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

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Farmers Bankshares, Inc. (FBVA) reported unaudited earnings of $1.2 million ($0.37 per share) for Q2 2022, with adjusted earnings rising to $1.4 million ($0.46 per share), up from $1.1 million in Q2 2021. Net income for the first half of 2022 reached $2.4 million ($0.75 per share). Net loans increased by 5% to $12.9 million, although deposits fell by $10.8 million. Non-interest income decreased by nearly 49%, primarily due to last year's gains from interest rate swaps. Despite challenges from market rate increases, the bank remains well-capitalized and positioned for profitability.

Positive

• Adjusted earnings increased to $1.4 million ($0.46 per share) for Q2 2022, up from $1.1 million in Q2 2021.
• Net loans grew by $12.9 million, representing a 5% increase since December 31, 2021.
• Net interest income for the first half of 2022 rose by 8.26% compared to the previous year.

Negative

• Non-interest income decreased by 48.86% year-over-year, primarily due to a lack of gains from interest rate swap terminations.
• Deposits fell by $10.8 million, with non-interest bearing deposits down by $5.3 million.
• Operating costs increased due to proxy contest expenses, raising non-interest expenses by 11.14%.

WINDSOR, Va., July 28, 2022 /PRNewswire/ -- Farmers Bankshares, Inc. (OTC-PINK: FBVA) today reported unaudited earnings of $1.2 million, or $0.37 per share, for the second quarter of 2022. Excluding extraordinary items, adjusted earnings for the quarter would have been $1.4 million, or $0.46 per share, an increase over the $1.1 million in adjusted earnings for the second quarter of 2021¹. Net income through the six months ended June 30, 2022 amounted to $2.4 million, or $0.75 per share.

"We are pleased with our loan growth during the second quarter of 2022," said President and Chief Executive Officer Vernon M. Towler. "We are seeing real growth in our newer markets which is very rewarding.  Our plan to fund disciplined loan growth with cash flow from the investment portfolio is playing out as anticipated.  While the unrealized losses in our investment portfolio, due to market rate increases, have negatively affected our tangible book value like many in our industry, our balance sheet is positioned for higher profitability in a rising rate environment."

"Costs associated with the proxy contest from our former Chairman increased our operating costs again in the second quarter; excluding these costs, our performance was strong."

Consolidated Balance Sheet

Net loans increased $12.9 million, or 5.00%, as compared to December 31, 2021.  Deposit balances were $520.8 million as of June 30, 2022, a decrease of $10.8 million from $531.6 million as of December 31, 2021.  Non-interest bearing deposits decreased by $5.3 million and make up approximately 35.24% of total deposits.  The decrease in cyclical municipal deposits contributed to a large portion of this decrease in deposits. 

Capital ratios at the bank level remain well above the well-capitalized guidelines of the regulatory framework. Tangible book value continues to be negatively affected by the unrealized losses on the securities portfolio recorded in other comprehensive income due to market interest rate increases since the beginning of 2022. 

Results of Operations

The continued increase in market rates and loan growth led to an 8.26% increase in net interest income in the first half of 2022 over the prior year's first half. Excluding PPP income for all quarters, net interest income increased by 14.8% for the first half of 2022 compared to the first half of 2021.  

Non-interest income through the first half of 2022 was approximately $4.1 million, a decrease of 48.86% from the same period in the prior year, primarily driven by a gain from terminating an interest rate swap, gains from the sale of investments, and the sale of other real estate owned that occurred in the first half of 2021 and totaled approximately $3.8 million, pre-tax.  As expected, going into 2022, with the increase in market rates, Farmers' share of our mortgage affiliate's income was decreased by 116.11% or $467 thousand. 

Non-interest expense through June 30, 2022 increased 11.14% compared to the same period in 2021. The Company has invested in talent and new markets over the compared time periods. In addition, approximately $502 thousand in pre-tax expenses related to the dispute with our former Chairman, including legal, advisory, and compensation paid to former employees, were included in the first half of 2022, increasing non-interest expense in that period. 

No provision for loan losses was added during the first half of 2022 or 2021.  The Company considers local and national unemployment, housing and market trends when determining the estimated allowance.  The allowance for loan losses was 2.18% of gross loans as of June 30, 2022. 

Asset Quality

Non-performing assets, which consists of nonaccrual loans and other real estate owned remained consistent with $1.3 million at December 31, 2021 and $1.3 million at June 30, 2022.  There was one loan added to nonaccrual status in the second quarter of 2022.

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, 2022, loans greater than thirty days past due totaled $1.1 million, or 0.40% of total gross loans.  This compared to $1.0 million, or 0.39% of total gross loans as of December 31, 2021. 

About Farmers Bankshares, Inc.

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.

¹ Adjusted earnings (non-GAAP) calculated by removing gains on securities and the termination of an interest rate swap, a one-time gain on the sale of other real estate owned and the legal, advisory and compensation expenditures noted under the Results of Operations section.  

 

Farmers Bankshares, Inc.
Consolidated Balance Sheets
($ in thousands)
	6/30/2022		12/31/2021
Assets	(Unaudited)
Total cash & cash equivalents	$        9,543		$      28,536
Available-for-sale securities	276,463		293,923
Non-marketable equity securities	7,827		7,323
Loans held for investment	277,339		264,540
Allowance for loan losses	(6,057)		(6,142)
Loans held for investment, net	271,282		258,398
Premises and equipment, net	6,230		6,363
Goodwill and other intangible assets, net	9,711		9,890
Other real estate owned	147		147
Bank-owned life insurance	11,805		11,662
Other assets	15,592		7,213
Total assets	$   608,600		$    623,455
Liabilities & Stockholders' Equity
Deposits
Non-interest bearing deposits	$   183,537		$    188,846
Interest-bearing deposits	337,247		342,779
Total deposits	520,784		531,625
Capital notes	8,500		8,500
Federal funds purchased	11,070		-
Securities sold under agreements to repurchase	21,985		7,160
Other liabilities	5,363		6,537
Total liabilities	567,702		553,822
Common stock	393		391
Capital surplus	3,859		3,589
Retained earnings	62,290		60,856
Accumulated other comprehensive income	(28,182)		2,182
Total Farmers Bankshares, Inc. stockholders' equity	38,360		67,018
Noncontrolling interest	2,538		2,615
Total stockholders' equity	40,898		69,633
Total liabilities and stockholders' equity	$   608,600		$    623,455

 

Farmers Bankshares, Inc.
Consolidated Income Statement (Unaudited)
($ in thousands)
	Three  Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Interest income
Interest and fees on loans held for investment	$               3,050		$               2,907		$          6,016		$         6,194
Interest on available-for-sale securities	1,610		1,215		3,102		2,306
Interest on federal funds sold	6		3		14		9
Other interest income	7		7		15		15
Total interest and dividend income	4,673		4,132		9,147		8,524
Interest expense
Interest on deposits	333		329		654		660
Interest on FHLB and other borrowings	18		3		18		30
Interest on capital notes	68		70		135		136
Interest on repurchase agreements	17		9		29		21
Total interest expense	436		411		836		847
Net interest income	4,237		3,721		8,311		7,677
Provision for loan losses	-		-		-		-
Net interest income after provision for loan losses	4,237		3,721		8,311		7,677
Noninterest income
Service charges and other fee income	157		105		309		217
Income from automated teller machines and interchange	185		181		362		341
Insurance commissions	1,305		1,344		3,031		2,935
Net gain on disposition of available-for-sale securities	63		2		63		275
Gain on interest rate swap	-		-		-		423
Income on bank owned life insurance	72		75		143		149
Gain on sale of other real estate owned	-		3,110		-		3,110
Other income	167		360		186		555
Total noninterest income	1,949		5,177		4,094		8,005
Noninterest expense
Salaries and employee benefits	2,678		2,579		5,391		5,143
Occupancy and equipment	550		457		1,105		972
Bank franchise and other taxes	191		155		347		340
Advertising and marketing	109		97		236		202
Data processing	389		391		787		755
Professional fees	414		199		662		373
Other noninterest expense	541		418		1,040		824
Total non-interest expense	4,872		4,296		9,568		8,609
Income before income taxes and noncontrolling interest	1,314		4,602		2,837		7,073
Income tax expense	132		812		315		1,195
Net income	1,182		3,790		2,522		5,878
Net income attributable to noncontrolling interest	23		73		154		197
Net income attributable to Farmers Bankshares, Inc.	$               1,159		$               3,717		$          2,368		$         5,681

 

Financial Highlights
	June 30,	March 31,	December 31,	September 30,	June 30,
At or For the Three Months Ended,	2022	2022	2021	2021	2021
Per Share and Shares Outstanding (1)
Basic net income	$              0.37	$              0.39	$              0.38	$              0.51	$              1.19
Book value at end of period	$            12.20	$            15.93	$            21.42	$            21.15	$            21.51
Tangible book value at end of period	$              9.11	$            12.82	$            18.26	$            17.96	$            18.29
Basic weighted average shares outstanding	3,143,824	3,136,960	3,127,724	3,126,957	3,125,678
Dividends per share	$              0.15	$              0.15	$              0.15	$              0.15	$              0.13
Shares outstanding at period end	3,143,824	3,143,824	3,129,010	3,127,048	3,125,678
Selected Performance Ratios
Return on average assets	0.76 %	0.77 %	0.78 %	1.10 %	2.58 %
Return on average stockholders' equity	10.01 %	7.75 %	6.92 %	9.44 %	22.31 %
Return on average tangible stockholders' equity	12.69 %	9.20 %	8.08 %	11.09 %	26.33 %
Net interest margin, tax equivalent (2)	2.98 %	2.89 %	2.96 %	3.22 %	3.20 %
Cost of deposits	0.27 %	0.26 %	0.22 %	0.26 %	0.28 %
Non-interest income as a percentage of total revenue (3)	31.51 %	34.47 %	38.88 %	37.66 %	58.18 %
Efficiency ratio (4)	78.70 %	75.54 %	76.68 %	69.55 %	48.28 %
Balance Sheet Ratios
Loans to deposits	52.09 %	46.81 %	48.44 %	46.29 %	51.51 %
Nonperforming loans to period-end loans	0.40 %	0.41 %	0.42 %	0.52 %	0.14 %
Allowance for loan losses to period-end loans	2.18 %	2.28 %	2.32 %	2.49 %	2.32 %
Net charge-offs (recoveries) to average loans outstanding	0.02 %	0.02 %	0.00 %	-0.01 %	0.04 %

(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 are the earnings results for Farmers Bankshares (FBVA) in Q2 2022?

Farmers Bankshares reported unaudited earnings of $1.2 million, or $0.37 per share, for Q2 2022.

How did Farmers Bankshares' adjusted earnings compare year-over-year?

Adjusted earnings for Q2 2022 increased to $1.4 million ($0.46 per share), up from $1.1 million in Q2 2021.

What were the trends in net loans and deposits for Farmers Bankshares (FBVA)?

Net loans increased by 5% to $12.9 million, while deposits decreased by $10.8 million as of June 30, 2022.

How did the non-interest income perform for Farmers Bankshares in the first half of 2022?

Non-interest income decreased by 48.86% in the first half of 2022 compared to the same period last year.