RISK FACTORS
The purpose
of the Plan is to provide a convenient and useful service for current Fauquier Bankshares, Inc.
shareholders. Nothing in this prospectus represents a recommendation by us or anyone else that a
person buy or sell Fauquier Bankshares, Inc. common stock. We urge you to read this prospectus thoroughly
before you make your investment decision regarding participation in the Plan.
Investors should
consider carefully the following factors in addition to the other information included or incorporated by
reference in this prospectus before making an investment in our common stock.
Our profitability depends on interest
rates generally.
Our profitability
depends in substantial part on our net interest margin, which is the difference between the rates we
receive on loans and investments and the rates we pay for deposits and other sources of funds. Our net
interest margin depends on many factors that are partly or completely outside of our control, including
competition, federal economic, monetary and fiscal policies, and economic conditions generally. Changes
in interest rates will affect our operating performance and financial condition. We try to minimize our
exposure to interest rate risk, but we are unable to completely eliminate this risk.
Our performance depends substantially
upon our credit quality.
The ability of our
borrowers to repay the loans we make to them impacts our performance. Although we have collateral for
most of our loans, that collateral can fluctuate in value and may not always cover the outstanding
balance on the loan. We devote substantial management attention to setting reserves that we believe are
adequate to cover potential credit quality problems. If we are wrong in our assessment, or events occur
that reduce the likelihood of loan repayment, our reserves may not be adequate. In general, if the
quality of our loans and the underlying collateral decreases, that may reduce our earnings and damage our
financial condition.
Our profitability depends significantly
on local economic conditions.
Our success depends
primarily on the general economic conditions of the markets in which we operate. Unlike larger banks that
are more geographically diversified, we provide banking and financial services to customers primarily in
Fauquier and Prince William Counties, Virginia and the surrounding communities. The local economic
conditions in this area have a significant impact on our business, real estate and construction loans,
the ability of the borrowers to repay these loans and the value of the collateral securing these loans.
A significant decline in general economic conditions, caused by inflation, recession, acts of terrorism,
an outbreak of hostilities or other international or domestic calamities, unemployment or other factors
beyond our control could impact these local economic conditions and could negatively affect the financial
results of our banking operations.
Our small to medium-sized business target
market may have fewer financial resources to weather a downturn in the economy.
We target our
commercial development and marketing strategy primarily to serve the banking and financial services needs
of small and medium size businesses. These businesses generally have fewer financial resources in terms
of capital or borrowing capacity than larger entities. If general economic conditions negatively impact
this major economic sector in the markets in which we operate, our results of operations and financial
condition may be adversely affected.
4
We may be adversely affected
by changes in government monetary policy.
As a bank holding
company, our business is affected by the monetary policies established by the Board of Governors of the
Federal Reserve System, which regulates the national money supply in order to mitigate recessionary and
inflationary pressures. In setting its policy, the Federal Reserve may utilize techniques such as the
following:
| |
• |
engaging in
open market transactions in United States government securities; |
| |
• |
setting the
discount rate on member bank borrowings; and |
| |
• |
determining
reserve requirements. |
These techniques may have an adverse effect
on our deposit levels, net interest margin, loan demand or our business and operations.
We may be adversely affected by unanticipated
changes in government regulations.
We and our wholly-owned subsidiary, The Fauquier Bank, are subject to regulation and supervision by the
Federal Reserve Bank, the Federal Deposit Insurance Corporation and the Virginia State Corporation
Commission. Any of these agencies, or other governmental or regulatory authorities, could revise existing
regulations or adopt new regulations at any time. Certain revisions could subject us and our subsidiaries
to more demanding regulatory compliance requirements which may adversely affect our ability to conduct, or
our cost of conducting, business. Legislation and regulatory initiatives containing wide-ranging proposals
for altering the structure, regulation and competitive relationships of financial institutions are
introduced regularly. We cannot predict whether or what form of proposed statute or regulation will be
adopted or the extent to which such adoption may affect our business.
Our future success will depend on our
ability to compete effectively in the highly competitive financial services industry.
We face substantial competition in all phases of our operations from a variety of different
competitors. In particular, there is very strong competition for financial services in the areas
of Virginia in which we conduct a substantial portion of our business. Our future growth and
success will depend on our ability to compete effectively in this highly competitive financial
services environment. Many of our competitors offer products and services which we do not, and many
have substantially greater resources, name recognition and market presence that benefit them in
attracting business. In addition, larger competitors may be able to price loans and deposits more
aggressively than we do. Some of the financial services organizations with which we compete are not
subject to the same degree of regulation as is imposed on bank holding companies and federally
insured state chartered banks. As a result, these nonbank competitors have certain advantages over
us in accessing funding and in providing various services.
We depend on the services of our key
personnel, and a loss of any of those personnel would disrupt our operations and
result in reduced revenues.
Our success depends upon the continued service of our senior management team and upon our ability
to attract and retain qualified financial services personnel. Competition for qualified employees
is intense. In our experience, it can take a significant period of time to identify and hire
personnel with the combination of skills and attributes required in carrying out our strategy. If
we lose the services of our key personnel, or are unable to attract additional qualified personnel,
our business, financial condition, results of operations and cash flows could be materially
adversely affected.
5
Our common stock has substantially less
liquidity than the average trading market for many other publicly traded common stock.
Although our
common stock is listed for trading on the Nasdaq SmallCap Market, the trading market in our common
stock has substantially less liquidity than the average trading market for many other publicly traded
companies, including most of the companies quoted on the Nasdaq National Market or traded on the
New York Stock Exchange. A public trading market having the desired characteristics of depth,
liquidity and orderliness depends on the presence in the market place of willing buyers and sellers
of our common stock at any given time. This presence depends on the individual decisions of investors
and general economic and market conditions over which we have no control.
We may not pay dividends to shareholders
in the future.
Dividends are
subject to determination and declaration by our board of directors, which takes into account many
factors. The declaration of dividends by us on our common stock is subject to the discretion of our
board and to applicable federal regulatory limitations. We cannot guarantee that dividends will not
be reduced or eliminated in future periods. Our ability to pay dividends on our common stock depends
on our receipt of dividends from our wholly-owned subsidiary bank, the Fauquier Bank.
Virginia law and our charter documents
contain anti-takeover provisions that may make it more difficult or expensive to
acquire us in the future or may adversely affect our stock price.
Virginia corporate
law and our charter documents contain several provisions that may make it more difficult for a third
party to acquire control of us without the approval of our board of directors and may make it more
difficult or expensive for a third party to acquire a majority of our outstanding common stock.
They may also delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other
transaction that might otherwise result in our shareholders receiving a premium over the market price
for their common stock. Our stock price could also be negatively affected as a result of these
anti-takeover provisions.
6
DESCRIPTION OF THE PLAN
The provisions of our Dividend Reinvestment and Stock Purchase Plan are set forth below in question
and answer format.
Purpose and Advantages
1. What is the
purpose of the Plan?
The purpose of the Plan is to provide eligible shareholders with a simple and convenient means of
investing cash dividends and, from time to time as the Board of Directors of Fauquier Bankshares,
Inc. may in its discretion determine, optional cash payments, or both, in shares of our common
stock without paying brokerage commissions, service charges or other expenses.
2. What are the options
available to participants in the Plan?
The Plan offers the following investment options to participants:
| |
• |
Participants
may purchase additional shares of common stock by having the cash dividends on all,
or part, of their shares of common stock automatically reinvested; |
| |
| |
• |
Participants
may purchase additional shares of common stock by receiving directly, as usual,
their cash dividends, if, as and when declared, on shares of common stock and investing
in the Plan by making cash payments of not less than $100 per payment or more than $10,000
per calendar year; or |
| |
| |
• |
Participants
may purchase additional shares of common stock by investing both their cash dividends
and any optional cash payments. |
3. What are the
advantages of the Plan?
| |
• |
Participants
in the Plan may reinvest dividends and invest optional cash payments without paying
brokerage commissions or other charges; provided, however, that if shares of common
stock are registered in the name of a nominee or broker, such nominee or broker
may charge a commission or fee. |
| |
| |
• |
Participants
may invest the full available amount of all dividends, as the Plan provides for
fractional interests in the shares of common stock held in the Plan. |
| |
| |
• |
Participants
will receive a detailed statement of Plan account transactions. |
| |
| |
• |
Participants
may change options under the Plan at any time. |
| |
| |
• |
Participants
retain voting control of shares held under the Plan. |
| |
| |
• |
Participants
can avoid safekeeping requirements and record-keeping costs through the custodial
service and reporting provisions of the Plan, subject to payment of an applicable
fee. |
7
| |
• |
Participants
may direct the Plan’s agent to transfer, at no cost, all or a portion of the
shares of common stock credited to a participant’s Plan account. (See the answer
to Question #19.) |
| |
| |
• |
Participants
may direct the Plan’s agent to sell shares of common stock credited to their
Plan accounts, subject to the payment of an applicable fee. (See the answer to Question
#21.) |
Participation
4. Who is eligible
to participate?
Subject to the terms of the next paragraph, any record holder of shares of our common stock is
eligible to participate in the Plan with respect to any or all of his or her shares. A holder of
record is a person who owns shares of our common stock registered in his or her name on our
records. A beneficial holder is a person who owns shares of our common stock in “street name,” such
as through a broker or other nominee. In order to be eligible to participate, beneficial owners of
shares of common stock whose shares are registered in names other than their own must either
arrange for the holder of record to join the Plan or have the shares they wish to enroll in the
Plan transferred to their own names. Beneficial owners who are not record holders, however, may not
make optional cash payments to purchase additional shares of common stock under the
Plan.
Shareholders residing in certain states or citizens or residents of a country other than the Unites
States, its territories or possessions, may be ineligible to participate in the Plan if Fauquier
Bankshares, Inc., in its sole discretion, determines that causing the Plan to comply with
applicable securities laws and regulations in such states or countries is onerous.
In addition, employees of Fauquier Bankshares, Inc. and its wholly owned subsidiaries who own
shares of our common stock are eligible to participate in the Plan through payroll deductions. Each
employee’s payroll deduction may not exceed $100 per payroll period. In addition, to ensure
that their investments are diversified, employees participating in the Plan are strongly urged not
to have more than 20% of their total investments in Fauquier Bankshares, Inc. common stock at any
time.
5. Is partial participation
possible under the Plan?
Yes. If you desire that the dividends on only some of your shares of common stock held of record be
reinvested under the Plan, you may indicate such number of shares on the authorization card.
Dividends will thereafter be reinvested on the number of shares you specify, and you will continue
to receive cash dividends on the remainder of your shares.
Please note that you cannot elect partial reinvestment for dividends on shares you receive though
the Plan itself, whether through dividend reinvestment or through optional cash purchases.
Dividends on these shares received through the Plan will be fully reinvested in additional shares
of common stock.
8
6. How does an eligible
shareholder become a participant in the Plan?
An eligible shareholder may join the Plan by making the election as to such participation and
signing an authorization card and returning it to the Plan’s agent. A self-addressed envelope
is provided for this purpose. Shareholders whose shares are registered in the name of a nominee or
broker must have the nominee or broker sign the authorization card and return it to the Plan’s
agent. Eligible shareholders will become participants only after a properly completed authorization
card has been received and accepted by the Plan’s agent.
Employees of Fauquier Bankshares, Inc. and its wholly owned subsidiaries who are also shareholders
may join the Plan by completing and signing the authorization card and returning it to their
respective payroll departments. Employee-shareholders may obtain authorization cards at any time by
written request to their respective payroll departments.
Additional authorization cards may be obtained at any time by written request to the Plan’s
agent, through the agent’s Internet website at www.amstock.com, or by calling the Plan’s
agent at 1-888-888-0142. (See the answer to Question #10 below for the name and address of the
Plan’s agent.) To gain access to the agent’s website, participants will need their 10
digit account number and their social security number.
7. When may a shareholder
join the Plan?
An eligible shareholder may join the Plan at any time and will remain a participant until
participation is discontinued (see the answer to Question #24) or all shares held in the
participant’s Plan account are sold.
With respect to reinvestment of dividends, if an authorization card specifying reinvestment of
dividends is received by the Plan’s agent by the record date established for payment of a
particular dividend, receipt of shares of common stock in lieu of cash dividends or reinvestment of
cash dividends, as appropriate, will start with that dividend payment. If the authorization card is
received after the record date established for payment of a particular dividend, then participation
in the Plan will not begin until the cash dividend payment date following the next record date, as
applicable.
We have declared and paid dividends as follows during the past two years:
| |
Declaration Date |
|
Record Date |
|
Payment Date |
| |
|
|
|
|
|
| |
February 19, 2004 |
|
March 23, 2004 |
|
April 1, 2004 |
| |
November 20, 2003 |
|
December 23, 2003 |
|
January 8, 2004 |
| |
August 21, 2003 |
|
September 23, 2003 |
|
October 2, 2003 |
| |
May 20, 2003 |
|
June 24, 2003 |
|
July 7, 2003 |
| |
February 20, 2003 |
|
March 25, 2003 |
|
April 3, 2003 |
| |
November 21, 2002 |
|
December 23, 2002 |
|
January 7, 2003 |
| |
August 15, 2002 |
|
September 24, 2002 |
|
October 3, 2002 |
| |
May 22, 2002 |
|
June 25, 2002 |
|
July 5, 2002 |
With respect to optional cash purchases of common stock, if an authorization card specifying
optional cash purchases is received by the Plan’s agent by the business day immediately prior
to a particular Purchase Date, cash purchases will begin with that Purchase Date, assuming that the
Plan
9
agent has received the cash purchase
funds by the business day before the Purchase Date. (See the answer to Question #13 for information
on Purchase Dates; Purchase Dates will generally be the same as quarterly dividend payment dates.
See also the answer to Question # 14 regarding required dates for receiving optional cash purchase
funds). If the authorization card is received after the business day immediately prior to a particular
Purchase Date, then cash purchases will not be made until the next Purchase Date.
8. What does the
authorization card provide?
The authorization card provides for the purchase of additional shares of common stock through the
following options:
| • |
Dividend Reinvestment Only. If the “Dividend Reinvestment Only” box is checked, the Plan’s
agent will apply cash dividends on all shares of common stock registered in the participant’s
name, or such number as specified by the participant on the authorization card, as well as on all
shares of common stock credited to the participant’s Plan account, to the purchase of
additional shares of common stock.
|
| |
| • |
Dividend Reinvestment
and Optional Cash Payments. If the “Dividend Reinvestment and Optional Cash Payments”
box is checked, the Plan’s agent will apply cash dividends on all shares of
common stock registered in the participant’s name, or such number as specified
by the participant on the authorization card, and any optional cash payments (including
employee payroll deductions), to the purchase of additional shares of common stock. |
| |
| • |
Optional Cash
Payments Only. If the “Optional Cash Payments Only” box is checked, the Plan’s
agent will apply any optional cash payments (including employee payroll deductions)
and any dividends on shares credited to the participant’s Plan account to the
purchase of additional shares of common stock. Cash dividends on shares of common
stock registered in the participant’s name other than in his or her Plan account
will be paid to the participant in the usual manner. |
Except with respect to dividends on shares of common stock in a participant’s Plan account,
which are reinvested automatically, a participant may elect to reinvest the dividends on all or
part of the shares of common stock registered in his or her name by designating the
participant’s intentions on the authorization card.
9. May a participant
change his or her method of participation after enrollment?
Yes. A participant may change his or her investment option at any time by signing a new
authorization card and returning it to the Plan’s agent. If the authorization card is received
by the Plan’s agent no later than two (2) business days preceding the related quarterly
dividend record date, the change in investment option will be effective on that quarterly dividend
payment date. If the authorization card is received by the Plan’s agent any time following two
business days preceding the related quarterly dividend record date, the change will be effective on
the next quarterly dividend payment date.
10
Administration
10. Who administers the
Plan for participants?
American Stock Transfer & Trust Company, a stock transfer company that we have selected, will
act as the Plan’s agent, administer the Plan for participants, arrange for the custody of
share certificates, keep records, send statements of account to participants and perform other
duties relating to the Plan. Shares of common stock purchased under the Plan will be held by the
Plan’s agent as agent for participants and registered in the name of the Plan’s agent or
its nominee. The Plan’s agent also serves as transfer agent for our common stock. Should the
Plan’s agent resign, or be asked to resign, another agent will be asked to
serve.
All inquiries relating to the Plan should include your account number and should be addressed as
follows:
Fauquier Bankshares, Inc.
Dividend Reinvestment and Stock Purchase Plan
American Stock Transfer &
Trust Company
59 Maiden Lane
Plaza Level
New York NY 10038
All transaction processing and related requests, such as sales of common stock, termination of your
Plan account and optional cash payments should include your account number and should be sent
to:
Fauquier Bankshares, Inc.
Dividend Reinvestment and Stock Purchase Plan
American Stock Transfer &
Trust Company
P.O. Box 922
Wall Street Station
New York, NY 10269-0560
The Plan’s agent has also established an Interactive Voice Response System (IVR) to answer
your questions regarding the Plan. You may access this system at 1-888-888-9142 with any
questions.
You can obtain information about your account over the Internet. To gain access to account
information on the agent’s website, participants will need their 10 digit account number and
their social security number. Messages forwarded on the Internet will be responded to promptly. The
Plan’s agent’s Internet address is www.amstock.com.
Costs
11. What are the expenses
to participants in connection with the Plan?
Participants will not incur any brokerage commissions or service charges for the purchases of
shares of common stock made under the Plan, for optional cash purchases or for transfers of Plan
shares. Participants will be responsible for brokerage commissions, service fees and taxes, if any,
when shares are sold for a participant’s account.
11
If a participant’s shares are registered in the name of a nominee or broker, such nominee or
broker may charge a commission or fee for both shares purchased in the open market and original
issue shares, and the participant will be responsible for such fees.
There are applicable charges to Plan participants related to: deposit of share certificates with
the Plan agent (see the answer to Question #20); sales of Plan shares (see the answer to Question
#21); complete withdrawal from the Plan (see the answer to Question #25); and liquidation of
fractional interests upon withdrawal from the Plan (see the answer to Question
#26).
Purchase of Shares
12. What is the source for
shares of common stock purchased under the Plan?
Plan shares will be purchased, at the discretion of Fauquier Bankshares, Inc., from Fauquier
Bankshares, Inc., in which event such shares will be either authorized but unissued shares or
shares held in the treasury, or on the open market, or any combination of these
sources.
13. When and how will shares
of common stock be purchased under the Plan?
In the event the Plan’s agent purchases shares of common stock from Fauquier Bankshares, Inc.,
dividends will be reinvested on the dividend payment date. In the event the Plan’s agent
purchases shares of common stock on the open market, dividends will be reinvested at such times as
the Plan’s agent may determine as soon as practicable on or following the dividend payment
date or such later date as may be necessary or advisable under any applicable securities or other
laws. Neither we nor any participant will have the authority or power to direct the time or place
at which shares will be purchased or the selection of a broker or dealer through or from which open
market purchases will be made.
The Plan’s agent will apply optional cash payments (including employee payroll deductions)
received by the Plan’s agent to the purchase of common stock on a quarterly basis on the
quarterly dividend payment date for dividends on common stock or the next trading day if any such
date is not a trading day (the “Purchase Date”) at a price determined in accordance with the
provisions of the Plan. The dividend payment dates during the past two years are listed under
Question #7, above. If no dividend is declared for a particular calendar quarter, the Purchase Date
for such quarter will be on the quarterly dividend payment date for the same quarter in the
previous calendar year, or the next trading day if any such date is not a business
day.
The Plan’s agent must receive optional cash payments at least one business day prior to a
Purchase Date to purchase shares on that Purchase Date. Any optional cash payments received less
than one business days prior to a Purchase Date for a particular calendar quarter will be applied
to the purchase of common stock on the Purchase Date in the next following calendar quarter. No
interest will be paid on optional cash payments. Therefore, you should forward optional cash
payments to the Plan’s agent shortly before the Purchase Date in a particular calendar quarter
while taking care to allow sufficient time to ensure that an optional cash payment is received by
the Plan’s agent at least one business day prior to the Purchase Date. Any uninvested optional
cash payments will be returned to a participant upon request received by the Plan’s agent at
least five business days prior to a Purchase Date.
12
14. How are optional cash
purchases made?
The option to make cash purchases is available to eligible shareholders on a quarterly basis. Each
such purchase must equal at least a minimum amount and purchases cannot exceed a total maximum
amount, both as determined by Fauquier Bankshares, Inc.
As of the date of this prospectus, optional cash purchases may be made in any amount from a minimum
payment of $100 up to a maximum total of $10,000 per calendar year. The minimum and maximum amounts
of quarterly optional cash purchases, however, may be changed (or optional cash purchases may be
eliminated) at Fauquier Bankshares, Inc.’s discretion upon sending Plan participants prior
written notice.
For purposes of the limitation on the maximum annual amount, all Plan accounts deemed by Fauquier
Bankshares, Inc. to be under common control or management will be aggregated. Fauquier Bankshares,
Inc. reserves the right to return to participants amounts which exceed the maximum annual
amount.
You can make optional cash purchases by enclosing a check or money order payable in the United
States with the authorization card. Checks and money orders should be made payable to “American
Stock Transfer & Trust Company” and should include “Fauquier Bankshares Dividend
Reinvestment and Stock Purchase Plan” in the memo line. Optional cash purchases may also be
made by completing the forms you receive from the Plan’s agent or through a direct draft from
the deposit account at your financial institution.
If for any reason a participant’s check for optional cash purchases is returned as unpaid, any
funds not yet invested will be removed from the participant’s account. If funds have already
been invested, then the shares purchased with such funds will be removed from the
participant’s account and will be sold by the Plan agent to cover the amount of the returned
check; provided that the Plan agent reserves the right to remove and sell additional shares in a
participant’s account to cover the full amount of the returned check and the agent’s
$25.00 return check fee.
Employees of Fauquier Bankshares, Inc. and its wholly-owned subsidiaries who own shares of our
common stock may make their optional cash purchases through payroll deductions. Each
employee’s payroll deduction may not exceed $100 per payroll period. Purchases of common stock
using funds from employee payroll deductions will be made on each quarterly Purchase Date as
described in the answer to Question #13 above. Employees utilizing the payroll deduction option to
make cash purchases are subject to the same minimum cash payment ($100) and maximum annual cash
payment ($10,000) restrictions as other Plan participants.
To ensure that their investments are diversified, employees participating in the Plan are strongly
urged not to have more than 20% of their total investments in Fauquier Bankshares, Inc. common
stock at any time.
13
15. At what price will shares
of common stock be purchased under the Plan?
The price of shares of common stock purchased with reinvested cash dividends and optional cash
payments, if any, will be the market price of the common stock. For shares acquired directly from
Fauquier Bankshares, Inc. the market price of the common stock for purposes of the Plan is the
average of the closing bid and asked quotations for a share of common stock on the day before the
dividend payment date, or the Purchase Date in the case of optional cash purchases, as reported by
Nasdaq. For shares acquired in the open market, the market price of the common stock is the
weighted average of the price actually paid for such shares, including brokerage commissions,
purchased by the Plan’s agent.
No purchases may be made directly from us in the event that the purchase price per share is less
than the par value of shares of our common stock, which is $3.13 per share. In that event, any
dividends payable and optional cash payments received, and not previously invested, will be used to
purchase shares of our common stock in the open market.
16. How many shares of our
common stock will be purchased for participants?
If you become a participant in the Plan, the number of shares that we will purchase for your
account depends on the amount of your dividends and/or optional cash payments (including payroll
deductions), if any, in a participant’s Plan account, and the applicable purchase price of
shares of our common stock. Your account will be credited with that number of shares, including
fractional interests computed to three decimal places, equal to the total amount to be reinvested
or invested through optional cash payment, divided by the applicable purchase price per
share.
17. Will certificates be
issued for shares of our common stock purchased under the Plan?
Unless requested by a participant, separate certificates for shares of our common stock purchased
under the Plan will not be issued to participants. The number of shares purchased for your account
under the Plan will be shown on your statement of account. This feature protects against loss,
theft or destruction of stock certificates.
Certificates for any number of whole shares credited to a participant’s account under the Plan
will be issued without charge upon the participant’s written request. Any remaining full
shares and fractional interests will continue to be credited to the participant’s account.
Certificates representing fractional interests will not be issued under any
circumstances.
18. In whose name will
certificates be registered when issued to participants?
All shares of common stock purchased by the Plan’s agent pursuant to the Plan, including any
fractions of a whole share, will be issued (in book-entry form) to and registered in the name of
the Plan’s agent or its nominee as agent for each participant. Shares of common stock
purchased by the Plan’s agent on behalf of each participant will be credited to such
participant’s account on the books and records of the Plan, which books and records will be
maintained at all times by the Plan’s agent.
14
Transfers
19. How may a participant
transfer Plan shares?
If a participant wishes to change the ownership of all or part of the participant’s Plan
shares through gift, private sale or otherwise, the participant may do so by delivering to the
Plan’s agent a properly executed stock power. The transfer will be effected as soon as
practicable following the Plan’s agent’s receipt of the required documentation, subject
to the provisions of receipt of the written request on or before the record date relating to a cash
dividend payment. Requests for account transfers are subject to the same requirements as for the
transfer of securities, including the requirement of receipt by the Plan’s agent of a properly
executed stock power with a medallion signature guarantee. A medallion signature guarantee is a
special guarantee for securities that may be obtained through a financial institution such as a
broker, bank, savings and loan association, or credit union. The guarantee ensures that the
individual requesting the stock transfer is in fact the owner of the applicable stock. Stock power
forms are available upon request from the Plan’s agent. Share transfer forms are also attached
to account statements.
Shares transferred will be credited to the transferee’s account. An account will be opened in
the name of the transferee if the transferee is not already a participant, and the transferee will
automatically be enrolled in the Plan. If the transferee is not already a participant, the account
will be enrolled under the full reinvestment option unless the form specifies
differently.
Both the transferee and the transferor will be sent a statement showing the transfer of the shares
into the transferee’s account.
Safekeeping Deposit of Stock Certificates
20. May a participant deposit
his or her common stock certificates with the Plan’s agent for conversion to
book-entry shares?
At the time of enrollment in the Plan, or at any later time, a participant may deposit any common
stock certificates in his or her possession with the Plan’s agent for credit as book-entry
shares for his or her account. By doing so, a participant will no longer bear the risk associated
with the loss, theft or destruction of stock certificates. Also, these shares are treated in the
same manner as shares purchased through the Plan and may be transferred or sold through the Plan in
a convenient and efficient manner. The Plan’s agent charges a fee for this service, which will
be payable by the participant. The fee is $7.50 as of the date of this prospectus, and is subject
to change in the sole discretion of the Plan’s agent. The fee will be waived if the
certificate(s) are delivered to the Plan agent in connection with a sale of the shares represented
by the certificate(s).
Delivery of certificates is at the risk of the participant and, for delivery by mail, insured
registered mail with return receipt is recommended. The receipt of any shares delivered for
safekeeping will be shown on your account statement.
15
Selling Shares
21. How may shares of common
stock be sold through the Plan?
Participants may sell shares of common stock held through the Plan in most cases by calling the
Plan’s agent at 1-888-888-9142 or through the Plan agent’s Internet website at
www.amstock.com. Participants may also mail their sale request using one of the transaction forms
provided with each account statement. Certificated shares held outside the Plan can be deposited in
a participant’s account and subsequently sold through the Plan. The Plan’s agent will
charge participants a fee for sales of shares held through the Plan. The fee is $15.00 per
transaction as of the date of this prospectus, and is subject to change in the sole discretion of
the Plan’s agent.
The Plan’s agent will process requests for sales received by telephone or through its Internet
website by 4:00 p.m. Eastern Time on a business day on that business day; the sale itself will
occur on the next trading day following the agent’s receipt of the request. Requests for sales
via telephone or through the agent’s Internet website received after 4:00 p.m. Eastern Time on
a business day or on a non-business day will be processed on the next business day, and the sale
will occur on the trading day following processing. The Plan’s agent will make every effort to
process requests received by mail on the date they are received, and the sale itself will occur on
the next trading day following processing. The proceeds of the sale, less applicable service fees,
brokerage commissions, transfer and other taxes, and other costs of sale, will be sent to the
participant. Shares being sold for the participant may be aggregated with those of other Plan
participants who have requested sales. In that case, the participant will receive proceeds based
on the average sales price of all shares sold, less a pro rata share of brokerage commissions,
transfer and other taxes and other transaction expenses.
Participants have full control of their shares and may transfer or dispose of them at any time.
Any participant may choose to sell shares credited in his or her accounts through the broker of his
or her choice. If a participant chooses to do so, he or she must notify the Plan’s agent. A
certificate will be issued and mailed to the participant or his or her broker (if so requested)
within five business days of the Plan’s agent’s receipt of the request.
Reports to Participants
22. What kind of reports
will be sent to participants in the Plan?
As soon as practicable after each purchase, a participant will receive a report of all transactions
since the last report. The report will include a statement of the number of shares allocated to the
participant’s account, the amount of dividends received that are allocable to the participant,
the number of shares of our common stock purchased and the price paid. These reports will provide a
record of the cost of purchases under the Plan and should be retained for tax purposes. In
addition, each participant will receive copies of our annual reports to shareholders, proxy
statements and information for income tax reporting purposes.
16
Dividends
23. Will participants be credited
with dividends on shares held in their accounts under the Plan?
Yes. The Plan’s agent will receive dividends for all shares held in the Plan on a dividend
record date and will credit those dividends to participants’ accounts on the basis of full
shares and fractional interests credited to those accounts. The dividends will be automatically
reinvested in additional shares of our common stock.
Discontinuation of Dividend Reinvestment
24. How does a participant
discontinue the reinvestment of dividends under the Plan?
A participant may discontinue the reinvestment of dividends under the Plan by notifying the
Plan’s agent of the participant’s desire to discontinue dividend reinvestment.
Withdrawal from the Plan may be made by requesting the issuance of a stock certificate for the
whole shares in your account plus the sale of any fractional share interest in your account or by
requesting the Plan’s agent to sell all shares in your Plan account.
If the Plan’s agent receives a notice of withdrawal from a Plan participant at least three (3)
business days before a dividend payment date, the agent will pay the cash dividend payable with
respect to the withdrawn shares to the participant on that dividend payment date, and no dividends
will be reinvested on the withdrawn shares on that dividend payment date. All future dividends with
respect to the withdrawn shares will be paid in cash. If the Plan’ agent receives a requests
for withdrawal less than three (3) days prior to a dividend payment date, dividends will be
reinvested on that dividend payment date and all subsequent dividends on the withdrawn shares will
be paid in cash.
The options open to participants who wish to discontinue participation in the dividend reinvestment
feature are as follows:
| |
• |
withdrawal
from the dividend reinvestment feature, while continuing to participate in the optional
cash payment feature, or |
| |
| |
• |
complete withdrawal
from the Plan (dividend reinvestment and optional cash payment feature). |
If a participant withdraws from the dividend reinvestment portion of the Plan without withdrawing
from the optional cash payment feature, dividends paid on any shares held in the participant’s
account will continue to be reinvested until the participant also withdraws from optional cash
payment feature.
17
Withdrawal of Shares in Plan Accounts
25. How may a participant
withdraw shares purchased under the Plan?
A participant who has purchased shares of our common stock under the Plan may withdraw all or a
portion of his or her shares from his or her Plan account by notifying the Plan’s agent to
that effect and specifying in the notice the number of shares to be withdrawn.
A participant who changes his or her place of residence must promptly notify the Plan’s agent
of the change of address. If a participant moves to a state where the shares offered pursuant to
the Plan are not registered or exempt from registration under applicable securities law, that
participant will be deemed to have withdrawn from the Plan as to all shares held by the participant
in the Plan.
Certificates for whole shares of our common stock withdrawn from the Plan will be registered in the
name of, and issued to, the participant. Certificates representing fractional interests will not be
issued.
The Plan’s agent will charge participants a fee in the event a participant withdraws all
shares from the participant’s Plan account. The fee is $15.00 as of the date of this
prospectus, and is subject to change in the sole discretion of the Plan’s
agent.
26. What happens to any
fractional interest in the shares of common stock in a Plan account when a participant withdraws all
shares from the Plan?
Any fractional interest in a participant’s Plan account at the time a participant determines
to withdraw all shares from the Plan will be liquidated, and a cash payment will be made promptly
from the resulting proceeds, less service fees, brokerage commissions and transfer taxes. The
Plan’s agent will mail net sales proceeds for any fractional interest together with
certificates for whole shares directly to the withdrawing participant.
27. What happens to a
participant’s Plan account if all shares in the participant’s own name are transferred
or sold?
If you dispose of all shares of our common stock registered in your own name, the Plan’s agent
will continue to reinvest the dividends on the shares held in your Plan account, unless you also
withdraw or sell all shares held in your account under the Plan.
Federal Income Tax
Consequences
28. What are the federal
income tax consequences of participation in the Plan?
The Plan does not offer a discount for purchases of shares of our common stock with reinvested
dividends. In the absence of a discount feature, the Internal Revenue Service has ruled that
shareholders participating in dividend reinvestment plans are treated for federal income tax
purposes as having received the full amount of the cash distribution that was payable, even though
the shareholder received no cash but instead received credit for stock of equivalent value. In
addition, a shareholder will be taxed on any brokerage commissions, fees or service charges that we
pay for in connection with a purchase of our common stock for the shareholder under the
Plan.
18
To the extent distributions by us to our shareholders are treated as made from our earnings and
profits, the distributions will be dividends taxable as ordinary income. At the present time, we
expect to have sufficient earnings and profits so that participating shareholders can expect that
the full amount of any distribution under the Plan will be taxable as a dividend.
In the case of corporate shareholders, the full amount of dividends reinvested will be eligible for
the dividends-received deduction available under the Internal Revenue Code.
In the case of foreign shareholders whose taxable income under the Plan is subject to federal
income tax withholding and in the case of any other shareholders as to whom federal income tax
withholding on dividends is required, we will make dividend reinvestment net of the amount of tax
required to be withheld.
The tax basis of any shares acquired through the Plan will be the purchase price on the applicable
purchase date. The holding period for shares acquired through the Plan will begin on the day after
the applicable purchase date.
Participants should consult their own tax advisors as to the tax consequences of Plan
transactions.
Other Information
29. What happens if we have a
common stock rights offering, issue a stock dividend or declare a stock split?
Participation
in any rights offering will be based upon both the shares registered in participants’ names and
the shares (including fractional interests) credited to participants’ Plan accounts. Any stock
dividend or share resulting from stock splits with respect to full shares and fractional interests
credited to participants’ accounts will be added to their accounts. Any securities other than
shares of our common stock or rights to subscribe for securities other than shares of our common stock
received in respect of the shares held in the accounts of participants will be distributed by the
Plan’s agent to the participants and will not become part of the Plan. Transaction processing
may either be curtailed or suspended until the completion of a rights offering, stock dividend, stock
split or other corporate action.
30. How will a participant’s
Plan shares be voted at a meeting of shareholders?
All shares of our common stock credited to your account under the Plan will be voted in the manner
that you direct. If on the record date for a meeting of shareholders there are shares credited to
your account under the Plan, you will be sent the proxy material for that meeting. When you return
an executed proxy, it will be voted with respect to all shares credited to you. Or, if you elect,
you may direct the vote of all of your shares in person at the shareholders’
meeting.
31. What procedures should be
followed to sell or pledge shares held in the Plan?
A participant who wishes to sell or pledge shares from his or her account must request the
withdrawal of such shares from the Plan as described in the answer to Question #25
above.
19
32. What is the responsibility
of the Plan’s agent?
The Plan’s agent receives the participants’ dividend payments and optional cash payments,
invests such amounts in additional shares of our common stock, maintains continuing records of each
participant’s account, and advises participants as to all transactions in and the status of
their accounts. The Plan’s agent acts in the capacity of agent for the
participants.
All notices from the Plan’s agent to a participant will be addressed to the participant at his
or her last address of record with the Plan’s agent. The mailing of a notice to a
participant’s last address of record will satisfy the Plan’s agent’s duty of giving
notice to that participant. Therefore, participants must promptly notify the Plan’s agent of
any change of address.
The Plan’s agent, a participant’s nominee or nominees, and we will not have any
responsibility for acts taken or not taken (including but not limited to purchases or sales of
shares) in good faith in connection with the Plan, including, for example, any claim for liability
arising out of failure to terminate a participant’s account upon the participant’s death
or adjudicated incompetency prior to receipt of notice in writing of such death or adjudicated
incompetency. In addition, these parties will not have any duties, responsibilities or liabilities
except for those that the Plan expressly provides for.
The Plan’s agent had no responsibility with respect to the preparation or content of this
prospectus.
All transactions in connection with the Plan, including the optional cash payment feature, shall be
governed by the laws of the Commonwealth of Virginia.
33. May the Plan be changed or
discontinued?
While we hope to continue a dividend reinvestment and stock purchase plan indefinitely, our Board
of Directors reserves the right to suspend or terminate the Plan at any time. It also reserves the
right to make modifications to the Plan. Participants will be notified of any suspension,
termination or modification. We also may adopt reasonable procedures for the administration of the
Plan.
34. How is the Plan to be
interpreted?
Any question or interpretation under the Plan will be determined by us, and any such determination
will be final.
35. Who bears the risk of market
price fluctuations in the common stock?
A participant’s investment in shares of common stock under the Plan will be no different from
investment in directly held shares of common stock. The participant will bear the risk of loss and
realize the benefits of any gain from market price changes with respect to all such shares held by
the participant in the Plan.
Participants should recognize that neither Fauquier Bankshares, Inc. nor the Plan’s agent can
assure participants of a profit or protect then against a loss on the shares of common stock
purchased by them under the Plan.
20
A participant’s investment in shares of common stock under the Plan is not guaranteed by the
FDIC or other governmental agency.
21
USE OF PROCEEDS
We do not know the number of shares of our common stock that ultimately will be purchased under the
Plan or the prices at which shares will be purchased. If the Plan purchases shares of common stock
directly from us, the net proceeds from these transactions will be added to our general funds and
used for general corporate purposes.
INDEMNIFICATION
Our articles of incorporation, as well as the statutes of the Commonwealth of Virginia, contain
provisions providing for the indemnification of our directors and officers against certain
liabilities, including liabilities arising under the Securities Act of 1933, as amended. Insofar as
indemnification for liabilities arising under the Securities Act may be permitted to our directors,
officers and controlling persons, we have been informed that, in the opinion of the Securities and
Exchange Commission, indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
EXPERTS
The consolidated financial statements included in our Annual Report on Form 10-K for the year ended
December 31, 2003, which we have incorporated by reference into this prospectus, have been audited
by Yount, Hyde & Barbour, P.C., independent certified public accountants, as stated in their
report included in the Annual Report, and have been incorporated by reference in reliance upon such
report given upon the authority of that firm as experts in accounting and auditing.
Documents that we have not yet filed and that we have incorporated by reference into this
prospectus will include financial statements, related schedules (if required) and auditors’
reports. Those financial statements and schedules will have been audited to the extent and for the
periods set forth in those reports by the firm or firms rendering the reports and, to the extent so
audited and consent to incorporation by reference is given, will be incorporated by reference in
reliance upon those reports given upon the authority of the firm or firms as experts in accounting
and auditing.
LEGAL OPINION
Holland & Knight LLP, counsel to Fauquier Bankshares, Inc., will pass upon the validity of the
shares of our common stock to be issued by us pursuant to the Plan.
We have not authorized any dealer, salesperson or other person to give any information or to
represent anything not contained in this prospectus. You must not rely on any unauthorized
information or representations. This prospectus is an offer to sell only the securities offered
hereby, but only in the jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of May 20, 2004.
22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
| |
Securities and Exchange
Commission Registration Fee* |
|
$ |
682 |
|
| |
Printing Expenses |
|
$ |
3,000 |
|
| |
Accounting Fees
and Expenses |
|
$ |
1,500 |
|
| |
Legal Fees and Expenses |
|
$ |
10,000 |
|
| |
Miscellaneous Expenses |
|
$ |
1,318 |
|
| |
|
|
|
|
|
| |
Total |
|
$ |
16,500 |
|
| |
|
|
|
|
|
| |
*
Represents actual expenses. All other expenses are estimates. |
|
|
|
|
Item 15. Indemnification of Directors and Officers
The laws of the Commonwealth of Virginia pursuant to which we are incorporated permit us to
indemnify our officers and directors against certain liabilities with the approval of our
shareholders. Our articles of incorporation, which have been approved by our shareholders, provide
for the indemnification of each director and officer (including former directors and officers and
each person who may have served at our request as a director of officer of any other legal entity
and, in all such cases, his or her heirs, executors and administrators) against liabilities
(including expenses) reasonably incurred by him or her in connection with any actual or threatened
action, suit or proceeding to which he or she may be made party by reason of his or her being or
having been a director or officer of our company, except in relation to any action, suit or
proceeding in which he or she has been adjudged liable because of willful misconduct or a knowing
violation of the criminal law.
We have purchased officers’ and director’s liability insurance policies. Within the
limits of their coverage, the policies insure (1) our directors and officers against certain losses
resulting from claims against them in their capacities as directors and officers to the extent that
such losses are not indemnified by us and 2) our company to the extent that it indemnifies such
directors and officers for losses as permitted under the laws of Virginia.
II-1
Item 16. Exhibits
The following
exhibits are filed on behalf of the Registrant as part of this Registration Statement:
| |
4.1 |
|
Articles of
Incorporation of Fauquier Bankshares, Inc. attached as Exhibit 3.1 to the Registration
Statement on Form 10-12G filed with the Commission on April 16, 1999 (the “Form
10-12G”), incorporated herein by reference. |
| |
|
|
|
| |
4.2 |
|
Bylaws of
the Fauquier Bankshares, Inc., attached as Exhibit 3.2 to the Form 10-12G, incorporated
herein by reference. |
| |
|
|
|
| |
*5.1 |
|
Opinion of
Holland & Knight LLP. |
| |
|
|
|
| |
*23.1 |
|
Consent of
Holland & Knight LLP (included in Exhibit 5.1). |
| |
|
|
|
| |
*23.2 |
|
Consent of
Yount, Hyde & Barbour, P.C. |
| |
|
|
|
| |
*24.1 |
|
Powers of
Attorney (included on signature page). |
| |
|
|
|
| |
*99.2 |
|
Dividend Reinvestment
and Stock Purchase Plan of Fauquier Bankshares, Inc. (set forth in full under the
heading “Description of Plan” in the Prospectus). |
| |
|
|
|
| |
*99.2 |
|
Form of Authorization
Card. |
| |
|
|
|
| |
|
|
|
II-2
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
| |
(1) |
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| |
|
|
|
| |
|
(i) |
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”); |
| |
|
|
|
| |
|
(ii) |
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and
|
| |
|
|
|
| |
|
(iii) |
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
| |
|
|
|
| |
(2) |
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and |
| |
|
|
|
| |
(3) |
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(b) The undersigned
Registrant hereby undertakes that, for purposes of determining any liability under
the Securities Act, each filing of the Registrant’s annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan’s annual report pursuant to Section 15(d)
of the Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Fauquier County, Commonwealth of Virginia, on May 20,
2004.
FAUQUIER
BANKSHARES, INC.
By:
/s/ C.
Hunton Tiffany
____________________________
C. Hunton
Tiffany
Chairman and Chief
Executive Officer
POWER OF ATTORNEY
Each of the undersigned hereby appoints C. Hunton Tiffany and Randy K. Ferrell, and each of them,
as attorney-in-fact and agent for the undersigned, with full power of substitution, for and in the
name, place and stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, any and all amendments (including
post-effective amendments) to this Registration Statement, with any schedules or exhibits thereto,
and any and all supplements or other documents to be filed with the Securities and Exchange
Commission pertaining to the registration of securities covered hereby, with full power and
authority to do and perform any and all acts and things as may be necessary or desirable in
furtherance of such registration.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
/s/ C. Hunton Tiffany
___________________________ |
|
Chairman and Chief Executive Officer Director |
|
May 20, 2004 |
| C. Hunton Tiffany |
|
(principal executive officer)
|
|
|
| |
|
|
|
|
/s/ Randy K. Ferrell
___________________________ |
|
President and Chief Operating Officer, Director |
|
May 20, 2004 |
| Randy K. Ferrell |
|
|
|
|
II-4
| |
|
|
|
|
/s/ Eric P. Graap
___________________________ |
|
Senior Vice President and Chief Financial Officer |
|
May 20, 2004 |
| Eric P. Graap |
|
(principal financial and accounting officer) |
|
|
| |
|
|
|
|
| |
|
|
|
|
/s/ Alexander G. Green, Jr.
___________________________ |
|
Director |
|
May 20, 2004 |
| Alexander G. Green, Jr. |
|
|
|
|
| |
|
|
|
|
/s/ Stanley C. Haworth
___________________________ |
|
Director |
|
May 20, 2004 |
| Stanley C. Haworth |
|
|
|
|
| |
|
|
|
|
/s/ John J. Norman, Jr.
___________________________ |
|
Director |
|
May 20, 2004 |
| John J. Norman, Jr. |
|
|
|
|
| |
|
|
|
|
/s/ Douglas C. Larson
___________________________ |
|
Director |
|
May 20, 2004 |
| Douglas C. Larson |
|
|
|
|
| |
|
|
|
|
/s/ C.H. Lawrence, Jr.
___________________________ |
|
Director |
|
May 20, 2004 |
| C.H. Lawrence, Jr. |
|
|
|
|
| |
|
|
|
|
/s/ D. Harcourt Lees, Jr.
___________________________ |
|
Director |
|
May 20, 2004 |
| D. Harcourt Lees, Jr. |
|
|
|
|
| |
|
|
|
|
/s/ Randolph T. Minter
___________________________ |
|
Director |
|
May 20, 2004 |
| Randolph T. Minter |
|
|
|
|
| |
|
|
|
|
/s/ B.S. Montgomery
___________________________ |
|
Director |
|
May 20, 2004 |
| B.S. Montgomery |
|
|
|
|
II-5
| |
|
|
|
|
/s/ H.P. Neale
___________________________ |
|
Director |
|
May 20, 2004 |
| H.P. Neale |
|
|
|
|
| |
|
|
|
|
/s/ Pat H. Nevill
___________________________ |
|
Director |
|
May 20, 2004 |
| Pat H. Nevill |
|
|
|
|
| |
|
|
|
|
/s/ H. Frances Stringfellow
___________________________ |
|
Director |
|
May 20, 2004 |
| H. Frances Stringfellow |
|
|
|
|
II-6