Fauquier Bankshares Announces Second Quarter 2011 Earnings

WARRENTON, Va., July 28, 2011 /PRNewswire/ -- Fauquier Bankshares, Inc. (NASDAQ: FBSS) holding company for The Fauquier Bank, reported net income of $1.14 million for the second quarter of 2011 compared with $1.01 million for the second quarter of 2010, an increase of 12.6%. Basic and diluted income per share for the second quarter of 2011 was $0.31 compared with income per share of $0.28 in the second quarter 2010.  

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Net income for the first six months of 2011 was $2.1 million compared with $1.8 million for the same period of 2010, an increase of 13.5%.  Basic and diluted income per share for the first six months of 2011 was $0.56 compared with income per share of $0.50 for the first six months of 2010.

"We are pleased with the double-digit increases in net income for the second quarter and for the first six months of this year, even as we keep a watchful eye on the deficit deliberations, general economic conditions and the reactions of markets in the U.S. and around the world," said Randy K. Ferrell, President and Chief Executive Officer.  Mr. Ferrell continued, "Our non-interest income generation from our Wealth Management division, and operating expense reductions contributed to our improvement from last year.  Our Trust and Brokerage income grew nicely over the first half of last year by over 26.0%."

Net interest margin was 4.06% in the second quarter of 2011 compared with 4.16% for the same quarter in 2010.  Net interest margin was 4.09% in the first half of 2011 compared with 4.24% for the same period in 2010.  Return on average assets (ROAA) was 0.77% and return on average equity (ROAE) was 9.99% for the second quarter of 2011, an increase from 0.69% and 9.28%, respectively, for the second quarter of 2010. For the six-month period ended June 30, 2011, Fauquier Bankshares' return on average assets was 0.70% and return on average equity was 9.19%, compared with 0.64% and 8.22%, respectively, for the six month period ended June 30, 2010.

Loans, net of allowance for loan losses, decreased $14.9 million, or 3.2%, from $462.7 at June 30, 2010, to $447.8 million at June 30, 2011. Total deposits were $518.6 million at June 30, 2011 compared with $492.8 at June 30, 2010, an increase of 5.2%.  At June 30, 2011 transaction accounts (Demand and NOW) totaled $218.1 million compared with $175.5 million at June 30, 2010, an increase of $42.5 million, or 24.2%.

Net loan charges-offs were $366,000 in the second quarter 2011, or 0.08% of average loans, compared with $447,000 in the second quarter of 2010 or 0.10% of average loans during the comparable quarter.  Year to date, net charge-offs decreased $373,000 for the first six months of 2011 to $462,000, or 0.10% of average loans, compared with $835,000 for the same period in 2010, or 0.18% of average loans. These numbers represent a decrease in net loan charge-offs for the current quarter of 18.1% from the second quarter 2010.  For the comparable six-month period, there was a 44.7% decrease in net loan charge-offs.

The allowance for loan losses was $6.6 million, or 1.46% of total loans, at June 30, 2011 compared with $5.4 million, or 1.15% of total loans at June 30, 2010.  The allowance for loan losses in the second quarter of 2011 represents 2.2 times non-performing loans.

The Bank's non-performing assets totaled $6.8 million, or 1.13% of period end total assets, at June 30, 2011, compared with $6.5 million, or 1.12% of period end total assets, at June 30, 2010.  Included in non-performing assets at June 30, 2011 were $3.0 million of non-performing loans, $3.5 million of other real estate owned and $324,000 of non-performing corporate bond investments.

Non-interest income decreased $19,000, or 1.4%, from $1.35 million in the second quarter of 2010, to $1.33 million in the first quarter 2011.  At June 30, 2011, Fauquier Bankshares' Wealth Management Services division income was $427,000 compared with $356,000 at June 30, 2010, an increase of 20.0%.  This solid performance was offset by a recorded $251,000 loss on real estate owned ("OREO") in the second quarter of 2011 compared with no loss or gain recorded in the second quarter of 2010.  Noninterest expense for the second quarter 2011 was $5.0 million, a decrease of $149,000 or 2.9% compared with $5.2 million for the second quarter 2010.  Salaries and benefits were $2.7 million for the second quarter 2011, a decrease of $151,500 compared with the second quarter 2010.

Shareholders' equity increased to $46.2 million, or 5.2%, at June 30, 2011 compared with $43.9 million at June 30, 2010.  The book value of FBSS's stock was $12.58 per common share as of June 30, 2011.  Fauquier Bankshares' stock price closed at $12.14 per share on July 26, 2011.  The Company's regulatory capital ratios continue to be deemed "Well Capitalized," the highest category assigned by the Federal Reserve Bank of Richmond.  At June 30, 2011, the Company's leverage ratio, an important indicator of financial health, was 8.66%, compared with 8.42% one year earlier. The Company's tier 1 and total risk-based ratios were 11.82% and 13.07%, respectively, at June 30, 2011, compared with 11.26% and 12.49% at June 30, 2010. 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. Additional information, including a more extensive investor presentation, is available at www.fauquierbank.com or by calling (800) 638-3798.

This news release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management uses these "non-GAAP" measures in their analysis of the Corporation's performance.  The Company's management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant gains and charges in the current period.  The Company believes that a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance.  The Company's management believes that investors may use these non-GAAP financial measures to analyze financial performance without the impact of unusual items that may obscure trends in the Company's underlying performance.  Where incorporated into our disclosures, these non-GAAP measures will be clearly identified as such. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.  

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, the FDIC 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.

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