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Press Release

Farmers National Banc Corp. Announces 2020 Second Quarter Financial Results

Company Release - 7/29/2020 8:00 AM ET
  • Dedicated to assisting associates, customers and communities during the COVID-19 crisis
  • Net income of $11 million for the quarter is 29% higher than same quarter in 2019, despite a $1.7 million increase in the second quarter provision for loan losses
  • Net interest income increased 16.7% for the quarter compared to the same period a year ago as a result of higher interest income and lower interest expense
  • Significant mortgage loan activity drives a 28.2% year-over-year increase in noninterest income
  • 150 consecutive quarters of profitability
  • Return on average assets, annualized was 1.56% for the second quarter
  • 28% growth in customer non-brokered deposits in the quarter compared to June 30, 2019

CANFIELD, Ohio--(BUSINESS WIRE)-- Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months ended June 30, 2020.

Net income for the three months ended June 30, 2020 was $11.0 million, or $0.39 per diluted share, which compares to $8.5 million, or $0.31 per diluted share, for the three months ended June 30, 2019 and $8.6 million or $0.30 per diluted share for the linked quarter. Net income excluding acquisition costs (non-GAAP) for the quarter ended June 30, 2020 was $11.1 million or $0.39 per share, compared to $8.5 million or $0.31 per share for the same quarter in 2019 and $9.7 million or $0.34 per share for the most recent prior quarter.

Annualized return on average assets and annualized return on average equity were 1.56% and 14.02%, respectively, for the three month period ending June 30, 2020, compared to 1.45% and 12.34% for the same three month period in 2019, and 1.32% and 11.53% for the linked quarter. Farmers’ annualized return on average tangible equity (non-GAAP) was 16.69% for the quarter ended June 30, 2020 compared to 14.59% for the same quarter in 2019 and 13.81% for the linked quarter.

Net income for the six months ended June 30, 2020 was $19.7 million, or $0.69 per diluted share, compared to $16.9 million or $0.61 per diluted share for the same six month period in 2019. Return on average assets and return on average equity were 1.44% and 12.81%, respectively, for the six months ended June 30, 2020, compared to 1.45% and 12.54% for the same period in 2019.

Kevin J. Helmick, President and CEO, stated, “For over 133 years, our success has been driven by supporting our local communities and doing what’s right for our customers. This win-win spirit is more important than ever as our communities face significant uncertainties brought on by the COVID-19 pandemic. Farmers is uniquely prepared to address the current economic environment as we benefit from diverse sources of income, proactive risk management, and a proven and motivated management team. As a result, Farmers ended the quarter with record quarterly noninterest income, regulatory capital well in excess of required minimums, a tangible common equity ratio at a solid 9.86% (non-GAAP), and a second quarter dividend payout ratio of 28.15%.”

In response to the rapidly evolving COVID-19 pandemic, the Company focused first on the well-being of its people, customers and communities. Preventative health measures were put in place including elimination of business related travel requirements, work from home requirements for all employees able to do so and social distancing precautions for all employees in the office. At the beginning of the pandemic, the Company restricted access to branch lobbies to appointment only, but has now re-opened the lobbies using personal protective equipment and maintaining social distancing guidelines and continues to conduct preventative cleaning at all offices and branches. The Company also focused on business continuity measures, including forming a COVID-19 task force, monitoring potential business interruptions, making improvements to our remote working technology, and conducting regular discussions with our technology vendors.

Farmers is offering special financial assistance to support customers who are experiencing financial hardships related to the COVID-19 pandemic. The following table reports the number and amount of payment deferrals by loan type as of dates listed:

 

March 31, 2020

 

June 30, 2020

 

July 24, 2020

 

Outstanding

Balance

 

Number of

Loans

 

Outstanding

Balance

 

Number of

Loans

 

Outstanding

Balance

 

Number of

Loans

Commercial real estate

 

$75,809

 

78

 

$43,954

 

44

 

$27,717

 

17

Commercial

 

11,839

 

81

 

8515

 

69

 

5,848

 

36

Agricultural

 

1,492

 

11

 

8340

 

22

 

2,505

 

12

Residential real estate

 

5,506

 

41

 

3785

 

37

 

1,397

 

15

Consumer

 

2,840

 

127

 

1,858

 

100

 

539

 

36

Total

 

$97,486

 

338

 

$66,452

 

272

 

$38,006

 

116

The Company offered three month deferrals upon request by the borrowers. The deferral requests began in the middle of March, 2020 and concluded at the end of the three month deferral period. The decline in deferred loans and balances was due to the ending of the deferment period and that not all borrowers requested additional deferment. The Company has granted a second three month deferral period to $23.8 million in commercial real estate loans and $5.7 million in commercial loans, which are included in the amounts detailed above. The second deferral period was offered to a select group of customers within specific industry codes that may have a higher credit risk. The Company anticipates that there will be a limited number of business customers with a total of a six month deferral period.

Farmers is also a preferred SBA lender and dedicated significant additional staff and other resources to help our customers complete and submit their applications and supporting documentation for loans offered under the new Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, so they could obtain SBA approval and receive funding as quickly as possible. At June 30, 2020, the Company had facilitated PPP assistance to 1,675 business customers totaling $199.1 million.

On January 7, 2020, Farmers announced it completed the merger of Maple Leaf Financial (“Maple Leaf”), the holding company for Geauga Savings Bank, with branches located in Cuyahoga and Geauga Counties in Ohio. The transaction increased Farmers’ market share in Cuyahoga and Geauga Counties and enables Farmers to continue building local scale throughout Northeast Ohio. As of January 7, 2020, Maple Leaf had total assets of $277.0 million, which included gross loans of $182.1 million, deposits of $183.1 million and equity of $32.1 million.

2020 Second Quarter Financial Highlights

  • Loans
    Total loans were $2.15 billion at June 30, 2020, compared to $1.78 billion at June 30, 2019, representing an increase of 20.7%. Excluding the $182.1 million of loans added from the Maple Leaf acquisition, loan growth was 10.5%. The increase in loans was a direct result of Farmers’ focus on loan growth utilizing a talented lending and credit team, while adhering to a sound underwriting discipline. The increase in loans has occurred primarily in the PPP category, with $199.1 million in outstanding balances. Loans now comprise 79.6% of the Bank's average earning assets for the quarter ended June 30, 2020, unchanged compared to the same period in 2019. The growth in loans has resulted in a 10.8% increase in tax equated loan interest income, including fees, in the second quarter of 2020 compared to the same quarter in 2019. A summary of loans summarized by industries that have particular vulnerability to the effects of COVID-19 and their outstanding balance as a percentage of total loans is shown in the following table:
      

Outstanding
Balance

 

% of total
loans

     

Restaurants and Catering Facilities

 

$52,134,168

 

2.43%

     

Hotels

 

42,655,026

 

1.98%

     

Golf Courses

 

7,665,569

 

0.36%

     

Energy

 

1,073,850

 

0.05%

     

Total

 

$103,528,612

 

4.82%

  • Deposits and Liquidity
    Farmers maintains, in the opinion of management, liquidity sufficient to satisfy depositors’ requirements and meet the credit needs of its customers. The Company’s non-brokered deposits increased 28% from $1.9 billion at June 30, 2019 to $2.4 billion at June 30, 2020. The loan to deposit ratio at June 30, 2020 stands at 88.12%, a slight improvement compared to 89.0% one year ago. The Company has additional borrowing capacity at the Federal Home Loan Bank of Cincinnati and approved lines of credit at two domestic banks.
  • Loan quality
    Non-performing assets to total assets remain at a low level, currently at 0.43%, but increased from the 0.30% reported one year ago. Early stage delinquencies were $10.3 million, or 0.48% of total loans, at June 30, 2020, compared to $19.1 million, or 0.96% of total loans, for the quarter ended March 31, 2020. Net charge-offs for the current quarter were $392 thousand, compared to $305 thousand in the same quarter in 2019, and total net charge-offs as a percentage of average net loans outstanding is 0.08% for the quarter ended June 30, 2020, compared to 0.13% for the most recent quarter. The Company increased its provision for loan losses to $2.4 million, an increase of $1.3 million compared to the $1.1 million provision recorded in the most recent quarter. This additional provision is the amount determined to be required as a result of the impact of increased negative economic factors that exist in the current business environment. As an overall percentage of loans, the allowance for loan losses increased to 0.79% during the current quarter compared to 0.76% during the quarter ended March 31, 2020. Excluding the PPP loans, this allowance for loan losses to gross loans ratio increases to 0.87%. The ratio of the allowance for loan losses to gross loans, excluding PPP loans and acquired loans is 0.96%. It is also important to note that the average FICO score of our indirect lending portfolio stands at a healthy 771 and our consumer loan portfolio average FICO score is currently 766.

    In accordance with the accounting relief provisions of the CARES Act, the Bank has postponed adoption of the current expected credit losses (“CECL”) accounting standards, primarily due to the impact the COVID-19 pandemic is having on the economy and the lack of reasonable and supportable economic forecasts.
  • Net interest margin
    The net interest margin for the three months ended June 30, 2020 was 3.74%, a 10 basis points decrease from the quarter ended June 30, 2019, but only 1 basis point less than the 3.75% reported for the linked quarter. In comparing the second quarter of 2020 to the same period in 2019, asset yields decreased 37 basis points, while the cost of interest-bearing liabilities decreased a similar 36 basis points. Most of the decrease in the asset yields was the result of lower rates earned on loans, declining from 5.14% to 4.75% due to the decrease in the prime lending rate and the addition of the lower yielding PPP loans. The cost of interest bearing liabilities decreased as the Federal Funds target rate was lowered to a target of 0-0.25% at the start of the COVID-19 pandemic in the United States. Each of the major interest-bearing liability categories experienced cost decreases compared to one year ago. The net interest margin is impacted by the additional accretion as a result of the discounted loan portfolios acquired in the previous mergers, which increased the net interest margin by 5 basis points for the quarter ended June 30, 2020 and 5 basis points for the quarter ended June 30, 2019.
  • Noninterest income
    Noninterest income increased 28.15% to $9.1 million for the quarter ended June 30, 2020 compared to $7.1 million in the same quarter in 2019. Gains on the sales of mortgage loans increased $2.6 million or 246.73%, as lower interest rates prompted an increase in mortgage loan refinancing and new home purchases. Debit card interchange fees increased $80 thousand or 9.02%, but that increase was offset by $42 thousand or 9.33% less in retirement plan consulting fees and reduced income from SBIC Funds which impacted other operating income. The Company also experienced a $340 thousand decrease in deposit account service charge income due to a change in consumer behavior and the waiver of some overdraft fees during the COVID-19 pandemic.
  • Noninterest expenses
    Farmers has remained committed to managing the level of noninterest expenses. Total noninterest expenses for the second quarter of 2020 increased 5.35% to $17.7 million compared to $16.8 million in the same quarter in 2019, primarily as a result of increases in salaries and employee benefits of $447 thousand or 4.82%, FDIC insurance premiums of $140 thousand or 164.71% and core processing charges and telephone and data costs of $131 thousand each. Other operating expenses increased $29 thousand or 1.07%, of which approximately $407 thousand was the result of an adjustment to mortgage servicing rights resulting from higher than expected mortgage loan payoffs. This increase was offset by a $505 thousand drop in litigation settlement expense. Annualized noninterest expenses excluding acquisition costs (non-GAAP) measured as a percentage of quarterly average assets decreased from 2.83% in the second quarter of 2019 to 2.50% in the second quarter of 2020.
  • Efficiency ratio
    The efficiency ratio for the quarter ended June 30, 2020 decreased to 50.75% compared to 58.28% for the same quarter in 2019. The improvement in mortgage banking income and net interest income, accompanied with careful management of noninterest expenses were the main drivers of the improvement.

Mr. Helmick concluded, "I want to extend my sincere thanks to all of our associates for their dedication and hard work during these unprecedented times. We remain committed to doing the right thing for our communities. On behalf of everyone at Farmers, we are proud to help our local business and individual customers alike.”

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $2.9 billion in banking assets. Farmers National Banc Corp.’s wholly-owned subsidiaries are comprised of The Farmers National Bank of Canfield, a full-service national bank engaged in commercial and retail banking with 42 banking locations in Mahoning, Trumbull, Columbiana, Stark, Wayne, Medina, Geauga and Cuyahoga Counties in Ohio and Beaver County in Pennsylvania, and Farmers Trust Company, which operates five trust offices and offers services in the same geographic markets. Total wealth management assets under care at June 30, 2020 are $2.4 billion. Farmers National Insurance, LLC and Bowers Insurance Agency, Inc., wholly-owned subsidiaries of The Farmers National Bank of Canfield, offer a variety of insurance products.

Non-GAAP Disclosure

This press release includes disclosures of Farmers’ tangible common equity ratio, return on average tangible assets, return on average tangible equity and net income excluding costs related to acquisition activities, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers’ marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures are included in the tables following Consolidated Financial Highlights below.

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Farmers’ financial condition, results of operations, asset quality trends and profitability. Forward-looking statements are not historical facts but instead represent only management’s current expectations and forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside of Farmers’ control. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions, as well as any statements related to future expectations of performance or conditional verbs, such as “will,” “would,” “should,” “could” or “may.” Farmers’ actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Factors that could cause Farmers’ actual results to differ materially from those described in the forward-looking statements include impacts from COVID-19 on local, national and global economic conditions; higher default rates on loans made to our customers related to COVID-19 and its impact on our customers’ operations and financial condition; unexpected changes in interest rates or disruptions in the mortgage markets related to COVID-19 or other responses to the health crisis; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2019, and subsequent Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission (SEC) and available on Farmers’ website (www.farmersbankgroup.com) and on the SEC’s website (www.sec.gov). Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management’s views as of any subsequent date. Farmers does not undertake any obligation to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

 

Farmers National Banc Corp. and Subsidiaries

Consolidated Financial Highlights

(Amounts in thousands, except per share results) Unaudited

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income

For the Three Months Ended

For the Six Months Ended

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

 

Percent

2020

 

2020

 

2019

 

2019

 

2019

 

2020

 

2019

 

Change

Total interest income

$28,142

$27,717

$25,847

$25,931

$25,529

$55,859

$50,208

11.3%

Total interest expense

4,221

5,415

4,682

5,174

5,038

9,636

9,752

-1.2%

Net interest income

23,921

22,302

21,165

20,757

20,491

46,223

40,456

14.3%

Provision for loan losses

2,400

1,100

600

550

750

3,500

1,300

169.2%

Noninterest income

9,136

7,870

7,814

7,576

7,129

17,006

13,772

23.5%

Acquisition related costs (income)

48

1,319

104

112

(19)

1,367

(19)

-7294%

Other expense

17,692

17,418

16,414

16,446

16,858

35,110

32,958

6.5%

Income before income taxes

12,917

10,335

11,861

11,225

10,031

23,252

19,989

16.3%

Income taxes

1,906

1,696

2,186

2,071

1,488

3,602

3,058

17.8%

Net income

$11,011

$8,639

$9,675

$9,154

$8,543

$19,650

$16,931

16.1%

 

 

 

 

 

 

 

 

Average diluted shares outstanding

28,280

28,710

27,829

27,819

27,931

28,492

27,950

Basic earnings per share

0.39

0.30

0.35

0.33

0.31

0.69

0.61

Diluted earnings per share

0.39

0.30

0.35

0.33

0.31

0.69

0.61

Cash dividends

3,100

3,104

2,767

2,767

2,504

6,204

5,004

Cash dividends per share

0.11

0.11

0.10

0.10

0.09

0.22

0.18

 

Performance Ratios

Net Interest Margin (Annualized)

3.74%

3.75%

3.84%

3.79%

3.84%

3.74%

3.83%

Efficiency Ratio (Tax equivalent basis)

50.75%

59.72%

54.51%

55.90%

58.28%

55.04%

58.06%

Return on Average Assets (Annualized)

1.56%

1.32%

1.58%

1.51%

1.45%

1.44%

1.45%

Return on Average Equity (Annualized)

14.02%

11.53%

12.78%

12.49%

12.34%

12.81%

12.54%

Dividends to Net Income

28.15%

35.93%

28.60%

30.23%

29.31%

31.57%

29.56%

 

Other Performance Ratios (Non-GAAP)

Return on Average Tangible Assets

1.58%

1.33%

1.62%

1.55%

1.47%

1.46%

1.47%

Return on Average Tangible Equity

16.69%

13.81%

15.03%

14.80%

14.59%

15.03%

14.82%

Return on Average Tangible Equity excluding acquisition costs

16.75%

15.50%

15.17%

14.95%

14.55%

15.88%

14.80%

Consolidated Statements of Financial Condition

    
 

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

2020

 

2020

 

2019

 

2019

 

2019

Assets

     

Cash and cash equivalents

 

$103,954

 

$83,107

 

$70,760

 

$85,675

 

$64,007

Securities available for sale

 

475,614

 

448,043

 

432,233

 

423,193

 

424,252

Equity securities

 

8,375

 

8,080

 

7,909

 

7,856

 

7,222

      

Loans held for sale

 

3,395

 

3,272

 

2,600

 

2,079

 

1,093

Loans

 

2,149,690

 

1,976,582

 

1,811,539

 

1,784,125

 

1,780,504

Less allowance for loan losses

 

16,960

 

14,952

 

14,487

 

14,261

 

14,222

Net Loans

 

2,132,730

 

1,961,630

 

1,797,052

 

1,769,864

 

1,766,282

      

Other assets

 

161,612

 

164,256

 

138,604

 

144,543

 

143,093

Total Assets

 

$2,885,680

 

$2,668,388

 

$2,449,158

 

$2,433,210

 

$2,405,949

      

Liabilities and Stockholders' Equity

     

Deposits

     

Noninterest-bearing

 

$593,162

 

$449,952

 

$434,126

 

$432,609

 

$415,935

Interest-bearing

 

1,846,323

 

1,796,325

 

1,574,838

 

1,608,043

 

1,584,700

Total deposits

 

2,439,485

 

2,246,277

 

2,008,964

 

2,040,652

 

2,000,635

Other interest-bearing liabilities

 

80,115

 

96,852

 

122,197

 

76,324

 

96,978

Other liabilities

 

34,728

 

21,523

 

18,688

 

23,011

 

23,511

Total liabilities

 

2,554,328

 

2,364,652

 

2,149,849

 

2,139,987

 

2,121,124

Stockholders' Equity

 

331,352

 

303,736

 

299,309

 

293,223

 

284,825

Total Liabilities

 

 

 

 

 

 

 

 

 

 

and Stockholders' Equity

 

$2,885,680

 

$2,668,388

 

$2,449,158

 

$2,433,210

 

$2,405,949

      

Period-end shares outstanding

 

28,180

 

28,127

 

27,671

 

27,669

 

27,768

Book value per share

 

$11.76

 

$10.80

 

$10.82

 

$10.60

 

$10.26

Tangible book value per share (Non-GAAP)*

 

9.92

 

8.94

 

9.28

 

9.04

 

8.70

      

* Tangible book value per share is calculated by dividing tangible common equity by average outstanding shares

      

Capital and Liquidity

     

Common Equity Tier 1 Capital Ratio (a)

 

12.56%

 

12.26%

 

12.94%

 

12.70%

 

12.47%

Total Risk Based Capital Ratio (a)

 

13.38%

 

13.43%

 

13.82%

 

13.58%

 

13.34%

Tier 1 Risk Based Capital Ratio (a)

 

12.66%

 

12.70%

 

13.03%

 

12.83%

 

12.59%

Tier 1 Leverage Ratio (a)

 

9.37%

 

10.18%

 

10.69%

 

10.42%

 

10.27%

Equity to Asset Ratio

 

11.48%

 

11.38%

 

12.22%

 

12.05%

 

11.84%

Tangible Common Equity Ratio (b)

 

9.86%

 

9.61%

 

10.67%

 

10.47%

 

10.22%

Net Loans to Assets

 

73.91%

 

73.51%

 

73.37%

 

72.74%

 

73.41%

Loans to Deposits

 

88.12%

 

87.99%

 

90.17%

 

87.43%

 

89.00%

Asset Quality

     

Non-performing loans

 

$12,225

 

$11,845

 

$6,345

 

$6,749

 

$7,252

Other Real Estate Owned

 

41

 

131

 

19

 

74

 

74

Non-performing assets

 

12,266

 

11,976

 

6,364

 

6,823

 

7,326

Loans 30 - 89 days delinquent

 

10,336

 

19,067

 

11,893

 

9,076

 

10,203

Charged-off loans

 

524

 

749

 

519

 

674

 

588

Recoveries

 

132

 

114

 

145

 

163

 

283

Net Charge-offs

 

392

 

635

 

374

 

511

 

305

Annualized Net Charge-offs to

     

Average Net Loans Outstanding

 

0.08%

 

0.13%

 

0.09%

 

0.12%

 

0.07%

Allowance for Loan Losses to Total Loans

 

0.79%

 

0.76%

 

0.80%

 

0.80%

 

0.80%

Non-performing Loans to Total Loans

 

0.57%

 

0.60%

 

0.35%

 

0.38%

 

0.41%

Allowance to Non-performing Loans

 

138.73%

 

126.23%

 

228.32%

 

211.31%

 

196.11%

Non-performing Assets to Total Assets

 

0.43%

 

0.45%

 

0.26%

 

0.28%

 

0.30%

 

 

 

 

 

 

 

 

 

 

 

(a) June 30, 2020 ratio is estimated

 

 

 

 

 

 

 

 

 

 

(b) This is a non-GAAP financial measure. A reconciliation to GAAP is shown below

  

Reconciliation of Total Assets to Tangible Assets

     

For the Six Months Ended

 

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

 

2020

 

2020

 

2019

 

2019

 

2019

 

2020

 

2019

Total Assets

 

$2,885,680

 

$2,668,388

 

$2,449,158

 

$2,433,210

 

$2,405,949

 

$2,885,680

 

$2,405,949

Less Goodwill and other intangibles

 

51,866

 

52,337

 

42,645

 

42,973

 

43,298

 

51,866

 

43,298

Tangible Assets

 

$2,833,814

 

$2,616,051

 

$2,406,513

 

$2,390,237

 

$2,362,651

 

$2,833,814

 

$2,362,651

Average Assets

 

2,842,730

 

2,641,597

 

2,424,574

 

2,409,010

 

2,369,388

 

2,741,903

 

2,354,112

Less average Goodwill and other intangibles

 

52,052

 

51,103

 

42,859

 

43,187

 

43,508

 

47,088

 

43,674

Average Tangible Assets

 

$2,790,678

 

$2,590,494

 

$2,381,715

 

$2,365,823

 

$2,325,880

 

$2,694,815

 

$2,310,438

        
     

 

 

Reconciliation of Common Stockholders' Equity to Tangible Common Equity

   

For the Six Months Ended

 

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

 

2020

 

2020

 

2019

 

2019

 

2019

 

2020

 

2019

Stockholders' Equity

 

$331,352

 

$303,736

 

$299,309

 

$293,223

 

$284,825

 

$331,352

 

$284,825

Less Goodwill and other intangibles

 

51,866

 

52,337

 

42,645

 

42,973

 

43,298

 

51,866

 

43,298

Tangible Common Equity

 

$279,486

 

$251,399

 

$256,664

 

$250,250

 

$241,527

 

$279,486

 

$241,527

Average Stockholders' Equity

 

315,988

 

301,408

 

300,355

 

290,673

 

277,746

 

308,524

 

272,218

Less average Goodwill and other intangibles

 

52,052

 

51,103

 

42,859

 

43,187

 

43,508

 

47,088

 

43,674

Average Tangible Common Equity

 

$263,936

 

$250,305

 

$257,496

 

$247,486

 

$234,238

 

$261,436

 

$228,544

        
        

Reconciliation of Net Income, Excluding Acquisition Related Costs

   
 

For the Three Months Ended

 

For the Six Months Ended

 

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

 

2020

 

2020

 

2019

 

2019

 

2019

 

2020

 

2019

Net income

 

$11,011

 

$8,639

 

$9,675

 

$9,154

 

$8,543

 

$19,650

 

$16,931

Acquisition related costs (income) - tax equated

 

41

 

1,063

 

90

 

97

 

(20)

 

1,104

 

(20)

Net income - Adjusted

 

$11,052

 

$9,702

 

$9,765

 

$9,251

 

$8,523

 

$20,754

 

$16,911

Diluted EPS excluding acquisition costs

 

$0.39

 

$0.34

 

$0.35

 

$0.33

 

$0.31

 

$0.73

 

$0.61

 
 

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

End of Period Loan Balances

 

2020

 

2020

 

2019

 

2019

 

2019

Commercial real estate

 

$715,342

 

$714,477

 

$616,778

 

$602,580

 

$614,452

Commercial

 

472,012

 

283,033

 

255,823

 

251,613

 

256,657

Residential real estate

 

528,853

 

541,534

 

500,024

 

499,996

 

493,529

Consumer

 

208,374

 

210,173

 

209,271

 

207,319

 

207,417

Agricultural loans

 

221,556

 

223,977

 

226,333

 

219,487

 

205,544

Total, excluding net deferred loan costs

 

$2,146,137

 

$1,973,194

 

$1,808,229

 

$1,780,995

 

$1,777,599

      
 

For the Three Months Ended

 

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

Noninterest Income

 

2020

 

2020

 

2019

 

2019

 

2019

Service charges on deposit accounts

 

$753

 

$1,095

 

$1,139

 

$1,208

 

$1,093

Bank owned life insurance income

 

204

 

208

 

192

 

204

 

208

Trust fees

 

1,852

 

1,857

 

1,891

 

1,905

 

1,821

Insurance agency commissions

 

681

 

883

 

696

 

681

 

739

Security gains (losses)

 

(26)

 

157

 

28

 

22

 

(18)

Retirement plan consulting fees

 

408

 

380

 

343

 

338

 

450

Investment commissions

 

304

 

423

 

435

 

384

 

327

Net gains on sale of loans

 

3,658

 

1,366

 

1,517

 

1,143

 

1,055

Debit card and EFT fees

 

967

 

851

 

922

 

935

 

887

Other operating income

 

335

 

650

 

651

 

756

 

567

Total Noninterest Income

 

$9,136

 

$7,870

 

$7,814

 

$7,576

 

$7,129

      
 

For the Three Months Ended

 

June 30,

 

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

Noninterest Expense

 

2020

 

2020

 

2019

 

2019

 

2019

Salaries and employee benefits

 

$9,713

 

$10,231

 

$9,128

 

$9,422

 

$9,266

Occupancy and equipment

 

1,675

 

1,800

 

1,667

 

1,615

 

1,650

State and local taxes

 

583

 

464

 

416

 

468

 

472

Professional fees

 

823

 

816

 

787

 

654

 

887

Merger related costs (income)

 

48

 

1,319

 

104

 

112

 

(19)

Advertising

 

322

 

271

 

607

 

437

 

442

FDIC insurance

 

225

 

225

 

79

 

80

 

85

Intangible amortization

 

331

 

332

 

326

 

326

 

327

Core processing charges

 

934

 

861

 

876

 

900

 

803

Telephone and data

 

348

 

203

 

235

 

236

 

217

Other operating expenses

 

2,738

 

2,215

 

2,293

 

2,308

 

2,709

Total Noninterest Expense

 

$17,740

 

$18,737

 

$16,518

 

$16,558

 

$16,839

 

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

 

Three Months Ended

Three Months Ended

June 30, 2020

June 30, 2019

AVERAGE

INTEREST (1)

AVERAGE

INTEREST (1)

BALANCE

RATE (1)

BALANCE

RATE (1)

EARNING ASSETS

Loans (2)

$2,101,500

$24,842

4.75%

$1,749,828

$22,431

5.14%

Taxable securities

197,906

1,278

2.60

195,934

1,238

2.53

Tax-exempt securities (2)

252,818

2,459

3.91

211,533

2,065

3.92

Equity securities

17,687

137

3.12

12,055

171

5.69

Federal funds sold and other

70,279

30

0.17

29,205

158

2.17

Total earning assets

2,640,190

28,746

4.38

2,198,555

26,063

4.75

Nonearning assets

202,540

170,833

Total assets

$2,842,730

$2,369,388

INTEREST-BEARING LIABILITIES

Time deposits

$493,048

$2,181

1.78%

$401,005

$1,984

1.98%

Brokered time deposits

84,198

319

1.52

94,463

559

2.35

Savings deposits

457,188

267

0.23

416,024

340

0.33

Demand deposits

823,058

1,093

0.53

631,436

1,476

0.94

Short term borrowings

12,613

18

0.57

100,199

631

2.53

Long term borrowings

76,751

343

1.80

5,724

48

3.36

Total interest-bearing liabilities

$1,946,856

4,221

0.87

$1,648,851

5,038

1.23

NONINTEREST-BEARING LIABILITIES

AND STOCKHOLDERS' EQUITY

Demand deposits

556,649

425,672

Other liabilities

23,237

17,119

Stockholders' equity

315,988

277,746

TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

$2,842,730

 

$2,369,388

 

Net interest income and interest rate spread

$24,525

3.51%

$21,025

3.52%

Net interest margin

3.74%

3.84%

 

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.

(2) For 2020, adjustments of $98 thousand and $506 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2019, adjustments of $107 thousand and $427 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. These adjustments were based on a marginal federal income tax rate of 21%, less disallowances.

 

Six Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

AVERAGE

INTEREST (1)

AVERAGE

INTEREST (1)

BALANCE

RATE (1)

BALANCE

RATE (1)

EARNING ASSETS

Loans (2)

$2,014,678

$49,039

4.89%

$1,738,953

$44,002

5.10%

Taxable securities

209,139

2,825

2.72

195,871

2,482

2.56

Tax-exempt securities

242,016

4,702

3.91

209,586

4,076

3.92

Equity securities (2)

16,996

277

3.28

12,058

346

5.79

Federal funds sold and other

64,090

179

0.56

31,712

354

2.25

Total earning assets

2,546,919

57,022

4.50

2,188,180

51,260

4.72

Nonearning assets

194,984

165,932

Total assets

$2,741,903

$2,354,112

INTEREST-BEARING LIABILITIES

Time deposits

$494,385

$4,623

1.88%

$384,643

$3,642

1.91%

Brokered time deposits

94,846

802

1.69

70,793

825

2.33

Savings deposits

441,232

588

0.27

418,306

648

0.31

Demand deposits

756,882

2,486

0.66

610,631

2,679

0.88

Short term borrowings

37,544

338

1.81

148,723

1,862

2.52

Long term borrowings

88,491

799

1.82

5,815

96

3.33

Total interest-bearing liabilities

$1,913,380

9,636

1.01

$1,638,911

9,752

1.20

NONINTEREST-BEARING LIABILITIES

AND STOCKHOLDERS' EQUITY

Demand deposits

$502,710

$427,039

Other liabilities

17,289

15,944

Stockholders' equity

308,524

272,218

TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

$2,741,903

 

$2,354,112

 

Net interest income and interest rate spread

$47,386

3.49%

$41,508

3.52%

Net interest margin

3.74%

3.83%

 

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.

(2) For 2020, adjustments of $196 thousand and $967 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2019, adjustments of $209 thousand and $843 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. These adjustments were based on a marginal federal income tax rate of 21%, less disallowances.

 

Kevin J. Helmick, President and CEO
20 South Broad Street, P.O. Box 555
Canfield, OH 44406
330.533.3341
Email: exec@farmersbankgroup.com

Source: Farmers National Banc Corp.

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