U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended Commission File No. 33-9686
September 30, 1996
CENTRAL VIRGINIA BANKSHARES, INC.
Virginia 54-1467806
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2036 New Dorset Road
P. O. Box 39
Powhatan, Virginia 23139
(Address of Principal Executive Office)
(804) 794-6266
(Registrant's Telephone Number, Including Area Code)
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 ___ (not subject to filing
requirements for the past 90 days).
As of November 13, 1996, 947,799 shares were outstanding.
<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
QUARTERLY REPORT ON FORM 10-QSB
September 30, 1996
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
Item 1 Financial Statements
<S> <C>
Consolidated Balance Sheets - September 30, 1996
and 1995....................................................................................3
Consolidated Statements of Income - Three
Months Ended September 30, 1996 and 1995
and Nine Months Ended September 30, 1996 and 1995...........................................4
Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 1996 and 1995....................................................5
Notes to Consolidated Financial Statements -
September 30, 1996 and 1995 (Unaudited).....................................................6
Item 2 Management's Discussion and
Analysis or Plan of Operation...............................................................7-12
Part II. Other Information
Item 6 Exhibits and Reports on Form 8-K............................................................12
Signatures......................................................................................................13
</TABLE>
<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Sept. 30, Sept. 30,
1996 1995
ASSETS
<S> <C> <C>
Cash and due from banks $ 5,197,033 $ 3,617,603
Federal funds sold 15,391,000 11,691,000
---------- -----------
Total cash and cash equivalents $ 20,588,033 $ 15,308,603
Securities available for sale 8,023,651 8,647,736
Securities held to maturity (approximate market value 1996
$9,521,065; 1995 $8,971,300) 9,431,393 8,713,422
Mortgage loans held for sale 385,000 60,000
Loans, net 81,983,838 83,055,991
Bank premises and equipment, net 3,486,080 2,086,359
Accrued interest receivable 597,649 730,955
Other assets 1,252,616 1,214,411
------------ ------------
Total assets $125,748,260 $119,817,477
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand deposits $ 15,697,950 $ 13,290,141
Interest bearing demand deposits and NOW accounts 20,866,667 19,935,252
Savings deposits 12,431,989 11,173,272
Time deposits, $100,000 and over 10,366,209 10,610,805
Other time deposits 50,452,121 50,239,228
---------- ----------
$109,814,936 $105,248,698
Securities sold under repurchase agreements 1,387,143 1,154,519
Note payable 54,000 63,000
Accrued interest payable 221,754 253,161
Other liabilities 229,179 265,755
---------- ----------
Total liabilities $111,707,012 $106,985,133
------------ ------------
STOCKHOLDERS' EQUITY
Capital stock, common, par value $2.50; authorized 3,000,000 shares; issued
947,799 shares 1996; 942,270 shares 1995 $ 2,369,475 $ 2,355,675
Surplus 4,066,628 3,972,653
Retained earnings 7,664,290 6,496,168
Unrealized gains on securities available for sale, net of tax (59,145) 7,848
---------- ----------
Total stockholders' equity $ 14,041,248 $ 12,832,344
------------ ------------
Total liabilities and stockholders' equity $125,748,260 $119,817,477
============ ============
</TABLE>
<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------- ----------------------------------
1996 1995 1996 1995
---- ---- ---- ----
Interest income
<S> <C> <C> <C> <C>
Interest and fees on loans $2,077,161 $2,130,960 $6,160,588 $6,156,297
Interest on securities:
U.S. Government agencies and
corporations 136,681 144,275 333,653 506,504
States and political subdivisions 134,144 126,211 415,822 371,185
Other 0 5,169 5,169 5,169
Interest on federal funds sold 228,296 140,901 640,026 202,534
---------- ---------- ---------- ----------
Total interest income $2,576,282 $2,547,516 $7,555,258 $7,241,689
---------- ---------- ---------- ----------
Interest expense
Interest on deposits $1,129,034 $1,163,835 $3,433,928 $3,139,624
Interest on federal funds
purchased - - 0 8,096
Interest on securities sold under
repurchase agreements 10,404 7,497 25,025 21,975
Interest on note payable 1,080 1,260 3,420 3,960
---------- ---------- ---------- ----------
Total interest expense $1,140,518 $1,172,592 $3,462,373 $3,173,655
---------- ---------- ---------- ----------
Net interest income $1,435,764 $1,374,924 $4,092,885 $4,068,034
Provision for loan losses 41,250 37,500 123,750 112,500
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses $1,394,514 $1,337,424 $3,969,135 $3,955,534
Other income
Securities gains $ 0 $ 0 $25,000 -
Service charges 145,083 139,102 439,478 396,751
Other 58,228 45,082 192,350 144,057
---------- ---------- ---------- ----------
Total other income $203,311 $184,184 $656,828 $540,808
Other expenses
Salaries and wages $387,325 $368,400 $1,165,525 $1,106,700
Pensions and other employee
benefits 72,632 60,275 199,512 187,377
Occupancy expense 64,566 37,707 159,659 119,502
Other operating expenses 479,392 343,472 1,344,499 1,182,927
---------- ---------- ---------- ----------
Total other expenses $1,003,915 $809,854 $2,869,195 $2,596,506
---------- -------- ---------- ----------
Income before income taxes $593,910 $711,754 $1,756,768 $1,899,836
Income taxes 177,341 223,364 524,712 596,194
---------- ---------- ---------- ----------
Net income $416,569 $488,390 $1,232,056 $1,303,642
======== ======== ========== ==========
Per share of common stock:
Income before income taxes $0.63 $0.76 $1.86 $2.02
Net income $0.44 $0.52 $1.30 $1.39
Weighted average shares
outstanding 946,712 940,271 945,406 939,239
</TABLE>
<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
Cash Flows for Operating Activities
<S> <C> <C>
Net Income $1,232,056 $1,303,642
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation 233,045 180,418
Amortization 15,067 15,067
Provision for loan losses 123,750 112,500
Amortization and accretion on securities (6,799) (16,051)
Change in operating assets and liabilities:
(Increase) decrease in assets:
Mortgage loans held for sale 483,594 39,593
Accrued interest receivable 189,895 41,729
Other assets (176,744) 39,405
Increase (decrease) in liabilities:
Accrued interest payable (41,666) 74,682
Other liabilities 116,054 28,981
---------- ----------
Net cash provided by operating activities $2,168,252 $1,819,966
---------- ----------
Cash Flows from Investment Activities
Proceeds from maturities of securities held to maturity $ 910,000 $ 275,000
Purchase of securities held to maturity (321,464) (750,000)
Proceeds from maturities of securities available for sale 2,574,894 2,962,906
Purchase of securities available for sale (5,788,583) (965,900)
Net (increase) decrease in loans made to customers 1,033,192 (3,588,697)
Capital expenditures (1,600,324) (106,948)
---------- ----------
Net cash provided by (used in) investing activities ($3,192,285) ($2,173,639)
------------ ------------
Cash Flows from Financing Activities
Net increase in deposits $2,008,731 $11,233,871
Repayment of note payable (9,000) (9,000)
Net proceeds from issuance of common stock 79,968 53,388
Net increase (decrease) in securities sold under repurchase
agreements (48,164) 306,844
Dividends paid (482,024) (436,763)
---------- ----------
Net cash provided by financing activities $1,549,511 $11,148,340
---------- -----------
Increase (decrease) in cash and cash equivalents $525,478 $10,794,667
Cash and cash equivalents:
Beginning 20,062,555 4,513,936
---------- ----------
Ending $20,588,033 $15,308,603
=========== ===========
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest $3,504,039 $3,098,973
========== ==========
Income Taxes $549,088 $602,306
======== ========
</TABLE>
<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and 1995
(Unaudited)
Note 1 Basis of Presentation
These interim financial statements are unaudited; however, such information
reflects all adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods presented. All adjustments
are of a normal recurring nature.
Note 2 Accounting Change
On January 1, 1995, the Company adopted FASB Statement No. 114, Accounting by
Creditors for Impairment of a Loan. Statement No. 114 has been amended by FASB
Statement No. 118, Accounting by Creditors for Impairment of a Loan Income
Recognition and Disclosures. Statement No. 114, as amended, requires that the
impairment of loans that have been separately identified for evaluation is to be
measured based on the present value of expected future cash flows or
alternatively, the observable market price of the loans or the fair value of the
collateral. However, for those loans that are collateral dependent (that is, if
repayment of those loans is expected to be provided solely by the underlying
collateral) and for which management has determined foreclosure is probable, the
measure of impairment of those loans is to be based on the fair value of the
collateral. Statement No. 114, as amended, also requires certain disclosures
about investments in impaired loans and the allowance for credit losses and
interest income recognized on those loans. The effect of adopting Statement No.
114, as amended, is immaterial to the interim financial statements presented
herein.
<PAGE>
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
The Company's net income totaled $416,569 in the third quarter of 1996,
a decrease of 14.7% from the third quarter of 1995. The earnings for the third
quarter of 1996 were affected by Congressional legislation passed on September
30, 1996 to recapitalize the Savings Association Insurance Fund (SAIF). The
pre-tax charge to the Company was $47,340 based on thrift deposits acquired in
1992. In addition, the third quarter earnings in 1995 were positively affected
by a refund of previous FDIC premiums paid in the amount of approximately
$51,000 before taxes. Without the effects of these one-time transactions, net
earnings for the quarter of 1996 was down 1.5% compared to 1995.
Net interest income increased by 4.4% for the third quarter of 1996
compared to the same period in 1995. Other operating expenses increased 39.6%
compared to the same period in 1995 primarily due to the SAIF charge and FDIC
refund previously noted. Net income per common share for the third quarter of
1996 was $.44 compared to $.52 for the same period in 1995. The Company's
annualized return on average equity was 12.07% in the third quarter of 1996,
compared to 15.43% for the third quarter of 1995, while the return on average
assets amounted to 1.33% and 1.66% for these periods, respectively.
The Company's net income for the nine months ended September 30, 1996
totaled $1,232,056 a decrease of 5.5% over the first nine months of 1995. Again,
without the effects of the two one-time insurance premium transactions, net
income for the first nine months of 1996 decreased $6,682 or .5% compared to
1995. This decrease is primarily the result of increased occupancy and other
expenses associated with the opening of the Company's new Operations Center in
May 1996. Net income per common share for the first nine months of 1996 was
$1.30 compared to $1.39 for the same period in 1995. The Company's annualized
return on average equity was 12.07% for the nine months ended September 30,
1996, compared to 14.14% for the nine months ended September 30, 1995. The
return on average assets amounted to 1.33% and 1.55% for these same periods,
respectively.
Net Interest Income. The Company's net interest income was $1,435,764
for the third quarter of 1996, compared to $1,374,924 for the third quarter of
1995. The increase in net interest income in 1996 was attributable primarily to
an increase in the volume of the Company's interest earning assets. Average
interest earning assets were $116.4 million for the third quarter of 1996,
compared to $111.3 million for the third quarter of 1995. In addition to the
increase in interest earning assets, the composition of interest earning assets
changed as lower-yielding federal funds sold increased from an average of $10.1
million for the quarter ended September 30, 1995 to an average of $16.6 million
for the quarter ended September 30, 1996, while average loans outstanding
decreased $1.1 million, or 1.3% to an average of $82.7 million for the quarter
ended September 30, 1996. For the nine months ended September 30, 1996, average
interest earning assets rose 8.1% to $115.2 million compared to the same period
in 1995.
The net interest margin is a measure of net interest income
performance. It represents the difference between interest income, including net
loan fees earned, and interest expense, reflected as a percentage of average
interest earning assets. The Company's net interest margin was 4.94% for both
the third quarters of 1996 and 1995. For the nine months ended September 30,
1996, the net interest margin was 4.74% compared to 5.09% for the same period of
1995.
<PAGE>
Non-Interest Income. In the third quarter of 1996, the Company's total
non-interest income totaled $203,311, an increase of 10.4%, or $19,127, compared
to 1995. Of the various components of non-interest income, this increase is
primarily attributable to an increase in fees received on mortgage loans
originated for others. For the first nine months of 1996, non-interest income
increased by $106,020, or 19.6%, compared to 1995. This increase is primarily
related to a $25,000 gain on the sale of a security in the first quarter of 1996
and an increase in fees collected on demand deposit accounts. The increase in
demand deposit fees is the result of a change in the method of tracking and
assessing these fees and is not the result of increasing the amount of the fees
charged.
Non-Interest Expenses. The Company's total non-interest expenses for
the third quarter ended September 30, 1996 increased $194,061, or 23.9%, and for
the nine month period ended September 30, 1996 increased $272,689, or 10.5%,
compared to the same periods in 1995. Expenses related to salaries and employee
benefits not treated as an adjustment to the yield of loans originated in 1996
increased $31,282 for the quarter and $70,960 for the first nine months compared
to 1995. Other operating expenses for the quarter increased $135,920, or 39.6%,
and for the nine months increased $161,572, or 13.7%, primarily due to the SAIF
assessment in the third quarter of 1996 and the FDIC insurance premium refund in
the third quarter of 1995. Other operating expenses for the third quarter and
nine months ended September 30, 1996 were also affected by expenses related to
the opening of the new Operations Center in May.
Income Taxes. The Company reported income taxes of $177,341 for the
third quarter and $524,712 for the first nine months of 1996, compared to
$223,364 and $596,194 for the same periods in 1995, respectively. These amounts
yielded effective tax rates of 29.9% for the quarter and 31.4% for the first
nine months of 1996, compared to 31.4% and 31.6% for the same periods in 1995,
respectively. In February, 1992 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes". This Statement superseded Statement of Financial Accounting Standards
No. 96, and is effective for fiscal years beginning after December 15, 1992.
This statement was implemented in March of 1993 and did not have a material
effect upon the financial position or results of operations of the Company.
Financial Condition
Loan Portfolio. The Company is an active residential mortgage and
residential construction lender and generally extends commercial loans to small
and medium sized businesses within its primary service area. The Company's
commercial lending activity extends across its primary service area of Powhatan,
Cumberland and western Chesterfield Counties. Consistent with its focus on
providing community-based financial services, the Company does not attempt to
diversify its loan portfolio geographically by making significant amounts of
loans to borrowers outside of its primary service area.
<PAGE>
The principal economic risk associated with each of the categories of
loans in the Company's portfolio is the creditworthiness of its borrowers.
Within each category, such risk is increased or decreased depending on
prevailing economic conditions. The risk associated with the real estate
mortgage loans and installment loans to individuals varies based upon employment
levels, consumer confidence, fluctuations in value of residential real estate
and other conditions that affect the ability of consumers to repay indebtedness.
The risk associated with commercial, financial and agricultural loans varies
based upon the strength and activity of the local economies of the Company's
market areas. The risk associated with real estate construction loans varies
based upon the supply of and demand for the type of real estate under
construction. Most of the Bank's real estate construction loans are for pre-sold
or contract homes.
At September 30, 1996 loans decreased $1.09 million from December 31,
1995 and $1.07 million from September 30, 1995. The loan-to-deposit ratio was
74.7% at September 30, 1996, compared to 77.1% at December 31, 1995, and 78.9%
at September 30, 1995. As of September 30, 1996, real estate loans accounted for
58.6% of the loan portfolio, consumer loans were 23.1%, and commercial and
industrial loans totaled 18.3%.
Asset Quality. Non-performing loans include non-accrual loans, loans 90
days or more past due and restructured loans. Non-accrual loans are loans on
which interest accruals have been discontinued. Loans which reach non-accrual
status may not be restored to accrual status until all delinquent principal and
interest has been paid, or the loan becomes both well secured and in the process
of collection. Restructured loans are loans with respect to which a borrower has
been granted a concession on the interest rate or the original repayment terms
because of financial difficulties.
The following table summarizes non-performing loans:
<TABLE>
<CAPTION>
Sept. 30, Dec. 31, Sept. 30,
1996 1995 1995
---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C>
Loans accounted for on a non-accrual basis $487 $648 $762
Loans contractually past due 90 days or more as
to interest or principal payments (not included
in non-accrual loans above) 512 478 295
Loans restructured and in compliance with
modified terms (not included in non-accrual
loans or loans contractually past due 90 days or
more above) -- -- 140
---- ------ ------
Total $999 $1,126 $1,097
==== ====== ======
</TABLE>
Management is not aware of any other loans at September 30, 1996 which
involve serious doubts as to the ability of such borrowers to comply with the
existing payment terms.
Management has analyzed the potential risk of loss on the Company's
loan portfolio, given the loan balances and the value of the underlying
collateral, and has recognized losses where appropriate. Non-performing loans
are closely monitored on an ongoing basis as part of the Company's loan review
process. Management reviews the loan loss allowance at the end of each month.
Based primarily on the Company's loan classification system, which classifies
problem
<PAGE>
credits as substandard, doubtful or loss, additional provisions for losses are
made monthly. The ratio of the allowance for loan losses to total loans was
1.42%, 1.34% and 1.38% at September 30, 1996, December 31, 1995 and September
30, 1995, respectively. At September 30, 1996 the ratio of the allowance for
loan losses to non-performing loans was 118.6%, compared to 100.1% at December
31, 1995 and 106.2% at September 30, 1995.
Management evaluates non-performing loans relative to their collateral
value and makes appropriate reductions in the carrying value of those loans
based on that review. Management believes, based on its review, that the Company
has adequate reserves to cover any future write down that may be required on
these loans.
For each period presented, the provision for loan losses charged to
operations is based on management's judgment after taking into consideration all
factors connected with the collectibility of the existing portfolio. Management
evaluates the loan portfolio in light of economic conditions, changes in the
nature and value of the portfolio, industry standards and other relevant
factors. Specific factors considered by management in determining the amounts
charged to operations include internally generated loan review reports, previous
loan loss experience with the borrower,the status of past due interest and
principal payments on the loan, the quality of financial information supplied by
the borrower and the general financial condition of the borrower.
The provision for loan losses totaled $41,250 for the quarter ended
September 30, 1996 and $37,500 for the same period in 1995. For the nine month
periods ended September 30, 1996 and 1995, the provision for loan losses totaled
$123,750 and $112,500, respectively. In the opinion of management, the provision
charged to operations has been sufficient to absorb the current year's net loan
losses while continuing to increase the allowance for loan losses.
Securities
The Company's securities portfolio serves several purposes. Portions of
the portfolio secure certain public and trust deposits. The remaining portions
are held as investments or used to assist the Company in liquidity and asset
liability management. During the first nine months of 1996, total securities
increased 16.6% to $17.5 million, or 13.9% of total assets at September 30,
1996. At December 31, 1995, total securities were $15.0 million, or 12.2% of
total assets and at September 30, 1995, total securities were $17.4 million, or
14.5% of total assets.
The securities portfolio consists of two components, investment
securities and securities available for sale. Securities are classified as
investment securities when management has the intent and the Company has the
ability at the time of purchase to hold the securities to maturity. Investment
securities are carried at cost adjusted for amortization of premiums and
accretion of discounts. Securities to be held for indefinite periods of time are
classified as available for sale and accounted for at the lower of cost or
market value. Securities available for sale include securities that may be sold
in response to changes in market interest rates, changes in the security's
prepayment risk, increases in loan demand, general liquidity needs and other
similar factors. The Company's recent purchases of investment securities have
generally been limited to securities of high credit quality with short to medium
term maturities.
<PAGE>
The fully taxable equivalent annualized average yield on the entire
portfolio was 7.65% for the third quarter and 7.56% for the first nine months of
1996, compared to 7.48% and 7.57% for the same periods in 1995. The market value
of the portfolio exceeded the book value by less than $100 at September 30,
1996.
Deposits and Short-Term Borrowings
The Company's predominate source of funds is depository accounts. The
Company's deposit base is comprised of demand deposits, savings and money market
accounts and other time deposits. The Company's deposits are provided by
individuals and businesses located within the communities served.
Total deposits grew by 1.9% between December 31, 1995 and September 30,
1996. The average aggregate interest rate paid on deposits was 4.06% in the
third quarter of 1996 and 4.17% for the first nine months of 1996, compared to
4.42% and 4.19% for the same periods in 1995. The majority of the Company's
deposits are higher yielding time deposits because most of its customers are
individuals who seek higher yields than those offered on savings and demand
accounts.
The following table is a summary of time deposits of $100,000 or more
by remaining maturities at September 30, 1996:
Sept. 30, 1996
Time Deposits
(Dollars in Thousands)
Three months or less $ 1,211
Three to twelve months 4,801
Over twelve months 4,354
--------
Total $10,366
Capital Resources
The assessment of capital adequacy depends on a number of factors such
as asset quality, liquidity, earnings performance and changing competitive
conditions and economic forces. The Company seeks to maintain a strong capital
base to support its growth and expansion activities, to provide stability to
current operations and to promote public confidence. The Company's capital
position continues to exceed regulatory minimums.
Banking regulations also require the Bank to maintain certain minimum
capital levels in relation to Bank Assets. Capital is measured using a leverage
ratio as well as based on risk-weighting assets according to regulatory
guidelines. A comparison of the Bank's actual regulatory capital as of September
30, 1996, with minimum requirements, as defined by regulation, is shown below:
<TABLE>
<CAPTION>
Minimum Actual
Requirements September 30, 1996
<S> <C> <C>
Tier 1 risk-based capital 4.0% 16.43%
Total risk-based capital 8.0% 17.68%
Leverage ratio 3.0% 11.05%
</TABLE>
<PAGE>
Liquidity and Interest Rate Sensitivity
Liquidity. Liquidity is the ability to meet present and future
financial obligations through either the sale or maturity of existing assets or
the acquisition of additional funds through liability management. Liquid assets
include cash, interest bearing deposits with banks, federal funds sold,
investments and loans maturing within one year. The Company's ability to obtain
deposits and purchase funds at favorable rates determines its liability
liquidity. As a result of the Company's management of liquid assets and the
ability to generate liquidity through liability funding, management believes
that the Company maintains overall liquidity sufficient to satisfy its
depositors' requirements and meet its customers' credit needs.
Additional sources of liquidity available to the Company include, but
are not limited to, loan repayments, the ability to obtain deposits through the
adjustment of interest rates and the purchasing of federal funds. To further
meet its liquidity needs, the Company also has access to the Federal Reserve
System. In the past, growth in deposits and proceeds from the maturity of
investment securities have been sufficient to fund the net increase in loans.
Interest Rate Sensitivity. In conjunction with maintaining a
satisfactory level of liquidity, management must also control the degree of
interest rate risk assumed on the balance sheet. Managing this risk involves
regular monitoring of the interest sensitive assets relative to interest
sensitive liabilities over specific time intervals.
Effects of Inflation
Inflation significantly affects industries having high proportions of
fixed assets or high levels of inventories. Although the Company is not
significantly affected in these areas, inflation does have an impact on the
growth of assets. As assets grow rapidly, it becomes necessary to increase
equity capital at proportionate levels to maintain the appropriate equity to
asset ratios. Traditionally, the Company's earnings and high capital retention
levels have enabled the Company to meet these needs.
The Company's reported earnings results have been affected by
inflation, but isolating the effect is difficult. The different types of income
and expense are affected in various ways. Interest rates are affected by
inflation, but the timing and magnitude of the changes may not coincide with
changes in the consumer price index. Management actively monitors interest rate
sensitivity in order to minimize the effects of inflationary trends on interest
rates. Other areas of non-interest expenses may be more directly affected by
inflation.
Part II. Other Information
ITEM 6 EXHIBITS AND REPORTS ON 8-K
(a) Exhibits:
27 Financial Data Schedule (filed herewith)
(b) Form 8-K. No reports were filed on Form 8-K in
the period for which this report is filed.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
CENTRAL VIRGINIA BANKSHARES, INC.
(Registrant)
Date: November 13, 1996 /s/ Ralph Larry Lyons
----------------------
Ralph Larry Lyons, President and Chief
Executive Officer (Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,197,033
<INT-BEARING-DEPOSITS> 94,116,986
<FED-FUNDS-SOLD> 15,391,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 8,023,651
<INVESTMENTS-CARRYING> 9,431,393
<INVESTMENTS-MARKET> 9,521,065
<LOANS> 81,983,838
<ALLOWANCE> 1,184,993
<TOTAL-ASSETS> 125,748,260
<DEPOSITS> 109,814,936
<SHORT-TERM> 1,387,143
<LIABILITIES-OTHER> 450,933
<LONG-TERM> 54,000
0
0
<COMMON> 2,369,475
<OTHER-SE> 11,671,773
<TOTAL-LIABILITIES-AND-EQUITY> 125,748,260
<INTEREST-LOAN> 6,160,588
<INTEREST-INVEST> 749,475
<INTEREST-OTHER> 640,026
<INTEREST-TOTAL> 7,555,258
<INTEREST-DEPOSIT> 3,433,928
<INTEREST-EXPENSE> 3,462,373
<INTEREST-INCOME-NET> 4,092,885
<LOAN-LOSSES> 123,750
<SECURITIES-GAINS> 25,000
<EXPENSE-OTHER> 2,869,195
<INCOME-PRETAX> 1,756,768
<INCOME-PRE-EXTRAORDINARY> 1,756,768
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,232,056
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.30
<YIELD-ACTUAL> 7.52
<LOANS-NON> 487,000
<LOANS-PAST> 512,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,126,872
<CHARGE-OFFS> 76,640
<RECOVERIES> 11,011
<ALLOWANCE-CLOSE> 1,184,993
<ALLOWANCE-DOMESTIC> 293,570
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 891,423
</TABLE>
