STRASBURG, Va., Jan. 29, 2013 /PRNewswire/ --First National Corporation (the "Company") (OTCBB: FXNC), the parent company of First Bank (the "Bank"), announced today fourth quarter and annual profits, both significant improvements over the comparable periods of 2011. Net income for the fourth quarter of 2012 totaled $966 thousand, compared to a net loss of $8.1 million for the same period in 2011. For the year ended December 31, 2012, net income totaled $2.8 million, which was a dramatic improvement compared to a net loss of $11.0 million for the same period in 2011. After the effective dividend on preferred stock, net income available to common shareholders totaled $740 thousand or $0.15 per basic and diluted share for the fourth quarter of 2012, compared to a net loss available to common shareholders of $8.4 million or $2.82 per basic and diluted share for the same period of 2011. For the year ended December 31, 2012, net income available to common shareholders totaled $1.9 million or $0.49 per basic and diluted share, compared to net loss available to common shareholders of $11.9 million or $4.01 per basic and diluted share for the same period of 2011.
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Scott C. Harvard, President and CEO of the Company and the Bank commented, "We are pleased to report a profitable 2012, in what was clearly a turnaround year for our banking company. The year 2012 was a rebuilding year across all areas of the company and we met our goals of being profitable each quarter, raising capital to add financial strength, lowering non-performing asset levels, and focusing on our core strength of delivering exceptional customer service. We are pleased that through the hard work of our dedicated staff, we achieved these goals, and in the fourth quarter we grew the loan portfolio for the first time in over two years. As one of the few independent banks in our communities, we remain excited about the prospects for the future."
Operating Highlights for 2012
- Significant earnings improvement
- Nonperforming assets decreased 23% from prior year end
- Raised $7.8 million of additional capital in June
- Exited TARP program in August
- Strengthened management with the addition of James Youngblood, Senior Lending Officer
- Stable revenues
- Provision for loan losses was $8.8 million lower
- Allowance for loan losses totaled $13.1 million or 3.41% of total loans
- Bank capital ratios continued to exceed well capitalized guidelines
Fourth Quarter Earnings
Net income was $9.1 million higher for the fourth quarter of 2012, compared to the same period one year ago. Improved asset quality contributed to the $2.9 million decrease in the provision for loan losses, which totaled $100 thousand in the fourth quarter of 2012 compared to $3.0 million for the same period of 2011. In addition, expenses related to OREO decreased $971 thousand to $669 thousand for the fourth quarter of 2012 compared to $1.6 million for the same period of 2011. Return on average assets was 0.73% and return on average equity was 8.57% for the fourth quarter of 2012, compared to -6.03% and -73.99%, respectively, for the fourth quarter of 2011.
Net interest income totaled $4.7 million for the fourth quarter of 2012 compared to $5.1 million for the same period one year ago. The net interest margin was 3.75% compared to 4.07% for the same period one year ago. Noninterest income increased 6% to $1.6 million compared to the same period one year ago. Revenues from gains on sales of loans and trust and investment advisory fees increased while service charges on deposit accounts and fees for other customer services decreased.
Noninterest expense decreased 19% to $5.1 million for the fourth quarter of 2012 compared to $6.3 million for the same period in 2011, primarily from reduced expenses related to OREO. OREO related expenses totaled $669 thousand in the fourth quarter of 2012, a decline of 59%, compared to $1.6 million for the same period in 2011.
Asset Quality
Nonperforming assets decreased 23% to $14.0 million at December 31, 2012 compared to $18.2 million at December 31, 2011. The reduction was primarily attributable to non-accrual loans decreasing from $11.8 million at the end of the fourth quarter of 2011 to $8.4 million at the end of the fourth quarter of 2012. Other real estate owned decreased by $782 thousand to $5.6 million. Net charge-offs for the period decreased $7.4 million to $1.1 million compared to $8.5 million in the fourth quarter of 2011. The allowance for loan losses totaled $13.1 million or 3.41% of total loans at December 31, 2012. This compared to an allowance for loan losses of $12.9 million, or 3.30% of total loans, at December 31, 2011.
Year-to-Date Performance
Net income was $13.8 million higher for the year ended December 31, 2012 compared to prior year. Improved asset quality contributed to the $8.8 million decrease in the provision for loan losses, which totaled $3.6 million in 2012 and $12.4 million in 2011. In addition, expenses related to OREO decreased $1.6 million to $1.4 million for the year ended December 31, 2012 compared to $3.0 million for 2011. Return on average assets was 0.54% and return on average equity was 6.85% for 2012, compared to -1.96% and -22.46%, respectively, for 2011.
Net interest income was $19.3 million compared to $20.2 million for same period in 2011. Noninterest income, excluding gains on sale of securities, increased 3% to $5.9 million compared to $5.7 million for the same period one year ago. Revenues from gains on sales of loans and trust and investment advisory fees increased while service charges on deposit accounts and ATM and check card income decreased.
Noninterest expense decreased 8% to $19.1 million compared to the same period in 2011, primarily from reduced expenses related to OREO. OREO related expenses totaled $1.4 million for 2012, a decline of 53%, compared to $3.0 million for the same period in 2011.
Cautionary Statements
The Company notes to investors that past results of operations do not necessarily indicate future results. Certain factors that affect the Company's operations and business environment are subject to uncertainties that could in turn affect future results. These factors are identified in the Annual Report on Form 10-K for the year ended December 31, 2011, which can be accessed from the Company's website at www.fbvirginia.com, as filed with the Securities and Exchange Commission.
About the Company
First National Corporation, headquartered in Strasburg, Virginia, is the bank holding company of First Bank. First Bank offers loan, deposit, trust and investment products and services from 10 office locations in the northern Shenandoah Valley region of Virginia, including Shenandoah County, Warren County, Frederick County and the City of Winchester. First Bank also owns First Bank Financial Services, Inc., which invests in entities that provide investment services and title insurance.
FIRST NATIONAL CORPORATION Quarterly Performance Summary (in thousands, except share and per share data) | |||||||||||||||
(unaudited) For the Three Months Ended | (unaudited) For the Year Ended | ||||||||||||||
Income Statement | 12/31/2012 | 12/31/2011 | 12/31/2012 | 12/31/2011 | |||||||||||
Interest and dividend income | |||||||||||||||
Interest and fees on loans | $ 5,061 | $ 5,590 | $ 21,062 | $ 22,907 | |||||||||||
Interest on federal funds sold | - | 5 | 12 | 18 | |||||||||||
Interest on deposits in banks | 11 | 3 | 30 | 18 | |||||||||||
Interest and dividends on securities available for sale: | |||||||||||||||
Taxable interest | 434 | 534 | 1,976 | 2,152 | |||||||||||
Tax-exempt interest | 47 | 118 | 275 | 483 | |||||||||||
Dividends | 20 | 20 | 77 | 70 | |||||||||||
Total interest and dividend income | $ 5,573 | $ 6,270 | $ 23,432 | $ 25,648 | |||||||||||
Interest expense | |||||||||||||||
Interest on deposits | $ 833 | $ 1,033 | $ 3,707 | $ 4,843 | |||||||||||
Interest on trust preferred capital notes | 56 | 59 | 238 | 386 | |||||||||||
Interest on other borrowings | 30 | 46 | 222 | 221 | |||||||||||
Total interest expense | $ 919 | $ 1,138 | $ 4,167 | $ 5,450 | |||||||||||
Net interest income | $ 4,654 | $ 5,132 | $ 19,265 | $ 20,198 | |||||||||||
Provision for loan losses | 100 | 2,985 | 3,555 | 12,380 | |||||||||||
Net interest income after provision for loan losses | $ 4,554 | $ 2,147 | $ 15,710 | $ 7,818 | |||||||||||
Noninterest income | |||||||||||||||
Service charges on deposit accounts | $ 558 | $ 611 | $ 2,127 | $ 2,237 | |||||||||||
ATM and check card fees | 352 | 363 | 1,481 | 1,535 | |||||||||||
Trust and investment advisory fees | 371 | 331 | 1,450 | 1,407 | |||||||||||
Fees for other customer services | 107 | 138 | 390 | 369 | |||||||||||
Gains on sale of loans | 71 | 37 | 214 | 131 | |||||||||||
Gains on sale of securities available for sale | - | 18 | 1,285 | 59 | |||||||||||
Gains on sale of premises and equipment | - | - | 2 | - | |||||||||||
Other operating income | 130 | 3 | 225 | 61 | |||||||||||
Total noninterest income | $ 1,589 | $ 1,501 | $ 7,174 | $ 5,799 | |||||||||||
Noninterest expense | |||||||||||||||
Salaries and employee benefits | $ 2,402 | $ 2,593 | $ 9,557 | $ 9,460 | |||||||||||
Occupancy | 347 | 335 | 1,343 | 1,354 | |||||||||||
Equipment | 301 | 299 | 1,208 | 1,272 | |||||||||||
Marketing | 137 | 111 | 430 | 425 | |||||||||||
Stationery and supplies | 74 | 69 | 308 | 323 | |||||||||||
Legal and professional fees | 227 | 223 | 968 | 969 | |||||||||||
ATM and check card fees | 169 | 169 | 649 | 661 | |||||||||||
FDIC assessment | 176 | 180 | 709 | 768 | |||||||||||
(Gains) losses on sale of other real estate owned, net | 19 | 938 | (278) | 910 | |||||||||||
Provision for other real estate owned | 657 | 455 | 1,252 | 1,558 | |||||||||||
Other real estate owned expense (income) | (7) | 247 | 443 | 572 | |||||||||||
Other operating expense | 582 | 665 | 2,490 | 2,471 | |||||||||||
Total noninterest expense | $ 5,084 | $ 6,284 | $ 19,079 | $ 20,743 | |||||||||||
Income (loss) before income taxes | $ 1,059 | $ (2,636) | $ 3,805 | $ (7,126) | |||||||||||
Income tax provision | 93 | 5,497 | 982 | 3,835 | |||||||||||
Net income (loss) | $ 966 | $ (8,133) | $ 2,823 | $ (10,961) | |||||||||||
Effective dividend and accretion on preferred stock | 226 | 224 | 903 | 894 | |||||||||||
Net income (loss) available to common shareholders | $ 740 | $ (8,357) | $ 1,920 | $ (11,855) | |||||||||||
Common Share and Per Common Share Data | |||||||||||||||
Net income (loss), basic and diluted | $ 0.15 | $ (2.82) | $ 0.49 | $ (4.01) | |||||||||||
Shares outstanding at period end | 4,901,464 | 2,955,649 | 4,901,464 | 2,955,649 | |||||||||||
Weighted average shares, basic and diluted | 4,901,464 | 2,955,649 | 3,944,506 | 2,953,344 | |||||||||||
Book value at period end | $ 6.22 | $ 7.72 | $ 6.22 | $ 7.72 | |||||||||||
Cash dividends | $ - | $ - | $ - | $ 0.20 | |||||||||||
FIRST NATIONAL CORPORATION Quarterly Performance Summary (in thousands, except share and per share data) | |||||||||||||||||||||||
(unaudited) For the Three Months Ended | (unaudited) For the Year Ended | ||||||||||||||||||||||
12/31/2012 | 12/31/2011 | 12/31/2012 | 12/31/2011 | ||||||||||||||||||||
Key Performance Ratios | |||||||||||||||||||||||
Return on average assets | 0.73% | (6.03%) | 0.54% | (1.96%) | |||||||||||||||||||
Return on average equity | 8.57% | (73.99%) | 6.85% | (22.46%) | |||||||||||||||||||
Net interest margin | 3.75% | 4.07% | 3.89% | 3.98% | |||||||||||||||||||
Efficiency ratio (1) | 69.96% | 76.49% | 71.41% | 69.66% | |||||||||||||||||||
Average Balances | |||||||||||||||||||||||
Average assets | $ 524,408 | $ 535,358 | $ 527,258 | $ 544,338 | |||||||||||||||||||
Average earning assets | 500,075 | 507,340 | 500,895 | 514,688 | |||||||||||||||||||
Average shareholders' equity | 44,827 | 43,612 | 41,203 | 47,416 | |||||||||||||||||||
Asset Quality | |||||||||||||||||||||||
Loan charge-offs | $ 1,210 | $ 8,652 | $ 3,793 | $ 15,789 | |||||||||||||||||||
Loan recoveries | 136 | 103 | 376 | 310 | |||||||||||||||||||
Net charge-offs | 1,074 | 8,549 | 3,417 | 15,479 | |||||||||||||||||||
Non-accrual loans | 8,393 | 11,841 | 8,393 | 11,841 | |||||||||||||||||||
Other real estate owned, net | 5,592 | 6,374 | 5,592 | 6,374 | |||||||||||||||||||
Nonperforming assets | 13,985 | 18,215 | 13,985 | 18,215 | |||||||||||||||||||
Loans over 90 days past due, still accruing | 228 | 459 | 228 | 459 | |||||||||||||||||||
Troubled debt restructurings (accruing) | 1,570 | 4,775 | 1,570 | 4,775 | |||||||||||||||||||
Special mention loans | 26,614 | 31,300 | 26,614 | 31,300 | |||||||||||||||||||
Substandard loans (accruing) | 44,620 | 45,023 | 44,620 | 45,032 | |||||||||||||||||||
Doubtful loans | - | 3,922 | - | 3,922 | |||||||||||||||||||
12/31/2012 | 12/31/2011 | ||||||||||||||||||||||
Capital Ratios | |||||||||||||||||||||||
Tier 1 capital | $ 54,920 | $ 45,231 | |||||||||||||||||||||
Total capital | 59,898 | 50,359 | |||||||||||||||||||||
Total capital to risk-weighted assets | 15.35% | 12.51% | |||||||||||||||||||||
Tier 1 capital to risk-weighted assets | 14.08% | 11.24% | |||||||||||||||||||||
Leverage ratio | 10.48% | 8.45% | |||||||||||||||||||||
Balance Sheet | |||||||||||||||||||||||
Cash and due from banks | $ 7,266 | $ 6,314 | |||||||||||||||||||||
Interest-bearing deposits in banks | 23,762 | 23,210 | |||||||||||||||||||||
Securities available for sale, at fair value | 89,457 | 91,665 | |||||||||||||||||||||
Restricted securities, at cost | 1,973 | 2,775 | |||||||||||||||||||||
Loans held for sale | 503 | 274 | |||||||||||||||||||||
Loans, net of allowance for loan losses | 370,519 | 379,503 | |||||||||||||||||||||
Premises and equipment, net | 18,587 | 19,598 | |||||||||||||||||||||
Interest receivable | 1,459 | 1,620 | |||||||||||||||||||||
Other assets | 19,153 | 14,105 | |||||||||||||||||||||
Total assets | $ 532,679 | $ 539,064 | |||||||||||||||||||||
Noninterest-bearing demand deposits | $ 85,118 | $ 81,714 | |||||||||||||||||||||
Savings and interest-bearing demand deposits | 221,601 | 198,194 | |||||||||||||||||||||
Time deposits | 160,198 | 189,264 | |||||||||||||||||||||
Total deposits | $ 466,917 | $ 469,172 | |||||||||||||||||||||
Other borrowings | 6,076 | 19,100 | |||||||||||||||||||||
Trust preferred capital notes | 9,279 | 9,279 | |||||||||||||||||||||
Other liabilities | 5,495 | 4,417 | |||||||||||||||||||||
Total liabilities | $ 487,767 | $ 501,968 | |||||||||||||||||||||
FIRST NATIONAL CORPORATION Quarterly Performance Summary (in thousands, except share and per share data) | ||||||||
(unaudited) | ||||||||
12/31/2012 | 12/31/2011 | |||||||
Balance Sheet (continued) | ||||||||
Preferred stock | $ 14,409 | $ 14,263 | ||||||
Common stock | 6,127 | 3,695 | ||||||
Surplus | 6,813 | 1,644 | ||||||
Retained earnings | 18,422 | 16,503 | ||||||
Accumulated other comprehensive income (loss), net | (859) | 991 | ||||||
Total shareholders' equity | $ 44,912 | $ 37,096 | ||||||
Total liabilities and shareholders' equity | $ 532,679 | $ 539,064 | ||||||
Loan Data | ||||||||
Mortgage loans on real estate: | ||||||||
Construction and land development | $ 43,524 | $ 48,363 | ||||||
Secured by farm land | 5,795 | 6,161 | ||||||
Secured by 1-4 family residential | 134,964 | 122,339 | ||||||
Other real estate loans | 168,425 | 174,980 | ||||||
Loans to farmers (except those secured by real estate) | 2,238 | 2,224 | ||||||
Commercial and industrial loans (except those secured by real estate) | 20,833 | 27,222 | ||||||
Consumer installment loans | 6,991 | 9,760 | ||||||
Deposit overdrafts | 153 | 325 | ||||||
All other loans | 671 | 1,066 | ||||||
Total loans | $ 383,594 | $ 392,440 | ||||||
Allowance for loan losses | 13,075 | 12,937 | ||||||
Loans, net | $ 370,519 | $ 379,503 | ||||||
(1) The efficiency ratio is computed by dividing noninterest expense excluding the provision for other real estate owned and gains and losses on other real estate owned by the sum of net interest income on a tax equivalent basis and noninterest income excluding gains and losses on sales of securities and premises and equipment. Tax equivalent net interest income is calculated by adding the tax benefit realized from interest income that is nontaxable to total interest income then subtracting total interest expense. The tax rate utilized in calculating the tax benefit for 2012 and 2011 was 34%. Net interest income on a tax equivalent basis was $4,713 and $5,198 for the three months ended December 31, 2012 and 2011, respectively, and $19,463 and $20,496 for the year ended December 31, 2012 and 2011. Noninterest income excluding gains and losses on sales of securities and premises and equipment was $1,589 and $1,483 for the three months ended December 31, 2012 and 2011, respectively, and $5,887 and $5,740 for the year ended December 31, 2012 and 2011, respectively. The efficiency ratio is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency. Such information is not in accordance with generally accepted accounting principles (GAAP) and should not be construed as such. Management believes such financial information is meaningful to the reader in understanding operational performance, but cautions that such information not be viewed as a substitute for GAAP. | ||||||||
Contact: | |
Scott C. Harvard | M. Shane Bell |
President and CEO | Executive Vice President and CFO |
(540) 465-9121 | (540) 465-9121 |
sharvard@fbvirginia.com | sbell@fbvirginia.com |
SOURCE First National Corporation
