Farmers Bankshares, Inc. Reports Strong Earnings in First Quarter 2022
WINDSOR, VA, May 4, 2022 — Farmers Bankshares, Inc. (OTC-PINK: FBVA) today reported unaudited earnings of $1.2 million, or $0.39 per share, for the first quarter of 2022. Excluding extraordinary items, adjusted earnings for the quarter would have been $1.4 million, or $0.44 per share1, and comparable to $1.4 million in adjusted earnings for the first quarter of 2021.
“Our Bank is performing well and we posted solid results, despite a number of challenges,” said President and Chief Executive Officer Vernon M. Towler. “As expected, early 2022 proved to be a tough macro environment for the banking industry with margin pressures and reduced mortgage revenue. On the positive side, we are seeing ‘green shoots’ related to the investments we have been making in new talent and new geographies.”
“Our ongoing dispute with our former Chairman increased our operating costs in the first quarter and served as a distraction for our management team and employees. However, we continue to drive our business forward, execute on our strategic plan and focus intently on increasing shareholder value.”
Consolidated Balance Sheet
Net loans increased $2.5 million, or 1.00%, as compared to December 31, 2021. This change includes the CARES Act’s Paycheck Protection Program (“PPP”) loan repayments totaling $2.8 million. All loans from this program have now been fully repaid or forgiven. Deposit balances were $557.4 million as of March 31, 2022, an increase of $25.8 million, and up from $531.6 million as of December 31, 2021. Non-interest-bearing deposits increased by $4.9 million and make up approximately 34.78% of total deposits. The increase in cyclical municipal deposits contributed to a large portion of this increase in deposits.
Capital ratios at the bank level remain well above the well-capitalized guidelines of the regulatory framework. Tangible book value decreased from the prior quarter primarily due to the unrealized losses on the securities portfolio recorded in other comprehensive income due to market interest rate increases in the first quarter of 2022.
Results of Operations
An increase in market rates led to a 2.99% increase in net interest income in the first quarter of 2022 over the prior year’s first quarter. Excluding PPP income for all quarters, net interest income increased by 11.69% for the first quarter of 2022 compared to the first quarter of 2021.
Non-interest income through the first quarter of 2022 was approximately $2.1 million, a decrease of 24.16% from the same period in the prior year, primarily driven by a gain from terminating an interest rate swap and gains from the sale of investments that occurred in the first quarter of 2021 and totaled approximately $696 thousand, pre-tax. As expected, going into 2022, with the increase in market rates, Farmers’ share of our mortgage subsidiary’s income was decreased by 134.2% or $138 thousand dollars.
Non-interest expense through March 31, 2022 increased 8.88% compared to the same period in 2021. The Company has invested in talent and new markets over the compared time periods. In addition, approximately $186 thousand in pre-tax, legal and advisory fees related to our ongoing dispute with our former Chairman and compensation expenses paid to former employees, including former Chairman Dick Holland, were included in the first quarter of 2022, increasing non-interest expense in that period. These expenses reduced quarterly annualized return on average assets from 0.89% to 0.77% and return on average equity from 8.95% to 7.75%.
No provision for loan losses was added during the first quarter of 2022 and 2021. The Company considers local and national unemployment, housing and market trends when determining the estimated allowance. The allowance for loan losses was 2.28% of gross loans as of March 31, 2022.
Asset Quality
Non-performing assets, which consists of nonaccrual loans and other real estate owned decreased from $1.3 million at December 31, 2021 to $1.2 million at March 31, 2022. There were no loans added to nonaccrual status in the first 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 March 31, 2022, loans greater than thirty days past due totaled $1.6 million, or 0.63% of total gross loans. This compared to $1.0 million, or 0.39% of total gross loans as of December 31, 2021.
Annual Meeting
Shareholders are encouraged to attend Farmers Bankshares’ annual meeting to be held on Thursday, May 12, 2022, at 4:00 p.m. (Eastern Time) at HUB757, 6801 Bridgeway Drive, Suffolk, Virginia 23435. Only shareholders of record as of March 15, 2022, will be admitted into the meeting. Shareholders will need to present their proxy card or a valid ID to ensure all votes are properly accounted for.
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 securities gains and extraordinary, non-interest expenditures noted under the Results of Operations section.
