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

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. 

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.

SOURCE Farmers Bankshares, Inc.