Farmers National Banc Corp. Reports 2022 Second Quarter Results

Jul 27th, 2022 12:00 EST

CANFIELD, Ohio--(BUSINESS WIRE)--Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB) today reported second quarter net income of $16.0 million for the three months ended June 30, 2022, compared to $15.6 million for the three months ended June 30, 2021. Diluted earnings per share were $0.47 for the second quarter of 2022 versus $0.55 for the second quarter of 2021. The results for the second quarter of 2022 included pretax items of $674,000 for merger related costs, security losses of $60,000, and a gain of $92,000 on the sale of assets. Excluding these items (non-GAAP), net income for the quarter ended June 30, 2022, would have been $16.5 million, or $0.49 per diluted share.

Kevin J. Helmick, President and CEO commented, “Our results for the second quarter were very solid and we are particularly pleased with the growth of our loan portfolio. Our lending teams have been working hard over the past several quarters and we are excited to see strong organic loan growth return to our balance sheet.”

On March 23, 2022, Farmers entered into an agreement and plan of merger (the “Merger Agreement”) with Emclaire Financial Corp. (NASDAQ: EMCF), a Pennsylvania corporation (“Emclaire”), and the parent company of The Farmers National Bank of Emlenton (“Emlenton”). On July 20, 2022, the transaction received the approval of Emclaire’s shareholders. The transaction is expected to be completed after the satisfaction or waiver of the remaining closing conditions set forth in the Merger Agreement, including the receipt of all required regulatory approvals. Emclaire operates 19 branches in ten counties throughout western Pennsylvania. As of June 30, 2022, Emclaire had total assets of $1.0 billion, gross loans of $810.7 million, deposits of $937.6 million and equity of $80.2 million.

Balance Sheet

Total assets were $4.11 billion at June 30, 2022 compared to $4.21 billion at March 31, 2022 and $4.14 billion at December 31, 2021. Gross loans (excluding loans held for sale and PPP loans) grew from $2.28 billion at March 31, 2022 to $2.37 billion at June 30, 2022, or 15.7% on an annualized basis. The quarter exhibited broad based strength as the Company saw growth across every major loan category exclusive of PPP loans. At June 30, 2022, the Company has $2.5 million of PPP loans before deferred fees still to be forgiven, and $72,000 in net deferred fees associated with these loans yet to be recognized into income.

Available for sale securities decreased to $1.36 billion at June 30, 2022 compared to $1.43 billion at December 31, 2021. The increase in U.S. treasury rates during the first half of the year resulted in a gross unrealized loss of $206.1 million at June 30, 2022, compared to a gross unrealized loss of $100.7 million at March 31, 2022 and a gross unrealized gain of $11.7 million at December 31, 2021. Excluding the gross unrealized gains and losses, the portfolio has increased by $3.5 million from March 31, 2022 to June 30, 2022 and by $151.9 million from December 31, 2021 to June 30, 2022 as the Company added securities to utilize excess cash and take advantage of the higher interest rates. The volatility in the bond market is expected to continue in 2022, which may result in increased volatility in the fair value of the Company’s available for sale securities.

Deposits declined $68.3 million from $3.69 billion at March 31, 2022, to $3.63 billion at June 30, 2022 but are still above the $3.55 billion in deposits reported at December 31, 2021. The seasonality of municipal deposits was responsible for a large portion of the change in deposit balances between March 31, 2022 and June 30, 2022.

Total stockholders’ equity decreased to $321.4 million at June 30, 2022, compared to $393.9 million at March 31, 2022 and $472.4 million at December 31, 2021. The decrease in stockholders’ equity has primarily been due to declines in accumulated other comprehensive income associated with the rapid increase in U.S. treasury rates in 2022 which has had a negative effect on the value of the Company’s available for sale securities, and in turn, the dollar amount that flows through accumulated other comprehensive income. This also continues to have a negative impact on the Company’s tangible book value per share (non-GAAP), which was $6.46 at June 30, 2022 compared to $8.58 at March 31, 2022 and $10.91 at December 31, 2021.

Credit Quality

The Company recorded a provision for credit losses and unfunded commitments of $616,000 for the second quarter of 2022 compared to $50,000 for the second quarter of 2021. Growth in loans was the primary reason for the increase in the provision expense. Net charge-offs totaled $42,000 in the second quarter of 2022 compared to $179,000 in the second quarter of 2021. Net charge-offs as a percentage of average net loans was 1 basis point for the quarter ended June 30, 2022, compared to 4 basis points for the second quarter of 2021. The allowance for credit losses to total loans declined to 1.16% at June 30, 2022, compared to 1.17% and 1.26% at March 31, 2022 and December 31, 2021, respectively.

The Company’s ratio of non-performing loans to loans continues to decline. At June 30, 2022 the ratio was 0.59% compared to 0.61% at March 31, 2022 and 0.69% at December 31, 2021. Early stage delinquencies, defined as 30-89 days delinquent, were $8.7 million, or 0.37% of total loans, at June 30, 2022 compared to $8.9 million, or 0.38% of total loans at December 31, 2021.

Net Interest Income

Net interest income increased $5.2 million, or 19.7%, for the second quarter of 2022 compared to the same period in 2021 due to the acquisition of Cortland Bancorp (“Cortland”) offset by a reduction in PPP interest and fees. Interest and fees associated with PPP loans totaled $2.1 million in the second quarter of 2021 compared to $634,000 in the second quarter of 2022. The net interest margin was 3.25% in the second quarter of 2022 compared to 3.27% for the first quarter of 2022 and 3.52% for the second quarter of 2021. The decline in net interest margin in the second quarter of 2022 compared to the second quarter of 2021 was driven by the lower PPP income in 2022 compared to 2021 and a greater percentage of earning assets invested in securities rather than loans. Excluding the impact of acquisition marks and related accretion and PPP interest and fees, the net interest margin (non-GAAP) for the second quarter of 2022 was 3.16% compared to 3.12% for the first quarter of 2022 and 3.36% for the second quarter of 2021.

Noninterest Income

The Company’s noninterest income decreased $31,000, to $9.5 million for the second quarter of 2022 compared to the second quarter of 2021. Net gains on the sale of loans decreased to $365,000 in the second quarter of 2022 compared to $2.2 million in the second quarter of 2021. This drop was caused by lower mortgage production compared to the prior year, compressed margins and a lower saleable mix due to the increase in interest rates in 2022.

For the second quarter of 2022, service charges on deposit accounts were $1.1 million compared to $790,000 for the second quarter of 2021 primarily due to the acquisition of Cortland and growth. BOLI income likewise increased due to the acquisition to $405,000 in the second quarter of 2022 from $300,000 for the second quarter of 2021. Debit card and EFT fees increased to $1.5 million in the second quarter of 2022 compared to $1.3 million in the second quarter of 2021. The increase was due to the acquisition and increased volumes. Other noninterest income increased by $1.0 million in the second quarter of 2022 compared to the second quarter of 2021. The increase was due to the acquisition of Cortland and increased income related to investments in SBIC and SBA funds.

Noninterest Expense

Total noninterest expense was $21.5 million in the second quarter of 2022 compared with $17.1 million for the second quarter ended June 30, 2021. The year-over-year increase was primarily due to the acquisition of Cortland, continued higher healthcare benefit costs and more merger related costs in the second quarter of 2022 compared to the same quarter in 2021.

About Farmers National Banc Corp.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $4.1 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 46 banking locations in Mahoning, Trumbull, Columbiana, Portage, 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, 2022 are $2.9 billion. Farmers National Insurance, LLC, a wholly-owned subsidiary of The Farmers National Bank of Canfield, offers 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, net interest margin excluding acquisition marks and related accretion and PPP interest and fees, efficiency ratio less one-time expenses, 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 Emclaire and Emlenton with Farmers in accordance with expectations; deviations from performance expectations related to Emclaire and Emlenton; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (SEC) and available on Farmers’ website (www.farmersbankgroup.com) and on the SEC’s website (www.sec.gov). Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management’s views as of any subsequent date. Farmers does not undertake any obligation to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

Farmers National Banc Corp. and Subsidiaries
Consolidated Financial Highlights
(Amounts in thousands, except per share results) Unaudited
 
 
Consolidated Statements of Income For the Three Months Ended For the Six Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30, Percent

 

2022

2022

2021

2021

2021

2022

2021

Change

Total interest income

$

34,286

 

$

33,279

 

$

31,685

 

$

28,375

 

$

28,609

 

$

67,565

 

$

56,399

 

19.8

%

Total interest expense

 

2,575

 

 

2,037

 

 

1,986

 

 

1,841

 

 

2,119

 

 

4,612

 

 

4,642

 

-0.6

%

Net interest income

 

31,711

 

 

31,242

 

 

29,699

 

 

26,534

 

 

26,490

 

 

62,953

 

 

51,757

 

21.6

%

Provision (credit) for credit losses

 

616

 

 

(358

)

 

5,366

 

 

(948

)

 

50

 

 

258

 

 

475

 

-45.7

%

Noninterest income

 

9,477

 

 

17,698

 

 

9,538

 

 

9,015

 

 

9,508

 

 

27,175

 

 

19,640

 

38.4

%

Acquisition related costs

 

674

 

 

1,940

 

 

6,521

 

 

472

 

 

104

 

 

2,614

 

 

116

 

2153.4

%

Other expense

 

20,787

 

 

28,516

 

 

21,140

 

 

16,656

 

 

16,966

 

 

49,303

 

 

34,271

 

43.9

%

Income before income taxes

 

19,111

 

 

18,842

 

 

6,210

 

 

19,369

 

 

18,878

 

 

37,953

 

 

36,535

 

3.9

%

Income taxes

 

3,160

 

 

2,998

 

 

508

 

 

3,358

 

 

3,303

 

 

6,158

 

 

6,404

 

-3.8

%

Net income

$

15,951

 

$

15,844

 

$

5,702

 

$

16,011

 

$

15,575

 

$

31,795

 

$

30,131

 

5.5

%

 
Average diluted shares outstanding

 

33,923

 

 

33,937

 

 

32,074

 

 

28,361

 

 

28,353

 

 

33,927

 

 

28,336

 

Basic earnings per share

 

0.47

 

 

0.47

 

 

0.18

 

 

0.57

 

 

0.55

 

 

0.94

 

 

1.07

 

Diluted earnings per share

 

0.47

 

 

0.47

 

 

0.18

 

 

0.56

 

 

0.55

 

 

0.94

 

 

1.06

 

Cash dividends per share

 

0.16

 

 

0.16

 

 

0.14

 

 

0.11

 

 

0.11

 

 

0.32

 

 

0.22

 

Performance Ratios
Net Interest Margin (Annualized)

 

3.25

%

 

3.27

%

 

3.33

%

 

3.47

%

 

3.52

%

 

3.25

%

 

3.53

%

Efficiency Ratio (Tax equivalent basis)

 

49.95

%

 

61.36

%

 

63.61

%

 

46.04

%

 

45.70

%

 

55.56

%

 

47.17

%

Return on Average Assets (Annualized)

 

1.54

%

 

1.52

%

 

0.58

%

 

1.92

%

 

1.90

%

 

1.53

%

 

1.89

%

Return on Average Equity (Annualized)

 

17.97

%

 

13.89

%

 

5.24

%

 

16.93

%

 

17.17

%

 

15.67

%

 

17.15

%

Dividends to Net Income

 

33.95

%

 

34.18

%

 

82.99

%

 

19.41

%

 

19.95

%

 

34.07

%

 

20.62

%

Other Performance Ratios (Non-GAAP)
Return on Average Tangible Assets

 

1.57

%

 

1.55

%

 

0.60

%

 

1.97

%

 

1.93

%

 

1.56

%

 

1.90

%

Return on Average Tangible Equity

 

25.23

%

 

17.92

%

 

6.57

%

 

19.63

%

 

19.81

%

 

20.96

%

 

19.76

%

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

2022

2022

2021

2021

2021

Assets
Cash and cash equivalents

$

65,458

 

$

137,627

 

$

112,790

 

$

79,808

 

$

149,357

 

Securities available for sale

 

1,361,682

 

 

1,463,626

 

 

1,427,677

 

 

1,183,361

 

 

996,271

 

Other investments

 

34,451

 

 

34,019

 

 

30,459

 

 

19,041

 

 

20,573

 

 
Loans held for sale

 

2,714

 

 

1,904

 

 

4,545

 

 

2,628

 

 

1,922

 

Loans

 

2,374,485

 

 

2,304,971

 

 

2,331,082

 

 

1,894,216

 

 

1,959,865

 

Less allowance for credit losses

 

27,454

 

 

27,015

 

 

29,386

 

 

23,136

 

 

24,806

 

Net Loans

 

2,347,031

 

 

2,277,956

 

 

2,301,696

 

 

1,871,080

 

 

1,935,059

 

 
Other assets

 

303,028

 

 

290,723

 

 

265,582

 

 

161,129

 

 

156,876

 

Total Assets

$

4,114,364

 

$

4,205,855

 

$

4,142,749

 

$

3,317,047

 

$

3,260,058

 

 
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing

$

983,713

 

$

963,143

 

$

916,237

 

$

675,938

 

$

663,640

 

Interest-bearing

 

2,641,825

 

 

2,730,668

 

 

2,630,998

 

 

2,190,475

 

 

2,115,183

 

Total deposits

 

3,625,538

 

 

3,693,811

 

 

3,547,235

 

 

2,866,413

 

 

2,778,823

 

Other interest-bearing liabilities

 

137,985

 

 

87,872

 

 

87,758

 

 

49,649

 

 

78,369

 

Other liabilities

 

29,392

 

 

30,286

 

 

35,324

 

 

23,461

 

 

35,958

 

Total liabilities

 

3,792,915

 

 

3,811,969

 

 

3,670,317

 

 

2,939,523

 

 

2,893,150

 

Stockholders' Equity

 

321,449

 

 

393,886

 

 

472,432

 

 

377,524

 

 

366,908

 

Total Liabilities
and Stockholders' Equity

$

4,114,364

 

$

4,205,855

 

$

4,142,749

 

$

3,317,047

 

$

3,260,058

 

 
Period-end shares outstanding

 

34,032

 

 

34,008

 

 

33,898

 

 

28,322

 

 

28,322

 

Book value per share

$

9.45

 

$

11.58

 

$

13.94

 

$

13.33

 

$

12.95

 

Tangible book value per share (Non-GAAP)*

 

6.46

 

 

8.58

 

 

10.91

 

 

11.61

 

 

11.23

 

 
* Tangible book value per share is calculated by dividing tangible common equity by outstanding shares
 
Capital and Liquidity
Common Equity Tier 1 Capital Ratio (a)

 

13.35

%

 

13.31

%

 

13.16

%

 

14.58

%

 

13.95

%

Total Risk Based Capital Ratio (a)

 

17.54

%

 

17.59

%

 

17.60

%

 

16.25

%

 

15.54

%

Tier 1 Risk Based Capital Ratio (a)

 

13.98

%

 

13.95

%

 

13.82

%

 

15.18

%

 

14.39

%

Tier 1 Leverage Ratio (a)

 

9.56

%

 

9.56

%

 

10.12

%

 

10.17

%

 

9.70

%

Equity to Asset Ratio

 

7.81

%

 

9.37

%

 

11.40

%

 

11.38

%

 

11.25

%

Tangible Common Equity Ratio (b)

 

5.47

%

 

7.11

%

 

9.15

%

 

10.06

%

 

9.90

%

Net Loans to Assets

 

57.04

%

 

54.16

%

 

55.56

%

 

56.41

%

 

59.36

%

Loans to Deposits

 

65.49

%

 

62.40

%

 

65.72

%

 

66.08

%

 

70.53

%

Asset Quality
Non-performing loans

$

14,107

 

$

14,046

 

$

16,195

 

$

14,744

 

$

13,873

 

Other Real Estate Owned

 

0

 

 

0

 

 

0

 

 

0

 

 

30

 

Non-performing assets

 

14,107

 

 

14,046

 

 

16,195

 

 

14,744

 

 

13,903

 

Loans 30 - 89 days delinquent

 

8,716

 

 

7,304

 

 

8,891

 

 

6,944

 

 

7,606

 

Charged-off loans

 

177

 

 

1,590

 

 

470

 

 

411

 

 

502

 

Recoveries

 

135

 

 

149

 

 

157

 

 

125

 

 

323

 

Net Charge-offs

 

42

 

 

1,441

 

 

313

 

 

286

 

 

179

 

Annualized Net Charge-offs to
Average Net Loans Outstanding

 

0.01

%

 

0.25

%

 

0.06

%

 

0.06

%

 

0.04

%

Allowance for Credit Losses to Total Loans

 

1.16

%

 

1.17

%

 

1.26

%

 

1.22

%

 

1.27

%

Non-performing Loans to Total Loans

 

0.59

%

 

0.61

%

 

0.69

%

 

0.78

%

 

0.71

%

Allowance to Non-performing Loans

 

194.61

%

 

192.33

%

 

181.45

%

 

156.92

%

 

178.81

%

Non-performing Assets to Total Assets

 

0.34

%

 

0.33

%

 

0.39

%

 

0.44

%

 

0.43

%

 
(a) June 30, 2022 ratio is estimated
(b) This is a non-GAAP financial measure. A reconciliation to GAAP is shown below
 
 
For the Three Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30,
End of Period Loan Balances

2022

2022

2021

2021

2021

Commercial real estate

$

1,040,243

 

$

1,000,972

 

$

1,011,891

 

$

690,407

 

$

704,809

 

Commercial

 

285,981

 

 

298,903

 

 

313,836

 

 

302,356

 

 

351,261

 

Residential real estate

 

464,489

 

 

455,501

 

 

453,635

 

 

376,901

 

 

383,187

 

HELOC

 

129,392

 

 

128,221

 

 

127,433

 

 

106,750

 

 

107,153

 

Consumer

 

218,219

 

 

192,586

 

 

189,522

 

 

189,497

 

 

190,064

 

Agricultural loans

 

230,477

 

 

224,845

 

 

232,365

 

 

226,896

 

 

223,427

 

Total, excluding net deferred loan costs

$

2,368,801

 

$

2,301,028

 

$

2,328,682

 

$

1,892,807

 

$

1,959,901

 

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

2022

2022

2021

2021

2021

2022

2021

Service charges on deposit accounts

$

1,139

 

$

1,145

 

$

1,138

 

$

924

 

$

790

 

$

2,284

 

$

1,598

 

Bank owned life insurance income, including death benefits

 

405

 

 

409

 

 

414

 

 

340

 

 

300

 

 

814

 

 

584

 

Trust fees

 

2,376

 

 

2,519

 

 

2,509

 

 

2,335

 

 

2,358

 

 

4,895

 

 

4,594

 

Insurance agency commissions

 

1,086

 

 

1,047

 

 

706

 

 

799

 

 

948

 

 

2,133

 

 

1,951

 

Security gains (losses), including fair value changes for equity securities

 

(60

)

 

(11

)

 

25

 

 

459

 

 

32

 

 

(71

)

 

520

 

Retirement plan consulting fees

 

323

 

 

397

 

 

378

 

 

334

 

 

389

 

 

720

 

 

709

 

Investment commissions

 

557

 

 

694

 

 

611

 

 

638

 

 

523

 

 

1,251

 

 

1,027

 

Net gains on sale of loans

 

365

 

 

1,129

 

 

1,728

 

 

1,466

 

 

2,191

 

 

1,494

 

 

5,091

 

Other mortgage banking fee income (loss), net

 

39

 

 

60

 

 

2

 

 

32

 

 

(55

)

 

99

 

 

(170

)

Debit card and EFT fees

 

1,528

 

 

1,416

 

 

1,424

 

 

1,227

 

 

1,322

 

 

2,944

 

 

2,493

 

Other noninterest income

 

1,719

 

 

8,893

 

 

603

 

 

461

 

 

710

 

 

10,612

 

 

1,243

 

Total Noninterest Income

$

9,477

 

$

17,698

 

$

9,538

 

$

9,015

 

$

9,508

 

$

27,175

 

$

19,640

 

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

2022

2022

2021

2021

2021

2022

2021

 

Salaries and employee benefits

$

11,073

 

$

11,831

 

$

10,230

 

$

9,321

 

$

9,866

 

$

22,904

 

$

19,842

 

Occupancy and equipment

 

2,918

 

 

2,680

 

 

2,422

 

 

1,899

 

 

1,890

 

 

5,598

 

 

4,165

 

State and local taxes

 

697

 

 

678

 

 

620

 

 

552

 

 

551

 

 

1,375

 

 

1,105

 

Professional fees

 

1,056

 

 

3,135

 

 

1,296

 

 

1,009

 

 

830

 

 

4,191

 

 

1,886

 

Merger related costs

 

674

 

 

1,940

 

 

6,521

 

 

472

 

 

104

 

 

2,614

 

 

116

 

Advertising

 

487

 

 

392

 

 

776

 

 

466

 

 

357

 

 

879

 

 

617

 

FDIC insurance

 

282

 

 

267

 

 

152

 

 

140

 

 

120

 

 

549

 

 

290

 

Intangible amortization

 

419

 

 

420

 

 

414

 

 

316

 

 

316

 

 

839

 

 

632

 

Core processing charges

 

1,123

 

 

745

 

 

880

 

 

860

 

 

831

 

 

1,868

 

 

1,458

 

Other noninterest expenses

 

2,732

 

 

8,368

 

 

4,350

 

 

2,093

 

 

2,205

 

 

11,100

 

 

4,276

 

Total Noninterest Expense

$

21,461

 

$

30,456

 

$

27,661

 

$

17,128

 

$

17,070

 

$

51,917

 

$

34,387

 

 
Average Balance Sheets and Related Yields and Rates
(Dollar Amounts in Thousands)
 
Three Months Ended Three Months Ended
June 30, 2022 June 30, 2021
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST (1) RATE (1) BALANCE INTEREST (1) RATE (1)
EARNING ASSETS
Loans (2)

$

2,337,251

$

25,792

4.41

%

$

2,005,151

$

23,669

4.73

%

Taxable securities

 

1,100,538

 

5,223

1.90

 

 

512,779

 

2,511

1.96

 

Tax-exempt securities (2)

 

474,034

 

3,832

3.23

 

 

340,539

 

2,952

3.48

 

Other investments

 

34,030

 

216

2.54

 

 

14,666

 

121

3.31

 

Federal funds sold and other

 

69,532

 

95

0.55

 

 

228,495

 

58

0.10

 

Total earning assets

 

4,015,385

 

35,158

3.50

 

 

3,101,630

 

29,311

3.79

 

Nonearning assets

 

140,334

 

178,686

Total assets

$

4,155,719

$

3,280,316

INTEREST-BEARING LIABILITIES
Time deposits

$

354,692

$

552

0.62

%

$

392,663

$

1,008

1.03

%

Brokered time deposits

 

45,767

 

49

0.43

 

 

15,429

 

29

0.75

 

Savings deposits

 

837,726

 

141

0.07

 

 

516,428

 

165

0.13

 

Demand deposits - interest bearing

 

1,430,273

 

909

0.25

 

 

1,226,894

 

627

0.20

 

Short term borrowings

 

42,527

 

97

0.91

 

 

4,674

 

3

0.26

 

Long term borrowings

 

87,914

 

827

3.76

 

 

74,496

 

287

1.55

 

Total interest-bearing liabilities

$

2,798,899

 

2,575

0.37

 

$

2,230,584

 

2,119

0.38

 

NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Demand deposits - noninterest bearing

 

972,174

 

666,053

Other liabilities

 

29,665

 

19,926

Stockholders' equity

 

354,981

 

363,753

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY

$

4,155,719

$

3,280,316

Net interest income and interest rate spread

$

32,583

3.13

%

$

27,192

3.41

%

Net interest margin

3.25

%

3.52

%

 
(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2022, adjustments of $78 thousand and $794 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2021, adjustments of $92 thousand and $610 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, 2022 June 30, 2021
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST (1) RATE (1) BALANCE INTEREST (1) RATE (1)
EARNING ASSETS
Loans (2)

$

2,326,392

$

51,438

4.42

%

$

2,029,901

$

47,569

4.73

%

Taxable securities

 

1,054,506

 

9,810

1.86

 

 

421,847

 

4,230

2.02

 

Tax-exempt securities (2)

 

467,947

 

7,559

3.23

 

 

311,453

 

5,565

3.60

 

Other investments

 

32,584

 

346

2.12

 

 

14,753

 

242

3.31

 

Federal funds sold and other

 

93,591

 

143

0.31

 

 

257,746

 

129

0.10

 

Total earning assets

 

3,975,020

 

69,296

3.49

 

 

3,035,700

 

57,735

3.84

 

Nonearning assets

 

192,085

 

182,672

Total assets

$

4,167,105

$

3,218,372

INTEREST-BEARING LIABILITIES
Time deposits

$

366,617

$

1,196

0.65

%

$

416,429

$

2,263

1.10

%

Brokered time deposits

 

30,745

 

64

0.42

 

 

23,669

 

75

0.64

 

Savings deposits

 

840,533

 

308

0.07

 

 

506,188

 

358

0.14

 

Demand deposits - interest bearing

 

1,420,957

 

1,327

0.19

 

 

1,155,642

 

1,359

0.24

 

Short term borrowings

 

22,486

 

98

0.87

 

 

3,735

 

7

0.38

 

Long term borrowings

 

87,856

 

1,619

3.69

 

 

75,248

 

580

1.55

 

Total interest-bearing liabilities

$

2,769,194

 

4,612

0.33

 

$

2,180,911

 

4,642

0.43

 

NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Demand deposits - noninterest bearing

$

964,380

$

661,550

Other liabilities

 

27,842

 

21,577

Stockholders' equity

 

405,689

 

354,334

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY

$

4,167,105

$

3,218,372

Net interest income and interest rate spread

$

64,684

3.16

%

$

53,093

3.41

%

Net interest margin

3.25

%

3.53

%

 
(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2022, adjustments of $162 thousand and $1.6 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2021, adjustments of $187 thousand and $1.1 million, 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.
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,

 

2022

2022

2021

2021

2021

2022

2021

Total Assets

$

4,114,364

 

$

4,205,855

 

$

4,142,749

 

$

3,317,047

 

$

3,260,058

 

$

4,114,364

 

$

3,260,058

 

Less Goodwill and other intangibles

 

101,767

 

 

102,187

 

 

102,606

 

 

48,670

 

 

48,985

 

 

101,767

 

 

48,985

 

Tangible Assets

$

4,012,597

 

$

4,103,668

 

$

4,040,143

 

$

3,268,377

 

$

3,211,073

 

$

4,012,597

 

$

3,211,073

 

Average Assets

 

4,155,719

 

 

4,178,618

 

 

3,879,901

 

 

3,304,708

 

 

3,280,316

 

 

4,167,105

 

 

3,218,372

 

Less average Goodwill and other intangibles

 

102,042

 

 

102,462

 

 

84,580

 

 

48,879

 

 

49,193

 

 

102,251

 

 

49,350

 

Average Tangible Assets

$

4,053,677

 

$

4,076,156

 

$

3,795,321

 

$

3,255,829

 

$

3,231,123

 

$

4,064,854

 

$

3,169,022

 

 
 
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,

 

2022

2022

2021

2021

2021

2022

2021

Stockholders' Equity

$

321,449

 

$

393,886

 

$

472,432

 

$

377,524

 

$

366,908

 

$

321,449

 

$

366,908

 

Less Goodwill and other intangibles

 

101,767

 

 

102,187

 

 

102,606

 

 

48,670

 

 

48,985

 

 

101,767

 

 

48,985

 

Tangible Common Equity

$

219,682

 

$

291,699

 

$

369,826

 

$

328,854

 

$

317,923

 

$

219,682

 

$

317,923

 

Average Stockholders' Equity

 

354,981

 

 

456,206

 

 

431,709

 

 

375,208

 

 

363,753

 

 

405,689

 

 

354,334

 

Less average Goodwill and other intangibles

 

102,042

 

 

102,462

 

 

84,580

 

 

48,879

 

 

49,193

 

 

102,251

 

 

49,350

 

Average Tangible Common Equity

$

252,939

 

$

353,744

 

$

347,129

 

$

326,329

 

$

314,560

 

$

303,438

 

$

304,984

 

 
 
Reconciliation of Net Income, Less Merger and Certain Items
For the Three Months Ended For the Six Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,

 

2022

2022

2021

2021

2021

2022

2021

Net income

$

15,951

 

$

15,844

 

$

5,702

 

$

16,011

 

$

15,575

 

$

31,795

 

$

30,131

 

Acquisition related costs - after tax

 

564

 

 

1,540

 

 

5,232

 

 

468

 

 

83

 

 

2,104

 

 

92

 

Acquisition related provision - after tax

 

0

 

 

0

 

 

3,846

 

 

0

 

 

0

 

 

0

 

 

0

 

Lawsuit settlement income - after tax

 

0

 

 

(6,616

)

 

0

 

 

0

 

 

0

 

 

(6,616

)

 

0

 

Lawsuit settlement contingent legal expense - after tax

 

0

 

 

1,639

 

 

0

 

 

0

 

 

0

 

 

1,639

 

 

0

 

Charitable donation - after tax

 

0

 

 

4,740

 

 

0

 

 

0

 

 

0

 

 

4,740

 

 

0

 

FHLB prepayment penalties - after tax

 

0

 

 

0

 

 

1,425

 

 

257

 

 

0

 

 

0

 

 

0

 

Net loss (gain) on asset/security sales - after tax

 

(25

)

 

97

 

 

134

 

 

(362

)

 

(26

)

 

72

 

 

(370

)

Gain on sale of credit card portfolio - after tax

 

0

 

 

0

 

 

(189

)

 

0

 

 

0

 

 

0

 

 

0

 

Net income - Adjusted

$

16,490

 

$

17,244

 

$

16,150

 

$

16,374

 

$

15,632

 

$

33,734

 

$

29,853

 

Diluted EPS excluding merger and one-time items

$

0.49

 

$

0.51

 

$

0.50

 

$

0.58

 

$

0.55

 

$

0.99

 

$

1.05

 

Return on Average Assets excluding merger and certain items (Annualized)

 

1.59

%

 

1.65

%

 

1.65

%

 

1.97

%

 

1.91

%

 

1.62

%

 

1.86

%

Return on Average Equity excluding merger and certain items (Annualized)

 

18.58

%

 

15.12

%

 

14.84

%

 

17.31

%

 

17.24

%

 

16.63

%

 

16.85

%

Return on Average Tangible Equity excluding acquisition costs and certain items (Annualized)

 

26.08

%

 

19.50

%

 

18.46

%

 

19.91

%

 

19.93

%

 

22.23

%

 

19.58

%

 
 
Efficiency ratio excluding certain items
For the Three Months Ended For the Six Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,

 

2022

2022

2021

2021

2021

2022

2021

Net interest income, after tax

$

32,583

 

$

32,100

 

$

30,486

 

$

27,256

 

$

27,192

 

$

64,684

 

$

53,093

 

Noninterest income

 

9,477

 

 

17,698

 

 

9,538

 

 

9,015

 

 

9,508

 

 

27,175

 

 

19,640

 

Legal settlement income

 

0

 

 

(8,375

)

 

0

 

 

0

 

 

0

 

 

(8,375

)

 

0

 

Net loss (gain) on asset/security sales

 

(32

)

 

123

 

 

170

 

 

(458

)

 

(33

)

 

91

 

 

(469

)

Gain on sale of credit card portfolio

 

0

 

 

0

 

 

(239

)

 

0

 

 

0

 

 

0

 

 

0

 

Net interest income and noninterest income adjusted

 

42,028

 

 

41,546

 

 

39,955

 

 

35,813

 

 

36,667

 

 

83,575

 

 

72,264

 

Noninterest expense less intangible amortization

 

21,042

 

 

30,036

 

 

27,247

 

 

16,813

 

 

16,755

 

 

51,078

 

 

33,757

 

Charitable donation

 

0

 

 

6,000

 

 

0

 

 

0

 

 

0

 

 

6,000

 

 

0

 

Contingent legal settlement expense

 

0

 

 

2,075

 

 

0

 

 

0

 

 

0

 

 

2,075

 

 

0

 

Acquisition related costs

 

674

 

 

1,940

 

 

6,521

 

 

472

 

 

104

 

 

2,614

 

 

116

 

FHLB prepayment penalties

 

0

 

 

0

 

 

1,804

 

 

325

 

 

0

 

 

0

 

 

0

 

Noninterest income adjusted

 

20,368

 

 

20,021

 

 

18,922

 

 

16,016

 

 

16,651

 

 

40,389

 

 

33,641

 

Efficiency ratio excluding one-time items

 

48.46

%

 

48.19

%

 

47.36

%

 

44.72

%

 

45.41

%

 

48.33

%

 

46.55

%

 
 
Net interest margin excluding acquisition marks and PPP interest and fees
For the Three Months Ended For the Six Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,

 

2022

2022

2021

2021

2021

2022

2021

Net interest income, taxable equivalent

$

32,583

 

$

32,100

 

$

30,486

 

$

27,256

 

$

27,192

 

$

64,684

 

$

53,093

 

Acquisition marks

 

381

 

 

957

 

 

496

 

 

(35

)

 

200

 

 

1,338

 

 

471

 

PPP interest and fees

 

634

 

 

686

 

 

979

 

 

1,402

 

 

2,097

 

 

1,320

 

 

4,241

 

Adjusted and annualized net interest income

 

126,272

 

 

121,828

 

 

115,098

 

 

102,712

 

 

99,854

 

 

124,052

 

 

96,762

 

Average earning assets

 

4,015,385

 

 

3,931,506

 

 

3,631,320

 

 

3,120,336

 

 

3,101,630

 

 

3,975,020

 

 

3,218,372

 

less PPP average balances

 

16,019

 

 

30,003

 

 

47,939

 

 

76,990

 

 

131,856

 

 

22,972

 

 

128,531

 

Adjusted average earning assets

 

3,999,366

 

 

3,901,503

 

 

3,583,381

 

 

3,043,346

 

 

2,969,774

 

 

3,952,048

 

 

3,089,841

 

Net interest margin excluding marks and PPP interest and fees

 

3.16

%

 

3.12

%

 

3.21

%

 

3.37

%

 

3.36

%

 

3.14

%

 

3.13

%

 

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