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Farmers Bankshares, Inc. Reports Strong Earnings in First Quarter 2022

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Farmers Bankshares (OTC-PINK: FBVA) reported unaudited earnings of $1.2 million, or $0.39 per share, for Q1 2022, with adjusted earnings at $1.4 million, or $0.44 per share, unchanged from Q1 2021. Despite macroeconomic challenges and increased operating costs due to a dispute with the former Chairman, the bank saw a 1.00% increase in net loans and a significant 25.8 million rise in deposits. However, non-interest income fell 24.16% year-over-year, influenced by previous gains in investments. The first quarter showed a 8.88% rise in non-interest expenses, affecting returns.

Positive
  • Net loans increased by $2.5 million or 1.00% since December 31, 2021.
  • Deposit balances rose by $25.8 million, totaling $557.4 million.
  • Net interest income increased by 2.99% in Q1 2022 compared to Q1 2021.
Negative
  • Non-interest income decreased by 24.16% year-over-year.
  • Non-interest expenses increased by 8.88% compared to the previous year.
  • Annualized return on average assets decreased from 0.89% to 0.77%.

WINDSOR, Va., May 4, 2022 /PRNewswire/ -- Farmers Bankshares, Inc. (OTC-PINK: FBVA) today reported unaudited earnings of $1.2 million, or $0.39 per share, for the first quarter of 2022. Excluding extraordinary items, adjusted earnings for the quarter would have been $1.4 million, or $0.44 per share1, and comparable to $1.4 million in adjusted earnings for the first quarter of 2021.

"Our Bank is performing well and we posted solid results, despite a number of challenges," said President and Chief Executive Officer Vernon M. Towler. "As expected, early 2022 proved to be a tough macro environment for the banking industry with margin pressures and reduced mortgage revenue.  On the positive side, we are seeing 'green shoots' related to the investments we have been making in new talent and new geographies."

"Our ongoing dispute with our former Chairman increased our operating costs in the first quarter and served as a distraction for our management team and employees. However, we continue to drive our business forward, execute on our strategic plan and focus intently on increasing shareholder value."

Consolidated Balance Sheet

Net loans increased $2.5 million, or 1.00%, as compared to December 31, 2021.  This change includes the CARES Act's Paycheck Protection Program ("PPP") loan repayments totaling $2.8 million.  All loans from this program have now been fully repaid or forgiven.  Deposit balances were $557.4 million as of March 31, 2022, an increase of $25.8 million, and up from $531.6 million as of December 31, 2021.  Non-interest-bearing deposits increased by $4.9 million and make up approximately 34.78% of total deposits.  The increase in cyclical municipal deposits contributed to a large portion of this increase in deposits. 

Capital ratios at the bank level remain well above the well-capitalized guidelines of the regulatory framework.   Tangible book value decreased from the prior quarter primarily due to the unrealized losses on the securities portfolio recorded in other comprehensive income due to market interest rate increases in the first quarter of 2022. 

Results of Operations

An increase in market rates led to a 2.99% increase in net interest income in the first quarter of 2022 over the prior year's first quarter.   Excluding PPP income for all quarters, net interest income increased by 11.69% for the first quarter of 2022 compared to the first quarter of 2021.  

Non-interest income through the first quarter of 2022 was approximately $2.1 million, a decrease of 24.16% from the same period in the prior year, primarily driven by a gain from terminating an interest rate swap and gains from the sale of investments that occurred in the first quarter of 2021 and totaled approximately $696 thousand, pre-tax.  As expected, going into 2022, with the increase in market rates, Farmers' share of our mortgage subsidiary's income was decreased by 134.2% or $138 thousand dollars

Non-interest expense through March 31, 2022 increased 8.88% compared to the same period in 2021. The Company has invested in talent and new markets over the compared time periods.    In addition, approximately $186 thousand in pre-tax, legal and advisory fees related to our ongoing dispute with our former Chairman and compensation expenses paid to former employees, including former Chairman Dick Holland, were included in the first quarter of 2022, increasing non-interest expense in that period.  These expenses reduced quarterly annualized return on average assets from 0.89% to 0.77% and return on average equity from 8.95% to 7.75%.

No provision for loan losses was added during the first quarter of 2022 and 2021.  The Company considers local and national unemployment, housing and market trends when determining the estimated allowance.  The allowance for loan losses was 2.28% of gross loans as of March 31, 2022. 

Asset Quality

Non-performing assets, which consists of nonaccrual loans and other real estate owned decreased from $1.3 million at December 31, 2021 to $1.2 million at March 31, 2022.  There were no loans added to nonaccrual status in the first 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 March 31, 2022, loans greater than thirty days past due totaled $1.6 million, or 0.63% of total gross loans.  This compared to $1.0 million, or 0.39% of total gross loans as of December 31, 2021. 

Annual Meeting

Shareholders are encouraged to attend Farmers Bankshares' annual meeting to be held on Thursday, May 12, 2022, at 4:00 p.m. (Eastern Time) at HUB757, 6801 Bridgeway Drive, Suffolk, Virginia 23435.  Only shareholders of record as of March 15, 2022, will be admitted into the meeting.   Shareholders will need to present their proxy card or a valid ID to ensure all votes are properly accounted for. 

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 securities gains and extraordinary, non-interest expenditures noted under the Results of Operations section.  

 

Farmers Bankshares, Inc. 

Consolidated Balance Sheets

($ in thousands)






3/31/2022


12/31/2021

Assets

(Unaudited)



Total cash & cash equivalents 

$      26,255


$      28,536

Available-for-sale securities

297,641


293,923

Non-marketable equity securities

7,258


7,323

Loans held for investment

267,022


264,540

Allowance for loan losses

(6,077)


(6,142)

Loans held for investment, net

260,945


258,398

Premises and equipment, net

6,311


6,363

Goodwill and other intangible assets, net

9,800


9,890

Other real estate owned 

147


147

Bank-owned life insurance 

11,733


11,662

Other assets

8,135


7,213

Total assets

$    628,225


$    623,455





Liabilities & Stockholders' Equity




Deposits




Non-interest bearing deposits

$    193,825


$    188,846

Interest-bearing deposits

363,581


342,779

Total deposits

557,406


531,625

Capital notes

8,500


8,500

Securities sold under agreements to repurchase

7,750


7,160

Other liabilities

1,959


6,537

Total liabilities

575,615


553,822





Common stock 

393


391

Capital surplus

3,803


3,589

Retained earnings

61,597


60,856

Accumulated other comprehensive income (loss)

(15,699)


2,182

Total Farmers Bankshares, Inc. stockholders' equity

50,094


67,018

Noncontrolling interest 

2,516


2,615

Total stockholders' equity

52,610


69,633

Total liabilities and stockholders' equity

$    628,225


$    623,455

 

Farmers Bankshares, Inc. 

Consolidated Income Statement (Unaudited) 

($ in thousands)







Three  Months Ended 



March 31, 



2022


2021


Interest income 





Interest and fees on loans held for investment

$               2,966


$               3,287


Interest on available-for-sale securities

1,492


1,091


Interest on federal funds sold

8


6


Other interest income 

8


8


Total interest and dividend income 

4,474


4,392







Interest expense





Interest on deposits

321


331


Interest on FHLB and other borrowings

-


27


Interest on capital notes

67


66


Interest on repurchase agreements 

12


12


Total interest expense

400


436


Net interest income 

4,074


3,956


Provision for loan losses

-


-


Net interest income after provision for loan losses

4,074


3,956







Noninterest income





Service charges and other fee income 

152


112


Income from automated teller machines and interchange

177


160


Insurance commissions

1,726


1,591


Net gain on disposition of available-for-sale securities

-


273


Gain on termination of interest rate swap 

-


423


Income on bank owned life insurance

71


74


Other income 

19


195


Total noninterest income

2,145


2,828







Noninterest expense





Salaries and employee benefits

2,713


2,564


Occupancy and equipment 

555


515


Bank franchise and other taxes 

156


185


Advertising and marketing

127


105


Data processing 

398


364


Professional fees 

248


174


Other noninterest expense 

499


406


Total non-interest expense

4,696


4,313


Income before income taxes and noncontrolling interest

1,523


2,471


Income tax expense

183


383


Net income 

1,340


2,088


Net income attributable to noncontrolling interest

131


124


Net income attributable to Farmers Bankshares, Inc. 

$               1,209


$               1,964


 

Financial Highlights 








March 31, 

December 31, 

September 30, 

June 30, 

March 31, 

At or For the Three Months Ended,

2022

2021

2021

2021

2021







Per Share and Shares Outstanding (1)






Basic net income  

$              0.39

$              0.38

$              0.51

$              1.19

$            0.63

Book value at end of period

$            15.93

$            21.42

$            21.15

$            21.51

$          19.77

Tangible book value at end of period 

$            12.82

$            18.26

$            17.96

$            18.29

$          16.52

Basic weighted average shares outstanding 

3,136,960

3,127,724

3,126,957

3,125,678

3,116,938

Dividends per share 

$              0.15

$              0.15

$              0.15

$              0.13

$            0.13

Shares outstanding at period end

3,143,824

3,129,010

3,127,048

3,125,678

3,125,678







Selected Performance Ratios 






Return on average assets

0.77%

0.78%

1.10%

2.58%

1.38%

Return on average stockholders' equity

7.75%

6.92%

9.44%

22.31%

12.14%

Return on average tangible stockholders' equity

9.20%

8.08%

11.09%

26.33%

14.41%

Net interest margin, tax equivalent (2)

2.89%

2.96%

3.22%

3.20%

3.22%

Cost of deposits

0.26%

0.22%

0.26%

0.28%

0.35%

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

34.47%

38.88%

37.66%

58.18%

41.69%

Efficiency ratio (4)

75.54%

76.68%

69.55%

48.28%

63.58%







Balance Sheet Ratios






Loans to deposits

46.81%

48.44%

46.29%

51.51%

53.78%

Nonperforming loans to period-end loans

0.41%

0.42%

0.52%

0.14%

0.10%

Allowance for loan losses to period-end loans

2.28%

2.32%

2.49%

2.32%

2.32%

Net charge-offs to average loans outstanding

0.02%

0.00%

-0.01%

0.04%

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 were Farmers Bankshares' earnings for Q1 2022?

Farmers Bankshares reported unaudited earnings of $1.2 million, or $0.39 per share, for Q1 2022.

How much did net loans increase for Farmers Bankshares?

Net loans increased by $2.5 million, or 1.00%, compared to December 31, 2021.

What was the status of non-interest income for Farmers Bankshares in Q1 2022?

Non-interest income decreased by 24.16% year-over-year, totaling approximately $2.1 million.

What were the deposit balances for Farmers Bankshares at the end of Q1 2022?

Deposit balances were $557.4 million as of March 31, 2022, an increase of $25.8 million from December 31, 2021.

When is the annual meeting for Farmers Bankshares?

Farmers Bankshares' annual meeting is scheduled for Thursday, May 12, 2022, at 4:00 p.m. Eastern Time.

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