Farmers Bankshares, Inc. Reports Third Quarter and Year-to-Date Earnings

·10 min read

WINDSOR, Va., Oct. 21, 2021 /PRNewswire/ -- Farmers Bankshares, Inc. (OTC-PINK: FBVA) reports unaudited earnings of $1.6 million, or $0.51 per share, for the third quarter of 2021. These results increased approximately 27.54% from the $1.3 million, or $0.41 per share, earned during the third quarter of 2020. Net income through the nine months ended September 30, 2021 amounted to $7.3 million or $2.33 per share, which is a 100.99% increase from the $3.6 million or $1.17 per share, reported for 2020.

Farmers Bank Logo (PRNewsfoto/Farmers Bankshares, Inc.)
Farmers Bank Logo (PRNewsfoto/Farmers Bankshares, Inc.)

At September 30, 2021, select financial information and key highlights include:

  • Return on average assets of 1.66%, compared to 0.96% in 2020.

  • Return on average equity of 14.28%, compared to 7.90% in 2020.

  • Return on average tangible common equity (1) of 16.77%, compared to 9.54% in 2020.

  • Net interest margin was 3.22%, reduced from 3.37% in the prior year.

  • Total cost of deposits decreased to 0.26% from 0.39% at September 30, 2020.

Consolidated Balance Sheet

Net loans decreased $17.6 million, or 6.85%, as compared to June 30, 2021. The decrease was primarily driven by the continued high cash balances held by customers, reducing borrowing needs, as well as one large loan payoff near the end of the quarter. The Company had approximately $5.3 million in the CARES Act's Paycheck Protection Program ("PPP") loans on the balance sheet as of September 30, 2021 and had received forgiveness of principal totaling $31.8 million. Deposit balances have increased by $18.2 million to $518.3 million as of September 30, 2021 from $500.1 million as of June 30, 2021. Non-interest bearing deposits increased by $7.5 million and make up approximately 34.53% of total deposits. The increase in the consumer savings rate, PPP loan funds and seasonal municipality deposits all contributed to this increase in deposits.

Capital ratios at the bank level remain well within the well-capitalized guidelines of the regulatory framework.

"While we saw a decline in loans this quarter we are optimistic about our ability to grow loans organically as the economy and uncertainty surrounding the business community improves. We have hired an experienced lender that is very familiar with the Virginia Beach market and will be devoted to growing our customer relationships in that area. Management and our Board believe we are very well positioned for future expansion and growth in both core banking and non-interest income business lines. Our capital position is strong and our balance sheet and income streams are diversified. We were pleased to increase our dividend declared in the third quarter showing our continued commitment to increasing shareholder value," stated Vernon M. Towler, President and Chief Executive Officer.

Results of Operations

Net interest income increased 1.41% in the third quarter of 2021 compared to the third quarter of 2020. Recognizing fees related to forgiven PPP loans and deploying excess cash into our securities portfolio both contributed to this slight increase. Continued repricing of deposits and prepaying FHLB advances in 2020 also aided in holding net interest income from further downward pressure.

Non-interest income through the third quarter of 2021 was approximately $10.4 million and was increased by 59.93% over the same period in the prior year primarily driven by the gain from unwinding an interest rate swap that occurred in the first quarter and the gain on other real estate owned recognized in the second quarter. Excluding these two extraordinary items, on a pre-tax basis, non-interest income would have increased 5.78% year over year.

Non-interest expense increased 2.88% through the third quarter of 2021 compared to same period in 2020. Investing in talent to expand our Virginia Beach market predominantly drove this increase.

No provision for loan losses was added during the third quarter of 2021. The Company considers local and national unemployment, housing and market trends when determining the estimated allowance. Our allowance for loan losses was 2.49% of gross loans as of September 30, 2021.

Asset Quality

Non-performing assets, which consists of nonaccrual loans and other real estate owned increased from $277 thousand at June 30, 2021 to $1.3 million at September 30, 2021. The increase was due to one loan being added to nonaccrual status during the quarter. This loan has been on the bank's watch list for several quarters.

Loans are considered past due if the required principal and interest income have not been received as of the date such payments were due. As of September 30, 2021, loans greater than thirty days past due totaled $1.3 million, or 0.52% of total gross loans. This compared to $374 thousand or 0.14% of total gross loans as of June 30, 2021.

(1)

Non-GAAP financial measure. Return on average tangible common equity excludes goodwill and intangibles.

Headquartered in Windsor, Virginia, Farmers Bankshares, Inc. is the holding company for Farmers Bank, Windsor, Virginia. Farmers Bank was founded in 1919, and is a community bank which operates eight branches and services areas throughout Tidewater Virginia. Additional information is available at the company's website, www.farmersbankva.com.

The common stock of Farmers Bankshares, Inc. trades on the OTC Pink Marketplace under the symbol FBVA. Any stockbroker can assist with purchase of the company's stock, as well as with sales of holdings.

Farmers Bankshares, Inc.

Consolidated Balance Sheets

($ in thousands)






9/30/2021


12/31/2020

Assets

(Unaudited)



Total cash & cash equivalents

$ 50,144


$ 28,557

Available-for-sale securities

276,396


203,766

Non-marketable equity securities

6,721


6,279

Loans held for investment

246,078


285,009

Allowance for loan losses

(6,138)


(6,347)

Loans held for investment, net

239,940


278,662

Premises and equipment, net

6,152


6,277

Goodwill and other intangible assets, net

9,980


10,250

Other real estate owned

147


672

Bank-owned life insurance

11,605


11,378

Other assets

7,685


6,077

Total assets

$ 608,770


$ 551,918





Liabilities & Stockholders' Equity




Deposits




Non-interest bearing deposits

$ 178,982


$ 149,637

Interest-bearing deposits

339,335


303,586

Total deposits

518,317


453,223

Federal Home Loan Bank borrowings

-


10,000

Capital notes

8,500


8,500

Securities sold under agreements to repurchase

6,347


6,637

Other liabilities

6,976


6,912

Total liabilities

540,140


485,272





Common stock

391


389

Capital surplus

3,557


3,357

Retained earnings

60,121


54,103

Accumulated other comprehensive income

2,068


6,341

Total Farmers Bankshares, Inc. stockholders' equity

66,137


64,190

Noncontrolling interest

2,493


2,456

Total stockholders' equity

68,630


66,646

Total liabilities and stockholders' equity

$ 608,770


$ 551,918

Farmers Bankshares, Inc.

Consolidated Income Statement (Unaudited)

($ in thousands)










Three Months Ended


Nine Months Ended


September 30,


September 30,


2021


2020


2021


2020

Interest income








Interest and fees on loans held for investment

$ 3,160


$ 3,319


$ 9,354


$ 10,190

Interest on available-for-sale securities

1,213


945


3,519


2,891

Interest on federal funds sold

10


6


19


84

Other interest income

40


23


55


91

Total interest and dividend income

4,423


4,293


12,947


13,256









Interest expense








Interest on deposits

323


390


983


1,420

Interest on FHLB and other borrowings

-


47


30


119

Interest on capital notes

68


57


204


155

Interest on repurchase agreements

10


10


31


27

Total interest expense

401


504


1,248


1,721

Net interest income

4,022


3,789


11,699


11,535

Provision for loan losses

-


270


-


921

Net interest income after provision for loan losses

4,022


3,519


11,699


10,614









Noninterest income








Service charges and other fee income

116


105


333


341

Income from automated teller machines and interchange

180


150


521


420

Insurance commissions

1,501


1,510


4,436


4,475

Net gain on disposition of available-for-sale securities

112


-


387


352

Gain on interest rate swap

-


-


423


-

Income on bank owned life insurance

58


57


207


207

Gain on sale of other real estate owned

-


-


3,110


-

Other income

462


426


1,017


729

Total noninterest income

2,429


2,248


10,434


6,524









Noninterest expense








Salaries and employee benefits

2,696


2,573


7,839


7,555

Occupancy and equipment

467


477


1,439


1,474

Bank franchise and other taxes

151


137


491


483

Advertising and marketing

155


110


357


315

Data processing

393


390


1,148


1,164

Other noninterest expense

624


558


1,821


1,737

Total non-interest expense

4,486


4,245


13,095


12,728

Income before income taxes and noncontrolling interest

1,965


1,522


9,038


4,410

Income tax expense

262


149


1,457


489

Net income

1,703


1,373


7,581


3,921

Net income attributable to noncontrolling interest

96


113


293


295

Net income attributable to Farmers Bankshares, Inc.

$ 1,607


$ 1,260


$ 7,288


$ 3,626

Financial Highlights








September 30,

June 30,

March 31,

December 31,

September 30,

At or For the Three Months Ended,

2021

2021

2021

2020

2020







Per Share and Shares Outstanding (1)






Basic net income

$ 0.51

$ 1.19

$ 0.63

$ 0.57

$ 0.41

Book value at end of period

$ 21.15

$ 21.51

$ 19.77

$ 20.65

$ 19.92

Tangible book value at end of period

$ 17.96

$ 18.29

$ 16.52

$ 17.35

$ 16.60

Basic weighted average shares outstanding

3,122,886

3,121,308

3,116,938

3,104,776

3,104,004

Dividends per share

$ 0.15

$ 0.13

$ 0.13

$ 0.12

$ 0.12

Shares outstanding at period end

3,127,048

3,125,678

3,125,678

3,108,462

3,106,809







Selected Performance Ratios






Return on average assets

1.66%

1.97%

1.38%

1.05%

0.96%

Return on average stockholders' equity

14.28%

17.05%

12.14%

8.70%

7.90%

Return on average tangible stockholders' equity

16.77%

20.12%

14.41%

10.45%

9.54%

Net interest margin, tax equivalent (2)

3.22%

3.20%

3.22%

3.53%

3.37%

Cost of deposits

0.26%

0.28%

0.35%

0.38%

0.39%

Non-interest income as a percentage of total revenue (3)

37.66%

58.18%

41.69%

44.17%

37.23%

Efficiency ratio (4)

69.55%

48.28%

63.58%

69.09%

69.63%







Balance Sheet Ratios






Loans to deposits

46.29%

51.51%

53.78%

61.29%

65.03%

Tangible common equity to tangible assets

11.06%

11.57%

10.91%

11.92%

11.74%

Nonperforming loans to period-end loans

0.52%

0.14%

0.10%

0.13%

0.10%

Allowance for loan losses to period-end loans

2.49%

2.32%

2.32%

2.23%

2.20%

Net charge-offs (recoveries) to average loans outstanding

-0.01%

0.04%

0.04%

0.09%

0.09%













(1) Computed based on the weighted average number of shares outstanding during each period.




(2) Net interest margin is net interest income divided by average interest earning assets.




(3) Total revenue consists of net interest income and non-interest income.





(4) Efficiency ratio is non-interest expense divided by the sum of net interest income and non-interest income.



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SOURCE Farmers Bankshares, Inc.

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