Higher interest rates and a falloff in consumer loan demand took their toll on First Virginia Banks Inc., whose first-quarter earnings of $27.2 million slipped 4% from the $28.8 million reported in the year-ago quarter.

Earnings per share at First Virginia, which is based in Falls Church, came in 8 cents below Wall Street consensus estimates, though some analysts might not have adjusted their models to account for recent acquisitions.

Chairman and CEO Barry J. Fitzpatrick, in a prepared statement Monday, blamed a downturn in automobile and home mortgage loans on higher interest rates, which produced "a reduced rate of growth in the economy."

First Virginia, which is primarily a retail bank, is particularly dependent on auto loans and home mortgages. Mr. Fitzpatrick said loan volume in both categories was "down considerably from the prior year's record volumes."

"Their niche is really indirect auto finance, and that market is getting tougher and tougher," said Vernon Plack, an analyst with Scott & Stringfellow Inc. in Richmond.

Higher interest rates also hurt First Virginia on the deposit side by bidding up the bank's cost of funds, which led to a weakening net interest margin. The margin declined 13 basis points to 5.12% from the fourth quarter and was down 16 basis points from the year-ago quarter.

A falling margin in the fourth quarter helped end First Virginia's three-year streak of annual record earnings increases.

Deposit pricing pressure in Virginia has been intense in recent quarters as banks bid up the cost of funds. According to First Virginia, customers "have begun to shift out of more liquid and lower-cost deposits, such as savings and transaction accounts, and into higher-yielding certificates of deposit."

First Virginia, which has $7.9 billion of assets, remains a high- performing institution. Return on assets for the first quarter was 1.41% and return on equity 13.35%, though this was down from 1.64% and 16.47% in the first quarter of 1994.

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