Farmers National Banc Corp. Reports Results for Second Quarter of 2023

Business Wire
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In this article:

  • Earnings per diluted share of $0.40 ($0.41 excluding certain items, non-GAAP) for the second quarter of 2023

  • 162 consecutive quarters of profitability

  • Additional FHLB borrowing capacity of $707.8 million as of June 30, 2023

  • Uninsured deposits (excluding collateralized deposits) are approximately 15.0% of customer deposit base

  • Available for sale securities not pledged totaled $290.0 million at June 30, 2023

  • Efficiency ratio of 56.3%, or 55.3% excluding certain items, non-GAAP, for the second quarter of 2023

  • Return on average assets of 1.18% for the second quarter of 2023

  • ROAE and ROATE (non-GAAP) of 16.1% and 33.6%, respectively, for the second quarter of 2023

CANFIELD, Ohio, July 26, 2023--(BUSINESS WIRE)--Farmers National Banc Corp. ("Farmers" or the "Company") (NASDAQ: FMNB) reported today net income of $15.0 million, or $0.40 per diluted share, for the three months ended June 30, 2023, compared to $16.0 million, or $0.47 per diluted share, for the three months ended June 30, 2022. Net income for the second quarter of 2023 included pretax items of $442,000 for acquisition related costs and combined net gains of $6,000 on the sale of securities and the sale of other assets. Excluding these items (non-GAAP), net income for the second quarter of 2023 would have been $15.3 million, or $0.41 per diluted share.

Kevin J. Helmick, President and CEO, stated "As we navigate an extremely fluid banking landscape, we will continue to focus on prudent expense management, growing revenue, and maintaining a strong balance sheet, while supporting our communities and investing in our growth strategies. We believe this approach will drive long-term shareholder value as we emerge from this challenging period a stronger and more profitable company," concluded Mr. Helmick.

Balance Sheet

The Company’s total assets were $5.07 billion at June 30, 2023 compared to $5.11 billion at March 31, 2023 and $4.08 billion at December 31, 2022. The increase from December was primarily due to the acquisition of Emclaire Financial Corp. ("Emclaire") which added $1.05 billion in assets in the first quarter of 2023. Gross loans (excluding loans held for sale) have increased by $750.5 million since December 31, 2022 and $2.9 million since March 31, 2023. Emclaire was responsible for $740.7 million of the increase in loans since December 31, 2022.

Securities available for sale were $1.32 billion at June 30, 2023, compared to $1.36 billion at March 31, 2023, and $1.27 billion at December 31, 2022. The increase since December is due to the addition of $127.0 million in available for sale securities from Emclaire and a reduction in the gross amount of unrealized losses which totaled $266.5 million at December 31, 2022 compared to a gross unrealized loss of $245.0 million at June 30, 2023. Offsetting these increases, the Company also had sales and runoff from the portfolio in the first six months of 2023. While bond market volatility is expected to continue throughout 2023, the Company will continue to look to opportunistically shrink the size of the securities portfolio to increase liquidity and optimize profitability.

Total customer deposits (excluding brokered time deposits) were $4.25 billion at June 30, 2023, compared to $4.31 billion at March 31, 2023 and $3.42 billion at December 31, 2022. The increase from December was driven by $875.8 million in deposits assumed in the acquisition of Emclaire. Competition for deposits remains high and the Company expects this will continue to place pressure on funding costs and deposit volumes.

Total stockholders’ equity was $367.0 million at June 30, 2023 compared to $374.6 million at March 31, 2023, and $292.3 million at December 31, 2022. The increase since December is primarily due to the acquisition of Emclaire and an increase in retained earnings along with a decrease in the loss from accumulated other comprehensive income offset by increased treasury stock activity. The Company repurchased 850,799 shares of its common stock during the first quarter of 2023 but did not repurchase any shares during the second quarter. The accumulated other comprehensive loss has declined $17.0 million between December 31, 2022 and June 30, 2023 as market rates declined during the first half of 2023 and pricing on available for sale securities improved.

Liquidity

The Company continues to monitor its deposit base and balance sheet composition as well as its access to other sources of liquidity. At June 30, 2023, the Company’s loan to deposit ratio was 73.9% and the Company’s average deposit balance per account was $27,539. In addition, the Company’s ratio of uninsured deposits (excluding collateralized deposits) is approximately 15.0% which remains significantly lower than the banking institutions that failed in the first quarter of 2023.

The Company has access to an additional $707.8 million of FHLB borrowing capacity at June 30, 2023 along with $290.0 million of available for sale securities that are not pledged. With a deep and diverse deposit base and access to a large amount of additional funding capacity, the Company is well positioned to navigate the current banking landscape.

Credit Quality

The provision for credit losses and unfunded commitments was $25,000 for the second quarter of 2023 compared to $616,000 for the second quarter of 2022. Annualized net charge-offs as a percentage of average loans was 0.10% for the three months ended June 30, 2023, compared to 0.01% for the same period in 2022. The allowance for credit losses to total loans was 1.11% at June 30, 2023 compared to 1.14% at March 31, 2023, and 1.12% at December 31, 2022.

Non-performing loans (NPLs) were $18.0 million at June 30, 2023 compared to $18.0 million at March 31, 2023, and $14.8 million at December 31, 2022. The increase since December was primarily due to the addition of Emclaire. The NPL to loans ratio was 0.57% at June 30, 2023 compared to 0.57% at March 31, 2023 and 0.62% at December 31, 2022. Non-performing assets to assets was 0.36% at June 30, 2023, compared to 0.35% at March 31, 2023, and 0.36% at December 31, 2022. Early stage delinquencies, defined as 30-89 days delinquent, were $12.3 million, or 0.39% of total loans, at June 30, 2023, compared to $9.6 million, or 0.40% of total loans, at December 31, 2022.

Net Interest Income

The Company recorded net interest income of $34.6 million in the second quarter of 2023 compared to $31.7 million for the second quarter of 2022. The Company had more earning assets in 2023 due to the acquisition of Emclaire but this was partially offset by a decline of 33 basis point in the net interest margin. The net interest margin was 2.92% for the second quarter of 2023 compared to 3.07% in the first quarter of 2023 and 3.25% for the second quarter of 2022. The decline in net interest margin between the second quarter of 2023 and the second quarter of 2022 was due to increases in funding costs outstripping the increase in yields on earning assets. This increase in funding costs has been due to the rapid increase in deposit rates due to intense competition for deposits, the continued Federal Reserve rate hiking cycle, and runoff of deposit balances which are being replaced by more costly wholesale funding. Excluding the impact of acquisition marks and related accretion and PPP interest and fees, the net interest margin (non-GAAP) for the second quarter of 2023 was 2.68% compared to 2.86% for the first quarter of 2023 and 3.16% for the second quarter of 2022.

Noninterest Income

Noninterest income totaled $9.4 million for the three months ended June 30, 2023, compared to $9.5 million for the three months ended June 30, 2022. Service charges on deposit accounts have increased by $362,000 in the second quarter of 2023 compared to the second quarter of 2022. The increase is primarily due to the acquisition of Emclaire. Bank owned life insurance income, other mortgage banking fee income and debit card income have also increased in the second quarter of 2023 compared to the second quarter of 2022 due to the Emclaire acquisition. Insurance agency commissions are up $246,000 in the second quarter of 2023 compared to the second quarter of 2022 as growth in the insurance business and increased annuity sales have bolstered income. Investment commissions are down slightly for the quarter ended June 30, 2023 compared to the quarter ended June 30, 2022, as customers have been more interested in the annuities mentioned above as opposed to traditional investment products. Net gains on the sale of loans have increased but are still sluggish due to the high level of interest rates and lack of loan volume. Other noninterest income has declined by $1.3 million for the quarter ending June 30, 2023 compared to the second quarter of 2022. This decrease is primarily due to a decline in the income associated with the Company’s investments in SBA/SBIC funds. The performance of these funds in 2022 was much better than had been experienced historically and 2023 has returned to more normal levels of profitability.

Noninterest Expense

Noninterest expense was $26.4 million for the three months ended June 30, 2023, compared to $21.5 million for the three months ended June 30, 2022. The increase in expense is primarily due to the acquisition of Emclaire. Salaries and employee benefits increased $2.6 million to $13.6 million in the second quarter of 2023 compared to the same period in 2022. The acquisition of Emclaire along with normal raise activity were the primary reasons for the increase. Occupancy and equipment expense increased primarily due to the acquisition. FDIC and state and local taxes increased due to the acquisition and the increase in the rate paid for FDIC insurance in 2023. Intangible amortization expense increased due to the acquisition and due to some acceleration of the core deposit intangible recorded in the Cortland Bancorp acquisition in 2021. The Company recorded an additional $359,000 of intangible amortization in the second quarter of 2023 related to the Cortland acquisition. Merger related costs were $442,000 for the second quarter of 2023 compared to $674,000 in the second quarter of 2022.

About Farmers National Banc Corp.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $5.1 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 65 banking locations in Mahoning, Trumbull, Columbiana, Portage, Stark, Wayne, Medina, Geauga and Cuyahoga Counties in Ohio and Beaver, Butler, Allegheny, Jefferson, Clarion, Venango, Clearfield, Mercer, Elk and Crawford Counties 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, 2023 are $3.2 billion. Farmers National Insurance, LLC, a wholly-owned subsidiary of The Farmers National Bank of Canfield, offers 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 certain items, return on average assets excluding merger costs and certain items, return on average equity excluding merger costs and certain items, net interest margin excluding acquisition marks and related accretion and PPP interest and fees and efficiency ratio less certain items, 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.

Cautionary Statements Regarding Forward-Looking Statements

We make statements in this news release and our related investor conference call, and we may from time to time make other statements, that are 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 certain forward-looking statements include significant changes in near-term local, regional, and U.S. economic conditions including those resulting from continued high rates of inflation, tightening monetary policy of the Board of Governors of the Federal Reserve, and possibility of a recession; Farmers’ failure to integrate Emclaire with Farmers in accordance with expectations; deviations from performance expectations related to Emclaire; continuing impacts from the length and extent of the economic impacts of the COVID-19 pandemic; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2022 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

2023

2023

2022

2022

2022

2023

2022

Change

Total interest income

$

52,804

$

51,233

$

38,111

$

36,410

$

34,286

$

104,037

$

67,565

54.0

%

Total interest expense

18,226

14,623

8,679

4,629

2,575

32,849

4,612

612.3

%

Net interest income

34,578

36,610

29,432

31,781

31,711

71,188

62,953

13.1

%

Provision (credit) for credit losses

25

8,599

416

448

616

8,624

258

3242.6

%

Noninterest income

9,449

10,425

8,200

8,827

9,477

19,874

27,175

-26.9

%

Acquisition related costs

442

4,313

584

872

674

4,755

2,614

81.9

%

Other expense

25,944

26,409

20,511

20,527

20,787

52,353

49,303

6.2

%

Income before income taxes

17,616

7,714

16,121

18,761

19,111

25,330

37,953

-33.3

%

Income taxes

2,650

639

2,765

3,315

3,160

3,289

6,158

-46.6

%

Net income

$

14,966

$

7,075

$

13,356

$

15,446

$

15,951

$

22,041

$

31,795

-30.7

%

Average diluted shares outstanding

37,320

37,933

33,962

33,932

33,923

37,624

33,927

Basic earnings per share

0.40

0.19

0.39

0.46

0.47

0.59

0.94

Diluted earnings per share

0.40

0.19

0.39

0.46

0.47

0.59

0.94

Cash dividends per share

0.17

0.17

0.17

0.16

0.16

0.34

0.32

Performance Ratios

Net Interest Margin (Annualized)

2.92

%

3.07

%

2.99

%

3.21

%

3.25

%

3.00

%

3.25

%

Efficiency Ratio (Tax equivalent basis)

56.28

%

62.53

%

52.59

%

50.55

%

49.95

%

59.50

%

55.56

%

Return on Average Assets (Annualized)

1.18

%

0.56

%

1.31

%

1.48

%

1.54

%

0.87

%

1.53

%

Return on Average Equity (Annualized)

16.12

%

7.71

%

20.16

%

18.71

%

17.97

%

11.94

%

15.67

%

Dividends to Net Income

42.54

%

90.50

%

43.10

%

35.06

%

33.95

%

58.09

%

34.07

%

Other Performance Ratios (Non-GAAP)

Return on Average Tangible Assets

1.23

%

0.58

%

1.34

%

1.52

%

1.57

%

0.90

%

1.56

%

Return on Average Tangible Equity

33.55

%

16.31

%

32.81

%

27.06

%

25.23

%

25.05

%

20.96

%

Consolidated Statements of Financial Condition

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

2023

2023

2022

2022

2022

Assets

Cash and cash equivalents

$

116,063

$

128,001

$

75,551

$

79,981

$

65,458

Securities available for sale

1,316,878

1,355,449

1,268,025

1,295,133

1,361,682

Other investments

44,975

39,670

33,444

34,399

34,451

Loans held for sale

2,197

1,703

858

2,142

2,714

Loans

3,155,200

3,152,339

2,404,750

2,399,981

2,374,485

Less allowance for credit losses

34,957

36,011

26,978

27,282

27,454

Net Loans

3,120,243

3,116,328

2,377,772

2,372,699

2,347,031

Other assets

473,098

468,735

326,550

335,668

303,028

Total Assets

$

5,073,454

$

5,109,886

$

4,082,200

$

4,120,022

$

4,114,364

Liabilities and Stockholders' Equity

Deposits

Noninterest-bearing

$

1,084,232

$

1,106,870

$

896,957

$

934,638

$

983,713

Interest-bearing

3,165,381

3,207,121

2,526,760

2,590,054

2,586,829

Brokered time deposits

21,135

82,169

138,051

42,459

54,996

Total deposits

4,270,748

4,396,160

3,561,768

3,567,151

3,625,538

Other interest-bearing liabilities

388,437

292,324

183,211

243,098

137,985

Other liabilities

47,278

46,760

44,926

44,154

29,392

Total liabilities

4,706,463

4,735,244

3,789,905

3,854,403

3,792,915

Stockholders' Equity

366,991

374,642

292,295

265,619

321,449

Total Liabilities

and Stockholders' Equity

$

5,073,454

$

5,109,886

$

4,082,200

$

4,120,022

$

4,114,364

Period-end shares outstanding

37,457

...

37,439

34,055

34,060

34,032

Book value per share

$

9.80

$

10.01

$

8.58

$

7.80

$

9.45

Tangible book value per share (Non-GAAP)*

4.67

4.84

5.60

4.79

6.46

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

Capital and Liquidity

Common Equity Tier 1 Capital Ratio (a)

10.39

%

10.04

%

13.71

%

13.36

%

13.30

%

Total Risk Based Capital Ratio (a)

13.94

%

13.60

%

17.79

%

17.44

%

17.46

%

Tier 1 Risk Based Capital Ratio (a)

10.89

%

10.54

%

14.32

%

13.97

%

13.92

%

Tier 1 Leverage Ratio (a)

7.68

%

7.43

%

9.84

%

10.24

%

9.56

%

Equity to Asset Ratio

7.23

%

7.33

%

7.16

%

6.45

%

7.81

%

Tangible Common Equity Ratio (b)

3.58

%

3.69

%

4.79

%

4.06

%

5.47

%

Net Loans to Assets

61.50

%

60.99

%

58.25

%

57.59

%

57.04

%

Loans to Deposits

73.88

%

71.71

%

67.52

%

67.28

%

65.49

%

Asset Quality

Non-performing loans

$

17,956

$

17,959

$

14,803

$

12,976

$

14,107

Non-performing assets

18,167

18,053

14,876

13,042

14,107

Loans 30 - 89 days delinquent

12,321

10,219

9,605

6,659

8,716

Charged-off loans

971

469

754

783

177

Recoveries

172

198

184

178

135

Net Charge-offs

799

271

570

605

42

Annualized Net Charge-offs to Average Net Loans

0.10

%

0.03

%

0.10

%

0.10

%

0.01

%

Allowance for Credit Losses to Total Loans

1.11

%

1.14

%

1.12

%

1.14

%

1.16

%

Non-performing Loans to Total Loans

0.57

%

0.57

%

0.62

%

0.54

%

0.59

%

Allowance to Non-performing Loans

194.68

%

200.52

%

182.25

%

210.25

%

194.61

%

Non-performing Assets to Total Assets

0.36

%

0.35

%

0.36

%

0.32

%

0.34

%

(a) June 30, 2023 ratio is estimated

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

For the Three Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

End of Period Loan Balances

2023

2023

2022

2022

2022

Commercial real estate

$

1,284,974

$

1,286,830

$

1,028,050

$

1,028,484

$

1,040,243

Commercial

362,664

361,845

293,643

296,932

285,981

Residential real estate

849,533

853,074

475,791

474,014

464,489

HELOC

138,535

137,319

132,179

132,267

129,392

Consumer

260,326

260,596

221,260

222,706

218,219

Agricultural loans

250,807

244,938

246,937

239,081

230,477

Total, excluding net deferred loan costs

$

3,146,839

$

3,144,602

$

2,397,860

$

2,393,484

$

2,368,801

For the Three Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

End of Period Customer Deposit Balances

2023

2023

2022

2022

2022

Noninterest-bearing demand

$

1,084,232

$

1,106,870

$

896,957

$

934,638

$

983,713

Interest-bearing demand

1,383,326

1,473,001

1,224,884

1,399,227

1,416,129

Money market

610,051

599,037

435,369

393,005

372,723

Savings

511,642

535,321

441,978

460,709

455,555

Certificate of deposit

660,362

599,762

424,529

337,113

342,422

Total customer deposits

$

4,249,613

$

4,313,991

$

3,423,717

$

3,524,692

$

3,570,542

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

June 30,

June 30,

Noninterest Income

2023

2023

2022

2022

2022

2023

2022

Service charges on deposit accounts

$

1,501

$

1,432

$

1,203

$

1,229

$

1,139

$

2,933

$

2,284

Bank owned life insurance income, including death benefits

584

547

590

406

405

1,131

814

Trust fees

2,248

2,587

2,373

2,370

2,376

4,835

4,895

Insurance agency commissions

1,332

1,456

1,133

1,136

1,086

2,788

2,133

Security gains (losses), including fair value changes for equity securities

13

121

(366

)

(17

)

(60

)

134

(71

)

Retirement plan consulting fees

382

307

337

332

323

689

720

Investment commissions

476

393

508

424

557

869

1,251

Net gains on sale of loans

406

310

242

326

365

716

1,494

Other mortgage banking fee income (loss), net

234

153

98

94

39

387

99

Debit card and EFT fees

1,810

1,789

1,407

1,463

1,528

3,599

2,944

Other noninterest income

463

1,330

675

1,064

1,719

1,793

10,612

Total Noninterest Income

$

9,449

$

10,425

$

8,200

$

8,827

$

9,477

$

19,874

$

27,175

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

June 30,

June 30,

Noninterest Expense

2023

2023

2022

2022

2022

2023

2022

Salaries and employee benefits

$

13,625

$

14,645

$

11,385

$

10,724

$

11,073

$

28,270

$

22,904

Occupancy and equipment

3,859

3,869

2,753

3,028

2,918

7,728

5,598

FDIC insurance and state and local taxes

1,494

1,222

1,010

1,017

979

2,716

1,924

Professional fees

1,190

1,114

938

985

1,056

2,304

4,191

Merger related costs

442

4,313

584

872

674

4,755

2,614

Advertising

478

409

472

596

487

887

879

Intangible amortization

1,222

909

702

432

419

2,131

839

Core processing charges

1,144

1,164

742

738

1,123

2,308

1,868

Other noninterest expenses

2,932

3,077

2,509

3,007

2,732

6,009

11,100

Total Noninterest Expense

$

26,386

$

30,722

$

21,095

$

21,399

$

21,461

$

57,108

$

51,917

Business Combination

Consideration

Cash

$

33,440

Stock

59,202

Fair value of total consideration transferred

$

92,642

Fair value of assets acquired

Cash and cash equivalents

$

20,265

Securities available for sale

126,970

Other investments

7,795

Loans, net

740,659

Premises and equipment

16,103

Bank owned life insurance

22,485

Core deposit intangible

19,249

Current and deferred taxes

17,246

Other assets

6,387

Total assets acquired

977,159

Fair value of liabilities assumed

Deposits

875,813

Short-term borrowings

75,000

Accrued interest payable and other liabilities

7,104

Total liabilities

957,917

Net assets acquired

$

19,242

Goodwill created

73,400

Total net assets acquired

$

92,642

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

Three Months Ended

Three Months Ended

June 30, 2023

June 30, 2022

AVERAGE

YIELD/

AVERAGE

YIELD/

BALANCE

INTEREST (1)

RATE (1)

BALANCE

INTEREST (1)

RATE (1)

EARNING ASSETS

Loans (2)

$

3,144,461

$

42,422

5.40

%

$

2,337,251

$

25,792

4.41

%

Taxable securities

1,157,284

6,654

2.30

1,100,538

5,223

1.90

Tax-exempt securities (2)

415,003

3,278

3.16

474,034

3,832

3.23

Other investments

41,361

594

5.74

34,030

216

2.54

Federal funds sold and other

72,801

551

3.03

69,532

95

0.55

Total earning assets

4,830,910

53,499

4.43

4,015,385

35,158

3.50

Nonearning assets

225,131

140,334

Total assets

$

5,056,041

$

4,155,719

INTEREST-BEARING LIABILITIES

Time deposits

$

646,782

$

4,525

2.80

%

$

354,692

$

552

0.62

%

Brokered time deposits

59,402

686

4.62

45,767

49

0.43

Savings deposits

1,133,371

2,402

0.85

837,726

141

0.07

Demand deposits - interest bearing

1,428,409

6,878

1.93

1,430,273

909

0.25

Short term borrowings

213,549

2,727

5.11

42,527

97

0.91

Long term borrowings

88,382

1,008

4.56

87,914

827

3.76

Total interest-bearing liabilities

$

3,569,895

18,226

2.04

$

2,798,899

2,575

0.37

NONINTEREST-BEARING LIABILITIES

AND STOCKHOLDERS' EQUITY

Demand deposits - noninterest bearing

1,067,605

972,174

Other liabilities

47,120

29,665

Stockholders' equity

371,421

354,981

TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

$

5,056,041

$

4,155,719

Net interest income and interest rate spread

$

35,273

2.39

%

$

32,583

3.13

%

Net interest margin

2.92

%

3.25

%

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

(2) For 2023, adjustments of $91 thousand and $604 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $78 thousand and $794 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, 2023

June 30, 2022

AVERAGE

YIELD/

AVERAGE

YIELD/

BALANCE

INTEREST (1)

RATE (1)

BALANCE

INTEREST (1)

RATE (1)

EARNING ASSETS

Loans (2)

$

3,140,500

$

83,365

5.31

%

$

2,326,392

$

51,438

4.42

%

Taxable securities

1,164,400

13,204

2.27

1,054,506

9,810

1.86

Tax-exempt securities (2)

426,743

6,797

3.19

467,947

7,559

3.23

Other investments

38,976

970

4.98

32,584

346

2.12

Federal funds sold and other

77,870

1,161

2.98

93,591

143

0.31

Total earning assets

4,848,489

105,497

4.35

3,975,020

69,296

3.49

Nonearning assets

221,955

192,085

Total assets

$

5,070,444

$

4,167,105

INTEREST-BEARING LIABILITIES

Time deposits

$

618,637

$

7,864

2.54

%

$

366,617

$

1,196

0.65

%

Brokered time deposits

144,747

3,007

4.15

30,745

64

0.42

Savings deposits

1,143,539

4,356

0.76

840,533

308

0.07

Demand deposits - interest bearing

1,423,211

11,971

1.68

1,420,957

1,327

0.19

Short term borrowings

147,436

3,648

4.95

22,486

98

0.87

Long term borrowings

88,326

2,003

4.54

87,856

1,619

3.69

Total interest-bearing liabilities

$

3,565,896

32,849

1.84

$

2,769,194

4,612

0.33

NONINTEREST-BEARING LIABILITIES

AND STOCKHOLDERS' EQUITY

Demand deposits - noninterest bearing

$

1,087,403

$

964,380

Other liabilities

47,996

27,842

Stockholders' equity

369,149

405,689

TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

$

5,070,444

$

4,167,105

Net interest income and interest rate spread

$

72,648

2.51

%

$

64,684

3.16

%

Net interest margin

3.00

%

3.25

%

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

(2) For 2023, adjustments of $178 thousand and $1.3 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $162 thousand and $1.6 million, 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.

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,

2023

2023

2022

2022

2022

2023

2022

Total Assets

$

5,073,454

$

5,109,886

$

4,082,200

$

4,120,022

$

4,114,364

$

5,073,454

$

4,114,364

Less Goodwill and other intangibles

192,052

193,273

101,666

102,368

101,767

192,052

101,767

Tangible Assets

$

4,881,402

$

4,916,613

$

3,980,534

$

4,017,654

$

4,012,597

$

4,881,402

$

4,012,597

Average Assets

5,070,444

5,085,009

4,080,497

4,164,855

4,155,719

5,070,444

4,167,105

Less average Goodwill and other intangibles

192,972

193,368

102,126

101,981

102,042

193,169

102,251

Average Tangible Assets

$

4,877,472

$

4,891,641

$

3,978,371

$

4,062,874

$

4,053,677

$

4,877,275

$

4,064,854

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,

2023

2023

2022

2022

2022

2023

2022

Stockholders' Equity

$

366,991

$

374,642

$

292,295

$

265,619

$

321,449

$

366,991

$

321,449

Less Goodwill and other intangibles

192,052

193,273

101,666

102,368

101,767

192,052

101,767

Tangible Common Equity

$

174,939

$

181,369

$

190,629

$

163,251

$

219,682

$

174,939

$

219,682

Average Stockholders' Equity

371,421

366,851

264,939

330,300

354,981

369,149

405,689

Less average Goodwill and other intangibles

192,972

193,368

102,126

101,981

102,042

193,169

102,251

Average Tangible Common Equity

$

178,449

$

173,483

$

162,813

$

228,319

$

252,939

$

175,980

$

303,438

Reconciliation of Net Income, Less Merger and Certain Items

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

June 30,

June 30,

2023

2023

2022

2022

2022

2023

2022

Net income

$

14,966

$

7,075

$

13,356

$

15,446

$

15,951

$

22,041

$

31,795

Acquisition related costs - after tax

354

3,449

475

711

564

3,803

2,104

Acquisition related provision - after tax

0

6,077

0

0

0

6,077

0

Lawsuit settlement income - after tax

0

0

0

0

0

0

(6,616

)

Lawsuit settlement contingent legal expense - after tax

0

0

0

0

0

0

1,639

Charitable donation - after tax

0

0

0

0

0

0

4,740

Net loss (gain) on asset/security sales - after tax

(5

)

(72

)

268

4

(25

)

(77

)

72

Net income - Adjusted

$

15,315

$

16,529

$

14,099

$

16,161

$

16,490

$

31,844

$

33,734

Diluted EPS excluding merger and one-time items

$

0.41

$

0.44

$

0.42

$

0.48

$

0.49

$

0.85

$

0.99

Return on Average Assets excluding merger and certain items (Annualized)

1.21

%

1.30

%

1.36

%

1.55

%

1.59

%

1.26

%

1.62

%

Return on Average Equity excluding merger and certain items (Annualized)

16.49

%

18.02

%

21.29

%

19.57

%

18.58

%

17.25

%

16.63

%

Return on Average Tangible Equity excluding acquisition costs and certain items (Annualized)

34.33

%

38.11

%

34.64

%

28.31

%

26.08

%

36.19

%

22.23

%

Efficiency ratio excluding certain items

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

June 30,

June 30,

2023

2023

2022

2022

2022

2023

2022

Net interest income, tax equated

$

35,273

$

37,374

$

30,212

$

32,636

$

32,583

$

72,648

$

64,684

Noninterest income

9,449

10,425

8,200

8,827

9,477

19,874

27,175

Legal settlement income

0

0

0

0

0

0

(8,375

)

Net loss (gain) on asset/security sales

(6

)

(91

)

338

6

(32

)

(97

)

91

Net interest income and noninterest income adjusted

44,716

47,708

38,750

41,469

42,028

92,425

83,575

Noninterest expense less intangible amortization

25,163

29,813

20,393

20,967

21,042

54,976

51,078

Charitable donation

0

0

0

0

0

0

6,000

Contingent legal settlement expense

0

0

0

0

0

0

2,075

Acquisition related costs

442

4,313

584

872

674

4,755

2,614

Noninterest income adjusted

24,721

25,500

19,809

20,095

20,368

50,221

40,389

Efficiency ratio excluding one-time items

55.28

%

53.45

%

51.12

%

48.46

%

48.46

%

54.34

%

48.33

%

Net interest margin excluding acquisition marks and PPP interest and fees

For the Three Months Ended

For the Six Months Ended

June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

June 30,

June 30,

2023

2023

2022

2022

2022

2023

2022

Net interest income, tax equated

$

35,273

$

37,374

$

30,212

$

32,636

$

32,583

$

72,648

$

64,684

Acquisition marks

2,884

2,628

174

215

349

5,512

1,338

PPP interest and fees

3

0

10

62

634

3

1,320

Adjusted and annualized net interest income

129,544

138,984

120,112

129,436

126,400

134,266

124,052

Average earning assets

4,830,910

4,866,263

4,047,343

4,065,085

4,015,385

4,848,489

3,975,020

Less PPP average balances

277

310

485

1,586

16,019

271

22,972

Adjusted average earning assets

4,830,633

4,865,953

4,046,858

4,063,499

3,999,366

4,848,218

3,952,048

Net interest margin excluding marks and PPP interest and fees

2.68

%

2.86

%

2.97

%

3.19

%

3.16

%

2.77

%

3.14

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20230725994151/en/

Contacts

Farmers National Banc Corp.
Kevin J. Helmick, President and CEO
Email: exec@farmersbankgroup.com

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