CANFIELD, Ohio--(BUSINESS WIRE)--
Farmers National Banc Corp. (OTCBB: FMNB), today reported consolidated
net income for the quarter ended June 30, 2009 of $1.657 million, or
$0.12 per share, compared to $1.684 million, or $0.13 per share in the
preceding quarter and $1.534 million, or $0.12 per share earned the same
three month period ended June 30, 2008.
For the six months ending June 30, 2009, net income totaled $3.341
million, a 2.55% increase from the net income of $3.258 million reported
for the six months ended June 30, 2008. Earnings per share were $0.25
for the first six months of 2009 which was the same amount reported at
June 30, 2008. Annualized return on average equity and average assets
for the second quarter of 2009 was 8.54% and .73%, respectively. This
compares to 8.73% and .80% for the same period in 2008.
During the first six months of this year and specifically in the second
quarter, all FDIC insured financial institutions had to deal with
increases in FDIC insurance premiums. The increase in FDIC premiums was
due to higher quarterly assessment rates and a special assessment levied
on all banks to restore the reserve ratio of the Deposit Insurance Fund,
which had been depleted by bank failures over the past six months. For
the six months ended June 30, 2009, our premium expense increased $872
thousand over the same period last year. Included in this increase was
the additional special assessment of $440 thousand. As a result, FDIC
insurance expense for the second quarter amounted to a total of $845
thousand versus $28 thousand paid during the second quarter of 2008.
Additionally, in June 2009, Farmers completed the sale of $12 million of
federal agency and mortgage backed securities, resulting in a pre-tax
gain of $509 thousand to help offset this expense.
"The common theme during this quarter's earning reports will be directed
to the extraordinary FDIC insurance premium expenses that all FDIC
insured banks have incurred this year along with the ongoing challenge
towards credit quality and loan losses." stated Frank L. Paden,
President & CEO. "Unfortunately, we can't be eliminated from those
issues in our industry, however, our focus is to look forward to
continue to grow our business organically and manage the balance sheet
and risk profile accordingly. It is a pleasure to report that our team
of commercial lenders and personal bankers has given additional lift to
our business model during this second quarter's results as they continue
to originate new loans and attract new core deposit relationships. Our
net interest income, which is the primary source of revenues for our
Company increased 28.7% over this last year's results. Our priorities
are to continue our growth initiatives and increase earnings; maintain
the appropriate levels of capital that are essential so that we remain a
well-capitalized institution under all regulatory guidelines; continue
to deal with the number of issues the banking industry has been facing;
closely monitor our efficiency ratio; and strategically manage interest
rate risk and credit risk, specifically, the non-performing assets."
The Company's total assets recorded at June 30, 2009 were $957.848
million, an increase of 16.2% over $824.513 million in total assets
recorded at this same time in 2008. On June 30, net loans were $586.756
million compared to $504.027 million in June 2008, representing a 16.4%
increase. Total deposits at June 30, 2009 were $713.616 million, a 12.6%
increase from $633.846 million recorded at June 30, 2008. "Given the
very difficult financial climate, management is very pleased with the
consistent growth of loans, deposits and total assets. We have made
strategic investments and process improvements that should provide a
foundation for continued growth in earnings and enhance our customer
experience," adds John S. Gulas, Executive Vice President and COO.
Net Interest Income --- Net interest income, which is the
Company's largest revenue source increased $1.835 million, or 28.7%,
from the same three-month period in 2008. The increase was attributable
to higher balances of loans and deposits and an improved net interest
margin. Since the end of 2008, the net interest margin, on a fully
taxable equivalent basis, increased from 3.58% to 3.93%. During that six
month period, the yields on average earning assets have decreased by 22
basis points, while our cost of interest-bearing liabilities decreased
by 68 basis points. Average deposit growth slightly outpaced the average
loan growth over the past six months. Excess deposit balances are being
positioned in liquid investments to fund future loan growth and to make
investment purchases, depending on the movement of interest rates.
Management continues to focus on growing core deposits along with a mix
of time deposits to meet the demand of the markets.
Non-Interest Income --- Excluding the gain-on-sale of securities,
non-interest income was $2.208 million in the second quarter of 2009,
compared to $1.118 million in the preceding quarter, and compared to
$1.195 million in the second quarter of 2008. Most of the increases
quarter-over-quarter and year-over-year are attributable the trust fee
income recognized during 2009 from the Corporation's purchase of Butler
Wick Trust Company (Now known as Farmers Trust Company) that closed on
March 31, 2009. Trust fee income amounted to $1.003 million for three
month period ending June 30, 2009.
Operating Expenses --- Non-interest expenses totaled $7.803
million for the second quarter of 2009 compared to $6.256 million for
the first quarter of 2009, and $5.095 million in the second quarter of
2008. On a year-to-date basis, operating expenses increased $3.958
million over the same six month period of 2008. This increase is a
combination of the regular and special FDIC insurance premiums assessed
in 2009 and the recognition of merger-related expenses attributable to
the Corporation's purchase of Butler Wick Trust Company from Butler Wick
Corp. that closed on March 31, 2009. These non-recurring expenses
totaled approximately $1.381 million during 2009. The addition of the
trust company also generated $1.023 million in additional recurring
costs based on the addition of staff and operations for the trust
company.
Asset Quality --- For the three months ended June 30, 2009,
management provided $1.050 million to the allowance for loan losses, an
increase of $600 thousand from the preceding quarter and an increase of
$950 thousand over the same period the prior year. These increases are
attributable to the increase in the ratio of nonperforming loans to
total loans, which increased from 1.68% at March 31, 2009 to 1.88% on
June 30, 2009, as well as the need to increase the reserve based on the
16% increase in net loans. As of June 30, 2009, total non-performing
loans were $11.178 million, compared to $2.879 million at this same time
in 2008. This increase in non-performing loans is due to a limited
number of account relationships and the classification of certain
commercial real estate and land development loans that are in default
according to the terms of the contract. On June 30, 2009, the ratio of
the allowance for loan losses (ALLL) to non-performing loans was 59%,
compared to 61% in preceding quarter and 191% at June 2008.
During this past three months, our Credit Administration Department has
completed an independent full scope review of the commercial real estate
and commercial and industrial loan portfolios to ensure the proper risk
assessment of these portfolios. We continue to implement aggressive
strategies to decrease our volume of non-performing assets. Net
charge-offs for the quarter ending June 30, 2009 was $245 thousand and
$413 thousand through the first six months of 2009 or 0.15% of average
loans annualized. This data compares net charge offs of $70 thousand and
$182 thousand at these same periods in 2008 and an annualized net
charge-off ratio of 0.26% for 2008.
Based on the evaluation of the adequacy of the allowance for loan
losses, management believes that the allowance for loan losses at June
30, 2009 was adequate and reflects probable incurred losses in the
portfolio. As of June 30, 2009, the ALLL/total loan ratio was 1.12%
compared to 1.02% at March 31, 2009 and 1.08% in June 2008. The increase
in this particular ratio is attributable to the increase in the amount
of loan loss provision expense in 2009. On June 30, 2009, the ALLL
balance is $6.640 million, up 20% from $5.553 million at year-end
December 31, 2008. With the increase in non-performing loans over the
past year and the increase in net charge-offs, management felt it was
prudent to increase the ALLL provision accordingly. The adequacy of the
ALLL is analyzed monthly and adjusted as necessary to absorb probable
loan losses. It may be necessary to increase this reserve based on
various factors such as more weakening in the current economic
conditions or should any borrower's financial strength deteriorate that
would impact cash flow and their ability to service the debt.
Equity - Total shareholder equity was $78.049 million as of June
30, 2009, compared to $73.287 million in June 2008. This represents a
6.5% increase. Shareholders received a $0.12 per share cash dividend on
June 30, 2009. Book value increased from $5.58 per share in June 2008 to
$5.82 per share on June 30, 2009.
Farmers National Banc Corp. is the bank holding company for the Farmers
National Bank of Canfield and Farmers Trust Company. Farmers operates
sixteen banking offices throughout Mahoning, Trumbull and Columbiana
Counties and two trust offices located in Youngstown and Howland. The
bank offers a wide range of banking and investment services to companies
and individuals, and maintains a website at www.fnbcanfield.com.
This earnings announcement presents a brief analysis of the assets and
liability structure of the Corporation and a brief discussion of the
results of operations for each of the periods presented. Certain
statements in this announcement that relate to Farmers National Banc
Corp.'s plans, objectives, or future performance may be deemed to be
forward-looking statements within the Private Securities Litigation
Reform Act of 1995. Such statements are based on management's current
expectations. Actual strategies and results in future periods may differ
materially from those currently expected because of various risks and
uncertainties.
Among the important factors that could cause actual results to differ
materially are interest rates, changes in the mix of the company's
business, competitive pressures, general economic conditions and the
risk factors detailed in the company's other periodic reports and
registration statements filed with the Securities and Exchange
Commission.
Farmers National Banc Corp. and Subsidiaries
Consolidated Financial Highlights
(Amounts in thousands, except per share data)
Consolidated
Statements of For the Three Months Ended For the Six Months Ended
Income
June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Total interest $12,329 $11,347 $24,323 $22,545
income
Total interest 4,101 4,954 8,412 10,318
expense
Net interest 8,228 6,393 15,911 12,227
income
Provision for loan 1,050 100 1,500 210
losses
Other income 2,643 644 3,761 2,039
Other expense 7,803 5,095 14,059 10,101
Income before 2,018 1,842 4,113 3,955
income taxes
Income taxes 361 308 772 697
Net income $1,657 $1,534 $3,341 $3,258
Basic and diluted $0.12 $0.12 $0.25 $0.25
earnings per share
Cash dividends 1,601 1,570 3,189 3,648
Cash dividends per 0.12 0.12 0.24 0.28
share
Book value per 5.82 5.58 5.82 5.58
share
Consolidated Statements of June 30, 2009 June 30, 2008
Financial Condition
Assets
Cash and cash $41,287 $27,059
equivalents
Securities 281,837 253,533
available for sale
Loans 593,396 509,514
Less allowance for 6,640 5,487
loan losses
Net Loans 586,756 504,027
Other assets 47,968 39,894
Total Assets $957,848 $824,513
Liabilities and
Stockholders'
Equity
Deposits $713,616 $633,846
Other
interest-bearing 161,893 113,428
liabilities
Other liabilities 4,290 3,952
Total liabilities 879,799 751,226
Stockholders' 78,049 73,287
Equity
Total Liabilities and Stockholders' $957,848 $824,513
Equity
Period-end shares 13,415 13,145
outstanding
Ratios
Return on Average
Assets 0.73 % 0.80 %
(Annualized)
Return on Average
Equity 8.54 8.73
(Annualized)
Efficiency Ratio (Year-to-date on a 68.90 64.55
tax equivalent basis)
Capital to Asset 8.15 8.89
Ratio
Dividends to Net
Income 95.45 111.97
(Year-to-date)
Net Loans to 61.26 61.13
Assets
Loans to Deposits 83.15 80.38
Allowance for Loan
Losses to Total 1.12 1.08
Loans
Non-performing
Loans to Total 1.88 0.57
Loans
Unaudited
Source: Farmers National Banc Corp.
Contact: Farmers National Banc Corp.
Frank L. Paden, President, 330-533-3341
330-533-0451 (FAX)
Email: exec@fnbcanfield.com