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

WINDSOR, Va., April 26, 2018

Return on average assets on an annualized basis of 0.79% for the first quarter of 2018 decreased from 1.23% from first quarter of 2017.  Return on average equity during the first quarter of 2018 was 7.66% as compared to the prior year first quarter of 12.00%. 

Richard J. Holland, Jr., Chairman and Chief Executive Officer, stated, "As noted previously, we have devoted substantial resources to selecting and implementing a new strategic technology partner. New enhancements to our electronic delivery systems, including, online, mobile and telephone banking became available to our customers beginning on March 19, 2018.  While we believe this move and advancement in technology was necessary to offer customers more sophisticated products, we did incur several one-time expenses that have negatively impacted first quarter earnings."  

Several large loans repaid within in the normal course of business and therefore, net loans decreased by $5.5 million as compared to December 31, 2017.  Deposit balances increased by $436 thousand to $371.3 million as of March 31, 2018 from $370.9 million as of December 31, 2017.  Non-interest bearing deposits decreased approximately $3.8 million from December 31, 2017 but still make up approximately 27.89% of total deposits. The decrease in non-interest bearing deposits is largely due to the cyclical nature of several large municipal deposits. 

Net interest income increased 1.08% in the first quarter of 2018 compared to the first quarter of 2017, as a result of pressure on deposit rates beginning to surface.  Non-interest income in the first quarter of 2018 was approximately $1.3 million and was increased by 14.72% over the same period in the prior year.  The first quarter of 2017 included a pre-tax, non-recurring gain on the sale of other real estate owned of approximately $590 thousand.  Exclusive of this transaction, non-interest income increased 144.11% over the first quarter of 2017.   Non-interest expense increased by approximately $1.0 million during the first quarter 2018 compared to same period in 2017, largely due to expenses related to our technology conversion and the continued consolidation of Manry Rawls, LLC, which began in May 2017. 

Capital ratios at the Bank level remain strong and well above regulatory requirements for "Well Capitalized" financial institutions.