FMNB
$14.86
Farmers Natl Banc Cp
$.09
.61%
Earnings Details
3rd Quarter September 2022
Wednesday, October 26, 2022 8:00:00 AM
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Summary

Farmers Natl Banc Cp (FMNB) Recent Earnings

Farmers Natl Banc Cp (FMNB) reported 3rd Quarter September 2022 earnings of $0.48 per share on revenue of $45.2 million. The consensus earnings estimate was $0.46 per share on revenue of $41.8 million. Revenue grew 21.0% on a year-over-year basis.

Results
Reported Earnings
$0.48
Earnings Whisper
-
Consensus Estimate
$0.46
Reported Revenue
$45.2 Mil
Revenue Estimate
$41.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Farmers National Banc Corp. Announces 2022 Third Quarter Results

  • Earnings per diluted share of $0.46 ($0.48 excluding certain items, non-GAAP) for the third quarter of 2022
  • Loan growth of $27.3 million for the quarter excluding PPP loans, or 4.6% on an annualized basis
  • 159 consecutive quarters of profitability
  • Efficiency ratio, (excluding certain items, non-GAAP), of 48.5% for the third quarter of 2022
  • Return on average assets, (excluding certain items, non-GAAP), was 1.55% for the third quarter of 2022
  • ROAE and ROATE, (excluding certain items, non-GAAP), 19.6% and 28.3%, respectively, for third quarter of 2022

 

CANFIELD, Ohio--(BUSINESS WIRE)--Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB) today announced third quarter net income of $15.4 million for the three months ended September 30, 2022. This compares to $16.0 million for the three months ended September 30, 2021. Diluted earnings per share were $0.46 for the third quarter of 2022 versus $0.56 for the third quarter of 2021. The third quarter of 2022 results included pretax items of $872,000 for merger related costs and combined net losses of $6,000 on the sale of securities and the sale of other assets. Excluding these items (non-GAAP), net income for the quarter ended September 30, 2022, would have been $16.2 million, or $0.48 per diluted share.

“We’re extremely pleased with another quarter of solid loan growth and continue to see good lending opportunities in the market”, said Kevin J. Helmick, President and CEO. “Our quarterly earnings were strong, we opened a new lab branch in Canton during the quarter and we look forward to receiving regulatory approval for our acquisition of Emclaire Financial Corp.”

On March 23, 2022, Farmers entered into an agreement and plan of merger (the “Merger Agreement”) with Emclaire Financial Corp. (NASDAQ: EMCF), a Pennsylvania corporation (“Emclaire”), and the parent company of The Farmers National Bank of Emlenton (“Emlenton”). On July 20, 2022, the transaction received the approval of Emclaire’s shareholders. The transaction is expected to be completed after the satisfaction or waiver of the remaining closing conditions set forth in the Merger Agreement, including the receipt of all required regulatory approvals. Emclaire operates 19 branches in ten counties throughout western Pennsylvania. As of September 30, 2022, Emclaire had total assets of $1.0 billion, gross loans of $810.1 million, deposits of $926.7 million and equity of $71.0 million.

Balance Sheet

At September 30, 2022, total assets were $4.12 billion compared to $4.11 billion at June 30, 2022 and $4.14 billion at December 31, 2021. Gross loans (excluding loans held for sale and PPP loans) increased to $2.40 billion at September 30, 2022 compared to $2.37 billion at June 30, 2022. The growth of $27.3 million for the quarter was equal to growth of 4.6% on an annualized basis. The quarter again exhibited strength across multiple sectors of the loan portfolio with loan pipelines still showing solid volume. At September 30, 2022, the Company’s PPP loans had declined to a minimal $637,000 before deferred fees still to be forgiven, and $13,000 in net deferred fees associated with these loans yet to be recognized into income.

The Company’s available for sale securities decreased $66.5 million from $1.36 billion at June 30, 2022 to $1.30 billion at September 30, 2022. The continued increase in U.S. treasury rates during the third quarter of 2022 resulted in a gross unrealized loss of $290.1 million compared to $206.1 million at June 30, 2022 and a gross unrealized gain of $11.7 million at December 31, 2021. With continued loan growth and the acquisition of Emclaire, the Company plans on allowing the securities portfolio to shrink and provide liquidity. The volatility in the bond market is expected to continue in 2022, which may result in increased volatility in the fair value of the Company’s available for sale securities.

The Company’s deposits declined from $3.63 billion at June 30, 2022 to $3.57 billion at September 30, 2022. Deposit balances at December 31, 2021 were $3.55 billion. Competition for deposits increased during the back half of the third quarter of 2022 as interest rates continued to increase. The Company expects competition for deposits to remain elevated which will increase funding costs moving forward.

Total stockholders’ equity decreased to $265.6 million at September 30, 2022 from $321.4 million at June 30, 2022 and $472.4 million at December 31, 2021. The decrease in stockholders’ equity has primarily been due to the decline in accumulated other comprehensive income associated with the rapid increase in U.S. treasury rates in 2022 which has had a negative effect on the value of the Company’s available for sale securities, and in turn, the dollar amount that flows through accumulated other comprehensive income. The Company’s tangible book value per share (non-GAAP) was $4.79 at September 30, 2022 compared to $6.46 at June 30, 2022, and $10.91 at December 31, 2021.

Credit Quality

Non-performing loans (NPLs) have continued to decline and the NPL to loans ratio was 0.54% at September 30, 2022 compared to 0.69% at December 31, 2021. Non-performing assets to assets has also declined from 0.39% at December 31, 2021 to 0.32% at September 30, 2022. In addition, early stage delinquencies, defined as 30-89 days delinquent, were $6.7 million, or 0.28% of total loans, at September 30, 2022 compared to $8.9 million, or 0.38% of total loans at December 31, 2021.

During the third quarter of 2022, the Company had a provision for credit losses and unfunded commitments of $448,000 compared to a credit for credit losses of $948,000 in the third quarter of 2021. Growth in loans was the primary reason for the increase in the provision expense. The Company experienced net charge-offs of $605,000 during the third quarter of 2022 compared to $286,000 in the third quarter of 2021. Net charge-offs as a percentage of average net loans was 10 basis point for the quarter ended September 30, 2022, compared to 6 basis points for the third quarter of 2021. The allowance for credit losses to total loans declined to 1.14% at September 30, 2022, compared to 1.26% at December 31, 2021, respectively. The low level of charge-off activity over the last several years continues to result in less allowance for credit losses being required.

Net Interest Income

Net interest income increased to $31.8 million for the quarter ended September 30, 2022 from $26.5 million for the quarter ended September 30, 2021. The increase was due to the acquisition of Cortland Bancorp (“Cortland”) offset by a reduction in PPP interest and fees. During the third quarter of 2021, the Company recognized $1.4 million in interest and fees associated with PPP loans compared to $62,000 in the third quarter of 2022. The net interest margin was 3.21% for the third quarter of 2022 compared to 3.25% for the second quarter of 2022 and 3.49% for the third quarter of 2021. The decline in net interest margin in the third quarter of 2022 compared to the third quarter of 2021 was driven by the lower PPP income in 2022 compared to 2021 and a greater percentage of earning assets invested in securities rather than loans. Excluding the impact of acquisition marks and related accretion and PPP interest and fees, the net interest margin (non-GAAP) for the third quarter of 2022 was 3.18% compared to 3.16% for the second quarter of 2022 and 3.37% for the third quarter of 2021.

Noninterest Income

Noninterest income decreased $188,000, to $8.8 million for the third quarter of 2022 compared to the third quarter of 2021. Service charges on deposit accounts increased $305,000 to $1.2 million in the third quarter of 2022 compared to $924,000 for the third quarter of 2021. The increase was primarily due to the acquisition of Cortland and growth. Insurance commissions increased to $1.1 million in the third quarter of 2022 compared to $799,000 in the third quarter of 2021. This business line continues to exhibit good growth. Net gains on the sale of loans decreased to $326,000 in the third quarter of 2022 compared to $1.5 million in the third quarter of 2021. This drop was caused by lower mortgage production compared to the prior year, compressed margins and a lower saleable mix due to the dramatic increase in interest rates in 2022.

Security losses for the third quarter of 2022 totaled $17,000 compared to security gains of $459,000 for the same period in 2021. Debit card and EFT fees increased to $1.5 million in the third quarter of 2022 compared to $1.2 million in the third quarter of 2021. This increase was due to the Cortland acquisition and increased volumes. Other noninterest income increased to $1.1 million in the third quarter of 2022 compared to $461,000 in the third quarter of 2021. This increase was due to the acquisition of Cortland and increased income related to investments in SBIC and SBA funds.

Noninterest Expense

Total noninterest expense increased to $21.4 million for the quarter ended September 30, 2022 compared to $17.1 million for the third quarter of 2021. The year-over-year increase was primarily due to the acquisition of Cortland, continued higher healthcare benefit costs and more merger related costs in the third quarter of 2022 compared to the third quarter of 2021.

About Farmers National Banc Corp.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $4.1 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 46 banking locations in Mahoning, Trumbull, Columbiana, Portage, 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 September 30, 2022 are $2.9 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, efficiency ratio less one-time expenses, 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.

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 impacts from the length and extent of the economic impacts of the COVID-19 pandemic; significant changes in near-term local, regional, and U.S. economic conditions 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 and Emlenton with Farmers in accordance with expectations; deviations from performance expectations related to Emclaire and Emlenton; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2021 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 Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

Percent

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2022

 

 

2021

 

Change

Total interest income

$

36,410

 

$

34,286

 

$

33,279

 

$

31,685

 

$

28,375

 

$

103,975

 

$

84,774

 

22.6

%

Total interest expense

 

4,629

 

 

2,575

 

 

2,037

 

 

1,986

 

 

1,841

 

 

9,241

 

 

6,483

 

42.5

%

Net interest income

 

31,781

 

 

31,711

 

 

31,242

 

 

29,699

 

 

26,534

 

 

94,734

 

 

78,291

 

21.0

%

Provision (credit) for credit losses

 

448

 

 

616

 

 

(358

)

 

5,366

 

 

(948

)

 

706

 

 

(473

)

-249.3

%

Noninterest income

 

8,827

 

 

9,477

 

 

17,698

 

 

9,538

 

 

9,015

 

 

36,002

 

 

28,655

 

25.6

%

Acquisition related costs

 

872

 

 

674

 

 

1,940

 

 

6,521

 

 

472

 

 

3,486

 

 

588

 

492.9

%

Other expense

 

20,527

 

 

20,787

 

 

28,516

 

 

21,140

 

 

16,656

 

 

69,830

 

 

50,927

 

37.1

%

Income before income taxes

 

18,761

 

 

19,111

 

 

18,842

 

 

6,210

 

 

19,369

 

 

56,714

 

 

55,904

 

1.4

%

Income taxes

 

3,315

 

 

3,160

 

 

2,998

 

 

508

 

 

3,358

 

 

9,473

 

 

9,762

 

-3.0

%

Net income

$

15,446

 

$

15,951

 

$

15,844

 

$

5,702

 

$

16,011

 

$

47,241

 

$

46,142

 

2.4

%

 
Average diluted shares outstanding

 

33,932

 

 

33,923

 

 

33,937

 

 

32,074

 

 

28,361

 

 

33,925

 

 

28,339

 

Basic earnings per share

 

0.46

 

 

0.47

 

 

0.47

 

 

0.18

 

 

0.57

 

 

1.40

 

 

1.63

 

Diluted earnings per share

 

0.46

 

 

0.47

 

 

0.47

 

 

0.18

 

 

0.56

 

 

1.39

 

 

1.63

 

Cash dividends per share

 

0.16

 

 

0.16

 

 

0.16

 

 

0.14

 

 

0.11

 

 

0.48

 

 

0.33

 

Performance Ratios
Net Interest Margin (Annualized)

 

3.21

%

 

3.25

%

 

3.27

%

 

3.33

%

 

3.49

%

 

3.24

%

 

3.49

%

Efficiency Ratio (Tax equivalent basis)

 

50.55

%

 

49.95

%

 

61.36

%

 

63.61

%

 

46.04

%

 

54.00

%

 

46.49

%

Return on Average Assets (Annualized)

 

1.48

%

 

1.54

%

 

1.52

%

 

0.58

%

 

1.92

%

 

1.51

%

 

1.90

%

Return on Average Equity (Annualized)

 

18.71

%

 

17.97

%

 

13.89

%

 

5.24

%

 

16.93

%

 

16.55

%

 

17.05

%

Dividends to Net Income

 

35.06

%

 

33.95

%

 

34.18

%

 

82.99

%

 

19.41

%

 

34.39

%

 

20.20

%

Other Performance Ratios (Non-GAAP)
Return on Average Tangible Assets

 

1.52

%

 

1.57

%

 

1.55

%

 

0.60

%

 

1.97

%

 

1.55

%

 

1.92

%

Return on Average Tangible Equity

 

27.06

%

 

25.23

%

 

17.92

%

 

6.57

%

 

19.63

%

 

22.62

%

 

19.64

%

 
Consolidated Statements of Financial Condition

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

Assets
Cash and cash equivalents

$

79,981

 

$

65,458

 

$

137,627

 

$

112,790

 

$

79,808

 

Securities available for sale

 

1,295,133

 

 

1,361,682

 

 

1,463,626

 

 

1,427,677

 

 

1,183,361

 

Other investments

 

34,399

 

 

34,451

 

 

34,019

 

 

30,459

 

 

19,041

 

 
Loans held for sale

 

2,142

 

 

2,714

 

 

1,904

 

 

4,545

 

 

2,628

 

Loans

 

2,399,981

 

 

2,374,485

 

 

2,304,971

 

 

2,331,082

 

 

1,894,216

 

Less allowance for credit losses

 

27,282

 

 

27,454

 

 

27,015

 

 

29,386

 

 

23,136

 

Net Loans

 

2,372,699

 

 

2,347,031

 

 

2,277,956

 

 

2,301,696

 

 

1,871,080

 

 
Other assets

 

335,668

 

 

303,028

 

 

290,723

 

 

265,582

 

 

161,129

 

Total Assets

$

4,120,022

 

$

4,114,364

 

$

4,205,855

 

$

4,142,749

 

$

3,317,047

 

 
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing

$

934,638

 

$

983,713

 

$

963,143

 

$

916,237

 

$

675,938

 

Interest-bearing

 

2,632,513

 

 

2,641,825

 

 

2,730,668

 

 

2,630,998

 

 

2,190,475

 

Total deposits

 

3,567,151

 

 

3,625,538

 

 

3,693,811

 

 

3,547,235

 

 

2,866,413

 

Other interest-bearing liabilities

 

243,098

 

 

137,985

 

 

87,872

 

 

87,758

 

 

49,649

 

Other liabilities

 

44,154

 

 

29,392

 

 

30,286

 

 

35,324

 

 

23,461

 

Total liabilities

 

3,854,403

 

 

3,792,915

 

 

3,811,969

 

 

3,670,317

 

 

2,939,523

 

Stockholders' Equity

 

265,619

 

 

321,449

 

 

393,886

 

 

472,432

 

 

377,524

 

Total Liabilities
and Stockholders' Equity

$

4,120,022

 

$

4,114,364

 

$

4,205,855

 

$

4,142,749

 

$

3,317,047

 

 
Period-end shares outstanding

 

34,060

 

 

34,032

 

 

34,008

 

 

33,898

 

 

28,322

 

Book value per share

$

7.80

 

$

9.45

 

$

11.58

 

$

13.94

 

$

13.33

 

Tangible book value per share (Non-GAAP)*

 

4.79

 

 

6.46

 

 

8.58

 

 

10.91

 

 

11.61

 

 
* 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)

 

13.46

%

 

13.30

%

 

13.31

%

 

13.16

%

 

14.58

%

Total Risk Based Capital Ratio (a)

 

17.57

%

 

17.46

%

 

17.59

%

 

17.60

%

 

16.25

%

Tier 1 Risk Based Capital Ratio (a)

 

14.08

%

 

13.92

%

 

13.95

%

 

13.82

%

 

15.18

%

Tier 1 Leverage Ratio (a)

 

9.67

%

 

9.56

%

 

9.56

%

 

10.12

%

 

10.17

%

Equity to Asset Ratio

 

6.45

%

 

7.81

%

 

9.37

%

 

11.40

%

 

11.38

%

Tangible Common Equity Ratio (b)

 

4.06

%

 

5.47

%

 

7.11

%

 

9.15

%

 

10.06

%

Net Loans to Assets

 

57.59

%

 

57.04

%

 

54.16

%

 

55.56

%

 

56.41

%

Loans to Deposits

 

67.28

%

 

65.49

%

 

62.40

%

 

65.72

%

 

66.08

%

Asset Quality
Non-performing loans

$

12,976

 

$

14,107

 

$

14,046

 

$

16,195

 

$

14,744

 

Non-performing assets

 

13,042

 

 

14,107

 

 

14,046

 

 

16,195

 

 

14,744

 

Loans 30 - 89 days delinquent

 

6,659

 

 

8,716

 

 

7,304

 

 

8,891

 

 

6,944

 

Charged-off loans

 

783

 

 

177

 

 

1,590

 

 

470

 

 

411

 

Recoveries

 

178

 

 

135

 

 

149

 

 

157

 

 

125

 

Net Charge-offs

 

605

 

 

42

 

 

1,441

 

 

313

 

 

286

 

Annualized Net Charge-offs to
Average Net Loans Outstanding

 

0.10

%

 

0.01

%

 

0.25

%

 

0.06

%

 

0.06

%

Allowance for Credit Losses to Total Loans

 

1.14

%

 

1.16

%

 

1.17

%

 

1.26

%

 

1.22

%

Non-performing Loans to Total Loans

 

0.54

%

 

0.59

%

 

0.61

%

 

0.69

%

 

0.78

%

Allowance to Non-performing Loans

 

210.25

%

 

194.61

%

 

192.33

%

 

181.45

%

 

156.92

%

Non-performing Assets to Total Assets

 

0.32

%

 

0.34

%

 

0.33

%

 

0.39

%

 

0.44

%

 
(a) September 30, 2022 ratio is estimated
(b) This is a non-GAAP financial measure. A reconciliation to GAAP is shown below
 

For the Three Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

End of Period Loan Balances

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

Commercial real estate

$

1,028,484

 

$

1,040,243

 

$

1,000,972

 

$

1,011,891

 

$

690,407

 

Commercial

 

296,932

 

 

285,981

 

 

298,903

 

 

313,836

 

 

302,356

 

Residential real estate

 

474,014

 

 

464,489

 

 

455,501

 

 

453,635

 

 

376,901

 

HELOC

 

132,267

 

 

129,392

 

 

128,221

 

 

127,433

 

 

106,750

 

Consumer

 

222,706

 

 

218,219

 

 

192,586

 

 

189,522

 

 

189,497

 

Agricultural loans

 

239,081

 

 

230,477

 

 

224,845

 

 

232,365

 

 

226,896

 

Total, excluding net deferred loan costs

$

2,393,484

 

$

2,368,801

 

$

2,301,028

 

$

2,328,682

 

$

1,892,807

 

 

For the Three Months Ended

For the Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

Noninterest Income

 

2022

 

 

2022

 

 

2022

 

 

2021

 

2021

 

2022

 

 

2021

 

Service charges on deposit accounts

$

1,229

 

$

1,139

 

$

1,145

 

$

1,138

$

924

$

3,513

 

$

2,522

 

Bank owned life insurance income, including death benefits

 

406

 

 

405

 

 

409

 

 

414

 

340

 

1,220

 

 

924

 

Trust fees

 

2,370

 

 

2,376

 

 

2,519

 

 

2,509

 

2,335

 

7,265

 

 

6,930

 

Insurance agency commissions

 

1,136

 

 

1,086

 

 

1,047

 

 

706

 

799

 

3,269

 

 

2,750

 

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

 

(17

)

 

(60

)

 

(11

)

 

25

 

459

 

(88

)

 

979

 

Retirement plan consulting fees

 

332

 

 

323

 

 

397

 

 

378

 

334

 

1,052

 

 

1,043

 

Investment commissions

 

424

 

 

557

 

 

694

 

 

611

 

638

 

1,675

 

 

1,665

 

Net gains on sale of loans

 

326

 

 

365

 

 

1,129

 

 

1,728

 

1,466

 

1,820

 

 

6,557

 

Other mortgage banking fee income (loss), net

 

94

 

 

39

 

 

60

 

 

2

 

32

 

193

 

 

(138

)

Debit card and EFT fees

 

1,463

 

 

1,528

 

 

1,416

 

 

1,424

 

1,227

 

4,407

 

 

3,720

 

Other noninterest income

 

1,064

 

 

1,719

 

 

8,893

 

 

603

 

461

 

11,676

 

 

1,703

 

Total Noninterest Income

$

8,827

 

$

9,477

 

$

17,698

 

$

9,538

$

9,015

$

36,002

 

$

28,655

 

 
 

For the Three Months Ended

For the Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

Noninterest Expense

 

2022

 

 

2022

 

 

2022

 

 

2021

 

2021

 

2022

 

 

2021

 

Salaries and employee benefits

$

10,724

 

$

11,073

 

$

11,831

 

$

10,230

$

9,321

$

33,628

 

$

29,163

 

Occupancy and equipment

 

3,028

 

 

2,918

 

 

2,680

 

 

2,422

 

1,899

 

8,626

 

 

6,065

 

FDIC insurance and state and local taxes

 

1,017

 

 

979

 

 

945

 

 

772

 

692

 

2,941

 

 

2,086

 

Professional fees

 

985

 

 

1,056

 

 

3,135

 

 

1,296

 

1,009

 

5,176

 

 

2,895

 

Merger related costs

 

872

 

 

674

 

 

1,940

 

 

6,521

 

472

 

3,486

 

 

588

 

Advertising

 

596

 

 

487

 

 

392

 

 

776

 

466

 

1,475

 

 

1,083

 

Intangible amortization

 

432

 

 

419

 

 

420

 

 

414

 

316

 

1,271

 

 

948

 

Core processing charges

 

738

 

 

1,123

 

 

745

 

 

880

 

860

 

2,606

 

 

2,318

 

Other noninterest expenses

 

3,007

 

 

2,732

 

 

8,368

 

 

4,350

 

2,093

 

14,107

 

 

6,369

 

Total Noninterest Expense

$

21,399

 

$

21,461

 

$

30,456

 

$

27,661

$

17,128

$

73,316

 

$

51,515

 

 

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

 

 

 

 

 

 

 

 

Three Months Ended

Three Months Ended

 

September 30, 2022

September 30, 2021

AVERAGEYIELD/AVERAGEYIELD/
BALANCEINTEREST (1)RATE (1)BALANCEINTEREST (1)RATE (1)
EARNING ASSETS
Loans (2)

$

2,386,184

$

27,570

4.62

%

$

1,917,443

$

22,665

4.73

%

Taxable securities

 

1,112,411

 

5,477

1.97

 

 

727,271

 

3,222

1.77

 

Tax-exempt securities (2)

 

473,677

 

3,814

3.22

 

 

360,371

 

3,065

3.40

 

Other investments

 

33,524

 

199

2.37

 

 

19,380

 

113

2.33

 

Federal funds sold and other

 

59,289

 

205

1.38

 

 

95,871

 

32

0.13

 

Total earning assets

 

4,065,085

 

37,265

3.67

 

 

3,120,336

 

29,097

3.73

 

Nonearning assets

 

99,770

 

184,372

Total assets

$

4,164,855

$

3,304,708

INTEREST-BEARING LIABILITIES
Time deposits

$

338,794

$

586

0.69

%

$

361,566

$

692

0.77

%

Brokered time deposits

 

50,494

 

142

1.12

 

 

0

 

0

0.00

 

Savings deposits

 

832,828

 

165

0.08

 

 

525,560

 

152

0.12

 

Demand deposits - interest bearing

 

1,426,801

 

2,317

0.65

 

 

1,278,099

 

502

0.16

 

Short term borrowings

 

90,978

 

533

2.34

 

 

5,671

 

0

0.00

 

Long term borrowings

 

88,031

 

886

4.03

 

 

51,767

 

495

3.82

 

Total interest-bearing liabilities

$

2,827,926

 

4,629

0.65

 

$

2,222,663

 

1,841

0.33

 

NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Demand deposits - noninterest bearing

 

969,700

 

684,419

Other liabilities

 

36,929

 

22,418

Stockholders' equity

 

330,300

 

375,208

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY

$

4,164,855

$

3,304,708

Net interest income and interest rate spread

$

32,636

3.02

%

$

27,256

3.40

%

Net interest margin

3.21

%

3.49

%

 
(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2022, adjustments of $76 thousand and $779 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2021, adjustments of $87 thousand and $635 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.
 
Nine Months EndedNine Months Ended
September 30, 2022September 30, 2021
AVERAGEYIELD/AVERAGEYIELD/
BALANCEINTEREST (1)RATE (1)BALANCEINTEREST (1)RATE (1)
EARNING ASSETS
Loans (2)

$

2,346,542

$

79,008

4.49

%

$

1,994,687

$

70,234

4.69

%

Taxable securities

 

1,074,020

 

15,287

1.90

 

 

524,774

 

7,452

1.89

 

Tax-exempt securities (2)

 

469,878

 

11,372

3.23

 

 

327,938

 

8,630

3.51

 

Other investments

 

32,901

 

545

2.21

 

 

20,372

 

355

2.32

 

Federal funds sold and other

 

82,031

 

348

0.57

 

 

204,037

 

161

0.11

 

Total earning assets

 

4,005,372

 

106,560

3.55

 

 

3,071,808

 

86,832

3.77

 

Nonearning assets

 

160,975

 

189,358

Total assets

$

4,166,347

$

3,261,166

INTEREST-BEARING LIABILITIES
Time deposits

$

357,241

$

1,782

0.67

%

$

393,704

$

2,955

1.00

%

Brokered time deposits

 

37,400

 

206

0.73

 

 

15,692

 

75

0.64

 

Savings deposits

 

837,937

 

473

0.07

 

 

512,716

 

510

0.13

 

Demand deposits - interest bearing

 

1,422,583

 

3,644

0.34

 

 

1,200,584

 

1,861

0.21

 

Short term borrowings

 

45,568

 

631

1.85

 

 

3,155

 

7

0.30

 

Long term borrowings

 

87,915

 

2,505

3.80

 

 

68,306

 

1,075

2.10

 

Total interest-bearing liabilities

$

2,788,644

 

9,241

0.44

 

$

2,194,157

 

6,483

0.39

 

NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Demand deposits - noninterest bearing

$

966,173

$

682,584

Other liabilities

 

30,904

 

22,026

Stockholders' equity

 

380,626

 

362,399

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY

$

4,166,347

$

3,261,166

Net interest income and interest rate spread

$

97,319

3.11

%

$

80,349

3.38

%

Net interest margin

3.24

%

3.49

%

 
(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2022, adjustments of $238 thousand and $2.3 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2021, adjustments of $274 thousand and $1.8 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 Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2022

 

 

2021

 

Total Assets

$

4,120,022

 

$

4,114,364

 

$

4,205,855

 

$

4,142,749

 

$

3,317,047

 

$

4,120,022

 

$

3,317,047

 

Less Goodwill and other intangibles

 

102,368

 

 

101,767

 

 

102,187

 

 

102,606

 

 

48,670

 

 

102,368

 

 

48,670

 

Tangible Assets

$

4,017,654

 

$

4,012,597

 

$

4,103,668

 

$

4,040,143

 

$

3,268,377

 

$

4,017,654

 

$

3,268,377

 

Average Assets

 

4,164,855

 

 

4,155,719

 

 

4,178,618

 

 

3,879,901

 

 

3,304,708

 

 

4,166,347

 

 

3,261,166

 

Less average Goodwill and other intangibles

 

101,981

 

 

102,042

 

 

102,462

 

 

84,580

 

 

48,879

 

 

102,160

 

 

49,192

 

Average Tangible Assets

$

4,062,874

 

$

4,053,677

 

$

4,076,156

 

$

3,795,321

 

$

3,255,829

 

$

4,064,187

 

$

3,211,974

 

 
 
Reconciliation of Common Stockholders' Equity to Tangible Common Equity

For the Three Months Ended

For the Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2022

 

 

2021

 

Stockholders' Equity

$

265,619

 

$

321,449

 

$

393,886

 

$

472,432

 

$

377,524

 

$

265,619

 

$

377,524

 

Less Goodwill and other intangibles

 

102,368

 

 

101,767

 

 

102,187

 

 

102,606

 

 

48,670

 

 

102,368

 

 

48,670

 

Tangible Common Equity

$

163,251

 

$

219,682

 

$

291,699

 

$

369,826

 

$

328,854

 

$

163,251

 

$

328,854

 

Average Stockholders' Equity

 

330,300

 

 

354,981

 

 

456,206

 

 

431,709

 

 

375,208

 

 

380,626

 

 

362,399

 

Less average Goodwill and other intangibles

 

101,981

 

 

102,042

 

 

102,462

 

 

84,580

 

 

48,879

 

 

102,160

 

 

49,192

 

Average Tangible Common Equity

$

228,319

 

$

252,939

 

$

353,744

 

$

347,129

 

$

326,329

 

$

278,466

 

$

313,207

 

 
 
Reconciliation of Net Income, Less Merger and Certain Items

For the Three Months Ended

For the Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2022

 

 

2021

 

Net income

$

15,446

 

$

15,951

 

$

15,844

 

$

5,702

 

$

16,011

 

$

47,241

 

$

46,142

 

Acquisition related costs - after tax

 

711

 

 

564

 

 

1,540

 

 

5,232

 

 

468

 

 

2,815

 

 

499

 

Acquisition related provision - after tax

 

0

 

 

0

 

 

0

 

 

3,846

 

 

0

 

 

0

 

 

0

 

Lawsuit settlement income - after tax

 

0

 

 

0

 

 

(6,616

)

 

0

 

 

0

 

 

(6,616

)

 

0

 

Lawsuit settlement contingent legal expense - after tax

 

0

 

 

0

 

 

1,639

 

 

0

 

 

0

 

 

1,639

 

 

0

 

Charitable donation - after tax

 

0

 

 

0

 

 

4,740

 

 

0

 

 

0

 

 

4,740

 

 

0

 

FHLB prepayment penalties - after tax

 

0

 

 

0

 

 

0

 

 

1,425

 

 

257

 

 

0

 

 

257

 

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

 

4

 

 

(25

)

 

97

 

 

134

 

 

(362

)

 

76

 

 

(732

)

Gain on sale of credit card portfolio - after tax

 

0

 

 

0

 

 

0

 

 

(189

)

 

0

 

 

0

 

 

0

 

Net income - Adjusted

$

16,161

 

$

16,490

 

$

17,244

 

$

16,150

 

$

16,374

 

$

49,895

 

$

46,166

 

Diluted EPS excluding merger and one-time items

$

0.48

 

$

0.49

 

$

0.51

 

$

0.50

 

$

0.58

 

$

1.47

 

$

1.63

 

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

 

1.55

%

 

1.59

%

 

1.65

%

 

1.65

%

 

1.97

%

 

1.60

%

 

1.89

%

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

 

19.57

%

 

18.58

%

 

15.12

%

 

14.84

%

 

17.31

%

 

17.48

%

 

16.99

%

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

 

28.31

%

 

26.08

%

 

19.50

%

 

18.46

%

 

19.91

%

 

23.89

%

 

19.65

%

 
 
Efficiency ratio excluding certain items

For the Three Months Ended

For the Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2022

 

 

2021

 

Net interest income, after tax

$

32,636

 

$

32,583

 

$

32,100

 

$

30,486

 

$

27,256

 

$

97,319

 

$

80,349

 

Noninterest income

 

8,827

 

 

9,477

 

 

17,698

 

 

9,538

 

 

9,015

 

 

36,002

 

 

28,655

 

Legal settlement income

 

0

 

 

0

 

 

(8,375

)

 

0

 

 

0

 

 

(8,375

)

 

0

 

Net loss (gain) on asset/security sales

 

6

 

 

(32

)

 

123

 

 

170

 

 

(458

)

 

97

 

 

(927

)

Gain on sale of credit card portfolio

 

0

 

 

0

 

 

0

 

 

(239

)

 

0

 

 

0

 

 

0

 

Net interest income and noninterest income adjusted

 

41,469

 

 

42,028

 

 

41,546

 

 

39,955

 

 

35,813

 

 

125,043

 

 

108,077

 

Noninterest expense less intangible amortization

 

20,967

 

 

21,042

 

 

30,036

 

 

27,247

 

 

16,813

 

 

72,045

 

 

50,570

 

Charitable donation

 

0

 

 

0

 

 

6,000

 

 

0

 

 

0

 

 

6,000

 

 

0

 

Contingent legal settlement expense

 

0

 

 

0

 

 

2,075

 

 

0

 

 

0

 

 

2,075

 

 

0

 

Acquisition related costs

 

872

 

 

674

 

 

1,940

 

 

6,521

 

 

472

 

 

3,486

 

 

588

 

FHLB prepayment penalties

 

0

 

 

0

 

 

0

 

 

1,804

 

 

325

 

 

0

 

 

325

 

Noninterest income adjusted

 

20,095

 

 

20,368

 

 

20,021

 

 

18,922

 

 

16,016

 

 

60,484

 

 

49,657

 

Efficiency ratio excluding one-time items

 

48.46

%

 

48.46

%

 

48.19

%

 

47.36

%

 

44.72

%

 

48.37

%

 

45.95

%

 
 
Net interest margin excluding acquisition marks and PPP interest and fees

For the Three Months Ended

For the Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2022

 

 

2021

 

Net interest income, taxable equivalent

$

32,636

 

$

32,583

 

$

32,100

 

$

30,486

 

$

27,256

 

$

97,319

 

$

80,349

 

Acquisition marks

 

246

 

 

381

 

 

957

 

 

496

 

 

(35

)

 

1,584

 

 

436

 

PPP interest and fees

 

62

 

 

634

 

 

686

 

 

979

 

 

1,402

 

 

1,382

 

 

5,643

 

Adjusted and annualized net interest income

 

129,312

 

 

126,272

 

 

121,828

 

 

115,098

 

 

102,712

 

 

125,804

 

 

99,027

 

Average earning assets

 

4,065,085

 

 

4,015,385

 

 

3,931,506

 

 

3,631,320

 

 

3,120,336

 

 

4,005,372

 

 

3,261,166

 

Less PPP average balances

 

1,586

 

 

16,019

 

 

30,003

 

 

47,939

 

 

76,990

 

 

15,766

 

 

111,162

 

Adjusted average earning assets

 

4,063,499

 

 

3,999,366

 

 

3,901,503

 

 

3,583,381

 

 

3,043,346

 

 

3,989,606

 

 

3,150,004

 

Net interest margin excluding marks and PPP interest and fees

 

3.18

%

 

3.16

%

 

3.12

%

 

3.21

%

 

3.37

%

 

3.15

%

 

3.14

%

 

 

Farmers National Banc Corp.
Kevin J. Helmick, President and CEO
330.533.3341
Email: exec@farmersbankgroup.com

Source: Farmers National Banc Corp.