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

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.  

SOURCE Farmers Bankshares, Inc.