Farmers National Banc Corp. Announces 2020 Second Quarter Financial Results
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
Balance
Number of
Loans
Outstanding
Balance
Number of
Loans
Outstanding
Balance
Number of
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
LoansTotal 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:
Outstanding
Balance
% of total
loans
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 LiquidityFarmers 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
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 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
INTEREST (1)
AVERAGE
INTEREST (1)
BALANCE
RATE (1)
BALANCE
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 applicable.
(2) For 2020, adjustments of $98 thousand and $506 thousand, respectively, were made to tax equate income 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 federal income tax rate of 21%, less disallowances.
Six Months Ended
Six Months Ended
June 30, 2020
June 30, 2019
AVERAGE
INTEREST (1)
AVERAGE
INTEREST (1)
BALANCE
RATE (1)
BALANCE
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 applicable.
(2) For 2020, adjustments of $196 thousand and $967 thousand, respectively, were made to tax equate 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 marginal federal income tax rate of 21%, less disallowances.
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