FMNB Farmers National Banc Corporation

• Earnings per diluted share of $0.39 ($0.41 excluding certain items, non-GAAP) for the fourth quarter of 2023
• 164 consecutive quarters of profitability
• Recorded a $915,000 gain during the quarter by selling $5.8 million of nonaccrual/troubled commercial loans
• Loan growth of $29.6 million, or 3.7% annualized, for the fourth quarter of 2023
• Excluding impact of commercial loan sale - loan growth of $37.7 million, or 4.8% annualized, for fourth quarter 2023
• Continued strong asset quality with non-performing assets to total assets of 0.30% as of December 31, 2023
• Return on average assets of 1.17% for the fourth quarter of 2023
• ROAE and ROATE (non-GAAP) of 18.0% and 43.8%, respectively, for the fourth quarter of 2023

Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB) today announced net income of $14.6 million, or $0.39 per diluted share, for the three months ended December 31, 2023, compared to $13.4 million, or $0.39 per diluted share, for the three months ended December 31, 2022. Net income for the fourth quarter of 2023 included pretax items of $452,000 for acquisition related costs, a gain of $915,000 on the sale of commercial loans, $1.0 million in expense for severance/contract payouts for staff resignations, and combined net losses of $217,000 on the sale of securities and the sale of other assets. Excluding these items (non-GAAP), net income for the fourth quarter of 2023 increased 7.8% to $15.2 million from $14.1 million for the same period last year. Net income per diluted share excluding these items (non-GAAP), was $0.41 for the fourth quarter of 2023, compared to $0.42 per diluted share for the fourth quarter of 2022.

Kevin J. Helmick, President and CEO, stated “Our solid fourth quarter results demonstrate our success enhancing profitability throughout an extremely challenging operating environment. This is a testament to our team’s focus on supporting our customers, maintaining excellent asset quality, and controlling operating costs. We expect the economic environment will remain fluid in 2024, but we believe Farmers is well positioned to navigate this period as a result of the value our team members provide our Ohio and Pennsylvania communities, as well as our continued focus on maintaining strong asset quality and profitability.”

Balance Sheet

The Company’s total assets were $5.08 billion at December 31, 2023, compared to $4.97 billion at September 30, 2023 and $4.08 billion at December 31, 2022. The increase from December was primarily due to the acquisition of Emclaire Financial Corp. (“Emclaire”) which added $977.6 million in assets in the first quarter of 2023. Loans have increased by $793.4 million since December 31, 2022 and $29.6 million, or 3.7% annualized, since September 30, 2023. Emclaire was responsible for $740.7 million of the increase in loans since December 31, 2022. Growth in the fourth quarter of 2023 was concentrated in commercial real estate.

The Company had securities available for sale of $1.30 billion at December 31, 2023, compared to $1.21 billion at September 30, 2023, and $1.27 billion at December 31, 2022. The increase since December is due to the acquisition of Emclaire which added $127.0 million in available for sale securities and a decrease in the amount of gross unrealized losses on the portfolio which totaled $266.5 million at December 31, 2022, compared to a gross unrealized loss of $217.1 million at December 31, 2023. The Company also had sales and runoff from the portfolio during the twelve months ended December 31, 2023. Bond market volatility was extreme in 2023 and this volatility may remain in 2024. The Company expects that it will continue to allow the size of the securities portfolio to shrink via runoff to optimize profitability and provide liquidity for future loan growth.

At December 31, 2023, deposits totaled $4.18 billion compared to $4.26 billion at September 30, 2023 and $4.51 billion at December 31, 2022. During the fourth quarter of 2023, the Company allowed $254.3 million in brokered time deposits to mature and replaced the funding with less expensive short term borrowings. In addition, public fund seasonality resulted in $95.3 million in shrinkage during the quarter offset by $15.3 million in growth in other deposit categories. The increase from December 31, 2022, was driven by $875.8 million in deposits assumed in the acquisition of Emclaire offset by a decline in brokered time deposits of $138.1 million and runoff in other deposit categories.

Total stockholders’ equity increased to $404.4 million at December 31, 2023, from $316.0 million at September 30, 2023, and $292.3 million at December 31, 2022. The year-over-year increase was primarily due to the acquisition of Emclaire and an increase in retained earnings and a decrease in the unrealized loss from accumulated other comprehensive income. The increase in total stockholders’ equity since September 30, 2023, was primarily due to a decline in the accumulated other comprehensive loss which decreased $79.7 million as market rates dropped rapidly during the fourth quarter of 2023.

Credit Quality

As of December 31, 2023, the Company’s non-performing loans totaled $15.1 million compared to $18.4 million at September 30, 2023, and $14.8 million at December 31, 2022. The year-over-year increase was primarily due to the addition of Emclaire while the decrease since September 30 was due to the sale of non-performing loans. The non-performing loans to total loans ratio was 0.47% at December 31, 2023, 0.58% at September 30, 2023, and 0.62% at December 31, 2022. Non-performing assets to total assets was 0.30% at December 31, 2023, 0.37% at September 30, 2023, and 0.36% at December 31, 2022. The Company also continues to experience low levels of early-stage delinquencies, defined as loans 30-89 days delinquent. At December 31, 2023, these early-stage delinquencies totaled $16.7 million, or 0.52% of total loans compared to $13.3 million, or 0.42% of total loans at September 30, 2023, and $9.6 million, or 0.40% of total loans, at December 31, 2022.

The Company recorded provision for credit losses and unfunded commitments of $286,000 for the fourth quarter of 2023 compared to $243,000 for the third quarter of 2023 and $416,000 for the fourth quarter of 2022. Annualized net charge-offs as a percentage of average loans were 0.10% for the three months ended December 31, 2023, compared to 0.10% for the same period in 2022. For the year ended December 31, 2023, net charge-offs as a percentage of average loans were 0.07% compared to 0.11% for last year. The allowance for credit losses to total loans was 1.08% at December 31, 2023, compared to 1.10% at September 30, 2023, and 1.12% at December 31, 2022.

Net Interest Income

Net interest income for the three months ended December 31, 2023, totaled $32.8 million in the fourth quarter of 2023 compared to $33.8 million in the third quarter of 2023 and $29.4 million for the fourth quarter of 2022. Earning assets were greater in the fourth quarter of 2023 compared to the fourth quarter of 2022 due to the acquisition of Emclaire but this was partially offset by a decline of 21 basis point in the net interest margin. The net interest margin was 2.78% for the quarter ending December 31, 2023, compared to 2.86% in the third quarter of 2023 and 2.99% for the fourth quarter of 2022. Excluding the impact of acquisition marks and related accretion and PPP interest and fees, the net interest margin (non-GAAP) for the fourth quarter of 2023 was 2.58% compared to 2.61% for the third quarter of 2023 and 2.97% for the fourth quarter of 2022. The decline in net interest margin between the fourth quarter of 2023 and the fourth quarter of 2022 was due to increases in funding costs outstripping the increase in yields on earning assets. This increase in funding costs has been due to the rapid increase in deposit rates due to intense competition for deposits, the Federal Reserve’s rate hiking cycle, and runoff of deposit balances which are being replaced with more costly wholesale funding.

Noninterest Income

The Company recorded $12.2 million in noninterest income during the fourth quarter of 2023 compared to $8.2 million during the fourth quarter of 2022. Service charges on deposit accounts increased to $1.7 million in the fourth quarter of 2023 compared to $1.2 million for the same period in 2022 primarily due to the acquisition of Emclaire. Bank owned life insurance income, other mortgage banking fee income and debit card income have also increased in the fourth quarter of 2023 compared to the fourth quarter of 2022 due to the Emclaire acquisition. Trust fees increased by $283,000 in the fourth quarter of 2023 compared to the fourth quarter of 2022 as growth in this line of business continued. Insurance agency commissions also exhibited outstanding growth as insurance commissions increased by $407,000 for the quarter ending December 31, 2023 compared to same quarter a year ago. Growth for the year in this business has been solid as pricing in the insurance business has been very strong and increased annuity sales have bolstered results. Investment commissions are up slightly for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022, as markets have been resilient in 2023 and the Company begins to expand into Pennsylvania. Net gains on the sale of loans have increased by over $1.0 million between the fourth quarter of 2022 and the fourth quarter of 2023. Of this increase, $915,000 was driven by the sale of commercial loans discussed previously. Traditional gains on the sale of mortgage loans remain sluggish due to high interest rates. Other noninterest income increased $910,000 in the fourth quarter of 2023 compared to the prior year’s fourth quarter. This increase was primarily driven by higher income associated with the Company’s investments in SBIC funds. The earnings on these funds can be volatile from period to period.

Noninterest Expense

The Company reported noninterest expense of $27.0 million for the three months ended December 31, 2023, compared to $21.1 million for the three months ended December 31, 2022. The increase in expense is primarily due to the acquisition of Emclaire along with the $1.0 million in severance expense associated with staff resignations. Salaries and employee benefits increased $3.5 million to $14.9 million in the fourth quarter of 2023 compared to $11.4 million during the same period in 2022. The acquisition of Emclaire, normal raise activity and the severance were the primary reasons for the increase. Occupancy and equipment expense increased $1.1 million primarily due to the acquisition. FDIC and state and local taxes increased $474,000 due to the acquisition and the increase in the rate paid for FDIC insurance in 2023. Core processing charges increased due to the acquisition. Merger related costs were $452,000 for the fourth quarter of 2023 compared to $584,000 in the fourth quarter of 2022. Other noninterest expense increased due to the acquisition.

Liquidity

At December 31, 2023, the Company’s loan to deposit ratio was 76.6% and the Company’s average deposit balance per account (excluding collateralized deposits) was $23,678. The Company has access to an additional $819.5 million of FHLB borrowing capacity at December 31, 2023 along with $214.3 million of available for sale securities that are not pledged. With a deep and diverse deposit base and access to a large amount of additional funding capacity, the Company is well positioned to navigate the current banking landscape.

About Farmers National Banc Corp.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $5.1 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 64 banking locations in Mahoning, Trumbull, Columbiana, Portage, Stark, Wayne, Medina, Geauga and Cuyahoga Counties in Ohio and Beaver, Butler, Allegheny, Jefferson, Clarion, Venango, Clearfield, Mercer, Elk and Crawford Counties 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 December 31, 2023 are $3.5 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 and certain items, return on average assets excluding merger costs and certain items, return on average equity excluding merger costs and certain items, net interest margin excluding acquisition marks and related accretion and PPP interest and fees and efficiency ratio less certain items, 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.

Cautionary Statements Regarding Forward-Looking Statements

We make statements in this news release and our related investor conference call, and we may from time to time make other statements, that are 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 certain forward-looking statements include significant changes in near-term local, regional, and U.S. economic conditions including those resulting from continued high rates of inflation, tightening monetary policy of the Board of Governors of the Federal Reserve, and possibility of a recession; Farmers’ failure to integrate Emclaire with Farmers in accordance with expectations; deviations from performance expectations related to Emclaire; continuing impacts from the length and extent of the economic impacts of the COVID-19 pandemic; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2022 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 Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

Percent

 

2023

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Change

Total interest income

$

55,069

 

$

54,229

 

$

52,804

 

$

51,233

 

$

38,111

 

$

213,335

 

$

142,086

 

50.1

%

Total interest expense

 

22,239

 

 

20,461

 

 

18,226

 

 

14,623

 

 

8,679

 

 

75,549

 

 

17,920

 

321.6

%

Net interest income

 

32,830

 

 

33,768

 

 

34,578

 

 

36,610

 

 

29,432

 

 

137,786

 

 

124,166

 

11.0

%

Provision (credit) for credit losses

 

286

 

 

243

 

 

25

 

 

8,599

 

 

416

 

 

9,153

 

 

1,122

 

715.8

%

Noninterest income

 

12,156

 

 

9,831

 

 

9,449

 

 

10,425

 

 

8,200

 

 

41,861

 

 

44,202

 

-5.3

%

Acquisition related costs

 

452

 

 

268

 

 

442

 

 

4,313

 

 

584

 

 

5,475

 

 

4,070

 

34.5

%

Other expense

 

26,520

 

 

27,448

 

 

25,944

 

 

26,409

 

 

20,511

 

 

106,321

 

 

90,341

 

17.7

%

Income before income taxes

 

17,728

 

 

15,640

 

 

17,616

 

 

7,714

 

 

16,121

 

 

58,698

 

 

72,835

 

-19.4

%

Income taxes

 

3,151

 

 

2,326

 

 

2,650

 

 

639

 

 

2,765

 

 

8,766

 

 

12,238

 

-28.4

%

Net income

$

14,577

 

$

13,314

 

$

14,966

 

$

7,075

 

$

13,356

 

$

49,932

 

$

60,597

 

-17.6

%

  Average diluted shares outstanding

 

37,426

 

 

37,379

 

 

37,320

 

 

37,933

 

 

33,962

 

 

37,498

 

 

33,929

 

Basic earnings per share

 

0.39

 

 

0.36

 

 

0.40

 

 

0.19

 

 

0.39

 

 

1.34

 

 

1.79

 

Diluted earnings per share

 

0.39

 

 

0.36

 

 

0.40

 

 

0.19

 

 

0.39

 

 

1.33

 

 

1.79

 

Cash dividends per share

 

0.17

 

 

0.17

 

 

0.17

 

 

0.17

 

 

0.17

 

 

0.68

 

 

0.65

 

Performance Ratios Net Interest Margin (Annualized)

 

2.78

%

 

2.86

%

 

2.92

%

 

3.07

%

 

2.99

%

 

2.91

%

 

3.18

%

Efficiency Ratio (Tax equivalent basis)

 

57.84

%

 

60.11

%

 

56.28

%

 

62.53

%

 

52.59

%

 

59.24

%

 

53.68

%

Return on Average Assets (Annualized)

 

1.17

%

 

1.06

%

 

1.18

%

 

0.56

%

 

1.31

%

 

0.99

%

 

1.46

%

Return on Average Equity (Annualized)

 

17.98

%

 

14.49

%

 

16.12

%

 

7.71

%

 

20.16

%

 

13.97

%

 

17.24

%

Dividends to Net Income

 

43.68

%

 

47.82

%

 

42.54

%

 

90.50

%

 

43.10

%

 

25.64

%

 

36.31

%

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

 

1.22

%

 

1.09

%

 

1.23

%

 

0.58

%

 

1.34

%

 

1.03

%

 

1.50

%

Return on Average Tangible Equity

 

43.77

%

 

30.29

%

 

33.55

%

 

16.31

%

 

32.81

%

 

30.23

%

 

24.31

%

Consolidated Statements of Financial Condition

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

 

2023

 

2023

 

2023

 

2023

 

2022

Assets Cash and cash equivalents

$

103,658

$

93,923

$

116,063

$

128,001

$

75,551

Debt securities available for sale

 

1,299,701

 

1,210,736

 

1,316,878

 

1,355,449

 

1,268,025

Other investments

 

35,311

 

35,342

 

44,975

 

39,670

 

33,444

  Loans held for sale

 

3,711

 

1,910

 

2,197

 

1,703

 

858

Loans

 

3,198,127

 

3,168,554

 

3,155,200

 

3,152,339

 

2,404,750

Less allowance for credit losses

 

34,440

 

34,753

 

34,957

 

36,011

 

26,978

Net Loans

 

3,163,687

 

3,133,801

 

3,120,243

 

3,116,328

 

2,377,772

  Other assets

 

472,282

 

495,451

 

473,098

 

468,735

 

326,550

Total Assets

$

5,078,350

$

4,971,163

$

5,073,454

$

5,109,886

$

4,082,200

  Liabilities and Stockholders' Equity Deposits Noninterest-bearing

$

1,026,630

$

1,039,524

$

1,084,232

$

1,106,870

$

896,957

Interest-bearing

 

3,150,756

 

3,217,869

 

3,165,381

 

3,207,121

 

2,526,760

Brokered time deposits

 

0

 

254,257

 

21,135

 

82,169

 

138,051

Total deposits

 

4,177,386

 

4,511,650

 

4,270,748

 

4,396,160

 

3,561,768

Other interest-bearing liabilities

 

443,663

 

88,550

 

388,437

 

292,324

 

183,211

Other liabilities

 

52,886

 

54,981

 

47,278

 

46,760

 

44,926

Total liabilities

 

4,673,935

 

4,655,181

 

4,706,463

 

4,735,244

 

3,789,905

Stockholders' Equity

 

404,415

 

315,982

 

366,991

 

374,642

 

292,295

Total Liabilities and Stockholders' Equity

$

5,078,350

$

4,971,163

$

5,073,454

$

5,109,886

$

4,082,200

  Period-end shares outstanding

 

37,503

 

37,489

 

37,457

 

37,439

 

34,055

Book value per share

$

10.78

$

8.43

$

9.80

$

10.01

$

8.58

Tangible book value per share (Non-GAAP)*

 

5.71

 

3.33

 

4.67

 

4.84

 

5.60

* Tangible book value per share is calculated by dividing tangible common equity by outstanding shares

For the Three Months Ended

For the Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

Capital and Liquidity

 

2023

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

2023

 

2022

 

Common Equity Tier 1 Capital Ratio (a)

 

10.63

%

 

10.37

%

 

10.25

%

 

10.04

%

 

13.71

%

Total Risk Based Capital Ratio (a)

 

14.08

%

 

13.83

%

 

13.76

%

 

13.60

%

 

17.79

%

Tier 1 Risk Based Capital Ratio (a)

 

11.11

%

 

10.86

%

 

10.74

%

 

10.54

%

 

14.32

%

Tier 1 Leverage Ratio (a)

 

8.02

%

 

7.84

%

 

7.68

%

 

7.43

%

 

9.84

%

Equity to Asset Ratio

 

7.96

%

 

6.36

%

 

7.23

%

 

7.33

%

 

7.16

%

Tangible Common Equity Ratio (b)

 

4.38

%

 

2.61

%

 

3.58

%

 

3.69

%

 

4.79

%

Net Loans to Assets

 

62.30

%

 

63.04

%

 

61.50

%

 

60.99

%

 

58.25

%

Loans to Deposits

 

76.56

%

 

70.23

%

 

73.88

%

 

71.71

%

 

67.52

%

Asset Quality Non-performing loans

$

15,063

 

$

18,368

 

$

17,956

 

$

17,959

 

$

14,803

 

Non-performing assets

 

15,321

 

 

18,522

 

 

18,167

 

 

18,053

 

 

14,876

 

Loans 30 - 89 days delinquent

 

16,705

 

 

13,314

 

 

12,321

 

 

10,219

 

 

9,605

 

Charged-off loans

 

972

 

 

525

 

 

971

 

 

469

 

 

754

 

2,937

 

3,304

 

Recoveries

 

172

 

 

139

 

 

172

 

 

198

 

 

184

 

681

 

646

 

Net Charge-offs

 

800

 

 

386

 

 

799

 

 

271

 

 

570

 

2,256

 

2,658

 

Annualized Net Charge-offs to Average Net Loans

 

0.10

%

 

0.05

%

 

0.10

%

 

0.03

%

 

0.10

%

0.07

%

0.11

%

Allowance for Credit Losses to Total Loans

 

1.08

%

 

1.10

%

 

1.11

%

 

1.14

%

 

1.12

%

Non-performing Loans to Total Loans

 

0.47

%

 

0.58

%

 

0.57

%

 

0.57

%

 

0.62

%

Loans 30 - 89 Days Delinquent to Total Loans

 

0.52

%

 

0.42

%

 

0.39

%

 

0.32

%

 

0.40

%

Allowance to Non-performing Loans

 

228.64

%

 

189.20

%

 

194.68

%

 

200.52

%

 

182.25

%

Non-performing Assets to Total Assets

 

0.30

%

 

0.37

%

 

0.36

%

 

0.35

%

 

0.36

%

(a) December 31, 2023 ratio is estimated (b) This is a non-GAAP financial measure. A reconciliation to GAAP is shown below

For the Three Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

End of Period Loan Balances

2023

2023

2023

2023

2022

Commercial real estate

$

1,335,806

$

1,295,847

$

1,284,974

$

1,286,830

$

1,028,050

Commercial

 

346,354

 

357,691

 

362,664

 

361,845

 

293,643

Residential real estate

 

843,697

 

842,729

 

849,533

 

853,074

 

475,791

HELOC

 

142,441

 

140,772

 

138,535

 

137,319

 

132,179

Consumer

 

259,784

 

261,136

 

260,326

 

260,596

 

221,260

Agricultural loans

 

261,288

 

261,738

 

250,807

 

244,938

 

246,937

Total, excluding net deferred loan costs

$

3,189,370

$

3,159,913

$

3,146,839

$

3,144,602

$

2,397,860

 

For the Three Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

End of Period Customer Deposit Balances

2023

2023

2023

2023

2022

Noninterest-bearing demand

$

1,026,630

$

1,039,524

$

1,084,232

$

1,106,870

$

896,957

Interest-bearing demand

 

1,362,609

 

1,426,349

 

1,383,326

 

1,473,001

 

1,224,884

Money market

 

593,975

 

588,043

 

610,051

 

599,037

 

435,369

Savings

 

468,890

 

488,991

 

511,642

 

535,321

 

441,978

Certificate of deposit

 

720,259

 

714,486

 

660,362

 

599,762

 

424,529

Total customer deposits

$

4,172,363

$

4,257,393

$

4,249,613

$

4,313,991

$

3,423,717

For the Three Months Ended

For the Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

Noninterest Income

 

2023

 

2023

 

 

2023

 

2023

 

2022

 

 

2023

 

 

2022

 

Service charges on deposit accounts

$

1,677

$

1,712

 

$

1,501

$

1,432

$

1,203

 

$

6,322

 

$

4,716

 

Bank owned life insurance income, including death benefits

 

617

 

694

 

 

584

 

547

 

590

 

 

2,442

 

 

1,810

 

Trust fees

 

2,656

 

2,617

 

 

2,248

 

2,587

 

2,373

 

 

10,108

 

 

9,638

 

Insurance agency commissions

 

1,540

 

1,116

 

 

1,332

 

1,456

 

1,133

 

 

5,444

 

 

4,402

 

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

 

19

 

(624

)

 

13

 

121

 

(366

)

 

(471

)

 

(454

)

Retirement plan consulting fees

 

357

 

360

 

 

382

 

307

 

337

 

 

1,406

 

 

1,389

 

Investment commissions

 

589

 

520

 

 

476

 

393

 

508

 

 

1,978

 

 

2,183

 

Net gains on sale of loans

 

1,280

 

395

 

 

406

 

310

 

242

 

 

2,391

 

 

2,062

 

Other mortgage banking fee income (loss), net

 

139

 

185

 

 

234

 

153

 

98

 

 

711

 

 

291

 

Debit card and EFT fees

 

1,697

 

1,763

 

 

1,810

 

1,789

 

1,407

 

 

7,059

 

 

5,814

 

Other noninterest income

 

1,585

 

1,093

 

 

463

 

1,330

 

675

 

 

4,471

 

 

12,351

 

Total Noninterest Income

$

12,156

$

9,831

 

$

9,449

$

10,425

$

8,200

 

$

41,861

 

$

44,202

 

   

For the Three Months Ended

For the Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

Noninterest Expense

 

2023

 

2023

 

 

2023

 

2023

 

2022

 

 

2023

 

 

2022

 

Salaries and employee benefits

$

14,871

$

14,233

 

$

13,625

$

14,645

$

11,385

 

$

57,374

 

$

45,013

 

Occupancy and equipment

 

3,896

 

3,810

 

 

3,859

 

3,869

 

2,753

 

 

15,434

 

 

11,379

 

FDIC insurance and state and local taxes

 

1,484

 

1,648

 

 

1,494

 

1,222

 

1,010

 

 

5,848

 

 

3,951

 

Professional fees

 

1,004

 

1,043

 

 

1,190

 

1,114

 

938

 

 

4,351

 

 

6,114

 

Merger related costs

 

452

 

268

 

 

442

 

4,313

 

584

 

 

5,475

 

 

4,070

 

Advertising

 

414

 

492

 

 

478

 

409

 

472

 

 

1,793

 

 

1,947

 

Intangible amortization

 

578

 

725

 

 

1,222

 

909

 

702

 

 

3,434

 

 

1,973

 

Core processing charges

 

1,057

 

1,274

 

 

1,144

 

1,164

 

742

 

 

4,639

 

 

3,348

 

Other noninterest expenses

 

3,216

 

4,223

 

 

2,932

 

3,077

 

2,509

 

 

13,448

 

 

16,616

 

Total Noninterest Expense

$

26,972

$

27,716

 

$

26,386

$

30,722

$

21,095

 

$

111,796

 

$

94,411

 

Business Combination Consideration Cash

$

33,440

Stock

 

59,202

Fair value of total consideration transferred

$

92,642

Fair value of assets acquired Cash and cash equivalents

$

20,265

Securities available for sale

 

126,970

Other investments

 

7,795

Loans, net

 

740,659

Premises and equipment

 

14,808

Bank owned life insurance

 

22,485

Core deposit intangible

 

19,249

Current and deferred taxes

 

17,708

Other assets

 

7,682

Total assets acquired

 

977,621

Fair value of liabilities assumed Deposits

 

875,813

Short-term borrowings

 

75,000

Accrued interest payable and other liabilities

 

7,104

Total liabilities

 

957,917

Net assets acquired

$

19,704

Goodwill created

 

72,938

Total net assets acquired

$

92,642

Average Balance Sheets and Related Yields and Rates (Dollar Amounts in Thousands)   Three Months Ended Three Months Ended December 31, 2023 December 31, 2022 AVERAGE YIELD/ AVERAGE YIELD/ BALANCE INTEREST (1) RATE (1) BALANCE INTEREST (1) RATE (1) EARNING ASSETS Loans (2)

$

3,188,581

$

44,868

5.63

%

$

2,394,872

$

29,092

4.86

%

Taxable securities

 

1,113,107

 

6,536

2.35

 

 

1,105,545

 

5,556

2.01

 

Tax-exempt securities (2)

 

411,860

 

3,235

3.14

 

 

453,917

 

3,580

3.15

 

Other investments

 

37,625

 

529

5.62

 

 

33,901

 

326

3.85

 

Federal funds sold and other

 

65,236

 

564

3.46

 

 

59,108

 

336

2.27

 

Total earning assets

 

4,816,409

 

55,732

4.63

 

 

4,047,343

 

38,890

3.84

 

Nonearning assets

 

163,905

 

33,154

Total assets

$

4,980,314

$

4,080,497

INTEREST-BEARING LIABILITIES Time deposits

$

712,485

$

6,291

3.53

%

$

370,914

$

1,261

1.36

%

Brokered time deposits

 

96,634

 

1,315

5.44

 

 

115,021

 

1,034

3.60

 

Savings deposits

 

1,068,465

 

2,918

1.09

 

 

871,584

 

879

0.40

 

Demand deposits - interest bearing

 

1,393,252

 

7,922

2.27

 

 

1,301,475

 

3,805

1.17

 

Short term borrowings

 

206,826

 

2,749

5.32

 

 

85,641

 

777

3.63

 

Long term borrowings

 

88,609

 

1,043

4.71

 

 

88,138

 

922

4.18

 

Total interest-bearing liabilities

$

3,566,271

 

22,238

2.49

 

$

2,832,773

 

8,678

1.23

 

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

 

1,035,405

 

938,881

Other liabilities

 

54,306

 

43,904

Stockholders' equity

 

324,332

 

264,939

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

4,980,314

$

4,080,497

Net interest income and interest rate spread

$

33,494

2.14

%

$

30,212

2.61

%

Net interest margin

2.78

%

2.99

%

(1) Interest and yields are calculated on a tax-equivalent basis where applicable. (2) For 2023, adjustments of $86 thousand and $577 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $72 thousand and $707 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. Twelve Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 AVERAGE YIELD/ AVERAGE YIELD/ BALANCE INTEREST (1) RATE (1) BALANCE INTEREST (1) RATE (1) EARNING ASSETS Loans (2)

$

3,155,858

$

172,161

5.46

%

$

2,358,724

$

108,100

4.58

%

Taxable securities

 

1,143,547

 

26,231

2.29

 

 

1,081,966

 

20,843

1.93

 

Tax-exempt securities (2)

 

419,557

 

13,283

3.17

 

 

465,855

 

14,952

3.21

 

Other investments

 

39,559

 

1,986

5.02

 

 

33,153

 

871

2.63

 

Federal funds sold and other

 

74,950

 

2,476

3.30

 

 

76,253

 

684

0.90

 

Total earning assets

 

4,833,471

 

216,137

4.47

 

 

4,015,951

 

145,450

3.62

 

Nonearning assets

 

205,683

 

128,757

Total assets

$

5,039,154

$

4,144,708

INTEREST-BEARING LIABILITIES Time deposits

$

654,717

$

19,462

2.97

%

$

360,687

$

3,044

0.84

%

Brokered time deposits

 

132,895

 

6,204

4.67

 

 

56,965

 

1,240

2.18

 

Savings deposits

 

1,113,561

 

9,899

0.89

 

 

846,418

 

1,352

0.16

 

Demand deposits - interest bearing

 

1,415,425

 

27,541

1.95

 

 

1,392,058

 

7,449

0.54

 

Short term borrowings

 

160,964

 

8,357

5.19

 

 

55,668

 

1,408

2.53

 

Long term borrowings

 

88,439

 

4,086

4.62

 

 

87,972

 

3,427

3.90

 

Total interest-bearing liabilities

$

3,566,001

 

75,549

2.12

 

$

2,799,768

 

17,920

0.64

 

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

$

1,065,389

$

959,294

Other liabilities

 

50,302

 

34,180

Stockholders' equity

 

357,462

 

351,466

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

5,039,154

$

4,144,708

Net interest income and interest rate spread

$

140,588

2.35

%

$

127,530

2.98

%

Net interest margin

2.91

%

3.18

%

(1) Interest and yields are calculated on a tax-equivalent basis where applicable. (2) For 2023, adjustments of $353 thousand and $2.4 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $310 thousand and $3.1 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 Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

 

2023

 

2023

 

2023

 

2023

 

2022

 

2023

 

2022

Total Assets

$

5,078,350

$

4,971,163

$

5,073,454

$

5,109,886

$

4,082,200

$

5,078,350

$

4,082,200

Less Goodwill and other intangibles

 

190,288

 

191,326

 

192,052

 

193,273

 

101,666

 

190,288

 

101,666

Tangible Assets

$

4,888,062

$

4,779,837

$

4,881,402

$

4,916,613

$

3,980,534

$

4,888,062

$

3,980,534

Average Assets

 

4,980,314

 

5,058,969

 

5,070,444

 

5,085,009

 

4,080,497

 

5,039,154

 

4,144,708

Less average Goodwill and other intangibles

 

191,108

 

191,804

 

192,972

 

193,368

 

102,126

 

192,306

 

102,151

Average Tangible Assets

$

4,789,206

$

4,867,165

$

4,877,472

$

4,891,641

$

3,978,371

$

4,846,848

$

4,042,557

Reconciliation of Common Stockholders' Equity to Tangible Common Equity

For the Three Months Ended

For the Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

 

2023

 

2023

 

2023

 

2023

 

2022

 

2023

 

2022

Stockholders' Equity

$

404,415

$

315,982

$

366,991

$

374,642

$

292,295

$

404,415

$

292,295

Less Goodwill and other intangibles

 

190,288

 

191,326

 

192,052

 

193,273

 

101,666

 

190,288

 

101,666

Tangible Common Equity

$

214,127

$

124,656

$

174,939

$

181,369

$

190,629

$

214,127

$

190,629

Average Stockholders' Equity

 

324,332

 

367,600

 

371,421

 

366,851

 

264,939

 

357,462

 

351,466

Less average Goodwill and other intangibles

 

191,108

 

191,804

 

192,972

 

193,368

 

102,126

 

192,306

 

102,151

Average Tangible Common Equity

$

133,224

$

175,796

$

178,449

$

173,483

$

162,813

$

165,156

$

249,315

Reconciliation of Net Income, Less Merger and Certain Items

For the Three Months Ended

For the Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

 

2023

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

$

14,577

 

$

13,314

 

$

14,966

 

$

7,075

 

$

13,356

 

$

49,932

 

$

60,597

 

Acquisition related costs - after tax

 

358

 

 

234

 

 

354

 

 

3,449

 

 

475

 

 

4,395

 

 

3,290

 

Acquisition related provision - after tax

 

0

 

 

0

 

 

0

 

 

6,077

 

 

0

 

 

6,077

 

 

0

 

Employee severence - after tax

 

798

 

 

0

 

 

0

 

 

0

 

 

0

 

 

798

 

 

0

 

Lawsuit settlement income - after tax

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

(6,616

)

Lawsuit settlement contingent legal expense - after tax

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

1,639

 

Lawsuit settlement expense - after tax

 

0

 

 

620

 

 

0

 

 

0

 

 

0

 

 

620

 

 

0

 

Charitable donation - after tax

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

4,740

 

Net (gain) on loan sale - after tax

 

(723

)

 

0

 

 

0

 

 

0

 

 

0

 

 

(723

)

 

0

 

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

 

171

 

 

604

 

 

(5

)

 

(72

)

 

268

 

 

698

 

 

344

 

Net income - Adjusted

$

15,181

 

$

14,772

 

$

15,315

 

$

16,529

 

$

14,099

 

$

61,797

 

$

63,994

 

Diluted EPS excluding merger and certain items

$

0.41

 

$

0.40

 

$

0.41

 

$

0.44

 

$

0.42

 

$

1.65

 

$

1.89

 

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

 

1.22

%

 

1.17

%

 

1.21

%

 

1.30

%

 

1.36

%

 

1.23

%

 

1.54

%

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

 

18.72

%

 

16.07

%

 

16.49

%

 

18.02

%

 

21.29

%

 

17.29

%

 

18.21

%

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

 

45.58

%

 

33.61

%

 

34.33

%

 

38.11

%

 

34.64

%

 

37.42

%

 

25.67

%

Efficiency ratio excluding certain items

For the Three Months Ended

For the Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

 

2023

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net interest income, tax equated

$

33,494

 

$

34,448

 

$

35,273

 

$

37,374

 

$

30,212

 

$

140,588

 

$

127,530

 

Noninterest income

 

12,156

 

 

9,831

 

 

9,449

 

 

10,425

 

 

8,200

 

 

41,861

 

 

44,202

 

Legal settlement income

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

(8,375

)

Net (gain) on loan sale

 

(915

)

 

0

 

 

0

 

 

0

 

 

0

 

 

(915

)

 

0

 

Net loss (gain) on asset/security sales

 

217

 

 

764

 

 

(6

)

 

(91

)

 

338

 

 

883

 

 

435

 

Net interest income and noninterest income adjusted

 

44,952

 

 

45,043

 

 

44,716

 

 

47,708

 

 

38,750

 

 

182,417

 

 

163,792

 

Noninterest expense less intangible amortization

 

26,394

 

 

26,991

 

 

25,163

 

 

29,813

 

 

20,393

 

 

108,361

 

 

92,438

 

Charitable donation

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

6,000

 

Legal settlement expense

 

0

 

 

785

 

 

0

 

 

0

 

 

0

 

 

785

 

 

0

 

Contingent legal settlement expense

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

0

 

 

2,075

 

Employee severence

 

1,010

 

 

0

 

 

0

 

 

0

 

 

0

 

 

1,010

 

 

0

 

Acquisition related costs

 

452

 

 

268

 

 

442

 

 

4,313

 

 

584

 

 

5,475

 

 

4,070

 

Noninterest expense adjusted

 

24,932

 

 

25,938

 

 

24,721

 

 

25,500

 

 

19,809

 

 

101,091

 

 

80,293

 

Efficiency ratio excluding certain items

 

55.46

%

 

57.58

%

 

55.28

%

 

53.45

%

 

51.12

%

 

55.42

%

 

49.02

%

Net interest margin excluding acquisition marks and PPP interest and fees

For the Three Months Ended

For the Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

 

2023

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net interest income, tax equated

$

33,494

 

$

34,448

 

$

35,273

 

$

37,374

 

$

30,212

 

$

140,588

 

$

127,530

 

Acquisition marks

 

2,475

 

 

2,959

 

 

2,884

 

 

2,628

 

 

174

 

 

10,946

 

 

1,793

 

PPP interest and fees

 

1

 

 

1

 

 

3

 

 

0

 

 

10

 

 

5

 

 

1,392

 

Adjusted and annualized net interest income

 

124,072

 

 

125,952

 

 

129,544

 

 

138,984

 

 

120,112

 

 

129,637

 

 

124,345

 

Average earning assets

 

4,816,409

 

 

4,820,888

 

 

4,830,910

 

 

4,866,263

 

 

4,047,343

 

 

4,833,471

 

 

4,015,951

 

Less PPP average balances

 

229

 

 

247

 

 

277

 

 

310

 

 

485

 

 

254

 

 

11,914

 

Adjusted average earning assets

 

4,816,180

 

 

4,820,641

 

 

4,830,633

 

 

4,865,953

 

 

4,046,858

 

 

4,833,217

 

 

4,004,037

 

Net interest margin excluding marks and PPP interest and fees

 

2.58

%

 

2.61

%

 

2.68

%

 

2.86

%

 

2.97

%

 

2.68

%

 

3.11

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240123953680/en/

Kevin J. Helmick, President and CEO 330.533.3341 Email: exec@farmersbankgroup.com