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.”
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.
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.
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.
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.
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Farmers Bankshares, Inc. |
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Consolidated Balance Sheets |
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($ in thousands) |
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9/30/2022 |
12/31/2021 |
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Assets |
(Unaudited) |
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Total cash & cash equivalents |
$ 11,564 |
$ 28,536 |
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Available-for-sale securities |
232,381 |
293,923 |
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Non-marketable equity securities |
7,620 |
7,323 |
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Loans held for investment |
286,018 |
264,540 |
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Allowance for loan losses |
(5,981) |
(6,142) |
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Loans held for investment, net |
280,037 |
258,398 |
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Premises and equipment, net |
6,127 |
6,363 |
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Goodwill and other intangible assets, net |
9,621 |
9,890 |
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Other real estate owned |
147 |
147 |
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Bank-owned life insurance |
11,879 |
11,662 |
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Other assets |
18,406 |
7,213 |
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Total assets |
$ 577,782 |
$ 623,455 |
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Liabilities & Stockholders’ Equity |
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Deposits |
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Non-interest bearing deposits |
$ 175,521 |
$ 188,846 |
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Interest-bearing deposits |
334,519 |
342,779 |
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Total deposits |
510,040 |
531,625 |
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Capital notes |
8,500 |
8,500 |
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Securities sold under agreements to repurchase |
24,300 |
7,160 |
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Other liabilities |
6,027 |
6,537 |
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Total liabilities |
548,867 |
553,822 |
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Common stock |
393 |
391 |
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Capital surplus |
3,894 |
3,589 |
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Retained earnings |
62,863 |
60,856 |
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Accumulated other comprehensive income (loss) |
(40,872) |
2,182 |
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Total Farmers Bankshares, Inc. stockholders’ equity |
26,278 |
67,018 |
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Noncontrolling interest |
2,637 |
2,615 |
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Total stockholders’ equity |
28,915 |
69,633 |
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Total liabilities and stockholders’ equity |
$ 577,782 |
$ 623,455 |
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Farmers Bankshares, Inc. |
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Consolidated Income Statement (Unaudited) |
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($ in thousands) |
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Three Months Ended |
Nine Months Ended |
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September 30, |
September 30, |
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2022 |
2021 |
2022 |
2021 |
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Interest income |
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Interest and fees on loans held for investment |
$ 3,375 |
$ 3,160 |
$ 9,391 |
$ 9,354 |
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Interest on available-for-sale securities |
1,453 |
1,213 |
4,555 |
3,519 |
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Interest on federal funds sold |
68 |
10 |
82 |
19 |
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Other interest income |
10 |
40 |
25 |
55 |
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Total interest and dividend income |
4,906 |
4,423 |
14,053 |
12,947 |
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Interest expense |
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Interest on deposits |
391 |
323 |
1,045 |
983 |
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Interest on FHLB and other borrowings |
7 |
– |
25 |
30 |
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Interest on capital notes |
67 |
68 |
202 |
204 |
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Interest on repurchase agreements |
32 |
10 |
61 |
31 |
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Total interest expense |
497 |
401 |
1,333 |
1,248 |
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Net interest income |
4,409 |
4,022 |
12,720 |
11,699 |
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Provision for loan losses |
– |
– |
– |
– |
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Net interest income after provision for loan losses |
4,409 |
4,022 |
12,720 |
11,699 |
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Noninterest income |
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Service charges and other fee income |
167 |
116 |
476 |
333 |
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Income from automated teller machines and interchange |
181 |
180 |
543 |
521 |
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Insurance commissions |
1,552 |
1,501 |
4,583 |
4,436 |
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Net gain on disposition of available-for-sale securities |
118 |
112 |
181 |
387 |
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Gain on interest rate swap |
– |
– |
– |
423 |
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Income on bank owned life insurance |
84 |
58 |
227 |
207 |
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Gain on sale of other real estate owned |
– |
– |
– |
3,110 |
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Other income |
125 |
462 |
311 |
1,017 |
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Total noninterest income |
2,227 |
2,429 |
6,321 |
10,434 |
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Noninterest expense |
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Salaries and employee benefits |
2,740 |
2,696 |
8,131 |
7,839 |
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Occupancy and equipment |
546 |
467 |
1,651 |
1,439 |
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Bank franchise and other taxes |
169 |
151 |
516 |
491 |
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Advertising and marketing |
100 |
155 |
336 |
357 |
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Data processing |
399 |
393 |
1,186 |
1,148 |
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Professional fees |
136 |
172 |
1,125 |
544 |
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Merger and acquisition costs |
800 |
– |
473 |
– |
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Other noninterest expense |
433 |
452 |
1,473 |
1,277 |
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Total non-interest expense |
5,323 |
4,486 |
14,891 |
13,095 |
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Income before income taxes and noncontrolling interest |
1,313 |
1,965 |
4,150 |
9,038 |
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Income tax expense |
174 |
262 |
489 |
1,457 |
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Net income |
1,139 |
1,703 |
3,661 |
7,581 |
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Net income attributable to noncontrolling interest |
99 |
96 |
253 |
293 |
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Net income attributable to Farmers Bankshares, Inc. |
$ 1,040 |
$ 1,607 |
$ 3,408 |
$ 7,288 |
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Financial Highlights |
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September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
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At or For the Three Months Ended, |
2022 |
2022 |
2022 |
2021 |
2021 |
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Per Share and Shares Outstanding (1) |
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Basic net income |
$ 0.33 |
$ 0.37 |
$ 0.39 |
$ 0.38 |
$ 0.51 |
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Book value at end of period |
$ 8.37 |
$ 12.20 |
$ 15.93 |
$ 21.42 |
$ 21.15 |
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Tangible book value at end of period |
$ 5.30 |
$ 9.11 |
$ 12.82 |
$ 18.26 |
$ 17.96 |
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Basic weighted average shares outstanding |
3,142,564 |
3,143,824 |
3,136,960 |
3,127,724 |
3,126,957 |
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Dividends per share |
$ 0.15 |
$ 0.15 |
$ 0.15 |
$ 0.15 |
$ 0.15 |
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Shares outstanding at period end |
3,141,327 |
3,143,824 |
3,143,824 |
3,129,010 |
3,127,048 |
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Selected Performance Ratios |
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Return on average assets |
0.69 % |
0.76 % |
0.77 % |
0.78 % |
1.10 % |
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Return on average stockholders’ equity |
9.59 % |
10.01 % |
7.75 % |
6.92 % |
9.44 % |
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Return on average tangible stockholders’ equity |
12.34 % |
12.69 % |
9.20 % |
8.08 % |
11.09 % |
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Net interest margin, tax equivalent (2) |
3.09 % |
2.98 % |
2.89 % |
2.96 % |
3.22 % |
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Cost of deposits |
0.33 % |
0.27 % |
0.26 % |
0.22 % |
0.26 % |
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Non-interest income as a percentage of total revenue (3) |
33.56 % |
31.51 % |
34.47 % |
38.88 % |
37.66 % |
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Efficiency ratio (4) |
80.21 % |
78.70 % |
75.54 % |
76.68 % |
69.55 % |
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Balance Sheet Ratios |
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Loans to deposits |
54.66 % |
52.09 % |
46.81 % |
48.44 % |
46.29 % |
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Nonperforming loans to period-end loans |
0.41 % |
0.40 % |
0.41 % |
0.42 % |
0.52 % |
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Allowance for loan losses to period-end loans |
2.09 % |
2.18 % |
2.28 % |
2.32 % |
2.49 % |
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Net charge-offs (recoveries) to average loans outstanding |
0.03 % |
0.02 % |
0.02 % |
0.00 % |
-0.01 % |
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(1) Computed based on the weighted average number of shares outstanding during each period. |
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(2) Net interest margin is net interest income divided by average interest earning assets. |
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(3) Total revenue consists of net interest income and non-interest income |
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(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.
