Farmers Bankshares, Inc. Reports Record Earnings for 2021

WINDSOR, Va., Feb. 4, 2022 /PRNewswire/ -- Farmers Bankshares, Inc. (OTC-PINK: FBVA) (the "Company") reports unaudited earnings of $1.2 million, or $0.38 per share, for the fourth quarter of 2021.  These results are decreased from the $1.8 million, or $0.57 per share, earned during the fourth quarter of 2020.  The Company posted record earnings for the year, which amounted to $8.5 million or $2.72 per share, which is a 56.98% increase from the $5.4 million or $1.74 per share, reported for 2020.  

At December 31, 2021, select financial information and key highlights for the year include:

• Return on average assets of 1.44%, compared to 1.05% in 2020.
• Return on average equity of 12.41%, compared to 8.70% in 2020.
• Return on average tangible common equity (1) of 14.56%, compared to 10.45% in 2020. 
• Net interest margin, tax equivalent (1) was 3.06%, reduced from 3.53% in the prior year. 
• Total cost of deposits decreased to 0.23% from 0.38% at December 31, 2020. 

"We earned a record $8.5 million in 2021, with many factors contributing to this success. The gain on the sale of other real estate owned boosted net income by approximately $2.6 million, after-tax. Excluding that extraordinary item, we still posted record earnings of $5.9 million (1).  Our mortgage and insurance partnerships also added meaningfully to earnings in 2021.  By investing excess liquidity in the securities portfolio we were able to offset stagnant loan growth and continued margin compression.  We are very aware that some of these favorable factors may not contribute as significantly in 2022 and are focused on organic loan growth and further opportunities to grow non-interest income.  Our credit metrics continue to be strong, which positions us well for an improvement in loan demand.   Near the end of the third quarter we invested in seasoned talent in Virginia Beach.  We are encouraged by this decision, seeing notable loan growth in the fourth quarter from this market and a strong pipeline into 2022.  We still believe there is a niche for expanding the Farmers Bank brand of banking in regions east of our traditional customer base," said Vernon M. Towler, President and Chief Executive Officer. 

Consolidated Balance Sheet

Net loans decreased $20.3 million, or 7.27%, as compared to December 31, 2020, however net loans grew $18.5 million or 7.69% during the fourth quarter of 2021 compared to the third quarter, primarily due to growth in newer markets.  The year over year decrease was driven by forgiveness of loans associated with the Company's participation in the CARES Act's Paycheck Protection Program ("PPP").  The Company had approximately $2.8 million in PPP loans remaining on the balance sheet as of December 31, 2021 and during 2021 received $26.4 million for forgiveness of PPP loans originated in 2020 and 2021.    Deposit balances increased by $78.4 million to $531.6 million as of December 31, 2021 from $453.2 million as of December 31, 2020.  Non-interest bearing deposits increased by $39.2 million and make up approximately 35.52% of total deposits.  The increase in the consumer savings rate, municipal deposits and overall liquidity in the economy all contributed to this increase in deposits. 

Capital ratios at the bank level remain well within the well-capitalized guidelines of the regulatory framework.   

Results of Operations

Net interest income increased by 1.46%, for the year ended December 31, 2021 compared to 2020.   Continuing to invest excess cash into our securities portfolio, recognizing fees related to forgiven PPP loans and repricing of deposits contributed to this slight increase. 

Non-interest income through the fourth quarter of 2021 was approximately $12.9 million and was increased by 35.39% over the same period in the prior year, primarily driven by a gain from terminating an interest rate swap that occurred in the first quarter and the gain on other real estate owned recognized in the second quarter.  

Non-interest expense through December 31, 2021 increased 3.94% compared to same period in 2020. Investing in talent and premises to expand our Virginia Beach and Pungo markets predominantly drove this increase.  Approximately, $180 thousand in non-recurring expenses related to talent acquisition and retirement benefits were included in the fourth quarter of 2021, increasing non-interest expense in that period. 

No provision for loan losses was added during the fourth quarter of 2021. Total provision equaled $-0- for the year ended December 31, 2021 compared to $921 thousand for the same period in 2020.  The Company considers local and national unemployment, housing and market trends when determining the estimated allowance.  The allowance for loan losses was 2.32% of gross loans as of December 31, 2021. 

Asset Quality

Non-performing assets, which consists of nonaccrual loans and other real estate owned increased from $844 thousand at December 31, 2020 to $1.3 million at December 31, 2021, but showed no increase during the fourth quarter.  The year over year increase was due to one loan being added to nonaccrual status during the third quarter. 

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 December 31, 2021, loans greater than thirty days past due totaled $1.0 million, or 0.39% of total gross loans.  This compared to $466 thousand, or 0.16% of total gross loans and $1.3 million, or 0.52% of total gross loans as of December 31, 2020 and September 30, 2021, respectively. 

(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)
	12/31/2021		12/31/2020
Assets	(Unaudited)
Total cash & cash equivalents	$      28,536		$      28,557
Available-for-sale securities	293,923		203,766
Non-marketable equity securities	7,323		6,279
Loans held for investment	264,540		285,009
Allowance for loan losses	(6,142)		(6,347)
Loans held for investment, net	258,398		278,662
Premises and equipment, net	6,363		6,277
Goodwill and other intangible assets, net	9,890		10,250
Other real estate owned	147		672
Bank-owned life insurance	11,662		11,378
Other assets	7,213		6,077
Total assets	$    623,455		$    551,918
Liabilities & Stockholders' Equity
Deposits
Non-interest bearing deposits	$    188,846		$    149,637
Interest-bearing deposits	342,779		303,586
Total deposits	531,625		453,223
Federal Home Loan Bank borrowings	-		10,000
Capital notes	8,500		8,500
Securities sold under agreements to repurchase	7,160		6,637
Other liabilities	6,537		6,912
Total liabilities	553,822		485,272
Common stock	391		389
Capital surplus	3,589		3,357
Retained earnings	60,856		54,103
Accumulated other comprehensive income	2,182		6,341
Total Farmers Bankshares, Inc. stockholders' equity	67,018		64,190
Noncontrolling interest	2,615		2,456
Total stockholders' equity	69,633		66,646
Total liabilities and stockholders' equity	$    623,455		$    551,918

 

Farmers Bankshares, Inc.
Consolidated Income Statement (Unaudited)
($ in thousands)
	Three  Months Ended				Twelve Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
Interest income
Interest and fees on loans held for investment	$               2,954		$               3,321		$        12,308		$       13,511
Interest on available-for-sale securities	1,359		994		4,878		3,885
Interest on federal funds sold	6		1		25		85
Other interest income	15		25		70		116
Total interest and dividend income	4,334		4,341		17,281		17,597
Interest expense
Interest on deposits	322		366		1,305		1,786
Interest on FHLB and other borrowings	-		19		30		138
Interest on capital notes	65		69		269		224
Interest on repurchase agreements	8		9		39		36
Total interest expense	395		463		1,643		2,184
Net interest income	3,939		3,878		15,638		15,413
Provision for loan losses	-		-		-		921
Net interest income after provision for loan losses	3,939		3,878		15,638		14,492
Noninterest income
Service charges and other fee income	157		116		490		457
Income from automated teller machines and interchange	185		159		706		579
Insurance commissions	1,714		1,873		6,150		6,348
Net gain on disposition of available-for-sale securities	-		255		377		607
Termination of interest rate swap	-		-		433		-
Income on bank owned life insurance	77		93		284		300
Gain on sale of other real estate owned	-		-		3,110		-
Other income	418		571		1,435		1,300
Total noninterest income	2,551		3,067		12,985		9,591
Noninterest expense
Salaries and employee benefits	3,055		2,784		10,894		10,339
Occupancy and equipment	553		662		1,992		2,136
Bank franchise and other taxes	72		41		563		524
Advertising and marketing	106		84		463		399
Data processing	391		337		1,539		1,501
Other noninterest expense	810		760		2,631		2,497
Total non-interest expense	4,987		4,668		18,082		17,396
Income before income taxes and noncontrolling interest	1,503		2,277		10,541		6,687
Income tax expense	182		326		1,639		815
Net income	1,321		1,951		8,902		5,872
Net income attributable to noncontrolling interest	123		172		416		467
Net income attributable to Farmers Bankshares, Inc.	$               1,198		$               1,779		$          8,486		$         5,405

 

Financial Highlights
	December 31,	September 30,	June 30,	March 31,
At or For the Three Months Ended,	2021	2021	2021	2021
Per Share and Shares Outstanding (1)
Basic net income	$              0.38	$              0.51	$              1.19	$            0.63
Book value at end of period	$            21.42	$            21.15	$            21.51	$          19.77
Tangible book value at end of period	$            18.26	$            17.96	$            18.29	$          16.52
Basic weighted average shares outstanding	3,127,724	3,126,957	3,125,678	3,116,938
Dividends per share	$              0.15	$              0.15	$              0.13	$            0.13
Shares outstanding at period end	3,129,010	3,127,048	3,125,678	3,125,678
Selected Performance Ratios
Return on average assets	0.78%	1.10%	2.58%	1.38%
Return on average stockholders' equity	6.92%	9.44%	22.31%	12.14%
Return on average tangible stockholders' equity	8.08%	11.09%	26.33%	14.41%
Net interest margin, tax equivalent (2)	2.96%	3.22%	3.20%	3.22%
Cost of deposits	0.22%	0.26%	0.28%	0.35%
Non-interest income as a percentage of total revenue (3)	38.88%	37.66%	58.18%	41.69%
Efficiency ratio (4)	76.68%	69.55%	48.28%	63.58%
Balance Sheet Ratios
Loans to deposits	48.44%	46.29%	51.51%	53.78%
Nonperforming loans to period-end loans	0.42%	0.52%	0.14%	0.10%
Allowance for loan losses to period-end loans	2.32%	2.49%	2.32%	2.32%
Net charge-offs to average loans outstanding	0.00%	-0.01%	0.04%	0.04%
(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.