DATE: Thursday, July 10, 1997               TAG: 9707100465

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

                                            LENGTH:   63 lines

QUARTERLY INCOME RISES FOR 2 BANK COMPANIES GOOD ECONOMY AIDS CENTRAL FIDELITY AND FIRST VIRGINIA BANKS.

Buoyed by continued loan growth, expense control and higher fee income, two major banking companies in Virginia reported higher net income for the June 30 quarter.

Central Fidelity Banks Inc., which recently agreed to a merger with Wachovia Corp. of Winston-Salem, N.C., said it earned $31.18 million for the April-through-June quarter. That was up from $28.81 million for the comparable three months of 1996.

Central Fidelity's per-share earnings were 54 cents, up from 48 cents in the year-earlier quarter. These were in line with analysts' projections.

The Richmond-based banking company attributed part of the improvement to a 21 percent increase in earnings from trust services, fees, sales of investment securities and other non-interest income. Central Fidelity's major source of earnings - net interest income from loans and investments - rose 9 percent to $101.9 million.

``The strength of the Virginia economy continues to be favorable for loan and fee income growth,'' Lewis N. Miller Jr., Central Fidelity chairman and chief executive officer, said in a prepared statement.

However, the company boosted its provision for loan losses by 25 percent to $13.33 million. In last year's second quarter, it set aside $10.64 million for loan losses.

Central Fidelity's net loans at the end of June totaled $6.94 billion, a 7 percent increase from $6.47 billion at mid-1996.

The price of Central Fidelity's shares were unchanged Wednesday at $37.06.

Meanwhile, First Virginia Banks Inc. reported a 10 percent increase in second-quarter net income, due partly to stronger demand for auto and commercial loans.

The Falls Church-based parent of First Virginia Bank of Tidewater said it earned a record $31.35 million in the June 30 quarter, compared with $28.57 million in the year-earlier period.

Earnings per share rose to 94 cents from 85 cents in the 1996 second quarter. The latest results matched analysts' expectations for the quarter.

``Automobile loan volume led the growth in loans, fueled by the success of the loan production offices established in recent years,'' said Barry J. Fitzpatrick, First Virginia chairman, president and chief executive.

For the three months ended June 30, its net interest income totaled $101.69 million, an 8 percent increase from the year-earlier quarter, First Virginia said.

Income from fees and other non-interest sources rose 6 percent after excluding a one-time gain from the sale of mortgage servicing rights in the second quarter of 1996, the company said.

First Virginia's earnings also were helped by a 10 percent reduction in its provision for loan losses, which dropped to $5.25 million.

Since mid-1996, the company's net loans have increased 15 percent to $5.99 billion from $5.19 billion.

The price of First Virginia's stock slipped 6.25 cents Wednesday to close at $61.31.

Separately, Heritage Bankshares Inc. in Norfolk said its second-quarter net income jumped 29 percent to $252,000 from $195,000.

The parent of Heritage Bank & Trust cited an 18 percent improvement in net interest income and a 5 percent rise in income from non-interest sources.

The banking company's earnings per share were 31 cents, up from 25 cents in the year-earlier period.

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