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

WINDSOR, Va., July 21, 2016

Richard J. Holland, Jr., Chairman and Chief Executive Officer, stated, "We continue to realize the benefits from strategic decisions made over the last year.  The first half of 2016 has been rewarding for our shareholders.  The increase in our dividend from the first to second quarter reiterates our commitment to our shareholders and echoes that we are focused on long term performance."

Return on average assets on an annualized basis of 0.96% for the second quarter of 2016 is improved from the second quarter of 2015 of 0.82%.  Return on average equity during the second quarter of 2016 was 9.41% as compared to the prior year second quarter of 8.80%. 

We experienced an increase in loan demand, as net loans increased by $6.2 million as compared to March 31, 2016.  Deposit balances decreased $5.8 million or 1.72% to $329 million in the second quarter of 2016 from $335 million as of March 31, 2016.  Non-interest bearing deposits decreased less than 1.00% from the first quarter of 2016 but still make up approximately 28% of total deposits.  Net interest income increased 5.46% when compared to second quarter of 2015, largely due to the decrease in funding costs.  Non-interest income, exclusive of securities transactions, increased approximately 7% from second quarter 2015.  Service charges continue to increase by 30.43% or $74 thousand when compared to the second quarter of 2015.  Non-interest expense remained consistent, only increasing by approximately 2.00% during the first quarter 2016 compared to same period in 2015. 

During the second quarter Farmers Bankshares, Inc. redeemed $1.565 million in capital notes at par, plus accrued and unpaid interest.  This transaction was to accommodate investor's liquidity needs and reduce our debt service obligations.  Capital ratios at the Bank level remain strong and well above regulatory requirements for "Well Capitalized" financial institutions. 

"Robust earnings in the first half of 2016 led to the decision to redeem a portion of our capital notes, which will result in reduced funding costs and ultimately margin improvement in the current low interest rate environment.   We are pleased with the new business opportunities that have come along with the May 2016 opening of our loan production office in the Greenbrier section of Chesapeake.   We believe this presence will help to further expand our customer base east of our traditional Western Hampton Roads markets," stated Vernon M. Towler, President. 

The common stock of Farmers Bankshares, Inc. trades on the NASDAQ market 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.