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

Rhea-AI Summary

Farmers Bankshares, Inc. (OTC-PINK: FBVA) reported a significant increase in earnings for Q2 2021, posting $3.7 million, or $1.19 per share, up 183.30% year-on-year. For the first half, net income totaled $5.7 million, a 140.11% rise. Key metrics include a return on average assets of 1.97% and return on average equity of 17.05%. However, net loans decreased by $21.1 million due to small businesses paying down credit lines. The bank's deposit balance grew by $46.8 million, largely due to stimulus payments and PPP funds, reflecting strong capital ratios.

Positive

• Earnings increased 183.30% year-over-year to $3.7 million.
• Net income for six months rose 140.11% to $5.7 million.
• Return on average assets improved to 1.97% from 0.96%.
• Return on average equity rose to 17.05% from 7.94%.
• Non-interest income surged 87.20% to $8.0 million.

Negative

• Net loans decreased by $21.1 million or 7.56% compared to December 31, 2020.
• Net interest margin reduced to 3.20% from 3.47% in the prior year.

WINDSOR, Va., July 23, 2021 /PRNewswire/ -- Farmers Bankshares, Inc. (OTC-PINK: FBVA) reports unaudited earnings of $3.7 million, or $1.19 per share, for the second quarter of 2021.  These results increased approximately 183.30% from the $1.3 million, or $0.42 per share, earned during the second quarter of 2020.  Net income through the six months ended June 30, 2021 amounted to $5.7 million or $1.82 per share, which is a 140.11% increase from the $2.4 million or $0.76 per share, reported for 2020. 

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

• Return on average assets of 1.97%, compared to 0.96% in 2020.
• Return on average equity of 17.05%, compared to 7.94% in 2020.
• Return on average tangible common equity (1) of 20.12%, compared to 9.64% in 2020.
• Net interest margin was 3.20%, reduced from 3.47% in the prior year.
• Total cost of deposits decreased to 0.28% from 0.45% at June 30, 2020.

Consolidated Balance Sheet

Net loans decreased $21.1 million, or 7.56%, as compared to December 31, 2020.  The decrease was primarily driven by many small businesses using excess cash from continued stimulus programs to pay down their credit lines. The Company had approximately $14.2 million in the CARES Act's Paycheck Protection Program ("PPP") loans on the balance sheet as of June 30, 2021.   Deposit balances have increased by $46.8 million to $500.1 million as of June 30, 2021 from $453.2 million as of December 31, 2020.  Non-interest bearing deposits increased by $21.9 million and make up approximately 34.31% of total deposits.  The influx of customer stimulus payments, PPP loan funds and seasonal municipality deposits all contributed to this increase in deposits.  Management has focused on minimizing cash held in federal funds by deploying excess into high quality investments when prudent and to offset tepid loan growth being seen throughout our market. 

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

"As previously disclosed we completed the sale of other real estate owned that resulted in a net, pre-tax gain of $3.1 million during the second quarter.  This one-time gain provides a boost to our already strong capital position and will help to further our strategy of investing for growth, to include the acquisition of other non-interest income business lines.  We remain keenly focused on creating value for our shareholders via increased profitability and returning capital through increasing common dividends.  We will continue to look for new and innovative ways to serve our customers with an emphasis on improving efficiency and expanding product offerings" stated Vernon M. Towler, President and Chief Executive Officer. 

Results of Operations

Net interest income decreased less than 1.00% in the second quarter of 2021 compared to the second quarter of 2020.  The inflation of our balance sheet due to stimulus funds for consumers, businesses and municipalities coupled with the downward pressure on loan rates has caused much of the reduction in net interest margin.  While we still have a small percentage of deposits that will reprice downward over the next twelve months, our cost of funds will not be reduced at the same pace as the previous twelve months going forward.      

Non-interest income through the second quarter of 2021 was approximately $8.0 million and was increased by 87.20% over the same period in the prior year due primarily to the gain from unwinding the interest rate swap that occurred in the first quarter and the gain on other real estate owned recognized in the second quarter.   In April 2021, the Company closed on the sale of other real estate owned that had been held for an extended period of time.  The gross sales proceeds totaled $3.6 million and the property had a cost basis of $525 thousand, resulting in a net, pre-tax gain of $3.1 million. 

Non-interest expense increased 1.49% through the first quarter of 2021 compared to same period in 2020.   Management continues to balance investing in growth and new markets with prudent expense control. 

No provision for loan losses was added during the second 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 2.32% of gross loans as of June 30, 2021, including loans originated through the PPP, and 2.45% of gross loans excluding loans originated through the PPP (1). 

Asset Quality

Non-performing assets, which consists of nonaccrual loans and other real estate owned decreased from $844 thousand at December 31, 2020 to $277 thousand at June 30, 2021.  The decrease was due to the sale of the other real estate owned previously discussed.  There were no additions to nonaccrual loans during the quarter. 

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 June 30, 2021, loans greater than thirty days past due totaled $374 thousand, or 0.14% of total gross loans.  This compared to $467 thousand or 0.13% of total gross loans as of December 31, 2020. 

(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)
	6/30/2021		12/31/2020
Assets	(Unaudited)
Total cash & cash equivalents	$      29,395		$      28,557
Available-for-sale securities	263,465		203,766
Non-marketable equity securities	5,821		6,279
Loans held for investment	263,700		285,009
Allowance for loan losses	(6,118)		(6,347)
Loans held for investment, net	257,582		278,662
Premises and equipment, net	6,193		6,277
Goodwill and other intangible assets, net	10,070		10,250
Other real estate owned	147		672
Bank-owned life insurance	11,527		11,378
Other assets	6,772		6,077
Total assets	$   590,972		$    551,918
Liabilities & Stockholders' Equity
Deposits
Non-interest bearing deposits	$   171,574		$    149,637
Interest-bearing deposits	328,496		303,586
Total deposits	500,070		453,223
Federal Home Loan Bank borrowings	-		10,000
Capital notes	8,500		8,500
Securities sold under agreements to repurchase	6,922		6,637
Other liabilities	5,857		6,912
Total liabilities	521,349		485,272
Common stock	391		389
Capital surplus	3,541		3,357
Retained earnings	58,980		54,103
Accumulated other comprehensive income	4,315		6,341
Total Farmers Bankshares, Inc. stockholders' equity	67,227		64,190
Noncontrolling interest	2,396		2,456
Total stockholders' equity	69,623		66,646
Total liabilities and stockholders' equity	$   590,972		$    551,918

 

Farmers Bankshares, Inc.
Consolidated Income Statement (Unaudited)
($ in thousands)
	Three  Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Interest income
Interest and fees on loans held for investment	$               2,907		$               3,494		$          6,194		$         6,871
Interest on available-for-sale securities	1,215		955		2,306		1,946
Interest on federal funds sold	3		2		9		78
Other interest income	7		64		15		68
Total interest and dividend income	4,132		4,515		8,524		8,963
Interest expense
Interest on deposits	329		436		660		1,030
Interest on FHLB and other borrowings	3		12		30		72
Interest on capital notes	70		49		136		98
Interest on repurchase agreements	9		8		21		17
Total interest expense	411		505		847		1,217
Net interest income	3,721		4,010		7,677		7,746
Provision for loan losses	-		526		-		651
Net interest income after provision for loan losses	3,721		3,484		7,677		7,095
Noninterest income
Service charges and other fee income	105		101		217		236
Income from automated teller machines and interchange	181		142		341		270
Insurance commissions	1,344		1,307		2,935		2,965
Net gain on disposition of available-for-sale securities	2		259		275		352
Gain on interest rate swap	-		-		423		-
Income on bank owned life insurance	75		74		149		150
Gain on sale of other real estate owned	3,110		-		3,110		-
Other income	360		266		555		303
Total noninterest income	5,177		2,149		8,005		4,276
Noninterest expense
Salaries and employee benefits	2,579		2,420		5,143		4,982
Occupancy and equipment	457		481		972		997
Bank franchise and other taxes	155		162		340		346
Advertising and marketing	97		84		202		205
Data processing	391		376		755		774
Other noninterest expense	617		530		1,197		1,179
Total non-interest expense	4,296		4,053		8,609		8,483
Income before income taxes and noncontrolling interest	4,602		1,580		7,073		2,888
Income tax expense	812		184		1,195		340
Net income	3,790		1,396		5,878		2,548
Net income attributable to noncontrolling interest	73		84		197		182
Net income attributable to Farmers Bankshares, Inc.	$               3,717		$               1,312		$          5,681		$         2,366

 

Financial Highlights
	June 30,	March 31,	December 31,	September 30,	June 30,
At or For the Three Months Ended,	2021	2021	2020	2020	2020
Per Share and Shares Outstanding (1)
Basic net income	$               1.19	$               0.63	$               0.57	$               0.41	$               0.42
Book value at end of period	$             21.51	$             19.77	$             20.65	$             19.92	$             18.94
Tangible book value at end of period	$             18.29	$             16.52	$             17.35	$             16.60	$             15.59
Basic weighted average shares outstanding	3,121,308	3,116,938	3,104,776	3,104,004	3,102,617
Dividends per share	$               0.13	$               0.13	$               0.12	$               0.12	$               0.12
Shares outstanding at period end	3,125,678	3,125,678	3,108,462	3,106,809	3,106,809
Selected Performance Ratios
Return on average assets	1.97%	1.38%	1.05%	0.96%	0.96%
Return on average stockholders' equity	17.05%	12.14%	8.70%	7.90%	7.94%
Return on average tangible stockholders' equity	20.12%	14.41%	10.45%	9.54%	9.64%
Net interest margin, tax equivalent (2)	3.20%	3.22%	3.53%	3.37%	3.47%
Cost of deposits	0.28%	0.35%	0.38%	0.39%	0.45%
Non-interest income as a percentage of total revenue (3)	58.18%	41.69%	44.17%	37.23%	34.89%
Efficiency ratio (4)	48.28%	63.58%	69.09%	69.63%	70.52%
Balance Sheet Ratios
Loans to deposits	51.51%	53.78%	61.29%	65.03%	67.11%
Tangible common equity to tangible assets	11.57%	10.91%	11.92%	11.74%	11.47%
Nonperforming loans to period-end loans	0.14%	0.10%	0.13%	0.10%	0.07%
Allowance for loan losses to period-end loans	2.32%	2.32%	2.23%	2.20%	2.11%
Net charge-offs to average loans outstanding	0.04%	0.04%	0.09%	0.09%	0.11%
(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.

FAQ

What were Farmers Bankshares' earnings for Q2 2021?

Farmers Bankshares reported earnings of $3.7 million, or $1.19 per share, for Q2 2021.

How much did net income increase for Farmers Bankshares in 2021?

Net income for the first half of 2021 increased by 140.11% to $5.7 million.

What is the stock symbol for Farmers Bankshares?

The stock symbol for Farmers Bankshares is FBVA.

How did the loan portfolio change for Farmers Bankshares?

Net loans decreased by $21.1 million or 7.56% compared to December 31, 2020.

What contributed to the increase in Farmers Bankshares' deposits?

The increase in deposits was primarily due to customer stimulus payments and PPP loan funds.