Farmers National Banc Corp. Announces 2021 Second Quarter Financial Results
Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months ended June 30, 2021.
Net income for the three months ended June 30, 2021 was $15.6 million, or $0.55 per diluted share, which compares to $11.0 million, or $0.39 per diluted share, for the three months ended June 30, 2020 and $14.6 million or $0.51 per diluted share for the linked quarter. Net income excluding acquisition costs (non-GAAP) for the quarter ended June 30, 2021 was $15.7 million or $0.55 per share, compared to $11.1 million or $0.39 per share for the same quarter in 2020 and $14.6 million or $0.51 per share for the most recent prior quarter.
Annualized return on average assets and annualized return on average equity were 1.90% and 17.17%, respectively, for the three month period ended June 30, 2021, compared to 1.56% and 14.02% for the same three month period in 2020, and 1.87% and 16.81% for the linked quarter. Farmers’ annualized return on average tangible equity excluding acquisition costs (non-GAAP) was 19.91% for the quarter ended June 30, 2021 compared to 16.75% for the same quarter in 2020 and 19.31% for the linked quarter.
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”). This transaction is subject to receipt of Cortland shareholder approval and customary regulatory approvals and is expected to close during the fourth quarter of 2021. Farmers expects that the transaction will increase Farmers’ market share in Trumbull, Mahoning and Cuyahoga Counties and enables Farmers to continue building local scale throughout Northeast Ohio. As of March 31, 2021, Cortland had total assets of $791.7 million, which included gross loans of $518.6 million, deposits of $680.3 million and equity of $81.1 million.
Kevin J. Helmick, President and CEO, stated, “Our record year-to-date financial results demonstrates Farmers strong position to grow earnings, despite the current low interest rate and loan environment. This success is a direct result of our win-win culture and providing business and retail customers with local, personal, and diversified financial services.”
“As a high performing financial institution, we believe we have significant opportunities to create value for shareholders. The recently announced acquisition of Cortland Bank immediately enhances economies of scale and our ability to expand Farmers’ diversified product offerings to Cortland Bank’s customer base.
“Our customer-first culture and the hard work of all our team members continues to drive our success. I want to thank everyone at Farmers for their dedication and look forward to welcoming Cortland Bank’s team to our corporate family,” concluded Mr. Helmick.
Farmers offered special financial assistance to support customers who were 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 the dates listed:
June 30, 2021
March 31, 2021
Dec. 31, 2020
Sept. 30, 2020
June 30, 2020
(dollars in thousands)
Balance
Number of Loans
Balance
Number of Loans
Balance
Number of Loans
Balance
Number of Loans
Balance
Number of Loans
Commercial real estate
$
8,716
2
$
16,584
5
$
19,027
6
$
155
1
$
43,954
44
Commercial
0
0
0
0
1,424
2
0
0
8,515
69
Agriculture
0
0
0
0
0
0
469
2
8,340
22
Residential real estate
0
0
0
0
0
0
222
1
3,785
37
Consumer
0
0
0
0
2
1
2
1
1,858
100
Total
$
8,716
2
$
16,584
5
$
20,453
9
$
848
5
$
66,452
272
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 were 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.
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 June 30, 2021, the Company has received life to date payments from the SBA for forgiveness of loans totaling $181.6 million, or approximately 90.8% of the PPP loans originated in 2020. The Company has processed $83.9 million in new loans for PPP loan funding during the six month period ended June 30, 2021. The Company has also received payments from the SBA for forgiveness of loans totaling $5.2 million, or approximately 6.2% of PPP loans originated in 2021.
2021 Second Quarter Financial Highlights
LoansTotal loans were $1.96 billion at June 30, 2021, compared to $2.15 billion at June 30, 2020, representing a decrease of 8.8%. The decrease in loans has occurred primarily in the PPP category, with $92.1 million, net of deferred fees, in outstanding balances at June 30, 2021 compared to $193.0 million at June 30, 2020 representing a decrease of $101 million or 52%. Average loans now comprise 64.7% of the Bank's average earning assets for the quarter ended June 30, 2021, compared to 79.6% for the same period in 2020. A summary of loans summarized by industries that may have particular vulnerability to the effects of COVID-19 and their outstanding balance as a percentage of total loans, as of June 30, 2021, is shown in the following table:
(dollars in thousands)
Outstanding Balance
% of total loans
Restaurants and Catering Facilities
$38,819
1.98%
Hotels
40,957
2.09%
Golf Courses
7,095
0.36%
Energy
1,256
0.07%
Total
$88,127
4.65%
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 17% from $2.4 billion at June 30, 2020 to $2.8 billion at June 30, 2021. As a result of the large increase in deposits, the loan to deposit ratio at June 30, 2021 stands at 70.5%, a significant decrease compared to 88.1% 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 qualityNon-performing assets to total assets remains at a low level, currently at 0.43% which is the same ratio reported one year ago. Early stage delinquencies, defined as 30-89 days past due, were $7.6 million, or 0.39% of total loans, at June 30, 2021, compared to $10.3 million, or 0.43% of total loans, for the quarter ended June 30, 2020. Net charge-offs for the current quarter were $179 thousand, compared to $392 thousand in the same quarter in 2020. Total net charge-offs as a percentage of average net loans outstanding is 0.04% for the quarter ended June 30, 2021, down 0.04% compared to the same quarter in 2020.
As a result of improved factors that exist in the current economic environment as well as the decrease in the loan portfolio when compared to prior quarters, the Company was able to decrease its provision for credit losses to $50 thousand for the quarter ended June 30, 2021, compared to the $425 thousand recorded in the first quarter of this year. As an overall percentage of loans, the allowance for credit losses increased to 1.27% for the current quarter compared to 1.22% for the quarter ended March 31, 2021. Excluding the PPP loans, this allowance for credit losses to gross loans ratio increased to 1.33% (non-GAAP) as of June 30, 2021, and the ratio of the allowance for credit losses to gross loans, excluding PPP loans and acquired loans is 1.52% (non-GAAP).
Net interest marginThe net interest margin for the three months ended June 30, 2021 was 3.54%, a 20 basis points decrease from the quarter ended June 30, 2020, and 4 basis points less than the 3.58% reported for the linked quarter. In comparing the second quarter of 2021 to the same period in 2020, asset yields decreased 56 basis points, while the cost of interest-bearing liabilities decreased 49 basis points. Most of the decrease in the asset yields was the result of lower rates earned on taxable and tax-exempt securities. Each of the major interest-bearing liability categories experienced cost decreases compared to one year ago. The net interest margin for the quarter ended June 30, 2021 excluding interest and fees from PPP loans would decrease the margin by 12 basis points (non-GAAP). The net interest margin is also impacted by the additional accretion as a result of the discounted loan portfolios acquired in previous mergers, which increased the net interest margin by 4 basis points for the quarter ended June 30, 2021 and 5 basis points for the quarter ended June 30, 2020.
Noninterest incomeNoninterest income increased 8.1% to $9.9 million for the quarter ended June 30, 2021 compared to $9.1 million in the same quarter in 2020. The Company’s wealth management businesses led the improvement as trust fee income increased $506 thousand, or 27.32%, insurance agency commissions increased $267 thousand, or 39.2% and investment commissions increased $219 thousand, or 72%. Other improvements noted include debit card interchange fees increasing $259 thousand, or 26.78%, and other operating income increasing $471 thousand, or 141%. Those increases were offset by a $1.2 million, or 31.66%, decrease in gain on sale of mortgage loan income resulting from a slowdown in the level of mortgage loan refinancing.
Noninterest expensesFarmers has remained committed to managing the level of noninterest expenses. Total noninterest expenses for the second quarter of 2021 decreased 1.72% to $17.4 million compared to $17.7 million in the same quarter in 2020. This was primarily a result of decreases in telephone and data communication costs of $209 thousand, or 60.06%, core processing charges of $103 thousand, or 11.03%, advertising expense of $126 thousand, or 39.13%, and FDIC insurance of $105 thousand, or 46.67%. These decreases were offset by increases of $215 thousand, or 12.84%, in occupancy and equipment expense and $153 thousand, or 1.58%, in salaries and employee benefits. Annualized noninterest expenses excluding acquisition costs (non-GAAP) measured as a percentage of quarterly average assets improved from 2.50% in the second quarter of 2020 to 2.12% in the second quarter of 2021.
Efficiency ratioThe efficiency ratio for the quarter ended June 30, 2021 improved to 46.14% compared to 50.75% for the same quarter in 2020. The increases in several categories of noninterest income and net interest income, accompanied with lower noninterest expenses were the main drivers of the improvement.
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 June 30, 2021 are $3.1 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.
IMPORTANT ADDITIONAL INFORMATION
In connection with the proposed merger with Cortland, Farmers will file with the SEC a Registration Statement on Form S-4 that will include a proxy statement of Cortland and a prospectus of Farmers, as well as other relevant documents concerning the proposed transaction.
SHAREHOLDERS OF CORTLAND AND OTHER INVESTORS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT/PROSPECTUS TO BE INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-4, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT FARMERS, CORTLAND, THE PROPOSED MERGER, THE PERSONS SOLICITING PROXIES WITH RESPECT TO THE PROPOSED MERGER AND THEIR INTERESTS IN THE PROPOSED MERGER AND RELATED MATTERS.
Investors and security holders will be able to obtain free copies of the Registration Statement on Form S-4 (when available) and other documents filed with the SEC by Farmers through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Farmers will be available free of charge on Farmers’ website at https://www.farmersbankgroup.com or may be obtained from Farmers by written request to Farmers National Banc Corp., 20 South Broad Street, Canfield, Ohio 44406, Attention: Investor Relations.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale is unlawful before registration or qualification of the securities under the securities laws of the jurisdiction. No offer of securities shall be made except by means of a prospectus satisfying the requirements of Section 10 of the Securities Act.
The respective directors and executive officers of Farmers and Cortland and other persons may be deemed to be participants in the solicitation of proxies from Cortland shareholders with respect to the merger. Information regarding the directors and executive officers of Farmers is available in its proxy statement filed with the SEC on March 12, 2021 in connection with its 2021 Annual Meeting of Shareholders. Information regarding directors and executive officers of Cortland is available on its website at www.cortlandbank.com. Other information regarding the participants in the solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and prospectus to be included in the Registration Statement on Form S-4 and other relevant materials to be filed with the SEC when they become available.
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
2021
2021
2020
2020
2020
2021
2020
Change
Total interest income
$28,609
$27,790
$28,833
$27,635
$28,142
$56,399
$55,859
1.0%
Total interest expense
2,119
2,523
3,030
3,470
4,221
4,642
9,636
-51.8%
Net interest income
26,490
25,267
25,803
24,165
23,921
51,757
46,223
12.0%
Provision for loan losses
50
425
3,000
2,600
2,400
475
3,500
-86.4%
Noninterest income
9,872
10,583
10,682
9,467
9,136
20,455
17,006
20.3%
Acquisition related costs
104
12
1,798
58
48
116
1,367
-91.5%
Other expense
17,330
17,756
17,979
17,662
17,692
35,086
35,110
-0.1%
Income before income taxes
18,878
17,657
13,708
13,312
12,917
36,535
23,252
57.1%
Income taxes
3,303
3,101
2,351
2,443
1,906
6,404
3,602
77.8%
Net income
$15,575
$14,556
$11,357
$10,869
$11,011
$30,131
$19,650
53.3%
Average diluted shares outstanding
28,353
28,336
28,322
28,291
28,280
28,336
28,492
Basic earnings per share
0.55
0.52
0.40
0.39
0.39
1.07
0.69
Diluted earnings per share
0.55
0.51
0.40
0.38
0.39
1.06
0.69
Cash dividends
3,107
3,107
3,100
3,101
3,100
6,214
6,204
Cash dividends per share
0.11
0.11
0.11
0.11
0.11
0.22
0.22
Performance Ratios
Net Interest Margin (Annualized)
3.54%
3.58%
3.73%
3.59%
3.74%
3.56%
3.74%
Efficiency Ratio (Tax equivalent basis)
46.14%
48.24%
50.25%
50.66%
50.75%
47.17%
55.04%
Return on Average Assets (Annualized)
1.90%
1.87%
1.49%
1.46%
1.56%
1.89%
1.44%
Return on Average Equity (Annualized)
17.17%
16.81%
13.10%
12.87%
14.02%
17.15%
12.81%
Dividends to Net Income
19.95%
21.35%
27.30%
28.53%
28.15%
20.62%
31.57%
Other Performance Ratios (Non-GAAP)
Return on Average Tangible Assets
1.93%
1.87%
1.52%
1.50%
1.58%
1.90%
1.46%
Return on Average Tangible Equity
19.81%
19.30%
15.48%
15.30%
16.69%
19.76%
15.03%
Return on Average Tangible Equity excluding acquisition costs
19.91%
19.31%
17.43%
15.37%
16.75%
19.82%
15.88%
Consolidated Statements of Financial Condition
June 30,
March 31,
Dec. 31,
Sept. 30,
June 30,
2021
2021
2020
2020
2020
Assets
Cash and cash equivalents
$149,357
$326,385
$254,621
$199,575
$103,954
Securities available for sale
996,271
802,866
575,600
481,509
475,614
Equity securities
6,658
6,902
6,881
8,307
8,375
Loans held for sale
1,922
3,993
4,766
7,076
3,395
Loans
1,959,865
2,037,404
2,078,044
2,147,158
2,143,600
Less allowance for credit losses (a)
24,806
24,935
22,144
19,341
16,960
Net Loans
1,935,059
2,012,469
2,055,900
2,127,817
2,126,640
Other assets
170,791
171,909
173,380
164,895
161,611
Total Assets
$3,260,058
$3,324,524
$3,071,148
$2,989,179
$2,879,589
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing
$663,640
$675,045
$608,791
$577,334
$593,162
Interest-bearing
2,115,183
2,158,009
2,002,087
1,960,998
1,846,323
Total deposits
2,778,823
2,833,054
2,610,878
2,538,332
2,439,485
Other interest-bearing liabilities
78,369
79,683
78,906
81,690
80,115
Other liabilities
35,958
64,432
31,267
29,189
28,637
Total liabilities
2,893,150
2,977,169
2,721,051
2,649,211
2,548,237
Stockholders' Equity
366,908
347,355
350,097
339,968
331,352
Total Liabilities
and Stockholders' Equity
$3,260,058
$3,324,524
$3,071,148
$2,989,179
$2,879,589
Period-end shares outstanding
28,322
28,237
28,190
28,186
28,180
Book value per share
$12.95
$12.30
$12.42
$12.06
$11.76
Tangible book value per share (Non-GAAP)*
11.23
10.56
10.66
10.23
9.92
* 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 (b)
14.10%
13.49%
13.22%
12.98%
12.65%
Total Risk Based Capital Ratio (b)
15.70%
15.10%
14.72%
14.36%
13.92%
Tier 1 Risk Based Capital Ratio (b)
14.54%
13.93%
13.67%
13.43%
13.10%
Tier 1 Leverage Ratio (b)
9.70%
9.69%
9.77%
9.67%
9.71%
Equity to Asset Ratio
11.25%
10.45%
11.40%
11.37%
11.51%
Tangible Common Equity Ratio (c)
9.90%
9.10%
9.94%
9.82%
9.88%
Net Loans to Assets
59.36%
60.53%
66.94%
71.18%
73.85%
Loans to Deposits
70.53%
71.92%
79.59%
84.59%
87.87%
Asset Quality
Non-performing loans
$13,873
$11,640
$13,835
$11,841
$12,225
Other Real Estate Owned
30
30
0
73
41
Non-performing assets
13,903
11,670
13,835
11,914
12,266
Loans 30 - 89 days delinquent
7,606
7,183
9,297
10,134
10,336
Charged-off loans
502
284
387
393
524
Recoveries
323
200
190
174
132
Net Charge-offs
179
84
197
219
392
Annualized Net Charge-offs to
Average Net Loans Outstanding
0.04%
0.02%
0.04%
0.04%
0.08%
Allowance for Credit Losses to Total Loans (a)
1.27%
1.22%
1.07%
0.90%
0.79%
Non-performing Loans to Total Loans
0.71%
0.57%
0.67%
0.55%
0.57%
Allowance to Non-performing Loans (a)
178.81%
214.22%
160.06%
163.34%
138.73%
Non-performing Assets to Total Assets
0.43%
0.35%
0.45%
0.40%
0.43%
(a) CECL method used for the June 30 and March 31, 2021 quarters. Prior periods used the incurred loss methodology.
(b) June 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 Six Months Ended
June 30,
March 31,
Dec. 31,
Sept. 30,
June 30,
June 30,
June 30,
2021
2021
2020
2020
2020
2021
2020
Total Assets
$3,260,058
$3,324,524
$3,071,148
$2,989,179
$2,879,589
$3,260,058
$2,879,589
Less Goodwill and other intangibles
48,985
49,301
49,617
51,608
51,866
48,985
51,866
Tangible Assets
$3,211,073
$3,275,223
$3,021,531
$2,937,571
$2,827,723
$3,211,073
$2,827,723
Average Assets
3,280,316
3,155,695
3,033,005
2,957,702
2,842,730
3,218,372
2,741,903
Less average Goodwill and other intangibles
49,193
49,509
51,476
51,754
52,052
49,350
47,088
Average Tangible Assets
$3,231,123
$3,106,186
$2,981,529
$2,905,948
$2,790,678
$3,169,022
$2,694,815
Reconciliation of Common Stockholders' Equity to Tangible Common Equity
For the Three Months Ended
For the Six Months Ended
June 30,
March 31,
Dec. 31,
Sept. 30,
June 30,
June 30,
June 30,
2021
2021
2020
2020
2020
2021
2020
Stockholders' Equity
$366,908
$347,355
$350,097
$339,968
$331,352
$366,908
$331,352
Less Goodwill and other intangibles
48,985
49,301
49,617
51,608
51,866
48,985
51,866
Tangible Common Equity
$317,923
$298,054
$300,480
$288,360
$279,486
$317,923
$279,486
Average Stockholders' Equity
363,753
351,190
344,949
335,982
315,988
354,334
308,524
Less average Goodwill and other intangibles
49,193
49,509
51,476
51,754
52,052
49,350
47,088
Average Tangible Common Equity
$314,560
$301,681
$293,473
$284,228
$263,936
$304,984
$261,436
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,
2021
2021
2020
2020
2020
2021
2020
Net income
$15,575
$14,556
$11,357
$10,869
$11,011
$30,131
$19,650
Acquisition related costs - tax equated
83
9
1,431
50
41
92
1,104
Net income - Adjusted
$15,658
$14,565
$12,788
$10,919
$11,052
$30,223
$20,754
Diluted EPS excluding acquisition costs
$0.55
$0.51
$0.45
$0.39
$0.39
$1.07
$0.73
Reconciliation of Allowance for Credit Losses to Gross Loans, Excluding PPP Loans and Acquired Loans
For the Three Months Ended
June 30,
March 31,
Dec. 31,
Sept. 30,
June 30,
2021
2021
2020
2020
2020
Gross Loans
$1,959,865
$2,037,404
$2,078,044
$2,147,158
$2,143,600
PPP Loans
92,073
136,826
125,396
194,490
192,969
Loans less PPP
1,867,792
1,900,578
1,952,648
1,952,668
1,950,631
Allowance for Credit Losses to Gross Loans Excluding PPP (a)
1.33%
1.31%
1.13%
0.99%
0.87%
Acquired Loans
233,772
251,616
272,150
294,712
320,184
Loans less PPP and Acquired
$1,634,020
$1,648,962
$1,680,498
$1,657,956
$1,630,447
Allowance for Credit Losses to Gross Loans Excluding PPP and Acquired (a)
1.52%
1.51%
1.32%
1.17%
1.04%
(a) CECL method used for the June 30 and March 31, 2021 quarters. Prior periods used the incurred loss methodology.
For the Three Months Ended
June 30,
March 31,
Dec. 31,
Sept. 30,
June 30,
End of Period Loan Balances
2021
2021
2020
2020
2020
Commercial real estate
$704,809
$702,556
$713,936
$710,730
$715,342
Commercial
351,261
406,064
404,492
481,593
472,012
Residential real estate
490,340
508,483
524,193
526,627
528,853
Consumer
190,064
193,295
203,061
209,883
208,374
Agricultural loans
223,427
227,073
232,129
219,896
221,556
Total, excluding net deferred loan costs
$1,959,901
$2,037,471
$2,077,811
$2,148,729
$2,146,137
For the Three Months Ended
June 30,
March 31,
Dec. 31,
Sept. 30,
June 30,
Noninterest Income
2021
2021
2020
2020
2020
Service charges on deposit accounts
$790
$808
$930
$904
$753
Bank owned life insurance income
300
284
187
196
204
Trust fees
2,358
2,236
1,950
1,973
1,852
Insurance agency commissions
948
1,001
776
784
681
Security gains (losses)
32
488
179
70
(26)
Retirement plan consulting fees
389
320
394
341
408
Investment commissions
523
504
450
353
304
Net gains on sale of loans
2,500
3,185
3,901
3,348
3,658
Debit card and EFT fees
1,226
1,084
1,061
1,048
967
Other operating income
806
673
854
450
335
Total Noninterest Income
$9,872
$10,583
$10,682
$9,467
$9,136
For the Three Months Ended
June 30,
March 31,
Dec. 31,
Sept. 30,
June 30,
Noninterest Expense
2021
2021
2020
2020
2020
Salaries and employee benefits
$9,866
$9,976
$9,638
$10,244
$9,713
Occupancy and equipment
1,890
2,275
2,060
1,719
1,675
State and local taxes
551
554
515
576
583
Professional fees
830
1,056
341
753
823
Merger related costs
104
12
1,798
58
48
Advertising
196
260
478
460
322
FDIC insurance
120
170
100
200
225
Intangible amortization
316
316
332
332
331
Core processing charges
831
627
831
925
934
Telephone and data
139
138
154
182
348
Other operating expenses
2,591
2,384
3,530
2,271
2,738
Total Noninterest Expense
$17,434
$17,768
$19,777
$17,720
$17,740
Average Balance Sheets and Related Yields and Rates
(Dollar Amounts in Thousands)
Three Months Ended
Three Months Ended
June 30, 2021
June 30, 2020
AVERAGE
AVERAGE
BALANCE
INTEREST (1)
RATE (1)
BALANCE
INTEREST (1)
RATE (1)
EARNING ASSETS
Loans (2)
$1,991,838
$23,669
4.77%
$2,101,500
$24,842
4.75%
Taxable securities
512,779
2,511
1.96
197,906
1,278
2.60
Tax-exempt securities (2)
340,539
2,952
3.48
252,818
2,459
3.91
Equity securities
14,666
121
3.31
17,687
137
3.12
Federal funds sold and other
218,093
58
0.11
70,279
30
0.17
Total earning assets
3,077,915
29,311
3.82
2,640,190
28,746
4.38
Nonearning assets
202,401
202,540
Total assets
$3,280,316
$2,842,730
INTEREST-BEARING LIABILITIES
Time deposits
$392,663
$1,008
1.03%
$493,048
$2,181
1.78%
Brokered time deposits
15,429
29
0.75
84,198
319
1.52
Savings deposits
516,428
165
0.13
457,188
267
0.23
Demand deposits
1,226,894
627
0.20
823,058
1,093
0.53
Short term borrowings
4,674
3
0.26
12,613
18
0.57
Long term borrowings
74,496
287
1.55
76,751
343
1.80
Total interest-bearing liabilities
$2,230,584
2,119
0.38
$1,946,856
4,221
0.87
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Demand deposits
666,053
556,649
Other liabilities
19,926
23,237
Stockholders' equity
363,753
315,988
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
$3,280,316
$2,842,730
Net interest income and interest rate spread
$27,192
3.44%
$24,525
3.51%
Net interest margin
3.54%
3.74%
(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2021, adjustments of $92 thousand and $610 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2020, adjustments of $98 thousand and $506 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, 2021
June 30, 2020
AVERAGE
AVERAGE
BALANCE
INTEREST (1)
RATE (1)
BALANCE
INTEREST (1)
RATE (1)
EARNING ASSETS
Loans (2)
$2,016,223
$47,569
4.76%
$2,014,678
$49,039
4.89%
Taxable securities
421,847
4,230
2.02
209,139
2,825
2.72
Tax-exempt securities
311,453
5,565
3.60
242,016
4,702
3.91
Equity securities (2)
14,753
242
3.31
16,996
277
3.28
Federal funds sold and other
241,898
129
0.11
64,090
179
0.56
Total earning assets
3,006,174
57,735
3.87
2,546,919
57,022
4.50
Nonearning assets
212,198
194,984
Total assets
$3,218,372
$2,741,903
INTEREST-BEARING LIABILITIES
Time deposits
$416,429
$2,263
1.10%
$494,385
$4,623
1.88%
Brokered time deposits
23,669
75
0.64
94,846
802
1.69
Savings deposits
506,188
358
0.14
441,232
588
0.27
Demand deposits
1,155,642
1,359
0.24
756,882
2,486
0.66
Short term borrowings
3,735
7
0.38
37,544
338
1.81
Long term borrowings
75,248
580
1.55
88,491
799
1.82
Total interest-bearing liabilities
$2,180,911
4,642
0.43
$1,913,380
9,636
1.01
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Demand deposits
$661,550
$502,710
Other liabilities
21,577
17,289
Stockholders' equity
354,334
308,524
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
$3,218,372
$2,741,903
Net interest income and interest rate spread
$53,093
3.44%
$47,386
3.49%
Net interest margin
3.56%
3.74%
(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2021, adjustments of $187 thousand and $1.2 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2020, adjustments of $196 thousand and $967 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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