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EX-99.2 - EX-99.2 - FARMERS NATIONAL BANC CORP /OH/d211418dex992.htm
8-K - FORM 8-K - FARMERS NATIONAL BANC CORP /OH/d211418d8k.htm

Exhibit 99.1

July 20, 2016

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

2016 SECOND QUARTER FINANCIAL RESULTS

 

    14% organic loan growth since June 30, 2015

 

    134 consecutive quarters of profitability

 

    Net income for quarter ended June 30, 2016 was $5.0 million compared to $4.8 million for the linked quarter

 

    Annualized return on assets was 1.05% for the first six months of 2016

 

    Noninterest income increased 30.1% compared to same quarter in 2015

 

    Non-performing assets to total assets remain at low levels, 0.46% at June 30, 2016

CANFIELD, Ohio (July 20, 2016) – Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three and six months ended June 30, 2016.

Net income for the three months ended June 30, 2016 was $5.0 million, or $0.19 per diluted share, which compares to $812 thousand, or $0.04 per diluted share, for the three months ended June 30, 2015. Excluding expenses related to acquisition activities, net income for the two periods was $5.2 million or $0.19 and $2.4 million or $0.12, respectively. In comparing the first quarter’s results to the most recent previous quarter, net income of $5.0 million increased 4.6% compared to $4.8 million for the quarter ended March 31, 2016.

Annualized return on average assets and return on average equity were 1.06% and 9.69%, respectively, for the three month period ending June 30, 2016, compared to 1.03% and 9.41% for the linked quarter. Excluding expenses related to acquisition activities, the annualized return on average assets and return on average equity for the quarter ended June 30, 2016 were 1.10% and 10.02% compared to 0.82% and 8.33% for the same quarter in 2015.

Net income for the six months ended June 30, 2016 was $9.8 million, or $0.36 per diluted share, compared to $3.0 million or $0.16 per diluted share for same six month period in 2015. Excluding expenses related to acquisition activities, net income for the two six month periods was $10.2 million, or $0.38 per share and $4.7 million or $0.25 per share, respectively, and the annualized return on average assets and return on average equity were 1.08% and 9.98% in 2016, compared to 0.78% and 6.81% in 2015, respectively.

During 2015, Farmers completed the mergers of National Bancshares Corporation (NBOH) the holding company for the First National Bank of Orrville, and Tri-State 1st Banc Inc. (Tri-State), the holding company for 1st National Community Bank of East Liverpool. These transactions resulted in the addition of $676 million in assets and 17 full-service branches in Northeastern Ohio and 1 in Beaver County in Pennsylvania.

On June 1, 2016 Farmers completed the acquisition of Bowers Insurance Agency, Inc. (The Bowers Group). The Bowers Group will continue to operate under its name from its current location in Cortland, Ohio, but is expected to merge with Farmers National Insurance, LLC, Farmers’ wholly-owned insurance agency subsidiary. The strategic acquisition is expected to enhance Farmers’ current company and product line up, and offer broader options of commercial, farm, home, and auto property/casualty insurance carriers to meet all the needs of all Farmers’ customers.

Kevin J. Helmick, President and CEO, stated, “We are pleased to report that our earnings have increased through the successful integration of both bank mergers, and we are encouraged by the early results of our merger with The Bowers Group. We also continue to be encouraged by our organic loan growth, which has increased 9.5% on an annualized basis during the past six months, and improvements in our level of noninterest income.”


2016 Second Quarter Financial Highlights

 

    Loan growth

Total loans were $1.36 billion at June 30, 2016, compared to $1.30 billion at December 31, 2015, representing an annualized growth of 9.5%. 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. Most of the increase in loans has occurred in the commercial real estate, commercial and industrial, residential real estate and consumer loan portfolios. Loans now comprise 76.3% of the Bank’s first quarter average earning assets at June 30, 2016, an improvement compared to 65.9% at the same time in 2015. This improvement along with the growth in earning assets organically and through merger activity has resulted in an 80% increase in tax equated loan income from the second quarter of 2015 to the same quarter in 2016.

 

    Loan quality

Non-performing assets to total assets remain at a safe level, currently at 0.46%. Early stage delinquencies also continue to remain at low levels, at $11.4 million, or 0.84% of total loans, at June 30, 2016. Net charge-offs for the current quarter were $660 thousand, down $627 thousand compared to $1.3 million in the same quarter in 2015. It is important to note that annualized net charge-offs as a percentage of average net loans outstanding decreased from 0.71% for the 3 months ended June 30, 2015 to 0.20% for the same period in 2016. Lending to the energy sector is insignificant and less than 1% of the loan portfolio.

 

    Net interest margin

The net interest margin for the three months ended June 30, 2016 was 4.06%, a 40 basis points increase from the quarter ended June 30, 2015. In comparing the second quarter of 2016 to the same period in 2015, asset yields increased 28 basis points, while the cost of interest-bearing liabilities decreased 13 basis points. Another key contributor to the increase in net interest margin was the shift in the mix of earning assets from securities to loans as explained previously. The increased margin is also partially due to the additional accretion as a result of the discounted loan portfolios acquired in the NBOH and Tri-State mergers. Excluding the amortization of premium on time deposits and FHLB advances along with the accretion of the acquired loan discount, the net interest margin would have been 9 basis points lower or 3.97% for the quarter ended June 30, 2016.

 

    Noninterest income

Noninterest income increased 30.1% to $5.7 million for the quarter ended June 30, 2016 compared to $4.4 million in 2015. Deposit account income increased $315 thousand, or 47%, in the current year’s quarter compared to the same quarter in 2015 and gains on the sale of mortgage loans increased $384 thousand, or 246%, in comparing the same two quarters. Investment commissions increased $100 thousand or 39% and insurance agency commissions increased $175 thousand or 148%. Debit card interchange fees also increased $593 thousand or 86% in comparing the second quarter of 2015 to the same quarter in 2016. The Company also recognized a $262 thousand gain from the sale of land during the second quarter of 2016, compared to none in the same quarter in 2015.

 

    Noninterest expenses

Farmers has remained committed to managing the level of noninterest expenses. Total noninterest expenses for the second quarter of 2016 were $14.8 million. Excluding expenses related to acquisition activities of $224 thousand, noninterest expenses were $14.6 million. Excluding expenses related to acquisition activities, annualized noninterest expenses measured as a percentage of quarterly average assets decreased from 3.39% in the second quarter of 2015 to 3.07% in the second quarter of 2016. Annualized salaries and employee benefits as a percent of average assets also decreased from 1.89% to 1.63% in comparing the second quarter of 2015 and 2016.

 

    Efficiency ratio

The efficiency ratio for the quarter ended June 30 2016 improved to 62.6% compared to 81.03% for the same quarter in 2015. Excluding expenses related to acquisition activities, the efficiency ratio for the same periods was 61.6% and 69.9%, respectively. The main factors leading to the improvement in the efficiency ratio was the increase in net interest income and noninterest income, along with the stabilized level of noninterest expenses relative to average assets as explained in the preceding paragraphs.


2016 Outlook

Mr. Helmick added, “We are encouraged by the promising start to 2016 in our financial results. We will continue to focus our energy on the seamless integration of the newly acquired companies and customers. We remain committed to the businesses and families we serve and 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 $1.9 billion in banking assets and $1 billion in trust 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 38 banking locations in Mahoning, Trumbull, Columbiana, Stark, Wayne, Medina and Cuyahoga Counties in Ohio and Beaver County in Pennsylvania, Farmers Trust Company, which operates three trust offices and offers services in the same geographic markets and National Associates, Inc. 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 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, 2015, as amended, 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 Six Months Ended  
     June 30,     March 31,     Dec. 31,     Sept. 30,     June 30,     June 30,     June 30,     Percent  
     2016     2016     2015     2015     2015     2016     2015     Change  

Total interest income

   $ 17,950      $ 17,747      $ 17,481      $ 15,594      $ 10,753      $ 35,697      $ 20,752        72.0

Total interest expense

     1,061        1,000        1,023        1,056        1,004        2,061        2,011        2.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     16,889        16,747        16,458        14,538        9,749        33,636        18,741        79.5

Provision for loan losses

     990        780        990        1,220        850        1,770        1,300        36.2

Other income

     5,737        4,946        5,175        4,685        4,409        10,683        8,446        26.5

Merger related costs

     224        289        1,736        2,499        1,912        513        2,157        -76.2

Other expense

     14,559        14,155        14,884        13,022        10,175        28,714        19,681        45.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     6,853        6,469        4,023        2,482        1,221        13,322        4,049        229.0

Income taxes

     1,833        1,671        848        625        409        3,504        1,026        241.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 5,020      $ 4,798      $ 3,175      $ 1,857      $ 812      $ 9,818      $ 3,023        224.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average shares outstanding

     26,965        26,937        27,027        25,672        19,366        26,951        18,890     

Basic and diluted earnings per share

     0.19        0.18        0.12        0.07        0.04        0.36        0.16     

Cash dividends

     1,083        1,077        809        770        552        2,160        1,104     

Cash dividends per share

     0.04        0.04        0.03        0.03        0.03        0.08        0.06     

Performance Ratios

                

Net Interest Margin (Annualized)

     4.06     4.07     3.99     3.84     3.66     4.07     3.65  

Efficiency Ratio (Tax equivalent basis)

     62.60     62.65     73.07     76.55     81.03     62.63     76.08  

Return on Average Assets (Annualized)

     1.06     1.03     0.68     0.43     0.27     1.05     0.52  

Return on Average Equity (Annualized)

     9.69     9.41     6.51     3.97     2.74     9.61     4.53  

Dividends to Net Income

     21.57     22.45     25.48     41.46     67.98     22.00     36.52  


Consolidated Statements of Financial Condition                                   
     June 30,      March 31,      Dec. 31,      Sept. 30,      June 30,  
     2016      2016      2015      2015      2015  

Assets

              

Cash and cash equivalents

   $ 62,184       $ 34,619       $ 56,014       $ 34,344       $ 37,028   

Securities available for sale

     378,432         387,093         394,312         379,138         386,319   

Loans held for sale

     1,737         488         1,769         566         399   

Loans

     1,358,484         1,315,501         1,296,865         1,183,016         1,134,838   

Less allowance for loan losses

     9,720         9,390         8,978         8,294         7,286   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Loans

     1,348,764         1,306,111         1,287,887         1,174,722         1,127,552   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other assets

     134,002         131,996         129,920         119,027         121,105   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 1,925,119       $ 1,860,307       $ 1,869,902       $ 1,707,797       $ 1,672,403   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

              

Deposits

   $ 1,447,442       $ 1,445,882       $ 1,409,047       $ 1,330,249       $ 1,320,569   

Other interest-bearing liabilities

     247,934         192,078         247,985         179,701         155,591   

Other liabilities

     17,252         18,365         14,823         11,696         13,668   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

     1,712,285         1,656,325         1,671,855         1,521,646         1,489,828   

Stockholders’ Equity

     212,491         203,982         198,047         186,151         182,575   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 1,925,119       $ 1,860,307       $ 1,869,902       $ 1,707,797       $ 1,672,403   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


Period-end shares outstanding

     27,048        26,924        26,944        25,674        25,672   

Book value per share

   $ 7.86      $ 7.58      $ 7.35      $ 7.25      $ 7.11   

Tangible book value per share

     6.17        5.99        5.77        5.72        5.57   

Capital and Liquidity

          

Common Equity Tier 1 Capital Ratio (a)

     11.60     11.82     11.59     12.12     12.61

Total Risk Based Capital Ratio (a)

     12.26     12.63     12.37     12.77     13.20

Tier 1 Risk Based Capital Ratio (a)

     11.60     11.97     11.74     12.12     12.61

Tier 1 Leverage Ratio (a)

     9.20     9.34     9.21     9.27     9.27

Equity to Asset Ratio

     11.04     10.96     10.59     10.90     10.92

Tangible Common Equity Ratio

     8.87     8.88     8.50     8.80     8.76

Net Loans to Assets

     70.06     70.21     68.87     68.79     67.42

Loans to Deposits

     93.85     90.98     92.04     88.93     85.94

Asset Quality

          

Non-performing loans

   $ 8,360      $ 9,710      $ 10,445      $ 9,620      $ 7,984   

Other Real Estate Owned

     572        555        942        1,052        1,128   

Non-performing assets

     8,932        10,265        11,387        10,672        9,112   

Loans 30-89 days delinquent

     11,371        10,072        9,130        6,974        7,146   

Charged-off loans

     820        578        447        631        1,496   

Recoveries

     160        210        151        420        209   

Net Charge-offs

     660        368        296        211        1,287   

Annualized Net Charge-offs to Average Net Loans Outstanding

     0.20     0.11     0.09     0.10     0.71

Allowance for Loan Losses to Total Loans

     0.72     0.71     0.69     0.70     0.64

Non-performing Loans to Total Loans

     0.62     0.74     0.81     0.81     0.70

Allowance to Non-performing Loans

     116.27     96.70     85.96     86.22     91.26

Non-performing Assets to Total Assets

     0.46     0.55     0.61     0.62     0.54

 

(a) June 30, 2016 ratio is estimated


 

Reconciliation of Common Stockholders’ Equity to Tangible Common Equity  
     June 30,      March 31,      Dec. 31,      Sept. 30,      June 30,  
     2016      2016      2015      2015      2015  

Stockholders’ Equity

   $ 212,491       $ 203,982       $ 198,047       $ 186,151       $ 182,575   

Less Goodwill and other intangibles

     45,718         42,604         42,661         39,265         39,569   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible Common Equity

   $ 166,773       $ 161,378       $ 155,386       $ 146,886       $ 143,006   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
              
Reconciliation of Total Assets to Tangible Assets                                   
     June 30,      March 31,      Dec. 31,      Sept. 30,      June 30,  
     2016      2016      2015      2015      2015  

Total Assets

   $ 1,925,119       $ 1,860,307       $ 1,869,902       $ 1,707,797       $ 1,672,403   

Less Goodwill and other intangibles

     45,718         42,604         42,661         39,265         39,569   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible Assets

   $ 1,879,401       $ 1,817,703       $ 1,827,241       $ 1,668,532       $ 1,632,834   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

Reconciliation of Net Income, Excluding Costs Related to Acquisition Activities      For the Six Months  
       For the Three Months Ended             Ended  
     June 30,      March 31,      Dec. 31,      Sept. 30,      June 30,      June 30,      June 30,  
     2016      2016      2015      2015      2015      2016      2015  

Income before income taxes - Reported

   $ 6,853       $ 6,469       $ 4,023       $ 2,482       $ 1,221       $ 13,322       $ 4,049   

Acquisition Costs

     224         289         1,736         2,499         1,912         513         2,157   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes - Adjusted

     7,077         6,758         5,759         4,981         3,133         13,835         6,206   

Income tax expense

     1,899         1,746         1,434         1,255         698         3,645         1,371   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income - Adjusted

   $ 5,178       $ 5,012       $ 4,325       $ 3,726       $ 2,435       $ 10,190       $ 4,835   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

End of Period Loan Balances                                             
   For the Three Months Ended     
   June 30,      March 31,      Dec. 31,      Sept. 30,      June 30,            
   2016      2016      2015      2015      2015            

Commercial real estate

   $ 503,095       $ 491,605       $ 492,430       $ 442,181       $ 427,028         

Commercial

     241,040         234,369         228,455         204,726         202,552         

Residential real estate

     419,174         406,039         392,849         360,586         319,820         

Consumer

     192,232         180,791         180,525         173,041         183,785         
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

       

Total, excluding net deferred loan costs

   $ 1,355,541       $ 1,312,804       $ 1,294,259       $ 1,180,534       $ 1,133,185         
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

       


     For the Three Months Ended  
     June 30,      March 31,      Dec. 31,      Sept. 30,      June 30,  
Noninterest Income    2016      2016      2015      2015      2015  

Service charges on deposit accounts

   $ 987       $ 935       $ 1,049       $ 929       $ 672   

Bank owned life insurance income

     201         212         214         184         165   

Trust fees

     1,564         1,496         1,518         1,482         1,509   

Insurance agency commissions

     293         139         175         130         118   

Security gains

     41         0         46         3         35   

Retirement plan consulting fees

     496         489         425         423         778   

Investment commissions

     356         236         286         332         256   

Net gains on sale of loans

     540         402         407         415         156   

Other operating income

     1,259         1,037         1,055         787         720   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Noninterest Income

   $ 5,737       $ 4,946       $ 5,175       $ 4,685       $ 4,409   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     For the Three Months Ended  
     June 30,      March 31,      Dec. 31,      Sept. 30,      June 30,  
Noninterest Expense    2016      2016      2015      2015      2015  

Salaries and employee benefits

   $ 7,740       $ 7,554       $ 8,220       $ 7,213       $ 5,663   

Occupancy and equipment

     1,616         1,664         1,772         1,368         1,201   

State and local taxes

     394         393         283         400         243   

Professional fees

     754         529         833         738         546   

Merger related costs

     224         289         1,736         2,499         1,912   

Advertising

     363         345         482         344         282   

FDIC insurance

     286         283         326         256         178   

Intangible amortization

     335         337         345         304         167   

Core processing charges

     580         638         770         643         382   

Other operating expenses

     2,491         2,412         1,853         1,756         1,513   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Noninterest Expense

   $ 14,783       $ 14,444       $ 16,620       $ 15,521       $ 12,087   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

 

     Three Months Ended     Three Months Ended  
     June 30, 2016     June 30, 2015  
     AVERAGE
BALANCE
     INTEREST
(1)
    

RATE

(1)

    AVERAGE
BALANCE
     INTEREST
(1)
    

RATE

(1)

 

EARNING ASSETS

                

Loans (2)

   $ 1,324,761       $ 15,787         4.79   $ 733,249       $ 8,780         4.75

Taxable securities

     246,590         1,288         2.10        273,799         1,405         2.04   

Tax-exempt securities (2)

     129,772         1,377         4.26        84,970         1,014         4.73   

Equity securities

     9,637         113         4.70        4,771         46         3.66   

Federal funds sold and other

     26,137         27         0.41        14,310         6         0.17   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total earning assets

   $ 1,736,897         18,592         4.30      $ 1,111,099         11,251         4.02   
  

 

 

         

 

 

       

INTEREST-BEARING LIABILITIES

                

Time deposits

   $ 249,491       $ 472         0.76   $ 203,193       $ 736         1.44

Savings deposits

     540,251         159         0.12        420,315         117         0.11   

Demand deposits

     323,869         162         0.20        152,372         26         0.07   

Short term borrowings

     208,660         144         0.28        70,260         16         0.09   

Long term borrowings

     20,746         124         2.40        35,114         109         1.22   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing liabilities

   $ 1,343,017         1,061         0.32      $ 881,254         1,004         0.45   
  

 

 

         

 

 

       

Net interest income and interest rate spread

      $ 17,531         3.98      $ 10,247         3.57
     

 

 

    

 

 

      

 

 

    

 

 

 

Net interest margin

           4.06           3.66
        

 

 

         

 

 

 

 

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.

 

(2) For 2016, adjustments of $164 thousand and $478 thousand, respectively, are made to tax equate income on tax exempt loans and tax exempt securities. For 2015, adjustments of $146 thousand and $352 thousand, respectively, are made to tax equate income on tax exempt loans and tax exempt securities. These adjustments are based on a marginal federal income tax rate of 35%, less disallowances.


     Six Months Ended     Six Months Ended  
     June 30, 2016     June 30, 2015  
     AVERAGE
BALANCE
     INTEREST
(1)
    

RATE

(1)

    AVERAGE
BALANCE
     INTEREST
(1)
    

RATE

(1)

 

EARNING ASSETS

                

Loans (2)

   $ 1,306,617       $ 31,217         4.80   $ 698,777       $ 16,599         4.79

Taxable securities

     253,635         2,725         2.16        285,209         3,052         2.16   

Tax-exempt securities

     129,149         2,733         4.26        85,154         1,953         4.62   

Equity securities (2)

     9,599         226         4.73        4,528         94         4.10   

Federal funds sold and other

     27,340         65         0.48        15,319         11         0.14   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total earning assets

   $ 1,726,340         36,966         4.31      $ 1,088,987         21,709         4.02   
  

 

 

         

 

 

       

INTEREST-BEARING LIABILITIES

                

Time deposits

   $ 246,219       $ 882         0.72   $ 202,993       $ 1,504         1.49

Savings deposits

     536,543         310         0.12        409,534         227         0.11   

Demand deposits

     320,691         309         0.19        141,544         35         0.05   

Short term borrowings

     212,068         316         0.30        63,314         28         0.09   

Long term borrowings

     21,384         242         2.28        35,876         217         1.23   
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing liabilities

   $ 1,336,905       $ 2,059         0.31      $ 853,261         2,011         0.48   
  

 

 

         

 

 

       

Net interest income and interest rate spread

      $ 34,907         4.00      $ 19,698         3.54
     

 

 

    

 

 

      

 

 

    

 

 

 

Net interest margin

           4.07           3.65
        

 

 

         

 

 

 

 

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.

 

(2) For 2016, adjustments of $324 thousand and $945 thousand, respectively, are made to tax equate income on tax exempt loans and tax exempt securities. For 2015, adjustments of $281 thousand and $676 thousand, respectively, are made to tax equate income on tax exempt loans and tax exempt securities. These adjustments are based on a marginal federal income tax rate of 35%, less disallowances.