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--()--Farmers National Banc Corp. (Farmers) (NASDAQ:FMNB) today reported financial results for the three months ended June 30, 2017.

“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.”

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

For the Six Months
Ended

Reconciliation of Common Stockholders' Equity to Tangible Common Equity
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  
 

For the Six Months
Ended

Reconciliation of Total Assets to Tangible Assets
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
Ended

For the Three Months 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
Ended

For the Three Months 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.

Contacts

Farmers National Banc Corp.
Kevin J. Helmick, 330-533-3341
President and CEO
exec@farmersbankgroup.com

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