First National Corporation Announces Fourth Quarter and Annual Profit
First National Corporation's fourth quarter and annual profits had significant improvements over the comparable periods of 2011.
- Winchester, VA-WV (1888PressRelease) February 01, 2013 - 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.
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 nonperforming 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.
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