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, 1996
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
(or for such shorter period that the registrant was required to
file such reports), 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 30, 1996, there were 33,494,346 shares of common
stock outstanding.
This report contains a total of 20 pages.
1
<PAGE>
INDEX
Page
---------
PART I - Financial Information
Item 1. Financial Statements.
Consolidated Balance Sheets - March 31, 1996
and 1995 (unaudited) and December 31, 1995 3/ 4
Consolidated Statements of Income - Three months
ended March 31, 1996 and 1995 (unaudited) 5/ 6
Condensed Consolidated Statements of Cash
Flows - Three months ended March 31, 1996
and 1995 (unaudited) 7
Condensed Consolidated Statements of Shareholders'
Equity - Three months ended March 31, 1996
and 1995 (unaudited) 8
Notes to Condensed Consolidated
Financial Statements (unaudited) 8/11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11/15
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 LLP 18
Exhibit 15A - Letter of Acknowledgement from
Ernst & Young LLP, Independent Accountants 19
Exhibit 27 - Financial Data Schedule as of
March 31, 1996, and the three months
ended March 31, 1996 (This exhibit is being
filed as a separate document in this Form
10-Q, for the quarter ended March 31, 1996) 20
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
March 31 December 31 March 31
1996 1995 1995
---------- ---------- ----------
(Unaudited) (Unaudited)
(In thousands)
ASSETS
Cash and noninterest-bearing
deposits in banks $ 315,492 $ 397,858 $ 349,833
Money market investments 435,743 235,000 345,119
---------- ---------- ----------
Total cash and cash equivalents 751,235 632,858 694,952
---------- ---------- ----------
Mortgage loans held for sale 25,139 19,216 14,297
Investment securities - available for sale - 64,546 -
Investment securities - held to maturity
(market values of $2,019,931, $2,146,792
and $1,890,360) 2,022,033 2,128,220 1,916,601
Loans, net of unearned income 5,039,272 5,038,076 4,924,554
Deduct: Allowance for loan losses (57,751) (57,922) (57,289)
---------- ---------- ----------
Net loans 4,981,521 4,980,154 4,867,265
---------- ---------- ----------
Other earning assets 14,621 11,528 9,187
Premises and equipment 149,029 150,168 155,914
Intangible assets 93,688 95,271 83,078
Other assets 138,385 139,575 120,457
---------- ---------- ----------
Total Assets $8,175,651 $8,221,536 $7,861,751
========== ========== ==========
3
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CONSOLIDATED BALANCE SHEETS (Continued)
March 31 December 31 March 31
1996 1995 1995
---------- ---------- ----------
(Unaudited) (Unaudited)
(In thousands)
LIABILITIES
Deposits:
Noninterest-bearing $1,216,653 $1,235,396 $1,160,107
Interest-bearing:
Interest checking/savings plan 1,336,884 1,342,482 1,327,856
Money market accounts 713,262 710,114 718,709
Savings deposits 1,194,567 1,184,298 1,289,754
Certificates of deposit:
Consumer 2,234,788 2,264,793 1,993,920
Large denomination 311,464 319,024 265,557
---------- ---------- ----------
Total deposits 7,007,618 7,056,107 6,755,903
Interest, taxes and other liabilities 92,264 83,353 72,592
Short-term borrowings 199,999 209,719 206,603
Long-term indebtedness 2,433 2,710 3,484
---------- ---------- ----------
Total Liabilities 7,302,314 7,351,889 7,038,582
---------- ---------- ----------
SHAREHOLDERS' EQUITY
Preferred stock, $10 par value 686 695 735
Common stock, $1 par value 33,671 33,951 34,067
Capital surplus 96,138 107,112 111,516
Retained earnings 742,842 726,255 676,851
Net unrealized gain on securities
available for sale - 1,634 -
---------- ---------- ----------
Total Shareholders' Equity 873,337 869,647 823,169
---------- ---------- ----------
Total Liabilities and Shareholders' Equity $8,175,651 $8,221,536 $7,861,751
========== ========== ==========
See notes to condensed consolidated financial statements
4
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended
March 31
1996 1995
-------- --------
(In thousands, except per-share data)
Interest income:
Interest and fees on loans $109,235 $107,025
Interest on mortgage loans
held for sale 337 256
Income on investment securities-
available for sale 1,152 -
Income on investment
securities - held to maturity 30,107 28,337
Income on money market investments 4,271 2,633
Income on other earning assets 203 144
------- -------
Total interest income 145,305 138,395
------- -------
Interest expense:
Deposits 52,354 46,574
Short-term borrowings 2,253 2,339
Long-term indebtedness 62 89
------- -------
Total interest expense 54,669 49,002
------- -------
Net interest income 90,636 89,393
Provision for loan losses 2,290 332
------- -------
Net interest income after provision
for loan losses 88,346 89,061
------- -------
5
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CONSOLIDATED STATEMENTS OF INCOME (Continued) (Unaudited)
Three Months Ended
March 31
1996 1995
------- -------
(In thousands, except per-share data)
Net interest income after provision
for loan losses 88,346 89,061
------- -------
Noninterest income:
Service charges on deposit
accounts 9,665 9,519
Insurance premiums and
commissions 1,636 1,830
Credit card service charges
and fees 2,552 2,657
Trust services 1,757 1,669
Income from other customer
services 4,673 4,184
Securities gains before
an income tax provision
of $616 1,759 -
Other 1,386 579
------- -------
Total noninterest income 23,428 20,438
------- -------
Noninterest expense:
Salaries and employee benefits 38,996 37,845
Occupancy 5,944 5,376
Equipment 5,357 5,075
Telephone 1,425 1,390
Printing and supplies 1,809 1,447
Postage 1,459 1,392
Credit card processing fees 1,909 1,828
FDIC assessment 376 3,802
Amortization of intangibles 1,935 1,653
Other 9,277 8,970
------- -------
Total noninterest expense 68,487 68,778
------- -------
Income before income taxes 43,287 40,721
Provision for income taxes 14,904 13,523
------- -------
NET INCOME $28,383 $27,198
======= =======
Net income per share of common stock $.84 $.80
Average primary shares of common
stock outstanding 33,963 34,136
See notes to condensed consolidated financial statements
6
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
March 31
1996 1995
-------- --------
(In thousands)
Net cash provided by operating activities $ 24,531 $ 39,661
Investing activities:
Proceeds from the maturity of
held to maturity investment securities 198,104 238,300
Proceeds from the sale of
available for sale investment securities 64,682 -
Purchase of held to maturity investment securities (93,953) (69,967)
Net (increase) decrease in loans (3,657) 70,799
Net increase in other earning assets (3,093) (200)
Purchases of premises and equipment (2,294) (3,302)
Sales of premises and equipment 259 167
Other 15,441 11,556
-------- --------
Net cash provided by investing activities 175,489 247,353
-------- --------
Financing activities:
Net decrease in deposits (48,488) (59,942)
Net increase (decrease) in short-term borrowings (9,720) 27,194
Proceeds from long-term borrowing - -
Principal payments on long-term borrowings (277) (329)
Cash dividends - common, $.35 and $.33 per share (11,883) (10,051)
Cash dividends - preferred (12) (13)
Stock purchased and retired (11,347) -
Proceeds from issuance of common stock 84 337
-------- --------
Net cash used for financing activities (81,643) (42,804)
-------- --------
Net increase in cash and cash equivalents 118,377 244,210
Cash and cash equivalents at beginning of year 632,858 450,742
-------- --------
Cash and cash equivalents at end of period $751,235 $694,952
======== ========
See notes to condensed consolidated financial statements
7
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
Three Months Ended
March 31
1996 1995
-------- --------
(In thousands)
Balance at beginning of year $869,647 $806,888
Net income 28,383 27,198
Common stock purchased and retired (11,347) -
Decrease in unrealized gain - securities
available for sale (1,634) -
Issuance of common stock for the dividend reinvestment
plan, stock options and stock appreciation rights 84 337
-------- --------
885,133 834,423
-------- --------
Deduct dividends declared:
Preferred stock 11 12
Common stock, $.35 and $.33 per share 11,785 11,242
-------- --------
11,796 11,254
-------- --------
Balance at end of period $873,337 $823,169
======== ========
See notes to consolidated financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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 unaudited
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 1995 have been reclassified for
comparative purposes.
8
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited)
2. INVESTMENT SECURITIES
The following reflects the amortized cost of securities held to maturity
and the related approximate market values (in thousands):
March 31, 1996 March 31, 1995
Amortized Market Amortized Market
Cost Value Cost Value
---------- ---------- ---------- ----------
U.S. Government and
its agencies $1,833,572 $1,829,590 $1,656,527 $1,630,708
State and municipal obligations 186,414 188,250 256,792 256,343
Other 2,047 2,091 3,282 3,309
---------- ---------- ---------- ----------
$2,022,033 $2,019,931 $1,916,601 $1,890,360
========== ========== ========== ==========
3. LOANS
Loans consisted of (in thousands):
March 31
1996 1995
---------- ----------
Consumer:
Automobile installment $1,895,856 $1,702,183
Home equity, fixed and variable rate 1,055,896 1,165,582
Revolving credit plans,
including credit cards 199,316 181,247
Other 300,508 317,896
Real estate:
Construction and land development 102,515 125,083
Commercial mortgage 479,440 457,787
Residential mortgage 490,993 460,038
Other, including Industrial
Development Authority loans 68,915 62,260
Commercial 445,833 452,478
---------- ----------
Loans, net of unearned income
of $303,724 and $347,945 $5,039,272 $4,924,554
========== ==========
9
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited)
4. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses was (in thousands):
Three Months Ended
March 31
1996 1995
------- -------
Balance at beginning of period $57,922 $58,860
Provision charged to operating
expense 2,290 332
------- -------
60,212 59,192
Less:
Loans charged off, net of
recoveries of $986 and $914 2,461 1,903
------- -------
Balance at March 31 $57,751 $57,289
======= =======
Percentage of annualized net
charge-offs to average loans .20% .15%
Percentage of allowance for loan
losses to period-end loans 1.15 1.16
Percentage of nonperforming assets
to period-end loans .60 .60
5. 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
1996 1995
------------- -------------
Amount Percent Amount Percent
------- ----- ------- -----
Statutory rate $15,150 35.0% $14,252 35.0%
Nontaxable interest on
municipal obligations (955)(2.2) (1,297)(3.2)
Other items 709 1.6 568 1.4
------- ---- ------- ----
Effective rate $14,904 34.4% $13,523 33.2%
======= ==== ======= ====
10
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited)
6. 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 1996 1995 1995
--------- --------- -------- ----------- --------
A 5% 22,641 23,040 23,434
B 7% 5,990 6,000 9,100
C 7% 10,484 10,484 10,484
D 8% 29,495 29,996 30,483
------ ------ ------
68,610 69,520 73,501
====== ====== ======
7. COMMON STOCK
There are 60,000,000 shares of common stock, par value $1.00 per share,
authorized and 33,671,000, 33,951,000 and 34,067,000 shares were outstanding
at March 31, 1996, December 31, 1995, and March 31, 1995, respectively.
Options to purchase 316,190 shares of common stock were outstanding on March
31, 1996. A total of 618,058 shares of common stock were reserved at March
31, 1996: 99,768 shares for the conversion of preferred stock and 518,290
shares for stock options and stock appreciation rights.
8. 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 $11,000 in 1996 and
$12,000 in 1995, are based on 33,963,000 and 34,136,000 average shares,
respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net income for the first quarter of 1996 increased 4% to $28,383,000
compared to the $27,198,000 earned in the first quarter of 1995. Earnings per
share increased at a greater rate of 5% to $.84 compared to the $.80 per
share earned in 1995 due to a lower volume of shares outstanding. The
corporation repurchased 282,700 shares of common stock during the quarter and
has purchased 2.1 million shares since the inception of the program in
early 1994.
11
Total assets grew 4% leaving the return on average assets relatively
unchanged at 1.40% - a level achieved by very few financial institutions and
none as consistently as First Virginia. The return on equity equaled 13.00%
in the first quarter compared to the 13.35% earned in the first quarter of
1995. First Virginia has one of the best equity to asset ratios of any of the
largest 100 financial institutions in the country. At the end of the first
quarter, the equity to asset ratio was 10.68% compared to 10.47% at the end
of the 1995 first quarter.
Average loans increased 2% compared to the prior year's quarter and were
up at an annualized rate of 2% compared to the fourth quarter of 1995.
Economic activity in the corporation's market area began to improve slightly
in the first quarter but still lagged the national economy. In the past two
months, there has been a surge in good, quality commercial loan requests and
there is an increasing volume of commercial loans in the pipeline. Despite a
harsh winter, where snow kept consumers away from automobile dealer showrooms
in early January, there has been a significant increase in indirect
automobile loan volume. The addition of several new offices to the
corporation's indirect automobile loan subsidiary, and a more attractive loan
product, resulted in a 40% increase in automobile loan production compared to
the first quarter of 1995. Home equity lending remained weak, however, due to
consumer concerns over continued employment prospects and a reluctance to
incur major economic commitments at this time.
Average deposits increased 4% over the 1995 first quarter. Demand deposits
increased 6%, and the shift of funds out of lower-yielding savings and money
market accounts and into certificates of deposit slowed considerably. Average
deposits declined slightly compared to the fourth quarter of 1995 but
followed normal seasonal patterns. By the end of the quarter, deposits were
increasing rapidly in anticipation of strong growth that normally occurs in
the second quarter.
The net interest margin declined 22 basis points to 4.90% compared to the
prior year's first quarter but was up 5 basis points compared to the fourth
quarter of 1995. The cost of funds increased 20 basis points compared to the
1995 first quarter, while the yield on earning assets dropped 10 basis
points. Compared to the fourth quarter of 1995 however, the cost of funds
declined 12 basis points, as the decline in interest rates began to impact
the cost of funds to a greater extent than the yield on earning assets, which
declined only 6 basis points.
Asset quality remained excellent as the ratio of nonperforming assets to
total loans remained at .60% compared to the first quarter of 1995. Both
nonaccruing loans and foreclosed real estate declined compared to 1995;
however, restructured loans increased $1.6 million due primarily to a single
loan. The provision for loan loss expense increased $2.0 million due to a
combination of increased loan volume, an increase in net charge-offs and the
maintenance of the allowance for loan losses at 1.15%. In the prior year's
first quarter, the provision benefited from a 2 basis-point decline in the
allowance. Net charge-offs increased $.6 million as the annualized charge-off
ratio increased 5 basis points to .20% compared to the first quarter of 1995.
Loans past due 90 days or more increased 5 basis points to .15%. After rising
gradually throughout 1995, loans past due 30 days or more declined 5 basis
points to .64% compared to the end of 1995.
12
A summary of nonperforming and delinquent loans is as follows:
1996 1995
------- -------
(Dollars in thousands)
Nonaccruing loans $16,751 $17,681
Restructured loans 5,789 4,202
Foreclosed real estate 7,537 7,880
------- -------
Total $30,077 $29,763
======= =======
Percentage of total loans .60% .60%
======= =======
Loans past due 90 days or more $ 7,385 $ 4,803
======= =======
Percentage of total loans .15% .10%
======= =======
Noninterest income increased 15% compared to the prior year's first quarter.
During the quarter, the corporation sold its entire portfolio of available
for sale investment securities to take advantage of certain tax benefits.
Excluding the gain on the sale of $1.8 million, noninterest income increased
6%. Income from other customer services increased 12% as a result of a 32%
increase in automated teller machine income, as well as the growing success
of the corporation's automobile leasing product, which was introduced at the
end of the prior year's first quarter. Trust Services income increased 5% as
the corporation's efforts to increase income from this source continued to
show success. Income from other sources advanced 139% caused by an increase
in mortgage loan origination activities as low interest rates sparked an
increase in consumer home loan refinancing and an increase in new home
purchases.
Noninterest expenses remained under tight control and actually declined
slightly during the first quarter. FDIC expense declined $3.4 million as the
FDIC fund became fully funded and premiums to banks were virtually eliminated
with the exception of premiums on deposits previously acquired from savings
and loans. Salaries and employee benefits increased only 3% - approximately
the same as the inflation rate. The number of employees declined from both
the end of the first and fourth quarters of 1995 as the corporation continues
to achieve benefits from the consolidation of prior year's acquisitions into
the First Virginia organization. As a result of the increase in income and
decline in expenses, the corporation's efficiency ratio improved to 58.5%
compared to 60.2% in the prior year's first quarter.
13
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AVERAGE BALANCES AND INTEREST RATES (Unaudited)
(Dollar amounts in thousands)
Three Months Ended March 31
1996
------------------------------
Interest
Average Income/
Balance Expense Rate
---------- --------- -------
Interest-earning assets:
Investment securities-available for sale:
U.S. Government $ 61,769 1,152 7.50%
Investment securities-held to maturity:
U.S. Government & its agencies 1,868,599 27,717 5.97
State and municipal obligations
(Fully taxable-equivalent basis) 191,026 3,218 6.74
Other (Fully taxable-equivalent basis) 2,048 39 7.65
---------- --------
Total investment securities 2,061,673 30,974 6.03
---------- --------
Loans, net of unearned income:
Installment 3,335,071 72,452 8.69
Real estate 946,638 20,769 8.78
Other (Fully taxable-equivalent basis) 739,702 16,589 8.98
---------- --------
Total loans 5,021,411 109,810 8.78
---------- --------
Mortgage loans held for sale 16,964 337 7.95
Money market investments 319,373 4,271 5.38
Other earning assets 12,439 204 6.57
---------- --------
Total earning assets and income $7,493,629 146,748 7.83
========== --------
Interest-bearing liabilities:
Interest checking/savings plans $1,324,958 6,237 1.89
Money market accounts 716,017 5,397 3.03
Savings deposits 1,180,863 6,887 2.35
Certificates of deposit:
Consumer 2,255,566 29,816 5.32
Large denomination 314,140 4,017 5.14
---------- --------
Total interest-bearing deposits 5,791,544 52,354 3.64
Short-term borrowings 194,907 2,253 4.65
Long-term indebtedness 2,609 62 9.53
---------- --------
Total interest-bearing liabilities
and interest expense $5,989,060 54,669 3.67
========== --------
Net interest income and net interest margin $ 92,079 4.90%
========
Other average balances:
Demand deposits $1,188,001
Common shareholders' equity 872,972
Total shareholders' equity 873,662
Total assets 8,130,426
14
AVERAGE BALANCES AND INTEREST RATES (Unaudited)
(Dollar amounts in thousands)
Three Months Ended March 31
1995
------------------------------
Interest
Average Income/
Balance Expense Rate
---------- --------- -------
Interest-earning assets:
Investment securities-available for sale:
U.S. Government $ - $ - - %
Investment securities-held to maturity:
U.S. Government & its agencies 1,686,895 24,904 5.98
State and municipal obligations
(Fully taxable-equivalent basis) 263,758 4,695 7.12
Other (Fully taxable-equivalent basis) 8,337 131 6.29
---------- --------
Total investment securities 1,958,990 29,730 6.27
---------- --------
Loans, net of unearned income:
Installment 3,283,629 69,864 8.52
Real estate 908,376 20,187 7.89
Other (Fully taxable-equivalent basis) 744,246 17,568 9.54
---------- --------
Total loans 4,936,251 107,619 8.76
---------- --------
Mortgage loans held for sale 12,021 256 8.52
Money market investments 181,047 2,633 5.90
Other earning assets 9,024 160 7.07
---------- --------
Total earning assets and income $7,097,333 140,398 7.93
========== --------
Interest-bearing liabilities:
Interest checking/savings plan $1,340,525 7,253 2.19
Money market accounts 740,364 5,694 3.12
Savings deposits 1,325,904 9,056 2.77
Certificates of deposit:
Consumer 1,901,997 21,613 4.61
Large denomination 246,302 2,958 4.87
---------- --------
Total interest-bearing deposits 5,555,092 46,574 3.40
Short-term borrowings 188,500 2,339 5.03
Long-term indebtedness 3,658 89 9.72
---------- --------
Total interest-bearing liabilities
and interest expense $5,747,250 49,002 3.47
========== --------
Net interest income and net interest margin $ 91,396 5.12%
========
Other average balances:
Demand deposits $1,125,703
Common shareholders' equity 814,176
Total shareholders' equity 814,917
Total assets 7,742,540
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 LLP (Page 18)
Exhibit 15A - Letter of Acknowledgement from
Ernst & Young LLP, Independent Accountants (Page 19)
Exhibit 27 - Financial Data Schedule (This exhibit is being filed
as a separate document in this Form 10-Q, for the quarter
ended March 31, 1996 (Page 20)
b) A Form 8-K was not required to be filed during the quarter
ended March 31, 1996.
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 10, 1996 ___________________________
Richard F. Bowman,
Senior Vice President,
Treasurer and Chief
Financial Officer
16
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EXHIBIT 11
FIRST VIRGINIA BANKS, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
Three Months Ended
March 31
1996 1995
------- -------
(In thousands, except per-share data)
PRIMARY:
Average common shares outstanding 33,884 34,057
Dilutive effect of stock options 79 79
------- -------
Total average common shares 33,963 34,136
======= =======
Net income $28,383 $27,198
Provision for preferred dividends 11 12
------- -------
Net income applicable to common
stock $28,372 $27,186
======= =======
Net income per share of common
stock $.84 $.80
======= =======
FULLY DILUTED:
Average common shares outstanding 33,884 34,057
Dilutive effect of stock options 81 82
Conversion of preferred stock 100 107
------- -------
Total average common shares 34,065 34,246
======= =======
Net income $28,383 $27,198
======= =======
Net income per share of common
stock $.83 $.79
======= =======
17
<PAGE>
EXHIBIT 15
Independent Accountants' Review Report
Board of Directors
First Virginia Banks, Inc.
We have reviewed the accompanying consolidated balance sheets of First
Virginia Banks, Inc. as of March 31, 1996 and 1995, the related
consolidated statements of income, and the related condensed consolidated
statements of cash flows and shareholders' equity for the three-month
periods ended March 31, 1996 and 1995. 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. as of December 31, 1995, and the related consolidated
statements of income, cash flows, and shareholders' equity for the year
then ended (not presented herein) and in our report dated January 17,
1996, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 1995, 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.
April 9, 1996
18
<PAGE>
EXHIBIT 15A
ERNST & YOUNG LLP
1225 Connecticut Avenue, N.W.
Washington, D.C. 20036
May 10, 1996
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 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 report dated April 9, 1996, relating to the
unaudited condensed consolidated interim financial statements of First
Virginia Banks, Inc., which are included in its Form 10-Q for the quarter
ended March 31, 1996.
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
19
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