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

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.

SOURCE Farmers Bankshares, Inc.

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