WINDSOR, Va., July 24, 2020 /PRNewswire/ -- Farmers Bankshares, Inc. (OTC-PINK: FBVA) reports unaudited earnings of $1.3 million, or $0.42 per share, for the second quarter of 2020. These results are in line with the $1.3 million, or $0.42 per share, earned during the second quarter of 2019.
Return on average assets on an annualized basis was 0.96% for the second quarter of 2020, a decrease from 1.15% for the second quarter of 2019. Return on average equity during the second quarter of 2020 was 7.94% as compared to 10.38% for the second quarter of 2019. Return on average tangible common equity (1) was 9.64% for the period ended June 30, 2020 and compared to 12.83% for the period ended June 30, 2019.
Net loans have increased $25.9 million, or 9.92%, as compared to December 31, 2019. The increase was primarily driven by loans associated with the Company's participation in the CARES Act's Paycheck Protection Program ("PPP"). The Bank serviced customers through the PPP with 257 loans totaling approximately $24.9 million processed through the end of the second quarter. Deposit balances have increased by $42.1 million to $427.6 million as of June 30, 2020 from $385.5 million as of December 31, 2019. Non-interest bearing deposits increased by $25.0 million and make up approximately 33.04% of total deposits. Customer stimulus payments and PPP loan fundings both contributed to this increase in deposits. Net interest income decreased 3.03% when comparing the second quarter of 2020 to the second quarter of 2019. Net interest margin for the second quarter decreased to 3.47%, including PPP and 3.55% excluding PPP, when compared to the second quarter of 2019 of 3.85%. This reduction is primarily due to the impact of significantly lower market interest rates since the second quarter of 2019 and the rate associated with loans originated through the PPP.
"I am pleased with our financial results for the first half of 2020, especially given the current interest rate environment and challenging economic situation. I am most proud of the way our entire team have shown a new level of commitment and support for our customers and communities while navigating these unparalleled times. Being a community bank, we strive to be flexible to meet the changing needs of our customers and present conditions have proven we are able to do that. We successfully opened our branch in the Pungo area of Virginia Beach during the second quarter and are very encouraged with the reception from that community." said Vernon M. Towler, President and Chief Executive Officer.
Non-interest income through the second quarter of 2020 was approximately $4.3 million and was increased by 9.61% over the same period in the prior year due primarily to increased insurance revenues from Manry Rawls Insurance and our investment in Tidewater Home Funding. Non-interest expense decreased by 2.61% during the second quarter 2020 compared to same period in 2019. This decrease was partially due to deferred salary costs related to participation in the PPP and reduced marketing expenses after celebrating our 100th anniversary in the prior year. Provision for loan losses of $526 thousand was added during the second quarter, bringing year to date provisions to $651 thousand for 2020 compared to $0 for the same period in 2019. Our allowance for loan losses was 2.11% of gross loans as of June 30, 2020, including loans originated through the PPP, and 2.30% of gross loans excluding loan originated through the PPP (1). Of the $37.6 million in loans that were on a payment deferral plan as of the end of the first quarter of 2020, $36.6 million have returned to a normal payment schedule as of June 30, 2020.
"We remain committed to managing our balance sheet in a manner that enables us to meet our long-term strategic goals while providing shareholders a competitive rate of return. A large deposit repriced, to lower current market rates, during the second quarter and helped to stabilize net interest margin when compared to the first quarter of 2020. While our credit metrics remain very healthy and have shown little deterioration, we did increase loan loss reserves during the second quarter to account for the high level of economic uncertainty. Consistent returns from our insurance subsidiary and favorable results from our mortgage partnership also contributed positively to second quarter earnings. Liquidity and capital levels remain strong and position us well for future opportunities." stated Kristy DeJarnette, Chief Financial Officer.
(1)
Non-GAAP financial measure. Return on average tangible common equity excludes goodwill and intangibles.
Farmers Bank, founded in 1919, is headquartered in Windsor, VA, and is a community bank which operates eight branches and services areas throughout Tidewater Virginia. Additional information is available at the company's website, www.farmersbankva.com.
The common stock of Farmers Bankshares, Inc. trades as an Over-the-Counter Bulletin Board stock under the symbol FBVA. Any stockbroker can assist with purchase of the company's stock, as well as with sales of holdings.
Farmers Bankshares, Inc.
Consolidated Balance Sheets
($ in thousands)
6/30/2020
12/31/2019
Assets
(Unaudited)
Total cash & cash equivalents
$ 27,272
$ 30,010
Available-for-sale securities
168,903
145,300
Non-marketable equity securities
5,286
5,265
Loans held for investment
293,141
266,741
Allowance for loan losses
(6,175)
(5,677)
Loans held for investment, net
286,966
261,064
Premises and equipment, net
6,396
5,796
Goodwill and other intangible assets, net
10,412
10,609
Other real estate owned
672
672
Bank-owned life insurance
11,307
11,157
Other assets
7,663
6,698
Total assets
$ 524,877
$ 476,571
Liabilities & Stockholders' Equity
Deposits
Non-interest bearing
$ 141,260
$ 116,235
Interest-bearing deposits
286,306
269,282
Total deposits
427,566
385,517
Federal Home Loan Bank borrowings
15,000
15,000
Capital notes
6,000
6,000
Securities sold under agreements to repurchase
5,417
5,142
Total other liabilities
7,695
6,626
Total liabilities
461,678
418,285
Common stock
388
386
Capital surplus
3,269
3,000
Retained earnings
51,803
50,176
Accumulated other comprehensive income
5,568
2,622
Total Farmers Bankshares, Inc. stockholders' equity
61,028
56,184
Noncontrolling interest
2,171
2,102
Total stockholders' equity
63,199
58,286
Total liabilities and stockholders' equity
$ 524,877
$ 476,571
Farmers Bankshares, Inc.
Consolidated Income Statement
For the Six Months Ended June 30,
2020
2019
Interest income
(Unaudited)
Interest and fees on loans held for investment
$ 6,870,730
$ 7,209,967
Interest on available-for-sale securities
1,945,534
2,276,824
Interest on federal funds sold
78,275
16,989
Other interest income
68,194
67,249
Total interest and dividend income
8,962,733
9,571,029
Interest expense
Interest on deposits
1,029,854
1,237,556
Interest on Federal Home Loan Bank advances
72,471
198,994
Interest on capital notes
97,500
97,500
Interest on repurchase agreements
16,723
13,420
Interest on federal funds purchased
605
35,780
Total interest expense
1,217,153
1,583,250
Net interest income
7,745,580
7,987,779
Provision for loan losses
651,000
-
Net interest income after provision for loan losses
7,094,580
7,987,779
Noninterest income
Service charges and other fee income
235,952
284,500
Income from automated teller machines and interchange
269,560
280,311
Insurance commissions
2,964,903
2,811,016
Net gain on disposition of available-for-sale securities
351,912
329,365
Income on bank owned life insurance
150,506
153,278
Other income
303,120
42,440
Total noninterest income
4,275,953
3,900,910
Noninterest expense
Salaries and employee benefits
4,982,496
5,102,259
Occupancy and equipment
997,336
1,027,778
Bank franchise and other taxes
346,412
223,802
Advertising and marketing
204,866
295,982
Data processing
774,339
813,705
Other noninterest expense
1,177,501
1,246,675
Total non-interest expense
8,482,950
8,710,201
Income before income taxes and noncontrolling interest
2,887,583
3,178,488
Income tax expense
339,464
392,725
Net income
2,548,119
2,785,763
Net income attributable to noncontrolling interest
181,998
132,205
Net income attributable to Farmers Bankshares, Inc.
$ 2,366,121
$ 2,653,558
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SOURCE Farmers Bankshares, Inc.
