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, 2001
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. [ X ] Yes [ ] 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, 2001, there were 46,162,566 shares
of common stock outstanding.
This report contains a total of 19 pages.
INDEX
Page
---------
PART I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 31,
2001 and 2000, and December 31, 2000 (Unaudited) 3/ 4
Condensed Consolidated Statements of Income - Three
months ended March 31, 2001 and 2000 (Unaudited) 5/ 6
Condensed Consolidated Statements of Shareholders'
Equity - Three months ended March 31, 2001
and 2000 (Unaudited) 7/ 8
Condensed Consolidated Statements of Cash
Flows - Three months ended March 31, 2001
and 2000 (Unaudited) 9
Notes to Condensed Consolidated Financial
Statements (Unaudited) 10/13
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14/18
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 19
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K 19
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
(Dollars in thousands, except per share data)
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
- -------------------------------------------------------------------------------
March 31 December 31 March 31
2001 2000 2000
- -------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 284,355 $ 322,966 $ 305,227
Money market investments 250,185 190,443 160,471
- -------------------------------------------------------------------------------
Total cash and cash equivalents 534,540 513,409 465,698
- -------------------------------------------------------------------------------
Securities - available for sale 90,825 110,989 114,950
Securities - held to maturity (fair values of
$2,326,299, $2,045,431 and $1,994,724) 2,316,541 2,053,119 2,047,834
- -------------------------------------------------------------------------------
Total securities 2,407,366 2,164,108 2,162,784
- -------------------------------------------------------------------------------
Loans, net of unearned income 6,237,575 6,366,464 6,410,181
Allowance for loan losses (68,914) (70,300) (70,225)
- -------------------------------------------------------------------------------
Net loans 6,168,661 6,296,164 6,339,956
- -------------------------------------------------------------------------------
Other earning assets 18,367 18,717 26,755
Premises and equipment 148,045 150,323 154,807
Intangible assets 154,095 157,777 166,722
Accrued income and other assets 219,740 215,971 199,988
- -------------------------------------------------------------------------------
Total assets $9,650,814 $9,516,469 $9,516,710
===============================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)(Continued)
- -------------------------------------------------------------------------------
March 31 December 31 March 31
2001 2000 2000
- -------------------------------------------------------------------------------
LIABILITIES
Deposits:
Noninterest-bearing $1,638,422 $1,618,901 $1,619,642
Interest-bearing:
Interest checking 1,535,473 1,524,943 1,534,168
Money market accounts 906,361 874,421 971,365
Savings deposits 995,993 983,781 1,069,198
Consumer certificates of deposit 2,322,603 2,323,733 2,291,101
Large denomination
certificates of deposit 515,979 500,037 467,729
- -------------------------------------------------------------------------------
Total deposits 7,914,831 7,825,816 7,953,203
- -------------------------------------------------------------------------------
Short-term borrowings 548,058 539,469 413,593
Long-term debt 830 1,116 1,940
Accrued interest and other liabilities 169,035 157,362 141,887
- -------------------------------------------------------------------------------
Total liabilities 8,632,754 8,523,763 8,510,623
- -------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $10 par value 434 451 481
Common stock, $1 par value 46,159 46,143 48,014
Capital surplus 1,071 612 -
Retained earnings 967,955 945,241 959,900
Accumulated other comprehensive income (loss) 2,441 259 (2,308)
- -------------------------------------------------------------------------------
Total shareholders' equity 1,018,060 992,706 1,006,087
- -------------------------------------------------------------------------------
Total liabilities and shareholders' equity $9,650,814 $9,516,469 $9,516,710
===============================================================================
See notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
- -------------------------------------------------------------------------------
Three Months Ended March 31 2001 2000
- -------------------------------------------------------------------------------
Interest income:
Loans $126,245 $125,869
Securities - available for sale 1,086 1,535
Securities - held to maturity 27,499 25,818
Money market investments 5,987 3,336
Other earning assets 317 517
- -------------------------------------------------------------------------------
Total interest income 161,134 157,075
- -------------------------------------------------------------------------------
Interest expense:
Deposits 50,466 45,734
Short-term borrowings 6,379 4,927
Long-term debt 28 49
- -------------------------------------------------------------------------------
Total interest expense 56,873 50,710
- -------------------------------------------------------------------------------
Net interest income 104,261 106,365
Provision for loan losses 863 2,307
- -------------------------------------------------------------------------------
Net interest income after provision for loan losses 103,398 104,058
- -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Continued)
- -------------------------------------------------------------------------------
Three Months Ended March 31 2001 2000
- -------------------------------------------------------------------------------
Net interest income after provision for loan losses 103,398 104,058
- -------------------------------------------------------------------------------
Noninterest income:
Service charges on deposit accounts 16,009 14,218
Electronic banking service fees 3,929 2,535
Trust and asset management fees 3,177 3,206
Insurance premiums and commissions 1,899 1,772
Other 12,244 5,234
Securities gains 1,468 -
- -------------------------------------------------------------------------------
Total noninterest income 38,726 26,965
- -------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 46,416 45,859
Occupancy 6,633 6,726
Equipment 8,380 8,072
Amortization of intangibles 3,682 3,672
Other 14,996 14,963
- -------------------------------------------------------------------------------
Total noninterest expense 80,107 79,292
- -------------------------------------------------------------------------------
Income before income taxes 62,017 51,731
Provision for income taxes 21,755 17,538
- -------------------------------------------------------------------------------
Net income $ 40,262 $ 34,193
===============================================================================
Net income per share of common stock:
Basic $ .87 $ .70
Diluted .87 .70
Average shares of common stock outstanding:
Basic 46,151 48,690
Diluted 46,353 48,878
See notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY(Unaudited)
- -------------------------------------------------------------------------------
Accum-
ulated
Other Total
Pre- Compre- Share-
ferred Common Capital Retained hensive holders'
Stock Stock Surplus Earnings Loss Equity
- -------------------------------------------------------------------------------
Balance January 1, 2000 $ 485 $49,162 $ - $982,357 $(1,517)$1,030,487
Comprehensive income:
Net income 34,193 34,193
Unrealized losses on
securities available for
sale (791) (791)
-----------
Total comprehensive income 33,402
-----------
Conversion of preferred
to common stock (4) 1 3 -
Issuance of shares for
stock options 12 326 338
Common stock purchased
and retired (1,161) (329) (39,326) (40,816)
Dividends declared:
Preferred stock (8) (8)
Common stock $.36 per share (17,316) (17,316)
- -------------------------------------------------------------------------------
Balance March 31, 2000 $ 481 $48,014 $ - $959,900 $(2,308)$1,006,087
===============================================================================
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY(Unaudited)(Continued)
- -------------------------------------------------------------------------------
Accum-
ulated
Other Total
Pre- Compre- Share-
ferred Common Capital Retained hensive holders'
Stock Stock Surplus Earnings Income Equity
- -------------------------------------------------------------------------------
Balance January 1, 2001 $ 451 $46,143 $ 612 $945,241 $ 259 $ 992,706
Comprehensive income:
Net income 40,262 40,262
Unrealized gains on
securities available for sale 2,182 2,182
-----------
Total comprehensive income 42,444
-----------
Conversion of preferred
to common stock (17) 4 13 -
Issuance of shares for
stock options 14 559 573
Common stock purchased
and retired (2) (113) (115)
Dividends declared:
Preferred stock (7) (7)
Common stock $.38 per share (17,541) (17,541)
- -------------------------------------------------------------------------------
Balance March 31, 2001 $ 434 $46,159 $1,071 $967,955 $ 2,441 $1,018,060
===============================================================================
See notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
- -------------------------------------------------------------------------------
Three Months Ended March 31 2001 2000
- -------------------------------------------------------------------------------
Net cash provided by operating activities $ 51,713 $ 46,976
- -------------------------------------------------------------------------------
Investing activities:
Proceeds from the sale of available
for sale securities 3,114 -
Proceeds from the maturity of held to
maturity securities 613,449 136,780
Purchases of held to maturity securities (847,790) (267,337)
Net(increase) decrease in loans 126,639 (26,982)
Purchases of premises and equipment (1,562) (2,104)
Sales of premises and equipment 376 114
Intangible assets acquired - (34)
Other (5,042) 1,792
- -------------------------------------------------------------------------------
Net cash used for investing activities (110,816) (157,771)
- -------------------------------------------------------------------------------
Financing activities:
Net increase in deposits 89,015 89,255
Net increase (decrease) in short-term borrowings 8,589 (6,704)
Principal payments on long-term debt (286) (265)
Common stock purchased and retired (115) (40,816)
Proceeds from issuance of common stock 573 338
Cash dividends paid (17,542) (17,738)
- -------------------------------------------------------------------------------
Net cash provided by financing activities 80,234 24,070
- -------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 21,131 (86,725)
Cash and cash equivalents at beginning of year 513,409 552,423
- -------------------------------------------------------------------------------
Cash and cash equivalents at end of period $534,540 $465,698
===============================================================================
Cash paid for:
Interest $ 54,602 $ 50,627
Income taxes 696 562
===============================================================================
See notes to condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
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 activities. 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
presented. Certain amounts previously reported in 2000 have been reclassified
for comparative purposes.
Certain information and disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted, pursuant to the
rules and regulations of the Securities and Exchange Commission. These
unaudited consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto included in the
corporation's annual report to stockholders on Form 10-K for the year ended
December 31, 2000.
2. SECURITIES
The following reflects the amortized cost of securities and the related
approximate fair values:
- -------------------------------------------------------------------------------
March 31, 2001 March 31, 2000
- -------------------------------------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
- -------------------------------------------------------------------------------
Available for sale:
U.S. Government and its agencies $ 69,509 $ 69,830 $ 107,425 $ 105,680
Other 17,339 20,995 11,081 9,270
- -------------------------------------------------------------------------------
Total $ 86,848 $ 90,825 $ 118,506 $ 114,950
===============================================================================
Held to maturity:
U.S. Government and its agencies $1,992,764 $1,999,087 $1,706,761 $1,659,217
State and municipal obligations 323,777 327,211 340,824 335,257
Other - - 249 250
- -------------------------------------------------------------------------------
Total $2,316,541 $2,326,299 $2,047,834 $1,994,724
===============================================================================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited)
3. LOANS
Loans consisted of:
- -------------------------------------------------------------------------------
March 31 2001 2000
- -------------------------------------------------------------------------------
Consumer:
Automobile $3,128,093 $3,231,769
Home equity, fixed- and variable-rate 712,698 813,938
Revolving credit loans, including credit cards 32,278 28,284
Other 163,493 181,936
Commercial 897,648 872,184
Construction and land development 168,226 156,380
Real estate:
Commercial mortgage 455,823 421,351
Residential mortgage 679,316 704,339
- -------------------------------------------------------------------------------
Total loans, net of unearned income
of $120,737 and $139,497 $6,237,575 $6,410,181
===============================================================================
4. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses was:
- -------------------------------------------------------------------------------
Three Months Ended March 31 2001 2000
- -------------------------------------------------------------------------------
Balance at beginning of period $70,300 $70,119
Provision charged to operating expense 863 2,307
- -------------------------------------------------------------------------------
Balance before charge-offs 71,163 72,426
Charge-offs 4,032 3,168
Recoveries 1,783 967
- -------------------------------------------------------------------------------
Balance at March 31 $68,914 $70,225
===============================================================================
Percentage of annualized net
charge-offs to average loans .14% .14%
Percentage of allowance for loan
losses to period-end loans 1.10 1.10
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited)
5. OTHER NONINTEREST INCOME
Other noninterest income for the quarter ended March 31, 2001 included
$7.749 million from the sale of the corporation's interest in Star Systems,
Inc., which was exchanged for shares of Concord EFS, Inc.
6. FEDERAL INCOME TAX
The reconcilement of income tax computed at the federal statutory tax
rates to the provision for income taxes was as follows:
- ------------------------------------------------------------------------------
Three Months Ended March 31 2001 2000
- ------------------------------------------------------------------------------
Amount Pct Amount Pct
- ------------------------------------------------------------------------------
Statutory rate $21,706 35.0% $18,106 35.0%
Nontaxable interest on municipal obligations (1,136) (1.8) (1,259) (2.4)
State taxes, net of Federal tax benefit 658 1.1 257 0.5
Nondeductible goodwill 571 0.9 568 1.1
Other items (44) (0.1) (134) (0.3)
- ------------------------------------------------------------------------------
Effective rate $21,755 35.1% $17,538 33.9%
==============================================================================
7. PREFERRED AND COMMON 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 2001 2000 2000
- ------------------------------------------------------------------------------
A 5% 16,325 16,548 16,771
B 7% 3,290 3,290 3,290
C 7% 5,072 5,372 8,108
D 8% 18,727 19,927 19,927
- ------------------------------------------------------------------------------
Total preferred shares 43,414 45,137 48,096
==============================================================================
The Series A, Series B and Series D shares are convertible into two and
one-fourth shares of common stock, and the Series C shares are convertible
into one and eight-tenths shares of common stock. All of the preferred stock
may be redeemed at the option of the corporation for $10.00 per share.
There are 175,000,000 shares of common stock, par value $1.00 per share,
authorized and 46,159,000, 46,143,000 and 48,014,000 shares were outstanding
at March 31, 2001, December 31, 2000, and March 31, 2000, respectively.
Options to purchase 991,333 shares of common stock were outstanding on March
31, 2001. A total of 3,059,505 shares of common stock were reserved at March
31, 2001: 95,397 shares for the conversion of preferred stock and 2,964,108
shares for stock options.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited)
8. EARNINGS PER SHARE
Earnings per share computations are as follows:
- -----------------------------------------------------------------------------
Three Months Ended March 31 2001 2000
- -----------------------------------------------------------------------------
Basic:
Net income $40,262 $34,193
Preferred stock dividends 7 8
- -----------------------------------------------------------------------------
Net income applicable to common stock $40,255 $34,185
- -----------------------------------------------------------------------------
Average common shares outstanding (000s) 46,151 48,690
Earnings per share of common stock $ .87 $ .70
=============================================================================
Diluted:
Net income $40,262 $34,193
Average common shares outstanding (000s) 46,151 48,690
Dilutive effect of stock options (000s) 104 83
Conversion of preferred stock (000s) 98 105
- -----------------------------------------------------------------------------
Total average common shares (000s) 46,353 48,878
- -----------------------------------------------------------------------------
Earnings per share of common stock $ .87 $ .70
=============================================================================
Options to purchase 181,500 and 648,500 shares in 2001 and 2000,
respectively, at weighted average prices of $52.31 and $46.06, respectively,
were not included in the calculation of diluted earnings per share because
the options' exercise price was greater than the average market price.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
(Dollars in thousands, except per share data)
QUARTERLY RESULTS:
Earnings per share increased 24% to $.87 in the first quarter of 2001
compared to the $.70 earned in the prior year's first quarter. The return on
average assets increased to 1.70% compared to 1.45% in the prior year's first
quarter, and the return on average shareholders' equity increased to 16.03%
compared to 13.39%. Net income for the quarter totaled $40.262 million
compared to $34.193 million in 2000's first quarter. Income in the first
quarter of 2001 included a nonrecurring after-tax gain of $4.735 million from
the sale of the corporation's interest in Star Systems, Inc. to Concord EFS,
Inc. Earnings per share, excluding the nonrecurring income in the 2001 first
quarter, equaled $.77 per share, a 10% increase over the $.70 earned in 2000.
Excluding the 2001 gain, the return on average assets increased to 1.50% in
the 2001 first quarter compared to 1.45% in 2000, and the return on average
shareholders' equity was 14.14% compared to 13.39%.
Cash basis recurring income, which excludes both the effects of
intangible assets and their related amortization and nonrecurring income
items, equaled $38.578 million in the first quarter compared to $37.199
million in the prior year's first quarter. Cash basis recurring income
produced a return on average tangible assets of 1.66% in the first quarter
and a return on average tangible shareholders' equity of 18.17%.
Total assets at March 31, 2001, were $9.651 billion compared to $9.517
billion at March 31, 2000. Average loans declined less than 1% in the
corporation's normal, seasonally slow first quarter to $6.292 billion
compared to $6.341 billion during the fourth quarter of 2000. Growth of
commercial loans continued to be strong, increasing at an annualized pace of
12% over the fourth quarter. Consumer loans, primarily for automobiles, were
seasonally weak during the first quarter with average loans declining at a 9%
annualized rate. Real estate loans rose slightly, however, as consumers took
advantage of lower interest rates and refinanced existing mortgage debt.
Average deposits also declined seasonally at a rate of less than 1% in the
first quarter to $7.762 billion compared to $7.794 billion in the fourth
quarter of 2000. During 2000, the corporation sold or closed 24 branches,
including the sale of four branches in the fourth quarter.
The net interest margin was unchanged at 4.88% compared to the fourth
quarter of 2000 but declined 14 basis points compared to the first quarter of
2000. The decline can be partially attributed to several interest rate
increases by the Federal Reserve in 2000, which increased the corporation's
cost of funds at a faster pace than its yield on earning assets. The yield
on earning assets increased 15 basis points to 7.52% compared to the prior
year's first quarter, while the cost of funds increased 39 basis points to
3.42%. The increase in the cost of funds was primarily due to a 76-basis-
point increase in the cost of certificates of deposit as a result of
certificates issued in mid-2000 at higher rates. During the first quarter of
2001, the Federal Reserve lowered interest rates on three occasions by 1/2%,
and rates on the corporation's newly issued deposit products have declined
significantly since mid-2000.
First Virginia continues to maintain excellent asset quality. The net
charge-off rate remained unchanged at .14% of average loans compared to the
first quarter of 2000 with net charge-offs totaling $2.249 million in the
first quarter of 2001 compared to $2.201 million in the prior year's first
quarter. Nonperforming assets declined 12% to $19.265 million or .31% of
outstanding loans compared to $21.864 million or .34% at the end of 2000 and
also declined compared to $20.854 million or .33% of loans at March 31, 2000.
Loans past due 90 days increased to $12.230 million or .20% of loans at March
31, 2001, compared to $11.111 million or .17% of loans at December 31, 2000,
but declined 28% compared to $16.955 million or .26% of loans at March 31,
2000. The allowance for loan losses remained unchanged at 1.10% of
outstanding loans, which covers annualized net charge-offs 7.66 times and
represents 480% of nonperforming loans. As a consequence of the decline in
outstanding loans and the stable quality of the corporation's loan portfolio,
the provision for loan loss expense declined 63% to $.863 million in the
first quarter of 2001 compared to $2.307 million in the prior year's first
quarter.
A summary of nonperforming and delinquent loans is as follows:
- -----------------------------------------------------------------------------
March 31 2001 2000
- -----------------------------------------------------------------------------
Nonaccruing loans $13,415 $15,196
Restructured loans 943 1,608
Properties acquired by foreclosure 4,907 4,050
- -----------------------------------------------------------------------------
Total nonperforming assets $19,265 $20,854
=============================================================================
Percentage of total loans and foreclosed real estate .31% .33%
Loans 90 days past due and still accruing interest $12,230 $16,955
Percentage of total loans .20% .26%
=============================================================================
Noninterest income increased 44% in the first quarter compared to the
prior year. Excluding the $7.749 million nonrecurring gain from the sale of
the corporation's interest in Star Systems, Inc. and other securities gains
of $1.468 million, noninterest income increased 9% to $29.509 million
compared to $26.965 million in 2000. Service charges on deposit accounts
increased 13% compared to 2000's first quarter on the strength of a 32%
increase in fees from commercial accounts and a near tripling of internet
banking related fees from consumers and businesses. Electronic banking
service fees increased 55%, primarily as a result of additional income
generated by the corporation's successful introduction of the Visa CheckCard
in mid-2000.
Noninterest expense increased 1% to $80.107 million compared to $79.292
million in the 2000 first quarter but declined 3% compared to the $82.705
million recorded in the fourth quarter of 2000. Most categories of expense
were relatively unchanged compared to the prior year's first quarter.
Salaries and employee benefits increased $557 thousand or 1% compared to the
first quarter of 2000. Virtually all of this increase was a result of a 41%
increase in the cost of employee health insurance and was offset by a slight
decline in salaries expense with the total number of employees declining 3%
compared to the first quarter of 2000. The efficiency ratio of 56.3% was
unchanged compared to the full year of 2000, but up modestly compared to the
56.0% recorded in the first quarter of 2000.
Total shareholders' equity was $1.018 billion at March 31, 2001,
compared to $1.006 billion at March 31, 2000. Net book value per share
increased 5% to $22.05 per share compared to $20.94 per share at the end of
the prior year's first quarter. First Virginia remains one of the most
highly capitalized banks in the nation, and its Tier 1 capital leverage ratio
at March 31, 2001 was 9.27%, an 18-basis-point increase compared to 9.09% at
the end of the first quarter of 2000. During the first quarter of 2001, the
corporation did not repurchase any of its shares of stock and has 2.125
million shares remaining in its currently authorized share repurchase
program. As a result of purchasing 3.074 million shares of stock in 2000,
average diluted shares outstanding in the first quarter of 2001 declined 5%
to 46.353 million shares compared to 48.878 million in the 2000 first
quarter. At March 31, 2001, there were 46.159 million shares outstanding.
During the quarter, the corporation announced that it would be acquiring
James River Bankshares, Inc., a $516-million multi-bank holding company
headquartered in Suffolk, Virginia. James River operates four banks with
offices in the Virginia areas of Richmond-Petersburg, Hampton Roads, Northern
Virginia and Sussex County. The addition of James River will complement
existing banks in these markets and gain access to Sussex county with a 34%
share of the banking market. The acquisition is expected to be completed in
the third quarter of 2001.
FORWARD-LOOKING STATEMENTS:
Certain statements in this discussion may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown risks
including, but not limited to, changes in general economic and business
conditions, interest-rate fluctuations, competition within and without the
banking industry, new products and services in the banking industry, risks
inherent in making loans, including repayment risks and fluctuating
collateral values, changing trends in customer profiles and changes in laws
and regulations applicable to the corporation. Although the corporation
believes that its expectations with respect to the forward-looking statements
are based upon reasonable assumptions within the bounds of its knowledge of
its business and operations, there can be no assurance that actual results,
performance or achievements of the corporation will not differ materially
from any future results, performance or achievements expressed or implied by
such forward-looking statements.
AVERAGE BALANCES AND INTEREST RATES (Unaudited)
- -------------------------------------------------------------------------
Interest
Average Income/
Three Months Ended March 31, 2001 Balance Expense Rate
- -------------------------------------------------------------------------
ASSETS
Interest-earning assets:
Securities-available for sale:
U.S. Government and its agencies $ 76,390 $ 977 5.18%
Other* 9,198 109 5.88
Securities-held to maturity:
U.S. Government and its agencies 1,584,527 23,706 6.00
State, municipal and other* 315,257 4,694 5.95
---------- --------
Total securities 1,985,372 29,486 5.96
---------- --------
Loans, net of unearned income:
Installment 4,071,134 81,527 8.47
Real estate 1,122,942 22,777 8.20
Other* 1,098,413 22,625 8.41
---------- --------
Total loans 6,292,489 126,929 8.16
---------- --------
Money market investments 436,876 5,987 5.56
Other earning assets 18,633 317 6.82
---------- --------
Total earning assets and income $8,733,370 162,719 7.52
========== --------
Interest-bearing liabilities:
Interest checking $1,504,319 1,760 0.47
Money market accounts 888,997 7,158 3.27
Savings deposits 982,976 3,599 1.48
Consumer certificates of deposit 2,334,602 30,818 5.35
Large denomination certificates of deposit 497,964 7,131 5.81
---------- --------
Total interest-bearing deposits 6,208,858 50,466 3.30
Short-term borrowings 535,797 6,379 4.83
Long-term debt 1,016 28 10.93
---------- --------
Total interest-bearing liabilities
and interest expense $6,745,671 56,873 3.42
========== --------
Net interest income and net interest margin $105,846 4.88%
========
*Fully taxable-equivalent basis
Other average balances:
Demand deposits $1,553,355
Preferred shareholders' equity 445
Common shareholders' equity 1,004,478
Total assets 9,447,791
AVERAGE BALANCES AND INTEREST RATES (Unaudited)(Continued)
- -------------------------------------------------------------------------
Interest
Average Income/
Three Months Ended March 31, 2000 Balance Expense Rate
- -------------------------------------------------------------------------
ASSETS
Interest-earning assets:
Securities-available for sale:
U.S. Government and its agencies $ 106,048 $ 1,378 5.23%
Other* 10,260 157 7.58
Securities-held to maturity:
U.S. Government and its agencies 1,529,788 21,801 5.71
State, municipal and other* 345,840 5,099 5.90
---------- --------
Total Securities 1,991,936 28,435 5.73
---------- --------
Loans, net of unearned income:
Installment 4,259,342 82,466 7.78
Real estate 1,125,001 22,902 8.18
Other* 1,010,669 21,215 8.50
---------- --------
Total loans 6,395,012 126,583 7.95
---------- --------
Money market investments 240,362 3,336 5.58
Other earning assets 27,400 517 7.55
---------- --------
Total earning assets and income $8,654,710 158,871 7.37
========== --------
Interest-bearing liabilities:
Interest checking $1,515,166 2,263 0.60
Money market accounts 957,523 7,182 3.02
Savings deposits 1,063,724 3,996 1.51
Consumer certificates of deposit 2,311,057 26,216 4.56
Large denomination certificates of deposit 468,800 6,077 5.21
---------- --------
Total interest-bearing deposits 6,316,270 45,734 2.91
Short-term borrowings 414,485 4,927 4.78
Long-term debt 2,114 49 9.24
---------- --------
Total interest-bearing liabilities
and interest expense $6,732,869 50,710 3.03
========== --------
Net interest income and net interest margin $108,161 5.02%
========
*Fully taxable-equivalent basis
Other average balances:
Demand deposits $1,548,444
Preferred shareholders' equity 484
Common shareholders' equity 1,020,779
Total assets 9,429,322
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
As of March 31, 2001, there have been no material changes
in information regarding quantitative and qualitative
disclosures about market risk from the information presented
as of December 31, 2000 in the corporation's annual report
on Form 10-K.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 - K
----------------------------------
b) No reports on Form 8-K were filed during the quarter
ended March 31, 2001.
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
hereunto duly authorized.
FIRST VIRGINIA BANKS, INC.
/s/ Richard F. Bowman
May 14, 2001 --------------------------
Richard F. Bowman,
Executive Vice President,
Treasurer and
Chief Financial Officer