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

Rhea-AI Summary

Farmers Bankshares, Inc. (OTC: FBVA) reported third-quarter 2022 earnings of $1.0 million, or $0.33 per share. Adjusted earnings, excluding merger-related expenses, would be $1.7 million, or $0.55 per share. Net income for the first nine months of 2022 totaled $3.4 million, or $1.08 per share. The bank's net loans increased by $21.6 million (8.37%) year-over-year. While net interest income rose by 8.74%, non-interest income fell 39.42%. The company anticipates completing its merger with TowneBank in Q1 2023.

Positive

• Third-quarter earnings of $1.0 million; adjusted earnings of $1.7 million excluding merger costs.
• Net loans increased by $21.6 million (8.37%) compared to the previous year.
• Net interest income rose by 8.74% year-over-year, driven by increased loans and interest margins.

Negative

• Non-interest income decreased by 39.42%, primarily due to prior gains not repeated this year.
• Non-interest expenses rose by 13.72%, including approximately $1.3 million related to the merger and former Chairman dispute.
• Tangible book value negatively impacted by unrealized losses on securities due to rising market rates.

WINDSOR, Va., Oct. 27, 2022 /PRNewswire/ --Farmers Bankshares, Inc. (OTC-PINK: FBVA) today reported unaudited earnings of $1.0 million, or $0.33 per share, for the third quarter of 2022. Excluding extraordinary items related to the proposed merger, adjusted earnings for the quarter would have been $1.7 million, or $0.55 per share.  Net income through the nine months ended September 30, 2022 amounted to $3.4 million, or $1.08 per share.

"Third quarter operating results were positively impacted by increases in loans and net interest margin," said President and Chief Executive Officer Vernon M. Towler.  "Excluding merger related costs, operating profits were as expected.  We remain very excited about our partnership with TowneBank.  Our integration teams have begun working together and we anticipate closing the merger transaction in the first quarter of 2023."

Consolidated Balance Sheet

Net loans increased $21.6 million, or 8.37%, as compared to December 31, 2021.  Deposit balances were $510.0 million as of September 30, 2022, a decrease of $21.6 million from $531.6 million as of December 31, 2021.  Non-interest bearing deposits decreased by $15.0 million and make up approximately 34.26% 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 8.74% increase in net interest income through the third quarter of 2022 compared to the same period in the prior year.  Excluding PPP income for all quarters, net interest income increased by 16.9% through the third quarter of 2022.  

Non-interest income through the third quarter of 2022 was approximately $6.3 million, a decrease of 39.42% 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 nine months of 2021 and totaled approximately $3.8 million, pre-tax.  As expected, with the increase in market rates, Farmers' share of our mortgage affiliate's income was decreased by 108.12% or $938 thousand, for the first nine months of 2022 compared to the same period in 2021. 

Non-interest expense through September 30, 2022 increased 13.72% compared to the same period in 2021. The Company has expended approximately $502 thousand in pre-tax expenses related to the dispute with our former Chairman, including legal, advisory, and compensation paid to former employees through the third quarter of 2022.  Also, the Company had non-interest pre-tax expense of $800 thousand during the third quarter related to the proposed merger with TowneBank. 

No provision for loan losses were added through the nine months ended September 30, 2022 or during 2021.  The Company considers local and national unemployment, housing and market trends when determining the estimated allowance.  The allowance for loan losses was 2.09% of gross loans as of September 30, 2022. 

Asset Quality

Non-performing assets, which consists of nonaccrual loans and other real estate owned remained consistent with $1.3 million at both December 31, 2021 and September 30, 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 September 30, 2022, loans greater than thirty days past due totaled $153 thousand, or 0.06% 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.

Forward-Looking Statements

This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. These forward-looking statements include, without limitation, statements with respect to Farmers' operations, performance, future strategy and goals. Actual results may differ materially from those included in the forward-looking statements due to a number of factors, including, without limitation, the effects of and changes in the following: economic conditions in Farmers' market area; Farmers' asset quality and ability to manage and assess the creditworthiness of its loan portfolio; deterioration in the housing market and collateral values; Farmers' inability to maintain adequate sources of funding and liquidity; Farmers' successful management of interest rate risk and changes in interest rates and interest rate policies; Farmers' reliance on its management team, including its ability to attract and retain key personnel; Farmers' ability to successfully manage technology and third-party vendors upon whom it is dependent; competition with other banks and financial institutions; the potential impact on Farmers of changes in laws and regulations; changes in accounting policies or standards; demand, development and acceptance of new products and services; changing trends in customer profiles and behavior; and the proposed merger with TowneBank, including its closing on the expected terms and schedule, the costs associated with completing it and integrating the businesses, and business operations until and through its closing.  This press release speaks only as of its date, and Farmers disclaims any duty to update the information in it.

 

Farmers Bankshares, Inc.
Consolidated Balance Sheets
($ in thousands)
	9/30/2022		12/31/2021
Assets	(Unaudited)
Total cash & cash equivalents	$      11,564		$       28,536
Available-for-sale securities	232,381		293,923
Non-marketable equity securities	7,620		7,323
Loans held for investment	286,018		264,540
Allowance for loan losses	(5,981)		(6,142)
Loans held for investment, net	280,037		258,398
Premises and equipment, net	6,127		6,363
Goodwill and other intangible assets, net	9,621		9,890
Other real estate owned	147		147
Bank-owned life insurance	11,879		11,662
Other assets	18,406		7,213
Total assets	$    577,782		$     623,455
Liabilities & Stockholders' Equity
Deposits
Non-interest bearing deposits	$    175,521		$     188,846
Interest-bearing deposits	334,519		342,779
Total deposits	510,040		531,625
Capital notes	8,500		8,500
Securities sold under agreements to repurchase	24,300		7,160
Other liabilities	6,027		6,537
Total liabilities	548,867		553,822
Common stock	393		391
Capital surplus	3,894		3,589
Retained earnings	62,863		60,856
Accumulated other comprehensive income (loss)	(40,872)		2,182
Total Farmers Bankshares, Inc. stockholders' equity	26,278		67,018
Noncontrolling interest	2,637		2,615
Total stockholders' equity	28,915		69,633
Total liabilities and stockholders' equity	$    577,782		$     623,455

 

Farmers Bankshares, Inc.
Consolidated Income Statement (Unaudited)
($ in thousands)
	Three  Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Interest income
Interest and fees on loans held for investment	$               3,375		$               3,160		$          9,391		$         9,354
Interest on available-for-sale securities	1,453		1,213		4,555		3,519
Interest on federal funds sold	68		10		82		19
Other interest income	10		40		25		55
Total interest and dividend income	4,906		4,423		14,053		12,947
Interest expense
Interest on deposits	391		323		1,045		983
Interest on FHLB and other borrowings	7		-		25		30
Interest on capital notes	67		68		202		204
Interest on repurchase agreements	32		10		61		31
Total interest expense	497		401		1,333		1,248
Net interest income	4,409		4,022		12,720		11,699
Provision for loan losses	-		-		-		-
Net interest income after provision for loan losses	4,409		4,022		12,720		11,699
Noninterest income
Service charges and other fee income	167		116		476		333
Income from automated teller machines and interchange	181		180		543		521
Insurance commissions	1,552		1,501		4,583		4,436
Net gain on disposition of available-for-sale securities	118		112		181		387
Gain on interest rate swap	-		-		-		423
Income on bank owned life insurance	84		58		227		207
Gain on sale of other real estate owned	-		-		-		3,110
Other income	125		462		311		1,017
Total noninterest income	2,227		2,429		6,321		10,434
Noninterest expense
Salaries and employee benefits	2,740		2,696		8,131		7,839
Occupancy and equipment	546		467		1,651		1,439
Bank franchise and other taxes	169		151		516		491
Advertising and marketing	100		155		336		357
Data processing	399		393		1,186		1,148
Professional fees	136		172		1,125		544
Merger and acquisition costs	800		-		473		-
Other noninterest expense	433		452		1,473		1,277
Total non-interest expense	5,323		4,486		14,891		13,095
Income before income taxes and noncontrolling interest	1,313		1,965		4,150		9,038
Income tax expense	174		262		489		1,457
Net income	1,139		1,703		3,661		7,581
Net income attributable to noncontrolling interest	99		96		253		293
Net income attributable to Farmers Bankshares, Inc.	$               1,040		$               1,607		$          3,408		$         7,288

 

Financial Highlights
	September 30,	June 30,	March 31,	December 31,	September 30,
At or For the Three Months Ended,	2022	2022	2022	2021	2021
Per Share and Shares Outstanding (1)
Basic net income	$               0.33	$               0.37	$               0.39	$               0.38	$               0.51
Book value at end of period	$               8.37	$             12.20	$             15.93	$             21.42	$             21.15
Tangible book value at end of period	$               5.30	$               9.11	$             12.82	$             18.26	$             17.96
Basic weighted average shares outstanding	3,142,564	3,143,824	3,136,960	3,127,724	3,126,957
Dividends per share	$               0.15	$               0.15	$               0.15	$               0.15	$               0.15
Shares outstanding at period end	3,141,327	3,143,824	3,143,824	3,129,010	3,127,048
Selected Performance Ratios
Return on average assets	0.69 %	0.76 %	0.77 %	0.78 %	1.10 %
Return on average stockholders' equity	9.59 %	10.01 %	7.75 %	6.92 %	9.44 %
Return on average tangible stockholders' equity	12.34 %	12.69 %	9.20 %	8.08 %	11.09 %
Net interest margin, tax equivalent (2)	3.09 %	2.98 %	2.89 %	2.96 %	3.22 %
Cost of deposits	0.33 %	0.27 %	0.26 %	0.22 %	0.26 %
Non-interest income as a percentage of total revenue (3)	33.56 %	31.51 %	34.47 %	38.88 %	37.66 %
Efficiency ratio (4)	80.21 %	78.70 %	75.54 %	76.68 %	69.55 %
Balance Sheet Ratios
Loans to deposits	54.66 %	52.09 %	46.81 %	48.44 %	46.29 %
Nonperforming loans to period-end loans	0.41 %	0.40 %	0.41 %	0.42 %	0.52 %
Allowance for loan losses to period-end loans	2.09 %	2.18 %	2.28 %	2.32 %	2.49 %
Net charge-offs (recoveries) to average loans outstanding	0.03 %	0.02 %	0.02 %	0.00 %	-0.01 %
(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.

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/farmers-bankshares-inc-reports-third-quarter-and-year-to-date-earnings-301660532.html

SOURCE Farmers Bankshares, Inc.

FAQ

What were Farmers Bankshares' earnings for Q3 2022?

Farmers Bankshares reported earnings of $1.0 million, or $0.33 per share for Q3 2022.

How much did net loans increase for Farmers Bankshares?

Net loans increased by $21.6 million, or 8.37%, compared to December 31, 2021.

What is the future outlook for Farmers Bankshares?

The company expects to close its merger with TowneBank in the first quarter of 2023.

How did non-interest income change for Farmers Bankshares in 2022?

Non-interest income decreased by 39.42% through the first nine months of 2022.

What are the earnings per share (EPS) for Farmers Bankshares?

Earnings per share (EPS) for the first nine months of 2022 amounted to $1.08.