-- Total Assets Now Exceed $1 Billion, Representing a 17% Increase in Total
Assets since September 2008.
-- Net Interest Income Increases $1.585 Million or 23% from the Same
Quarter in 2008.
-- Net Interest Margin (Tax Equivalent) Increased to 3.90% from 3.58% at
the End of 2008.
-- Non-Performing Loans Represent 2.06% of Total Loans and 1.24% of Total
Assets.
CANFIELD, Ohio--(BUSINESS WIRE)--
Farmers National Banc Corp. (OTCBB: FMNB), today reported another
profitable quarter with consolidated net income for the quarter ended
September 30, 2009 of $1.556 million, or $0.12 per share, compared to
$1.657 million, or $0.12 per share in the preceding quarter and $999
thousand, or $0.08 per share earned the same three month period ended
September 30, 2008.
For the nine months ending September 30, 2009, net income totaled $4.897
million, a 15.03% increase from the net income of $4.257 million
reported for the nine months ended September 30, 2008. Earnings per
share improved to $0.37 for the first nine months of 2009 compared to
$0.33 earnings per share for the same nine month period in 2008.
Annualized return on average equity and average assets for the
nine-month period ending September 30, 2009, also improved to 8.27% and
.69%, respectively. This compares to 7.68% and .68% for the same period
in 2008.
"I am pleased to again report another quarter of solid earnings for the
Corporation. Our third quarter performance reflects continued growth in
our core loan portfolios and deposits in spite of a clearly very
challenging economic environment," stated Frank L. Paden, President &
CEO. "Year-over-year, core commercial and retail lending portfolios
increased 15% and total deposits grew 14%. The foundation of our
financial position - our talented people, prudent risk management,
liquidity and our capital position has served us well in these
challenging times and continue to differentiate us from our competition.
Significant drivers of the company's performance this quarter were
increases in our net interest income, improvement in our net interest
margin, continued loan growth across our strategic lending business
lines, improvements in fee income and expense controls. These were
partially offset by FDIC deposit insurance expenses and our decision to
increase the allowance for loan losses." Commenting on asset quality,
Paden added, "With the growth of our loan portfolio, higher net loan
losses and the continued economic stress in the markets, we increased
our allowance for loan loss provision balance, while maintaining
favorable key asset quality ratios compared to our peers. Our credit
team has implemented a proactive process to identify our credit problems
and take appropriate steps to assure our loan loss reserve is adequate
to cover the exposures in our loan portfolio."
The Company's total assets recorded at September 30, 2009 were $1.016
billion, an increase of 16.5% over $872.057 million in total assets
recorded at this same time in 2008. On September 30, net loans were
$604.842 million compared to $524.457 million in September 2008,
representing a 15.3% increase. Total deposits at September 30, 2009 were
$743.899 million, a 14.5% increase from $649.857 million recorded at
September 30, 2008.
Net Interest Income --- During the third quarter, net interest
income, which is the Company's largest revenue source increased $1.585
million, or 23%, 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
3.90%. During that nine month period, the yields on average earning
assets have decreased by 31 basis points, while our cost of
interest-bearing liabilities decreased by 76 basis points. Average
deposit growth slightly outpaced the average loan growth over during
2009. 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 and in accordance with liquidity
needs. Management continues to focus on growing core deposits while
maintaining a disciplined pricing strategy.
Non-Interest Income --- Non-interest income was $2.609 million in
the third quarter of 2009, compared to $2.643 million in the preceding
quarter, and compared to $1.595 million in the third quarter of 2008.
Last years result's excludes the $1.217 million (after tax)
other-than-temporary impairment charge related to the Fannie Mae
Preferred Stock owned by the Corporation. Year-over-year increases 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 $1.248 million for three month period ending September 30,
2009 compared to the $1.003 million reported during the quarter ending
June 30, 2009.
Operating Expenses --- Non-interest expenses totaled $7.675
million for the third quarter of 2009 compared to $7.803 million for the
preceding quarter, and $5.269 million in the third quarter of 2008. On a
year-to-date basis, operating expenses increased $6.364 million over the
same nine month period of 2008. This increase is a combination of the
regular and special FDIC insurance premiums assessed in 2009, the
recognition of merger-related expenses attributable to the Corporation's
purchase of the trust company and $2.1 million of general operating
expenses related to the Trust Company.
Asset Quality --- For the three months ended September 30, 2009,
management provided $1.550 million to the allowance for loan losses, an
increase of $500 thousand from the preceding quarter and an increase of
$1.2 million 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 1.88% at June 30, 2009 to 2.06% on
September 30, 2009. As of September 30, 2009, total non-performing loans
were $12.640 million, compared to $11.178 million on June 30, 2009 and
$3.088 million at this same time in 2008. This increase in
non-performing loans is related to a limited number of commercial real
estate and land development relationships. On September 30, 2009, the
ratio of the allowance for loan losses (ALLL) to non-performing loans
was 57%, compared to 59% in preceding quarter and 176% at September 2008.
Net charge-offs for the quarter ending September 30, 2009 were $980
thousand compared to $245 thousand in the second quarter of 2009 and
$404 thousand at for the same period ending September 30, 2008. For the
nine months period ending September 30, 2009, net charge-offs total
$1.392 million, representing an annualized ratio of 0.33% of net
charge-offs to average loans. For this same nine month period in 2008,
net charge offs were $586 thousand, representing .12% of average loans
annualized.
Based on the evaluation of the adequacy of the allowance for loan losses
(ALLL), management believes that the allowance for loan losses at
September 30, 2009 was adequate and reflects probable incurred losses in
the portfolio. As of September 30, 2009, the ALLL/total loan ratio was
1.18% compared to 1.12% at June 30, 2009 and 1.03% in September 2008.
The increase in this particular ratio is attributable to the increase in
the amount of loan loss provision expense in 2009. On September 30,
2009, the ALLL balance is $7.210 million, up 29.83% 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 growth in the overall loan portfolio and 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 $82.259 million as of
September 30, 2009, compared to $73.297 million in September 2008. This
represents a 12.2% increase. Shareholders received a $0.06 per share
cash dividend on September 30, 2009. This reflects a decrease from the
$0.12 per share cash dividend that was paid the previous four quarters.
The cash dividend reduction fits with the strategic plans for the
Corporation that gives us the opportunity to preserve capital and
strengthen our balance sheet to support our growth initiatives in the
current challenging economic conditions. Book value increased from $5.55
per share in September 2008 to $6.11 per share on September 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 Nine Months Ended
Income
Sept 30, 2009 Sept 30, 2008 Sept 30, 2009 Sept 30, 2008
Total interest $12,649 $11,808 $36,972 $34,353
income
Total interest 4,178 4,922 12,590 15,240
expense
Net interest 8,471 6,886 24,382 19,113
income
Provision for loan 1,550 350 3,050 560
losses
Other income 2,609 (249) 6,370 1,790
Other expense 7,675 5,269 21,734 15,370
Income before 1,855 1,018 5,968 4,973
income taxes
Income taxes 299 19 1,071 716
Net income $1,556 $999 $4,897 $4,257
Basic and diluted $0.12 $0.08 $0.37 $0.33
earnings per share
Cash dividends 805 1,577 3,993 5,226
Cash dividends per 0.06 0.12 0.30 0.40
share
Book value per 6.11 5.55 6.11 5.55
share
Consolidated Statements of Sept 30, 2009 Sept 30, 2008
Financial Condition
Assets
Cash and cash $45,152 $32,529
equivalents
Securities 320,781 274,373
available for sale
Loans 612,052 529,890
Less allowance for 7,210 5,433
loan losses
Net Loans 604,842 524,457
Other assets 45,276 40,698
Total Assets $1,016,051 $872,057
Liabilities and
Stockholders'
Equity
Deposits $743,899 $649,857
Other
interest-bearing 186,272 144,813
liabilities
Other liabilities 3,621 4,090
Total liabilities 933,792 798,760
Stockholders' 82,259 73,297
Equity
Total Liabilities and Stockholders' $1,016,051 $872,057
Equity
Period-end shares 13,463 13,214
outstanding
Ratios
Return on Average
Assets 0.69% 0.68%
(Annualized)
Return on Average
Equity 8.27 7.68
(Annualized)
Efficiency Ratio (Year-to-date on a 67.48 63.20
tax equivalent basis)
Capital to Asset 8.10 8.41
Ratio
Dividends to Net
Income 81.54 122.76
(Year-to-date)
Net Loans to 59.53 60.14
Assets
Loans to Deposits 82.28 81.54
Allowance for Loan
Losses to Total 1.18 1.03
Loans
Non-performing
Loans to Total 2.06 0.58
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