Farmers National Banc Corp 8-K, filed Oct 27, 2021
Farmers National Banc Corp (FMNB)
About this 8-K
Farmers National Banc Corp filed this 8-K on October 27, 2021.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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| Item 2.02 | Results of Operations and Financial Condition. |
On October 27, 2021, Farmers National Banc Corp. (the “Company”) announced earnings for the quarter ended September 30, 2021. A copy of the press release and certain financial information for this period is attached as Exhibit 99.1 hereto and incorporated by reference herein.
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 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”) except as may be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit |
Description | |
| 99.1 | Press Release, dated October 27, 2021 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
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: October 27, 2021
Exhibit 99.1
October 27, 2021
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: exec@farmersbankgroup.com |
FARMERS NATIONAL BANC CORP. ANNOUNCES
STRONG THIRD QUARTER 2021 RESULTS
| • | Record net income of $16.0 million for the quarter |
| • | Earnings per diluted share of $0.56 ($0.58 excluding merger costs) up 47% per share from the third quarter of 2020 |
| • | 155 consecutive quarters of profitability |
| • | Average deposit costs were 19 basis points for third quarter of 2021 down 7 basis points from second quarter 2021 |
| • | 3.2% growth in deposits in the current quarter compared to the second quarter 2021 |
| • | Strong net interest margin of 3.47%, or 3.37% excluding the impact of PPP loans and acquisition marks |
| • | Efficiency ratio of 46.0% for the third quarter of 2021 |
| • | Allowance for credit losses ratio of 1.22%, or 1.26% excluding PPP loans for the third quarter of 2021 |
| • | Return on average assets was 1.92% for the third quarter of 2021 |
| • | ROAE and ROATE (non-GAAP) was 16.9% and 19.6%, respectively, for the third quarter of 2021 |
CANFIELD, Ohio (October 27, 2021) – Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB) today announced financial results for the three and nine months ended September 30, 2021.
Net income for the third quarter of 2021 was $16.0 million, or $0.56 per diluted share, which compares to $10.9 million, or $0.38 per diluted share, for the three months ended September 30, 2020. The results for the quarter were positively impacted by a negative provision for credit losses totaling $948,000 pre-tax which was primarily due to a release of reserves for credit losses. Net income excluding acquisition costs (non-GAAP) for the quarter ended September 30, 2021 was $16.5 million or $0.58 per diluted share, compared to $10.9 million or $0.39 per diluted share for the same quarter in 2020.
Net income for the nine months ended September 30, 2021, totaled $46.1 million, or $1.63 per diluted share, compared to $30.5 million, or $1.07 per diluted share for the nine months ended September 30, 2020. Net income excluding acquisition costs (non-GAAP) for the nine months ended September 30, 2021 was $46.6 million, or $1.65 per share, compared to $31.7 million, or $1.11 per share for the same period in 2020.
On June 22, 2021, Farmers entered into an agreement and plan of merger with Cortland Bancorp Inc. (“Cortland”), the parent company of Cortland Savings and Banking Company (“Cortland Bank”). The transaction has received the approval of Cortland’s shareholders and all customary regulatory approvals. The transaction is expected to close on November 1, 2021 and will enable Farmers to continue building local scale throughout Northeast Ohio as Farmers’ market share increases in Trumbull, Mahoning and Cuyahoga Counties. As of September 30, 2021, Cortland had total assets of $799.2 million, which included gross loans of $500.0 million, deposits of $693.0 million and equity of $83.0 million.
Kevin J. Helmick, President and CEO, stated, “We are pleased with our ability to post record earnings and find ways to win even as the impact from PPP loans begins to wane. Our strong net interest margin and fee businesses, outstanding credit quality and tight expense control have contributed to this record performance. With the closing of the Cortland Bank acquisition in November, we are poised to realize additional economies of scale which should allow us to continue our momentum into 2022.”
Balance Sheet
Total assets at September 30, 2021, were $3.32 billion compared to $3.07 billion at December 31, 2020. Total loans were $1.89 billion at September 30, 2021, compared to $1.96 billion at June 30, 2021 and $2.08 billion at December 31, 2020. Through the nine months ended September 30, 2021, total loans have declined $183.8 million due to a $71.8 million decrease in PPP loans, a decline of $36.9 million in 1-4 family residential loans due to the continued level of refinance activity in 2021 and declines in commercial and commercial real estate due to a high degree of liquidity in the system that has resulted in a greater level of payoffs. Securities have grown to $1.18 billion at September 30, 2021, compared to $996.3 million at June 30, 2021 and $575.6 million at December 31, 2020.
Total deposits grew to $2.87 billion at September 30, 2021, which represents growth of $87.6 million from June 30, 2021 and $255.5 million in growth, or 9.8%, compared to December 31, 2020. Growth has come from increases in both noninterest-bearing and interest-bearing deposits as customers continue to carry higher balances in their accounts.
Total stockholders’ equity was $377.5 million at September 30, 2021, compared to $366.9 million at June 30, 2021 and $350.1 million at December 31, 2020. The Company has not been able to repurchase any of its common shares in the third quarter due to the announcement of the Cortland transaction but still has 548,913 common shares remaining to be repurchased under the Company’s existing authorization.
Credit Quality
Due to a decline in loan balances, a decrease in a specific reserve on one loan, and a continued decline in historical loss ratios, the Company recorded a negative provision for credit losses of $948,000 for the quarter ended September 30, 2021, compared to the $2.6 million of loan loss provision recorded in the third quarter of 2020. Net charge-offs for the current quarter were $286,000, compared to $219,000 in the same quarter in 2020. Total net charge-offs as a percentage of average net loans outstanding was 0.06% for the quarter ended September 30, 2021, compared to 0.04% for the same quarter in 2020. As an overall percentage of loans, the allowance for credit losses decreased to 1.22% for the current quarter compared to 1.27% for the quarter ended June 30, 2021. Excluding the PPP loans, this allowance for credit losses to gross loans ratio increased to 1.26% (non-GAAP) as of September 30, 2021, and the ratio of the allowance for credit losses to gross loans, excluding PPP loans and acquired loans is 1.42% (non-GAAP).
Non-performing loans to loans ticked up to 0.78% at June 30, 2021, compared to 0.71% at June 30, 2021. This increase was primarily driven by the nonperformance of one credit. Early stage delinquencies, defined as 30-89 days past due, were $6.9 million, or 0.37% of total loans, at September 30, 2021, compared to $7.6 million, or 0.39% of total loans, for the prior quarter.
Net interest income
Net interest income was $26.5 million for the third quarter of 2021 compared to $24.2 million for the third quarter of 2020. The increase was due to growth in average interest earning assets and the impact of PPP fees offset by a decline in the net interest margin of 8 basis points. The net interest margin was 3.47% for the current quarter which is down from the 3.52% net interest margin reported in the second quarter of 2021 and lower than the 3.55% net interest margin reported in the third quarter of 2020. Excluding the impact of acquisition marks and PPP interest and fees (non-GAAP), the net interest margin for the third quarter of 2021 was 3.37% compared to 3.35% for the second quarter of 2021 and 3.60% for the third quarter of 2020.
Noninterest income
Noninterest income was down slightly to $9.0 million for the quarter ended September 30, 2021 compared to $9.2 million in the same quarter in 2020. Net gains on the sale of loans was down $1.7 million for the third quarter of 2021 compared to the third quarter of 2020 due to lower origination volumes. This decline was offset by an increase in trust fees of $362,000, or 18.4%, investment commissions of $285,000, or 80.7%, security gains of $389,000 and bank owned life insurance income of $144,000.
Noninterest expense
Total noninterest expense for the third quarter of 2021 decreased to $17.1 million compared to $17.5 million in the same quarter in 2020. Excluding merger related costs and a $326,000 prepayment penalty for the payoff of a $25 million FHLB advance, noninterest expense declined $1.1 million from the third quarter of 2020 to the third quarter of 2021. The $342,000 decline in noninterest expense from the third quarter of 2020 to the third quarter of 2021 was primarily due to a $923,000 decline in salaries and employee benefits offset by an increase of $180,000 in occupancy and equipment, $256,000 in professional fees and $414,000 in merger related expenses. The drop in salary and employee benefits was due to lower health insurance costs compared to the same quarter in 2020 along with lower incentive compensation expense and a greater amount of contra salary expense related deferred loan costs.
Covid Support Efforts
Farmers offered special financial assistance to support customers who were experiencing financial hardships related to the COVID-19 pandemic. The Company offered three month deferrals upon request by the borrowers, beginning in the middle of March, 2020 and concluding at the end of the three month deferral period. For those borrowers in industries that were greatly impacted by COVID-19, additional deferrals were considered and granted beyond the initial three month period. The range of deferred months for subsequent requests was three to nine months. The decline in deferred loans and balances was due to borrowers not requesting additional deferments and beginning to restart payments under the original terms of their loan. At September 30, 2021, Farmers had one customer with a loan balance of $5.0 million still on deferral. This customer is expected to come off of deferral in the 4th quarter of 2021.
Farmers is also a preferred SBA lender and we dedicated significant additional staff and other resources to help our customers complete and submit their applications and supporting documentation for loans offered under the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, so they could obtain SBA approval and receive funding as quickly as possible. During the initial 2020 period of the PPP program, the Company facilitated PPP assistance to 1,714 business customers totaling $199.8 million. The Company, on behalf of its customers, began processing borrower applications for PPP forgiveness at the beginning of September 2020. The SBA has up to ninety days to review an application for PPP forgiveness and provide a decision at the end of that review. Once forgiveness of the PPP loans has been communicated and payment is received from the SBA, the Company will record the cash received from the SBA, pay-off the loans based on the amount of forgiveness provided and accelerate the amount of net deferred loan fees/costs recognized for the portion of the PPP loans that are forgiven. During the period ended September 30, 2021, the Company has received life to date payments from the SBA for forgiveness of loans totaling $198.4 million, or approximately 99.2% of the PPP loans originated in 2020. The Company has processed $84.0 million in new loans for PPP loan funding during 2021. The Company has also received payments from the SBA for forgiveness of loans totaling $29.2 million, or approximately 34.7% of PPP loans originated in 2021.
About Farmers National Banc Corp.
Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $3.3 billion in banking assets. Farmers National Banc Corp.’s wholly-owned subsidiaries are comprised of The Farmers National Bank of Canfield, a full-service national bank engaged in commercial and retail banking with 41 banking locations in Mahoning, Trumbull, Columbiana, Stark, Wayne, Medina, Geauga and Cuyahoga Counties in Ohio and Beaver County in Pennsylvania, and Farmers Trust Company, which operates five trust offices and offers services in the same geographic markets. Total wealth management assets under care at September 30, 2021 are $3.0 billion. Farmers National Insurance, LLC and Bowers Insurance Agency, Inc., wholly-owned subsidiaries of The Farmers National Bank of Canfield, offer a variety of insurance products.
Non-GAAP Disclosure
This press release includes disclosures of Farmers’ tangible common equity ratio, return on average tangible assets, return on average tangible equity, net income excluding costs related to acquisition activities and allowance for credit losses to gross loans, excluding PPP loans and acquired loans, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers’ marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures to their GAAP equivalents are included in the tables following Consolidated Financial Highlights below.
Forward-Looking Statements
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Farmers’ financial condition, results of operations, asset quality trends and profitability. Forward-looking statements are not historical facts but instead represent only management’s current expectations and forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside of Farmers’ control. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions, as well as any statements related to future expectations of performance or conditional verbs, such as “will,” “would,” “should,” “could” or “may.” Farmers’ actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Factors that could cause Farmers’ actual results to differ materially from those described in the forward-looking statements include impacts from the COVID-19 pandemic, including further resurgence in the spread of COVID-19, on local, national and global economic conditions; higher default rates on loans made to our customers related to COVID-19 and its impact on our customers’ operations and financial condition; unexpected changes in interest rates or disruptions in the mortgage markets related to COVID-19 or other responses to the health crisis; impacts of the upcoming U.S. elections on the regulatory landscape, capital markets, and response to and management of the COVID-19 pandemic including further economic stimulus from the federal government; Farmers’ failure to integrate Cortland and Cortland Bank with Farmers in accordance with expectations; deviations from performance expectations related to Cortland and Cortland Bank; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2020 and subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (SEC) and available on Farmers’ website (www.farmersbankgroup.com) and on the SEC’s website (www.sec.gov). Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management’s views as of any subsequent date. Farmers does not undertake any obligation to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.
| Farmers National Banc Corp. and Subsidiaries |
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| Consolidated Financial Highlights |
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| (Amounts in thousands, except per share results) Unaudited |
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| Consolidated Statements of Income | For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||
| Sept. 30, 2021 |
June 30, 2021 |
March 31, 2021 |
Dec. 31, 2020 |
Sept. 30, 2020 |
Sept. 30, 2021 |
Sept. 30, 2020 |
Percent Change |
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| Total interest income |
$ | 28,375 | $ | 28,609 | $ | 27,790 | $ | 28,833 | $ | 27,635 | $ | 84,774 | $ | 83,494 | 1.5 | % | ||||||||||||||||
| Total interest expense |
1,841 | 2,119 | 2,523 | 3,030 | 3,470 | 6,483 | 13,106 | -50.5 | % | |||||||||||||||||||||||
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| Net interest income |
26,534 | 26,490 | 25,267 | 25,803 | 24,165 | 78,291 | 70,388 | 11.2 | % | |||||||||||||||||||||||
| Provision for credit losses |
(948 | ) | 50 | 425 | 3,000 | 2,600 | (473 | ) | 6,100 | -107.8 | % | |||||||||||||||||||||
| Noninterest income |
9,015 | 9,508 | 10,183 | 10,499 | 9,217 | 28,706 | 25,662 | 11.9 | % | |||||||||||||||||||||||
| Acquisition related costs |
472 | 104 | 12 | 1,798 | 58 | 588 | 1,425 | -58.7 | % | |||||||||||||||||||||||
| Other expense |
16,656 | 16,966 | 17,356 | 17,796 | 17,412 | 50,978 | 51,961 | -1.9 | % | |||||||||||||||||||||||
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| Income before income taxes |
19,369 | 18,878 | 17,657 | 13,708 | 13,312 | 55,904 | 36,564 | 52.9 | % | |||||||||||||||||||||||
| Income taxes |
3,358 | 3,303 | 3,101 | 2,351 | 2,443 | 9,762 | 6,045 | 61.5 | % | |||||||||||||||||||||||
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| Net income |
$ | 16,011 | $ | 15,575 | $ | 14,556 | $ | 11,357 | $ | 10,869 | $ | 46,142 | $ | 30,519 | 51.2 | % | ||||||||||||||||
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| Average diluted shares outstanding |
28,361 | 28,353 | 28,336 | 28,322 | 28,291 | 28,339 | 28,421 | |||||||||||||||||||||||||
| Basic earnings per share |
0.57 | 0.55 | 0.52 | 0.40 | 0.39 | 1.63 | 1.08 | |||||||||||||||||||||||||
| Diluted earnings per share |
0.56 | 0.55 | 0.51 | 0.40 | 0.38 | 1.63 | 1.07 | |||||||||||||||||||||||||
| Cash dividends |
3,107 | 3,107 | 3,107 | 3,100 | 3,101 | 9,321 | 9,305 | |||||||||||||||||||||||||
| Cash dividends per share |
0.11 | 0.11 | 0.11 | 0.11 | 0.11 | 0.33 | 0.33 | |||||||||||||||||||||||||
| Performance Ratios |
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| Net Interest Margin (Annualized) |
3.47 | % | 3.52 | % | 3.54 | % | 3.69 | % | 3.55 | % | 3.50 | % | 3.64 | % | ||||||||||||||||||
| Efficiency Ratio (Tax equivalent basis) |
46.04 | % | 45.70 | % | 47.76 | % | 50.07 | % | 50.37 | % | 46.49 | % | 53.48 | % | ||||||||||||||||||
| Return on Average Assets (Annualized) |
1.92 | % | 1.90 | % | 1.87 | % | 1.49 | % | 1.46 | % | 1.90 | % | 1.45 | % | ||||||||||||||||||
| Return on Average Equity (Annualized) |
16.93 | % | 17.17 | % | 16.81 | % | 13.10 | % | 12.87 | % | 17.05 | % | 12.84 | % | ||||||||||||||||||
| Dividends to Net Income |
19.41 | % | 19.95 | % | 21.35 | % | 27.30 | % | 28.53 | % | 20.20 | % | 30.49 | % | ||||||||||||||||||
| Other Performance Ratios (Non-GAAP) |
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| Return on Average Tangible Assets |
1.97 | % | 1.93 | % | 1.87 | % | 1.52 | % | 1.50 | % | 1.92 | % | 1.47 | % | ||||||||||||||||||
| Return on Average Tangible Equity |
19.63 | % | 19.81 | % | 19.30 | % | 15.48 | % | 15.30 | % | 19.67 | % | 15.14 | % | ||||||||||||||||||
| Return on Average Tangible Equity excluding acquisition costs |
20.20 | % | 19.91 | % | 19.31 | % | 17.43 | % | 15.37 | % | 19.88 | % | 15.71 | % | ||||||||||||||||||
Consolidated Statements of Financial Condition
| Sept. 30, 2021 |
June 30, 2021 |
March 31, 2021 |
Dec. 31, 2020 |
Sept. 30, 2020 |
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| Assets |
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| Cash and cash equivalents |
$ | 79,808 | $ | 149,357 | $ | 326,385 | $ | 254,621 | $ | 199,575 | ||||||||||
| Securities available for sale |
1,183,361 | 996,271 | 802,866 | 575,600 | 481,509 | |||||||||||||||
| Other investments |
19,041 | 20,573 | 21,317 | 21,528 | 23,276 | |||||||||||||||
| Loans held for sale |
2,628 | 1,922 | 3,993 | 4,766 | 7,076 | |||||||||||||||
| Loans |
1,894,216 | 1,959,865 | 2,037,404 | 2,078,044 | 2,147,158 | |||||||||||||||
| Less allowance for credit losses (a) |
23,136 | 24,806 | 24,935 | 22,144 | 19,341 | |||||||||||||||
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| Net Loans |
1,871,080 | 1,935,059 | 2,012,469 | 2,055,900 | 2,127,817 | |||||||||||||||
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| Other assets |
161,129 | 156,876 | 157,494 | 158,733 | 149,926 | |||||||||||||||
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| Total Assets |
$ | 3,317,047 | $ | 3,260,058 | $ | 3,324,524 | $ | 3,071,148 | $ | 2,989,179 | ||||||||||
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| Liabilities and Stockholders’ Equity |
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| Deposits |
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| Noninterest-bearing |
$ | 675,938 | $ | 663,640 | $ | 675,045 | $ | 608,791 | $ | 577,334 | ||||||||||
| Interest-bearing |
2,190,475 | 2,115,183 | 2,158,009 | 2,002,087 | 1,960,998 | |||||||||||||||
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| Total deposits |
2,866,413 | 2,778,823 | 2,833,054 | 2,610,878 | 2,538,332 | |||||||||||||||
| Other interest-bearing liabilities |
49,649 | 78,369 | 79,683 | 78,906 | 81,690 | |||||||||||||||
| Other liabilities |
23,461 | 35,958 | 64,432 | 31,267 | 29,189 | |||||||||||||||
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| Total liabilities |
2,939,523 | 2,893,150 | 2,977,169 | 2,721,051 | 2,649,211 | |||||||||||||||
| Stockholders’ Equity |
377,524 | 366,908 | 347,355 | 350,097 | 339,968 | |||||||||||||||
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| Total Liabilities and Stockholders’ Equity |
$ | 3,317,047 | $ | 3,260,058 | $ | 3,324,524 | $ | 3,071,148 | $ | 2,989,179 | ||||||||||
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| Period-end shares outstanding |
28,322 | 28,322 | 28,308 | 28,258 | 28,186 | |||||||||||||||
| Book value per share |
$ | 13.33 | $ | 12.95 | $ | 12.27 | $ | 12.39 | $ | 12.06 | ||||||||||
| Tangible book value per share (Non-GAAP)* |
11.61 | 11.23 | 10.53 | 10.63 | 10.23 | |||||||||||||||
| * Tangible book value per share is calculated by dividing tangible common equity by outstanding shares |
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| Capital and Liquidity |
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| Common Equity Tier 1 Capital Ratio (b) |
14.58 | % | 13.95 | % | 13.49 | % | 13.22 | % | 12.98 | % | ||||||||||
| Total Risk Based Capital Ratio (b) |
16.25 | % | 15.54 | % | 15.10 | % | 14.72 | % | 14.36 | % | ||||||||||
| Tier 1 Risk Based Capital Ratio (b) |
15.18 | % | 14.39 | % | 13.93 | % | 13.67 | % | 13.43 | % | ||||||||||
| Tier 1 Leverage Ratio (b) |
10.17 | % | 9.70 | % | 9.69 | % | 9.77 | % | 9.67 | % | ||||||||||
| Equity to Asset Ratio |
11.38 | % | 11.25 | % | 10.45 | % | 11.40 | % | 11.37 | % | ||||||||||
| Tangible Common Equity Ratio (c) |
10.06 | % | 9.90 | % | 9.10 | % | 9.94 | % | 9.82 | % | ||||||||||
| Net Loans to Assets |
56.41 | % | 59.36 | % | 60.53 | % | 66.94 | % | 71.18 | % | ||||||||||
| Loans to Deposits |
66.08 | % | 70.53 | % | 71.92 | % | 79.59 | % | 84.59 | % | ||||||||||
| Asset Quality |
||||||||||||||||||||
| Non-performing loans |
$ | 14,744 | $ | 13,873 | $ | 11,640 | $ | 13,835 | $ | 11,841 | ||||||||||
| Other Real Estate Owned |
0 | 30 | 30 | 0 | 73 | |||||||||||||||
| Non-performing assets |
14,744 | 13,903 | 11,670 | 13,835 | 11,914 | |||||||||||||||
| Loans 30—89 days delinquent |
6,944 | 7,606 | 7,183 | 9,297 | 10,134 | |||||||||||||||
| Charged-off loans |
411 | 502 | 284 | 387 | 393 | |||||||||||||||
| Recoveries |
125 | 323 | 200 | 190 | 174 | |||||||||||||||
| Net Charge-offs |
286 | 179 | 84 | 197 | 219 | |||||||||||||||
| Annualized Net Charge-offs to Average Net Loans Outstanding |
0.06 | % | 0.04 | % | 0.02 | % | 0.04 | % | 0.04 | % | ||||||||||
| Allowance for Credit Losses to Total Loans (a) |
1.22 | % | 1.27 | % | 1.22 | % | 1.07 | % | 0.90 | % | ||||||||||
| Non-performing Loans to Total Loans |
0.78 | % | 0.71 | % | 0.57 | % | 0.67 | % | 0.55 | % | ||||||||||
| Allowance to Non-performing Loans (a) |
156.92 | % | 178.81 | % | 214.22 | % | 160.06 | % | 163.34 | % | ||||||||||
| Non-performing Assets to Total Assets |
0.44 | % | 0.43 | % | 0.35 | % | 0.45 | % | 0.40 | % | ||||||||||
| (a) | CECL method used for the 2021 quarters. Prior periods used the incurred loss methodology. |
| (b) | Sept. 30, 2021 ratio is estimated |
| (c) | This is a non-GAAP financial measure. A reconciliation to GAAP is shown below |
Reconciliation of Total Assets to Tangible Assets
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Total Assets |
$ | 3,317,047 | $ | 3,260,058 | $ | 3,324,524 | $ | 3,071,148 | $ | 2,989,179 | $ | 3,317,047 | $2,989,179 | |||||||||||||||
| Less Goodwill and other intangibles |
48,670 | 48,985 | 49,301 | 49,617 | 51,608 | 48,670 | 51,608 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Tangible Assets |
$ | 3,268,377 | $ | 3,211,073 | $ | 3,275,223 | $ | 3,021,531 | $ | 2,937,571 | $ | 3,268,377 | $2,937,571 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Average Assets |
3,304,708 | 3,280,316 | 3,155,695 | 3,033,005 | 2,957,702 | 3,247,466 | 2,814,339 | |||||||||||||||||||||
| Less average Goodwill and other intangibles |
48,879 | 49,193 | 49,509 | 51,476 | 51,754 | 49,192 | 48,655 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Average Tangible Assets |
$ | 3,255,829 | $ | 3,231,123 | $ | 3,106,186 | $ | 2,981,529 | $ | 2,905,948 | $ | 3,198,274 | $2,765,684 | |||||||||||||||
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|
|
|
|
|
|
| ||||||||||||||||
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, | ||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Stockholders’ Equity |
$ | 377,524 | $ | 366,908 | $ | 347,355 | $ | 350,097 | $ | 339,968 | $ | 377,524 | $339,968 | |||||||||||||||
| Less Goodwill and other intangibles |
48,670 | 48,985 | 49,301 | 49,617 | 51,608 | 48,670 | 51,608 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Tangible Common Equity |
$ | 328,854 | $ | 317,923 | $ | 298,054 | $ | 300,480 | $ | 288,360 | $ | 328,854 | $288,360 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Average Stockholders’ Equity |
375,208 | 363,753 | 351,190 | 344,949 | 335,982 | 361,933 | 317,448 | |||||||||||||||||||||
| Less average Goodwill and other intangibles |
48,879 | 49,193 | 49,509 | 51,476 | 51,754 | 49,192 | 48,655 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
| Average Tangible Common Equity |
$ | 326,329 | $ | 314,560 | $ | 301,681 | $ | 293,473 | $ | 284,228 | $ | 312,741 | $268,793 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Reconciliation of Net Income, Excluding Acquisition Related Costs
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||
| Net income |
$ | 16,011 | $ | 15,575 | $ | 14,556 | $ | 11,357 | $ | 10,869 | $ | 46,142 | $ | 30,519 | ||||||||||||||||||
| Acquisition related costs—tax equated |
468 | 83 | 9 | 1,431 | 50 | 499 | 1,154 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Net income—Adjusted |
$ | 16,479 | $ | 15,658 | $ | 14,565 | $ | 12,788 | $ | 10,919 | $ | 46,641 | $ | 31,673 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Diluted EPS excluding acquisition costs |
$ | 0.58 | $ | 0.55 | $ | 0.51 | $ | 0.45 | $ | 0.39 | $ | 1.65 | $ | 1.11 | ||||||||||||||||||
|
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|
|
|
|
|
|
|
|||||||||||||||||||
Reconciliation of Allowance for Credit Losses to Gross Loans, Excluding PPP Loans and Acquired Loans
| For the Three Months Ended | ||||||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | ||||||||||||||||||||
| Gross Loans |
$ | 1,894,216 | $ | 1,959,865 | $ | 2,037,404 | $ | 2,078,044 | $ | 2,147,158 | ||||||||||||||
| PPP Loans, net |
53,580 | 92,073 | 136,826 | 125,396 | 194,490 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loans less PPP |
1,840,636 | 1,867,792 | 1,900,578 | 1,952,648 | 1,952,668 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Allowance for Credit Losses to Gross Loans Excluding PPP (a) |
1.26 | % | 1.33 | % | 1.31 | % | 1.13 | % | 0.99 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Acquired Loans |
211,954 | 233,790 | 251,616 | 272,150 | 294,712 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loans less PPP and Acquired |
$ | 1,628,682 | $ | 1,634,002 | $ | 1,648,962 | $ | 1,680,498 | $ | 1,657,956 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Allowance for Credit Losses to Gross Loans Excluding PPP and Acquired (a) |
1.42 | % | 1.52 | % | 1.51 | % | 1.32 | % | 1.17 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (a) CECL method used for the 2021 quarters. Prior periods used the incurred loss methodology. |
|
|||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| End of Period Loan Balances | Sept. 30, 2021 |
June 30, 2021 |
March 31, 2021 |
Dec. 31, 2020 |
Sept. 30, 2020 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Commercial real estate |
$ | 690,407 | $ | 704,809 | $ | 702,556 | $ | 713,936 | $ | 710,730 | ||||||||||
| Commercial |
302,356 | 351,261 | 406,064 | 404,492 | 481,593 | |||||||||||||||
| Residential real estate |
376,901 | 383,187 | 400,982 | 413,841 | 416,859 | |||||||||||||||
| HELOC |
106,750 | 107,153 | 107,501 | 110,352 | 109,768 | |||||||||||||||
| Consumer |
189,497 | 190,064 | 193,295 | 203,061 | 209,883 | |||||||||||||||
| Agricultural loans |
226,896 | 223,427 | 227,073 | 232,129 | 219,896 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total, excluding net deferred loan costs |
$ | 1,892,807 | $ | 1,959,901 | $ | 2,037,471 | $ | 2,077,811 | $ | 2,148,729 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| Noninterest Income | Sept. 30, 2021 |
June 30, 2021 |
March 31, 2021 |
Dec. 31, 2020 |
Sept. 30, 2020 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Service charges on deposit accounts |
$ | 924 | $ | 790 | $ | 808 | $ | 930 | $ | 904 | ||||||||||
| Bank owned life insurance income |
340 | 300 | 284 | 187 | 196 | |||||||||||||||
| Trust fees |
2,335 | 2,358 | 2,236 | 1,950 | 1,973 | |||||||||||||||
| Insurance agency commissions |
799 | 948 | 1,001 | 776 | 784 | |||||||||||||||
| Security gains (losses) |
459 | 32 | 488 | 179 | 70 | |||||||||||||||
| Retirement plan consulting fees |
334 | 389 | 320 | 394 | 341 | |||||||||||||||
| Investment commissions |
638 | 523 | 504 | 450 | 353 | |||||||||||||||
| Net gains on sale of loans |
1,466 | 2,191 | 2,900 | 3,610 | 3,119 | |||||||||||||||
| Other mortgage banking fee income, net |
32 | (55 | ) | (115 | ) | 108 | (21 | ) | ||||||||||||
| Debit card and EFT fees |
1,128 | 1,226 | 1,084 | 1,061 | 1,048 | |||||||||||||||
| Other operating income |
560 | 806 | 673 | 854 | 450 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Noninterest Income |
$ | 9,015 | $ | 9,508 | $ | 10,183 | $ | 10,499 | $ | 9,217 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| Noninterest Expense | Sept. 30, 2021 |
June 30, 2021 |
March 31, 2021 |
Dec. 31, 2020 |
Sept. 30, 2020 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Salaries and employee benefits |
$ | 9,321 | $ | 9,866 | $ | 9,976 | $ | 9,638 | $ | 10,244 | ||||||||||
| Occupancy and equipment |
1,899 | 1,890 | 2,275 | 2,060 | 1,719 | |||||||||||||||
| State and local taxes |
552 | 551 | 554 | 515 | 576 | |||||||||||||||
| Professional fees |
1,009 | 830 | 1,056 | 341 | 753 | |||||||||||||||
| Merger related costs |
472 | 104 | 12 | 1,798 | 58 | |||||||||||||||
| Advertising |
391 | 196 | 260 | 478 | 460 | |||||||||||||||
| FDIC insurance |
140 | 120 | 170 | 100 | 200 | |||||||||||||||
| Intangible amortization |
316 | 316 | 316 | 332 | 332 | |||||||||||||||
| Core processing charges |
860 | 831 | 627 | 831 | 925 | |||||||||||||||
| Telephone and data |
117 | 139 | 138 | 154 | 182 | |||||||||||||||
| Other operating expenses |
2,051 | 2,227 | 1,984 | 3,347 | 2,021 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Noninterest Expense |
$ | 17,128 | $ | 17,070 | $ | 17,368 | $ | 19,594 | $ | 17,470 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Average Balance Sheets and Related Yields and Rates | ||||||||||||
| (Dollar Amounts in Thousands) | ||||||||||||
| Three Months Ended September 30, 2021 |
Three Months Ended September 30, 2020 |
|||||||||||||||||||||||
| AVERAGE BALANCE |
INTEREST (1) | RATE (1) | AVERAGE BALANCE |
INTEREST (1) | RATE (1) | |||||||||||||||||||
| EARNING ASSETS |
||||||||||||||||||||||||
| Loans (2) |
$ | 1,917,443 | $ | 22,665 | 4.69 | % | $ | 2,142,624 | $ | 24,331 | 4.52 | % | ||||||||||||
| Taxable securities |
727,271 | 3,222 | 1.76 | 197,311 | 1,263 | 2.55 | ||||||||||||||||||
| Tax-exempt securities (2) |
360,371 | 3,065 | 3.37 | 254,533 | 2,459 | 3.84 | ||||||||||||||||||
| Other investments |
19,380 | 113 | 2.31 | 22,999 | 138 | 2.39 | ||||||||||||||||||
| Federal funds sold and other |
95,871 | 32 | 0.13 | 159,151 | 52 | 0.13 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total earning assets |
3,120,336 | 29,097 | 3.70 | 2,776,618 | 28,243 | 4.05 | ||||||||||||||||||
| Nonearning assets |
184,372 | 181,084 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total assets |
$ | 3,304,708 | $ | 2,957,702 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||
| Time deposits |
$ | 361,566 | $ | 692 | 0.76 | % | $ | 476,205 | $ | 1,869 | 1.56 | % | ||||||||||||
| Brokered time deposits |
0 | 0 | 0 | 57,000 | 157 | 1.10 | ||||||||||||||||||
| Savings deposits |
525,560 | 152 | 0.11 | 476,097 | 256 | 0.21 | ||||||||||||||||||
| Demand deposits |
1,278,099 | 502 | 0.16 | 913,946 | 871 | 0.38 | ||||||||||||||||||
| Short term borrowings |
5,671 | 0 | 0.00 | 4,476 | 14 | 1.24 | ||||||||||||||||||
| Long term borrowings |
51,767 | 495 | 3.79 | 76,554 | 303 | 1.57 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing liabilities |
$ | 2,222,663 | 1,841 | 0.33 | $ | 2,004,278 | 3,470 | 0.69 | ||||||||||||||||
|
|
|
|||||||||||||||||||||||
| NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||||||||||||||
| Demand deposits |
684,419 | 592,539 | ||||||||||||||||||||||
| Other liabilities |
22,418 | 24,903 | ||||||||||||||||||||||
| Stockholders’ equity |
375,208 | 335,982 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 3,304,708 | $ | 2,957,702 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net interest income and interest rate spread |
$ | 27,256 | 3.37 | % | $ | 24,773 | 3.36 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net interest margin |
3.47 | % | 3.55 | % | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| (1) | Interest and yields are calculated on a tax-equivalent basis where applicable. |
| (2) | For 2021, adjustments of $87 thousand and $635 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2020, adjustments of $103 thousand and $505 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 Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, 2021 | September 30, 2020 | |||||||||||||||||||||||
| AVERAGE BALANCE |
INTEREST (1) | RATE (1) | AVERAGE BALANCE |
INTEREST (1) | RATE (1) | |||||||||||||||||||
| EARNING ASSETS |
||||||||||||||||||||||||
| Loans (2) |
$ | 1,992,003 | $ | 70,234 | 4.71 | % | $ | 2,066,178 | $ | 73,370 | 4.78 | % | ||||||||||||
| Taxable securities |
524,774 | 7,452 | 1.90 | 205,168 | 4,088 | 2.66 | ||||||||||||||||||
| Tax-exempt securities (2) |
327,938 | 8,630 | 3.52 | 246,218 | 7,161 | 3.88 | ||||||||||||||||||
| Other investments |
20,372 | 355 | 2.33 | 24,008 | 415 | 2.31 | ||||||||||||||||||
| Federal funds sold and other |
203,197 | 161 | 0.11 | 104,201 | 231 | 0.33 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total earning assets |
3,068,284 | 86,832 | 3.78 | 2,645,773 | 85,265 | 4.35 | ||||||||||||||||||
| Nonearning assets |
179,182 | 168,566 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total assets |
$ | 3,247,466 | $ | 2,814,339 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||
| Time deposits |
$ | 397,378 | $ | 2,955 | 0.99 | % | $ | 488,051 | $ | 6,492 | 1.78 | % | ||||||||||||
| Brokered time deposits |
15,692 | 75 | 0.64 | 82,138 | 959 | 1.56 | ||||||||||||||||||
| Savings deposits |
512,716 | 510 | 0.13 | 452,938 | 844 | 0.25 | ||||||||||||||||||
| Demand deposits |
1,196,910 | 1,861 | 0.21 | 809,619 | 3,357 | 0.55 | ||||||||||||||||||
| Short term borrowings |
4,395 | 7 | 0.21 | 26,440 | 352 | 1.78 | ||||||||||||||||||
| Long term borrowings |
67,335 | 1,075 | 2.13 | 84,483 | 1,102 | 1.74 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing liabilities |
$ | 2,194,426 | 6,483 | 0.39 | $ | 1,943,669 | 13,106 | 0.90 | ||||||||||||||||
| NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||||||||||||||
| Demand deposits |
$ | 669,255 | $ | 533,400 | ||||||||||||||||||||
| Other liabilities |
21,852 | 19,822 | ||||||||||||||||||||||
| Stockholders’ equity |
361,933 | 317,448 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 3,247,466 | $ | 2,814,339 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net interest income and interest rate spread |
$ | 80,349 | 3.39 | % | $ | 72,159 | 3.45 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net interest margin |
3.50 | % | 3.64 | % | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| (1) | Interest and yields are calculated on a tax-equivalent basis where applicable. |
| (2) | 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. For 2020, adjustments of $299 thousand and $1.5 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. |