Fauquier Bankshares Announces Third Quarter 2016 Results

WARRENTON, Va., Nov. 7, 2016

Marc Bogan, President and CEO, said, "While our year-to-date results do not comprehensively reflect satisfactory performance in 2016, our team made strides in the third quarter of 2016 toward implementing a strategy that will benefit our shareholders and our company in the coming years. We are steadily beginning to grow earning assets and our core deposit growth continues to be strong. Our profitability in the third quarter of 2016 compared unfavorably to the prior year partially due to the recognition of a one-time event in the same period of 2015. Excluding one-time events and non-recurring gains recognized in the third quarter of 2015 and the second quarter of 2016, neither period exhibits acceptable profitability for our organization. However, I am encouraged by the strategic progress we are making, and I expect earnings, much like asset and loan growth, to slowly begin to improve in the future."     

Total assets were $623.9 million on September 30, 2016 compared with $601.4 million on December 31, 2015 and $594.2 million on September 30, 2015. Net loans increased $10.2 million or 2.31% to $452.9 million on September 30, 2016 from $442.7 million on December 31, 2015 and decreased $7.8 million or 1.7% from $460.7 million on September 30, 2015. Total deposits were $545.4 million on September 30, 2016 compared with $524.3 million and $511.1 million on December 31, 2015 and September 30, 2015, respectively. Low cost transaction deposits (demand and interest checking accounts) grew $21.0 million and $33.1 million over the same 9 and 12 month periods, now representing 62.5% of total deposits.

Return on average assets (ROAA) was 0.44% and return on average equity (ROAE) was 5.11% for the third quarter of 2016, compared with 0.90% and 9.40%, respectively, for the third quarter of 2015. For the nine month period ended September 30, 2016, Fauquier Bankshares' return on average assets was 0.63% and return on average equity was 7.13%, compared with 0.70% and 7.47%, respectively, for the nine month period ended September 30, 2015.

Net interest margin was 3.45% in the third quarter of 2016 compared with 3.69% for the same period in 2015. Net interest income for the third quarter of 2016 decreased $47,000 to $4.97 million when compared with $5.01 million for the same period in 2015. The decline was primarily due to decline in the average yield on earning assets which declined 25 basis points from third quarter 2015. Net interest margin was 3.50% for the first nine months of 2016 compared with 3.63% for the same period in 2015. Net interest income for the first nine months of 2016 decreased $83,000 to $14.65 million when compared with $14.73 million for the same period in 2015. 

Nonperforming assets were $4.57 million, or 0.73% of total assets, on September 30, 2016, compared with $3.83 million, or 0.64% of total assets, on September 30, 2015. The increase was primarily due to the addition of a single commercial loan. Included in nonperforming assets on September 30, 2016 were $3.22 million of nonperforming loans and $1.36 million of other real estate owned. The ratio of nonperforming loans to total loans at the period's end was 0.70% at September 30, 2016 compared with 0.50% at September 30, 2015.

Net loan charge-offs in the third quarter of 2016 were $609,000 compared with $8,000 in the third quarter of 2015. Net loan recoveries for the first nine months of 2016 were $732,000, or (0.16%) of average loans, compared with net loan charge-offs of $815,000, or 0.18% of average loans for the same period in 2015. Allowance for loan losses was $4.42 million or 0.97% of total loans on September 30, 2016 compared with $4.78 million or 1.03% of total loans on September 30, 2015. The allowance for loan losses coverage ratio was 1.37 times nonperforming loans on September 30, 2016 compared with 2.07 times for the same period in 2015.