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
June 30, 1997
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 July 31, 1997, there were 34,571,184 shares of common
stock outstanding.
This report contains a total of 29 pages.
1
<PAGE>
INDEX
Page
---------
PART I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - June 30,
1997 and 1996, (Unaudited), and December 31, 1996 3/ 4
Condensed Consolidated Statements of Income - Three
months and six months ended June 30, 1997
and 1996 (Unaudited) 5/ 6
Condensed Consolidated Statements of Cash Flows - Six
months ended June 30, 1997 and 1996 (Unaudited) 7
Condensed Consolidated Statements of Shareholders'
Equity - Six months ended June 30, 1997
and 1996 (Unaudited) 8
Notes to Condensed Consolidated Financial
Statements (Unaudited) 8/12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13/19
PART II - Other Information
Item 4. Submission of Matters to a Vote of Security
Holders 20/23
Item 6. Exhibits and Reports on Form 8-K
Signature 24
Exhibit 11 - Statement re: Computation of
Per Share Earnings 25
Exhibit 12 - Statement re: Computation of Ratios 26
Exhibit 15 - Independent Accountants' Review
Report from Ernst & Young LLP 27
Exhibit 15A - Letter of Acknowledgement from
Ernst & Young LLP, Independent Accountants 28
Exhibit 27 - Financial Data Schedule as of June 30,
1997 and the six months ended June 30, 1997.
(This exhibit is being filed as a separate
document in this form 10-Q, for the quarter
ended June 30, 1997.) 29
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 December 31 June 30
1997 1996 1996
---------- ---------- ----------
(Unaudited) (Unaudited)
(In thousands)
ASSETS
Cash and noninterest-bearing
deposits in banks $ 402,355 $ 378,171 $ 309,227
Money market investments 225,238 323,620 266,494
---------- ---------- ----------
Total cash and cash equivalents 627,593 701,791 575,721
---------- ---------- ----------
Mortgage loans held for sale 14,126 12,771 14,596
Investment securities - held to maturity
(market values of $1,957,102, $1,823,404
and $1,981,832 1,955,584 1,820,949 1,993,645
Loans, net of unearned income 5,994,091 5,364,787 5,190,411
Deduct: Allowance for loan losses (68,634) (62,761) (59,974)
---------- ---------- ----------
Net loans 5,925,457 5,302,026 5,130,437
---------- ---------- ----------
Other earning assets 23,443 19,672 14,626
Premises and equipment 166,361 148,187 148,637
Intangible assets 181,900 94,381 92,215
Other assets 160,465 136,279 143,112
---------- ---------- ----------
Total Assets $9,054,929 $8,236,056 $8,112,989
========== ========== ==========
3
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
June 30 December 31 June 30
1997 1996 1996
---------- ---------- ----------
(Unaudited) (Unaudited)
(In thousands)
LIABILITIES
Deposits:
Noninterest-bearing $1,452,787 $1,303,950 $1,251,954
Interest-bearing:
Interest checking/savings plan 1,366,223 1,308,539 1,295,735
Money market accounts 723,677 712,550 711,233
Savings deposits 1,197,673 1,111,677 1,174,932
Certificates of deposit:
Consumer 2,526,732 2,255,803 2,212,860
Large denomination 408,804 350,131 310,724
---------- ---------- ----------
Total deposits 7,675,896 7,042,650 6,957,438
Interest, taxes and other liabilities 93,916 83,765 95,059
Short-term borrowings 252,029 234,488 196,726
Long-term indebtedness 3,355 3,876 2,153
---------- ---------- ----------
Total Liabilities 8,025,196 7,364,779 7,251,376
---------- ---------- ----------
SHAREHOLDERS' EQUITY
Preferred stock, $10 par value 637 647 675
Common stock, $1 par value 35,318 32,408 32,971
Capital surplus 164,095 43,531 68,605
Retained earnings 829,683 794,691 759,362
---------- ---------- ----------
Total Shareholders' Equity 1,029,733 871,277 861,613
---------- ---------- ----------
Total Liabilities and Shareholders' Equity $9,054,929 $8,236,056 $8,112,989
========== ========== ==========
See notes to condensed consolidated financial statements.
4
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
-------- -------- -------- --------
(In thousands, except per share data)
Interest income:
Interest and fees on loans $122,607 $111,327 $236,904 $220,562
Interest on mortgage loans
held for sale 302 344 468 681
Income from investment securities-
available for sale - - - 1,152
Income from investment
securities - held to maturity 29,116 29,191 56,180 59,298
Income from money
market investments 3,968 5,278 8,674 9,549
Income from other earning assets 348 239 676 442
-------- -------- -------- --------
Total interest income 156,341 146,379 302,902 291,684
-------- -------- -------- --------
Interest expense:
Deposits 51,638 50,022 100,612 102,376
Short-term borrowings 2,944 2,368 5,534 4,621
Long-term indebtedness 65 57 108 119
-------- -------- -------- --------
Total interest expense 54,647 52,447 106,254 107,116
-------- -------- -------- --------
Net interest income 101,694 93,932 196,648 184,568
Provision for loan losses 5,248 5,861 8,590 8,151
-------- -------- -------- --------
Net interest income after provision
for loan losses 96,446 88,071 188,058 176,417
-------- -------- -------- --------
5
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Continued) (Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
-------- -------- -------- --------
(In thousands, except per share data)
Net interest income after provision
for loan losses 96,446 88,071 188,058 176,417
-------- -------- -------- --------
Noninterest income:
Service charges on deposit
accounts 10,369 9,931 20,258 19,596
Insurance premiums and
commissions 1,720 1,659 3,287 3,295
Credit card service charges
and fees 2,988 2,971 5,621 5,523
Trust services 2,306 1,947 4,554 3,704
Electronic banking service fees 2,639 1,347 4,989 2,634
Income from other customer
services 3,714 3,771 7,177 7,157
Securities gains before income
tax provision of $12, $0,
$9 and $616 36 - 27 1,759
Other 1,235 3,512 2,327 4,898
-------- -------- -------- --------
Total noninterest income 25,007 25,138 48,240 48,566
-------- -------- -------- --------
Noninterest expense:
Salaries and employee benefits 41,321 38,963 80,998 77,959
Occupancy 5,947 5,667 11,755 11,611
Equipment 6,307 5,769 12,143 11,126
Advertising 1,961 1,546 3,699 3,636
Printing and supplies 1,707 1,748 3,348 3,557
Credit card processing fees 2,058 2,101 3,987 4,010
FDIC assessment 277 251 534 627
Amortization of intangibles 2,562 1,947 4,687 3,882
Other 11,220 11,838 21,950 21,909
-------- -------- -------- --------
Total noninterest expense 73,360 69,830 143,101 138,317
-------- -------- -------- --------
Income before income taxes 48,093 43,379 93,197 86,666
Provision for income taxes 16,740 14,805 32,447 29,709
-------- -------- -------- --------
NET INCOME $ 31,353 $ 28,574 $ 60,750 $ 56,957
======== ======== ======== ========
Net income per share of common stock $.94 $.85 $1.85 $1.69
Average primary shares of common
stock outstanding 33,350 33,554 32,900 33,759
See notes to condensed consolidated financial statements.
6
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
June 30
1997 1996
-------- --------
(In thousands)
Net cash provided by operating activities $ 70,178 $ 72,207
-------- --------
Investing activities:
Proceeds from the maturity of
held to maturity securities 390,202 459,690
Proceeds from the sale of
available for sale securities - 64,682
Purchase of held to maturity securities (361,657) (328,983)
Net increase in loans (127,608) (158,434)
Net increase in other earning assets (295) (3,098)
Purchases of premises and equipment (9,339) (5,319)
Sales of premises and equipment 1,435 1,069
Intangible assets acquired (199) (896)
Acquisition of banks, net of cash acquired 45,374 -
Other (5,341) 17,363
-------- --------
Net cash (used for)
provided by investing activities (67,428) 46,074
-------- --------
Financing activities:
Net decrease in deposits (20,255) (98,669)
Net increase (decrease) in short-term borrowings 7,369 (12,993)
Principal payments on long-term borrowings (521) (557)
Cash dividends - common, $.75 and $.70 per share (24,228) (23,668)
Cash dividends - preferred (21) (23)
Stock purchased and retired (39,640) (39,688)
Proceeds from issuance of common stock 348 180
-------- --------
Net cash used for financing activities (76,948) (175,418)
-------- --------
Net decrease in cash and
cash equivalents (74,198) (57,137)
Cash and cash equivalents at beginning of year 701,791 632,858
-------- --------
Cash and cash equivalents at end of period $627,593 $575,721
======== ========
See notes to condensed consolidated financial statements.
7
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
Six Months Ended
June 30
1997 1996
---------- --------
(In thousands)
Balance at beginning of year $871,277 $869,647
Increase attributable to an acquired bank 162,755 -
Net income 60,750 56,957
Common stock purchased and retired (39,640) (39,688)
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 348 180
---------- --------
1,055,490 885,462
---------- --------
Deduct dividends declared:
Preferred stock 21 23
Common stock, $.76 1/2 and $.71 per share 25,736 23,826
---------- --------
25,757 23,849
---------- --------
Balance at end of period $1,029,733 $861,613
========== ========
See notes to condensed 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 1996 have been reclassified for
comparative purposes.
2. ACQUISITIONS
On May 24, 1997, the acquisition of Premier Bankshares Corporation by the
corporation was consummated. Premier Bankshares Corporation was the bank
holding company for Premier Bank-South, N.A. in Wytheville, Virginia; Premier
Bank-Central, N.A. in Honaker, Virginia and Premier Bank, N.A. in Tazewell,
Virginia. These banks became wholly owned subsidiary banks of the corporation
as a result of the acquisition. Shares of the corporation's common stock
totaling 3.624 million were issued and were valued at $44.94 per share. The
acquisition was accounted for using the purchase method of accounting.
8
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited)
The results of operations of the acquisition are included in the
consolidated statements of income from the date of acquisition through June 30,
1997. Periods prior to the date of acquisition are not included in the
consolidated statements of income.
The unaudited pro forma information presented in the following table has
been prepared based on the historical results of the corporation combined with
Premier Bankshares Corporation. The information has been combined to present
the results of operations as if the acquisition had occurred at the beginning
of 1996. The pro forma results are not necessarily indicative of the results
that would have actually been obtained if the acquisition had been consummated
in the past nor are they indicative of future results.
Six Months Ended
June 30
1997 1996
-------- --------
(In thousands, except)
per share data)
Total interest income $325,149 $320,660
Total interest expense 115,897 120,323
Provision for loan losses 8,800 8,301
Noninterest income 49,918 50,531
Noninterest expense 153,865 150,758
Provision for income taxes 34,109 31,469
-------- --------
Net income $ 62,396 $ 60,340
======== ========
Earnings per share $ 1.75 $ 1.61
Average primary shares of common stock outstanding 35,589 37,383
3. INVESTMENT SECURITIES
The following reflects the amortized cost of securities held to maturity
and the related approximate market values (in thousands):
June 30, 1997 June 30, 1996
Amortized Market Amortized Market
Cost Value Cost Value
---------- ---------- ---------- ----------
U.S. Government and
its agencies $1,769,426 $1,768,051 $1,825,682 $1,812,823
State and municipal obligations 184,905 187,000 166,914 167,927
Other 1,253 2,051 1,049 1,082
---------- ---------- ---------- ----------
$1,955,584 $1,957,102 $1,993,645 $1,981,832
========== ========== ========== ==========
9
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited)
4. LOANS
Loans consisted of (in thousands):
June 30
1997 1996
---------- ----------
Consumer:
Automobile installment $2,292,543 $2,001,329
Home equity, fixed- and variable-rate 944,804 1,029,423
Revolving credit plans,
including credit cards 203,905 201,567
Other 412,912 321,245
Real estate:
Construction and land development 131,066 111,007
Commercial mortgage 592,593 511,495
Residential mortgage 731,213 494,070
Other, including Industrial
Development Authority loans 95,917 79,471
Commercial 589,138 440,804
---------- ----------
Loans, net of unearned income
of $212,182 and $282,676 $5,994,091 $5,190,411
========== ==========
5. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses was (dollars in thousands):
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
------- ------- ------- -------
Balance at beginning of period $62,468 $57,751 $62,761 $57,922
Increase attributable to
an acquired bank 5,551 - 5,551 -
Provision charged to expense 5,248 5,861 8,590 8,151
------- ------- ------- -------
73,267 63,612 76,902 66,073
Less:
Loans charged off, net of
recoveries of $931, $893,
$1,784 and $1,879 4,633 3,638 8,268 6,099
------- ------- ------- -------
Balance at June 30 $68,634 $59,974 $68,634 $59,974
======= ======= ======= =======
Percentage of net charge-offs to
average loans .33% .28% .30% .24%
Percentage of allowance for loan
losses to period-end loans 1.15 1.16
Percentage of nonperforming assets
to period-end loans .44 .54
10
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited)
6. FEDERAL INCOME TAX
The reconcilement of income tax computed at the federal statutory tax
rates to the provision for income tax was as follows (dollars in thousands):
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
------------ ------------ ------------ ------------
$ % $ % $ % $ %
------- ---- ------- ---- ------- ---- ------- ----
Statutory rate $16,832 35.0% $15,183 35.0% $32,619 35.0% $30,333 35.0%
Nontaxable interest on
municipal obligations (1,005)(2.1) (962)(2.2) (1,878)(2.0) (1,917)(2.2)
Other items 913 1.9 584 1.3 1,706 1.8 1,293 1.5
------- ---- ------- ---- ------- ---- ------- ----
Effective rate $16,740 34.8% $14,805 34.1% $32,447 34.8% $29,709 34.3%
======= ==== ======= ==== ======= ==== ======= ====
7. 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:
June 30 December 31 June 30
Series Dividends 1997 1996 1996
--------- --------- -------- ----------- --------
A 5% 21,205 21,511 22,331
B 7% 5,290 5,750 5,990
C 7% 9,836 9,836 9,968
D 8% 27,391 27,591 29,204
------ ------ ------
63,722 64,688 67,493
====== ====== ======
8. COMMON STOCK
There are 60,000,000 shares of common stock, par value $1.00 per share,
authorized and 35,318,000, 32,408,000 and 32,971,000 shares were outstanding
at June 30, 1997, December 31, 1996 and June 30, 1996, respectively. Options
to purchase 322,488 shares of common stock were outstanding on June 30, 1997.
A total of 581,469 shares of common stock were reserved at June 30, 1997:
92,631 shares for the conversion of preferred stock and 488,838 shares for
stock options and stock appreciation rights.
An additional 17,947,935 shares of common stock have been reserved for
the 3 for 2 stock split declared by the Board of Directors with the record
date at the close of business on August 13, 1997, and payable on September 3,
1997: 17,658,907 for the current outstanding common stock and 289,028 for the
conversion of preferred stock, stock options and stock appreciation rights.
In 1988, the corporation adopted a shareholder rights plan, which under
certain circumstances will give the holders of the corporation's common stock
the right to purchase shares of its preferred stock or other securities. The
11<PAGE>
rights will become exercisable if a person or entity should acquire 20% or
more of the corporation's voting stock, unless it is acquired pursuant to an
offer for all outstanding shares of common stock at a price and on terms
determined by the Board of Directors to be adequate and in the best interests
of the corporation and its shareholders.
If the rights become exercisable, the holder of each share of common
stock, except the person or entity acquiring 20% or more of the voting stock,
will have the right to purchase for $90 the number of one one-hundredths of a
share of preferred stock or equivalent security equal to $180, divided by the
then market value of one share of common stock. In the event of a merger
involving an exchange of common stock, the holder of each right, except the
acquiring person or entity, will also have the right to purchase for $90 the
number of shares of common stock of the acquiring company having a then
market value of $180.
The corporation may redeem the rights for $.01 per right, at its option,
at any time prior to the date they become exercisable. The rights expire on
August 8, 1998.
9. EARNINGS PER SHARE
Earnings per share of common stock for the six months ended
June 30, after giving effect to dividends on preferred stock of $21,000 in
1997 and $23,000 in 1996, are based on 32,900,000 and 33,759,000 average
shares, respectively.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net income for the second quarter increased 10% to a record $31.353
million compared to the $28.574 million earned in the prior year's second
quarter. Earnings per share increased at the slightly greater rate of 11% to
$.94 per share compared to $.85 per share in the second quarter of 1996 due
to a lower number of average shares outstanding as a consequence of the
corporation's share repurchase program. The return on average assets for the
quarter increased seven basis points to 1.47% compared to 1.40% in the 1996
second quarter, and the return on average shareholders' equity increased 60
basis points to 13.74%.
For the first six months, net income of $60.750 million, also a record,
was up 7% compared to the $56.957 million earned in the first six months of
1996. Because of a lower number of average outstanding shares, earnings per
share increased at a greater rate of 9% to $1.85 per share compared to the
previous year's $1.69. The return on average assets for the first six months
rose five basis points to 1.45% compared to the first half of 1996, while the
13.54% return on average shareholders' equity increased 47 basis points from
the 13.07% earned in 1996.
On May 24, 1997, the corporation completed the acquisition of Premier
Bankshares Corporation (Premier), which added 36 branches and approximately
$750 million in assets. As a consequence, First Virginia's total assets
increased 12% to an historic high of $9.055 billion and shareholders' equity
surpassed the one billion dollar mark for the first time. This acquisition
was recorded using the purchase method of accounting, and the results of
operations include approximately $879 thousand in net income for the 38 days
in which Premier was a part of First Virginia. In connection with this
acquisition, First Virginia issued 3.624 million shares and recorded
intangible assets totaling $80.985 million.
Loan demand strengthened from the first quarter and, excluding $510
million in loans acquired from Premier, total loans increased 6% over the
prior year. Automobile loan volume led the growth in loans, fueled by the
success of the loan production offices established in recent years. A new
office in Nashville, Tennessee, was established and began originating loans
in the second quarter. Commercial loan demand was also strong as average
outstanding loans in this area expanded 14% compared to the prior year's
second quarter. Home equity loans continued to be weak and declined slightly
from the end of the previous quarter.
Total deposits increased 10% to $7.676 billion at June 30, 1997, or 1%
excluding the $654 million in deposits acquired from Premier. Alternative
investment vehicles such as stocks and mutual funds continue to place
pressure on the entire banking industry to achieve deposit growth. In
addition, the mix of deposits has been slowly shifting over the past several
years to relatively higher yielding categories such as certificates of
deposit, which now comprise 38% of total deposits compared to 36% of deposits
at June 30, 1996, and 35% of deposits at June 30, 1995.
13
<PAGE>
The net interest margin rose 19 basis points to 5.23% in the second
quarter compared to the prior year's second quarter of 5.04%. Contributing
to the rise was an improvement in asset yields of 18 basis points to 8.02%,
while the stability of rates over the past two years meant the cost of funds
was unchanged. The improvement in asset yields was due to a more favorable
asset mix with relatively higher yielding loans comprising 71.4% of earning
assets compared to 67.8% in the prior year's second quarter. Yields on
investment securities rose 14 basis points, caused primarily by the maturity
of lower yielding securities that were reinvested at higher yields.
Asset quality remains excellent as nonperforming assets declined 7% from
a year ago. Total nonperforming assets at June 30, 1997, were at a record
low of .44% of outstanding loans, or $26.324 million compared to .54% and
$28.203 million at June 30, 1996. Annualized net charge-offs increased five
basis points in the second quarter to .33% compared to the prior year's
second quarter, and for the first six months net charge-offs were .30%, up
six basis points compared to the first half of 1996. The provision for loan
losses declined 10% to $5.248 million compared to the prior year's second
quarter that had included a large provision for a commercial loan. At June
30, 1997, the allowance for loan losses equaled 1.15% of outstanding loans,
down one basis point from the prior year as a result of the lower level in
the allowance maintained by Premier. Loans past due 90 days or more have
been increasing gradually over the past year and were up $5.137 million to
$12.213 million compared to June 30, 1996, and represented .20% of
outstanding loans.
A summary of nonperforming and delinquent loans is as follows:
1997 1996
------- -------
(Dollars in thousands)
Nonaccruing loans $15,781 $15,493
Restructured loans 4,968 5,862
Foreclosed real estate 5,575 6,848
------- -------
Total $26,324 $28,203
======= =======
Percentage of total loans .44% .54%
======= =======
Loans past due 90 days or more $12,213 $ 7,075
======= =======
Percentage of total loans .20% .14%
======= =======
In spite of a slight decline to $25.007 million, noninterest income
increased 6%, excluding the gain on sale of mortgage servicing rights of $1.5
million in the prior year's second quarter. First Virginia has followed a
normal practice of selling a package of mortgage servicing rights once a year
and anticipates making such a sale in the third quarter of 1997. Income from
trust services was up 18% in the second quarter and 23% for the first six
months while income from electronic banking services was up 96% for the
second quarter.
14
<PAGE>
The corporation continues to control expenses tightly as noninterest
expenses, excluding the expenses of Premier, were up only 1% for the second
quarter and 2% for the first six months. As a consequence of the lesser rate
of increase in noninterest expenses compared to noninterest income, the
efficiency ratio improved further to a new low of 55.4% in the second quarter
compared to the 56.4% recorded in the prior year's second quarter.
Average shareholders' equity increased 5% to $912.709 million compared
to the $869.872 million in the prior year's second quarter. During the
second quarter, the corporation repurchased 111,100 shares in connection with
the corporation's share repurchase program. As a consequence of the
acquisition of Premier, the corporation issued 3.624 million shares and added
$162.755 million to outstanding equity. At June 30, 1997, the ratio of
equity to total assets was 11.37% compared to 10.62% at June 30, 1996. The
Tier 1 leverage ratio, which excludes intangible assets, was unchanged at
9.59% at the end of both the second quarters of 1997 and 1996.
15
<PAGE>
AVERAGE BALANCES AND INTEREST RATES (Unaudited)
(Dollar amounts in thousands)
Three Months Ended June 30
1997
------------------------------
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 1,770,853 27,204 6.16
State and municipal obligations
(Fully taxable-equivalent basis) 147,981 2,576 6.96
Other (Fully taxable-equivalent basis) 1,088 32 11.88
---------- --------
Total investment securities 1,919,922 29,812 6.15
---------- --------
Loans, net of unearned income:
Installment 3,655,722 79,867 8.76
Real estate 1,095,916 24,073 8.79
Other (Fully taxable-equivalent basis) 858,868 19,417 9.03
---------- --------
Total loans 5,610,506 123,357 8.82
---------- --------
Mortgage loans held for sale 13,209 302 9.16
Money market investments 292,726 3,968 5.44
Other earning assets 21,357 348 6.53
---------- --------
Total earning assets and income $7,857,720 157,787 8.02
========== --------
Interest-bearing liabilities:
Interest checking/savings plan $1,327,813 5,832 1.76
Money market accounts 724,151 5,341 2.96
Savings deposits 1,149,710 6,518 2.27
Certificates of deposit:
Consumer 2,366,692 28,982 4.92
Large denomination 369,737 4,965 5.39
---------- --------
Total interest-bearing deposits 5,938,103 51,638 3.49
Short-term borrowings 250,576 2,943 4.71
Long-term indebtedness 3,512 65 7.46
---------- --------
Total interest-bearing liabilities
and interest expense $6,192,191 54,646 3.54
========== --------
Net interest income and net interest margin $103,141 5.23%
========
Other average balances:
Demand deposits $1,340,773
Common shareholders' equity 912,067
Total shareholders' equity 912,709
Total assets 8,532,192
16
<PAGE>
AVERAGE BALANCES AND INTEREST RATES (Continued) (Unaudited)
(Dollar amounts in thousands)
Three Months Ended June 30
1996
------------------------------
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 1,813,048 26,964 5.98
State and municipal obligations
(Fully taxable-equivalent basis) 176,555 2,997 6.79
Other (Fully taxable-equivalent basis) 1,894 37 7.82
---------- --------
Total investment securities 1,991,497 29,998 6.01
---------- --------
Loans, net of unearned income:
Installment 3,400,558 74,036 8.76
Real estate 952,040 20,980 8.81
Other (Fully taxable-equivalent basis) 755,933 16,890 8.95
---------- --------
Total loans 5,108,531 111,906 8.79
---------- --------
Mortgage loans held for sale 17,359 344 7.92
Money market investments 402,757 5,278 5.27
Other earning assets 14,626 239 6.54
---------- --------
Total earning assets and income $7,534,770 147,765 7.84
========== --------
Interest-bearing liabilities:
Interest checking/savings plan $1,322,190 6,068 1.85
Money market accounts 718,510 5,322 2.98
Savings deposits 1,181,491 6,659 2.27
Certificates of deposit:
Consumer 2,219,898 28,111 5.08
Large denomination 310,388 3,862 5.00
---------- --------
Total interest-bearing deposits 5,752,477 50,022 3.50
Short-term borrowings 210,660 2,368 4.52
Long-term indebtedness 2,326 57 9.83
---------- --------
Total interest-bearing liabilities
and interest expense $5,965,463 52,447 3.54
========== --------
Net interest income and net interest margin $ 95,318 5.04%
========
Other average balances:
Demand deposits $1,233,255
Common shareholders' equity 869,193
Total shareholders' equity 869,872
Total assets 8,150,046
17
<PAGE>
AVERAGE BALANCES AND INTEREST RATES (Continued) (Unaudited)
(Dollar amounts in thousands)
Six Months Ended June 30
1997
------------------------------
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 1,727,495 52,546 6.12
State and municipal obligations
(Fully taxable-equivalent basis) 142,361 4,891 6.87
Other (Fully taxable-equivalent basis) 949 47 9.96
---------- --------
Total investment securities 1,870,805 57,484 6.11
---------- --------
Loans, net of unearned income:
Installment 3,616,765 156,439 8.72
Real estate 1,038,627 45,317 8.73
Other (Fully taxable-equivalent basis) 819,410 36,580 8.96
---------- --------
Total loans 5,474,802 238,336 8.76
---------- --------
Mortgage loans held for sale 11,391 468 8.22
Money market investments 327,367 8,674 5.34
Other earning assets 20,356 677 6.66
---------- --------
Total earning assets and income $7,704,721 305,639 7.95
========== --------
Interest-bearing liabilities:
Interest checking/savings plan $1,309,741 11,545 1.78
Money market accounts 719,997 10,562 2.96
Savings deposits 1,128,726 12,673 2.26
Certificates of deposit:
Consumer 2,313,180 56,427 4.92
Large denomination 360,182 9,404 5.27
---------- --------
Total interest-bearing deposits 5,831,826 100,611 3.48
Short-term borrowings 240,962 5,534 4.63
Long-term indebtedness 3,639 108 5.95
---------- --------
Total interest-bearing liabilities
and interest expense $6,076,427 106,253 3.53
========== --------
Net interest income and net interest margin $199,386 5.17%
========
Other average balances:
Demand deposits $1,294,720
Common shareholders' equity 896,630
Total shareholders' equity 897,274
Total assets 8,353,253
18
<PAGE>
AVERAGE BALANCES AND INTEREST RATES (Continued) (Unaudited)
(Dollar amounts in thousands)
Six Months Ended June 30
1996
------------------------------
Interest
Average Income/
Balance Expense Rate
---------- --------- -------
Interest-earning assets:
Investment securities-available for sale:
U.S. Government $ 30,854 $ 1,152 7.51%
Investment securities-held to maturity:
U.S. Government & its agencies 1,840,854 54,682 5.97
State and municipal obligations
(Fully taxable-equivalent basis) 183,791 6,216 6.76
Other (Fully taxable-equivalent basis) 1,971 76 7.73
---------- --------
Total investment securities 2,057,470 62,126 6.04
---------- --------
Loans, net of unearned income:
Installment 3,367,814 146,488 8.75
Real estate 949,339 41,749 8.80
Other (Fully taxable-equivalent basis) 747,818 33,478 8.97
---------- --------
Total loans 5,064,971 221,715 8.79
---------- --------
Mortgage loans held for sale 17,161 681 7.94
Money market investments 361,065 9,549 5.32
Other earning assets 13,532 442 6.55
---------- --------
Total earning assets and income $7,514,199 294,513 7.84
========== --------
Interest-bearing liabilities:
Interest checking/savings plan $1,323,574 12,305 1.87
Money market accounts 717,264 10,719 3.01
Savings deposits 1,181,177 13,546 2.31
Certificates of deposit:
Consumer 2,237,732 57,928 5.22
Large denomination 312,264 7,878 5.07
---------- --------
Total interest-bearing deposits 5,772,011 102,376 3.57
Short-term borrowings 202,783 4,621 4.58
Long-term indebtedness 2,468 119 9.67
---------- --------
Total interest-bearing liabilities
and interest expense $5,977,262 107,116 3.60
========== --------
Net interest income and net interest margin $187,397 4.97%
========
Other average balances:
Demand deposits $1,210,628
Common shareholders' equity 870,858
Total shareholders' equity 871,543
Total assets 8,140,535
19
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
a) An Annual Meeting of the Shareholders was held on Friday,
April 25, 1997. Proxies for the meeting were solicited pursuant to
Regulation 14 under the Act.
b) There was no solicitation in opposition to the management nominees as
listed in the proxy statement and all such nominees were elected. The
following directors were elected at the meeting:
Management nominee: Common Preferred Total
Barry J. Fitzpatrick Stock Stock Stock
==================== ----------- ------- -----------
Votes for:
Individual votes 11,375,968 31,284 11,407,252
Broker/Nominee votes 14,234,716 3,664 14,238,380
----------- ------- -----------
Total Management proxy votes for 25,610,684 34,948 25,645,632
Floor vote for - Individual/In person 520 0 520
----------- ------- -----------
Total votes for 25,611,204 34,948 25,646,152
Votes withheld:
Individual votes 71,785 149 71,934
Broker/Nominee votes 125,962 0 125,962
----------- ------- -----------
Total votes 25,808,951 35,097 25,844,048
Shares present but not voted 73,566 0 73,566
----------- ------- -----------
Shares for a Quorum 25,882,517 35,097 25,917,614
Shares not present nor voted:
Individual 4,155,558 29,236 4,184,794
Broker/Nominee 2,679,429 333 2,679,762
----------- ------- -----------
Total Shares Outstanding 32,717,504 64,666 32,782,170
=========== ======= ===========
20
<PAGE>
Management nominee: Common Preferred Total
Elsie C. Gruver Stock Stock Stock
=============== ----------- ------- -----------
Votes for:
Individual votes 11,359,932 31,264 11,391,196
Broker/Nominee votes 14,212,359 3,664 14,216,023
----------- ------- -----------
Total Management proxy votes for 25,572,291 34,928 25,607,219
Floor vote for - Individual/In person 520 0 520
----------- ------- -----------
Total votes for 25,572,811 34,928 25,607,739
Votes withheld:
Individual votes 87,821 169 87,990
Broker/Nominee votes 148,319 0 148,319
----------- ------- -----------
Total votes 25,808,951 35,097 25,844,048
Shares present but not voted 73,566 0 73,566
----------- ------- -----------
Shares for a Quorum 25,882,517 35,097 25,917,614
Shares not present nor voted:
Individual 4,155,558 29,236 4,184,794
Broker/Nominee 2,679,429 333 2,679,762
----------- ------- -----------
Total Shares Outstanding 32,717,504 64,666 32,782,170
=========== ======= ===========
Management nominee: Common Preferred Total
W. Lee Phillips, Jr. Stock Stock Stock
==================== ----------- ------- -----------
Votes for:
Individual votes 11,385,820 31,288 11,417,108
Broker/Nominee votes 14,215,115 3,664 14,218,779
----------- ------- -----------
Total Management proxy votes for 25,600,935 34,952 25,635,887
Floor vote for - Individual/In person 520 0 520
----------- ------- -----------
Total votes for 25,601,455 34,952 25,636,407
Votes withheld:
Individual votes 61,932 145 62,077
Broker/Nominee votes 145,563 0 145,563
----------- ------- -----------
Total votes 25,808,950 35,097 25,844,047
Shares present but not voted 73,566 0 73,566
----------- ------- -----------
Shares for a Quorum 25,882,516 35,097 25,917,613
Shares not present nor voted:
Individual 4,155,558 29,236 4,184,794
Broker/Nominee 2,679,429 333 2,679,762
----------- ------- -----------
Total Shares Outstanding 32,717,503 64,666 32,782,169
=========== ======= ===========
21
<PAGE>
Management nominee: Common Preferred Total
Josiah P. Rowe, III Stock Stock Stock
=================== ----------- ------- -----------
Votes for:
Individual votes 11,370,827 31,288 11,402,115
Broker/Nominee votes 14,207,867 3,664 14,211,531
----------- ------- -----------
Total Management proxy votes for 25,578,694 34,952 25,613,646
Floor vote for - Individual/In person 520 0 520
----------- ------- -----------
Total votes for 25,579,214 34,952 25,614,166
Votes withheld:
Individual votes 76,926 145 77,071
Broker/Nominee votes 152,811 0 152,811
----------- ------- -----------
Total votes 25,808,951 35,097 25,844,048
Shares present but not voted 73,566 0 73,566
----------- ------- -----------
Shares for a Quorum 25,882,517 35,097 25,917,614
Shares not present nor voted:
Individual 4,155,558 29,236 4,184,794
Broker/Nominee 2,679,429 333 2,679,762
----------- ------- -----------
Total Shares Outstanding 32,717,504 64,666 32,782,170
=========== ======= ===========
Management nominee: Common Preferred Total
Albert F. Zettlemoyer Stock Stock Stock
===================== ----------- ------- -----------
Votes for:
Individual votes 11,382,969 31,138 11,414,107
Broker/Nominee votes 14,229,922 3,664 14,233,586
----------- ------- -----------
Total Management proxy votes for 25,612,891 34,802 25,647,693
Floor vote for - Individual/In person 520 0 520
----------- ------- -----------
Total votes for 25,613,411 34,802 25,648,213
Votes withheld:
Individual votes 64,784 295 65,079
Broker/Nominee votes 130,756 0 130,756
----------- ------- -----------
Total votes 25,808,951 35,097 25,844,048
Shares present but not voted 73,566 0 73,566
----------- ------- -----------
Shares for a Quorum 25,882,517 35,097 25,917,614
Shares not present nor voted:
Individual 4,155,558 29,236 4,184,794
Broker/Nominee 2,679,429 333 2,679,762
----------- ------- -----------
Total Shares Outstanding 32,717,504 64,666 32,782,170
=========== ======= ===========
22
<PAGE>
c) Among other matters voted on at the meeting was the following:
i) The appointment of the independent auditors.
Common Preferred Total
Stock Stock Stock
----------- ------- -----------
Votes for:
Individual votes 11,315,979 30,402 11,346,381
Broker/Nominee votes 14,297,731 3,554 14,301,285
----------- ------- -----------
Total Management proxy votes for 25,613,710 33,956 25,647,666
Floor vote for - Individual/In person 520 0 520
----------- ------- -----------
Total votes for 25,614,230 33,956 25,648,186
Votes against:
Individual votes 62,767 228 62,995
Broker/Nominee votes 21,518 100 21,618
----------- ------- -----------
Total shares voted 25,698,515 34,284 25,732,799
Votes abstain:
Individual votes 69,005 803 69,808
Broker/Nominee votes 41,429 10 41,439
----------- ------- -----------
Total votes received 25,808,949 35,097 25,844,046
Shares present but not voted 73,566 0 73,566
Shares not present nor voted:
Individual 4,155,558 29,236 4,184,794
Broker/Nominee 2,679,429 333 2,679,762
----------- ------- -----------
Total Shares Outstanding 32,717,502 64,666 32,782,168
=========== ======= ===========
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 - K
----------------------------------
a) Exhibit 11 - Statement re: Computation of Per Share
Earnings (Page 25)
Exhibit 12 - Statement re: Computation of Ratios (Page 26)
Exhibit 15 - Independent Accountants' Review Report
from Ernst & Young LLP (Page 27)
Exhibit 15A - Letter of Acknowledgement from
Ernst & Young LLP, Independent Accountants (Page 28)
Exhibit 27 - Financial Data Schedule (Page 29)
b) A Form 8-K was not required to be filed during the quarter
ended June 30, 1997.
23
<PAGE>
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
August 8, 1997 __________________________
Richard F. Bowman,
Senior Vice President,
Treasurer and
Chief Financial Officer
24
<PAGE>
EXHIBIT 11
FIRST VIRGINIA BANKS, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
------- ------- ------- -------
(In thousands, except per share data)
PRIMARY:
Average common shares outstanding 33,267 33,474 32,819 33,679
Dilutive effect of stock options 83 80 81 80
------- ------- ------- -------
Total average common shares 33,350 33,554 32,900 33,759
======= ======= ======= =======
Net income $31,353 $28,574 $60,750 $56,957
Provision for preferred dividends 10 12 21 23
------- ------- ------- -------
Net income applicable to common
stock $31,343 $28,562 $60,729 $56,934
======= ======= ======= =======
Net income per share of common
stock $.94 $.85 $1.85 $1.69
======= ======= ======= =======
FULLY DILUTED:
Average common shares outstanding 33,267 33,474 32,819 33,679
Dilutive effect of stock options 90 80 85 80
Conversion of preferred stock 93 98 93 99
------- ------- ------- -------
Total average common shares 33,450 33,652 32,997 33,858
======= ======= ======= =======
Net income $31,353 $28,574 $60,750 $56,957
======= ======= ======= =======
Net income per share of common
stock $.94 $.85 $1.84 $1.68
======= ======= ======= =======
25
<PAGE>
EXHIBIT 12
FIRST VIRGINIA BANKS, INC.
STATEMENT RE: COMPUTATION OF RATIOS
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
---------- ---------- ---------- ----------
Ratios - Page 10 (In thousands, except per share data and ratios)
- ----------------
Net Loan Charge-offs (Annualized)
to Average Loans:
Net charge-offs $ 4,633 $ 3,638 $ 8,268 $ 6,099
Average loans $5,610,506 $5,108,531 $5,474,802 $5,064,971
Net Loan Charge-offs
to Average Loans 0.33% 0.28% 0.30% 0.24%
========== ========== ========== ==========
Allowance for Loan Losses
to Period-end Loans:
Allowance for Loan Losses $ 68,634 $ 59,974
Period-end Loans $5,994,091 $5,190,411
Allowance for Loan Losses
to Period-end Loans 1.15% 1.16%
========== ==========
Nonperforming Assets to
Period-end Loans:
Nonperforming Assets:
Non-accruing loans $ 15,781 $ 15,493
Restructured loans 4,968 5,862
Properties acquired by foreclosure 5,575 6,848
---------- ----------
Nonperforming Assets $ 26,324 $ 28,203
---------- ----------
Period-end Loans $5,994,091 $5,190,411
Nonperforming Assets to Period-end Loans: 0.44% 0.54%
========== ==========
Ratios - Pages 16/19
- --------------------
Net Interest Margin:
Net interest income
(Taxable equivalent) $ 103,141 $ 95,318 $ 199,386 $ 187,397
Total average
earning assets $7,857,720 $7,534,770 $7,704,721 $7,514,199
Net interest margin
ratio (Annualized) 5.23% 5.04% 5.17% 4.97%
========== ========== ========== ==========
26
<PAGE>
EXHIBIT 15
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. as of June 30, 1997 and 1996,
the related condensed consolidated statements of income for the
three-month and six-month periods ended June 30, 1997 and 1996, and
the related condensed consolidated statements of cash flows and
shareholders' equity for the six-month periods ended June 30, 1997
and 1996. 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, 1996, 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 21, 1997, 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, 1996, 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.
July 8, 1997, except for Note 8,
as to which the date is July 23, 1997
27
<PAGE>
EXHIBIT 15A
ERNST & YOUNG LLP
1225 Connecticut Avenue, N.W.
Washington, D.C. 20036
August 8, 1997
Board of Directors
First Virginia Banks, Inc.
We are aware of the incorporation by reference in Registration
Statement Number 333-30465 on Form S-8 dated June 30, 1997, Registration
Statement Number 333-24003 on Form S-4 dated April 10, 1997; 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 reports dated April 8, 1997 and July 8, 1997,
except for Note 8, as to which the date is July 23, 1997, relating to the
unaudited condensed consolidated interim financial statements of First
Virginia Banks, Inc., that are included in its Forms 10-Q for the quarters
ended March 31, 1997 and June 30, 1997.
Pursuant to Rule 436 (c) of the Securities Act of 1933, our reports
are not a part of the registration statements 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
28
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000037032
<NAME> FIRST VIRGINIA BANKS, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 402,355
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 225,238
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 1,955,584
<INVESTMENTS-MARKET> 1,957,102
<LOANS> 5,994,091
<ALLOWANCE> 68,634
<TOTAL-ASSETS> 9,054,929
<DEPOSITS> 7,675,896
<SHORT-TERM> 252,029
<LIABILITIES-OTHER> 93,916
<LONG-TERM> 3,355
<COMMON> 35,318
0
637
<OTHER-SE> 993,778
<TOTAL-LIABILITIES-AND-EQUITY> 9,054,929
<INTEREST-LOAN> 237,372
<INTEREST-INVEST> 56,180
<INTEREST-OTHER> 9,350
<INTEREST-TOTAL> 302,902
<INTEREST-DEPOSIT> 100,612
<INTEREST-EXPENSE> 5,642
<INTEREST-INCOME-NET> 196,648
<LOAN-LOSSES> 8,590
<SECURITIES-GAINS> 27
<EXPENSE-OTHER> 143,101
<INCOME-PRETAX> 93,197
<INCOME-PRE-EXTRAORDINARY> 93,197
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,750
<EPS-PRIMARY> 1.85
<EPS-DILUTED> 1.84
<YIELD-ACTUAL> 7.95
<LOANS-NON> 15,781
<LOANS-PAST> 12,213
<LOANS-TROUBLED> 4,968
<LOANS-PROBLEM> 5,575
<ALLOWANCE-OPEN> 62,761
<CHARGE-OFFS> 10,052
<RECOVERIES> 1,784
<ALLOWANCE-CLOSE> 68,634
<ALLOWANCE-DOMESTIC> 68,634
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
