Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - FAUQUIER BANKSHARES, INC. | form8k021016.htm |
NEWS RELEASE
CONTACT ERIC GRAAP
(540) 349-0212 or
eric.graap@TFB.bank
Fauquier Bankshares Announces Year End and Fourth Quarter 2015 Results
WARRENTON, VA, February 10, 2016 -- Fauquier Bankshares, Inc. (NASDAQ: FBSS), parent company of The Fauquier Bank (the "Bank"), reported a net loss of $612,000 for the year ended December 31, 2015 compared with net income of $4.81 million for the year ended December 31, 2014. Basic and diluted loss per share for the year ended December 31, 2015 were $0.16, compared with basic and diluted earnings per share of $1.29 and $1.28, respectively, for 2014. The decrease in year-to-year earnings was attributable to a loan loss provision of $8.0 million for 2015 compared with no provision in 2014.
The provision for loan loss of $8.0 million is primarily based on a third-party field audit received by the Bank on November 18, 2015. The audit identified a potentially fraudulent commercial loan relationship, totaling $8.5 million, made up of five loans to one borrower. It also indicated potential evidence of a sophisticated loan scheme by the borrower, orchestrated to deceive and avoid attention of the Bank through the falsification of financial documents and other false statements. As stated in the November 20, 2015 Form 8-K filing with the U.S. Securities and Exchange Commission, Fauquier Bankshares recognized an impairment charge of $5.5 million based on a best efforts estimation of value of collateral with respect to the loan relationship, including inventory, receivables and equipment. The filing also estimated that the range of impairment on the five loans could be between $4.2 million and $6.4 million. The impairment loss was increased to a total of $8.5 million for the quarter ended December 31, 2015. Negotiations are in process for the sale of the assets of the borrower. Any future receipt of sale proceeds will be recognized as a loan recovery in the quarter when received.
"We have investigated and will continue to investigate this matter thoroughly. We have committed the necessary resources and legal measures to best protect our shareholders and the assets of our Company," said Randy Ferrell, President and CEO of Fauquier Bankshares. "Our investigation leads us to believe that this situation is isolated to the five loans, and our information has been turned over to the appropriate authorities for a prospective criminal investigation."
Ferrell said, "After comprehensive review, we are confident that the Bank's loan policies, internal controls and underwriting are fundamentally sound. Our uncompromising focus on credit quality and the adequacy of our loan loss reserves, position us to resolve this situation with minimal impact to future earnings, we believe. Finally, the Bank's capital strength, most of it in the form of tangible equity, remains well above all current capital requirements of its regulators."
For the fourth quarter of 2015, Fauquier Bankshares had a net loss of $3.75 million compared with net income of $1.15 million for the fourth quarter of 2014. The quarter-to-quarter decrease in earnings was attributable to a $7.8 million loan loss provision during the fourth quarter of 2015 compared with no provision for the same quarter one year earlier. Basic and diluted loss per share for the fourth quarter of 2015 were $1.00, compared with basic and diluted earnings per share of $0.31 and $0.30, respectively, in the fourth quarter of 2014.
Return on average assets was -0.10% and return on average equity was -1.09% for the year ended December 31, 2015, compared with 0.80% and 8.98%, respectively, for 2014. For the fourth quarter of 2015, Fauquier Bankshares' return on average assets was -2.46% and return on average equity was -26.90%, compared with 0.76% and 8.33%, respectively, for the fourth quarter of 2014.
Net interest margin was 3.62% for the year ended December 31, 2015, compared with 3.55% in 2014. Net interest income for the year ended December 31, 2015 increased $361,000 or 1.9%, compared with the same period in 2014. Net interest margin was 3.59% in the fourth quarter of 2015, compared with 3.47% for the same period in 2014. Net interest income for the fourth quarter of 2015 increased $197,000 or 4.1% when compared with the fourth quarter of 2014.
Nonperforming assets totaled $3.21 million or 0.53% of total assets at December 31, 2015, compared with $2.63 million or 0.43% as of December 31, 2014. Included in nonperforming assets at December 31, 2015 were $1.85 million of nonperforming loans and $1.36 million of other real estate owned. Nonperforming loans represent 0.41% of total loans at year end 2015, compared with 0.28% at year-end 2014.
Net loan charge-offs were $9.20 million for the year ended December 31, 2015, compared with $1.28 million in 2014. The ratio of net charge-offs to average loans for 2015 was 2.04% compared with 0.29% for 2014. For the fourth quarter of 2015, net charge-offs were $8.38 million or 1.84% of average loans compared with $1.2 million or 0.28% of average loans for the same period in 2014. Allowance for loan losses was $4.19 million or 0.94% of total loans at December 31, 2015, compared with $5.39 million or 1.22% of total loans at December 31, 2014.
Noninterest income, excluding securities gains and losses, decreased $205,000 to $6.41 million for the year ended December 31, 2015 compared to $6.62 million for the same period in 2014. Noninterest income, excluding securities gains and losses, decreased slightly to $1.56 million for the fourth quarter 2015 compared with $1.57 million for the same period in 2014.
Noninterest expense for the year ended December 31, 2015 increased $379,000 to $20.19 million compared with $19.81 million for the same period in 2014. Noninterest expense for the fourth quarter 2015 decreased $343,000 to $4.61 million compared with $4.95 million for the same period in 2014.
Total assets were $601.4 million at December 31, 2015 compared with $606.3 million at December 31, 2014. Total loans, net were $442.7 million at December 31, 2015 compared with $435.1 million at December 31, 2014. Total deposits were $524.3 million at December 31, 2015 compared with $525.2 million at December 31, 2014. Transaction deposits (Demand & NOW accounts) increased $9.9 million to $320.2 million at December 31, 2015 compared with $310.3 million at December 31, 2014, representing 61.1% of total deposits.
Shareholders' equity decreased to $52.6 million at December 31, 2015 compared with $55.2 million at December 31, 2014. The book value of Fauquier Bankshares' stock was $14.06 per common share as of December 31, 2015. Fauquier Bankshares' stock price closed at $15.35 per share on February 9, 2016.
On January 1, 2015, new minimum capital requirements became effective as part of the Basel III regulatory capital reforms. On December 31, 2015, the Bank's leverage ratio was 9.13% and the Bank's common equity tier 1 capital ratio was 11.64%. The Bank's tier 1 and total risk-based ratios were 11.64% and 12.53%, respectively, on December 31, 2015. The Bank exceeds all fully phased-in capital requirements of Basel III (effective January 1, 2015 with the fully phased-in requirements effective January 1, 2019) on December 31, 2015.
Fauquier Bankshares, through its operating subsidiary, The Fauquier Bank, is an independent, locally-owned, community bank offering a full range of financial services, including internet banking, mobile banking with mobile deposit, commercial, retail, insurance, wealth management, and financial planning services through eleven banking offices throughout Fauquier and Prince William Counties in Virginia. Additional information is available at http://www.tfb.bank 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.
SOURCE: Fauquier Bankshares, Inc. (FBSS)
FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
|
For the Quarter Ended,
|
||||||||||||||||||||
|
(Dollars in thousands, except per share data)
|
Dec. 31, 2015
|
Sep. 30, 2015
|
Jun. 30, 2015
|
Mar. 31, 2015
|
Dec. 31, 2014
|
|||||||||||||||
|
EARNINGS STATEMENT DATA:
|
||||||||||||||||||||
|
Interest income
|
$
|
5,436
|
$
|
5,460
|
$
|
5,425
|
$
|
5,373
|
$
|
5,422
|
||||||||||
|
Interest expense
|
438
|
448
|
516
|
560
|
621
|
|||||||||||||||
|
Net interest income
|
4,998
|
5,012
|
4,909
|
4,813
|
4,801
|
|||||||||||||||
|
Provision for loan losses
|
7,800
|
100
|
100
|
-
|
-
|
|||||||||||||||
|
Net interest income (loss) after provision for loan losses
|
(2,802
|
)
|
4,912
|
4,809
|
4,813
|
4,801
|
||||||||||||||
|
Noninterest income
|
1,562
|
1,881
|
1,695
|
1,276
|
1,569
|
|||||||||||||||
|
Securities gains (losses)
|
1
|
3
|
-
|
-
|
3
|
|||||||||||||||
|
Noninterest expense
|
4,609
|
5,212
|
5,150
|
5,215
|
4,952
|
|||||||||||||||
|
Income (loss) before income taxes
|
(5,848
|
)
|
1,584
|
1,354
|
874
|
1,421
|
||||||||||||||
|
Income taxes
|
(2,098
|
)
|
238
|
305
|
131
|
269
|
||||||||||||||
|
Net income (loss)
|
$
|
(3,750
|
)
|
$
|
1,346
|
$
|
1,049
|
$
|
743
|
$
|
1,152
|
|||||||||
|
PER SHARE DATA:
|
||||||||||||||||||||
|
Net income (loss) per share, basic
|
$
|
(1.00
|
)
|
$
|
0.36
|
$
|
0.28
|
$
|
0.20
|
$
|
0.31
|
|||||||||
|
Net income (loss) per share, diluted
|
$
|
(1.00
|
)
|
$
|
0.36
|
$
|
0.28
|
$
|
0.20
|
$
|
0.30
|
|||||||||
|
Cash dividends
|
$
|
0.12
|
$
|
0.12
|
$
|
0.12
|
$
|
0.12
|
$
|
0.17
|
||||||||||
|
Average basic shares outstanding
|
3,744,562
|
3,744,562
|
3,744,562
|
3,737,111
|
3,730,877
|
|||||||||||||||
|
Average diluted shares outstanding
|
3,767,288
|
3,764,416
|
3,761,545
|
3,751,222
|
3,754,334
|
|||||||||||||||
|
Book value at period end
|
$
|
14.06
|
$
|
15.24
|
$
|
14.98
|
$
|
14.87
|
$
|
14.78
|
||||||||||
|
BALANCE SHEET DATA:
|
||||||||||||||||||||
|
Total assets
|
$
|
601,400
|
$
|
594,204
|
$
|
597,792
|
$
|
597,384
|
$
|
606,286
|
||||||||||
|
Loans, net
|
442,669
|
460,705
|
447,344
|
439,318
|
435,070
|
|||||||||||||||
|
Investment securities
|
56,510
|
56,790
|
58,764
|
57,038
|
58,700
|
|||||||||||||||
|
Deposits
|
524,294
|
511,081
|
516,248
|
516,157
|
525,215
|
|||||||||||||||
|
Transaction accounts (Demand & NOW accounts)
|
320,169
|
308,060
|
315,347
|
303,320
|
310,342
|
|||||||||||||||
|
Shareholders' equity
|
52,633
|
57,083
|
56,079
|
55,688
|
55,157
|
|||||||||||||||
|
PERFORMANCE RATIOS:
|
||||||||||||||||||||
|
Net interest margin(1)
|
3.59
|
%
|
3.69
|
%
|
3.62
|
%
|
3.59
|
%
|
3.47
|
%
|
||||||||||
|
Return on average assets
|
(2.46
|
%)
|
0.90
|
%
|
0.70
|
%
|
0.50
|
%
|
0.76
|
%
|
||||||||||
|
Return on average equity
|
(26.90
|
%)
|
9.40
|
%
|
7.51
|
%
|
5.42
|
%
|
8.33
|
%
|
||||||||||
|
Efficiency ratio(2)
|
69.16
|
%
|
72.73
|
%
|
76.74
|
%
|
84.18
|
%
|
76.42
|
%
|
||||||||||
|
Yield on earning assets
|
3.90
|
%
|
4.02
|
%
|
4.00
|
%
|
4.01
|
%
|
3.91
|
%
|
||||||||||
|
Cost of interest bearing liabilities
|
0.40
|
%
|
0.41
|
%
|
0.47
|
%
|
0.51
|
%
|
0.55
|
%
|
||||||||||
|
(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, 2015
|
Sep. 30, 2015
|
Jun. 30, 2015
|
Mar. 31, 2015
|
Dec. 31, 2014
|
|||||||||||||||
|
ASSET QUALITY RATIOS:
|
||||||||||||||||||||
|
Nonperforming loans
|
$
|
1,849
|
$
|
2,305
|
$
|
876
|
$
|
1,593
|
$
|
1,227
|
||||||||||
|
Other real estate owned
|
1,356
|
1,524
|
1,871
|
1,406
|
1,406
|
|||||||||||||||
|
Total nonperforming assets
|
3,205
|
3,829
|
2,747
|
2,999
|
2,633
|
|||||||||||||||
|
Restructured loans still accruing
|
5,495
|
5,220
|
6,731
|
7,402
|
7,431
|
|||||||||||||||
|
Student loans (U. S. Government guaranteed) past due 90 or more days and still accruing
|
2,814
|
2,907
|
3,173
|
2,721
|
4,551
|
|||||||||||||||
|
Loans past due 90 or more days and still accruing
|
-
|
-
|
85
|
2
|
-
|
|||||||||||||||
|
Total nonperforming and other risk assets
|
$
|
11,514
|
$
|
11,956
|
$
|
12,736
|
$
|
13,124
|
$
|
14,615
|
||||||||||
|
Nonperforming loans to total loans, period end
|
0.41
|
%
|
0.50
|
%
|
0.19
|
%
|
0.36
|
%
|
0.28
|
%
|
||||||||||
|
Nonperforming assets to period end total assets
|
0.53
|
%
|
0.64
|
%
|
0.46
|
%
|
0.50
|
%
|
0.43
|
%
|
||||||||||
|
Allowance for loan losses
|
$
|
4,193
|
$
|
4,776
|
$
|
4,684
|
$
|
5,386
|
$
|
5,391
|
||||||||||
|
Allowance for loan losses to period end loans
|
0.94
|
%
|
1.03
|
%
|
1.04
|
%
|
1.21
|
%
|
1.22
|
%
|
||||||||||
|
Allowance for loan losses as percentage of nonperforming loans, period end
|
226.77
|
%
|
207.20
|
%
|
534.70
|
%
|
338.10
|
%
|
439.36
|
%
|
||||||||||
|
Net loan charge-offs for the quarter
|
$
|
8,382
|
$
|
8
|
$
|
802
|
$
|
6
|
$
|
1,204
|
||||||||||
|
Net loan charge-offs to average loans
|
1.84
|
%
|
0.00
|
%
|
0.18
|
%
|
0.00
|
%
|
0.28
|
%
|
||||||||||
|
CAPITAL RATIOS:
|
||||||||||||||||||||
|
Tier 1 leverage ratio (Bank only)
|
9.13
|
%*
|
9.98
|
%*
|
9.75
|
%*
|
9.65
|
%*
|
9.48
|
%
|
||||||||||
|
Common equity tier 1 capital ratio (Bank only)
|
11.64
|
%*
|
12.05
|
%*
|
12.14
|
%*
|
12.23
|
%*
|
NA
|
|||||||||||
|
Tier 1 risk-based capital ratio (Bank only)
|
11.64
|
%*
|
12.05
|
%*
|
12.14
|
%*
|
12.23
|
%*
|
12.84
|
%
|
||||||||||
|
Total risk-based capital ratio (Bank only)
|
12.53
|
%*
|
13.02
|
%*
|
13.12
|
%*
|
13.38
|
%*
|
14.05
|
%
|
||||||||||
|
Tangible equity to total assets (Consolidated Company)
|
8.75
|
%
|
9.61
|
%
|
9.38
|
%
|
9.32
|
%
|
9.10
|
%
|
||||||||||
*Reflects Basel III capital requirements effective January 1, 2015. When fully phased-in on January 1, 2019, the rules will require the Bank to maintain a minimum tier 1 leverage ratio of 4.0%, a minimum common equity tier 1 capital ratio of 4.5% plus a "capital conservation buffer" of 2.5% for a total of 7.0%, a tier 1 risk-based capital ratio of 6.0% plus a "capital conservation buffer" of 2.5% for a total for 8.5%, and a total risk-based capital ratio of 8.0% plus a "capital conservation buffer" of 2.5% for a total of 10.5%.
FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
|
(Dollars in thousands, except per share data)
|
For the Twelve Month Period Ended,
|
|||||||
|
Dec. 31, 2015
|
Dec. 31, 2014
|
|||||||
|
EARNINGS STATEMENT DATA:
|
||||||||
|
Interest income
|
$
|
21,694
|
$
|
21,935
|
||||
|
Interest expense
|
1,962
|
2,564
|
||||||
|
Net interest income
|
19,732
|
19,371
|
||||||
|
Provision for loan losses
|
8,000
|
-
|
||||||
|
Net interest income after
|
||||||||
|
provision for loan losses
|
11,732
|
19,371
|
||||||
|
Noninterest income
|
6,414
|
6,619
|
||||||
|
Securities gains (losses)
|
4
|
3
|
||||||
|
Noninterest expense
|
20,186
|
19,807
|
||||||
|
Income (loss) before income taxes
|
(2,036
|
)
|
6,186
|
|||||
|
Income taxes
|
(1,424
|
)
|
1,380
|
|||||
|
Net income (loss)
|
$
|
(612
|
)
|
$
|
4,806
|
|||
|
PER SHARE DATA:
|
||||||||
|
Net income (loss) per share, basic
|
$
|
(0.16
|
)
|
$
|
1.29
|
|||
|
Net income (loss) per share, diluted
|
$
|
(0.16
|
)
|
$
|
1.28
|
|||
|
Cash dividends
|
$
|
0.48
|
$
|
0.53
|
||||
|
Average basic shares outstanding
|
3,742,725
|
3,728,316
|
||||||
|
Average diluted shares outstanding
|
3,761,143
|
3,747,247
|
||||||
|
|
||||||||
|
PERFORMANCE RATIOS:
|
||||||||
|
Net interest margin(1)
|
3.62
|
%
|
3.55
|
%
|
||||
|
Return on average assets
|
(0.10
|
%)
|
0.80
|
%
|
||||
|
Return on average equity
|
(1.09
|
%)
|
8.98
|
%
|
||||
|
Efficiency ratio(2)
|
75.50
|
%
|
74.96
|
%
|
||||
|
Net loan charge-offs
|
$
|
9,198
|
$
|
1,276
|
||||
|
Net loan charge-offs to average loans
|
2.04
|
%
|
0.29
|
%
|
||||
|
(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.
|