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

Rhea-AI Summary

Farmers Bankshares, Inc. (OTC-PINK: FBVA) reported a strong financial performance for Q3 2021, achieving earnings of $1.6 million or $0.51 per share, a 27.54% increase from the previous year. Year-to-date net income rose 100.99% to $7.3 million, or $2.33 per share. Key highlights include a return on average assets of 1.66% and a decrease in net loans of 6.85%. Total deposits increased by $18.2 million to $518.3 million, bolstered by non-interest bearing deposits. The bank continues to focus on loan growth and has declared an increased dividend reflecting its commitment to shareholder value.

Positive

• Earnings of $1.6 million, up 27.54% year-over-year.
• Year-to-date net income increased 100.99% to $7.3 million.
• Return on average assets improved to 1.66% from 0.96% in 2020.
• Total deposits rose by $18.2 million to $518.3 million.
• Increased dividend declared, demonstrating commitment to shareholder value.

Negative

• Net loans decreased by $17.6 million, or 6.85%, since June 30, 2021.
• Non-performing assets rose from $277 thousand to $1.3 million in the quarter.

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. 

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.

FAQ

What were Farmers Bankshares, Inc.'s earnings for Q3 2021?

Farmers Bankshares, Inc. reported earnings of $1.6 million, or $0.51 per share for Q3 2021.

How much did net income increase for the first nine months of 2021?

Net income for the first nine months of 2021 increased by 100.99% to $7.3 million, or $2.33 per share.

What is the current return on average assets for FBVA?

The return on average assets for Farmers Bankshares, Inc. is 1.66% as of September 30, 2021.

How much did total deposits increase for FBVA in Q3 2021?

Total deposits increased by $18.2 million to $518.3 million as of September 30, 2021.

What was the change in non-performing assets for Farmers Bankshares, Inc.?

Non-performing assets increased from $277 thousand to $1.3 million from June 30 to September 30, 2021.