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Farmers National Banc Corp. Announces 2021 Second Quarter Financial Results

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·31 min read
In this article:
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  • Record net income of $15.6 million for the quarter is 41% higher than same quarter in 2020

  • Net interest income increased 10.7% for the quarter compared to the same period a year ago, primarily as a result of a higher level of interest earning assets

  • Increases in fee income from wealth management businesses contributed to an 8% increase in total noninterest income compared to the second quarter in 2020

  • 154 consecutive quarters of profitability

  • Return on average assets, annualized, was 1.90% for the second quarter

  • 17% growth in customer non-brokered deposits in the current quarter compared to June 30, 2020

CANFIELD, Ohio, July 28, 2021--(BUSINESS WIRE)--Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months ended June 30, 2021.

Net income for the three months ended June 30, 2021 was $15.6 million, or $0.55 per diluted share, which compares to $11.0 million, or $0.39 per diluted share, for the three months ended June 30, 2020 and $14.6 million or $0.51 per diluted share for the linked quarter. Net income excluding acquisition costs (non-GAAP) for the quarter ended June 30, 2021 was $15.7 million or $0.55 per share, compared to $11.1 million or $0.39 per share for the same quarter in 2020 and $14.6 million or $0.51 per share for the most recent prior quarter.

Annualized return on average assets and annualized return on average equity were 1.90% and 17.17%, respectively, for the three month period ended June 30, 2021, compared to 1.56% and 14.02% for the same three month period in 2020, and 1.87% and 16.81% for the linked quarter. Farmers’ annualized return on average tangible equity excluding acquisition costs (non-GAAP) was 19.91% for the quarter ended June 30, 2021 compared to 16.75% for the same quarter in 2020 and 19.31% for the linked quarter.

On June 22, 2021, Farmers entered into an agreement and plan of merger with Cortland Bancorp Inc. ("Cortland"), the parent company of Cortland Savings and Banking Company ("Cortland Bank"). This transaction is subject to receipt of Cortland shareholder approval and customary regulatory approvals and is expected to close during the fourth quarter of 2021. Farmers expects that the transaction will increase Farmers’ market share in Trumbull, Mahoning and Cuyahoga Counties and enables Farmers to continue building local scale throughout Northeast Ohio. As of March 31, 2021, Cortland had total assets of $791.7 million, which included gross loans of $518.6 million, deposits of $680.3 million and equity of $81.1 million.

Kevin J. Helmick, President and CEO, stated, "Our record year-to-date financial results demonstrates Farmers strong position to grow earnings, despite the current low interest rate and loan environment. This success is a direct result of our win-win culture and providing business and retail customers with local, personal, and diversified financial services."

"As a high performing financial institution, we believe we have significant opportunities to create value for shareholders. The recently announced acquisition of Cortland Bank immediately enhances economies of scale and our ability to expand Farmers’ diversified product offerings to Cortland Bank’s customer base.

"Our customer-first culture and the hard work of all our team members continues to drive our success. I want to thank everyone at Farmers for their dedication and look forward to welcoming Cortland Bank’s team to our corporate family," concluded Mr. Helmick.

Farmers offered special financial assistance to support customers who were 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 the dates listed:

June 30, 2021

March 31, 2021

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

(dollars in thousands)

Balance

Number of Loans

Balance

Number of Loans

Balance

Number of Loans

Balance

Number of Loans

Balance

Number of Loans

Commercial real estate

$

8,716

2

$

16,584

5

$

19,027

6

$

155

1

$

43,954

44

Commercial

0

0

0

0

1,424

2

0

0

8,515

69

Agriculture

0

0

0

0

0

0

469

2

8,340

22

Residential real estate

0

0

0

0

0

0

222

1

3,785

37

Consumer

0

0

0

0

2

1

2

1

1,858

100

Total

$

8,716

2

$

16,584

5

$

20,453

9

$

848

5

$

66,452

272

The Company offered three month deferrals upon request by the borrowers, beginning in the middle of March, 2020 and concluding at the end of the three month deferral period. For those borrowers in industries that were greatly impacted by COVID-19, additional deferrals were considered and granted beyond the initial three month period. The range of deferred months for subsequent requests were three to nine months. The decline in deferred loans and balances was due to borrowers not requesting additional deferments and beginning to restart payments under the original terms of their loan.

Farmers is also a preferred SBA lender and we dedicated significant additional staff and other resources to help our customers complete and submit their applications and supporting documentation for loans offered under the 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. During the initial 2020 period of the PPP program, the Company facilitated PPP assistance to 1,714 business customers totaling $199.8 million. The Company, on behalf of its customers, began processing borrower applications for PPP forgiveness at the beginning of September 2020. The SBA has up to ninety days to review an application for PPP forgiveness and provide a decision at the end of that review. Once forgiveness of the PPP loans has been communicated and payment is received from the SBA, the Company will record the cash received from the SBA, pay-off the loans based on the amount of forgiveness provided and accelerate the amount of net deferred loan fees/costs recognized for the portion of the PPP loans that are forgiven. During the period ended June 30, 2021, the Company has received life to date payments from the SBA for forgiveness of loans totaling $181.6 million, or approximately 90.8% of the PPP loans originated in 2020. The Company has processed $83.9 million in new loans for PPP loan funding during the six month period ended June 30, 2021. The Company has also received payments from the SBA for forgiveness of loans totaling $5.2 million, or approximately 6.2% of PPP loans originated in 2021.

2021 Second Quarter Financial Highlights

  • Loans

Total loans were $1.96 billion at June 30, 2021, compared to $2.15 billion at June 30, 2020, representing a decrease of 8.8%. The decrease in loans has occurred primarily in the PPP category, with $92.1 million, net of deferred fees, in outstanding balances at June 30, 2021 compared to $193.0 million at June 30, 2020 representing a decrease of $101 million or 52%. Average loans now comprise 64.7% of the Bank's average earning assets for the quarter ended June 30, 2021, compared to 79.6% for the same period in 2020. A summary of loans summarized by industries that may have particular vulnerability to the effects of COVID-19 and their outstanding balance as a percentage of total loans, as of June 30, 2021, is shown in the following table:

(dollars in thousands)

Outstanding Balance

% of total loans

Restaurants and Catering Facilities

$38,819

1.98%

Hotels

40,957

2.09%

Golf Courses

7,095

0.36%

Energy

1,256

0.07%

Total

$88,127

4.65%

  • 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 17% from $2.4 billion at June 30, 2020 to $2.8 billion at June 30, 2021. As a result of the large increase in deposits, the loan to deposit ratio at June 30, 2021 stands at 70.5%, a significant decrease compared to 88.1% 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 remains at a low level, currently at 0.43% which is the same ratio reported one year ago. Early stage delinquencies, defined as 30-89 days past due, were $7.6 million, or 0.39% of total loans, at June 30, 2021, compared to $10.3 million, or 0.43% of total loans, for the quarter ended June 30, 2020. Net charge-offs for the current quarter were $179 thousand, compared to $392 thousand in the same quarter in 2020. Total net charge-offs as a percentage of average net loans outstanding is 0.04% for the quarter ended June 30, 2021, down 0.04% compared to the same quarter in 2020.

As a result of improved factors that exist in the current economic environment as well as the decrease in the loan portfolio when compared to prior quarters, the Company was able to decrease its provision for credit losses to $50 thousand for the quarter ended June 30, 2021, compared to the $425 thousand recorded in the first quarter of this year. As an overall percentage of loans, the allowance for credit losses increased to 1.27% for the current quarter compared to 1.22% for the quarter ended March 31, 2021. Excluding the PPP loans, this allowance for credit losses to gross loans ratio increased to 1.33% (non-GAAP) as of June 30, 2021, and the ratio of the allowance for credit losses to gross loans, excluding PPP loans and acquired loans is 1.52% (non-GAAP).

  • Net interest margin

The net interest margin for the three months ended June 30, 2021 was 3.54%, a 20 basis points decrease from the quarter ended June 30, 2020, and 4 basis points less than the 3.58% reported for the linked quarter. In comparing the second quarter of 2021 to the same period in 2020, asset yields decreased 56 basis points, while the cost of interest-bearing liabilities decreased 49 basis points. Most of the decrease in the asset yields was the result of lower rates earned on taxable and tax-exempt securities. Each of the major interest-bearing liability categories experienced cost decreases compared to one year ago. The net interest margin for the quarter ended June 30, 2021 excluding interest and fees from PPP loans would decrease the margin by 12 basis points (non-GAAP). The net interest margin is also impacted by the additional accretion as a result of the discounted loan portfolios acquired in previous mergers, which increased the net interest margin by 4 basis points for the quarter ended June 30, 2021 and 5 basis points for the quarter ended June 30, 2020.

  • Noninterest income

Noninterest income increased 8.1% to $9.9 million for the quarter ended June 30, 2021 compared to $9.1 million in the same quarter in 2020. The Company’s wealth management businesses led the improvement as trust fee income increased $506 thousand, or 27.32%, insurance agency commissions increased $267 thousand, or 39.2% and investment commissions increased $219 thousand, or 72%. Other improvements noted include debit card interchange fees increasing $259 thousand, or 26.78%, and other operating income increasing $471 thousand, or 141%. Those increases were offset by a $1.2 million, or 31.66%, decrease in gain on sale of mortgage loan income resulting from a slowdown in the level of mortgage loan refinancing.

  • Noninterest expenses

Farmers has remained committed to managing the level of noninterest expenses. Total noninterest expenses for the second quarter of 2021 decreased 1.72% to $17.4 million compared to $17.7 million in the same quarter in 2020. This was primarily a result of decreases in telephone and data communication costs of $209 thousand, or 60.06%, core processing charges of $103 thousand, or 11.03%, advertising expense of $126 thousand, or 39.13%, and FDIC insurance of $105 thousand, or 46.67%. These decreases were offset by increases of $215 thousand, or 12.84%, in occupancy and equipment expense and $153 thousand, or 1.58%, in salaries and employee benefits. Annualized noninterest expenses excluding acquisition costs (non-GAAP) measured as a percentage of quarterly average assets improved from 2.50% in the second quarter of 2020 to 2.12% in the second quarter of 2021.

  • Efficiency ratio

The efficiency ratio for the quarter ended June 30, 2021 improved to 46.14% compared to 50.75% for the same quarter in 2020. The increases in several categories of noninterest income and net interest income, accompanied with lower noninterest expenses were the main drivers of the improvement.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $3.3 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 41 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, 2021 are $3.1 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, net income excluding costs related to acquisition activities and allowance for credit losses to gross loans, excluding PPP loans and acquired loans, 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 to their GAAP equivalents 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 the COVID-19 pandemic, including further resurgence in the spread of 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; impacts of the upcoming U.S. elections on the regulatory landscape, capital markets, and response to and management of the COVID-19 pandemic including further economic stimulus from the federal government; Farmers’ failure to integrate Cortland and Cortland Bank with Farmers in accordance with expectations; deviations from performance expectations related to Cortland and Cortland Bank; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2020 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.

IMPORTANT ADDITIONAL INFORMATION

In connection with the proposed merger with Cortland, Farmers will file with the SEC a Registration Statement on Form S-4 that will include a proxy statement of Cortland and a prospectus of Farmers, as well as other relevant documents concerning the proposed transaction.

SHAREHOLDERS OF CORTLAND AND OTHER INVESTORS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT/PROSPECTUS TO BE INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-4, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT FARMERS, CORTLAND, THE PROPOSED MERGER, THE PERSONS SOLICITING PROXIES WITH RESPECT TO THE PROPOSED MERGER AND THEIR INTERESTS IN THE PROPOSED MERGER AND RELATED MATTERS.

Investors and security holders will be able to obtain free copies of the Registration Statement on Form S-4 (when available) and other documents filed with the SEC by Farmers through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Farmers will be available free of charge on Farmers’ website at https://www.farmersbankgroup.com or may be obtained from Farmers by written request to Farmers National Banc Corp., 20 South Broad Street, Canfield, Ohio 44406, Attention: Investor Relations.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale is unlawful before registration or qualification of the securities under the securities laws of the jurisdiction. No offer of securities shall be made except by means of a prospectus satisfying the requirements of Section 10 of the Securities Act.

The respective directors and executive officers of Farmers and Cortland and other persons may be deemed to be participants in the solicitation of proxies from Cortland shareholders with respect to the merger. Information regarding the directors and executive officers of Farmers is available in its proxy statement filed with the SEC on March 12, 2021 in connection with its 2021 Annual Meeting of Shareholders. Information regarding directors and executive officers of Cortland is available on its website at www.cortlandbank.com. Other information regarding the participants in the solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and prospectus to be included in the Registration Statement on Form S-4 and other relevant materials to be filed with the SEC when they become available.

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

2021

2021

2020

2020

2020

2021

2020

Change

Total interest income

$28,609

$27,790

$28,833

$27,635

$28,142

$56,399

$55,859

1.0%

Total interest expense

2,119

2,523

3,030

3,470

4,221

4,642

9,636

-51.8%

Net interest income

26,490

25,267

25,803

24,165

23,921

51,757

46,223

12.0%

Provision for loan losses

50

425

3,000

2,600

2,400

475

3,500

-86.4%

Noninterest income

9,872

10,583

10,682

9,467

9,136

20,455

17,006

20.3%

Acquisition related costs

104

12

1,798

58

48

116

1,367

-91.5%

Other expense

17,330

17,756

17,979

17,662

17,692

35,086

35,110

-0.1%

Income before income taxes

18,878

17,657

13,708

13,312

12,917

36,535

23,252

57.1%

Income taxes

3,303

3,101

2,351

2,443

1,906

6,404

3,602

77.8%

Net income

$15,575

$14,556

$11,357

$10,869

$11,011

$30,131

$19,650

53.3%

Average diluted shares outstanding

28,353

28,336

28,322

28,291

28,280

28,336

28,492

Basic earnings per share

0.55

0.52

0.40

0.39

0.39

1.07

0.69

Diluted earnings per share

0.55

0.51

0.40

0.38

0.39

1.06

0.69

Cash dividends

3,107

3,107

3,100

3,101

3,100

6,214

6,204

Cash dividends per share

0.11

0.11

0.11

0.11

0.11

0.22

0.22

Performance Ratios

Net Interest Margin (Annualized)

3.54%

3.58%

3.73%

3.59%

3.74%

3.56%

3.74%

Efficiency Ratio (Tax equivalent basis)

46.14%

48.24%

50.25%

50.66%

50.75%

47.17%

55.04%

Return on Average Assets (Annualized)

1.90%

1.87%

1.49%

1.46%

1.56%

1.89%

1.44%

Return on Average Equity (Annualized)

17.17%

16.81%

13.10%

12.87%

14.02%

17.15%

12.81%

Dividends to Net Income

19.95%

21.35%

27.30%

28.53%

28.15%

20.62%

31.57%

Other Performance Ratios (Non-GAAP)

Return on Average Tangible Assets

1.93%

1.87%

1.52%

1.50%

1.58%

1.90%

1.46%

Return on Average Tangible Equity

19.81%

19.30%

15.48%

15.30%

16.69%

19.76%

15.03%

Return on Average Tangible Equity excluding acquisition costs

19.91%

19.31%

17.43%

15.37%

16.75%

19.82%

15.88%

Consolidated Statements of Financial Condition

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

2021

2021

2020

2020

2020

Assets

Cash and cash equivalents

$149,357

$326,385

$254,621

$199,575

$103,954

Securities available for sale

996,271

802,866

575,600

481,509

475,614

Equity securities

6,658

6,902

6,881

8,307

8,375

Loans held for sale

1,922

3,993

4,766

7,076

3,395

Loans

1,959,865

2,037,404

2,078,044

2,147,158

2,143,600

Less allowance for credit losses (a)

24,806

24,935

22,144

19,341

16,960

Net Loans

1,935,059

2,012,469

2,055,900

2,127,817

2,126,640

Other assets

170,791

171,909

173,380

164,895

161,611

Total Assets

$3,260,058

$3,324,524

$3,071,148

$2,989,179

$2,879,589

Liabilities and Stockholders' Equity

Deposits

Noninterest-bearing

$663,640

$675,045

$608,791

$577,334

$593,162

Interest-bearing

2,115,183

2,158,009

2,002,087

1,960,998

1,846,323

Total deposits

2,778,823

2,833,054

2,610,878

2,538,332

2,439,485

Other interest-bearing liabilities

78,369

79,683

78,906

81,690

80,115

Other liabilities

35,958

64,432

31,267

29,189

28,637

Total liabilities

2,893,150

2,977,169

2,721,051

2,649,211

2,548,237

Stockholders' Equity

366,908

347,355

350,097

339,968

331,352

Total Liabilities

and Stockholders' Equity

$3,260,058

$3,324,524

$3,071,148

$2,989,179

$2,879,589

Period-end shares outstanding

28,322

28,237

28,190

28,186

28,180

Book value per share

$12.95

$12.30

$12.42

$12.06

$11.76

Tangible book value per share (Non-GAAP)*

11.23

10.56

10.66

10.23

9.92

* 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 (b)

14.10%

13.49%

13.22%

12.98%

12.65%

Total Risk Based Capital Ratio (b)

15.70%

15.10%

14.72%

14.36%

13.92%

Tier 1 Risk Based Capital Ratio (b)

14.54%

13.93%

13.67%

13.43%

13.10%

Tier 1 Leverage Ratio (b)

9.70%

9.69%

9.77%

9.67%

9.71%

Equity to Asset Ratio

11.25%

10.45%

11.40%

11.37%

11.51%

Tangible Common Equity Ratio (c)

9.90%

9.10%

9.94%

9.82%

9.88%

Net Loans to Assets

59.36%

60.53%

66.94%

71.18%

73.85%

Loans to Deposits

70.53%

71.92%

79.59%

84.59%

87.87%

Asset Quality

Non-performing loans

$13,873

$11,640

$13,835

$11,841

$12,225

Other Real Estate Owned

30

30

0

73

41

Non-performing assets

13,903

11,670

13,835

11,914

12,266

Loans 30 - 89 days delinquent

7,606

7,183

9,297

10,134

10,336

Charged-off loans

502

284

387

393

524

Recoveries

323

200

190

174

132

Net Charge-offs

179

84

197

219

392

Annualized Net Charge-offs to

Average Net Loans Outstanding

0.04%

0.02%

0.04%

0.04%

0.08%

Allowance for Credit Losses to Total Loans (a)

1.27%

1.22%

1.07%

0.90%

0.79%

Non-performing Loans to Total Loans

0.71%

0.57%

0.67%

0.55%

0.57%

Allowance to Non-performing Loans (a)

178.81%

214.22%

160.06%

163.34%

138.73%

Non-performing Assets to Total Assets

0.43%

0.35%

0.45%

0.40%

0.43%

(a) CECL method used for the June 30 and March 31, 2021 quarters. Prior periods used the incurred loss methodology.

(b) June 30, 2021 ratio is estimated

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

Reconciliation of Total Assets to Tangible Assets

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

June 30,

June 30,

2021

2021

2020

2020

2020

2021

2020

Total Assets

$3,260,058

$3,324,524

$3,071,148

$2,989,179

$2,879,589

$3,260,058

$2,879,589

Less Goodwill and other intangibles

48,985

49,301

49,617

51,608

51,866

48,985

51,866

Tangible Assets

$3,211,073

$3,275,223

$3,021,531

$2,937,571

$2,827,723

$3,211,073

$2,827,723

Average Assets

3,280,316

3,155,695

3,033,005

2,957,702

2,842,730

3,218,372

2,741,903

Less average Goodwill and other intangibles

49,193

49,509

51,476

51,754

52,052

49,350

47,088

Average Tangible Assets

$3,231,123

$3,106,186

$2,981,529

$2,905,948

$2,790,678

$3,169,022

$2,694,815

Reconciliation of Common Stockholders' Equity to Tangible Common Equity

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

June 30,

June 30,

2021

2021

2020

2020

2020

2021

2020

Stockholders' Equity

$366,908

$347,355

$350,097

$339,968

$331,352

$366,908

$331,352

Less Goodwill and other intangibles

48,985

49,301

49,617

51,608

51,866

48,985

51,866

Tangible Common Equity

$317,923

$298,054

$300,480

$288,360

$279,486

$317,923

$279,486

Average Stockholders' Equity

363,753

351,190

344,949

335,982

315,988

354,334

308,524

Less average Goodwill and other intangibles

49,193

49,509

51,476

51,754

52,052

49,350

47,088

Average Tangible Common Equity

$314,560

$301,681

$293,473

$284,228

$263,936

$304,984

$261,436

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,

2021

2021

2020

2020

2020

2021

2020

Net income

$15,575

$14,556

$11,357

$10,869

$11,011

$30,131

$19,650

Acquisition related costs - tax equated

83

9

1,431

50

41

92

1,104

Net income - Adjusted

$15,658

$14,565

$12,788

$10,919

$11,052

$30,223

$20,754

Diluted EPS excluding acquisition costs

$0.55

$0.51

$0.45

$0.39

$0.39

$1.07

$0.73

Reconciliation of Allowance for Credit Losses to Gross Loans, Excluding PPP Loans and Acquired Loans

For the Three Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

2021

2021

2020

2020

2020

Gross Loans

$1,959,865

$2,037,404

$2,078,044

$2,147,158

$2,143,600

PPP Loans

92,073

136,826

125,396

194,490

192,969

Loans less PPP

1,867,792

1,900,578

1,952,648

1,952,668

1,950,631

Allowance for Credit Losses to Gross Loans Excluding PPP (a)

1.33%

1.31%

1.13%

0.99%

0.87%

Acquired Loans

233,772

251,616

272,150

294,712

320,184

Loans less PPP and Acquired

$1,634,020

$1,648,962

$1,680,498

$1,657,956

$1,630,447

Allowance for Credit Losses to Gross Loans Excluding PPP and Acquired (a)

1.52%

1.51%

1.32%

1.17%

1.04%

(a) CECL method used for the June 30 and March 31, 2021 quarters. Prior periods used the incurred loss methodology.

For the Three Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

End of Period Loan Balances

2021

2021

2020

2020

2020

Commercial real estate

$704,809

$702,556

$713,936

$710,730

$715,342

Commercial

351,261

406,064

404,492

481,593

472,012

Residential real estate

490,340

508,483

524,193

526,627

528,853

Consumer

190,064

193,295

203,061

209,883

208,374

Agricultural loans

223,427

227,073

232,129

219,896

221,556

Total, excluding net deferred loan costs

$1,959,901

$2,037,471

$2,077,811

$2,148,729

$2,146,137

For the Three Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

Noninterest Income

2021

2021

2020

2020

2020

Service charges on deposit accounts

$790

$808

$930

$904

$753

Bank owned life insurance income

300

284

187

196

204

Trust fees

2,358

2,236

1,950

1,973

1,852

Insurance agency commissions

948

1,001

776

784

681

Security gains (losses)

32

488

179

70

(26)

Retirement plan consulting fees

389

320

394

341

408

Investment commissions

523

504

450

353

304

Net gains on sale of loans

2,500

3,185

3,901

3,348

3,658

Debit card and EFT fees

1,226

1,084

1,061

1,048

967

Other operating income

806

673

854

450

335

Total Noninterest Income

$9,872

$10,583

$10,682

$9,467

$9,136

For the Three Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

Noninterest Expense

2021

2021

2020

2020

2020

Salaries and employee benefits

$9,866

$9,976

$9,638

$10,244

$9,713

Occupancy and equipment

1,890

2,275

2,060

1,719

1,675

State and local taxes

551

554

515

576

583

Professional fees

830

1,056

341

753

823

Merger related costs

104

12

1,798

58

48

Advertising

196

260

478

460

322

FDIC insurance

120

170

100

200

225

Intangible amortization

316

316

332

332

331

Core processing charges

831

627

831

925

934

Telephone and data

139

138

154

182

348

Other operating expenses

2,591

2,384

3,530

2,271

2,738

Total Noninterest Expense

$17,434

$17,768

$19,777

$17,720

$17,740

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

Three Months Ended

Three Months Ended

June 30, 2021

June 30, 2020

AVERAGE

AVERAGE

BALANCE

INTEREST (1)

RATE (1)

BALANCE

INTEREST (1)

RATE (1)

EARNING ASSETS

Loans (2)

$1,991,838

$23,669

4.77%

$2,101,500

$24,842

4.75%

Taxable securities

512,779

2,511

1.96

197,906

1,278

2.60

Tax-exempt securities (2)

340,539

2,952

3.48

252,818

2,459

3.91

Equity securities

14,666

121

3.31

17,687

137

3.12

Federal funds sold and other

218,093

58

0.11

70,279

30

0.17

Total earning assets

3,077,915

29,311

3.82

2,640,190

28,746

4.38

Nonearning assets

202,401

202,540

Total assets

$3,280,316

$2,842,730

INTEREST-BEARING LIABILITIES

Time deposits

$392,663

$1,008

1.03%

$493,048

$2,181

1.78%

Brokered time deposits

15,429

29

0.75

84,198

319

1.52

Savings deposits

516,428

165

0.13

457,188

267

0.23

Demand deposits

1,226,894

627

0.20

823,058

1,093

0.53

Short term borrowings

4,674

3

0.26

12,613

18

0.57

Long term borrowings

74,496

287

1.55

76,751

343

1.80

Total interest-bearing liabilities

$2,230,584

2,119

0.38

$1,946,856

4,221

0.87

NONINTEREST-BEARING LIABILITIES

AND STOCKHOLDERS' EQUITY

Demand deposits

666,053

556,649

Other liabilities

19,926

23,237

Stockholders' equity

363,753

315,988

TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

$3,280,316

$2,842,730

Net interest income and interest rate spread

$27,192

3.44%

$24,525

3.51%

Net interest margin

3.54%

3.74%

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

(2) For 2021, adjustments of $92 thousand and $610 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2020, adjustments of $98 thousand and $506 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, 2021

June 30, 2020

AVERAGE

AVERAGE

BALANCE

INTEREST (1)

RATE (1)

BALANCE

INTEREST (1)

RATE (1)

EARNING ASSETS

Loans (2)

$2,016,223

$47,569

4.76%

$2,014,678

$49,039

4.89%

Taxable securities

421,847

4,230

2.02

209,139

2,825

2.72

Tax-exempt securities

311,453

5,565

3.60

242,016

4,702

3.91

Equity securities (2)

14,753

242

3.31

16,996

277

3.28

Federal funds sold and other

241,898

129

0.11

64,090

179

0.56

Total earning assets

3,006,174

57,735

3.87

2,546,919

57,022

4.50

Nonearning assets

212,198

194,984

Total assets

$3,218,372

$2,741,903

INTEREST-BEARING LIABILITIES

Time deposits

$416,429

$2,263

1.10%

$494,385

$4,623

1.88%

Brokered time deposits

23,669

75

0.64

94,846

802

1.69

Savings deposits

506,188

358

0.14

441,232

588

0.27

Demand deposits

1,155,642

1,359

0.24

756,882

2,486

0.66

Short term borrowings

3,735

7

0.38

37,544

338

1.81

Long term borrowings

75,248

580

1.55

88,491

799

1.82

Total interest-bearing liabilities

$2,180,911

4,642

0.43

$1,913,380

9,636

1.01

NONINTEREST-BEARING LIABILITIES

AND STOCKHOLDERS' EQUITY

Demand deposits

$661,550

$502,710

Other liabilities

21,577

17,289

Stockholders' equity

354,334

308,524

TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

$3,218,372

$2,741,903

Net interest income and interest rate spread

$53,093

3.44%

$47,386

3.49%

Net interest margin

3.56%

3.74%

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

(2) For 2021, adjustments of $187 thousand and $1.2 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2020, adjustments of $196 thousand and $967 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005571/en/

Contacts

Kevin J. Helmick, President and CEO
330.533.3341
Email: exec@farmersbankgroup.com