.S. Government & its agencies $1,860,531 $ 30,415 6.63%
State and municipal obligations
(Fully taxable-equivalent basis) 245,478 5,077 8.27
Other (Fully taxable-equivalent basis) 34,108 562 6.58
---------- --------
Total investment securities 2,140,117 36,054 6.82
---------- --------
Loans, net of unearned income:
Installment 2,567,836 63,556 9.91
Real estate 651,464 15,416 9.47
Other (Fully taxable-equivalent basis) 605,243 11,572 7.75
---------- --------
Total loans 3,824,543 90,544 9.50
---------- --------
Mortgages held for sale 31,972 587 7.35
Federal funds sold and securities
purchased under agreements to resell 236,365 1,828 3.14
---------- --------
Total earning assets and income $6,232,997 129,013 8.32
========== --------
Interest-bearing liabilities:
Transaction accounts $1,179,684 7,872 2.71
Money-market accounts 767,663 5,222 2.76
Savings deposits 1,221,691 9,013 2.99
Certificates of deposit:
Large denomination 167,680 1,621 3.93
Other 1,654,210 16,902 4.14
---------- --------
Total interest-bearing deposits 4,990,928 40,630 3.30
Short-term borrowings 141,241 813 2.33
Notes and mortgages 2,349 78 13.34
---------- --------
Total interest-bearing liabilities
and interest expense $5,134,518 41,521 3.28
========== --------
Net interest income and net interest margin $ 87,492 5.62%
========
Other average balances:
Demand deposits $ 928,665
Common shareholders' equity 620,416
Total shareholders' equity 621,238
Total assets 6,749,953
15
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 - K
----------------------------------
a) Exhibit 11 - Statement re: Computation of Per Share
Earnings (Page 17)
Exhibit 15 - Independent Accountants' Review Report
from Ernst & Young (Page 18)
Exhibit 15A - Letter of Acknowledgement from
Ernst & Young, Independent Accountants (Page 19)
b) A Form 8-K was not required to be filed during the quarter
ended March 31, 1994.
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 its
principal financial officer thereunto duly authorized.
FIRST VIRGINIA BANKS, INC.
/s/ Richard F. Bowman
May 9, 1994 __________________________
Richard F. Bowman, Vice
President and Treasurer
16
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EXHIBIT 11
FIRST VIRGINIA BANKS, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
Three Months Ended
March 31
1994 1993
------- -------
(In thousands, except per share data)
PRIMARY:
Average common shares outstanding 32,438 32,390
Dilutive effect of stock options 99 119
------- -------
Total average common shares 32,537 32,509
======= =======
Net income $28,816 $29,220
Provision for preferred dividends 13 13
------- -------
Net income applicable to common
stock $28,803 $29,207
======= =======
Net income per share of common
stock $.89 $.90
======= =======
FULLY DILUTED:
Average common shares outstanding 32,438 32,390
Dilutive effect of stock options 99 119
Conversion of preferred stock 115 118
------- -------
Total average common shares 32,652 32,627
======= =======
Net income $28,816 $29,220
======= =======
Net income per share of common
stock $.88 $.90
======= =======
17
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EXHIBIT 15
ERNST & YOUNG
1225 Connecticut Avenue, N.W.
Washington, D.C. 20036
Independent Accountants' Review Report
Board of Directors
First Virginia Banks, Inc.
We have reviewed the accompanying consolidated balance sheets of First
Virginia Banks, Inc. and subsidiaries as of March 31, 1994 and 1993,
the related consolidated statements of income for the three-month
periods ended March 31, 1994 and 1993, and the consolidated statements
of shareholders' equity and cash flows for the three-month periods
ended March 31, 1994 and 1993. These financial statements are the
responsibility of the Corporation's management.
We conducted our reviews in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data, and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, which will be performed for the
full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our reviews, we are not aware of any material modifications
that should be made to the accompanying consolidated financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of First Virginia
Banks, Inc. and subsidiaries as of December 31, 1993, and the related
consolidated statements of income, shareholders' equity, and cash flows
for the year then ended (not presented herein) and in our report dated
January 13, 1994, we expressed an unqualified opinion on those
consolidated financial statements.
/s/ Ernst & Young
Washington, D. C.
April 11, 1994
18
<PAGE>
EXHIBIT 15A
ERNST & YOUNG
1225 Connecticut Avenue, N.W.
Washington, D.C. 20036
May 9, 1994
Board of Directors
First Virginia Banks, Inc.
We are aware of the incorporation by reference in the Registration
Statement Number 33-52507 on Form S-4 dated March 4, 1994, Post-
effective Amendment No. 1 to Registration Statement Number 33-38024 on
Form S-8 dated January 10, 1994, Registration Statement Number 33-51587
on Form S-3 dated December 20, 1993, Registration Statement Number
33-54802 on Form S-8 dated November 20, 1992, Registration Statement
Number 33-31890 on form S-3 dated November 1, 1989, Post-effective
Amendment Number 3 to Registration Statement Number 2-67507 on Form S-3
dated January 7, 1988, Post-effective Amendment Number 2 to
Registration Statement Number 2-77151 on Form S-8 dated October 30,
1987, Registration Statement Number 33-17358 on Form S-8 dated
September 28, 1987, Registration Statement Number 33-15360 on Form S-3
dated June 26, 1987, of our report dated April 11, 1994 relating to the
unaudited consolidated interim financial statements of First Virginia
Banks, Inc. and subsidiaries which are included in its Form 10-Q for
the quarter ended March 31, 1994.
Pursuant to Rule 436 (c) of the Securities Act of 1933, our report
is not a part of the registration statement prepared or certified by
accountants within the meaning of Section 7 or 11 of the Securities Act
of 1933.
/s/ Ernst & Young
19
