SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K

(Mark One)
  X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----  EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended        December 31, 1996
                          -----------------------------------------------------


                                     - OR -

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from _________________  to  _____________________


SEC File Number:  0-24668

                           FFVA FINANCIAL CORPORATION
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its Charter)

                  Virginia                                     74-2712490
-------------------------------------------            ------------------------
       (State or other jurisdiction of                       (I.R.S. Employer
      of incorporation or organization)                    Identification No.)

925 Main Street, Lynchburg, Virginia                           24504
----------------------------------------                     ----------
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code:              (804) 845-2371
                                                                 --------------
Securities registered pursuant to Section 12(b) of the Act:           None
                                                                 --------------
Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                                (Title of Class)

      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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

      The aggregate market value of the voting stock held by  non-affiliates  of
the Registrant,  based upon the last sale price of such stock on March 17, 1997,
was $93.7 million. (4,073,014 shares at $23.00 per share).

      As of March 17, 1997, the Registrant had 4,542,552  shares of Common Stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

1.   Parts  II  and  IV  --  Portions  of  the  Registrant's  Annual  Report  to
     Stockholders for the year ended December 31, 1996.
2.   Part III -- Portions of the Registrant's Proxy Statement for Annual Meeting
     of Stockholders to be held on April 22, 1997.


<PAGE>



                                    PART I

Item 1. Business
-----------------

General

      FFVA  Financial  Corporation  ("Registrant"  or  "Company")  is a  unitary
savings and loan  holding  company that was  incorporated  in May 1994 under the
laws of the  Commonwealth  of Virginia for the purpose of  acquiring  all of the
common  stock of First  Federal  Savings Bank of Lynchburg  (the  "Bank").  This
acquisition  occurred  in October of 1994 at which time the Bank  simultaneously
converted  from a mutual  to  stock  institution,  sold  all of its  outstanding
capital stock to the Company and the Company made its initial public offering of
common  stock.  As of December 31, 1996,  the Company had total assets of $533.8
million,  total  deposits of $397.4  million and  stockholders'  equity of $74.5
million or 13.95% of total assets under generally accepted accounting principles
("GAAP").  The only  subsidiary  of the  Company  is the  Bank.  The Bank has no
subsidiaries at this time.

      The Bank is a federally  chartered  capital  stock savings bank located in
Lynchburg,  Virginia.  The Bank was founded in 1923 as Lynchburg Mutual Building
and Loan Association and operated under a charter granted by the Commonwealth of
Virginia.  A federal  charter  was  obtained in 1936 and the name was changed to
First  Federal  Savings and Loan  Association  of Lynchburg.  In 1988,  the Bank
obtained a federal  savings bank  charter and changed its name to First  Federal
Savings Bank of  Lynchburg.  The Bank's  deposits are  federally  insured by the
Savings  Association  Insurance Fund ("SAIF"),  as  administered  by the Federal
Deposit Insurance Corporation ("FDIC").

      The Company  directs and plans the  activities of the Bank,  the Company's
primary asset.  The Company's  business  activities to date have been limited to
its investment in the Bank, other equity investments, loans made to the Bank for
use in the  normal  course of the Bank's  business,  and loans made to the First
Federal  Savings Bank Employee Stock  Ownership Plan ("ESOP") to enable the ESOP
to purchase shares of the Company's common stock in the initial public offering.
References  to the  Company  include  the Bank,  unless  the  context  otherwise
indicates.

      The Company  offers a variety of  financial  services to meet the needs of
the  communities  it serves.  The  Company's  principal  business is  attracting
deposits from the general  public and investing  those  deposits,  together with
funds generated from  operations,  to originate one- to four-family  residential
mortgage loans. To a lesser extent, the Company invests in multi-family mortgage
loans,  commercial  real  estate  loans,   construction  loans,  land  and  land
development  loans and  consumer  and other  loans.  The Company also invests in
mortgaged-backed  securities and investment  securities.  The Company's revenues
are  derived   principally  from  interest  earned  on  its  mortgage  loan  and
mortgage-backed securities portfolios and interest and dividends received on its
investment  securities.  The Company's primary sources of funds are deposits and
principal  and  interest   payments  on  loans,   mortgage-backed   and  related
securities, investment securities and borrowings.

      The  Company  operates  from its main office  located at 925 Main  Street,
Lynchburg,  Virginia and eleven branch  offices.  The Bank has five locations in
the  City  of  Lynchburg,  Virginia,  and  locations  at  Altavista,  Farmville,
Keysville,  Madison  Heights,  South Boston (2), and South Hill,  Virginia.  The
office located in Keysville was acquired from Crestar  Financial  Corporation in
August 1995. The office located in Madison  Heights was completed and opened for
business in June 1996. The Company's  primary  market area includes,  but is not
limited to, the City of Lynchburg, and all or portions of Amherst,

                                      1

<PAGE>



Appomattox,  Bedford, Brunswick,  Buckingham,  Campbell, Charlotte,  Cumberland,
Halifax,  Lunenburg,  Mecklenburg,  Nelson, Nottaway,  Pittsylvania,  and Prince
Edward Counties in Virginia.

Lending Activities

      Loan  Portfolio   Composition.   The  Company's  loan  portfolio  consists
primarily of  conventional  first  mortgage loans secured by one- to four-family
residences  and,  to a lesser  extent,  multi-family,  commercial  real  estate,
construction,  land  and land  development  loans,  consumer  and  other  loans.
Consumer  loans in the  Company's  portfolio  at December  31, 1996  principally
consisted of loans secured by deposits, loans secured by real estate, automobile
loans, mobile home loans and small business loans.

      The Company's  primary  lending  strategy is to originate  adjustable  and
fixed-rate one- to four-family  mortgages for portfolio.  From time to time, the
Company may chose to limit  interest rate risk exposure on fixed-rate  mortgages
by serving as closing agent for various mortgage corporations. This relationship
allows  the  Company  to earn fee  income  on loans  produced  as agent  without
subjecting  the  Company  to undue  interest  rate risk  exposure.  The  Company
continues  to monitor the interest  rate  environment  and evaluate  loan volume
related to interest  rate risk.  The Company  continues  to pursue high  quality
multi-family  and commercial  real estate loans in the Company's  primary market
area. The Company also continued to aggressively  market short term consumer and
small  business  loans  during  1996,  as year end  balances  increased to $32.4
million from $20.8 million.





                                      2

<PAGE>



      The  following  table sets forth the  composition  of the  Company's  loan
portfolio in dollar amounts and in percentage at the dates indicated.

<TABLE>
<CAPTION>

                                                                          At December 31,
                                 --------------------------------------------------------------------------------------------------
                                        1992                 1993               1994                 1995               1996
                                 --------------------  ------------------  ------------------  ------------------  ----------------
                                           Percent of          Percent of          Percent of          Percent of         Percent of
                                 Amount      Total     Amount    Total     Amount    Total     Amount    Total     Amount    Total
                                 ------    ----------  ------  ----------  ------  ----------  ------  ----------  ------ ----------
                                                                          (Dollars in Thousands)
Mortgage Loans:
<S>                             <C>         <C>      <C>        <C>       <C>       <C>       <C>       <C>       <C>        <C>   
  One- to four-family(1)....... $211,675     78.47%  $207,649    76.60%   $212,872   77.21%   $220,433   73.73%   $232,237    70.52%
  Multi-family ................   11,484      4.26     12,123     4.47      11,626    4.21      15,361    5.14      15,226     4.62
  Commercial real estate.......   26,729      9.91     26,872     9.91      28,882   10.48      30,414   10.17      35,006    10.63
  Construction ................    6,742      2.50     11,245     4.15       6,707    2.43       9,453    3.16      12,554     3.81
  Land and land development....    1,819       .67      2,829     1.05       2,725     .99       2,494     .83       1,939      .59
                                --------    ------   --------   ------    --------  ------    --------  ------    --------   ------ 
    Total .....................  258,449     95.81    260,718    96.18     262,812   95.32     278,155   93.03     296,962    90.17
Consumer and other loans.......   11,310      4.19     10,364     3.82      12,906    4.68      20,831    6.97      32,389     9.83
                                --------    ------   --------   ------    --------  ------    --------  ------    --------   ------ 
    Total loans receivable.....  269,759    100.00%   271,082   100.00%    275,718  100.00%    298,986  100.00%    329,351   100.00%
                                            ======              ======              ======              ======               ======


Less:
  Loans in process ............    2,900                5,964               3,138               3,585                3,533
  Unearned discounts and
   deferred loan fees .........    1,170                1,073                 994                 969                  980
  Allowance for credit losses..    2,359                2,576               3,054               3,217                3,310
                                --------             --------            --------            --------             --------  
  Loans receivable, net........ $263,330             $261,469            $268,532            $291,215             $321,528
                                ========             ========            ========            ========             ========

</TABLE>

        ----------------------
        (1)   Includes home equity loans on one- to four-family residences.

                                               3

<PAGE>



      Loan Maturity.  The following  table sets forth certain  information as of
December  31,  1996,  regarding  the  dollar  amount  of loans  maturing  in the
Company's portfolio based on their contractual terms to maturity.  ARM loans are
included  in the period in which  interest  rates are next  scheduled  to adjust
rather than the period in which they contractually  mature.  Fixed rate mortgage
loans and  construction  loans  are  included  in the  period in which the final
contractual repayment is due.

<TABLE>
<CAPTION>
                                                               After
                                                                One
                                                     Within   Through      After
                                                      One      Five        Five
                                                      Year     Years       Years     Total
                                                     -----    -------      -----     -----
                                                                 (In Thousands)
Real estate loans:
  Permanent mortgage loans including,
<S>                                                <C>        <C>        <C>        <C>     
     multi-family and commercial real estate....   $115,548   $ 52,075   $116,785   $284,408
  Construction loans, net ......................      7,998      1,023         --      9,021
                                                   --------   --------   --------   --------
Total real estate loans ........................    123,546     53,098    116,785    293,429
  Consumer and other loans .....................     10,252      6,809      2,289     19,350
  Commercial installment loans .................     10,099      2,563        377     13,039
                                                   --------   --------   --------   --------
      Total loans ..............................   $143,897   $ 62,470   $119,451   $325,818
                                                   ========   ========   ========   ========
</TABLE>


      One- to Four-Family  Mortgage Lending.  The Company offers both fixed rate
and ARM  loans  secured  by one- to  four-family  residences,  most of which are
located in the  Company's  primary  market area.  The majority of such loans are
secured by  property  which  typically  serves as the primary  residence  of the
owner.  Sources  of  loan  originations   typically  include  existing  or  past
customers,  building  contractors,  members  of the local  communities  and real
estate agents in the Company's lending area.

      The Company generally originates one- to four-family  residential mortgage
loans in amounts up to 80% of the lower of the appraised  value or selling price
of the property  securing the loan.  One- to  four-family  mortgage loans may be
originated in amounts up to 95% of the lower of the  appraised  value or selling
price of the mortgaged  property,  provided that the property is  owner-occupied
and private  mortgage  insurance  ("PMI") is provided on the amount in excess of
80% of the  lesser of the  appraised  value or  selling  price.  Mortgage  loans
originated by the Company  generally include  due-on-sale  clauses which provide
the Company  with the  contractual  right to deem the loan  immediately  due and
payable in the event  that the  borrower  transfers  ownership  of the  property
without the Company's  consent.  Due-on- sale clauses are an important  means of
adjusting the rates on the Company's  fixed-rate mortgage loan portfolio and the
Company has generally exercised its rights under these clauses.

      The Company currently offers ARM loans that adjust annually as well as ARM
loans that adjust  annually  after the first  three years or adjust  every three
years after the first three year period. The Company offers ARM loans with terms
up to 30 years. The Company's ARM loans typically carry an initial interest rate
below  the  fully-indexed  rate for the loan.  The  initial  discounted  rate is
determined by the Company in accordance with market and competitive factors. The
Company's ARM loans adjust by a maximum of 2.0% per adjustment,  with a lifetime
cap of 6%.

      The  volume and types of ARM loans  originated  by the  Company  have been
affected by such market factors as the level of interest rates,  competition and
consumer  preferences.  The Company will  continue to offer ARM loans,  however,
there  can be no  assurance  that  in the  future  the  Company  will be able to
originate  a  sufficient  volume  of ARM  loans  to  increase  or  maintain  the
proportion that these

                                      4

<PAGE>



loans bear to total loans.  In fact, the proportion of ARM loans  outstanding as
compared  to total  mortgage  loans has  declined  during 1995 and 1996 due to a
relatively stable and affordable fixed rate lending environment.

      The  origination  of ARM loans  helps  reduce the  Company's  exposure  to
increases in interest  rates.  However,  ARM loans  generally  pose credit risks
different  from the risks  inherent  in fixed rate loans,  primarily  because as
interest  rates rise,  the  underlying  payments of the borrower  rise,  thereby
increasing the potential for default.  In order to minimize risks,  borrowers of
ARM loans are  qualified  at the maximum  first  adjustment  rate at the time of
origination. The Company has not originated, nor does it currently originate ARM
loans which provide for negative amortization.

      The Company offers fixed rate mortgage loans with terms of 10 to 30 years,
which amortize monthly.  Interest rates charged on fixed rate mortgage loans are
competitively priced based on market conditions and the Company's cost of funds.
From time to time,  the Company has chosen to limit  interest rate risk exposure
on  fixed-rate  mortgages  by  serving  as closing  agent for  various  mortgage
corporations.  During 1994,  1995 and 1996,  fees earned in this  capacity  were
$196,000, $105,000, and $64,000, respectively.

      The  Company has in the past sold a portion of its  conforming  fixed rate
mortgage loans in the secondary  market to federal  agencies while retaining the
servicing  rights on such loans sold.  As of December  31, 1996,  the  Company's
portfolio of loans serviced for others totalled approximately $5.9 million.

      Multi-Family Lending. The Company originates  multi-family loans generally
with contractual  terms of up to 25 years.  These loans are secured by apartment
buildings  and are made in amounts of up to 80% of the lower of appraised  value
or selling  price of the property.  In making such loans,  the Company bases its
underwriting  decision  primarily on the net operating  income  generated by the
real estate to support the debt service,  the financial resources and the income
level of the borrower,  the borrower's  experience in owning or managing similar
property, the marketability of the property and the Company's lending experience
with the borrower.  The Company  generally  requires  personal  guarantees  from
borrowers.

      Commercial Real Estate  Lending.  The Company  originates  commercial real
estate loans that are  generally  secured by  properties  used  exclusively  for
business purposes such as retail stores, mini- warehouse units, churches, hotels
and professional  office buildings  located  primarily in the Company's  primary
market area.  The Company's  commercial  real estate loans are generally made in
amounts up to the lower of 80% of the  appraised  value or selling  price of the
property.  These  loans are  generally  made with terms of up to 15 years.  Most
commercial  real estate  loans are ARMs or five to 10 year  balloons.  In making
such loans,  the Company  considers the net operating income of the property and
the borrower's  expertise,  financial  strength and credit history.  The Company
generally  requires personal  guarantees from the borrowers or the principals of
the borrowing entity.

      Since payments on loans secured by commercial  real estate  properties are
often  dependent on the  successful  operation or management of the  properties,
repayment of such loans may be subject to a greater extent to adverse conditions
in the real  estate  market  or the  economy.  As a  result,  loans  secured  by
commercial  real estate  properties  generally  involve a greater degree of risk
than residential mortgage loans.


                                      5

<PAGE>



      Construction  Loans. The Company's  construction loans primarily have been
made to finance the construction of one- to four-family  residential  properties
and, to a lesser extent,  multi-family  residential  and commercial  real estate
properties.  Construction  loans  generally are made to customers of the Company
and developers and contractors in the Company's lending area. The Company offers
construction  loans in amounts up to 80% of the appraised  value of the property
securing the loan.  Loan proceeds are  disbursed in  increments as  construction
progresses  and as  inspections  warrant.  Single-family  residential  loans are
structured to allow the borrower to pay interest only on the funds  advanced for
construction  for a period of up to 18 months.  Multi-family and commercial real
estate  construction  loans are  originated for up to one year with the borrower
paying a variable  rate of interest  indexed to prime rate as  published  in The
Wall  Street  Journal.  Upon or prior to  completion  of the  construction,  the
borrower generally applies to the Company for a permanent loan.

      Construction  financing is generally considered to involve a higher degree
of risk of loss than  long-term  financing on improved,  occupied real estate as
the builder may encounter cost over-runs or  construction  delays.  As a result,
construction  lending often involves the disbursement of substantial  funds with
repayment  dependent,  in part, on the success of the construction.  At December
31, 1996,  the Company had $12.6  million,  or 3.81% of its total loan portfolio
invested in  construction  loans.  At that date, the Company had originated $3.9
million in construction  loans to various local contractors on unsold properties
located in the Company's primary market area.

      Land and Land  Development  Loans.  The Company  originates  loans for the
acquisition  and development of property to contractors  and  individuals.  Land
development  loans  typically  are  short-term  loans.  The Company  offers land
development  loans in amounts up to 75% of the  appraised  value of the property
securing the loan.  Loan proceeds are  disbursed in  increments  as  development
progresses and as inspections warrant. Land development loans are originated for
up to five years with the borrower  paying  interest only,  indexed to the prime
rate as published in The Wall Street Journal.  Land development  loans generally
are made to customers of the Company and  developers and  contractors  with whom
the Company has had prior lending experience.

      In addition  to land  development  loans,  the  Company  originates  loans
secured by improved lots and raw land. The Company offers lot loans of up to 75%
of lesser of the  appraised  value or selling  price of the  property.  Raw land
(unimproved)  loan to value is limited to 65%. Such loans have terms of up to 15
years.  Land and land development  lending is generally  considered to involve a
higher  degree of risk of loss than  long-term  financing on improved,  occupied
real estate.

      Consumer and Other Loans.  The Company also offers  secured and  unsecured
consumer  loans.  The  primary  collateral  for secured  loans  consists of real
estate,  automobiles,  and deposits,  however  other types of collateral  may be
considered. In underwriting consumer loans, the Company considers the borrower's
credit history,  an analysis of the borrower's  income,  expenses and ability to
repay  the loan and the value of the  collateral,  if any.  Federal  regulations
allow the Company to make secured and unsecured  consumer  loans of up to 35% of
the Company's assets.  In addition,  the Company has lending authority above the
35% limit for certain consumer loans,  such as home improvement  loans and loans
secured by savings accounts.

      The Company may make secured or unsecured loans for commercial, corporate,
business or agricultural  purposes,  including the issuance of letters of credit
secured by real estate, business equipment, inventories, accounts receivable and
cash  equivalents  in amounts not exceeding 10% of the Company's  assets.  These
loans are generally for the purpose of small business operations.

                                      6

<PAGE>




      Consumer  and  business  loans  generally  involve  more risk  than  first
mortgage  one- to  four-family  residential  real estate  loans.  In the case of
certain  collateralized  consumer and business  loans,  the value of repossessed
collateral may not prove to be an adequate source of repayment. In addition, the
collateral may be less marketable than single family real estate.  Further,  the
application  of various  federal  and state  laws,  including  federal and state
bankruptcy  and  insolvency  laws,  may limit the amount which can be recovered.
These loans may also give rise to claims and defenses by a borrower  against the
Company,  and a borrower  may be able to assert  against the Company  claims and
defenses which it has against the seller of the underlying collateral.





                                      7

<PAGE>



     Delinquent Loans. At December 31, 1994, 1995 and 1996, delinquencies in the
Company's portfolio were as follows:

<TABLE>
<CAPTION>

                                 At December 31, 1994                At December 31, 1995                 At December 31, 1996
                         ----------------------------------- -----------------------------------  ----------------------------------
                              60-89 Days     90 Days or More     60-89 Days      90 Days or More      60-89 Days     90 Days or More
                         ----------------- ----------------- -----------------  ----------------  ----------------- ----------------
                         Number  Principal Number  Principal Number  Principal  Number Principal  Number  Principal Number Principal
                           of     Balance    of     Balance    of     Balance     of    Balance     of     Balance    of    Balance
                          Loans   of Loans  Loans   of Loans  Loans   of Loans  Loans   of Loans   Loans   of Loans Loans   of Loans
                          -----   --------  -----   --------  -----   --------  -----   --------   -----   -------- -----   --------

                                                                   (Dollars in Thousands)

<S>                          <C>   <C>         <C>   <C>         <C>   <C>         <C>    <C>         <C>    <C>       <C>   <C>  
One- to four-family....        7   $  140       16   $  656        7   $   233      18    $  729       13    $ 469      12   $  619
Multi-family...........       --       --       --       --       --        --      --        --       --       --      --       --
Commercial real estate.       --       --        4    1,730       --        --       4     1,776       --       --      --       --
Construction ..........       --       --       --       --       --        --      --        --       --       --      --       --
Land and land development     --       --        1      150       --        --      --        --       --       --      --       --
                            ----   ------     ----    -----   ------    ------  ------   -------   ------   ------  ------    -----
   Total mortgage loans        7      140       21    2,536        7       233      22     2,505       13      469      12      619
Other loans............       --       --        6       23        3         9      12        93       12      166      11       67
                            ----   ------      ---   ------    -----     -----   -----     -----    -----    -----   -----    -----
   Total loans.........        7   $  140       27   $2,559       10    $  242      34    $2,598       25   $  635      23   $  686
                             ===    =====      ===    =====    =====     =====   =====     =====    =====    =====   =====    =====
Delinquent loans to 
 net loans.............      .09%     .05%     .36%     .95%     .12%      .08%    .42%      .89%     .30%     .20%    .27%     .21%
Delinquent loans to 
 total loans..........       .09%     .05%     .36%     .93%     .12%      .08%    .42%      .88%     .30%     .19%    .27%     .21%

</TABLE>



                                      8

<PAGE>



      Non-Performing   Assets.   The  following  table  sets  forth  information
regarding non-accrual loans and loans that are 90 days or more delinquent but on
which the  Company is  accruing  interest  at the dates  indicated.  The Company
continues  accruing  interest on loans  delinquent 90 days or more past due, but
reserves  100% of the interest due on such loans,  thus  effecting a non-accrual
status.  This  policy  was  established  at the  request of the Office of Thrift
Supervision ("OTS").

<TABLE>
<CAPTION>

                                                                                   At December 31,
                                                                   ----------------------------------------------
                                                                    1992      1993     1994       1995      1996
                                                                   ------    ------   ------     ------    ------
                                                                                (Dollars in Thousands)
Loans accounted for on a non-accrual basis:
Mortgage loans:
<S>                                                                <C>       <C>       <C>       <C>       <C>   
  One- to four-family ..........................................   $1,000    $  866    $  656    $  677    $  619
  All other mortgage loans .....................................    5,206     3,669     2,814     1,776     1,074
Consumer and other loans .......................................       --        --        --        --        67
                                                                   ------    ------    ------    ------    ------
    Total(1) ...................................................    6,206     4,535     3,470     2,453     1,760
                                                                   ------    ------    ------    ------    ------
Accruing loans which are contractually past due 90 days or more:
Mortgage loans:
  Permanent loans secured by one- to four-
    family dwelling units ......................................       --        --        --        52        --
  All other mortgage loans .....................................       --        --        --        --        --
Consumer and other loans .......................................       73        13        23        93        --
                                                                   ------    ------    ------    ------    ------
    Total ......................................................       73        13        23       145        --
                                                                   ------    ------    ------    ------    ------
    Total non-performing loans .................................    6,279     4,548     3,493     2,598     1,760
    Total foreclosed real estate ...............................      249       400        85        --       154
                                                                   ------    ------    ------    ------    ------
    Total non-performing assets(2) .............................   $6,528    $4,948    $3,578    $2,598    $1,914
                                                                   ======    ======    ======    ======    ======
Restructured loans .............................................   $  656    $  372    $   --    $   --    $   --
Non-performing loans to net loans ..............................     2.38%     1.74%     1.30%      .89%      .55%
Non-performing loans to total loans ............................     2.33%     1.68%     1.28%      .88%      .54%
    Total non-performing assets to total
       assets ..................................................     1.79%     1.30%      .81%      .52%      .36%
</TABLE>

-----------------------------------
(1)  The amount of  interest  income  which would have been  recorded  under the
     original  terms of such  nonperforming  loans was $225,000,  $135,000,  and
     $44,000  for  the  years  ended   December  31,  1994,   1995,   and  1996,
     respectively.   During  the  year  ended  December  31,  1996,  $36,000  of
     delinquent  interest was reserved on non-accrual  loans,  while $108,000 of
     interest was included in interest  income as a result of non-accrual  loans
     being  paid-off or being returned to a full accrual  status.  Consequently,
     interest income was increased  $72,000 for the year ended December 31, 1996
     as a result of  changes  in the  status of  non-accrual  loans.  Changes in
     accrued interest on nonperforming  consumer loans are disregarded  based on
     immateriality.
(2)  All non-performing  assets at December 31, 1996 were included in classified
     assets at that date.

      The reduction in  non-performing  assets from $2.6 million at December 31,
1995 to $1.9 million at December 31, 1996 resulted  primarily from the payoff of
a  delinquent  commercial  real estate loan  secured by property  located in the
Lynchburg  area.  At December  31,  1996  non-performing  loans  included a $1.1
million loan participation secured by a shopping center in Bedford, Virginia.

      Classified Assets. Federal regulations and the Company's Classification of
Assets  Policy  provide  for  the  classification  of  loans  and  other  assets
considered by the OTS to be of lesser  quality as  "Substandard,"  "Doubtful" or
"Loss"  assets.  An  asset  is  considered  Substandard  if it  is  inadequately
protected by the current net worth and paying  capacity of the obligor or of the
collateral pledged, if any.

                                      9

<PAGE>



Substandard  assets include those  characterized  by the "distinct  possibility"
that the insured  institution  will sustain "some loss" if the  deficiencies are
not corrected. Assets classified as Doubtful have all of the weaknesses inherent
in  those  classified   Substandard  with  the  added  characteristic  that  the
weaknesses  present make  "collection  or  liquidation in full," on the basis of
currently  existing facts,  conditions,  and values,  "highly  questionable  and
improbable." Assets classified as Loss are those considered  "uncollectible" and
of such little value that their  continuance as assets without the establishment
of a specific  loss  reserve is not  warranted.  Assets  which do not  currently
expose the insured  institution to sufficient risk to warrant  classification in
one of the  aforementioned  categories but possess weaknesses are required to be
designated "Special Mention" by management.

      When an insured  institution  classifies  one or more assets,  or portions
thereof,  as  Substandard  or  Doubtful,  it is required to  establish a general
allowance for credit losses in an amount deemed prudent by  management.  General
allowances  represent loss allowances  which have been  established to recognize
the inherent risk associated with lending activities, but which, unlike specific
allowances,  have not been  allocated  to  particular  problem  assets.  When an
insured institution classifies one or more assets, or portions thereof, as Loss,
it is required either to establish a specific allowance for losses equal to 100%
of the amount of the asset so  classified  or to  charge-off  such  amount.  The
Company's policies provide that the senior management and the Board of Directors
regularly  review  problem  loans and review  quarterly  all  classified  assets
reported to the OTS.

      The following table sets forth the Company's classified assets at December
31, 1996.

                                           At
                                       December 31,
                                          1996
                                      --------------
                                      (In Thousands)

Special Mention...............           $  813
Substandard...................            3,257
Doubtful......................               --
Loss..........................               29
                                         ------
 Total........................           $4,099
                                         ======



      The Company's most significant  classified  asset is a loan  participation
secured by a shopping  center in Bedford,  Virginia.  At December 31, 1996, this
loan had a balance of $1.1 million and was classified Substandard.

Allowance for Credit Losses

      The  allowance for credit  losses is  established  through a provision for
credit losses based on management's  evaluation of the risk inherent in its loan
portfolio  and the regional  and  national  economy.  The  determination  of the
adequacy  of the  valuation  allowance  is  based  on a  detailed  analysis  and
classification   of  loans  with  known  or  anticipated   adverse   performance
characteristics,  and includes  consideration of historical  patterns,  industry
experience,  current  economic  conditions,  changes  in  composition  and  risk
characteristics of the loan portfolio,  and other factors deemed relevant to the
collectibility  of  the  loans  currently  outstanding.   In  addition,  various
regulatory agencies, as an integral

                                      10

<PAGE>



part of their examination  process,  periodically review the Company's allowance
for credit losses and valuation of foreclosed real estate.  Such authorities may
require the  Company to  recognize  additions  to the  allowance  based on their
judgments about information available to them at the time of their examination.

      When  the  Company  determines  that an asset  should  be  classified,  it
generally  does not  establish  a specific  allowance  for such asset  unless it
determines  that such  asset may result in a loss.  The  Company  may,  however,
increase its general  valuation  allowance in an amount deemed prudent.  General
valuation  allowances  represent loss allowances  which have been established to
recognize  the inherent  risk  associated  with lending  activities,  but which,
unlike  specific  allowances,  have not been  allocated  to  particular  problem
assets.  The Company's  determination as to the classification of its assets and
the amount of its  valuation  allowances is subject to review by the OTS and the
FDIC which can order the  establishment  of additional  general or specific loss
allowances.

      The Company  provided  $255,000  and $60,000 to its  allowance  for credit
losses for the years ended December 31, 1995 and 1996, respectively. At December
31, 1996,  the total  allowance  was $3.3  million,  which  included  $29,000 in
specific valuation  allowances with the remaining balance  representing  general
valuation   allowances.   Adjustments  to  the  allowance  reflect  management's
evaluation  of the  risks  inherent  in its loan  portfolio.  The  Company  will
continue to monitor and modify the level of its  allowance  for credit losses in
order to maintain a level which  management  considers  adequate.  For the years
ended  December 31, 1995 and 1996,  the Company had  charge-offs of $154,000 and
$27,000, respectively, against this allowance.

      The following table sets forth an analysis of the Company's  allowance for
credit losses for the periods indicated.

<TABLE>
<CAPTION>

                                                                          For the Year Ended December 31,
                                                               ---------------------------------------------------
                                                                 1992       1993       1994      1995        1996
                                                               --------  ---------   --------  --------    -------
                                                                              (Dollars in Thousands)

<S>                                                            <C>        <C>        <C>        <C>        <C>    
Balance at beginning of period .............................   $ 1,652    $ 2,359    $ 2,576    $ 3,054    $ 3,217
Provision for credit losses ................................       726        900        600        255         60
Charge-offs:
  Mortgage loans ...........................................        55        698        196         14         15
  Other loans ..............................................        26         12          2        140         12
Recoveries:
  Mortgage loans ...........................................        55          5         52          8          6
  Other loans ..............................................         7         22         24         54         54
                                                               -------    -------    -------    -------    -------
Balance at end of period ...................................   $ 2,359    $ 2,576    $ 3,054    $ 3,217    $ 3,310
                                                               =======    =======    =======    =======    =======
Ratio of net charge-offs (recoveries) during the period to
  average net loans outstanding during the period...........        01%       .26%       .05%       .03%      (.01)%
Ratio of allowance for credit losses to net loans receivable
  at the end of the period .................................       .90        .99       1.14       1.10       1.03
Ratio of allowance for credit losses to total
  non-performing assets at the end of the priod.............     36.14      52.06      85.35     123.83     172.94
Ratio of allowance for credit losses to
  non-performing loans at the end of the period.............     37.57      56.64      87.43     123.83     188.07

</TABLE>




                                       11

<PAGE>



      The following  table sets forth the allocation of the Company's  allowance
for credit  losses by loan category and the percent of loans in each category to
total loans receivable,  at the dates indicated.  The portion of the credit loss
allowance allocated to each loan category does not represent the total available
for  future  losses  which may occur  within the loan  category  since the total
credit loss  allowance  is a  valuation  reserve  applicable  to the entire loan
portfolio.

<TABLE>
<CAPTION>
                                                                               At December 31,
                               ----------------------------------------------------------------------------------------------------
                                      1992                  1993                  1994                  1995                  1996
                               -------------------  -------------------  ------------------    ------------------ -----------------
                                       Percent of           Percent of          Percent of            Percent of          Percent of
                                        Loans to             Loans to            Loans to              Loans to            Loans of
                               Amount  Total Loans  Amount  Total Loans  Amount Total Loans    Amount Total Loans Amount Total Loans
                               ------  -----------  ------  -----------  ------ -----------    ------ ----------- ------ -----------
                                                                       (Dollars in Thousands)
At end of period allocated to:
<S>                             <C>        <C>      <C>         <C>       <C>       <C>        <C>         <C>     <C>        <C>   
  One- to four-family.......... $  221     78.47%   $  230      76.60%    $  203    77.21%     $  301      73.73   $  235     70.52%
  Multi-family.................     57      4.26        61       4.47         58     4.21          77       5.14       77      4.62
  Commercial real estate.......  1,166      9.91       984       9.91      1,201    10.48       1,108      10.17      839     10.63
  Construction.................     42      2.50       152       4.15         34     2.43          68       3.16       82      3.81
  Land and land development....     70       .67        73       1.05         58      .99          25        .83       19       .59
  Consumer and other loans.....    258      4.19       205       3.82        229     4.68         260       6.97      412      9.83
  Unallocated general reserves.    545        --       871         --      1,271       --       1,378         --    1,646        --
                                 -----    ------     -----      -----      ----- --------       -----      -----    -----    ------
      Total allowance.......... $2,359    100.00%   $2,576     100.00%    $3,054   100.00%     $3,217     100.00%  $3,310    100.00%
                                 =====    ======     =====     ======      =====   ======       =====     ======    =====    ======

</TABLE>


                                       12

<PAGE>



Investment Activities

      Federally  chartered savings  institutions have the authority to invest in
various types of liquid assets, including U.S. Treasury obligations,  securities
of various federal  agencies,  certain  certificates of deposit of insured banks
and savings institutions,  certain bankers'  acceptances,  repurchase agreements
and federal funds. Subject to various restrictions,  federally chartered savings
institutions may also invest their assets in commercial paper,  investment grade
corporate  debt  securities  and  mutual  funds  whose  assets  conform  to  the
investments  that  a  federally   chartered  savings  institution  is  otherwise
authorized to make  directly.  Additionally,  the Company must maintain  minimum
levels of  investments  that  qualify as liquid  assets  under OTS  regulations.
Historically,  the Company has  maintained  liquid  assets above the minimum OTS
requirements  and at a level  believed to be  adequate to meet its normal  daily
activities.  In addition, the Company may invest in mortgage-backed and mortgage
related securities,  such as collateralized mortgage obligations,  to supplement
its lending activities.

      The  investment  policy of the Company,  which is approved by the Board of
Directors  and   implemented   by  the  Company's   President  and  Senior  Vice
President/Treasurer,   is  designed   primarily  to  manage  the  interest  rate
sensitivity  of its  overall  assets and  liabilities,  to  generate a favorable
return without  incurring undue interest rate and credit risk, to complement the
Company's  lending  activities  and  to  provide  and  maintain  liquidity.   In
establishing its investment  strategies,  the Company considers its business and
growth plans,  the economic  environment,  its interest rate  sensitivity  "gap"
position,  the types of securities to be held, and other factors.  The President
presents a monthly  report to the Board of Directors  detailing  all  investment
activity and commitments to purchase securities.

      Securities  which are  classified  as held to maturity are  accounted  for
based on  historical  cost  adjusted for  amortization  of premiums or discounts
using the level yield method. Securities classified as held to maturity totalled
$82.9 million as of December 31, 1996. The held to maturity  portfolio  consists
primarily of U.S.  Government  obligations  and  securities  of various  federal
agencies,  mortgage-backed  and related securities.  Mortgage-backed  securities
held to  maturity  consists of fixed rate,  five year,  and seven year  balloons
insured  or  guaranteed  by  either  FNMA  or  FHLMC.   Mortgage-backed  related
securities  held  to  maturity   consist  of  adjustable  rate  and  fixed  rate
collateralized   mortgage  obligations.   All  of  the  collateralized  mortgage
obligations  are also  guaranteed  by FNMA or FHLMC with the  exception of $10.6
million in "AAA" rated private mortgage collateral.

      Mortgage-backed  and related  securities  typically are issued with stated
principal amounts, and the securities are backed by pools of mortgage loans with
varying interest rates and maturities. The interest rate risk characteristics of
the underlying pool of mortgages as well as the  prepayments  risk are passed on
to the holder of the mortgage-backed  securities.  Consequently,  in a declining
interest rate environment there is a risk that  mortgage-backed  securities will
prepay faster than  anticipated  and the Company may not be able to reinvest the
cash flow from  prepaid  mortgage-backed  securities  into  comparable  yielding
investments.   In  a  rising   interest  rate   environment  the  value  of  the
mortgage-backed  securities may be impaired and the  mortgage-backed  securities
with fixed-rate  underlying  mortgage loans will be worth less as investors seek
higher yielding investments.

      Securities  that are classified as available for sale are accounted for at
their market  value,  with  unrealized  gains and losses  reported as a separate
component of capital designated as "unrealized holding gains/losses on available
for sale  securities."  Securities  classified  as available  for sale  totalled
$106.6  million as of December 31, 1996.  Equity  capital was  increased for the
period  ending  December  31,  1996  as a  result  of this  adjustment.  The net
unrealized  holding gain on available for sale securities  totalled $1.2 million
at December 31, 1996.  The available for sale  portfolio  consists  primarily of
U.S.  Government   obligations  and  securities  of  various  federal  agencies,
investment grade corporate obligations,

                                      13

<PAGE>



and 30-year fixed and adjustable rate mortgage-backed securities issued by GNMA,
FHLMC,  and FNMA.  While the market value of U.S.  Government and federal agency
securities  are directly  related to changes in interest rates after the time of
purchase,  the market value of the investment  grade corporate  securities could
also be affected by upgrades or  downgrades  in the credit rating of the issuer.
The market value of both fixed and adjustable rate mortgage-backed securities is
not only affected by changes in the general level of interest rates, but is also
affected by prepayment experience and changes in prepayment  assumptions.  While
adjustable rate mortgage-backed  securities tend to exhibit more price stability
than fixed  rate  mortgage-backed  securities,  their  market  value may also be
influenced  by the  annual and  lifetime  caps to which  they are  subject.  The
interest rate risk associated with adjustable mortgage-backed securities is that
if interest rates increase to such an extent that full interest rate adjustments
cannot be made as a result of the annual or lifetime  caps,  the market value of
such securities may be adversely affected despite its adjustable rate features.

      The  following  table sets  forth the  carrying  and market  values of the
Company's investment securities portfolio, short-term investments,  FHLB-Atlanta
stock, and  mortgage-backed  and related  securities at the dates indicated.  At
December  31,  1996,  the market value of the  Company's  investment  securities
portfolio and mortgage-backed securities portfolio were $61.4 million and $131.6
million, respectively.

<TABLE>
<CAPTION>
                                                 1994                  1995                 1996
                                         ---------------------   -----------------   --------------------
                                         Carrying      Market    Carrying   Market    Carrying    Market
                                           Value       Value      Value     Value      Value      Value
                                         ---------  ----------   --------  -------   ----------  --------
                                                                   (In Thousands)
Investment securities held to maturity:
 U.S. Government and related
<S>                                        <C>       <C>        <C>        <C>        <C>        <C>     
  securities and agency obligations....    $27,986   $ 26,750   $ 31,482   $ 32,209   $ 35,558   $ 35,756
 Corporate obligations ................     21,888     21,150         --         --         --         --
 Other debt securities ................      1,485      1,427      1,832      1,836        732        742
                                          --------   --------   --------   --------   --------   --------
   Total ..............................     51,359     49,327     33,314     34,045     36,290     36,498
Investment securities,
  available for sale ..................     25,875     25,875     34,724     34,724     21,652     21,652
 FHLB-Atlanta stock ...................      3,075      3,075      3,075      3,075      3,268      3,268
                                          --------   --------   --------   --------   --------   --------
Total investment securities ...........   $ 80,309   $ 78,277   $ 71,113   $ 71,844   $ 61,210   $ 61,418
                                          ========   ========   ========   ========   ========   ========
Mortgage-backed and related
  securities held to maturity:
  Agency backed fixed rate ............   $ 38,339   $ 36,973   $ 12,857   $ 12,920   $ 11,892   $ 11,844
  Agency backed adjustable rate.......       2,582      2,545         --         --         --         --
Collateralized mortgage obligations,
  variable rate .......................         --         --     12,145     12,539     16,413     16,748
Collateralized mortgage obligations,
  fixed rate ..........................     10,920     10,299     10,944     11,012     18,265     18,146
                                          --------   --------   --------   --------   --------   --------
   Total ..............................     51,841     49,817     35,946     36,471     46,570     46,738
Mortgage-backed and related
  securities available for sale........     13,024     13,024     78,844     78,844     84,899     84,899
                                          --------   --------   --------   --------   --------   --------
Total mortgage-backed and
  related securities ..................   $ 64,865   $ 62,841   $114,790   $115,315   $131,469   $131,637
                                          ========   ========   ========   ========   ========   ========

</TABLE>

      There were no investment securities issued by any one entity (exclusive of
obligations  of the U.S.  Government or federal  agencies) with a total carrying
value in excess of 10% of the Company's equity capital at December 31, 1996.

                                      14

<PAGE>



Investment Portfolio Maturities

      The following table sets forth certain information  regarding the carrying
values,  weighted  average  yields  and  expected  maturities  of the  Company's
investment securities portfolio as of December 31, 1996. Expected maturities may
differ from  contractual  maturities  because issuers may have the right to call
some  obligations  without  penalty.   Market  value  adjustments   recorded  in
compliance  with SFAS 115 are not considered  when computing the yields and cost
of securities.

<TABLE>
<CAPTION>
                                                                           At December 31, 1996    
                                   -------------------------------------------------------------------------------------------------
                                                                                                                    Total
                                   One Year or Less  One to Five Years Five to Ten Years  After Ten Years    Investment Securities
                                   ----------------- ----------------- ----------------- -----------------  ------------------------
                                            Weighted          Weighted          Weighted          Weighted          Weighted
                                   Carrying Average  Carrying Average  Carrying Average  Carrying Average   Carrying Average  Market
                                    Value    Yield    Value    Yield    Value    Yield    Value    Yield      Value   Yield   Value
                                   -------  -------  -------  -------  -------  -------  -------  -------    ------- -------- ------

Investment securities held to 
 maturity:
U.S. Government and related
   securities and agency 
<S>                                <C>       <C>      <C>        <C>   <C>       <C>      <C>       <C>     <C>        <C>   <C>    
   obligations.....................$ 8,000   7.69     $21,579    7.12% $ 4,000   7.10%    $ 1,979   7.19%   $35,558    7.25% $35,756
Other asset-backed securities .....     --     --         732   10.24       --     --         --      --        732   10.24      742
                                   -------   ----     -------    ----  -------   ----     -------   ----    -------    ----  -------
Total, held to maturity ...........  8,000   7.69      22,311    7.22    4,000   7.10       1,979   7.19     36,290    7.31   36,498
                                   -------            -------          -------            -------           -------          -------
                                                                                                         
Investment securities available 
  for sale:                                                                    
U.S. Government and related
  securities and agency 
  obligations .....................  2,024   7.18       4,039    6.48       --     --          --     --      6,063    6.72    6,063
Corporate obligations .............  5,023   5.78       4,082    7.29       --     --       1,003   7.89     10,108    6.59   10,108
                                   -------   ----     -------    ----  -------   ----     -------   ----    -------    ----  -------
Total available for sale ..........  7,047   6.17       8,121    6.87       --     --       1,003   7.89     16,171    6.64   16,171
                                   -------   ----     -------    ----  -------   ----     -------   ----    -------    ----  -------
Preferred stock and other equity 
  securities.......................  2,491     --          --      --       --     --       2,990     --      5,481      --    5,481
                                   -------   ----     -------    ----  -------   ----     -------   ----    -------    ----  -------
Total investment securities .......$17,538   6.98%    $30,432    7.13% $ 4,000   7.10%    $ 5,972   7.43%   $57,942    7.10% $58,150
                                   =======   ====     =======    ====  =======   ====     =======   ====    =======    ====  =======
</TABLE>



                                              15

<PAGE>



      The  following  table  sets  forth  the  carrying  value  of  Registrant's
mortgage-backed securities portfolio at the dates indicated.

                                                                     Weighted
                                                                     Average
                                                                     Rate at
                                  December 31,     December 31,     December 31,
                                      1995             1996             1996
                                      ----             ----             ----
Held to maturity:                              (Dollars in Thousands)

Agency backed, fixed rate....      $ 12,857         $ 11,892           6.59%
CMOs, fixed rate.............        10,944           18,265           6.46%
CMOs, adjustable rate........        12,145           16,413           6.86%
                                   --------         --------           ---- 
  Total held to maturity.....        35,946           46,570           6.63%
                                   --------         --------           ---- 

Available for Sale:

Agency backed, fixed rate....        27,429           40,181           8.05%
Agency backed, adjustable rate       50,591           44,118           6.79%
CMOs, fixed rate.............           824              600           7.79%
                                   --------         --------           ---- 
  Total available for sale...        78,844           84,899           7.39%
                                   --------         --------           ---- 
Total mortgage-backed securities   $114,790         $131,469           7.12%
                                   ========         ========           ==== 



      Mortgage-Backed  Securities  Maturity.  The following table sets forth the
contractual  maturity of Registrant's  mortgage-backed  securities  portfolio at
December 31, 1996. The table does not include scheduled  principal  payments and
estimated prepayments.

                                           Contractual
                                         Maturities Due
                                         --------------
                                         (In Thousands)

Less than 1 year.......................    $     74
1 to 5 years...........................      10,067
5 to 10 years..........................       4,789
Over 10 years..........................     116,539
                                           --------
     Total mortgage-backed securities..    $131,469
                                           ========





                                       16

<PAGE>



      The   following   table  sets  forth  the   activity   in  the   Company's
mortgage-backed securities during the periods indicated.

<TABLE>
<CAPTION>


                                                      Year Ended December 31,
                                                ------------------------------------
                                                   1994         1995        1996
                                                ---------   -----------  -----------
                                                       (Dollars in Thousands)
Mortgage-backed securities:
<S>                                             <C>          <C>         <C>      
At beginning of period ......................   $  40,109    $ 64,865    $ 114,790

   Mortgage-backed securities purchased......      42,012      57,388       46,544
   Mortgage-backed securities sold ..........      (2,801)         --       (5,183)
   Provision appreciation (depreciation) in
     market value ...........................      (1,438)      3,256         (189)
   Amortization and repayments ..............     (13,017)    (10,719)     (24,493)
                                                ---------    ---------    ---------
   Balance of mortgage-backed and related
      securities at end of period ...........   $  64,865    $114,790    $ 131,469
                                                =========    =========    =========

</TABLE>


Sources of Funds

      Deposits.  The Company offers a variety of deposit accounts having a range
of interest  rates and terms.  The Company  presently  offers  regular  savings,
interest-bearing  checking,   noninterest-bearing  checking,  money  market  and
certificate accounts (including  retirement  accounts).  The flow of deposits is
influenced  significantly by general economic conditions,  changes in prevailing
interest rates, pricing of deposits and competition.  The Company's deposits are
primarily  obtained from areas  surrounding its twelve offices,  and the Company
relies primarily on service and  long-standing  relationships  with customers to
attract and retain these  deposits.  Deposits  increased $19.4 million to $397.4
million at December  31, 1996 from $378.0  million at  December  31,  1995.  The
weighted  average rate of deposits  decreased from 4.96% at December 31, 1995 to
4.71% at December 31, 1996,  as interest  rates  remained  fairly  stable during
1996.  The  opening of our newest  branch  office in Madison  Heights,  Virginia
(Amherst  County)  contributed  a $2.8  million  deposit  gain in six  months of
operations.

      When  management  determines  the levels of the Company's  deposit  rates,
consideration is given to local competition,  U.S. Treasury securities offerings
and the rates charged on other sources of funds.

                                      17

<PAGE>



      The following table sets forth the  distribution of the Company's  deposit
accounts at the dates indicated and the weighted  average nominal interest rates
on each category of deposits presented.  The Company does not have a significant
amount of deposits from out-of-state sources.

<TABLE>
<CAPTION>

                                                                              At December 31,
                                ----------------------------------------------------------------------------------------------------
                                              1994                                1995                             1996
                                --------------------------------   --------------------------------   ------------------------------
                                                        Weighted                           Weighted                         Weighted
                                             Percent    Average                  Percent    Average              Percent    Average
                                             to Total   Nominal                  to Total   Nominal              to Total   Nominal
                                 Amount      Deposits    Rate      Amount        Deposits    Rate     Amount     Deposits    Rate
                                --------   ----------- ---------   -------       --------  --------   ------     --------- ---------
                                                                      (Dollars in Thousands)
Transaction accounts:
  Noninterest-bearing
<S>                             <C>            <C>       <C>      <C>            <C>        <C>     <C>          <C>        <C>
   checking accounts ........   $  3,274          .97%     --%    $  6,218         1.65%      --%   $  6,790       1.71%      --%
  NOW and Super NOW .........     26,048         7.72    2.76       30,664         8.11     2.76      32,957       8.29     2.30
  Money market ..............     52,130        15.46    3.41       45,642        12.08     3.58      43,735      11.00     3.52
  Savings ...................     32,314         9.58    3.00       33,956         8.98     3.00      34,520       8.69     3.03
                                --------       ------             --------       ------             --------     ------      
       Total ................    113,766        33.73    3.05      116,480        30.82     3.00     118,002      29.69     2.83
                                --------       ------             --------       ------             --------     ------     

Certificate accounts:
 Contractual maturities:
   Within 12 months .........    137,840        40.87    4.96      163,861        43.35     5.66     158,156      39.80     5.21
   12-36 months .............     46,905        13.91    5.57       55,844        14.77     5.84      86,648      21.80     5.61
   Beyond 36 months .........     38,745        11.49    5.87       41,790        11.06     6.51      34,629       8.71     6.51
                                --------       ------             --------       ------             --------     ------      
      Total .................    223,490        66.27    5.25      261,495        69.18     5.83     279,433      70.31     5.50
                                --------       ------             --------       ------             --------     ------        
      Total deposits.........   $337,256       100.00%   4.50%    $377,975       100.00%    4.96%   $397,435     100.00%    4.71%
                                ========       ======             ========       ======             ========     ======     

</TABLE>


      The following table indicates the amount of the Company's  certificates of
deposit of $100,000 or more by time  remaining  until  maturity at December  31,
1996.

                                          Certificates
Maturity Period                            of Deposits
                                          --------------
                                          (In Thousands)
Within three months..................         $ 8,934
Three through six months.............           4,980
Six through twelve months............           9,595
Over twelve months...................          17,080
                                              -------
                                              $40,589
                                              =======



                                       18

<PAGE>



Borrowings

      Deposits are the Company's  primary source of funds.  The Company's policy
has been to utilize  borrowings to meet liquidity needs and when they are a less
costly  source of funds or can be  invested  at a positive  rate of return.  The
Company may obtain from the FHLB-Atlanta advances which are generally secured by
a blanket lien against the Company's  mortgage loan  portfolio.  At December 31,
1996,  the  Company  had  $41.0  million  in   outstanding   advances  from  the
FHLB-Atlanta.  The Company,  from time to time, also makes use of other forms of
borrowings,  primarily reverse repurchase agreements.  At December 31, 1996, the
Company  had  $19.0  million  in  outstanding   reverse  repurchase   agreements
collateralized by mortgage backed and mortgage related securities.  The weighted
average interest rate for all borrowed funds was 5.69% at December 31, 1996.

      The  following  table  sets forth  certain  information  regarding  FHLB -
Atlanta advances and other borrowings at the dates or for the periods indicated.

<TABLE>
<CAPTION>

                                                                 At or for the Year
                                                                 Ended December 31,
                                                           -----------------------------
                                                            1994        1995       1996
                                                           ------      ------     ------
                                                              (Dollars in Thousands)

<S>                                                        <C>        <C>        <C>    
Average balance outstanding ............................   $13,199    $30,702    $50,236
Maximum amount outstanding at any month-end
  during the period ....................................    19,250     43,250     60,000
Balance outstanding at end of period ...................    11,250     29,250     60,000
Weighted average interest rate during the period .......      6.74%      6.36%      5.57%
Weighted average interest rate at the end of period.....      7.14%      5.97%      5.69%

</TABLE>


      The  following  table  sets  forth at  December  31,  1996  the  repayment
schedule,  interest  rates  and  amounts  of  FHLB-Atlanta  advances  and  other
borrowings due by year.

              Interest
Year Due        Rate          Amount
--------      --------        ------
                          (In Thousands)

1997           5.66%          $56,000
1998           5.51             2,000
1999             --                --
2000           6.16             2,000
                              -------
                              $60,000


Personnel

      As of December 31,  1996,  the Company had 132  full-time  and 8 part-time
employees.  None of the  Company's  employees  are  represented  by a collective
bargaining  group. The Company believes that its relationship with its employees
is good.


                                      19

<PAGE>



Regulation

      Set forth below is a brief description of certain laws which relate to the
regulation of the Company.  The description  does not purport to be complete and
is qualified in its entirety by reference to  applicable  laws and  regulations.
Unless otherwise indicated, this section discusses regulations that apply to the
Company indirectly through their direct  application to the Bank.  However,  the
section  entitled  "Company  Regulation"  applies to the Company rather than the
Bank.

      General. As a federally chartered,  SAIF-insured savings association,  the
Company is  subject to  extensive  regulation  by the OTS and the FDIC.  Lending
activities and other  investments must comply with various federal statutory and
regulatory  requirements.  The  Company  is  also  subject  to  certain  reserve
requirements promulgated by the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board").

      The OTS, in conjunction with the FDIC,  regularly examines the Company and
prepares  reports for the  consideration  of the Company's Board of Directors on
any  deficiencies  that they find in the  Company's  operations.  The  Company's
relationship  with its  depositors  and  borrowers is also  regulated to a great
extent by federal law,  especially  in such matters as the  ownership of savings
accounts and the form and content of the Company's mortgage documents.

      The Company  must file reports  with the OTS and the FDIC  concerning  its
activities  and  financial  condition,   in  addition  to  obtaining  regulatory
approvals  prior to entering into certain  transactions  such as mergers with or
acquisitions  of other savings  institutions.  This  regulation and  supervision
establishes a comprehensive  framework of activities in which an institution can
engage and is intended  primarily for the protection of the SAIF and depositors.
The  regulatory  structure  also  gives  the  regulatory  authorities  extensive
discretion in connection with their  supervisory and enforcement  activities and
examination  policies,  including policies with respect to the classification of
assets and the  establishment  of adequate  loan loss  reserves  for  regulatory
purposes.  Any change in such  regulations,  whether by the OTS, the FDIC or the
Congress could have a material adverse impact on the Company and its operations.
The Company,  as a holding  company,  is also  required to file certain  reports
with,  and otherwise  comply with the rules and  regulations  of the OTS and the
Securities and Exchange Commission ("SEC").

Insurance of Deposit Accounts

      The  deposit  accounts  held by the  Company  are insured by the SAIF to a
maximum of $100,000 for each insured member (as defined by law and  regulation).
Insurance  of deposits  may be  terminated  by the FDIC upon a finding  that the
institution  has  engaged  in unsafe or  unsound  practices,  is in an unsafe or
unsound  condition to continue  operations or has violated any  applicable  law,
regulation,  rule, order or condition  imposed by the FDIC or the  institution's
primary regulator.

      The FDIC charges an annual  assessment for the insurance of deposits based
on the risk a particular  institution poses to its deposit insurance fund. Under
this system as of September 30, 1996,  SAIF members paid within a range of 23 to
31 basis points (23 cents to 31 cents per $100 of domestic deposits),  depending
upon the institution's risk classification. This risk classification is based on
an institution's capital group and supervisory subgroup assignment.  Pursuant to
a law adopted during 1996, the FDIC imposed a special assessment on SAIF members
to capitalize the SAIF at the designated reserve level of 1.25% as of October 1,
1996.  Based on the  Company's  deposits  as of  March  31,  1995,  the date for
measuring  the  amount  of the  special  assessment  pursuant  to the  Act,  the
assessment  for the  Company  totalled  $2.2  million.  The FDIC has lowered the
premium for deposit  insurance to a level  necessary to maintain the SAIF at its
required reserve level. As of January 1, 1997, the Company was not required

                                      20

<PAGE>



to pay any deposit insurance premium;  however, the FDIC may choose to reinstate
premiums in the future.

      The Company  will pay, in addition to its deposit  insurance  premium as a
member of the SAIF, an amount equal to approximately 6.6 basis points toward the
retirement of Financing  Corporation bonds ("Fico Bonds") issued in the 1980s to
assist in the  recovery of the savings  and loan  industry.  Members of the Bank
Insurance  Fund  ("BIF"),  by contrast,  will pay, in addition to their  deposit
insurance  premium,  approximately  1.3 basis  points.  Beginning  no later than
January  1,  2000,  the rate paid to  retire  the Fico  Bonds  will be equal for
members of the BIF and the SAIF.  By January 1, 1999,  the BIF and the SAIF will
be merged,  provided  there are no  financial  institutions  still  chartered as
savings  associations.  Should the insurance  funds be merged before  January 1,
2000,  the rate paid by all  members  of this new fund to retire  the Fico Bonds
would be equal.

Regulatory Capital Requirements

      OTS capital regulations require savings institutions to meet three capital
standards:  (1) tangible capital equal to 1.5% of total adjusted  assets,  (2) a
leverage ratio (core capital) equal to at least 3% of total adjusted assets, and
(3) a  risk-based  capital  requirement  equal  to 8.0% of  total  risk-weighted
assets.

      Savings  associations  with a greater than "normal" level of interest rate
exposure may, in the future,  become  subject to a deduction from capital for an
interest  rate  risk  ("IRR")   component  for  purposes  of  calculating  their
risk-based capital requirement.

      The Company is not under any agreement with regulatory  authorities nor is
it aware of any current  recommendations by the regulatory authorities which, if
they were to be implemented,  would have a material effect on liquidity, capital
resources or operations of the Company.

Prompt Corrective Action

      Banking  regulators  are  required  to take  certain  supervisory  actions
against  undercapitalized  institutions,  the severity of which depends upon the
institution's  degree of  capitalization.  Under the OTS rules,  an  institution
shall be deemed to be (i) "well  capitalized" if it has total risk-based capital
of  10.0% or more,  has a Tier I  risk-based  capital  ratio  (core or  leverage
capital to  risk-weighted  assets) of 6.0% or more, has a leverage capital ratio
of 5.0% or more and is not subject to any order or final  capital  directive  to
meet and  maintain  a  specific  capital  level for any  capital  measure,  (ii)
"adequately  capitalized" if it has a total risk-based  capital ratio of 8.0% or
more, a Tier I risked -based ratio of 4.0% or more and a leverage  capital ratio
of 4.0% or more  (3.0%  under  certain  circumstances)  and  does  not  meet the
definition of "well  capitalized",  (iii)  "undercapitalized"  if it has a total
risk-based  capital  ratio that is less than 6.0%, a Tier I  risk-based  capital
ratio that is less than 4.0% or a leverage  capital ratio that is less than 4.0%
(3.0% in certain circumstances), (iv) "significantly undercapitalized" if it has
a total  risk-based  capital  ratio that is less than 6.0%,  a Tier I risk-based
capital  ratio that is less than 3.0% or a leverage  capital  ratio that is less
than 3.0% and (v)  "critically  undercapitalized"  if it has a ratio of tangible
equity to total  assets  that is equal to or less than 2.0% In  addition,  under
certain   circumstances,   a  federal  banking  agency  may  reclassify  a  well
capitalized  institution as adequately capitalized and may require an adequately
capitalized  institution  or an  undercapitalized  institution  to  comply  with
supervisory  actions as if it were in the next lower  category  (except that the
FDIC  may  not  reclassify  a  significantly   undercapitalized  institution  as
critically undercapitalized).


                                      21

<PAGE>



      Immediately upon becoming undercapitalized, an institution becomes subject
to  restrictive  provisions.  The  appropriate  federal  banking  agency  for an
undercapitalized   institution   also  may  take  any  number  of  discretionary
supervisory  actions  if the  agency  determines  that any of these  actions  is
necessary to resolve the problems of the  institution at the least possible long
term cost to the deposit  insurance fund,  subject in certain cases to specified
procedures.

      The Company is currently a well capitalized institution.

Dividend and Other Capital Distribution Limitations

      Under  Virginia  law,  the Company may pay any cash  dividend,  so long as
after  giving  effect to the  dividend,  the Company will (1) be able to pay its
bills in the usual course of business;  and (2) the Company's  total assets will
not be less than the sum of its total  liabilities plus the amount that would be
needed, if the Company were to be dissolved at the time of the distribution,  to
satisfy  the  preferential   rights  upon  dissolution  of  shareholders   whose
preferential  rights are  superior to those  receiving  the  distribution.  With
respect  to stock  dividends,  shares  may be issued  pro rata and  without  the
requirement that shareholders pay for any part of the dividend.

      The Bank,  however,  is  subject  to OTS  restrictions  on the  payment of
dividends to its sole  stockholder FFVA Financial  Corporation.  OTS regulations
require  the  Bank  to  give  the OTS 30 days  advance  notice  of any  proposed
declaration  of dividends  and the OTS has the authority  under its  supervisory
powers to  prohibit  the payment of  dividends.  In  addition,  the Bank may not
declare or pay a cash dividend on its capital stock if the effect  thereof would
be to reduce the  regulatory  capital of the Bank below the amount  required for
the  liquidation  account  created  in  connection  with  the  mutual  to  stock
conversion of the Bank.

      OTS  regulations  impose  limitations  upon all capital  distributions  by
savings  institutions,  such  as  cash  dividends,  payments  to  repurchase  or
otherwise acquire its shares, payments to shareholders of another institution in
a cash-out  merger and other  distributions  charged against  capital.  The rule
establishes  three tiers of  institutions,  based primarily on an  institution's
capital  level.  An  institution  that  exceeds  all  fully  phased-in   capital
requirements  before  and  after  a  proposed  capital   distribution  ("Tier  1
institution")  and has not  been  advised  by the OTS that it is in need of more
than the normal  supervision can, after prior notice but without the approval of
the OTS, make capital  distributions during a calendar year equal to the greater
of (i) 100% of its net income to date during the  calendar  year plus the amount
that would reduce by one-half its "surplus  capital  ratio" (the excess  capital
over its fully phased-in capital  requirements) at the beginning of the calendar
year,  or (ii) 75% of its net income over the most recent four  quarter  period.
Any additional capital  distributions  require prior regulatory approval.  As of
December 31, 1996,  the Bank was a Tier 1  institution.  In the event the Bank's
capital fell below its fully  phased-in  requirement or the OTS notified it that
it was in need of more than  normal  supervision,  the  Bank's  ability  to make
capital distributions to the Company could be restricted.  In addition,  the OTS
could prohibit a proposed capital  distribution by any institution,  which would
otherwise  be  permitted  by the  regulation,  if the OTS  determines  that such
distribution would constitute an unsafe or unsound practice.

      Finally,  a  savings  association  is  prohibited  from  making a  capital
distribution if, after making the distribution, the savings association would be
"undercapitalized"   (not  meet  any  one  of  its  minimum  regulatory  capital
requirements).


                                       22

<PAGE>



Qualified Thrift Lender Test

      The  Home  Owners  Loan  Act  ("HOLA"),   as  amended,   requires  savings
institutions  to meet a qualified  thrift  lender  ("QTL")  test. If the Company
maintains  at least 65% of its  portfolio  assets  (defined as all assets  minus
intangible  assets,  property used by the institution in conducting its business
and liquid assets equal to 10% of total assets) in Qualified Thrift  Investments
(primarily  residential  mortgages and related  investments,  including  certain
mortgage-backed  securities)  ("QTIs") and otherwise qualifies as a QTL, it will
continue to enjoy full borrowing  privileges  from the FHLB of Atlanta.  Certain
assets are subject to a percentage  limitation  of 20% of portfolio  assets.  In
addition,  savings  associations may include shares of stock of the Federal Home
Loan Banks,  FNMA and FHLMC as qualifying QTIs.  Compliance with the QTL test is
measured on a monthly  basis in nine out of every 12 months.  As of December 31,
1996, the Company was in compliance with its QTL requirement  with 87.14% of its
total assets invested in QTIs.

      A savings association that does not meet a QTL test must either convert to
a bank charter or comply with the following restrictions on its operations:  (i)
the  savings  association  may not  engage in any new  activity  or make any new
investment,  directly or  indirectly,  unless such  activity  or  investment  is
permissible  for a  national  bank;  (ii) the  branching  powers of the  savings
association  shall be restricted to those of a national bank;  (iii) the savings
association shall not be eligible to obtain any advances from its FHLB; and (iv)
payment of  dividends by the savings  association  shall be subject to the rules
regarding payment of dividends by a national bank.

Liquidity Requirements

      All savings associations are required to maintain an average daily balance
of liquid assets,  as defined by the OTS,  equal to a certain  percentage of the
sum of its  average  daily  balance of net  withdrawable  deposit  accounts  and
borrowings payable in one year or less. The liquidity  requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all  savings  associations.  The Company  was in  compliance  with this
requirement on December 31, 1996.

Federal Home Loan Bank System

      The  Company  is a  member  of the  FHLB of  Atlanta,  which  is one of 12
regional FHLBs that  administers  the home financing  credit function of savings
associations.  Each FHLB  serves as a reserve  or central  bank for its  members
within its assigned  region.  It is funded  primarily from proceeds derived from
the sale of  consolidated  obligations  of the FHLB  System.  It makes  loans to
members (i.e.,  advances) in accordance with policies and procedures established
by the Board of Directors of the FHLB.

      As a member, the Company is required to purchase and maintain stock in the
FHLB of  Atlanta  in an  amount  equal to at least  1% of its  aggregate  unpaid
residential  mortgage loans, home purchase  contracts or similar  obligations at
the  beginning  of each year.  As of  December  31,  1996,  the Company had $3.3
million in FHLB stock, which was in compliance with this requirement.


                                       23

<PAGE>



Company Regulation

      The  Company is a unitary  savings  and loan  holding  company  subject to
regulatory  oversight  by the OTS.  As such,  the  Company is  required  to file
reports with the OTS and is subject to regulation and examination by the OTS. In
addition,  the OTS has  enforcement  authority  over  the  Company  and its non-
savings  association  subsidiaries  which also  permits  the OTS to  restrict or
prohibit  activities  that are determined to be a serious risk to the subsidiary
savings association. This regulation and oversight is intended primarily for the
protection of the depositors of the Company's subsidiary savings association and
not for stockholders of the Company.

      As a unitary savings and loan holding  company,  the Company  generally is
not subject to activity  restrictions,  provided the Company  satisfies  the QTL
test.  If the  Company  acquires  control of another  savings  association  as a
separate  subsidiary,  it  would  become a  multiple  savings  and loan  holding
company,  and the activities of the Company and any of its  subsidiaries  (other
than  the Bank or any  other  SAIF-insured  savings  association)  would  become
subject to such  restrictions  unless such other  associations each qualify as a
QTL and were acquired in a supervisory acquisition.

      The Company must obtain approval from the OTS before acquiring  control of
any other SAIF- insured association.  Such acquisitions are generally prohibited
if they  result in a  multiple  savings  and loan  holding  company  controlling
savings  associations  in  more  than  one  state.   However,   such  interstate
acquisitions  are  permitted  based  on  specific  state  authorization  or in a
supervisory acquisition of a failing savings association.

Recent and Proposed Legislation

      Bills  have  been  introduced  to  congressional   committees  that  would
consolidate the OTS with the Office of the Comptroller of the Currency  ("OCC").
The resulting agency would regulate all federally chartered commercial banks and
thrift institutions.  In the event that the OTS is consolidated with the OCC, it
is possible that the thrift  charter  could be  eliminated  and thrifts could be
forced to convert to commercial banks.  Legislation  passed in 1996 required the
recapture  (for income tax  purposes)  of the Bank's post 1987  additions to bad
debt reserves;  however,  the Bank's  management does not believe this recapture
has had a material effect on the earnings of the Bank or the Company because the
Bank has previously  provided  deferred  taxes on its bad debt  reserves.  Under
current law and regulations, a unitary savings and loan holding company, such as
the  Company,  which  has only  one  thrift  subsidiary  such as the  Bank,  has
essentially unlimited investment  authority.  Legislation has also been proposed
which, if enacted, would limit the non-banking related activities of savings and
loan holding companies to those activities permitted for bank holding companies.


                                      24

<PAGE>



Executive Officers of the Registrant
------------------------------------

      The following  individuals were executive officers of the Registrant as of
December 31, 1996:


Name                          Age(1)     Positions Held With the Registrant
----                          ------     ----------------------------------

James L. Davidson, Jr.          63       President, and Chief Executive Officer

E. L. (Ron) Rash, Jr.           45       Executive Vice President

Ronald W. Neblett               49       Senior Vice President and Treasurer

Margaret C. Burnette            52       Senior Vice President and Secretary

---------------------------
(1)   At December 31, 1996.


      The following is a description of the principal  occupation and employment
of the executive  officers of the Registrant as of December 31, 1996,  during at
least the past five years.

     James L. Davidson, Jr., has served as a director of the Bank since 1965 and
was  appointed  President  in  1975.  Mr.  Davidson's  employment  with the Bank
commenced in 1961. Mr. Davidson has also served as director of the Company since
its formation in 1994.

     E.L.  (Ron) Rash,  Jr., has served as Executive  Vice President of the Bank
since December  1995.  Prior to that he served as a Senior Vice President of the
Bank.  Mr. Rash has been  employed  by the Bank for 17 years.  Mr. Rash has also
served as an executive officer of the Company since its formation in 1994.

     Ronald W. Neblett,  CPA, has served as Senior Vice  President and Treasurer
of the Bank since January 1985. Mr. Neblett has been employed by the Bank for 25
years. Mr. Neblett has also served as an executive  officer of the Company since
its formation in 1994.

     Margaret C.  Burnette has served as Senior Vice  President and Secretary of
the Bank since January 1985. Ms. Burnette has been employed with the Bank for 33
years. Ms. Burnette has also served as an executive officer of the Company since
its formation in 1994.

Item 2. Properties
------------------

Properties
----------

      The  Company  conducts  its  business  through  its main office and eleven
branch offices.


                                      25

<PAGE>



Item 3. Legal Proceedings
-------------------------

      There  are  various   claims  and   lawsuits  in  which  the  Company  are
periodically involved, such as claims to enforce liens, condemnation proceedings
on properties in which the Company holds security  interests,  claims  involving
the making and servicing of real property loans and other issues incident to the
Company's business.  In the opinion of management,  no material loss is expected
from any of such pending claims or lawsuits.

Item  4.  Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------

      No matter was  submitted to a vote of security  holders  during the fourth
quarter of the most recent fiscal year.

                                    PART II

Item  5.  Market for Registrant's Common Equity and Related Stockholder Matters
-------------------------------------------------------------------------------

      The  information  contained  under  the  section  captioned  "Stock  Price
Information" on page 53 of the Company's  Annual Report to Stockholders  for the
fiscal year ended  December  31, 1996 (the  "Annual  Report"),  is  incorporated
herein by reference.

Item  6.  Selected Financial Data
---------------------------------

      The information  contained in the table captioned  "Selected  Consolidated
Financial and Other Data" and "Selected  Consolidated Financial Ratios and Other
Data" on pages 3 and 4 of the Annual Report is incorporated herein by reference.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations
-------------

      The  information   contained  in  the  section   captioned   "Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations"  on
pages 5 to 16 of the Annual Report is incorporated herein by reference.

Item  8.  Financial Statements and Supplementary Data
-----------------------------------------------------

      The   Registrant's   financial   statements   listed  under  Item  14  are
incorporated herein by reference.

Item  9.  Changes  in and  Disagreements  with  Accountants  On  Accounting  and
--------------------------------------------------------------------------------
Financial Disclosure.
--------------------

      There were no changes in or  disagreements  with accountants on accounting
and financial disclosure during the last fiscal year.

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant
------------------------------------------------------------

      The information  contained under the section  captioned  "Information With
Respect to Nominees  for  Director and  Directors  Continuing  in Office" in the
Registrant's  definitive proxy statement for the Registrant's  Annual Meeting of
Stockholders  to  be  held  on  April  22,  1997  (the  "Proxy   Statement")  is
incorporated herein by reference.


                                      26

<PAGE>



      Additional  information  concerning executive officers is included in this
report under "Part I Executive  Officers of the  Registrant" and included in the
Proxy Statement in the section  captioned  "Section 16(a)  Beneficial  Ownership
Reporting Compliance."

Item 11.  Executive Compensation
--------------------------------

      The information contained in the section captioned "Director and Executive
Officer   Compensation"  in  the  Proxy  Statement  is  incorporated  herein  by
reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

      (a)   Security Ownership of Certain Beneficial Owners

            Information   required  by  this  item  is  incorporated  herein  by
            reference to the section captioned "Voting  Securities and Principal
            Holders Thereof" in the Proxy Statement.

      (b)   Security Ownership of Management

            Information   required  by  this  item  is  incorporated  herein  by
            reference to the chart in the section captioned  "Voting  Securities
            and  Principal  Holders  Thereof"  and to the  chart in the  section
            captioned  "Information  With  Respect to Nominees  for Director and
            Directors Continuing in Office" in the Proxy Statement.

      (c)   Management of the Registrant knows of no arrangements, including any
            pledge by any person of securities of the Registrant,  the operation
            of which may at a  subsequent  date result in a change in control of
            the Registrant.

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------

      The information  required by this item is incorporated herein by reference
to the section captioned "Certain Relationships and Related Transactions" in the
Proxy Statement.

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
-------------------------------------------------------------------------

      (a)   The following documents are filed as a part of this report:

            1. The following financial  statements and the report of independent
accountants  of the  Registrant  included in the Annual Report are  incorporated
herein by reference and also in Item 8 hereof.

     Report of Independent Auditors

     Consolidated  Statements of Financial Condition as of December 31, 1995 and
     1996

     Consolidated  Statements  of  Stockholders'  Equity  for  the  Years  Ended
     December 31, 1994, 1995 and 1996

     Consolidated  Statements  of Income for the Years Ended  December 31, 1994,
     1995 and 1996


                                      27

<PAGE>



     Consolidated  Statements  of Cash Flows for the Years  Ended  December  31,
     1994, 1995 and 1996

     Notes to Consolidated Financial Statement

            2. Financial  Statement Schedules for which provision is made in the
applicable accounting  regulations of the SEC are not required under the related
instructions or are inapplicable and therefore have been omitted.

            3.  The   following   exhibits   are  included  in  this  Report  or
incorporated herein by reference:

            (a)   List of Exhibits:

             3(i)   Restated   Articles  of   Incorporation  of  FFVA  Financial
                    Corporation*

             3(ii)  Bylaws of FFVA Financial Corporation

             11     Statement regarding computation of per share earnings

             13     Portions of the Annual Report to Stockholders for the fiscal
                    year ended December 31, 1996

             21     Subsidiaries of the Registrant**

             23     Consent from Cherry, Bekaert & Holland, L.L.P. regarding the
                    incorporation by reference of their report into a previously
                    filed Registration Statement on Form S-8 originally filed by
                    the Registrant  with the Securities and Exchange  Commission
                    on September 28, 1995

             27     Financial Data Schedule***

             (b)    On November  13,  1996,  the Company  filed a Form 8-K which
                    indicated  its  receipt  of  regulatory   authorization   to
                    repurchase up to 502,255 shares of the Company's outstanding
                    common stock.








---------------------
*    Incorporated by reference to the  registration  statement on Form S-1 (File
     No. 33-79540) declared effective by the Commission on August 12, 1994.
**   Incorporated by reference to the Form 10-K filed on March 28, 1995 with the
     Commission for the fiscal year ended December 31, 1994.
***  Provided in electronic filing only.


                                      28

<PAGE>
                                  SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized as of March 25, 1997.

                                          FFVA FINANCIAL CORPORATION


                                          By: /s/ James L. Davidson, Jr.
                                              ---------------------------
                                              James L. Davidson, Jr.
                                              President and Chief Executive 
                                               Officer
                                              (Duly Authorized Representative)

      Pursuant to the  requirement of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated as of March 25, 1997.


/s/ James L. Davidson, Jr.                   /s/ Ronald W. Neblett
-----------------------------------          ----------------------------------
James L. Davidson, Jr.                       Ronald W. Neblett
President, Chief Executive Officer,          Senior Vice President and Treasurer
and Director                                 (Principal Financial and Accounting
(Principal Executive Officer)                  Officer)


/s/ John W. Ferguson, Jr.                     /s/ James K. Candler
-----------------------------------           ---------------------------------
John W. Ferguson, Jr.                         James K. Candler
Chairman of the Board                         Director


/s/ James E. McCausland                       /s/ Thomas P. Whitten
-----------------------------------           ---------------------------------
James E. McCausland                           Thomas P. Whitten
Director                                      Director


/s/ Edward A. Hunt, Jr.                       /s/ V. Howard Belcher
-----------------------------------           --------------------------------- 
Edward A. Hunt, Jr.                           V. Howard Belcher
Director                                      Director


/s/ Charles R. W. Schoew                      /s/ Thomas O. Doyle
-----------------------------------           ---------------------------------
Charles R. W. Schoew                          Thomas O. Doyle
Director                                      Director