8-K
Farmers National Banc Corp /Oh/ (FMNB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENTREPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 29, 2020
Farmers National Banc Corp.
(Exact name of registrant as specified in its charter)
| Ohio | 001-35296 | 34-1371693 |
|---|---|---|
| (State or other jurisdiction<br><br><br>of incorporation) | (Commission<br><br><br>File Number) | (IRS Employer<br><br><br>Identification No.) |
| 20 South Broad Street, P.O. Box 555, Canfield, Ohio | 44406-0555 | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code) (330)533-3341
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17<br>CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br><br>Symbol | Name of each exchange<br><br><br>on which registered |
|---|---|---|
| Common Stock, No Par Value | FMNB | The NASDAQ Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On July 29, 2020, Farmers National Banc Corp. (the “Company”) announced earnings for the quarter ended June 30, 2020. A copy of the press release and certain financial information for this period is attached as Exhibit 99.1 hereto, which is incorporated herein by reference.
Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 2.02 and Exhibit 99.1 is being furnished under Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Furthermore, the information in this Item 2.02 and Exhibit 99.1 shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | Press Release – Quarterly Financial Results, dated July 29, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Farmers National Banc Corp. | |
|---|---|
| By: | /s/ Kevin J. Helmick |
| Kevin J. Helmick | |
| President and Chief Executive Officer |
Date: July 29, 2020
EX-99.1
Exhibit 99.1
July 29, 2020
Press Release
| Source: | Farmers National Banc Corp. |
|---|---|
| Kevin J. Helmick, President and CEO | |
| --- | |
| 20 South Broad Street, P.O. Box 555 | |
| --- | |
| Canfield, OH 44406 | |
| --- | |
| 330.533.3341 | |
| --- | |
| Email: [email protected] | |
| --- |
FARMERS NATIONAL BANC CORP. ANNOUNCES
2020 SECOND QUARTER FINANCIAL RESULTS
| • | Dedicated to assisting associates, customers and communities during theCOVID-19 crisis |
|---|---|
| • | Net income of $11 million for the quarter is 29% higher than same quarter in 2019, despite a$1.7 million increase in the second quarter provision for loan losses |
| --- | --- |
| • | Net interest income increased 16.7% for the quarter compared to the same period a year ago as a result ofhigher interest income and lower interest expense |
| --- | --- |
| • | Significant mortgage loan activity drives a 28.2% year-over-year increase in noninterest income |
| --- | --- |
| • | 150 consecutive quarters of profitability |
| --- | --- |
| • | Return on average assets, annualized was 1.56% for the second quarter |
| --- | --- |
| • | 28% growth in customer non-brokered deposits in the quarter comparedto June 30, 2019 |
| --- | --- |
CANFIELD, Ohio (July 29, 2020) – Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months ended June 30, 2020.
Net income for the three months ended June 30, 2020 was $11.0 million, or $0.39 per diluted share, which compares to $8.5 million, or $0.31 per diluted share, for the three months ended June 30, 2019 and $8.6 million or $0.30 per diluted share for the linked quarter. Net income excluding acquisition costs (non-GAAP) for the quarter ended June 30, 2020 was $11.1 million or $0.39 per share, compared to $8.5 million or $0.31 per share for the same quarter in 2019 and $9.7 million or $0.34 per share for the most recent prior quarter.
Annualized return on average assets and annualized return on average equity were 1.56% and 14.02%, respectively, for the three month period ending June 30, 2020, compared to 1.45% and 12.34% for the same three month period in 2019, and 1.32% and 11.53% for the linked quarter. Farmers’ annualized return on average tangible equity (non-GAAP) was 16.69% for the quarter ended June 30, 2020 compared to 14.59% for the same quarter in 2019 and 13.81% for the linked quarter.
Net income for the six months ended June 30, 2020 was $19.7 million, or $0.69 per diluted share, compared to $16.9 million or $0.61 per diluted share for the same six month period in 2019. Return on average assets and return on average equity were 1.44% and 12.81%, respectively, for the six months ended June 30, 2020, compared to 1.45% and 12.54% for the same period in 2019.
Kevin J. Helmick, President and CEO, stated, “For over 133 years, our success has been driven by supporting our local communities and doing what’s right for our customers. This win-win spirit is more important than ever as our communities face significant uncertainties brought on by the COVID-19 pandemic. Farmers is uniquely prepared to address the current economic environment as we benefit from diverse sources of income, proactive risk management, and a proven and motivated management team. As a result, Farmers ended the quarter with record quarterly noninterest income, regulatory capital well in excess of required minimums, a tangible common equity ratio at a solid 9.86% (non-GAAP), and a second quarter dividend payout ratio of 28.15%.”
In response to the rapidly evolving COVID-19 pandemic, the Company focused first on the well-being of its people, customers and communities. Preventative health measures were put in place including elimination of business related travel requirements, work from home requirements for all employees able to do so and social distancing precautions for all employees in the office. At the beginning of the pandemic, the Company restricted access to branch lobbies to appointment only, but has now re-opened the lobbies using personal protective equipment and maintaining social distancing guidelines and continues to conduct preventative cleaning at all offices and branches. The Company also focused on business continuity measures, including forming a COVID-19 task force, monitoring potential business interruptions, making improvements to our remote working technology, and conducting regular discussions with our technology vendors.
Farmers is offering special financial assistance to support customers who are 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 dates listed:
| March 31, 2020 | June 30, 2020 | July 24, 2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Outstanding<br>Balance | Number of<br>Loans | Outstanding<br>Balance | Number of<br>Loans | Outstanding<br>Balance | Number of<br>Loans | |||||||
| Commercial real estate | $ | 75,809 | 78 | $ | 43,954 | 44 | $ | 27,717 | 17 | |||
| Commercial | 11,839 | 81 | 8515 | 69 | 5,848 | 36 | ||||||
| Agricultural | 1,492 | 11 | 8340 | 22 | 2,505 | 12 | ||||||
| Residential real estate | 5,506 | 41 | 3785 | 37 | 1,397 | 15 | ||||||
| Consumer | 2,840 | 127 | 1,858 | 100 | 539 | 36 | ||||||
| Total | $ | 97,486 | 338 | $ | 66,452 | 272 | $ | 38,006 | 116 |
The Company offered three month deferrals upon request by the borrowers. The deferral requests began in the middle of March, 2020 and concluded at the end of the three month deferral period. The decline in deferred loans and balances was due to the ending of the deferment period and that not all borrowers requested additional deferment. The Company has granted a second three month deferral period to $23.8 million in commercial real estate loans and $5.7 million in commercial loans, which are included in the amounts detailed above. The second deferral period was offered to a select group of customers within specific industry codes that may have a higher credit risk. The Company anticipates that there will be a limited number of business customers with a total of a six month deferral period.
Farmers is also a preferred SBA lender and dedicated significant additional staff and other resources to help our customers complete and submit their applications and supporting documentation for loans offered under the new 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. At June 30, 2020, the Company had facilitated PPP assistance to 1,675 business customers totaling $199.1 million.
On January 7, 2020, Farmers announced it completed the merger of Maple Leaf Financial (“Maple Leaf”), the holding company for Geauga Savings Bank, with branches located in Cuyahoga and Geauga Counties in Ohio. The transaction increased Farmers’ market share in Cuyahoga and Geauga Counties and enables Farmers to continue building local scale throughout Northeast Ohio. As of January 7, 2020, Maple Leaf had total assets of $277.0 million, which included gross loans of $182.1 million, deposits of $183.1 million and equity of $32.1 million.
2020 Second Quarter Financial Highlights
| • | Loans |
|---|
Total loans were $2.15 billion at June 30, 2020, compared to $1.78 billion at June 30, 2019, representing an increase of 20.7%. Excluding the $182.1 million of loans added from the Maple Leaf acquisition, loan growth was 10.5%. The increase in loans was a direct result of Farmers’ focus on loan growth utilizing a talented lending and credit team, while adhering to a sound underwriting discipline. The increase in loans has occurred primarily in the PPP category, with $199.1 million in outstanding balances. Loans now comprise 79.6% of the Bank’s average earning assets for the quarter ended June 30, 2020, unchanged compared to the same period in 2019. The growth in loans has resulted in a 10.8% increase in tax equated loan interest income, including fees, in the second quarter of 2020 compared to the same quarter in 2019. A summary of loans summarized by industries that have particular vulnerability to the effects of COVID-19 and their outstanding balance as a percentage of total loans is shown in the following table:
| OutstandingBalance | % of totalloans | ||||
|---|---|---|---|---|---|
| Restaurants and Catering Facilities | $ | 52,134,168 | 2.43 | % | |
| Hotels | 42,655,026 | 1.98 | % | ||
| Golf Courses | 7,665,569 | 0.36 | % | ||
| Energy | 1,073,850 | 0.05 | % | ||
| Total | $ | 103,528,612 | 4.82 | % | |
| • | 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 28% from $1.9 billion at June 30, 2019 to $2.4 billion at June 30, 2020. The loan to deposit ratio at June 30, 2020 stands at 88.12%, a slight improvement compared to 89.0% 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 remain at a low level, currently at 0.43%, but increased from the 0.30% reported one year ago. Early stage delinquencies were $10.3 million, or 0.48% of total loans, at June 30, 2020, compared to $19.1 million, or 0.96% of total loans, for the quarter ended March 31, 2020. Net charge-offs for the current quarter were $392 thousand, compared to $305 thousand in the same quarter in 2019, and total net charge-offs as a percentage of average net loans outstanding is 0.08% for the quarter ended June 30, 2020, compared to 0.13% for the most recent quarter. The Company increased its provision for loan losses to $2.4 million, an increase of $1.3 million compared to the $1.1 million provision recorded in the most recent quarter. This additional provision is the amount determined to be required as a result of the impact of increased negative economic factors that exist in the current business environment. As an overall percentage of loans, the allowance for loan losses increased to 0.79% during the current quarter compared to 0.76% during the quarter ended March 31, 2020. Excluding the PPP loans, this allowance for loan losses to gross loans ratio increases to 0.87%. The ratio of the allowance for loan losses to gross loans, excluding PPP loans and acquired loans is 0.96%. It is also important to note that the average FICO score of our indirect lending portfolio stands at a healthy 771 and our consumer loan portfolio average FICO score is currently 766.
In accordance with the accounting relief provisions of the CARES Act, the Bank has postponed adoption of the current expected credit losses (“CECL”) accounting standards, primarily due to the impact the COVID-19 pandemic is having on the economy and the lack of reasonable and supportable economic forecasts.
| • | Net interest margin |
|---|
The net interest margin for the three months ended June 30, 2020 was 3.74%, a 10 basis points decrease from the quarter ended June 30, 2019, but only 1 basis point less than the 3.75% reported for the linked quarter. In comparing the second quarter of 2020 to the same period in 2019, asset yields decreased 37 basis points, while the cost of interest-bearing liabilities decreased a similar 36 basis points. Most of the decrease in the asset yields was the result of lower rates earned on loans, declining from 5.14% to 4.75% due to the decrease in the prime lending rate and the addition of the lower yielding PPP loans. The cost of interest bearing liabilities decreased as the Federal Funds target rate was lowered to a target of 0-0.25% at the start of the COVID-19 pandemic in the United States. Each of the major interest-bearing liability categories experienced cost decreases compared to one year ago. The net interest margin is impacted by the additional accretion as a result of the discounted loan portfolios acquired in the previous mergers, which increased the net interest margin by 5 basis points for the quarter ended June 30, 2020 and 5 basis points for the quarter ended June 30, 2019.
| • | Noninterest income |
|---|
Noninterest income increased 28.15% to $9.1 million for the quarter ended June 30, 2020 compared to $7.1 million in the same quarter in 2019. Gains on the sales of mortgage loans increased $2.6 million or 246.73%, as lower interest rates prompted an increase in mortgage loan refinancing and new home purchases. Debit card interchange fees increased $80 thousand or 9.02%, but that increase was offset by $42 thousand or 9.33% less in retirement plan consulting fees and reduced income from SBIC Funds which impacted other operating income. The Company also experienced a $340 thousand decrease in deposit account service charge income due to a change in consumer behavior and the waiver of some overdraft fees during the COVID-19 pandemic.
| • | Noninterest expenses |
|---|
Farmers has remained committed to managing the level of noninterest expenses. Total noninterest expenses for the second quarter of 2020 increased 5.35% to $17.7 million compared to $16.8 million in the same quarter in 2019, primarily as a result of increases in salaries and employee benefits of $447 thousand or 4.82%, FDIC insurance premiums of $140 thousand or 164.71% and core processing charges and telephone and data costs of $131 thousand each. Other operating expenses increased $29 thousand or 1.07%, of which approximately $407 thousand was the result of an adjustment to mortgage servicing rights resulting from higher than expected mortgage loan payoffs. This increase was offset by a $505 thousand drop in litigation settlement expense. Annualized noninterest expenses excluding acquisition costs (non-GAAP) measured as a percentage of quarterly average assets decreased from 2.83% in the second quarter of 2019 to 2.50% in the second quarter of 2020.
| • | Efficiency ratio |
|---|
The efficiency ratio for the quarter ended June 30, 2020 decreased to 50.75% compared to 58.28% for the same quarter in 2019. The improvement in mortgage banking income and net interest income, accompanied with careful management of noninterest expenses were the main drivers of the improvement.
Mr. Helmick concluded, “I want to extend my sincere thanks to all of our associates for their dedication and hard work during these unprecedented times. We remain committed to doing the right thing for our communities. On behalf of everyone at Farmers, we are proud to help our local business and individual customers alike.”
Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $2.9 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 42 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, 2020 are $2.4 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 and net income excluding costs related to acquisition activities, 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 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 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; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2019, 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 | |||||||||||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | 2020 | 2019 | Change | |||||||||||||||||
| Total interest income | $ | 28,142 | $ | 27,717 | $ | 25,847 | $ | 25,931 | $ | 25,529 | $ | 55,859 | $ | 50,208 | 11.3 | % | ||||||||
| Total interest expense | 4,221 | 5,415 | 4,682 | 5,174 | 5,038 | 9,636 | 9,752 | -1.2 | % | |||||||||||||||
| Net interest income | 23,921 | 22,302 | 21,165 | 20,757 | 20,491 | 46,223 | 40,456 | 14.3 | % | |||||||||||||||
| Provision for loan losses | 2,400 | 1,100 | 600 | 550 | 750 | 3,500 | 1,300 | 169.2 | % | |||||||||||||||
| Noninterest income | 9,136 | 7,870 | 7,814 | 7,576 | 7,129 | 17,006 | 13,772 | 23.5 | % | |||||||||||||||
| Acquisition related costs (income) | 48 | 1,319 | 104 | 112 | (19 | ) | 1,367 | (19 | ) | -7294 | % | |||||||||||||
| Other expense | 17,692 | 17,418 | 16,414 | 16,446 | 16,858 | 35,110 | 32,958 | 6.5 | % | |||||||||||||||
| Income before income taxes | 12,917 | 10,335 | 11,861 | 11,225 | 10,031 | 23,252 | 19,989 | 16.3 | % | |||||||||||||||
| Income taxes | 1,906 | 1,696 | 2,186 | 2,071 | 1,488 | 3,602 | 3,058 | 17.8 | % | |||||||||||||||
| Net income | $ | 11,011 | $ | 8,639 | $ | 9,675 | $ | 9,154 | $ | 8,543 | $ | 19,650 | $ | 16,931 | 16.1 | % | ||||||||
| Average diluted shares outstanding | 28,280 | 28,710 | 27,829 | 27,819 | 27,931 | 28,492 | 27,950 | |||||||||||||||||
| Basic earnings per share | 0.39 | 0.30 | 0.35 | 0.33 | 0.31 | 0.69 | 0.61 | |||||||||||||||||
| Diluted earnings per share | 0.39 | 0.30 | 0.35 | 0.33 | 0.31 | 0.69 | 0.61 | |||||||||||||||||
| Cash dividends | 3,100 | 3,104 | 2,767 | 2,767 | 2,504 | 6,204 | 5,004 | |||||||||||||||||
| Cash dividends per share | 0.11 | 0.11 | 0.10 | 0.10 | 0.09 | 0.22 | 0.18 | |||||||||||||||||
| Performance Ratios | ||||||||||||||||||||||||
| Net Interest Margin (Annualized) | 3.74 | % | 3.75 | % | 3.84 | % | 3.79 | % | 3.84 | % | 3.74 | % | 3.83 | % | ||||||||||
| Efficiency Ratio (Tax equivalent basis) | 50.75 | % | 59.72 | % | 54.51 | % | 55.90 | % | 58.28 | % | 55.04 | % | 58.06 | % | ||||||||||
| Return on Average Assets (Annualized) | 1.56 | % | 1.32 | % | 1.58 | % | 1.51 | % | 1.45 | % | 1.44 | % | 1.45 | % | ||||||||||
| Return on Average Equity (Annualized) | 14.02 | % | 11.53 | % | 12.78 | % | 12.49 | % | 12.34 | % | 12.81 | % | 12.54 | % | ||||||||||
| Dividends to Net Income | 28.15 | % | 35.93 | % | 28.60 | % | 30.23 | % | 29.31 | % | 31.57 | % | 29.56 | % | ||||||||||
| Other Performance Ratios (Non-GAAP) | ||||||||||||||||||||||||
| Return on Average Tangible Assets | 1.58 | % | 1.33 | % | 1.62 | % | 1.55 | % | 1.47 | % | 1.46 | % | 1.47 | % | ||||||||||
| Return on Average Tangible Equity | 16.69 | % | 13.81 | % | 15.03 | % | 14.80 | % | 14.59 | % | 15.03 | % | 14.82 | % | ||||||||||
| Return on Average Tangible Equity excluding acquisition costs | 16.75 | % | 15.50 | % | 15.17 | % | 14.95 | % | 14.55 | % | 15.88 | % | 14.80 | % |
Consolidated Statements of Financial Condition
| June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2020 | 2019 | 2019 | 2019 | |||||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents | $ | 103,954 | $ | 83,107 | $ | 70,760 | $ | 85,675 | $ | 64,007 | |||||
| Securities available for sale | 475,614 | 448,043 | 432,233 | 423,193 | 424,252 | ||||||||||
| Equity securities | 8,375 | 8,080 | 7,909 | 7,856 | 7,222 | ||||||||||
| Loans held for sale | 3,395 | 3,272 | 2,600 | 2,079 | 1,093 | ||||||||||
| Loans | 2,149,690 | 1,976,582 | 1,811,539 | 1,784,125 | 1,780,504 | ||||||||||
| Less allowance for loan losses | 16,960 | 14,952 | 14,487 | 14,261 | 14,222 | ||||||||||
| Net Loans | 2,132,730 | 1,961,630 | 1,797,052 | 1,769,864 | 1,766,282 | ||||||||||
| Other assets | 161,612 | 164,256 | 138,604 | 144,543 | 143,093 | ||||||||||
| Total Assets | $ | 2,885,680 | $ | 2,668,388 | $ | 2,449,158 | $ | 2,433,210 | $ | 2,405,949 | |||||
| Liabilities and Stockholders’ Equity | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| Deposits | |||||||||||||||
| Noninterest-bearing | $ | 593,162 | $ | 449,952 | $ | 434,126 | $ | 432,609 | $ | 415,935 | |||||
| Interest-bearing | 1,846,323 | 1,796,325 | 1,574,838 | 1,608,043 | 1,584,700 | ||||||||||
| Total deposits | 2,439,485 | 2,246,277 | 2,008,964 | 2,040,652 | 2,000,635 | ||||||||||
| Other interest-bearing liabilities | 80,115 | 96,852 | 122,197 | 76,324 | 96,978 | ||||||||||
| Other liabilities | 34,728 | 21,523 | 18,688 | 23,011 | 23,511 | ||||||||||
| Total liabilities | 2,554,328 | 2,364,652 | 2,149,849 | 2,139,987 | 2,121,124 | ||||||||||
| Stockholders’ Equity | 331,352 | 303,736 | 299,309 | 293,223 | 284,825 | ||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 2,885,680 | $ | 2,668,388 | $ | 2,449,158 | $ | 2,433,210 | $ | 2,405,949 | |||||
| Period-end shares outstanding | 28,180 | 28,127 | 27,671 | 27,669 | 27,768 | ||||||||||
| Book value per share | $ | 11.76 | $ | 10.80 | $ | 10.82 | $ | 10.60 | $ | 10.26 | |||||
| Tangible book value per share (Non-GAAP)* | 9.92 | 8.94 | 9.28 | 9.04 | 8.70 | ||||||||||
| * | Tangible book value per share is calculated by dividing tangible common equity by average outstanding shares<br> | ||||||||||||||
| --- | --- | ||||||||||||||
| Capital and Liquidity | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Common Equity Tier 1 Capital Ratio (a) | 12.56 | % | 12.26 | % | 12.94 | % | 12.70 | % | 12.47 | % | |||||
| Total Risk Based Capital Ratio (a) | 13.38 | % | 13.43 | % | 13.82 | % | 13.58 | % | 13.34 | % | |||||
| Tier 1 Risk Based Capital Ratio (a) | 12.66 | % | 12.70 | % | 13.03 | % | 12.83 | % | 12.59 | % | |||||
| Tier 1 Leverage Ratio (a) | 9.37 | % | 10.18 | % | 10.69 | % | 10.42 | % | 10.27 | % | |||||
| Equity to Asset Ratio | 11.48 | % | 11.38 | % | 12.22 | % | 12.05 | % | 11.84 | % | |||||
| Tangible Common Equity Ratio (b) | 9.86 | % | 9.61 | % | 10.67 | % | 10.47 | % | 10.22 | % | |||||
| Net Loans to Assets | 73.91 | % | 73.51 | % | 73.37 | % | 72.74 | % | 73.41 | % | |||||
| Loans to Deposits | 88.12 | % | 87.99 | % | 90.17 | % | 87.43 | % | 89.00 | % | |||||
| Asset Quality | |||||||||||||||
| Non-performing loans | $ | 12,225 | $ | 11,845 | $ | 6,345 | $ | 6,749 | $ | 7,252 | |||||
| Other Real Estate Owned | 41 | 131 | 19 | 74 | 74 | ||||||||||
| Non-performing assets | 12,266 | 11,976 | 6,364 | 6,823 | 7,326 | ||||||||||
| Loans 30—89 days delinquent | 10,336 | 19,067 | 11,893 | 9,076 | 10,203 | ||||||||||
| Charged-off loans | 524 | 749 | 519 | 674 | 588 | ||||||||||
| Recoveries | 132 | 114 | 145 | 163 | 283 | ||||||||||
| Net Charge-offs | 392 | 635 | 374 | 511 | 305 | ||||||||||
| Annualized Net Charge-offs to | |||||||||||||||
| Average Net Loans Outstanding | 0.08 | % | 0.13 | % | 0.09 | % | 0.12 | % | 0.07 | % | |||||
| Allowance for Loan Losses to Total Loans | 0.79 | % | 0.76 | % | 0.80 | % | 0.80 | % | 0.80 | % | |||||
| Non-performing Loans to Total Loans | 0.57 | % | 0.60 | % | 0.35 | % | 0.38 | % | 0.41 | % | |||||
| Allowance to Non-performing Loans | 138.73 | % | 126.23 | % | 228.32 | % | 211.31 | % | 196.11 | % | |||||
| Non-performing Assets to Total Assets | 0.43 | % | 0.45 | % | 0.26 | % | 0.28 | % | 0.30 | % | |||||
| (a) | June 30, 2020 ratio is estimated | ||||||||||||||
| --- | --- | ||||||||||||||
| (b) | This is a non-GAAP financial measure. A reconciliation to GAAP is shown<br>below | ||||||||||||||
| --- | --- |
Reconciliation of Total Assets to Tangible Assets
| For the Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | June 30, | June 30, | ||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | 2020 | 2019 | ||||||||
| Total Assets | $ | 2,885,680 | $ | 2,668,388 | $ | 2,449,158 | $ | 2,433,210 | $ | 2,405,949 | $ | 2,885,680 | $ | 2,405,949 |
| Less Goodwill and other intangibles | 51,866 | 52,337 | 42,645 | 42,973 | 43,298 | 51,866 | 43,298 | |||||||
| Tangible Assets | $ | 2,833,814 | $ | 2,616,051 | $ | 2,406,513 | $ | 2,390,237 | $ | 2,362,651 | $ | 2,833,814 | $ | 2,362,651 |
| Average Assets | 2,842,730 | 2,641,597 | 2,424,574 | 2,409,010 | 2,369,388 | 2,741,903 | 2,354,112 | |||||||
| Less average Goodwill and other intangibles | 52,052 | 51,103 | 42,859 | 43,187 | 43,508 | 47,088 | 43,674 | |||||||
| Average Tangible Assets | $ | 2,790,678 | $ | 2,590,494 | $ | 2,381,715 | $ | 2,365,823 | $ | 2,325,880 | $ | 2,694,815 | $ | 2,310,438 |
Reconciliation of Common Stockholders’ Equity to Tangible Common Equity
| For the Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | June 30, | June 30, | ||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | 2020 | 2019 | ||||||||
| Stockholders’ Equity | $ | 331,352 | $ | 303,736 | $ | 299,309 | $ | 293,223 | $ | 284,825 | $ | 331,352 | $ | 284,825 |
| Less Goodwill and other intangibles | 51,866 | 52,337 | 42,645 | 42,973 | 43,298 | 51,866 | 43,298 | |||||||
| Tangible Common Equity | $ | 279,486 | $ | 251,399 | $ | 256,664 | $ | 250,250 | $ | 241,527 | $ | 279,486 | $ | 241,527 |
| Average Stockholders’ Equity | 315,988 | 301,408 | 300,355 | 290,673 | 277,746 | 308,524 | 272,218 | |||||||
| Less average Goodwill and other intangibles | 52,052 | 51,103 | 42,859 | 43,187 | 43,508 | 47,088 | 43,674 | |||||||
| Average Tangible Common Equity | $ | 263,936 | $ | 250,305 | $ | 257,496 | $ | 247,486 | $ | 234,238 | $ | 261,436 | $ | 228,544 |
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, | ||||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | 2020 | 2019 | ||||||||||
| Net income | $ | 11,011 | $ | 8,639 | $ | 9,675 | $ | 9,154 | $ | 8,543 | $ | 19,650 | $ | 16,931 | ||
| Acquisition related costs (income) - tax equated | 41 | 1,063 | 90 | 97 | (20 | ) | 1,104 | (20 | ) | |||||||
| Net income - Adjusted | $ | 11,052 | $ | 9,702 | $ | 9,765 | $ | 9,251 | $ | 8,523 | $ | 20,754 | $ | 16,911 | ||
| Diluted EPS excluding acquisition costs | $ | 0.39 | $ | 0.34 | $ | 0.35 | $ | 0.33 | $ | 0.31 | $ | 0.73 | $ | 0.61 | ||
| June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| End of Period Loan Balances | 2020 | 2020 | 2019 | 2019 | 2019 | |||||||||||
| Commercial real estate | $ | 715,342 | $ | 714,477 | $ | 616,778 | $ | 602,580 | $ | 614,452 | ||||||
| Commercial | 472,012 | 283,033 | 255,823 | 251,613 | 256,657 | |||||||||||
| Residential real estate | 528,853 | 541,534 | 500,024 | 499,996 | 493,529 | |||||||||||
| Consumer | 208,374 | 210,173 | 209,271 | 207,319 | 207,417 | |||||||||||
| Agricultural loans | 221,556 | 223,977 | 226,333 | 219,487 | 205,544 | |||||||||||
| Total, excluding net deferred loan costs | $ | 2,146,137 | $ | 1,973,194 | $ | 1,808,229 | $ | 1,780,995 | $ | 1,777,599 | ||||||
| For the Three Months Ended | ||||||||||||||||
| June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | ||||||||||||
| Noninterest Income | 2020 | 2020 | 2019 | 2019 | 2019 | |||||||||||
| Service charges on deposit accounts | $ | 753 | $ | 1,095 | $ | 1,139 | $ | 1,208 | $ | 1,093 | ||||||
| Bank owned life insurance income | 204 | 208 | 192 | 204 | 208 | |||||||||||
| Trust fees | 1,852 | 1,857 | 1,891 | 1,905 | 1,821 | |||||||||||
| Insurance agency commissions | 681 | 883 | 696 | 681 | 739 | |||||||||||
| Security gains (losses) | (26 | ) | 157 | 28 | 22 | (18 | ) | |||||||||
| Retirement plan consulting fees | 408 | 380 | 343 | 338 | 450 | |||||||||||
| Investment commissions | 304 | 423 | 435 | 384 | 327 | |||||||||||
| Net gains on sale of loans | 3,658 | 1,366 | 1,517 | 1,143 | 1,055 | |||||||||||
| Debit card and EFT fees | 967 | 851 | 922 | 935 | 887 | |||||||||||
| Other operating income | 335 | 650 | 651 | 756 | 567 | |||||||||||
| Total Noninterest Income | $ | 9,136 | $ | 7,870 | $ | 7,814 | $ | 7,576 | $ | 7,129 | ||||||
| For the Three Months Ended | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | ||||||||||||
| Noninterest Expense | 2020 | 2020 | 2019 | 2019 | 2019 | |||||||||||
| Salaries and employee benefits | $ | 9,713 | $ | 10,231 | $ | 9,128 | $ | 9,422 | $ | 9,266 | ||||||
| Occupancy and equipment | 1,675 | 1,800 | 1,667 | 1,615 | 1,650 | |||||||||||
| State and local taxes | 583 | 464 | 416 | 468 | 472 | |||||||||||
| Professional fees | 823 | 816 | 787 | 654 | 887 | |||||||||||
| Merger related costs (income) | 48 | 1,319 | 104 | 112 | (19 | ) | ||||||||||
| Advertising | 322 | 271 | 607 | 437 | 442 | |||||||||||
| FDIC insurance | 225 | 225 | 79 | 80 | 85 | |||||||||||
| Intangible amortization | 331 | 332 | 326 | 326 | 327 | |||||||||||
| Core processing charges | 934 | 861 | 876 | 900 | 803 | |||||||||||
| Telephone and data | 348 | 203 | 235 | 236 | 217 | |||||||||||
| Other operating expenses | 2,738 | 2,215 | 2,293 | 2,308 | 2,709 | |||||||||||
| Total Noninterest Expense | $ | 17,740 | $ | 18,737 | $ | 16,518 | $ | 16,558 | $ | 16,839 |
Average Balance Sheets and Related Yields and Rates
(Dollar Amounts in Thousands)
| Three Months Ended | Three Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2020 | June 30, 2019 | |||||||||||||
| AVERAGE | AVERAGE | |||||||||||||
| BALANCE | INTEREST (1) | RATE (1) | BALANCE | INTEREST (1) | RATE (1) | |||||||||
| EARNING ASSETS | ||||||||||||||
| Loans (2) | $ | 2,101,500 | $ | 24,842 | 4.75 | % | $ | 1,749,828 | $ | 22,431 | 5.14 | % | ||
| Taxable securities | 197,906 | 1,278 | 2.60 | 195,934 | 1,238 | 2.53 | ||||||||
| Tax-exempt securities (2) | 252,818 | 2,459 | 3.91 | 211,533 | 2,065 | 3.92 | ||||||||
| Equity securities | 17,687 | 137 | 3.12 | 12,055 | 171 | 5.69 | ||||||||
| Federal funds sold and other | 70,279 | 30 | 0.17 | 29,205 | 158 | 2.17 | ||||||||
| Total earning assets | 2,640,190 | 28,746 | 4.38 | 2,198,555 | 26,063 | 4.75 | ||||||||
| Nonearning assets | 202,540 | 170,833 | ||||||||||||
| Total assets | $ | 2,842,730 | $ | 2,369,388 | ||||||||||
| INTEREST-BEARING LIABILITIES | ||||||||||||||
| Time deposits | $ | 493,048 | $ | 2,181 | 1.78 | % | $ | 401,005 | $ | 1,984 | 1.98 | % | ||
| Brokered time deposits | 84,198 | 319 | 1.52 | 94,463 | 559 | 2.35 | ||||||||
| Savings deposits | 457,188 | 267 | 0.23 | 416,024 | 340 | 0.33 | ||||||||
| Demand deposits | 823,058 | 1,093 | 0.53 | 631,436 | 1,476 | 0.94 | ||||||||
| Short term borrowings | 12,613 | 18 | 0.57 | 100,199 | 631 | 2.53 | ||||||||
| Long term borrowings | 76,751 | 343 | 1.80 | 5,724 | 48 | 3.36 | ||||||||
| Total interest-bearing liabilities | $ | 1,946,856 | 4,221 | 0.87 | $ | 1,648,851 | 5,038 | 1.23 | ||||||
| NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Demand deposits | 556,649 | 425,672 | ||||||||||||
| Other liabilities | 23,237 | 17,119 | ||||||||||||
| Stockholders’ equity | 315,988 | 277,746 | ||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,842,730 | $ | 2,369,388 | ||||||||||
| Net interest income and interest rate spread | $ | 24,525 | 3.51 | % | $ | 21,025 | 3.52 | % | ||||||
| Net interest margin | 3.74 | % | 3.84 | % | ||||||||||
| (1) | Interest and yields are calculated on a tax-equivalent basis where<br>applicable. | |||||||||||||
| --- | --- | |||||||||||||
| (2) | For 2020, adjustments of $98 thousand and $506 thousand, respectively, were made to tax equate income<br>on tax exempt loans and tax exempt securities. For 2019, adjustments of $107 thousand and $427 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. These adjustments were based on a marginal<br>federal income tax rate of 21%, less disallowances. | |||||||||||||
| --- | --- | |||||||||||||
| Six Months Ended | Six Months Ended | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 30, 2020 | June 30, 2019 | |||||||||||||
| AVERAGE | AVERAGE | |||||||||||||
| BALANCE | INTEREST (1) | RATE (1) | BALANCE | INTEREST (1) | RATE (1) | |||||||||
| EARNING ASSETS | ||||||||||||||
| Loans (2) | $ | 2,014,678 | $ | 49,039 | 4.89 | % | $ | 1,738,953 | $ | 44,002 | 5.10 | % | ||
| Taxable securities | 209,139 | 2,825 | 2.72 | 195,871 | 2,482 | 2.56 | ||||||||
| Tax-exempt securities | 242,016 | 4,702 | 3.91 | 209,586 | 4,076 | 3.92 | ||||||||
| Equity securities (2) | 16,996 | 277 | 3.28 | 12,058 | 346 | 5.79 | ||||||||
| Federal funds sold and other | 64,090 | 179 | 0.56 | 31,712 | 354 | 2.25 | ||||||||
| Total earning assets | 2,546,919 | 57,022 | 4.50 | 2,188,180 | 51,260 | 4.72 | ||||||||
| Nonearning assets | 194,984 | 165,932 | ||||||||||||
| Total assets | $ | 2,741,903 | $ | 2,354,112 | ||||||||||
| INTEREST-BEARING LIABILITIES | ||||||||||||||
| Time deposits | $ | 494,385 | $ | 4,623 | 1.88 | % | $ | 384,643 | $ | 3,642 | 1.91 | % | ||
| Brokered time deposits | 94,846 | 802 | 1.69 | 70,793 | 825 | 2.33 | ||||||||
| Savings deposits | 441,232 | 588 | 0.27 | 418,306 | 648 | 0.31 | ||||||||
| Demand deposits | 756,882 | 2,486 | 0.66 | 610,631 | 2,679 | 0.88 | ||||||||
| Short term borrowings | 37,544 | 338 | 1.81 | 148,723 | 1,862 | 2.52 | ||||||||
| Long term borrowings | 88,491 | 799 | 1.82 | 5,815 | 96 | 3.33 | ||||||||
| Total interest-bearing liabilities | $ | 1,913,380 | 9,636 | 1.01 | $ | 1,638,911 | 9,752 | 1.20 | ||||||
| NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Demand deposits | $ | 502,710 | $ | 427,039 | ||||||||||
| Other liabilities | 17,289 | 15,944 | ||||||||||||
| Stockholders’ equity | 308,524 | 272,218 | ||||||||||||
| TOTAL LIABILITIES AND | ||||||||||||||
| STOCKHOLDERS’ EQUITY | $ | 2,741,903 | $ | 2,354,112 | ||||||||||
| Net interest income and interest rate spread | $ | 47,386 | 3.49 | % | $ | 41,508 | 3.52 | % | ||||||
| Net interest margin | 3.74 | % | 3.83 | % | ||||||||||
| (1) | Interest and yields are calculated on a tax-equivalent basis where<br>applicable. | |||||||||||||
| --- | --- | |||||||||||||
| (2) | For 2020, adjustments of $196 thousand and $967 thousand, respectively, were made to tax equate<br>income on tax exempt loans and tax exempt securities. For 2019, adjustments of $209 thousand and $843 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. These adjustments were based on a<br>marginal federal income tax rate of 21%, less disallowances. | |||||||||||||
| --- | --- |