2014

Fauquier Bankshares Announces Fourth Quarter and Year End 2012 Results

WARRENTON, Va., Feb. 4, 2013 /PRNewswire/ --

Fourth Quarter of 2012 Highlights

  • Net earnings of $453,000 or $0.12 per diluted share
  • Quarterly provision for loan losses of $1.4 million, an increase of $888,000 from fourth quarter 2011
  • Ratio of net loan charge-offs to average loans was 0.73%
  • Noninterest expense decreased $884,000 from fourth quarter 2011

2012 Full-Year Highlights

  • Net earnings of $2.7 million or $0.73 per diluted share
  • Provision for loan losses was $5.2 million for 2012, an increase of $3.3 million from 2011
  • Ratio of net loan charge-offs to average loans was 1.16%
  • Noninterest expense decreased $2.2 million from 2011

Fauquier Bankshares, Inc. (NASDAQ: FBSS) parent company of The Fauquier Bank (TFB) reported net income of $453,000 for the fourth quarter of 2012 compared with $911,000 for the fourth quarter of 2011.  Basic and diluted earnings per share for the fourth quarter of 2012 were $0.12 compared with $0.25 per share in the fourth quarter of 2011.  For the year ended December 31, 2012, net income was $2.7 million compared with $4.1 million for 2011.  Basic and diluted earnings per share for the year ended December 31, 2012 were $0.73 compared with $1.12 for 2011. The decrease in year-to-year earnings was primarily attributable to an increase of $3.3 million to the loan loss provision and $1.1 million decrease in net interest income; partially offset by a $2.2 million decrease in noninterest expense.

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Randy Ferrell, President and CEO stated, "Our solid core earnings were overshadowed by an increase of $3.3 million to the loan loss provision from 2011 as we aggressively addressed the three largest impaired loans in our portfolio towards the end of the 2012, one of which was fully resolved.  We believe the sooner we work through these two other problem loans, the sooner we can be refocused on maximizing profitability.  I'm proud of our associates' efforts to reduce expenses and pursue additional revenue opportunities during this current banking environment of lower net interest margins and the ever increasing regulatory changes and expenses."

Return on average assets was 0.31% and return on average equity was 3.70% for the fourth quarter of 2012, compared with 0.59% and 7.63%, respectively, for the fourth quarter of 2011.  For the year ended December 31, 2012, Fauquier Bankshares' return on average assets was 0.46% and return on average equity was 5.58%, compared with 0.69% and 8.93%, respectively, for 2011.

Net interest margin decreased to 3.60% in the fourth quarter of 2012 compared with 3.87% for the same period of 2011.  Net interest income for the fourth quarter of 2012 decreased $567,000 or 10.4% when compared with the fourth quarter of 2011.  The net interest margin was 3.85% for the year ended December 31, 2012 compared with 4.00% in 2011.  Net interest income for the year ended December 31, 2012 decreased $1.1 million, or 5.2%, over the same period in 2011.  Interest income continues to be adversely impacted by the extended low interest rate environment as yields on earning assets decline from previous quarters.  The average yield on earning assets decreased 46 basis points while the cost of funds decreased 22 basis points from the fourth quarter 2011.   

The provision for loan losses for the fourth quarter of 2012 was $1.4 million compared with $462,000 for the fourth quarter of 2011.  For the year ended December 31, 2012, the provision for loan losses was $5.2 million compared with $1.9 million for the same period in 2011.    Allowance for loan losses was $6.66 million or 1.47% of total loans at December 31, 2012, compared with $6.73 million, or 1.47%, at December 31, 2011.

Net loan charge-offs were $3.3 million in the fourth quarter 2012 compared with $616,000 in the fourth quarter of 2011.  The ratio of net charge-offs to average loans outstanding for the fourth quarter of 2012 was 0.73% compared with 0.13% for the same period in 2011.  For the year ended December 31, 2012, net charge-offs were $5.3 million or 1.16% of average loans compared with $1.5 million or 0.33% of average loans for 2011.

"Because we added $5.2 million to the loan loss provision during 2012, we were prepared for the $1.1 million and $2.8 million in loan charge-offs taken on the three problem loans in the third and fourth quarters, respectively." Ferrell said.  "Because appropriate actions were taken in 2012 with reserves and loan charge-offs, the Bank is better positioned from a credit quality perspective."

Nonperforming assets totaled $13.8 million or 2.29% of total assets at December 31, 2012, compared with $6.7 million or 1.10% as of December 31, 2011.  Included in nonperforming assets at December 31, 2012 were $11.7 million of nonperforming loans, $1.8 million of other real estate owned and $325,000 of nonperforming corporate bond investments.  Included within the $11.7 million of nonperforming loans were $3.2 million with a U. S. government guaranty.  In 2012, no impairment losses were recognized for the investment in the four corporate bond investments compared with $189,000 in 2011.

For the year ended December 31, 2012, Fauquier Bankshares' Wealth Management Services (WMS) division revenues were $1.73 million compared to $1.64 million a year earlier, an increase of 5.9%.  Assets under management for WMS at December 31, 2012 increased 12.2% to $328.6 million compared with $292.9 million a year earlier.

Noninterest income, excluding securities gains and losses, decreased $95,000 to $1.57 million for the fourth quarter 2012 compared with $1.67 million for the same period in 2011.  Noninterest income, excluding securities gains and losses, decreased $163,000 to $6.2 million for the year ended December 31, 2012 compared to $6.4 million for the same period in 2011.  The majority of the decrease is directly related to a decline in service charges on deposits, partially offset by an increase to trust and estate income.

Noninterest expense for the fourth quarter 2012 decreased $884,000 or 16.1% to $4.6 million compared with $5.5 million for the same period in 2011.  A majority of the decrease, $667,000, related to other real estate owned (OREO) provision or loss booked in 2011 while in 2012 there was no OREO provision or loss taken.  Noninterest expense for the year ended December 31, 2012 decreased $2.2 million or 10.4% to $18.7 million compared with $20.9 million for the same period in 2011.  Salaries and employee benefits and other consulting expenses decreased because of our continued efforts to manage operating costs. Additionally, there was a $1.1 million decrease in the loss on the sale or impairment of OREO properties from the prior year.

"As a result of reduced incentive compensation, improved retail branch operating efficiency and no OREO properties added to our books, we saw a $2.2 million decrease in noninterest expense in 2012." Ferrell said.  "Our efficiency ratio was 67.64% for 2012 compared with 72.05% in 2011, a positive reflection of our efforts to reduce expenses."

Total assets were $602.0 million at December 31, 2012 compared with $614.2 million at December 31, 2011.  Total loans, net were $445.7 million at December 31, 2012 compared with $452.1 million at December 31, 2011.  Total deposits were $515.1 million at December 31, 2012 compared with $530.6 million at December 31, 2011.  Transaction deposits (Demand & NOW accounts) grew $20.6 million to $280.3 million at December 31, 2012 compared with $259.7 million at December 31, 2011, representing 54.4% of total deposits.

Shareholders' equity increased to $48.4 million at December 31, 2012 compared with $47.6 million at December 31, 2011.  The Company's regulatory capital ratios continue to be deemed "Well Capitalized" by the Federal Reserve Bank of Richmond.  At December 31, 2012, the Company had a leverage ratio of 9.23%, compared with 8.70% one year earlier.  The tier 1 and total risk-based ratios were 12.60% and 13.85%, respectively, at December 31, 2012, compared with 12.05% and 13.31% at December 31, 2011.  The minimum capital ratios to be considered "Well Capitalized" by the Federal Reserve are 5.00% for the leverage ratio, 6.00% for the tier 1 risk-based ratio, and 10.00% for the total risk-based ratio.

The Fauquier Bank is an independent, locally-owned, community bank offering a full range of financial services, including internet banking, commercial, retail, insurance, wealth management, and financial planning services through ten banking offices throughout Fauquier and Prince William Counties in Virginia.  Fauquier Bankshares' stock price closed at $12.18 per share on February 1, 2013.  Additional information, including a more extensive investor presentation with comparisons of the company's performance to peer institutions is available at http://investor.fauquierbank.com/CorporateProfile.aspx?iid=1017981 or by calling Investor Relations at (800) 638-3798.

This news release may contain "forward-looking statements" as defined by federal securities laws. These statements address issues that involve risks, uncertainties, estimates and assumptions made by management, and actual results could differ materially from the results contemplated by these forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in: interest rates and the shape of the interest rate yield curve, general economic conditions, legislative/regulatory policies, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan and/or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in our market area, our plans to expand our branch network and increase our market share, and accounting principles, policies and guidelines. Other risk factors are detailed from time to time in our Securities and Exchange Commission filings. Readers should consider these risks and uncertainties in evaluating our forward-looking statements and should not place undue reliance on such statements. We undertake no obligation to update these statements following the date of this news release.


 


FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES

SELECTED FINANCIAL DATA



For the Quarter Ended,


(Dollars in thousands, except per share data)

Dec. 31, 2012


Sep. 30, 2012


Jun. 30, 2012


Mar. 31, 2012


Dec. 31, 2011











EARNINGS STATEMENT DATA:










Interest income

$             5,794


$             6,288


$             6,365


$             6,507


$           6,685

Interest expense

898


977


1,042


1,112


1,222

Net interest income

4,896


5,311


5,323


5,395


5,463

Provision for loan losses

1,350


550


2,800


500


462

Net interest income after provision for loan losses

3,546


4,761


2,523


4,895


5,001

Noninterest income

1,573


1,542


1,602


1,482


1,668

Securities gains (losses)

-


2


163


1


75

Noninterest expense

4,601


4,641


4,347


5,111


5,486

Income before income taxes

518


1,664


(59)


1,267


1,258

Income taxes

65


452


(138)


313


347

Net income

$            453


$            1,212


$                 79


$             954


$            911











PER SHARE DATA:










Net income per share, basic

$              0.12


$              0.33


$               0.02


$               0.26


$             0.25

Net income per share, diluted

$              0.12


$              0.33


$               0.02


$               0.26


$             0.25

Cash dividends

$              0.12


$              0.12


$               0.12


$               0.12


$             0.12

Average basic shares outstanding

3,695,160


3,695,160


3,695,160


3,680,230


3,669,758

Average diluted shares outstanding

3,714,699


3,712,058


3,709,416


3,691,844


3,691,688

Book value at period end

$            13.10


$            13.11


$             12.86


$             13.00


$           12.96











BALANCE SHEET DATA:










Total assets

$        602,032


$        575,602


$         582,552


$         594,212


$       614,224

Loans, net

445,715


445,304


450,243


450,338


452,086

Investment securities

50,429


55,361


59,863


59,069


50,193

Deposits

515,134


492,004


500,100


511,179


530,569

Transaction accounts (Demand & NOW accounts)

280,303


253,148


250,643


253,274


259,694

Shareholders' equity

48,393


48,459


47,536


48,056


47,571











PERFORMANCE RATIOS:










Net interest margin(1)

3.60%


3.94%


3.95%


3.89%


3.87%

Return on average assets

0.31%


0.83%


0.05%


0.64%


0.59%

Return on average equity

3.70%


10.00%


0.65%


7.97%


7.63%

Efficiency ratio(2)

69.80%


66.45%


60.18%


72.88%


74.71%

Yield on earning assets

4.26%


4.65%


4.72%


4.69%


4.72%

Cost of interest bearing liabilities

0.80%


0.87%


0.93%


0.95%


1.02%











(1) Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Company's net yield on its earning assets.

(2) Efficiency ratio is computed by dividing non-interest expense by the sum of fully taxable equivalent net interest income and non-interest income.

 

FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES

SELECTED FINANCIAL DATA



For the Quarter Ended,

(Dollars in thousands, except for ratios)

Dec. 31, 2012


Sep. 30, 2012


Jun. 30, 2012


Mar. 31, 2012


Dec. 31, 2011

ASSET QUALITY RATIOS:










Nonperforming loans

$           11,657


$           12,428


$             7,382


$             4,846


$           4,621

Other real estate owned

1,776


1,776


1,776


1,776


1,776

Foreclosed property

-


-


-


-


15

Nonperforming corporate bonds, at fair value

325


303


292


276


335

  Total nonperforming assets

13,758


14,507


9,450


6,898


6,747

Restructured loans still accruing

5,556


5,562


4,148


-


-

Loans past due 90 or more days and still accruing

132


130


201


86


101

Total nonperforming and other risk assets

$            19,446


$            20,199


$            13,799


$             6,984


$           6,848











Nonperforming loans to total loans, period end

2.58%


2.74%


1.61%


1.06%


1.01%

Nonperforming assets to period end total assets

2.29%


2.52%


1.62%


1.16%


1.10%

Allowance for loan losses

$            6,658


$            8,606


$             9,449


$             6,877


$           6,728

Allowance for loan losses to period end loans

1.47%


1.90%


2.06%


1.50%


1.47%

Allowance for loan losses as percentage of nonperforming loans, period end

57.12%


69.25%


128.00%


141.91%


145.61%

Net loan charge-offs for the quarter

$            3,299


$            1,393


$            228


$               351


$           616

Net loan charge-offs  to average loans

0.73%


0.30%


0.05%


0.08%


0.13%





















CAPITAL RATIOS:










Tier 1 leverage ratio

9.23%


9.35%


9.06%


8.90%


8.70%

Tier 1 risk-based capital ratio

12.60%


12.60%


12.08%


12.10%


12.05%

Total risk-based capital ratio

13.85%


13.84%


13.35%


13.35%


13.31%

Tangible equity to total assets

8.04%


8.42%


8.16%


8.09%


7.74%

 

FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES

SELECTED FINANCIAL DATA


(Dollars in thousands, except per share data)

For the Twelve Month Period Ended,


Dec. 31, 2012


Dec. 31, 2011

EARNINGS STATEMENT DATA:




Interest income

$        24,954


$                27,149

Interest expense

4,029


5,075

Net interest income

20,925


22,074

Provision for loan losses

5,200


1,933

Net interest income after




  provision for loan losses

15,725


20,141

Noninterest income

6,199


6,361

Securities gains (losses)

166


(87)

Noninterest expense

18,700


20,863

Income before income taxes

3,390


5,552

     Income taxes

692


1,435

Net income

$          2,698


$               4,117





PER SHARE DATA:




Net income per share, basic

$            0.73


$                 1.12

Net income per share, diluted

$            0.73


$                 1.12

Cash dividends

$            0.48


$                 0.48

Average basic shares outstanding

3,691,517


3,666,206

Average diluted shares outstanding

3,707,094


3,684,162





PERFORMANCE RATIOS:




Net interest margin(1)

3.85%


4.00%

Return on average assets

0.46%


0.69%

Return on average equity

5.58%


8.93%

Efficiency ratio(2)

67.64%


72.05%





Net loan charge-offs

$           5,271


$                1,512

Net loan charge-offs to average loans

1.16%


0.33%





(1) Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Company's net yield on its earning assets.

(2) Efficiency ratio is computed by dividing non-interest expense by the sum of fully taxable equivalent net interest income and non-interest income.

 

SOURCE Fauquier Bankshares, Inc.



RELATED LINKS
http://www.fauquierbank.com

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