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
September 30, 1995
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 October 31, 1995, there were 33,945,087 shares of common
stock outstanding.
This report contains a total of 21 pages.
1
<PAGE>
INDEX
Page
---------
PART I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - September 30,
1995 and 1994 and December 31, 1994 3/ 4
Consolidated Statements of Income - Three
months and nine months ended
September 30, 1995 and 1994 5/ 6
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1995 and 1994 7
Condensed Consolidated Statements of Shareholders'
Equity - Nine months ended September 30, 1995
and 1994 8
Notes to Condensed Consolidated Financial
Statements 8/10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10/16
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature 17
Exhibit 11 - Statement re: Computation of
Per Share Earnings 18
Exhibit 15 - Independent Accountants' Review
Report from Ernst & Young LLP 19
Exhibit 15A - Letter of Acknowledgement from
Ernst & Young LLP, Independent Accountants 20
Exhibit 27 - Financial Data Schedule as of
September 30, 1995 and the Nine months
ended September 30, 1995 21
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (Unaudited)
Sept. 30 December 31 Sept. 30
1995 1994 1994
---------- ---------- ----------
(In thousands)
ASSETS
Cash and noninterest-bearing
deposits in banks $ 346,627 $ 420,742 $ 333,995
Federal funds sold and securities purchased
under agreements to resell 400,000 30,000 145,000
---------- ---------- ----------
Total cash and cash equivalents 746,627 450,742 478,995
---------- ---------- ----------
Mortgage loans held for sale 21,717 13,291 13,279
Investment securities - held to maturity:
U.S. Government & its agencies 1,878,653 1,785,837 1,664,148
State and municipal obligations 214,642 280,817 228,361
Other 4,637 19,376 2,193
---------- ---------- ----------
Total investment securities (market
values of $2,099,856, $2,032,148
and $1,864,271) 2,097,932 2,086,030 1,894,702
---------- ---------- ----------
Loans, net of unearned income 4,977,316 4,997,194 4,598,622
Deduct: Allowance for loan losses (57,471) (58,860) (53,323)
---------- ---------- ----------
Net loans 4,919,845 4,938,334 4,545,299
---------- ---------- ----------
Other earning assets 9,198 8,987 6,820
Premises and equipment 150,879 156,051 141,998
Intangible assets 96,939 85,322 21,662
Other assets 133,707 126,625 118,038
---------- ---------- ----------
Total Assets $8,176,844 $7,865,382 $7,220,793
========== ========== ==========
3
<PAGE>
CONSOLIDATED BALANCE SHEETS (Continued) (Unaudited)
Sept. 30 December 31 Sept. 30
1995 1994 1994
---------- ---------- ----------
(In thousands)
LIABILITIES
Deposits:
Noninterest-bearing $1,210,856 $1,234,060 $1,092,828
Interest-bearing:
Transaction accounts 1,274,882 1,391,978 1,265,987
Money market accounts 709,243 761,160 710,999
Savings deposits 1,224,810 1,402,889 1,311,642
Certificates of deposit:
Consumer 2,297,888 1,820,274 1,672,878
Large denomination 327,019 205,480 190,063
---------- ---------- ----------
Total deposits 7,044,698 6,815,841 6,244,397
Interest, taxes and other liabilities 81,689 59,430 57,872
Short-term borrowings and securities sold
under agreements to repurchase 195,225 179,409 176,082
Mortgage indebtedness 783 963 937
Other long-term indebtedness 2,186 2,851 3,064
---------- ---------- ----------
Total Liabilities 7,324,581 7,058,494 6,482,352
---------- ---------- ----------
SHAREHOLDERS' EQUITY
Preferred stock, $10 par value 707 746 753
Common stock, $1 par value 33,945 34,050 32,292
Capital Surplus 107,022 111,184 58,642
Retained Earnings 710,589 660,908 646,754
---------- ---------- ----------
Total Shareholders' Equity 852,263 806,888 738,441
---------- ---------- ----------
Total Liabilities and Shareholders' Equity $8,176,844 $7,865,382 $7,220,793
========== ========== ==========
See notes to consolidated financial statements
4
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
1995 1994 1995 1994
------- ------- -------- --------
(In thousands, except per share data)
Interest income:
Interest and fees on loans $110,001 $ 96,267 $325,561 $277,513
Interest on mortgage loans
held for sale 314 348 836 1,660
Income on investment
securities - held to maturity:
U.S. Government & its agencies 26,405 25,342 76,461 81,292
State and municipal
obligations 2,717 2,922 9,020 9,285
Other 97 28 284 226
Income from federal funds sold
and securities purchased
under agreements to resell 5,707 1,937 13,825 5,481
Income on other earning assets 144 103 434 292
------- ------- -------- --------
Total interest income 145,385 126,947 426,421 375,749
------- ------- -------- --------
Interest expense:
Deposits:
Transaction accounts 6,536 7,053 20,822 21,300
Money market accounts 5,304 4,869 16,555 14,133
Savings deposits 7,788 9,206 25,276 27,454
Certificates of deposit:
Consumer 28,657 15,722 76,622 45,881
Large denomination 3,883 2,193 10,283 4,995
Short-term borrowings 2,983 1,976 8,149 4,631
Long-term indebtedness 79 104 252 341
------- ------- -------- --------
Total interest expense 55,230 41,123 157,959 118,735
------- ------- -------- --------
Net interest income 90,155 85,824 268,462 257,014
Provision for loan losses 2,462 938 4,878 5,101
------- ------- -------- --------
Net interest income after provision
for loan losses 87,693 84,886 263,584 251,913
------- ------- -------- --------
5
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (Continued) (Unaudited)
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
1995 1994 1995 1994
------- ------- -------- --------
(In thousands, except per share data)
Net interest income after provision
for loan losses 87,693 84,886 263,584 251,913
------- ------- -------- --------
Noninterest income:
Service charges on deposit
accounts 9,771 9,070 28,922 27,108
Insurance premiums and
commissions 1,753 1,749 5,061 4,997
Credit card service charges
and fees 2,972 2,935 8,622 8,357
Trust services 1,650 1,394 5,210 3,884
Income from other customer
services 4,893 4,692 13,805 13,079
Securities gains before income
tax provision of $341 - - - 974
Other 1,203 853 5,645 5,974
------- ------- -------- --------
Total noninterest income 22,242 20,693 67,265 64,373
------- ------- -------- --------
Noninterest expenses:
Salaries and employee benefits 38,909 35,774 114,597 104,767
Occupancy 5,562 4,868 16,321 14,387
Equipment 5,164 5,068 15,301 14,953
FDIC insurance (293) 3,474 7,310 10,268
Other 16,320 15,446 50,424 44,994
------- ------- -------- --------
Total noninterest expenses 65,662 64,630 203,953 189,369
------- ------- -------- --------
Income before income taxes 44,273 40,949 126,896 126,917
Provision for income taxes 15,004 13,363 42,857 41,486
------- ------- -------- --------
NET INCOME $29,269 $27,586 $ 84,039 $ 85,431
======= ======= ======== ========
Net income per share of common stock $.86 $.85 $2.47 $2.63
Average primary shares of common
stock outstanding 34,021 32,437 34,066 32,515
See notes to consolidated financial statements
6
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
Sept. 30
1995 1994
-------- --------
(In thousands)
Net cash provided by operating activities $111,503 $166,986
Investing activities:
Proceeds from the maturity of
held to maturity securities 522,092 490,897
Proceeds from the sale of
available for sale securities - 2,183
Purchase of held to maturity securities (538,853) (230,024)
Net (increase) decrease in loans 13,640 (583,038)
Net (increase) decrease in other earning assets (211) 562
Purchases of premises and equipment (10,505) (15,103)
Sales of premises and equipment 6,299 949
Goodwill and other intangible assets acquired (17,181) (7,220)
Acquisition of a bank, net of cash acquired - 11,745
Other 3,638 (5,340)
-------- --------
Net cash used for investing activities (21,081) (334,389)
-------- --------
Financing activities:
Net increase in deposits 228,856 108,008
Net increase in short-term borrowings 15,816 24,222
Proceeds from long-term borrowing - 3,722
Principal payments on long-term borrowings (844) (730)
Cash dividends - common, $1.00 and $.94 per share (34,018) (30,594)
Cash dividends - preferred (36) (40)
Stock purchased and retired (5,692) (19,980)
Proceeds from issuance of common stock 1,381 654
-------- --------
Net cash provided by
financing activities 205,463 85,262
-------- --------
Net increase (decrease) in cash and
cash equivalents 295,885 (82,141)
Cash and cash equivalents at beginning of year 450,742 561,136
-------- --------
Cash and cash equivalents at end of period $746,627 $478,995
======== ========
See notes to consolidated financial statements
7
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
Nine Months Ended
Sept. 30
1995 1994
-------- --------
(In thousands)
Balance at beginning of year $806,888 $691,501
Increase attributable to an acquired bank - 11,745
Net income 84,039 85,431
Common stock purchased and retired (5,693) (19,980)
Issuance of common stock for the dividend reinvestment
plan, stock options and stock appreciation rights 1,387 654
-------- --------
886,621 769,351
-------- --------
Deduct dividends declared:
Preferred stock 36 39
Common stock, $1.01 and $.95 per share 34,322 30,871
-------- --------
34,358 30,910
-------- --------
Balance at end of period $852,263 $738,441
======== ========
See notes to consolidated financial statements
NOTES TO CONDENSED 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 1994 have been reclassified for comparative
purposes.
8
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses was (in thousands):
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
1995 1994 1995 1994
------- ------- ------- -------
Balance at beginning of period $57,356 $53,472 $58,860 $50,927
Balance of an acquired bank - - - 744
Provision charged to operating
expense 2,462 938 4,878 5,101
------- ------- ------- -------
59,818 54,410 63,738 56,772
Less:
Loans charged off, net of
recoveries of $876, $988,
$2,633 and $2,954 2,347 1,087 6,267 3,449
------- ------- ------- -------
Balance at September 30 $57,471 $53,323 $57,471 $53,323
======= ======= ======= =======
Percentage of net charge-offs to
average loans .19% .10% .17% .11%
Percentage of allowance for loan
losses to period-end loans 1.15 1.16
Percentage of nonperforming assets
to period-end loans .56 .54
3. FEDERAL INCOME TAX
The reconcilement of income tax computed at the federal statutory tax
rates to provision for income tax is as follows (dollars in thousands):
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
1995 1994 1995 1994
------------ ------------ ------------ ------------
$ % $ % $ % $ %
------- ---- ------- ---- ------- ---- ------- ----
Statutory rate $15,495 35.0% 14,332 35.0 $44,414 35.0% 44,421 35.0
Nontaxable interest on
municipal obligations (1,105)(2.5) (1,165)(2.8) (3,598)(2.8) (3,769)(3.0)
Other items 614 1.4 196 .5 2,041 1.6 834 .7
------- ---- ------- ---- ------- ---- ------- ----
Effective rate $15,004 33.9% $13,363 32.7% $42,857 33.8% $41,486 32.7%
======= ==== ======= ==== ======= ==== ======= ====
9
<PAGE>
NOTES TO CONDENSED 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:
Sept. 30 December 31 Sept. 30
Series Dividends 1995 1994 1994
--------- --------- -------- ----------- --------
A 5% 23,222 23,721 24,101
B 7% 7,000 9,300 9,520
C 7% 10,484 10,484 10,484
D 8% 30,011 31,083 31,183
------ ------ ------
70,717 74,588 75,288
====== ====== ======
5. COMMON STOCK
There are 60,000,000 shares of common stock, par value $1.00 per share,
authorized and 33,945,000, 34,050,000 and 32,292,000 shares were outstanding
at September 30, 1995, December 31, 1994 and September 30, 1994,
respectively. Options to purchase 241,290 shares of common stock were
outstanding on September 30, 1995. A total of 629,820 shares of common stock
were reserved at September 30, 1995: 102,930 shares for the conversion of
preferred stock and 526,890 shares for stock options and stock appreciation
rights.
6. EARNINGS PER SHARE
Earnings per share of common stock for the nine months ended September
30, after giving effect to dividends on preferred stock of $36,000 in 1995
and $39,000 in 1994, are based on 34,066,000 and 32,515,000 average shares,
respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
First Virginia Banks, Inc., earned $29.27 million in the third quarter,
equivalent to $.86 per share of common stock. This was up 6.1% from the
$27.59 million earned in the third quarter of 1994 and the $27.57 million
earned in the second quarter of 1995. The higher number of shares
outstanding as a result of the acquisition of Farmers National Bancorp meant
earnings per share were up by a lesser amount of 1.2% compared to $.85 in the
third quarter of 1994, but they were up 6.2% compared to the $.81 earned in
the second quarter of 1995. These earnings produced a return on average
assets for the quarter of 1.47% and a return on average shareholders' equity
of 13.89%.
10
For the first nine months, net income of $84.04 million, or $2.47 per
share, was down 1.6% compared to the $85.43 million, or $2.63 per share,
earned in the first nine months of 1994. These earnings produced a return on
average assets of 1.42% and a return on average shareholders' equity of
13.53%.
Average loans were up 9% compared to the third quarter of 1994, and were
up 4% on an annualized basis compared to the second quarter of 1995. In the
Washington, D.C., metropolitan area in particular, consumer confidence has
been dampened by concerns about continued employment in the wake of proposed
federal budget reductions. This has moderated home equity borrowing for big-
ticket items.
Indirect automobile lending remained strong as gross loan production
increased 4% compared to the third quarter of 1994, despite a weakening in
national automobile sales. During the quarter, the corporation added two new
loan production offices in its automobile finance subsidiary and anticipates
that additional offices will be opened in future months. Automobile leasing
activities, which were introduced in the second quarter, continued to expand
as the product became available to additional areas in First Virginia's
market.
Commercial loan volumes declined 4% compared to the second quarter,
caused in part by normal seasonal activity in the automobile dealer inventory
financing area, but also by strong competition as banks aggressively lowered
rates and terms to attract new business. First Virginia continues to
maintain a very high quality loan portfolio and will not compromise on safety
in order to produce volume.
After dropping slightly in the first and second quarters, average
deposits increased at an annualized rate of 5% compared to the second
quarter. Most of this growth occurred in certificates of deposit that
advanced at an annualized rate of 5% compared to the second quarter. The
transfer of deposits out of relatively lower-cost areas such as savings and
insured money market accounts continued, although at a decreasing rate
compared to the first and second quarters when interest rates were higher.
On September 22, the corporation acquired four offices and $220 million in
deposits from Citizens Savings Bank, FSB in Richmond, Virginia. This
acquisition complements the market covered by the corporation's existing bank
in Richmond and increases its deposit base by 64% with practically no
increase in costs beyond the branches themselves.
The net interest margin was 5.00%, virtually unchanged in the third
quarter compared to the second quarter margin of 5.01%, but was down 22 basis
points compared to the 5.22% in the third quarter of 1994. The increase in
the cost of funds slowed in the third quarter as interest rates for new
certificates of deposit declined moderately compared to the first and second
quarters. This was offset to a modest extent by the transfer of funds by
consumers out of lower-cost savings areas, such as insured money market and
traditional savings accounts, and into relatively higher-cost certificates of
deposit.
Asset quality remained high at First Virginia with non-performing
assets, delinquencies and net charge-offs significantly below industry
averages. The allowance for loan losses remained unchanged during the
quarter at 1.15% of loans, while the provision for loan losses increased
slightly compared to the second quarter due to a higher volume of loans
outstanding. Net charge-offs increased slightly to .19% of average loans
during the third quarter. For the first nine months, they were .17% of
11
average loans, compared to .11% in the first nine months of 1994.
Nonperforming assets increased $3.38 million compared to the prior year,
caused primarily by the acquisition of Farmers National Bancorp whose
nonperforming balances were not included in the 1994 figures.
September 30
1995 1994
------- -------
(Dollars in thousands)
Nonaccruing loans $15,939 $15,493
Restructured loans 4,458 2,268
Foreclosed real estate 7,766 7,022
------- -------
Total $28,163 $24,783
======= =======
Percentage of total loans .56% .54%
======= =======
Loans past due 90 days or more $ 6,122 $ 3,425
======= =======
Percentage of total loans .12% .07%
======= =======
Noninterest income increased 7% compared to the prior year's third
quarter and was up 4% for the first nine months. One of the corporation's
primary goals is to increase the amount and sources of noninterest income.
Earlier in the year, the corporation's insurance agency affiliate began
offering real property title insurance, and income from this area totaled
$114,000 and is building rapidly. Automobile leasing fee income increased
81% compared to the second quarter, and both the title insurance and leasing
programs have been profitable since inception earlier this year. During the
fourth quarter, the corporation plans to begin a pilot program to offer
nonbank traditional financial products, such as mutual funds and annuities,
as another means to increase noninterest income sources.
During the third quarter, the corporation received a partial rebate of
second and third quarter FDIC premiums of $4.09 million. Future periods will
reflect the new lower FDIC assessment rate of 4 cents per $100 of deposits
and will result in an increase in annual income after taxes of approximately
$.24 per share. The corporation continues to control expenses tightly and,
despite acquisitions and new branches, has reduced the number of employees by
2% since the end of 1994. The efficiency ratio for the first nine months of
1995 of 58.43% compares favorably to the industry average of approximately
62.00% despite the heavy retail nature of the corporation. The provision for
income taxes increased 12% compared to the prior year's third quarter due to
an 8% increase in pretax income and to an increase in the effective tax rate
to 33.89% compared to 32.63% in the prior year's third quarter. The higher
effective tax rate was due to an increase in nondeductible goodwill expense
arising from the acquisition of Farmers National Bancorp.
Shareholders' equity increased at an annualized rate of 9% compared to
the second quarter. At the end of the third quarter, the ratio of equity to
total assets was 10.42% compared to 10.50% at the end of the second quarter.
This decline was caused by the more rapid growth in deposits and assets
resulting from the acquisition of $220 million in deposits from Citizens
Savings Bank, FSB, late in the quarter. The Tier 1 leverage ratio declined
34 basis points to 9.62% as a result of this purchase. During the quarter,
the corporation did not repurchase any shares of its stock although there is
a remaining authorization of 885,000 still outstanding.
12<PAGE>
AVERAGE BALANCES AND INTEREST RATES (Unaudited)
(Dollar amounts in thousands)
Three Months Ended Sept. 30
1995
------------------------------
Interest
Average Income/
Balance Expense Rate
---------- --------- -------
Interest-earning assets:
Investment securities-held to maturity:
U.S. Government & its agencies $1,743,253 $ 26,405 6.01%
State and municipal obligations
(Fully taxable-equivalent basis) 220,314 3,809 6.92
Other (Fully taxable-equivalent basis) 6,214 97 6.25
---------- --------
Total investment securities 1,969,781 30,311 6.09
---------- --------
Loans, net of unearned income:
Installment 3,299,512 72,588 8.79
Real estate 944,483 20,926 8.86
Other (Fully taxable-equivalent basis) 722,284 17,090 9.37
---------- --------
Total loans 4,966,279 110,604 8.92
---------- --------
Mortgage loans held for sale 16,613 314 7.57
Federal funds sold and securities
purchased under agreements to resell 367,983 5,707 6.15
Other earning assets 9,256 144 6.28
---------- --------
Total earning assets and income $7,329,912 147,080 7.99
========== --------
Interest-bearing liabilities:
Transaction accounts $1,291,256 6,536 2.01
Money market accounts 704,009 5,304 2.99
Savings deposits 1,230,017 7,788 2.51
Certificates of deposit:
Consumer 2,128,296 28,657 5.34
Large denomination 303,258 3,883 5.08
---------- --------
Total interest-bearing deposits 5,656,836 52,168 3.66
Short-term borrowings 207,921 2,983 5.69
Long-term indebtedness 3,132 79 10.09
---------- --------
Total interest-bearing liabilities
and interest expense $5,867,889 55,230 3.73
========== --------
Net interest income and net interest margin $ 91,850 5.00%
========
Other average balances:
Demand deposits $1,190,101
Common shareholders' equity 841,951
Total shareholders' equity 842,660
Total assets 7,975,500
13
<PAGE>
AVERAGE BALANCES AND INTEREST RATES (Unaudited)
(Dollar amounts in thousands)
Three Months Ended Sept. 30
1994
------------------------------
Interest
Average Income/
Balance Expense Rate
---------- --------- -------
Interest-earning assets:
Investment securities-held to maturity:
U.S. Government & its agencies $1,738,427 $ 25,342 5.78%
State and municipal obligations
(Fully taxable-equivalent basis) 233,286 4,134 7.09
Other (Fully taxable-equivalent basis) 2,440 31 5.08
---------- --------
Total investment securities 1,974,153 29,507 5.94
---------- --------
Loans, net of unearned income:
Installment 3,202,289 67,305 8.40
Real estate 688,390 15,235 8.85
Other (Fully taxable-equivalent basis) 655,727 14,346 8.67
---------- --------
Total loans 4,546,406 96,886 8.53
---------- --------
Mortgage loans held for sale 15,467 300 7.75
Federal funds sold and securities
purchased under agreements to resell 161,234 1,937 4.77
Other earning assets 6,831 103 6.03
---------- --------
Total earning assets and income $6,704,091 128,733 7.66
========== --------
Interest-bearing liabilities:
Transaction accounts $1,286,597 7,053 2.17
Money-market accounts 731,633 4,869 2.64
Savings deposits 1,340,515 9,206 2.72
Certificates of deposit:
Consumer 1,631,754 15,722 3.82
Large denomination 188,492 2,193 4.62
---------- --------
Total interest-bearing deposits 5,178,991 39,043 2.99
Short-term borrowings 195,056 1,976 4.02
Long-term indebtedness 4,151 104 10.04
---------- --------
Total interest-bearing liabilities
and interest expense $5,378,198 41,123 3.03
========== --------
Net interest income and net interest margin $ 87,610 5.22%
========
Other average balances:
Demand deposits $1,078,441
Common shareholders' equity 733,378
Total shareholders' equity 734,153
Total assets 7,244,909
14
<PAGE>
AVERAGE BALANCES AND INTEREST RATES (Unaudited)
(Dollar amounts in thousands)
Nine Months Ended Sept. 30
1995
------------------------------
Interest
Average Income/
Balance Expense Rate
---------- --------- -------
Interest-earning assets:
Investment securities-held to maturity:
U.S. Government & its agencies $1,702,858 $ 76,461 6.00%
State and municipal obligations
(Fully taxable-equivalent basis) 242,639 12,747 7.00
Other (Fully taxable-equivalent basis) 6,454 284 5.87
---------- --------
Total investment securities 1,951,951 89,492 6.10
---------- --------
Loans, net of unearned income:
Installment 3,279,053 212,773 8.65
Real estate 925,264 61,405 8.85
Other (Fully taxable-equivalent basis) 740,601 53,179 9.58
---------- --------
Total loans 4,944,918 327,357 8.85
---------- --------
Mortgage loans held for sale 13,906 836 8.01
Federal funds sold and securities
purchased under agreements to resell 305,095 13,825 6.06
Other earning assets 9,180 434 6.33
---------- --------
Total earning assets and income $7,225,050 431,944 7.97
========== --------
Interest-bearing liabilities:
Transaction accounts $1,316,474 20,822 2.11
Money-market accounts 717,989 16,555 3.08
Savings deposits 1,272,410 25,276 2.66
Certificates of deposit:
Consumer 2,028,930 76,622 5.04
Large denomination 275,642 10,283 4.99
---------- --------
Total interest-bearing deposits 5,611,445 149,558 3.56
Short-term borrowings 204,127 8,149 5.34
Long-term indebtedness 3,391 252 9.92
---------- --------
Total interest-bearing liabilities
and interest expense $5,818,963 157,959 3.63
========== --------
Net interest income and net interest margin $273,985 5.05%
========
Other average balances:
Demand deposits $1,159,588
Common shareholders' equity 827,552
Total shareholders' equity 828,274
Total assets 7,871,074
15
<PAGE>
AVERAGE BALANCES AND INTEREST RATES (Unaudited)
(Dollar amounts in thousands)
Nine Months Ended Sept. 30
1994
------------------------------
Interest
Average Income/
Balance Expense Rate
---------- --------- -------
Interest-earning assets:
Investment securities-held to maturity:
U.S. Government & its agencies $1,832,439 $ 81,292 5.93%
State and municipal obligations
(Fully taxable-equivalent basis) 247,536 13,461 7.25
Other (Fully taxable-equivalent basis) 2,191 104 6.33
---------- --------
Total investment securities 2,082,166 94,857 6.09
---------- --------
Loans, net of unearned income:
Installment 3,039,614 197,028 8.64
Real estate 650,040 43,481 8.92
Other (Fully taxable-equivalent basis) 621,382 38,753 8.31
---------- --------
Total loans 4,311,036 279,262 8.69
---------- --------
Mortgage loans held for sale 31,321 1,614 6.87
Federal funds sold and securities
purchased under agreements to resell 191,744 5,481 3.82
Other earning assets 6,479 292 6.01
---------- --------
Total earning assets and income $6,622,746 381,506 7.68
========== --------
Interest-bearing liabilities:
Transaction accounts $1,293,832 21,300 2.20
Money market accounts 729,658 14,133 2.59
Savings deposits 1,344,525 27,454 2.73
Certificates of deposit:
Consumer 1,593,048 45,881 3.85
Large denomination 173,991 4,995 3.84
---------- --------
Total interest-bearing deposits 5,135,054 113,763 2.96
Short-term borrowings 186,038 4,631 3.33
Long-term indebtedness 4,308 341 10.55
---------- --------
Total interest-bearing liabilities
and interest expense $5,325,400 118,735 2.98
========== --------
Net interest income and net interest margin $262,771 5.29%
========
Other average balances:
Demand deposits $1,054,989
Common shareholders' equity 716,256
Total shareholders' equity 717,047
Total assets 7,157,085
16
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 - K
----------------------------------
a) Exhibit 11 - Statement re: Computation of Per Share
Earnings (Page 18)
Exhibit 15 - Independent Accountants' Review Report
from Ernst & Young LLP (Page 19)
Exhibit 15A - Letter of Acknowledgement from
Ernst & Young LLP, Independent Accountants (Page 20)
Exhibit 27 - Financial Data Schedule (Page 21)
b) A Form 8-K was not required to be filed during the quarter
ended September 30, 1995.
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
November 8, 1995 __________________________
Richard F. Bowman,
Senior Vice President,
Treasurer and Chief
Financial Officer
17
<PAGE>
EXHIBIT 11
FIRST VIRGINIA BANKS, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
1995 1994 1995 1994
------- ------- ------- -------
(In thousands, except per share data)
PRIMARY:
Average common shares outstanding 33,940 32,343 33,986 32,419
Dilutive effect of stock options 81 93 80 96
------- ------- ------- -------
Total average common shares 34,021 32,436 34,066 32,515
======= ======= ======= =======
Net income $29,269 $27,586 $84,039 $85,431
Provision for preferred dividends 12 12 36 39
------- ------- ------- -------
Net income applicable to common
stock $29,257 $27,574 $84,003 $85,392
======= ======= ======= =======
Net income per share of common
stock $.86 $.85 $2.47 $2.63
======= ======= ======= =======
FULLY DILUTED:
Average common shares outstanding 33,940 32,343 33,986 32,419
Dilutive effect of stock options 85 93 85 96
Conversion of preferred stock 103 110 104 113
------- ------- ------- -------
Total average common shares 34,128 32,546 34,175 32,628
======= ======= ======= =======
Net income $29,269 $27,586 $84,039 $85,431
======= ======= ======= =======
Net income per share of common
stock $.86 $.85 $2.46 $2.62
======= ======= ======= =======
18
<PAGE>
EXHIBIT 15
ERNST & YOUNG LLP
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 condensed consolidated balance sheets of
First Virginia Banks, Inc. and subsidiaries as of September 30, 1995 and
1994, the related condensed consolidated statements of income for the
three-month and nine-month periods ended September 30, 1995 and 1994, and
the related condensed consolidated statements of cash flows and
shareholders' equity for the nine-month periods ended September 30, 1995
and 1994. 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 condensed 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, 1994, 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 17, 1995, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
December 31, 1994, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been
derived.
/s/ Ernst & Young LLP
Ernst & Young LLP
Washington, D. C.
October 10, 1995
19
<PAGE>
EXHIBIT 15A
ERNST & YOUNG LLP
1225 Connecticut Avenue, N.W.
Washington, D.C. 20036
November 8, 1995
Board of Directors
First Virginia Banks, Inc.
We are aware of the incorporation by reference in the 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 and Registration Statement Number 33-
15360 on Form S-3 dated June 26, 1987 of our reports dated April 7, 1995,
July 7, 1995, and October 10, 1995 relating to the unaudited condensed
consolidated interim financial statements of First Virginia Banks, Inc.
and subsidiaries which are included in its Forms 10-Q for the quarters
ended March 31, 1995, June 30, 1995, and September 30, 1995.
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 LLP
Ernst & Young LLP
20
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<NAME> FIRST VIRGINIA BANKS, INC.
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