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EXHIBIT 99.1

July 26, 2017

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

2017 SECOND QUARTER FINANCIAL RESULTS

 

    Earnings per diluted share increased to $0.21 for the quarter ended June 30, 2017 compared to $0.19 for same quarter in 2016

 

    138 consecutive quarters of profitability

 

    11% organic loan growth since June 30, 2016

 

    Annualized return on average assets was 1.11% and annualized return on average equity 10.25% for the quarter ended June 30, 2017

 

    Noninterest income increased 6% compared to same quarter in 2016

 

    Non-performing assets to total assets remain at low levels, 0.32% at June 30, 2017

CANFIELD, Ohio (July 26, 2017) – Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months ended June 30, 2017.

Net income for the three months ended June 30, 2017 was $5.7 million, or $0.21 per diluted share, which compares to $5.0 million, or $0.19 per diluted share, for the three months ended June 30, 2016 and $5.8 million or $0.21 per diluted share for the linked quarter. Excluding acquisition expenses net income for the three month period ended June 30, 2017 would have been $5.8 million. Annualized return on average assets and return on average equity were 1.11% and 10.25%, respectively, for the three month period ending June 30, 2017, compared to 1.06% and 9.69% for the same three month period in 2016, and 1.17% and 10.87% for the linked quarter. Farmers’ return on average tangible equity (Non-GAAP) also improved to 12.77% for the quarter ended June 30, 2017 compared to 12.22% for the same quarter in 2016 and 13.54% for the linked quarter.

Net income for the six months ended June 30, 2017 was $11.5 million, or $0.42 per diluted share, compared to $9.8 million or $0.36 per diluted share for the same six month period in 2016. Return on average assets and return on average equity were 1.14% and 10.52%, respectively, for the six months ended June 30, 2017, compared to 1.05% and 9.61% for the same period in 2016. Excluding expenses related to acquisition activities net income for the six month period ended June 30, 2017 would have been $11.6 million or $0.43 per diluted share.

On March 13, 2017, Farmers entered into an agreement and plan of merger with Monitor Bancorp, Inc. (Monitor), the holding company for The Monitor Bank, located in Holmes County in Ohio. This transaction has obtained all regulatory approvals and is expected to close during the third quarter of 2017. This transaction will serve as an entrance into the attractive Holmes County market for Farmers. Monitor has an excellent core deposit base and has been a solid earner with strong asset quality. This transaction will help Farmers continue to grow its market share, balance sheet and earnings. As of December 31, 2016, Monitor had total assets of $43.3 million, which included net loans of $22.3 million and deposits of $37.2 million. For the year ended December 31, 2016, Monitor’s return on average assets and return on average equity were 0.74% and 5.44%, respectively.

Kevin J. Helmick, President and CEO, stated, “ We are looking forward to close our fourth acquisition in the past two years, which further enhances Farmers’ brand and delivers long-term value for our shareholders. We remain focused on our strategic growth plan which has paved the way for the company to reach over $2 billion in assets in 2017. This growth enhances profitability by creating significant economies of scale and improved operational efficiencies. We continue to be encouraged by our organic loan growth, which has increased 11% during the past twelve months, and improvements in our level of noninterest income.”


2017 Second Quarter Financial Highlights

 

    Loan growth

Total loans were $1.51 billion at June 30, 2017, compared to $1.36 billion at June 30, 2016, representing an increase of 10.8%. The increase in loans is a direct result of Farmers’ focus on loan growth utilizing a talented lending and credit team, while adhering to a sound underwriting discipline. The increase in loans has occurred across each of the major loan categories. Loans now comprise 77.6% of the Bank’s average earning assets for the quarter ended June 30, 2017, an improvement compared to 76.2% for the same period in 2016. This improvement, along with the growth in earning assets, has resulted in an 11% increase in tax equated loan income in the second quarter of 2017 compared to the same quarter in 2016.

 

    Loan quality

Non-performing assets to total assets remain at a low level, currently at 0.32%. Early stage delinquencies also continue to remain at low levels, at $7.1 million, or 0.47% of total loans, at June 30, 2017. Net charge-offs for the current quarter were $523 thousand, compared to $660 thousand in the same quarter in 2016 and total net charge-offs as a percentage of average net loans outstanding is only 0.14% for the quarter ended June 30, 2017. 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, 2017 was 4.05%, a 1 basis point decrease from the quarter ended June 30, 2016. In comparing the first quarter of 2017 to the same period in 2016, asset yields increased 11 basis points, while the cost of interest-bearing liabilities increased 14 basis points. The net interest margin is impacted by the additional accretion as a result of the discounted loan portfolios acquired in the NBOH and Tri-State mergers, which increased the net interest margin by 2 and 9 basis points for the quarters ended June 30, 2017 and 2016, respectively.

 

    Noninterest income

Noninterest income increased 5.5% to $6.1 million for the quarter ended June 30, 2017 compared to $5.7 million in 2016. Gains on the sale of mortgage loans increased $351 thousand, or 65% in the current year’s quarter compared to the same quarter in 2016. Insurance agency commissions increased $379 thousand in comparing the same two quarters due mainly to the acquisition of the Bowers Group that closed on June 1, 2016. Debit card interchange fees increased $179 thousand or 27.3% in comparing the second quarter of 2017 to the same quarter in 2016. Other operating income is down $286 thousand in June 30, 2017 compared to the same quarter in 2016, mainly as a result of a $262 thousand gain on the sale of land that was recognized during the second quarter of 2016.

 

    Noninterest expenses

Farmers has remained committed to managing the level of noninterest expenses. Total noninterest expenses for the second quarter of 2017 increased to $15.8 million compared to $14.8 million in the same quarter in 2016, primarily as a result of an increase in salaries and employee benefits of $1.1 million, offset by a $156 thousand decrease in other operating expenses and a $120 thousand decrease in merger related costs. There were also $155 thousand of litigation settlement expense in the current quarter ended June 30, 2017 compared to none in the same quarter in 2016. It is important to note that annualized noninterest expenses measured as a percentage of quarterly average assets decreased from 3.13% in the second quarter of 2016 to 3.08% in the second quarter of 2017.

 

    Efficiency ratio

The efficiency ratio for the quarter ended June 30, 2017 improved to 60.8% compared to 62.6% for the same quarter in 2016. The main factors leading to this improvement were the increase in net interest income and noninterest income, the decrease in merger related costs, along with the stabilized level of noninterest expenses relative to average assets as explained in the preceding paragraphs.

2017 Outlook

Mr. Helmick added, “We are encouraged by the promising start to 2017 in our financial results. We will focus our energy on the seamless integration of our newly acquired bank and customers and 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 $2 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, return on average tangible assets, return on average tangible equity and net income excluding costs related to acquisition activities and litigation settlement expenses, 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, 2016, 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,
2017
    March
31, 2017
    Dec. 31,
2016
    Sept. 30,
2016
    June 30,
2016
    June 30,
2017
    June 30,
2016
    Percent
Change
 

Total interest income

   $ 20,042     $ 18,850     $ 18,469     $ 18,332     $ 17,950     $ 38,892     $ 35,697       9.0

Total interest expense

     1,669       1,319       1,178       1,139       1,061       2,988       2,061       45.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     18,373       17,531       17,291       17,193       16,889       35,904       33,636       6.7

Provision for loan losses

     950       1,050       990       1,110       990       2,000       1,770       13.0

Noninterest income

     6,055       5,887       6,076       6,485       5,737       11,942       10,683       11.8

Merger related costs

     104       62       19       31       224       166       513       -67.6

Other expense

     15,660       14,551       14,981       15,194       14,559       30,211       28,714       5.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     7,714       7,755       7,377       7,343       6,853       15,469       13,322       16.1

Income taxes

     2,004       1,972       2,014       1,967       1,833       3,976       3,504       13.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 5,710     $ 5,783     $ 5,363     $ 5,376     $ 5,020     $ 11,493     $ 9,818       17.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average shares outstanding

     27,067       27,054       27,048       27,048       26,965       27,061       26,951    

Basic and diluted earnings per share

     0.21       0.21       0.20       0.20       0.19       0.42       0.36    

Cash dividends

     1,353       1,353       1,082       1,082       1,083       2,707       2,160    

Cash dividends per share

     0.05       0.05       0.04       0.04       0.04       0.10       0.08    

Performance Ratios

                

Net Interest Margin (Annualized)

     4.05     4.01     3.95     3.97     4.06     4.03     4.07  

Efficiency Ratio (Tax equivalent basis)

     60.79     58.79     60.37     60.85     62.60     59.81     62.63  

Return on Average Assets (Annualized)

     1.11     1.17     1.08     1.10     1.06     1.14     1.05  

Return on Average Equity (Annualized)

     10.25     10.87     9.74     9.97     9.69     10.52     9.61  

Dividends to Net Income

     23.70     23.40     20.18     20.13     21.57     23.55     22.00  

Other Performance Ratios (Non-GAAP)

                

Return on Average Tangible Assets

     1.14     1.18     1.11     1.13     1.08     1.16     1.06  

Return on Average Tangible Equity

     12.77     13.54     12.34     12.73     12.22     13.10     12.10  

 

Consolidated Statements of Financial Condition

 

 

     
     June 30,
2017
     March 31,
2017
     Dec. 31,
2016
     Sept. 30,
2016
     June 30,
2016
 

Assets

              

Cash and cash equivalents

   $ 64,640      $ 61,251      $ 41,778      $ 67,372      $ 62,184  

Securities available for sale

     391,628        377,072        369,995        368,729        378,432  

Loans held for sale

     583        1,098        355        2,148        1,737  

Loans

     1,505,273        1,461,461        1,427,635        1,395,620        1,358,484  

Less allowance for loan losses

     11,746        11,319        10,852        10,518        9,720  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Loans

     1,493,527        1,450,142        1,416,783        1,385,102        1,348,764  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other assets

     135,286        136,924        137,202        137,657        134,002  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 2,085,664      $ 2,026,487      $ 1,966,113      $ 1,961,008      $ 1,925,119  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


Liabilities and Stockholders’ Equity               

Deposits

              

Noninterest-bearing

   $ 387,596      $ 374,399      $ 366,870      $ 352,441      $ 339,364  

Interest-bearing

     1,153,407        1,165,821        1,157,886        1,139,724        1,108,078  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

     1,541,003        1,540,220        1,524,756        1,492,165        1,447,442  

Other interest-bearing liabilities

     298,827        245,069        213,496        235,757        247,934  

Other liabilities

     19,147        23,136        14,645        17,649        17,252  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

     1,858,977        1,808,425        1,752,897        1,745,571        1,712,628  

Stockholders’ Equity

     226,687        218,062        213,216        215,437        212,491  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 2,085,664      $ 2,026,487      $ 1,966,113      $ 1,961,008      $ 1,925,119  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Period-end shares outstanding

     27,067        27,067        27,048        27,048        27,048  

Book value per share

   $ 8.38      $ 8.06      $ 7.88      $ 7.96      $ 7.86  

Tangible book value per share (Non-GAAP)*

     6.73        6.40        6.21        6.29        6.17  

 

* 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)

     11.79     11.75     11.69     11.67     11.61

Total Risk Based Capital Ratio (a)

     12.52     12.61     12.53     12.51     12.41

Tier 1 Risk Based Capital Ratio (a)

     11.79     11.89     11.83     11.81     11.75

Tier 1 Leverage Ratio (a)

     9.38     9.47     9.41     9.35     9.37

Equity to Asset Ratio

     10.87     10.76     10.84     10.99     11.04

Tangible Common Equity Ratio

     8.93     8.74     8.75     8.88     8.87

Net Loans to Assets

     71.61     71.56     72.06     70.63     70.06

Loans to Deposits

     97.68     94.89     93.63     93.53     93.85

Asset Quality

          

Non-performing loans

   $ 6,355     $ 6,553     $ 8,170     $ 8,003     $ 8,360  

Other Real Estate Owned

     236       318       482       506       572  

Non-performing assets

     6,591       6,871       8,652       8,509       8,932  

Loans 30 - 89 days delinquent

     7,052       8,258       12,747       10,986       11,371  

Charged-off loans

     725       943       841       562       820  

Recoveries

     202       360       185       250       160  

Net Charge-offs

     523       583       656       312       660  

Annualized Net Charge-offs to Average Net Loans Outstanding

     0.14     0.16     0.20     0.09     0.20

Allowance for Loan Losses to Total Loans

     0.78     0.77     0.76     0.75     0.72

Non-performing Loans to Total Loans

     0.42     0.45     0.57     0.57     0.62

Allowance to Non-performing Loans

     184.83     172.73     132.83     131.43     116.27

Non-performing Assets to Total Assets

     0.32     0.34     0.44     0.43     0.46

 

(a) June 30, 2017 ratio is estimated


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,  
     2017      2017      2016      2016      2016      2017      2016  

Stockholders’ Equity

   $ 226,687      $ 218,062      $ 213,216      $ 215,437      $ 212,491      $ 226,687      $ 212,491  

Less Goodwill and other intangibles

     44,425        44,789        45,154        45,299        45,718        44,425        45,718  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible Common Equity

   $ 182,262      $ 173,273      $ 168,062      $ 170,138      $ 166,773      $ 182,262      $ 166,773  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Stockholders’ Equity

     223,544        215,819        219,028        214,484        207,776        220,308        205,407  

Less Average Goodwill and other intangibles

     44,665        45,028        45,173        45,575        43,475        44,845        43,137  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Tangible Common Equity

   $ 178,879      $ 170,791      $ 173,855      $ 168,909      $ 164,301      $ 175,463      $ 162,270  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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,  
     2017      2017      2016      2016      2016      2017      2016  

Total Assets

   $ 2,085,664      $ 2,026,487      $ 1,966,113      $ 1,961,008      $ 1,925,119      $ 2,085,664      $ 1,925,119  

Less Goodwill and other intangibles

     44,425        44,789        45,154        45,299        45,718        44,425        45,718  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible Assets

   $ 2,041,239      $ 1,981,698      $ 1,920,959      $ 1,915,709      $ 1,879,401      $ 2,041,239      $ 1,879,401  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Assets

     2,055,758        2,001,084        1,977,589        1,949,204        1,897,068        2,025,939        1,889,308  

Less average Goodwill and other intangibles

     44,665        45,028        45,173        45,575        43,475        44,845        43,137  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average Tangible Assets

   $ 2,011,093      $ 1,956,056      $ 1,932,416      $ 1,903,629      $ 1,853,593      $ 1,981,094      $ 1,846,171  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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,  
     2017      2017      2016      2016      2016      2017      2016  

Income before income taxes - Reported

   $ 7,714      $ 7,755      $ 7,377      $ 7,343      $ 6,853      $ 15,469      $ 13,322  

Acquisition Costs

     104        62        19        31        224        166        513  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes - Adjusted

     7,818        7,817        7,396        7,374        7,077        15,635        13,835  

Income tax expense (b)

     2,014        1,987        2,018        1,973        1,899        4,001        3,645  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income - Adjusted

   $ 5,804      $ 5,830      $ 5,378      $ 5,401      $ 5,178      $ 11,634      $ 10,190  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Average shares outstanding

     27,067        27,054        27,048        27,048        26,965        27,061        26,951  

EPS excluding acquisition costs

   $ 0.21      $ 0.22      $ 0.20      $ 0.20      $ 0.19      $ 0.43      $ 0.38  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(b) The income tax expense change from actual income tax expense relates to the deductibility of certain acquisition costs

Reconciliation of Return on Average Assets and Average Equity, Excluding Acquisition Costs

 

                                   For the Six Months  
     For the Three Months Ended     Ended  
     June 30,     March 31,     Dec. 31,     Sept. 30,     June 30,     June 30,     June 30,  
     2017     2017     2016     2016     2016     2017     2016  

ROA excluding acquisition costs (c)

     1.13     1.17     1.09     1.11     1.09     1.15     1.08

ROE excluding acquisition costs (d)

     10.39     10.81     9.82     10.07     9.97     10.56     9.92

 

(c) Net income -adjusted divided by average assets
(d) Net income - adjusted divided by average equity


     For the Three Months Ended  
     June 30,     March 31,      Dec. 31,      Sept. 30,      June 30,  
End of Period Loan Balances    2017     2017      2016      2016      2016  

Commercial real estate

   $ 476,844     $ 456,917      $ 446,975      $ 426,657      $ 418,269  

Commercial

     215,676       208,913        204,771        207,228        201,796  

Residential real estate

     445,991       441,593        430,674        423,009        418,693  

Consumer

     220,454       216,648        212,836        205,466        192,232  

Agricultural loans

     142,687       133,868        128,981        129,959        124,551  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total, excluding net deferred loan costs

   $ 1,501,652     $ 1,457,939      $ 1,424,237      $ 1,392,319      $ 1,355,541  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
     For the Three Months Ended  
     June 30,     March 31,      Dec. 31,      Sept. 30,      June 30,  
Noninterest Income    2017     2017      2016      2016      2016  

Service charges on deposit accounts

   $ 989     $ 951      $ 1,031      $ 1,057      $ 987  

Bank owned life insurance income

     191       201        208        194        201  

Trust fees

     1,523       1,678        1,482        1,693        1,564  

Insurance agency commissions

     672       674        559        569        293  

Security gains

     (14     13        1        31        41  

Retirement plan consulting fees

     399       513        444        561        496  

Investment commissions

     253       222        310        308        356  

Net gains on sale of loans

     891       607        838        1,063        540  

Debit card and EFT fees

     836       653        722        656        657  

Other operating income

     315       375        481        353        602  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total Noninterest Income

   $ 6,055     $ 5,887      $ 6,076      $ 6,485      $ 5,737  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
     For the Three Months Ended  
     June 30,     March 31,      Dec. 31,      Sept. 30,      June 30,  
Noninterest Expense    2017     2017      2016      2016      2016  

Salaries and employee benefits

   $ 8,853     $ 8,287      $ 8,248      $ 8,366      $ 7,740  

Occupancy and equipment

     1,631       1,587        1,748        1,587        1,616  

State and local taxes

     424       417        363        394        394  

Professional fees

     775       747        803        671        754  

Merger related costs

     104       62        19        31        224  

Litigation settlement expense

     155       0        0        0        0  

Advertising

     317       244        241        383        363  

FDIC insurance

     234       235        199        287        286  

Intangible amortization

     365       365        368        421        335  

Core processing charges

     717       655        743        738        580  

Telephone and data

     242       241        275        206        233  

Other operating expenses

     1,947       1,773        1,993        2,141        2,258  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total Noninterest Expense

   $ 15,764     $ 14,613      $ 15,000      $ 15,225      $ 14,783  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 


Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

 

     Three Months Ended     Three Months Ended  
     June 30, 2017     June 30, 2016  
     AVERAGE                   AVERAGE                
     BALANCE      INTEREST (1)      RATE (1)     BALANCE      INTEREST (1)      RATE (1)  

EARNING ASSETS

                

Loans (2)

   $ 1,472,575      $ 17,572        4.79   $ 1,320,777      $ 15,787        4.79

Taxable securities

     216,414        1,265        2.34       246,590        1,288        2.10  

Tax-exempt securities (2)

     164,369        1,791        4.37       129,772        1,377        4.26  

Equity securities

     10,216        123        4.83       9,637        113        4.70  

Federal funds sold and other

     33,053        82        1.00       26,137        27        0.41  
  

 

 

    

 

 

      

 

 

    

 

 

    

Total earning assets

     1,896,627        20,833        4.41       1,732,913        18,592        4.30  

Nonearning assets

     159,131             164,155        
  

 

 

         

 

 

       

Total assets

   $ 2,055,758           $ 1,897,068        
  

 

 

         

 

 

       

INTEREST-BEARING LIABILITIES

                

Time deposits

   $ 234,952      $ 652        1.11   $ 249,491      $ 472        0.76

Savings deposits

     526,398        183        0.14       540,251        159        0.12  

Demand deposits

     399,413        281        0.28       323,869        162        0.20  

Short term borrowings

     271,313        501        0.74       208,660        144        0.28  

Long term borrowings

     9,705        52        2.15       20,746        124        2.40  
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing liabilities

   $ 1,441,781        1,669        0.46     $ 1,343,017        1,061        0.32  
          

 

 

       

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY

                

Demand deposits

     378,499             334,007        

Other liabilities

     11,934             12,268        

Stockholders’ equity

     223,544             207,776        
  

 

 

         

 

 

       

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 2,055,758           $ 1,897,068        
  

 

 

    

 

 

      

 

 

    

 

 

    

Net interest income and interest rate spread

      $ 19,164        3.95      $ 17,531        3.98
     

 

 

    

 

 

      

 

 

    

 

 

 

Net interest margin

           4.05           4.06
        

 

 

         

 

 

 

 

 

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2017, adjustments of $170 thousand and $621 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2016, adjustments of $164 thousand and $478 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 35%, less disallowances.


     Six Months Ended     Six Months Ended  
     June 30, 2017     June 30, 2016  
     AVERAGE                   AVERAGE                
     BALANCE      INTEREST (1)      RATE (1)     BALANCE      INTEREST (1)      RATE (1)  

EARNING ASSETS

                

Loans (2)

   $ 1,454,599      $ 34,210        4.74   $ 1,306,617      $ 31,217        4.80

Taxable securities

     214,076        2,383        2.24       253,635        2,725        2.16  

Tax-exempt securities

     158,674        3,430        4.36       129,149        2,733        4.26  

Equity securities (2)

     10,071        238        4.77       9,599        226        4.73  

Federal funds sold and other

     33,637        145        0.87       27,340        65        0.48  
  

 

 

    

 

 

      

 

 

    

 

 

    

Total earning assets

     1,871,057        40,406        4.35       1,726,340        36,966        4.31  

Nonearning assets

     154,882             162,968        
  

 

 

         

 

 

       

Total assets

   $ 2,025,939           $ 1,889,308        
  

 

 

         

 

 

       

INTEREST-BEARING LIABILITIES

                

Time deposits

   $ 235,036      $ 1,152        0.99   $ 246,219      $ 881        0.72

Savings deposits

     523,257        353        0.14       536,543        310        0.12  

Demand deposits

     392,049        525        0.27       320,691        309        0.19  

Short term borrowings

     260,469        828        0.64       212,068        319        0.30  

Long term borrowings

     10,991        130        2.39       21,384        242        2.28  
  

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing liabilities

   $ 1,421,802        2,988        0.42     $ 1,336,905        2,061        0.31  

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY

                

Demand deposits

   $ 370,790           $ 334,296        

Other liabilities

     13,039             12,700        

Stockholders’ equity

     220,308             205,407        
  

 

 

         

 

 

       

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 2,025,939           $ 1,889,308        
  

 

 

    

 

 

      

 

 

    

 

 

    

Net interest income and interest rate spread

      $ 37,418        3.93      $ 34,905        4.00
     

 

 

    

 

 

      

 

 

    

 

 

 

Net interest margin

           4.03           4.07
        

 

 

         

 

 

 

 

 

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2017, adjustments of $325 thousand and $1.2 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2016, adjustments of $324 thousand and $945 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 35%, less disallowances.