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): January 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) |
(330) 533-3341
(Registrant’s telephone number, including area code)
(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 Symbol | Name of each exchange 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 January 29, 2020, Farmers National Banc Corp. (the “Company”) announced earnings for the quarter and year ended December 31, 2019. A copy of the press release and certain financial information for those periods 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. |
| --- | --- |
| ExhibitNumber | Description |
| --- | --- |
| 99.1 | Press Release, dated January 29, 2020 |
Forward Looking Statements.
The press release attached to this Form 8-K contains forward-looking statements within the meaningof the Private Securities Litigation Reform Act of 1995. These statements are not historical facts, but rather statements based on the Company’s current expectations regarding its business strategies and its intended results and futureperformance. 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 ofperformance or conditional verbs, such as “will,” “would,” “should,” “could” or “may.”
Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to theCompany’s actual results, performance, and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that could cause the Company’s actual results to differ materially from thosedescribed in the forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, which has been filed with the Securities and ExchangeCommission (“SEC”) and is available on the Company’s website (www.farmersbankgroup.com) and on the SEC’s website (www.sec.gov). Factors that may cause or contribute to these differences may also include, without limitation, theCompany’s failure to integrate Maple Leaf and its subsidiary Geauga Savings Bank in accordance with expectations; deviations from performance expectations related to Maple Leaf and Geauga Savings Bank; general economic conditions, includingchanges in market interest rates and changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; competitive conditions in the banking markets served by the Company’s subsidiaries; the adequacy of theallowance for losses on loans and the level of future provisions for losses on loans; and other factors disclosed periodically in the Company’s filings with the SEC. Because of the risks and uncertainties inherent in forward-looking statements,readers are cautioned not to place undue reliance on them, whether included in this report or made elsewhere from time to time by the Company or on the Company’s behalf. The Company assumes no obligation to update any forward-lookingstatements.
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: January 29, 2020
EX-99.1
Exhibit 99.1
January 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: exec@farmersbankgroup.com | |
| --- |
FARMERS NATIONAL BANC CORP. ANNOUNCES
2019 FOURTH QUARTER FINANCIAL RESULTS
| • | Record net income of $9.7 million for the quarter is 11% higher than same quarter in 2018 |
|---|---|
| • | 148 consecutive quarters of profitability |
| --- | --- |
| • | Annualized return on average assets was 1.58% and annualized return on average equity 12.78% for the quarterended December 31, 2019 |
| --- | --- |
| • | 14% noninterest income growth in the fourth quarter of 2019 compared to same quarter in 2018 |
| --- | --- |
| • | 8.5% growth in customer non-brokered deposits compared toDecember 31, 2018 |
| --- | --- |
| • | Non-performing assets to total assets remain at low levels, 0.26% atDecember 31, 2019 |
| --- | --- |
CANFIELD, Ohio (January 29, 2020) – Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months and year ended December 31, 2019.
Net income for the three months ended December 31, 2019 was $9.7 million, or $0.35 per diluted share, which compares to $8.7 million, or $0.31 per diluted share, for the three months ended December 31, 2018 and $9.2 million or $0.33 per diluted share for the linked quarter. Annualized return on average assets and annualized return on average equity were 1.58% and 12.78%, respectively, for the three month period ending December 31, 2019, compared to 1.50% and 13.65% for the same three month period in 2018, and 1.51% and 12.49% for the linked quarter. Farmers’ return on average tangible equity (non-GAAP) was 15.03% for the quarter ended December 31, 2019 compared to 16.68% for the same quarter in 2018 and 14.80% for the linked quarter.
Net income for the twelve months ended December 31, 2019 was $35.8 million, or $1.28 per diluted share, compared to $32.6 million or $1.16 per diluted share for the same twelve month period in 2018. Return on average assets and return on average equity were 1.50% and 12.56%, respectively, for the twelve months ended December 31, 2019, compared to 1.46% and 13.13% for the same period in 2018.
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 increases Farmers’ market share in Cuyahoga and Geauga Counties and enables Farmers to continue building local scale throughout Northeast Ohio. As of September 30, 2019, Maple Leaf had total assets of $275.6 million, which included gross loans of $183.5 million, deposits of $183.4 million and equity of $33.4 million.
Kevin J. Helmick, President and CEO, stated, “As a result of solid loan and deposit growth over the past twelve months, 14% increase in noninterest income, careful management of our noninterest expenses and continued strong asset quality, we are pleased to report an 11% increase in net income compared to the same quarter one year ago. We are also pleased to report a 25% increase in cash dividends paid to our shareholders, from $0.08 per share paid in the fourth quarter of 2018 to $0.10 paid for the same quarter in 2019.”
2019 Fourth Quarter Financial Highlights
| • | Loan growth |
|---|
Total loans were $1.81 billion at December 31, 2019, compared to $1.74 billion at December 31, 2018, representing an increase of 4.4%. The increase in loans is 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 in the agricultural, commercial, commercial real estate, and residential real estate loan portfolios. Loans now comprise 79.5% of the Bank’s average earning assets for the quarter ended December 31, 2019, a slight improvement compared to 79.4% for the same period in 2018. This improvement, along with the growth in earning assets, has resulted in a 6.1% increase in tax equated loan interest income, including fees, in the fourth quarter of 2019 compared to the same quarter in 2018.
| • | Loan quality |
|---|
Non-performing assets to total assets remain at a low level, currently at 0.26%. Early stage delinquencies also continue to remain at low levels, at $11.9 million, or 0.66% of total loans, at December 31, 2019. Net charge-offs for the current quarter were $374 thousand, compared to $310 thousand in the same quarter in 2018, and total net charge-offs as a percentage of average net loans outstanding is only 0.09% for the quarter ended December 31, 2019.
| • | Net interest margin |
|---|
The net interest margin for the three months ended December 31, 2019 was 3.84%, a 4 basis points increase from the quarter ended December 31, 2018, and 5 basis points better than the 3.79% reported for the linked quarter. In comparing the fourth quarter of 2019 to the same period in 2018, asset yields increased 7 basis points, while the cost of interest-bearing liabilities increased just 3 basis points. Most of the increase in the asset yields was the result of higher rates earned on loans. 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 4 basis points for the quarter ended December 31, 2019 and 5 basis points for the quarter ended December 31, 2018.
| • | Noninterest income |
|---|
Noninterest income increased 14.1% to $7.6 million for the quarter ended December 31, 2019 compared to $6.7 million in the same quarter in 2018. Gains on the sales of mortgage loans increased $685 thousand or 82%, investment commissions increased $176 thousand or 68%, trust fees increased $139 thousand or 8%, insurance agency commissions grew $54 thousand or 8%, and other operating income increased $91 thousand or 23% in comparing the fourth quarter of 2019 to the same quarter in 2018. These increases were offset by a decrease of securities gains of $232 thousand or 89%.
| • | Noninterest expenses |
|---|
Farmers has remained committed to managing the level of noninterest expenses. Total noninterest expenses for the fourth quarter of 2019 increased 2.3% to $16.4 million compared to $16.0 million in the same quarter in 2018, primarily as a result of increases in merger related costs of $284 thousand and other operating expenses of $236 thousand, offset by a $316 thousand decrease in salaries and employee benefits and a $155 thousand decrease in FDIC insurance expense. Annualized noninterest expenses measured as a percentage of quarterly average assets decreased from 2.75% in the fourth quarter of 2018 to 2.68% in the fourth quarter of 2019.
| • | Efficiency ratio |
|---|
The efficiency ratio for the quarter ended December 31, 2019 decreased to 54.51% compared to 57.73% for the same quarter in 2018. The improvement in net interest income and noninterest income in the fourth quarter of 2019 was offset by a slightly higher level of noninterest expenses as explained in the preceding paragraphs.
2020 Outlook
Mr. Helmick added, “With the announcement of the completion of our acquisition of Geauga Savings Bank and our continued strong financial performance during this year, we look forward in 2020 to realize the benefits of the full integration of our new banking locations and to build on our momentum of having achieved another successful year. We remain extremely proud of our committed employees that continue to deliver strong results for our stakeholders and remain committed to our community banking approach and culture.”
Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $2.4 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 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 December 31, 2019 are $2.5 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 can be found in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2018, which has been filed with the Securities and Exchange Commission (SEC) and is 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 Twelve Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | Percent | |||||||||||||
| 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | Change | |||||||||||||
| Total interest income | $ | 25,847 | $ | 25,931 | $ | 25,529 | $ | 24,679 | $ | 24,447 | $ | 101,986 | $ | 91,766 | 11.1 | % | ||||
| Total interest expense | 4,682 | 5,174 | 5,038 | 4,714 | 4,373 | 19,608 | 13,265 | 47.8 | % | |||||||||||
| Net interest income | 21,165 | 20,757 | 20,491 | 19,965 | 20,074 | 82,378 | 78,501 | 4.9 | % | |||||||||||
| Provision for loan losses | 600 | 550 | 750 | 550 | 525 | 2,450 | 3,000 | -18.3 | % | |||||||||||
| Noninterest income | 7,647 | 7,441 | 6,994 | 6,520 | 6,705 | 28,602 | 25,499 | 12.2 | % | |||||||||||
| Acquisition related costs (income) | 104 | 112 | (19 | ) | 0 | (180 | ) | 197 | (155 | ) | -227.1 | % | ||||||||
| Other expense | 16,247 | 16,311 | 16,723 | 15,977 | 16,163 | 65,258 | 62,872 | 3.8 | % | |||||||||||
| Income before income taxes | 11,861 | 11,225 | 10,031 | 9,958 | 10,271 | 43,075 | 38,283 | 12.5 | % | |||||||||||
| Income taxes | 2,186 | 2,071 | 1,488 | 1,570 | 1,585 | 7,315 | 5,714 | 28.0 | % | |||||||||||
| Net income | $ | 9,675 | $ | 9,154 | $ | 8,543 | $ | 8,388 | $ | 8,686 | $ | 35,760 | $ | 32,569 | 9.8 | % | ||||
| Average diluted shares outstanding | 27,829 | 27,819 | 27,931 | 27,983 | 27,962 | 27,876 | 27,974 | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| Basic earnings per share | 0.35 | 0.33 | 0.31 | 0.30 | 0.31 | 1.29 | 1.18 | |||||||||||||
| Diluted earnings per share | 0.35 | 0.33 | 0.31 | 0.30 | 0.31 | 1.28 | 1.16 | |||||||||||||
| Cash dividends | 2,767 | 2,767 | 2,504 | 2,500 | 2,223 | 10,538 | 8,315 | |||||||||||||
| Cash dividends per share | 0.10 | 0.10 | 0.09 | 0.09 | 0.08 | 0.38 | 0.30 | |||||||||||||
| Performance Ratios | ||||||||||||||||||||
| Net Interest Margin (Annualized) | 3.84 | % | 3.79 | % | 3.84 | % | 3.81 | % | 3.80 | % | 3.82 | % | 3.87 | % | ||||||
| Efficiency Ratio (Tax equivalent basis) | 54.51 | % | 55.90 | % | 58.28 | % | 57.83 | % | 57.73 | % | 56.59 | % | 57.93 | % | ||||||
| Return on Average Assets (Annualized) | 1.58 | % | 1.51 | % | 1.45 | % | 1.45 | % | 1.50 | % | 1.50 | % | 1.46 | % | ||||||
| Return on Average Equity (Annualized) | 12.78 | % | 12.49 | % | 12.34 | % | 12.71 | % | 13.65 | % | 12.56 | % | 13.13 | % | ||||||
| Dividends to Net Income | 28.60 | % | 30.23 | % | 29.31 | % | 29.80 | % | 25.59 | % | 29.47 | % | 25.53 | % | ||||||
| Other Performance Ratios (Non-GAAP) | ||||||||||||||||||||
| Return on Average Tangible Assets | 1.62 | % | 1.55 | % | 1.47 | % | 1.46 | % | 1.54 | % | 1.53 | % | 1.49 | % | ||||||
| Return on Average Tangible Equity | 15.03 | % | 14.80 | % | 14.59 | % | 14.99 | % | 16.68 | % | 14.81 | % | 16.02 | % | ||||||
| Return on Average Tangible Equity excluding acquisition costs | 15.17 | % | 14.95 | % | 14.55 | % | 14.99 | % | 16.34 | % | 14.88 | % | 15.95 | % |
Consolidated Statements ofFinancial Condition
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2019 | 2019 | 2019 | 2018 | ||||||
| Assets | ||||||||||
| Cash and cash equivalents | $ | 70,760 | $ | 85,675 | $ | 64,007 | $ | 69,672 | $ | 57,926 |
| Securities available for sale | 432,233 | 423,193 | 424,252 | 403,770 | 402,190 | |||||
| Equity securities | 7,909 | 7,856 | 7,222 | 7,460 | 7,130 | |||||
| Loans held for sale | 2,600 | 2,079 | 1,093 | 2,360 | 1,237 | |||||
| Loans | 1,811,539 | 1,784,125 | 1,780,504 | 1,743,651 | 1,735,840 | |||||
| Less allowance for loan losses | 14,487 | 14,261 | 14,222 | 13,777 | 13,592 | |||||
| Net Loans | 1,797,052 | 1,769,864 | 1,766,282 | 1,729,874 | 1,722,248 | |||||
| Other assets | 138,604 | 144,543 | 143,093 | 142,938 | 138,133 | |||||
| Total Assets | $ | 2,449,158 | $ | 2,433,210 | $ | 2,405,949 | $ | 2,356,074 | $ | 2,328,864 |
| Liabilities and Stockholders’ Equity | ||||||||||
| Deposits | ||||||||||
| Noninterest-bearing | $ | 434,126 | $ | 432,609 | $ | 415,935 | $ | 415,131 | $ | 421,950 |
| Interest-bearing | 1,574,838 | 1,608,043 | 1,584,700 | 1,539,202 | 1,377,770 | |||||
| Total deposits | 2,008,964 | 2,040,652 | 2,000,635 | 1,954,333 | 1,799,720 | |||||
| Other interest-bearing liabilities | 122,197 | 76,324 | 96,978 | 109,348 | 250,792 | |||||
| Other liabilities | 18,688 | 23,011 | 23,511 | 19,442 | 16,032 | |||||
| Total liabilities | 2,149,849 | 2,139,987 | 2,121,124 | 2,083,123 | 2,066,544 | |||||
| Stockholders’ Equity | 299,309 | 293,223 | 284,825 | 272,951 | 262,320 | |||||
| Total Liabilities and Stockholders’ Equity | $ | 2,449,158 | $ | 2,433,210 | $ | 2,405,949 | $ | 2,356,074 | $ | 2,328,864 |
| Period-end shares outstanding | 27,671 | 27,669 | 27,768 | 27,777 | 27,792 | |||||
| Book value per share | $ | 10.82 | $ | 10.60 | $ | 10.26 | $ | 9.83 | $ | 9.44 |
| Tangible book value per share (Non-GAAP)* | 9.28 | 9.04 | 8.70 | 8.26 | 7.86 | |||||
| * | 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) | 12.94 | % | 12.70 | % | 12.47 | % | 12.37 | % | 12.16 | % | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Risk Based Capital Ratio (a) | 13.82 | % | 13.58 | % | 13.34 | % | 13.24 | % | 13.03 | % | |||||
| Tier 1 Risk Based Capital Ratio (a) | 13.06 | % | 12.83 | % | 12.59 | % | 12.50 | % | 12.28 | % | |||||
| Tier 1 Leverage Ratio (a) | 10.69 | % | 10.42 | % | 10.27 | % | 10.07 | % | 9.91 | % | |||||
| Equity to Asset Ratio | 12.22 | % | 12.05 | % | 11.84 | % | 11.58 | % | 11.26 | % | |||||
| Tangible Common Equity Ratio (b) | 10.67 | % | 10.47 | % | 10.22 | % | 9.92 | % | 9.56 | % | |||||
| Net Loans to Assets | 73.37 | % | 72.74 | % | 73.41 | % | 73.42 | % | 73.95 | % | |||||
| Loans to Deposits | 90.17 | % | 87.43 | % | 89.00 | % | 89.22 | % | 96.45 | % | |||||
| Asset Quality | |||||||||||||||
| Non-performing loans | $ | 6,345 | $ | 6,749 | $ | 7,252 | $ | 7,578 | $ | 7,731 | |||||
| Other Real Estate Owned | 19 | 74 | 74 | 208 | 0 | ||||||||||
| Non-performing assets | 6,364 | 6,823 | 7,326 | 7,786 | 7,731 | ||||||||||
| Loans 30 - 89 days delinquent | 11,893 | 9,076 | 10,203 | 9,082 | 8,877 | ||||||||||
| Charged-off loans | 519 | 674 | 588 | 566 | 753 | ||||||||||
| Recoveries | 145 | 163 | 283 | 201 | 443 | ||||||||||
| Net Charge-offs | 374 | 511 | 305 | 365 | 310 | ||||||||||
| Annualized Net Charge-offs to | |||||||||||||||
| Average Net Loans Outstanding | 0.09 | % | 0.12 | % | 0.07 | % | 0.08 | % | 0.07 | % | |||||
| Allowance for Loan Losses to Total Loans | 0.80 | % | 0.80 | % | 0.80 | % | 0.79 | % | 0.78 | % | |||||
| Non-performing Loans to Total Loans | 0.35 | % | 0.38 | % | 0.41 | % | 0.43 | % | 0.45 | % | |||||
| Allowance to Non-performing Loans | 228.32 | % | 211.31 | % | 196.11 | % | 181.80 | % | 175.81 | % | |||||
| Non-performing Assets to Total Assets | 0.26 | % | 0.28 | % | 0.30 | % | 0.33 | % | 0.33 | % | |||||
| (a) | December 31, 2019 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 TwelveMonths Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||
| 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||
| Total Assets | $ | 2,449,158 | $ | 2,433,210 | $ | 2,405,949 | $ | 2,356,074 | $ | 2,328,864 | $ | 2,449,158 | $ | 2,328,864 |
| Less Goodwill and other intangibles | 42,645 | 42,973 | 43,298 | 43,625 | 43,952 | 42,645 | 43,952 | |||||||
| Tangible Assets | $ | 2,406,513 | $ | 2,390,237 | $ | 2,362,651 | $ | 2,312,449 | $ | 2,284,912 | $ | 2,406,513 | $ | 2,284,912 |
| Average Assets | 2,424,574 | 2,409,010 | 2,369,388 | 2,338,792 | 2,301,847 | 2,383,236 | 2,230,380 | |||||||
| Less average Goodwill and other intangibles | 42,859 | 43,187 | 43,508 | 43,840 | 44,185 | 43,345 | 44,712 | |||||||
| Average Tangible Assets | $ | 2,381,715 | $ | 2,365,823 | $ | 2,325,880 | $ | 2,294,952 | $ | 2,257,662 | $ | 2,339,891 | $ | 2,185,668 |
| Reconciliation of Common Stockholders’ Equity to Tangible Common Equity | ||||||||||||||
| For the TwelveMonths Ended | ||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||
| 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||
| Stockholders’ Equity | $ | 299,309 | $ | 293,223 | $ | 284,825 | $ | 272,951 | $ | 262,320 | $ | 299,309 | $ | 262,320 |
| Less Goodwill and other intangibles | 42,645 | 42,973 | 43,298 | 43,625 | 43,952 | 42,645 | 43,952 | |||||||
| Tangible Common Equity | $ | 256,664 | $ | 250,250 | $ | 241,527 | $ | 229,326 | $ | 218,368 | $ | 256,664 | $ | 218,368 |
| Average Stockholders’ Equity | 300,355 | 290,673 | 277,746 | 267,736 | 252,449 | 284,759 | 247,965 | |||||||
| Less average Goodwill and other intangibles | 42,859 | 43,187 | 43,508 | 43,840 | 44,185 | 43,345 | 44,712 | |||||||
| Average Tangible Common Equity | $ | 257,496 | $ | 247,486 | $ | 234,238 | $ | 223,896 | $ | 208,264 | $ | 241,414 | $ | 203,253 |
Reconciliation of Net Income, Excluding Acquisition Related Costs
| For the Three Months Ended | For the TwelveMonths Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||
| 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||
| Net income | $ | 9,675 | $ | 9,154 | $ | 8,543 | $ | 8,388 | $ | 8,686 | $ | 35,760 | $ | 32,569 | |||
| Acquisition related costs (income) – tax equated | 90 | 97 | (20 | ) | 0 | (180 | ) | 167 | (158 | ) | |||||||
| Net income – Adjusted | $ | 9,765 | $ | 9,251 | $ | 8,523 | $ | 8,388 | $ | 8,506 | $ | 35,927 | $ | 32,411 | |||
| Diluted EPS excluding acquisition costs | $ | 0.35 | $ | 0.33 | $ | 0.31 | $ | 0.30 | $ | 0.30 | $ | 1.29 | $ | 1.16 | |||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| End of Period Loan Balances | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||||
| Commercial real estate | $ | 616,778 | $ | 602,580 | $ | 614,452 | $ | 589,219 | $ | 579,481 | |||||||
| Commercial | 255,823 | 251,613 | 256,657 | 254,957 | 245,172 | ||||||||||||
| Residential real estate | 500,024 | 499,996 | 493,529 | 488,854 | 492,887 | ||||||||||||
| Consumer | 209,271 | 207,319 | 207,417 | 209,541 | 216,284 | ||||||||||||
| Agricultural loans | 226,333 | 219,487 | 205,544 | 198,210 | 199,013 | ||||||||||||
| Total, excluding net deferred loan costs | $ | 1,808,229 | $ | 1,780,995 | $ | 1,777,599 | $ | 1,740,781 | $ | 1,732,837 | |||||||
| For the Three Months Ended | |||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||||||||
| Noninterest Income | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||||
| Service charges on deposit accounts | $ | 1,139 | $ | 1,208 | $ | 1,093 | $ | 1,074 | $ | 1,115 | |||||||
| Bank owned life insurance income | 192 | 204 | 208 | 214 | 221 | ||||||||||||
| Trust fees | 1,891 | 1,905 | 1,821 | 1,858 | 1,752 | ||||||||||||
| Insurance agency commissions | 696 | 681 | 739 | 803 | 642 | ||||||||||||
| Security gains (losses) | 28 | 22 | (18 | ) | 10 | 260 | |||||||||||
| Retirement plan consulting fees | 343 | 338 | 450 | 358 | 370 | ||||||||||||
| Investment commissions | 435 | 384 | 327 | 260 | 259 | ||||||||||||
| Net gains on sale of loans | 1,517 | 1,143 | 1,055 | 671 | 832 | ||||||||||||
| Debit card and EFT fees | 922 | 935 | 887 | 778 | 861 | ||||||||||||
| Other operating income | 484 | 621 | 432 | 494 | 393 | ||||||||||||
| Total Noninterest Income | $ | 7,647 | $ | 7,441 | $ | 6,994 | $ | 6,520 | $ | 6,705 | |||||||
| For the Three Months Ended | |||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||||||||
| Noninterest Expense | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||||
| Salaries and employee benefits | $ | 9,128 | $ | 9,422 | $ | 9,266 | $ | 9,356 | $ | 9,444 | |||||||
| Occupancy and equipment | 1,667 | 1,615 | 1,650 | 1,717 | 1,566 | ||||||||||||
| State and local taxes | 416 | 468 | 472 | 470 | 474 | ||||||||||||
| Professional fees | 787 | 654 | 887 | 794 | 734 | ||||||||||||
| Merger related costs (income) | 104 | 112 | (19 | ) | 0 | (180 | ) | ||||||||||
| Advertising | 607 | 437 | 442 | 250 | 416 | ||||||||||||
| FDIC insurance | 79 | 80 | 85 | 87 | 234 | ||||||||||||
| Intangible amortization | 326 | 326 | 327 | 327 | 355 | ||||||||||||
| Core processing charges | 876 | 900 | 803 | 791 | 762 | ||||||||||||
| Telephone and data | 235 | 236 | 217 | 260 | 288 | ||||||||||||
| Other operating expenses | 2,126 | 2,173 | 2,574 | 1,925 | 1,890 | ||||||||||||
| Total Noninterest Expense | $ | 16,351 | $ | 16,423 | $ | 16,704 | $ | 15,977 | $ | 15,983 |
Average Balance Sheets and Related Yields and Rates
(Dollar Amounts in Thousands)
| Three Months Ended | Three Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | |||||||||||||
| AVERAGE | AVERAGE | |||||||||||||
| BALANCE | INTEREST (1) | RATE (1) | BALANCE | INTEREST (1) | RATE (1) | |||||||||
| EARNING ASSETS | ||||||||||||||
| Loans (2) | $ | 1,784,421 | $ | 22,725 | 5.05 | % | $ | 1,706,008 | $ | 21,424 | 4.98 | % | ||
| Taxable securities | 181,894 | 1,162 | 2.53 | 199,472 | 1,241 | 2.47 | ||||||||
| Tax-exempt securities (2) | 227,259 | 2,205 | 3.85 | 202,241 | 1,936 | 3.80 | ||||||||
| Equity securities | 12,059 | 130 | 4.28 | 11,822 | 185 | 6.21 | ||||||||
| Federal funds sold and other | 37,914 | 170 | 1.78 | 29,663 | 154 | 2.06 | ||||||||
| Total earning assets | 2,243,547 | 26,392 | 4.67 | 2,149,206 | 24,940 | 4.60 | ||||||||
| Nonearning assets | 181,027 | 152,641 | ||||||||||||
| Total assets | $ | 2,424,574 | $ | 2,301,847 | ||||||||||
| INTEREST-BEARING LIABILITIES | ||||||||||||||
| Time deposits | $ | 418,722 | $ | 2,089 | 1.98 | % | $ | 324,696 | $ | 1,349 | 1.65 | % | ||
| Brokered time deposits | 85,973 | 446 | 2.06 | 272 | 2 | 2.35 | ||||||||
| Savings deposits | 402,464 | 320 | 0.32 | 438,008 | 284 | 0.26 | ||||||||
| Demand deposits | 683,143 | 1,506 | 0.87 | 578,470 | 1,128 | 0.77 | ||||||||
| Short term borrowings | 35,838 | 99 | 1.10 | 264,371 | 1,562 | 2.34 | ||||||||
| Long term borrowings | 45,203 | 222 | 1.95 | 6,089 | 48 | 3.13 | ||||||||
| Total interest-bearing liabilities | $ | 1,671,343 | 4,682 | 1.11 | $ | 1,611,906 | 4,373 | 1.08 | ||||||
| NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Demand deposits | 434,778 | 423,576 | ||||||||||||
| Other liabilities | 18,098 | 13,916 | ||||||||||||
| Stockholders’ equity | 300,355 | 252,449 | ||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,424,574 | $ | 2,301,847 | ||||||||||
| Net interest income and interest rate spread | $ | 21,710 | 3.56 | % | $ | 20,567 | 3.52 | % | ||||||
| Net interest margin | 3.84 | % | 3.80 | % | ||||||||||
| (1) | Interest and yields are calculated on a tax-equivalent basis where<br>applicable. | |||||||||||||
| --- | --- | |||||||||||||
| (2) | For 2019, adjustments of $99 thousand and $446 thousand, respectively, were made to tax equate income<br>on tax exempt loans and tax exempt securities. For 2018, adjustments of $92 thousand and $401 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. | |||||||||||||
| --- | --- | |||||||||||||
| Twelve Months Ended | Twelve Months Ended | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2019 | December 31, 2018 | |||||||||||||
| AVERAGE | AVERAGE | |||||||||||||
| BALANCE | INTEREST (1) | RATE (1) | BALANCE | INTEREST (1) | RATE (1) | |||||||||
| EARNING ASSETS | ||||||||||||||
| Loans (2) | $ | 1,757,799 | $ | 89,517 | 5.09 | % | $ | 1,632,541 | $ | 80,192 | 4.91 | % | ||
| Taxable securities | 190,944 | 4,840 | 2.53 | 202,270 | 4,928 | 2.44 | ||||||||
| Tax-exempt securities | 216,586 | 8,418 | 3.89 | 194,302 | 7,195 | 3.70 | ||||||||
| Equity securities (2) | 12,057 | 627 | 5.20 | 11,382 | 652 | 5.73 | ||||||||
| Federal funds sold and other | 34,948 | 729 | 2.09 | 34,006 | 644 | 1.89 | ||||||||
| Total earning assets | 2,212,334 | 104,131 | 4.71 | 2,074,501 | 93,611 | 4.51 | ||||||||
| Nonearning assets | 170,902 | 155,879 | ||||||||||||
| Total assets | $ | 2,383,236 | $ | 2,230,380 | ||||||||||
| INTEREST-BEARING LIABILITIES | ||||||||||||||
| Time deposits | $ | 401,317 | $ | 7,847 | 1.96 | % | $ | 293,725 | $ | 4,210 | 1.43 | % | ||
| Brokered time deposits | 83,311 | 1,921 | 2.31 | 68 | 2 | 2.35 | ||||||||
| Savings deposits | 410,672 | 1,285 | 0.31 | 465,283 | 1,015 | 0.22 | ||||||||
| Demand deposits | 641,461 | 5,807 | 0.91 | 506,099 | 2,912 | 0.58 | ||||||||
| Short term borrowings | 96,145 | 2,250 | 2.34 | 281,063 | 4,936 | 1.76 | ||||||||
| Long term borrowings | 23,318 | 498 | 2.14 | 6,491 | 190 | 2.93 | ||||||||
| Total interest-bearing liabilities | $ | 1,656,224 | 19,608 | 1.18 | $ | 1,552,729 | 13,265 | 0.85 | ||||||
| NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Demand deposits | $ | 429,289 | $ | 415,968 | ||||||||||
| Other liabilities | 12,964 | 13,718 | ||||||||||||
| Stockholders’ equity | 284,759 | 247,965 | ||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,383,236 | $ | 2,230,380 | ||||||||||
| Net interest income and interest rate spread | $ | 84,523 | 3.53 | % | $ | 80,346 | 3.66 | % | ||||||
| Net interest margin | 3.82 | % | 3.87 | % | ||||||||||
| (1) | Interest and yields are calculated on a tax-equivalent basis where<br>applicable. | |||||||||||||
| --- | --- | |||||||||||||
| (2) | For 2019, adjustments of $414 thousand and $1.7 million, respectively, were made to tax equate income<br>on tax exempt loans and tax exempt securities. For 2018, adjustments of $357 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<br>federal income tax rate of 21%, less disallowances. | |||||||||||||
| --- | --- |