##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2006
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period fromto
 Commission File No. 000-25805
 Fauquier Bankshares, Inc.
  Virginia
    
    54-1288193(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)10 Courthouse SquareWarrenton, Virginia
    
    20186(Address of principal executive offices)
    
    (Zip Code)
 (540) 347-2700
  Not Applicable
  þ o
  o o þ
  o þ




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##### 



FAUQUIER BANKSHARES, INC.
   PageItem 1.
    
    Financial Statements
    
    

    
    
    3Consolidated Balance Sheets as of September 30, 2006 (unaudited) and December 31, 2005
    
    

    
    
    3Consolidated Statements of Income (unaudited) for the Three Months Ended September 30, 2006
and 2005
    
    

    
    
    4Consolidated Statements of Income (unaudited) for the Nine Months Ended September 30, 2006
and 2005
    
    
    
    
    5Consolidated Statements of Changes in Shareholders Equity (unaudited) for the Nine Months
Ended September 30, 2006 and 2005
    
    

    
    
    6Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2006
and 2005
    
    

    
    
    7Notes to Consolidated Financial Statements
    
    

    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    


    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    

    
    
    31Item 4.
    
    Controls and Procedures
    
    

    
    
    31Part II. OTHER INFORMATION
    
    

    
    
    31Item 1.
    
    Legal Proceedings
    
    

    
    
    32Item 1A.
    
    Risk Factors
    
    

    
    
    32Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    

    
    
    32Item 3.
    
    Defaults Upon Senior Securities
    
    

    
    
    32Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    

    
    
    32Item 5.
    
    Other Information
    
    




    
    
    32Item 6.
    
    Exhibits
    
    


    
    
    33SIGNATURES
 2




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##### 



Part
I. FINANCIAL INFORMATION
  Fauquier Bankshares, Inc. and Subsidiaries
Consolidated Balance Sheets
 Unaudited
    
    
    AuditedSeptember 30, 2006
    
    
    December 31, 2005AssetsCash and due from banks
    
    $
    13,710,546
    
    
    $
    26,565,702Interest-bearing deposits in other banks
    
    
    377,083
    
    
    
    680,013Federal funds sold
    
    
    
    
    
    
    493,000Securities, at fair value
    
    
    42,808,222
    
    
    
    48,390,771Loans, net of allowance for loan losses of $4,512,514 in 2006
and $4,238,143 in 2005
    
    
    413,884,375
    
    
    
    381,049,471Bank premises and equipment, net
    
    
    7,748,553
    
    
    
    8,289,581Accrued interest receivable
    
    
    1,689,896
    
    
    
    1,585,849Other assets
    
    
    13,778,625
    
    
    
    14,191,023Total assets
    
    
    493,997,300
    
    
    
    481,245,410LiabilitiesDeposits:Noninterest-bearing
    
    
    78,861,017
    
    
    
    95,411,624Interest-bearing
    
    
    316,387,981
    
    
    
    296,245,545Total deposits
    
    
    395,248,998
    
    
    
    391,657,169Federal funds purchased
    
    
    1,026,000
    
    
    
    5,000,000Dividends payable
    
    
    
    
    
    
    Federal Home Loan Bank advances
    
    
    48,000,000
    
    
    
    42,000,000Company-obligated mandatorily redeemable capital securities
    
    
    8,248,000
    
    
    
    4,124,000Other liabilities
    
    
    3,148,324
    
    
    
    2,885,096Commitments and contingent liabilities
    
    
    
    
    
    
    Total liabilities
    
    
    455,671,322
    
    
    
    445,666,265Shareholders EquityCommon stock, par value, $3.13; authorized 8,000,000 shares;
issued and outstanding, 2006, 3,476,960 shares; 2005,
3,448,786 shares
    
    
    10,882,885
    
    
    
    10,794,700Retained earnings
    
    
    27,915,069
    
    
    
    25,440,838Accumulated other comprehensive income (loss), net
    
    
    (471,976
    )
    
    
    (656,393
    )Total shareholders equity
    
    
    38,325,978
    
    
    
    35,579,145Total liabilities and shareholders equity
    
    $
    493,997,300
    
    
    $
    481,245,410
  3




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##### 



Fauquier Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
For the Three Months Ended September 30, 2006 and 2005
 2006
    
    
    2005Interest IncomeInterest and fees on loans
    
    $
    7,371,651
    
    
    $
    5,855,666Interest and dividends on securities available for sale:Taxable interest income
    
    
    394,861
    
    
    
    448,791Interest income exempt from federal income taxes
    
    
    13,189
    
    
    
    13,082Dividends
    
    
    79,041
    
    
    
    61,656Interest on federal funds sold
    
    
    4,783
    
    
    
    8,907Interest on deposits in other banks
    
    
    11,877
    
    
    
    1,400Total interest income
    
    
    7,875,402
    
    
    
    6,389,502Interest ExpenseInterest on deposits
    
    
    2,137,304
    
    
    
    1,275,949Interest on federal funds purchased
    
    
    184,898
    
    
    
    31,348Interest on Federal Home Loan Bank advances
    
    
    549,514
    
    
    
    204,282Distribution on capital securities of subsidiary trusts
    
    
    100,490
    
    
    
    72,272Total interest expense
    
    
    2,972,206
    
    
    
    1,583,851Net interest income
    
    
    4,903,196
    
    
    
    4,805,651Provision for loan losses
    
    
    60,000
    
    
    
    139,167Net interest income after
provision for loan losses
    
    
    4,843,196
    
    
    
    4,666,484Other IncomeWealth management income
    
    
    337,088
    
    
    
    432,082Service charges on deposit accounts
    
    
    704,079
    
    
    
    675,440Other service charges, commissions and income
    
    
    377,748
    
    
    
    353,958Gain on sale of property rights
    
    
    
    
    
    
    Total other income
    
    
    1,418,915
    
    
    
    1,461,480Other ExpensesSalaries and benefits
    
    
    2,265,102
    
    
    
    2,102,809Net occupancy expense of premises
    
    
    240,509
    
    
    
    244,778Furniture and equipment
    
    
    329,785
    
    
    
    311,403Other operating expenses
    
    
    1,290,502
    
    
    
    1,302,490Loss on sale of securities
    
    
    
    
    
    
    Total other expenses
    
    
    4,125,898
    
    
    
    3,961,480Income before income taxes
    
    
    2,136,213
    
    
    
    2,166,484Income tax expense
    
    
    652,882
    
    
    
    693,707Net Income
    
    $
    1,483,331
    
    
    $
    1,472,777Earnings per Share, basic
    
    $
    0.43
    
    
    $
    0.43Earnings per Share, assuming dilution
    
    $
    0.41
    
    
    $
    0.41Dividends per Share
    
    $
    0.19
    
    
    $
    0.16
  4




---



##### 



Fauquier Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
For the Nine Months Ended September 30, 2006 and 2005
 2006
    
    
    2005Interest IncomeInterest and fees on loans
    
    $
    20,700,435
    
    
    $
    16,930,296Interest and dividends on securities
available for sale:Taxable interest income
    
    
    1,208,183
    
    
    
    1,439,268Interest income exempt from
federal income taxes
    
    
    39,441
    
    
    
    39,218Dividends
    
    
    201,036
    
    
    
    147,155Interest on federal funds sold
    
    
    22,188
    
    
    
    46,403Interest on deposits in other banks
    
    
    23,155
    
    
    
    4,230Total interest income
    
    
    22,194,438
    
    
    
    18,606,570Interest ExpenseInterest on deposits
    
    
    5,554,978
    
    
    
    3,518,244Interest on federal funds purchased
    
    
    389,348
    
    
    
    58,234Interest on Federal Home Loan Bank
advances
    
    
    1,431,951
    
    
    
    626,385Distribution on capital securities of
subsidiary trusts
    
    
    273,213
    
    
    
    201,872Total interest expense
    
    
    7,649,490
    
    
    
    4,404,735Net interest income
    
    
    14,544,948
    
    
    
    14,201,835Provision for loan losses
    
    
    360,000
    
    
    
    472,917Net interest income after
provision for loan losses
    
    
    14,184,948
    
    
    
    13,728,918Other IncomeWealth management income
    
    
    1,000,969
    
    
    
    1,034,450Service charges on deposit accounts
    
    
    2,063,531
    
    
    
    1,976,960Other service charges, commissions
and income
    
    
    1,103,153
    
    
    
    979,520Gain on sale of property rights
    
    
    250,000
    
    
    
    Total other income
    
    
    4,417,653
    
    
    
    3,990,930Other ExpensesSalaries and benefits
    
    
    6,769,925
    
    
    
    6,235,035Net occupancy expense of premises
    
    
    744,310
    
    
    
    708,096Furniture and equipment
    
    
    1,009,291
    
    
    
    948,531Other operating expenses
    
    
    4,022,870
    
    
    
    3,990,144Loss onssale of securities
    
    
    82,564
    
    
    
    Total other expenses
    
    
    12,628,960
    
    
    
    11,881,806Income before income taxes
    
    
    5,973,641
    
    
    
    5,838,042Income tax expense
    
    
    1,804,886
    
    
    
    1,805,846Net Income
    
    $
    4,168,755
    
    
    $
    4,032,196Earnings per Share, basic
    
    $
    1.20
    
    
    $
    1.18Earnings per Share, assuming dilution
    
    $
    1.16
    
    
    $
    1.13Dividends per Share
    
    $
    0.555
    
    
    $
    0.47
  5




---



##### 



Fauquier Bankshares, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders Equity
(Unaudited)
For the Nine Months Ended September 30, 2006 and 2005
 AccumulatedOtherRetained
    
    
    Comprehensive
    
    
    ComprehensiveCommon Stock
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Income
    
    
    TotalBalance, December 31, 2004
    
    $
    10,618,775
    
    
    $
    21,320,224
    
    
    $
    (47,934
    )
    
    
    
    
    
    $
    31,891,065Comprehensive income:Net income
    
    
    
    
    
    
    4,032,196
    
    
    
    
    
    
    $
    4,032,196
    
    
    $
    4,032,196Other comprehensive income net of tax:Unrealized holding losses on securities available
for sale, net of deferred income taxes of $152,308
    
    
    
    
    
    
    
    
    
    
    (295,655
    )
    
    
    (295,655
    )
    
    $
    (295,655
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,736,541Cash dividends ($.47 per share)
    
    
    
    
    
    
    (1,617,192
    )
    
    
    
    
    
    
    
    
    
    $
    (1,617,192
    )Restricted stock forfeiture
    
    
    (3,506
    )
    
    
    (24,494
    )
    
    
    
    
    
    
    
    
    
    $
    (28,000
    )Net issuance of restricted stock, stock incentive plan
(10,045
shares)
    
    
    31,441
    
    
    
    218,077
    
    
    
    
    
    
    
    
    
    
    $
    249,518Unearned compensation on restricted stock
    
    
    
    
    
    
    (249,518
    )
    
    
    
    
    
    
    
    
    
    $
    (249,518
    )Amortization of unearned compensation, restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    194,720awards
    
    
    
    
    
    
    194,720Issuance of common stock
    
    
    12,764
    
    
    
    91,937
    
    
    
    
    
    
    
    
    
    
    $
    104,701Exercise of stock options
    
    
    131,219
    
    
    
    230,747
    
    
    
    
    
    
    
    
    
    
    $
    361,966Balance, September 30, 2005
    
    $
    10,790,694
    
    
    $
    24,196,698
    
    
    $
    (343,590
    )
    
    
    
    
    
    $
    34,643,802Balance, December 31, 2005
    
    $
    10,794,700
    
    
    $
    25,440,838
    
    
    $
    (656,393
    )
    
    
    
    
    
    $
    35,579,146Comprehensive income:Net income
    
    
    
    
    
    
    4,168,755
    
    
    
    
    
    
    $
    4,168,755
    
    
    
    4,168,755Other comprehensive income net of tax:Unrealized holding losses on securities available
for sale, net of deferred income taxes of $95,003
    
    
    
    
    
    
    
    
    
    
    184,417
    
    
    
    184,417
    
    
    
    184,417Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,353,172Cash dividends ($.555 per share)
    
    
    
    
    
    
    (1,928,695
    )
    
    
    
    
    
    
    
    
    
    
    (1,928,695
    )Acquisition of 1,900 shares of common stock
    
    
    (5,947
    )
    
    
    (37,257
    )
    
    
    
    
    
    
    
    
    
    
    (43,204
    )Net issuance of restricted stock, stock incentive plan
(10,347
shares)
    
    
    32,386
    
    
    
    228,772
    
    
    
    
    
    
    
    
    
    
    
    261,158Unearned compensation on restricted stock
    
    
    
    
    
    
    (261,158
    )
    
    
    
    
    
    
    
    
    
    
    (261,158
    )Amortization of unearned compensation, restricted stock
awards
    
    
    
    
    
    
    161,573
    
    
    
    
    
    
    
    
    
    
    
    161,573Issuance of common stock
    
    
    15,797
    
    
    
    108,492
    
    
    
    
    
    
    
    
    
    
    
    124,289Exercise of stock options
    
    
    45,948
    
    
    
    33,749
    
    
    
    
    
    
    
    
    
    
    
    79,697Balance, September 30, 2006
    
    $
    10,882,885
    
    
    $
    27,915,069
    
    
    $
    (471,976
    )
    
    
    
    
    
    $
    38,325,978
  6




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##### 



Fauquier Bankshares, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended September 30, 2006 and 2005
 2006
    
    
    2005Cash Flows from Operating ActivitiesNet income
    
    $
    4,168,755
    
    
    $
    4,032,196Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    901,951
    
    
    
    879,681Provision for loan losses
    
    
    360,000
    
    
    
    472,917Amortization of security premiums, net
    
    
    18,958
    
    
    
    44,714Amortization of unearned compensation
    
    
    161,573
    
    
    
    194,720Changes in assets and liabilities:Decrease (Increase) in other assets
    
    
    213,350
    
    
    
    (21,944
    )(Decrease) Increase in other liabilities
    
    
    263,228
    
    
    
    (890,166
    )Net cash provided by operating activities
    
    
    6,087,815
    
    
    
    4,712,118Cash Flows from Investing ActivitiesProceeds from sale of securities available for sale
    
    
    3,024,745
    
    
    
    Proceeds from maturities, calls and principal
payments of securities available for sale
    
    
    3,192,165
    
    
    
    9,589,469Purchase of securities available for sale
    
    
    
    
    
    
    (524,451
    )Purchase of premises and equipment
    
    
    (360,923
    )
    
    
    (816,792
    )Proceeds (Purchase) of other investment
    
    
    (373,900
    )
    
    
    (416,300
    )Net Decrease (Increase) in loans
    
    
    (33,194,904
    )
    
    
    (29,449,058
    )Net cash (used in) investing activities
    
    
    (27,712,817
    )
    
    
    (21,617,132
    )Cash Flows from Financing ActivitiesNet (Decrease) Increase in demand deposits, NOW accounts
and savings accounts
    
    
    (23,227,413
    )
    
    
    (6,328,598
    )Net (Decrease) Increase in certificates of deposit
    
    
    26,819,242
    
    
    
    21,560,673Federal Home Loan Bank advances
    
    
    70,000,000
    
    
    
    18,000,000Federal Home Loan Bank principal repayments
    
    
    (64,000,000
    )
    
    
    (11,000,000
    )Purchase (Repayment) of Federal Funds
    
    
    (3,974,000
    )
    
    
    4,500,000Proceeds from issuance of trust preferred securities
    
    
    4,124,000
    
    
    
    Cash dividends paid on common stock
    
    
    (1,928,695
    )
    
    
    (1,617,191
    )Issuance of common stock
    
    
    203,986
    
    
    
    28,000Acquisition of common stock
    
    
    (43,204
    )
    
    
    (28,000
    )Net cash provided by (used in) financing activities
    
    
    7,973,916
    
    
    
    25,114,884Increase (Decrease) in cash and cash equivalents
    
    
    (13,651,086
    )
    
    
    8,209,870Cash and Cash EquivalentsBeginning
    
    
    27,738,715
    
    
    
    9,166,574Ending
    
    $
    14,087,629
    
    
    $
    17,376,444Supplemental Disclosures of Cash Flow InformationCash payments for:Interest
    
    $
    5,357,341
    
    
    $
    4,264,442Income taxes
    
    $
    1,534,000
    
    
    $
    1,290,000Supplemental Disclosures of Noncash Investing ActivitiesUnrealized gain (loss) on securities available for sale, net
    
    $
    (279,419
    )
    
    $
    (447,962
    )
  7




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##### 



Fauquier Bankshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 1. General
   2. Securities
  8




---



##### 



Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    (Losses)
    
    
    ValueSeptember 30, 2006Obligations of U.S. Government corporations and
agencies
    
    $
    32,459,283
    
    
    $
    2,248
    
    
    $
    (727,766
    )
    
    $
    31,733,765Obligations of states and political subdivisions
    
    
    962,619
    
    
    
    51,694
    
    
    
    
    
    
    
    1,014,313Corporate Bonds
    
    
    6,000,000
    
    
    
    27,500
    
    
    
    (51,250
    )
    
    
    5,976,250Mutual Funds
    
    
    276,515
    
    
    
    
    
    
    
    (9,041
    )
    
    
    267,474FHLMC Preferred Bank Stock
    
    
    441,000
    
    
    
    
    
    
    
    (8,500
    )
    
    
    432,500Restricted investments:Federal Home Loan Bank Stock
    
    
    3,122,000
    
    
    
    
    
    
    
    
    
    
    
    3,122,000Federal Reserve Bank Stock
    
    
    99,000
    
    
    
    
    
    
    
    
    
    
    
    99,000Community Bankers Bank Stock
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    50,000The Bankers Bank Stock
    
    
    112,920
    
    
    
    
    
    
    
    
    
    
    
    112,920$
    43,523,337
    
    
    $
    81,442
    
    
    $
    (796,557
    )
    
    $
    42,808,222
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    (Losses)
    
    
    ValueDecember 31, 2005Obligations of U.S. Government corporations and
agencies
    
    $
    38,731,324
    
    
    $
    10,072
    
    
    $
    (943,127
    )
    
    $
    37,798,269Obligations of states and political subdivisions
    
    
    962,013
    
    
    
    57,516
    
    
    
    
    
    
    
    1,019,529Corporate Bonds
    
    
    6,000,000
    
    
    
    
    
    
    
    (98,750
    )
    
    
    5,901,250Mutual Funds
    
    
    267,947
    
    
    
    
    
    
    
    (7,144
    )
    
    
    260,803FHLMC Preferred Bank Stock
    
    
    441,000
    
    
    
    
    
    
    
    (13,100
    )
    
    
    427,900Restricted investments:Federal Home Loan Bank Stock
    
    
    2,748,100
    
    
    
    
    
    
    
    
    
    
    
    2,748,100Federal Reserve Bank Stock
    
    
    72,000
    
    
    
    
    
    
    
    
    
    
    
    72,000Community Bankers Bank Stock
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    50,000The Bankers Bank Stock
    
    
    112,920
    
    
    
    
    
    
    
    
    
    
    
    112,920$
    49,385,304
    
    
    $
    67,588
    
    
    $
    (1,062,121
    )
    
    $
    48,390,771
  September 30, 2006Amortized
    
    
    FairCost
    
    
    ValueDue in one year or less
    
    $
    
    
    
    $
    Due after one year through five years
    
    
    17,763,124
    
    
    
    17,425,296Due after five years through ten years
    
    
    3,177,852
    
    
    
    3,111,682Due after ten years
    
    
    18,480,926
    
    
    
    18,187,349Equity securities
    
    
    4,101,435
    
    
    
    4,083,895$
    43,523,337
    
    
    $
    42,808,222
 9




---



##### 



Unrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    
    (Losses)
    
    
    Fair Value
    
    
    (Losses)
    
    
    Fair Value
    
    
    (Losses)Obligations of U.S. Government, corporations and
agencies
    
    $
    2,721,551
    
    
    $
    (41,509
    )
    
    $
    28,781,519
    
    
    $
    (686,257
    )
    
    $
    31,503,070
    
    
    $
    (727,766
    )Corporate Bonds
    
    
    
    
    
    
    
    
    
    
    3,948,750
    
    
    
    (51,250
    )
    
    
    3,948,750
    
    
    
    (51,250
    )Subtotal, debt securities
    
    
    2,721,551
    
    
    
    (41,509
    )
    
    
    32,730,269
    
    
    
    (737,507
    )
    
    
    35,451,820
    
    
    
    (779,016
    )Preferred Stock
    
    
    
    
    
    
    
    
    
    
    441,000
    
    
    
    (8,500
    )
    
    
    441,000
    
    
    
    (8,500
    )Mutual Fund
    
    
    
    
    
    
    
    
    
    
    276,515
    
    
    
    (9,041
    )
    
    
    276,515
    
    
    
    (9,041
    )Total temporary impaired securities
    
    $
    2,721,551
    
    
    $
    (41,509
    )
    
    $
    33,447,784
    
    
    $
    (755,048
    )
    
    $
    36,169,335
    
    
    $
    (796,557
    )
     10




---



##### 



3. Loans
  September 30,
    
    
    December 31,2006
    
    
    2005(Thousands)Real estate loans:Construction
    
    $
    30,903
    
    
    $
    27,302Secured by farmland
    
    
    1,158
    
    
    
    535Secured by 1 - to - 4 family residential
    
    
    168,570
    
    
    
    153,997Other real estate loans
    
    
    136,806
    
    
    
    120,416Commercial and industrial loans (not secured by real estate)
    
    
    39,270
    
    
    
    35,497Consumer installment loans
    
    
    33,132
    
    
    
    38,677All other loans
    
    
    9,084
    
    
    
    9,386Total loans
    
    $
    418,923
    
    
    $
    385,810Unearned income
    
    
    (526
    )
    
    
    (523
    )Allowance for loan losses
    
    
    4,513
    
    
    
    4,238Net loans
    
    $
    413,884
    
    
    $
    381,049
  Nine Months
    
    
    Nine Months
    
    
    Twelve MonthsEnded
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    December 31,2006
    
    
    2005
    
    
    2005Balance at beginning of period
    
    $
    4,238,143
    
    
    $
    4,060,321
    
    
    $
    4,060,321Provision charged to operating expense
    
    
    360,000
    
    
    
    472,917
    
    
    
    472,917Recoveries added to the allowance
    
    
    113,112
    
    
    
    46,657
    
    
    
    53,331Loan losses charged to the allowance
    
    
    (198,741
    )
    
    
    (241,739
    )
    
    
    (348,426
    )Balance at end of period
    
    $
    4,512,514
    
    
    $
    4,338,156
    
    
    $
    4,238,143
  September 30,
    
    
    December 31,2006
    
    
    2005(Thousands)Nonaccrual loans
    
    $
    1,652
    
    
    $
    13Restructured loans
    
    
    
    
    
    
    Total nonperforming loans
    
    
    1,652
    
    
    
    13Foreclosed property
    
    
    79
    
    
    
    182Total nonperforming assets
    
    $
    1,731
    
    
    $
    195
  11




---



##### 



4. Company-Obligated Mandatorily Redeemable Capital Securities of Subsidiary Trusts
    5. Earning per Share
  Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    EndedSeptember 30, 2006
    
    
    September 30, 2006
    
    
    September 30, 2005Per Share
    
    
    
    
    
    
    Per Share
    
    
    
    
    
    
    Per ShareShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    AmountBasic earnings per share
    
    
    3,477,402
    
    
    $
    0.43
    
    
    
    3,471,194
    
    
    $
    1.20
    
    
    
    3,429,161
    
    
    $
    1.18Effect of dilutive securities, stock options
    
    
    105,039
    
    
    
    
    
    
    
    110,137
    
    
    
    
    
    
    
    129,600Diluted earnings per share
    
    
    3,582,441
    
    
    $
    0.41
    
    
    
    3,581,331
    
    
    $
    1.16
    
    
    
    3,558,761
    
    
    $
    1.13
 12




---



##### 



6. Stock-Based Compensation
   September 30,
    
    
    September 30,2006
    
    
    2005Net Income, as reported
    
    $
    4,168,755
    
    
    $
    4,032,196Deduct: Total stock-based employee
compensation expense determined based
on fair value method of awards, net
of tax
    
    
    
    
    
    
    Pro forma net income
    
    $
    4,168,755
    
    
    $
    4,032,196Earnings per share:Basic  as reported
    
    $
    1.20
    
    
    $
    1.18Basic  pro forma
    
    
    1.20
    
    
    
    1.18Diluted  as reported
    
    
    1.16
    
    
    
    1.13Diluted  pro forma
    
    
    1.16
    
    
    
    1.13
 7. Employee Benefit Plan
  Nine Months EndedSeptember 30,2006
    
    
    2005Service cost
    
    $
    519,381
    
    
    $
    287,240Interest cost
    
    
    281,991
    
    
    
    170,240Expected return on plan assets
    
    
    (296,880
    )
    
    
    (150,858
    )Amortization of transition (asset)
    
    
    (14,235
    )
    
    
    (9,490
    )Amortization of prior service cost
    
    
    5,826
    
    
    
    3,884Recognized net actuarial loss
    
    
    45,717
    
    
    
    31,156Net periodic benefit cost
    
    $
    541,800
    
    
    $
    332,172
  13




---



##### 



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
  GENERAL
    14




---



##### 



CRITICAL ACCOUNTING POLICIES
   15




---



##### 



EXECUTIVE OVERVIEW
    16




---



##### 



COMPARISION OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 AND SEPTEMBER
30, 2005
 NET INCOME.
 NET INTEREST INCOME.
   17




---



##### 



18




---



##### 



Three Months Ended September 30, 2006
    
    
    Three Months Ended September 30, 2005Average
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalances
    
    
    Expense
    
    
    Rate
    
    
    Balances
    
    
    Expense
    
    
    RateASSETS:LoansTaxable
    
    $
    410,750
    
    
    $
    7,274
    
    
    
    6.94
    %
    
    $
    352,164
    
    
    $
    5,771
    
    
    
    6.42
    %Tax-exempt (1)
    
    
    8,194
    
    
    
    149
    
    
    
    7.09
    %
    
    
    7,010
    
    
    
    128
    
    
    
    7.17
    %Nonaccrual
    
    
    1,691
    
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    Total Loans
    
    
    420,635
    
    
    
    7,423
    
    
    
    6.91
    %
    
    
    359,265
    
    
    
    5,899
    
    
    
    6.44
    %SecuritiesTaxable
    
    
    41,782
    
    
    
    474
    
    
    
    4.54
    %
    
    
    49,124
    
    
    
    510
    
    
    
    4.16
    %Tax-exempt (1)
    
    
    1,011
    
    
    
    20
    
    
    
    7.91
    %
    
    
    1,029
    
    
    
    20
    
    
    
    7.70
    %Total securities
    
    
    42,793
    
    
    
    494
    
    
    
    4.62
    %
    
    
    50,153
    
    
    
    530
    
    
    
    4.23
    %Deposits in banks
    
    
    630
    
    
    
    12
    
    
    
    7.36
    %
    
    
    717
    
    
    
    1
    
    
    
    0.76
    %Federal funds sold
    
    
    371
    
    
    
    5
    
    
    
    5.04
    %
    
    
    902
    
    
    
    9
    
    
    
    3.87
    %Total earning assets
    
    
    464,429
    
    
    
    7,934
    
    
    
    6.70
    %
    
    
    411,037
    
    
    
    6,439
    
    
    
    6.15
    %Less: Reserve for loan losses
    
    
    (4,515
    )
    
    
    
    
    
    
    
    
    
    
    (4,362
    )Cash and due from banks
    
    
    16,526
    
    
    
    
    
    
    
    
    
    
    
    18,146Bank premises and equipment, net
    
    
    7,920
    
    
    
    
    
    
    
    
    
    
    
    8,459Other assets
    
    
    15,601
    
    
    
    
    
    
    
    
    
    
    
    15,462Total Assets
    
    $
    499,961
    
    
    
    
    
    
    
    
    
    
    $
    448,742LIABILITIES AND SHAREHOLDERS EQUITY:DepositsDemand deposits
    
    $
    82,615
    
    
    
    
    
    
    
    
    
    
    $
    90,949Interest-bearing depositsNOW accounts
    
    
    64,439
    
    
    
    74
    
    
    
    1.91
    %
    
    
    94,864
    
    
    
    216
    
    
    
    2.16
    %Money market accounts
    
    
    34,498
    
    
    
    120
    
    
    
    1.38
    %
    
    
    53,169
    
    
    
    190
    
    
    
    1.42
    %Premium money market accounts
    
    
    54,173
    
    
    
    554
    
    
    
    4.06
    %
    
    
    5,278
    
    
    
    42
    
    
    
    3.12
    %Savings accounts
    
    
    36,702
    
    
    
    34
    
    
    
    0.37
    %
    
    
    41,868
    
    
    
    34
    
    
    
    0.32
    %Time deposits
    
    
    126,358
    
    
    
    1,355
    
    
    
    4.25
    %
    
    
    100,263
    
    
    
    795
    
    
    
    3.15
    %Total interest-bearing deposits
    
    
    316,170
    
    
    
    2,137
    
    
    
    2.68
    %
    
    
    295,442
    
    
    
    1,277
    
    
    
    1.71
    %Federal funds purchased and securities sold
under agreements to repurchase
    
    
    13,653
    
    
    
    185
    
    
    
    5.37
    %
    
    
    2,946
    
    
    
    31
    
    
    
    4.22
    %Federal Home Loan Bank advances
    
    
    42,293
    
    
    
    550
    
    
    
    5.08
    %
    
    
    18,804
    
    
    
    204
    
    
    
    4.25
    %Capital Securities of Subsidiary Trusts
    
    
    4,572
    
    
    
    100
    
    
    
    8.60
    %
    
    
    4,124
    
    
    
    72
    
    
    
    6.86
    %Total interest-bearing liabilities
    
    
    376,688
    
    
    
    2,972
    
    
    
    3.12
    %
    
    
    321,316
    
    
    
    1,584
    
    
    
    1.95
    %Other liabilities
    
    
    3,020
    
    
    
    
    
    
    
    
    
    
    
    2,377Shareholders equity
    
    
    37,638
    
    
    
    
    
    
    
    
    
    
    
    34,100Total Liabilities & Shareholders Equity
    
    $
    499,961
    
    
    
    
    
    
    
    
    
    
    $
    448,742Net interest spread
    
    
    
    
    
    $
    4,962
    
    
    
    3.58
    %
    
    
    
    
    
    $
    4,855
    
    
    
    4.20
    %Interest expense as a percent of average
earning assets
    
    
    
    
    
    
    
    
    
    
    2.53
    %
    
    
    
    
    
    
    
    
    
    
    1.53
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.17
    %
    
    
    
    
    
    
    
    
    
    
    4.63
    %
 
 (1)
    
    Income and rates on non-taxable assets are computed on a tax-equivalent basis using a federal
tax rate of 34%. 19




---



##### 



RATE/VOLUME ANALYSIS
  
 Three Months Ended September 30, 2006 Compared toThree Months Ended September 30, 2005Due to
    
    
    Due toChange
    
    
    Volume
    
    
    RateINTEREST INCOMELoans; taxable
    
    $
    1,503
    
    
    $
    947
    
    
    $
    556Loans; tax-exempt (1)
    
    
    20
    
    
    
    22
    
    
    
    (2
    )Securities; taxable
    
    
    (37
    )
    
    
    (53
    )
    
    
    16Securities; tax-exempt (1)
    
    
    1
    
    
    
    
    
    
    
    1Deposits in banks
    
    
    11
    
    
    
    
    
    
    
    11Federal funds sold
    
    
    (4
    )
    
    
    (5
    )
    
    
    1Total Interest Income
    
    
    1,494
    
    
    
    911
    
    
    
    583INTEREST EXPENSENOW accounts
    
    
    (141
    )
    
    
    (157
    )
    
    
    16Money market accounts
    
    
    (70
    )
    
    
    (67
    )
    
    
    (3
    )Premium money market accounts
    
    
    512
    
    
    
    385
    
    
    
    127Savings accounts
    
    
    
    
    
    
    (4
    )
    
    
    4Time deposits
    
    
    560
    
    
    
    207
    
    
    
    353Federal funds purchased and securities
sold under agreements to repurchase
    
    
    154
    
    
    
    114
    
    
    
    40Federal Home Loan Bank Advances
    
    
    345
    
    
    
    255
    
    
    
    90Capital Securities of Subsidiary Trusts
    
    
    28
    
    
    
    8
    
    
    
    20Total Interest Expense
    
    
    1,388
    
    
    
    741
    
    
    
    647Net Interest Income
    
    $
    106
    
    
    $
    170
    
    
    $
    (64
    )
 
 (1)
    
    Income and rates on non-taxable assets are computed on a tax-equivalent basis using a
federal tax rate of 34%.  PROVISION FOR LOAN LOSSES.
 20




---



##### 



TOTAL OTHER INCOME.
 TOTAL OTHER EXPENSES.
  COMPARISION OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND SEPTEMBER
30, 2005
 NET INCOME.
 NET INTEREST INCOME.
 21




---



##### 



22




---



##### 



Nine Months Ended September 30, 2006
    
    
    Nine Months Ended September 30, 2005Average
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalances
    
    
    Expense
    
    
    Rate
    
    
    Balances
    
    
    Expense
    
    
    RateASSETS:LoansTaxable
    
    $
    396,714
    
    
    $
    20,404
    
    
    
    6.79
    %
    
    $
    345,089
    
    
    $
    16,674
    
    
    
    6.38
    %Tax-exempt (1)
    
    
    8,085
    
    
    
    449
    
    
    
    7.32
    %
    
    
    7,147
    
    
    
    388
    
    
    
    7.16
    %Nonaccrual
    
    
    1,178
    
    
    
    
    
    
    
    
    
    
    
    124
    
    
    
    Total Loans
    
    
    405,977
    
    
    
    20,853
    
    
    
    6.78
    %
    
    
    352,360
    
    
    
    17,062
    
    
    
    6.40
    %SecuritiesTaxable
    
    
    43,283
    
    
    
    1,409
    
    
    
    4.34
    %
    
    
    52,742
    
    
    
    1,586
    
    
    
    4.01
    %Tax-exempt (1)
    
    
    1,016
    
    
    
    60
    
    
    
    7.84
    %
    
    
    1,023
    
    
    
    59
    
    
    
    7.74
    %Total securities
    
    
    44,299
    
    
    
    1,469
    
    
    
    4.42
    %
    
    
    53,765
    
    
    
    1,645
    
    
    
    4.08
    %Deposits in banks
    
    
    662
    
    
    
    23
    
    
    
    4.61
    %
    
    
    360
    
    
    
    4
    
    
    
    1.57
    %Federal funds sold
    
    
    645
    
    
    
    22
    
    
    
    4.53
    %
    
    
    2,114
    
    
    
    46
    
    
    
    2.89
    %Total earning assets
    
    
    451,583
    
    
    
    22,367
    
    
    
    6.54
    %
    
    
    408,599
    
    
    
    18,757
    
    
    
    6.07
    %Less: Reserve for loan losses
    
    
    (4,396
    )
    
    
    
    
    
    
    
    
    
    
    (4,217
    )Cash and due from banks
    
    
    17,098
    
    
    
    6.78
    %
    
    
    
    
    
    
    16,890Bank premises and equipment, net
    
    
    8,104
    
    
    
    
    
    
    
    
    
    
    
    8,461Other assets
    
    
    15,181
    
    
    
    
    
    
    
    
    
    
    
    14,975Total Assets
    
    $
    487,570
    
    
    
    
    
    
    
    
    
    
    $
    444,708LIABILITIES AND SHAREHOLDERS EQUITY:DepositsDemand deposits
    
    $
    87,236
    
    
    
    
    
    
    
    
    
    
    $
    86,567Interest-bearing depositsNOW accounts
    
    
    68,424
    
    
    
    264
    
    
    
    0.52
    %
    
    
    101,888
    
    
    
    739
    
    
    
    0.97
    %Money market accounts
    
    
    38,010
    
    
    
    393
    
    
    
    1.38
    %
    
    
    58,093
    
    
    
    540
    
    
    
    1.24
    %Premium money market accounts
    
    
    48,469
    
    
    
    1,432
    
    
    
    3.95
    %
    
    
    2,303
    
    
    
    53
    
    
    
    3.09
    %Savings accounts
    
    
    37,782
    
    
    
    97
    
    
    
    0.34
    %
    
    
    42,495
    
    
    
    105
    
    
    
    0.33
    %Time deposits
    
    
    115,695
    
    
    
    3,368
    
    
    
    3.89
    %
    
    
    92,329
    
    
    
    2,081
    
    
    
    3.01
    %Total interest-bearing deposits
    
    
    308,380
    
    
    
    5,554
    
    
    
    2.41
    %
    
    
    297,108
    
    
    
    3,518
    
    
    
    1.58
    %Federal funds purchased and securities sold
under agreements to repurchase
    
    
    9,752
    
    
    
    389
    
    
    
    5.34
    %
    
    
    2,363
    
    
    
    58
    
    
    
    3.30
    %Federal Home Loan Bank advances
    
    
    37,978
    
    
    
    1,432
    
    
    
    4.97
    %
    
    
    19,337
    
    
    
    626
    
    
    
    4.27
    %Capital Securities of Subsidiary Trusts
    
    
    4,275
    
    
    
    273
    
    
    
    8.43
    %
    
    
    4,124
    
    
    
    202
    
    
    
    6.46
    %Total interest-bearing liabilities
    
    
    360,385
    
    
    
    7,648
    
    
    
    2.83
    %
    
    
    322,932
    
    
    
    4,404
    
    
    
    1.82
    %Other liabilities
    
    
    2,759
    
    
    
    
    
    
    
    
    
    
    
    2,022Shareholders equity
    
    
    37,190
    
    
    
    
    
    
    
    
    
    
    
    33,187Total Liabilities & Shareholders Equity
    
    $
    487,570
    
    
    
    
    
    
    
    
    
    
    $
    444,708Net interest spread
    
    
    
    
    
    $
    14,719
    
    
    
    3.72
    %
    
    
    
    
    
    $
    14,353
    
    
    
    4.25
    %Interest expense as a percent of average earning assets
    
    
    
    
    
    
    
    
    
    
    2.26
    %
    
    
    
    
    
    
    
    
    
    
    1.44
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.29
    %
    
    
    
    
    
    
    
    
    
    
    4.63
    %
 
 (1)
    
    Income and rates on non-taxable assets are computed on a tax-equivalent basis using a federal tax rate of 34%. 23




---



##### 



RATE/VOLUME ANALYSIS
  
 Nine Months Ended September 30, 2006 Compared toNine Months Ended September 30, 2005Due to
    
    
    Due toChange
    
    
    Volume
    
    
    RateINTEREST INCOMELoans; taxable
    
    $
    3,730
    
    
    $
    2,407
    
    
    $
    1,323Loans; tax-exempt (1)
    
    
    61
    
    
    
    51
    
    
    
    10Securities; taxable
    
    
    (177
    )
    
    
    (241
    )
    
    
    64Securities; tax-exempt (1)
    
    
    1
    
    
    
    
    
    
    
    1Deposits in banks
    
    
    19
    
    
    
    4
    
    
    
    15Federal funds sold
    
    
    (24
    )
    
    
    (32
    )
    
    
    8Total Interest Income
    
    
    3,610
    
    
    
    2,189
    
    
    
    1,421INTEREST EXPENSENOW accounts
    
    
    (475
    )
    
    
    (487
    )
    
    
    12Money market accounts
    
    
    (147
    )
    
    
    (187
    )
    
    
    40Premium money market accounts
    
    
    1,379
    
    
    
    1,069
    
    
    
    310Savings accounts
    
    
    (8
    )
    
    
    (12
    )
    
    
    4Time deposits
    
    
    1,287
    
    
    
    527
    
    
    
    760Federal funds purchased and securities
sold under agreements to repurchase
    
    
    331
    
    
    
    182
    
    
    
    149Federal Home Loan Bank Advances
    
    
    806
    
    
    
    604
    
    
    
    202Capital Securities of Subsidiary Trusts
    
    
    71
    
    
    
    7
    
    
    
    64Total Interest Expense
    
    
    3,244
    
    
    
    1,703
    
    
    
    1,541Net Interest Income
    
    $
    366
    
    
    $
    486
    
    
    $
    (120
    )
 
 (1)
    
    Income and rates on non-taxable assets are computed on a tax-equivalent basis using a
federal tax rate of 34%.  PROVISION FOR LOAN LOSSES.
 24




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##### 



TOTAL OTHER INCOME.
 TOTAL OTHER EXPENSES.
 COMPARISON OF SEPTEMBER 30, 2006 AND DECEMBER 31, 2005 FINANCIAL CONDITION
  CASH AND DUE FROM BANKS.
 LOANS.
 25




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##### 



DEPOSITS
  FEDERAL FUNDS PURCHASED FEDERAL HOME LOAN ADVANCES.
 ASSET QUALITY
    CONTRACTUAL OBLIGATIONS
  OFF-BALANCE SHEET ARRANGEMENTS
  26




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##### 



CAPITAL RESOURCES
      27




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##### 



September 30, 2006
    
    
    December 31, 2005Tier 1 Capital:Shareholders Equity
    
    $
    38,326
    
    
    $
    35,579Plus: Unrealized loss on securities available for sale
    
    
    472
    
    
    
    636Less: Intangible assets, net
    
    
    (31
    )
    
    
    (32
    )Plus: Company-obligated madatorily redeemable capital
securities
    
    
    8,000
    
    
    
    4,000Total Tier 1 Capital
    
    
    46,767
    
    
    
    40,183Tier 2 Capital:Allowable Allowance for Loan Losses
    
    
    4,513
    
    
    
    4,238Total Capital
    
    $
    51,280
    
    
    $
    44,421Risk Weighted Assets:
    
    $
    395,671
    
    
    $
    371,193Regulatory Capital Ratios:Leverage Ratio
    
    
    9.35
    %
    
    
    8.66
    %Tier 1 to Risk Weighted Assets
    
    
    11.82
    %
    
    
    10.83
    %Total Capital to Risk Weighted Assets
    
    
    12.96
    %
    
    
    11.97
    %
 LIQUIDITY
   28




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##### 



September 30, 2006
    
    
    December 31, 2005Total
    
    
    In Use
    
    
    Available
    
    
    Total
    
    
    In Use
    
    
    AvailableSources:Federal funds borrowing lines of credit
    
    $
    51,920
    
    
    $
    1,026
    
    
    $
    50,894
    
    
    $
    52,020
    
    
    $
    5,000
    
    
    $
    47,020Federal Home Loan Bank advances
    
    
    138,218
    
    
    
    48,000
    
    
    
    90,218
    
    
    
    106,420
    
    
    
    42,000
    
    
    
    64,420Federal funds sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    493Securities, available for sale and unpledged
at fair value
    
    
    
    
    
    
    
    
    
    
    23,575
    
    
    
    
    
    
    
    
    
    
    
    27,090Total short-term funding sources
    
    $
    190,138
    
    
    $
    49,026
    
    
    $
    164,687
    
    
    $
    158,440
    
    
    $
    47,000
    
    
    $
    139,023Uses:Unfunded loan commitments and
lending lines of credit
    
    
    
    
    
    
    
    
    
    $
    115,363
    
    
    
    
    
    
    
    
    
    
    $
    106,542Letters of credit
    
    
    
    
    
    
    
    
    
    
    9,974
    
    
    
    
    
    
    
    
    
    
    
    5,839Total potential short-term funding uses
    
    
    
    
    
    
    
    
    
    $
    125,337
    
    
    
    
    
    
    
    
    
    
    $
    112,381Ratio of short-term funding sources to
potential short-term funding uses
    
    
    
    
    
    
    
    
    
    
    131.4
    %
    
    
    
    
    
    
    
    
    
    
    123.7
    %
  RECENT ACCOUNTING PRONOUNCEMENTS
   29




---



##### 



30




---



##### 



Part II. OTHER INFORMATION
   31




---



##### 



Total
    
    Average
    
    Total Number ofNumber of
    
    Price
    
    Shares Purchased as
    
    Maximum Number ofShares
    
    Paid per
    
    Part of Publicly
    
    Shares that May Yet BePurchased
    
    Share
    
    Announced Plan
    
    Purchased Under the PlanJuly 1  31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    206,927August 1  31, 2006
    
    
    100
    
    
    $
    21.99
    
    
    
    100
    
    
    
    206,827September 1  30, 2006
    
    
    1,800
    
    
    $
    22.78
    
    
    
    1,800
    
    
    
    205,027Total
    
    
    1,900
    
    
    
    
    
    
    
    1,900
        32




---



##### 



3.1
    
    Articles of Incorporation of Fauquier Bankshares, Inc., as amended,
incorporated by reference to Exhibit 3(i) to registration statement on Form 10 filed
April 16, 19993.2
    
    Amended and Restated Bylaws of Fauquier Bankshares, Inc., incorporated
by reference to Exhibit 3.2 to Form 8-K filed March 22, 2006Certain instruments relating to capital securities not being registered have
been omitted in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K. The
registrant will furnish a copy of any such instrument to the Securities and Exchange
Commission upon its request.11
    
    Refer to Part I, Item 1, Footnote 5 to the Consolidated Financial Statements31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350 of Chief Executive Officer32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350 of Chief Financial Officer
 33




---



##### 



FAUQUIER BANKSHARES, INC.(Registrant)Date: November 10, 2006
    
    /s/ Randy K. FerrellRandy K. FerrellPresident and Chief Executive Officer(principal executive officer)Date: November 10, 2006
    
    /s/ Eric P. GraapEric P. Graap SeniorVice President and Chief Financial Officer(principal financial and accounting officer)
 34