EX-99.1 2 d85507dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

April 26, 2023

Press Release

 

  Source:

          Farmers National Banc Corp.

Kevin J. Helmick, President and CEO

20 South Broad Street, P.O. Box 555

Canfield, OH 44406

330.533.3341

Email: exec@farmersbankgroup.com

FARMERS NATIONAL BANC CORP. ANNOUNCES

EARNINGS FOR FIRST QUARTER OF 2023

 

  •  

Earnings per diluted share of $0.19 ($0.44 excluding certain items, non-GAAP) for the first quarter of 2023

 

  •  

Completed the acquisition and systems integration of Emclaire Financial Corp.

 

  •  

161 consecutive quarters of profitability

 

  •  

Repurchased 850,799 shares of FMNB common stock during the quarter, or 2.2% of shares outstanding

 

  •  

Additional FHLB borrowing capacity of $656.1 million as of March 31, 2023

 

  •  

Uninsured deposits are approximately 19.2% of customer deposit base

 

  •  

Available for sale securities not pledged totaled $539.9 million at March 31, 2023

 

  •  

Efficiency ratio, (excluding certain items, non-GAAP), of 53.5% for the first quarter of 2023

 

  •  

Return on average assets, (excluding certain items, non-GAAP), was 1.30% for the first quarter of 2023

 

  •  

ROAE and ROATE (excluding certain items, non-GAAP) 18.0% and 38.1%, respectively, for first quarter of 2023

CANFIELD, Ohio (April 26, 2023) – Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB) today announced net income of $7.1 million for the three months ended March 31, 2023 compared to $15.8 million for the three months ended March 31, 2022. Diluted earnings per share were $0.19 for the first quarter of 2023 compared to $0.47 for the first quarter of 2022. The results for the first quarter of 2023 included pretax items for acquisition related provision for credit loss expense of $7.7 million, $4.3 million for acquisition related costs and combined net gains of $91,000 on the sale of securities and the sale of other assets. Excluding these items (non-GAAP), net income for the first quarter of 2023 would have been $16.5 million, or $0.44 per diluted share.

Kevin J. Helmick, President and CEO, commented, “For over 136 years, Farmers has been dedicated to serving its local communities, while adhering to safe and sound banking principals. This has driven our legacy of financial success, allowing us to continually support our customers during both good and bad economic periods. As volatility within the macro-economic environment has increased, we have remained focused on serving our retail, commercial and wealth customers, controlling expenses, and managing capital levels. In addition, we continue to allocate capital to support our dividend policy and share repurchase program.”

“We remain well positioned to navigate the current challenges in the banking industry and interest rate environment, as a result of our experienced leadership team, diverse revenue streams, enhanced scale, and legendary customer service. I am proud of our team’s performance during the first quarter, and encouraged by the direction Farmers is headed,” concluded Mr. Helmick.

As previously announced, Farmers entered into an agreement and plan of merger with Emclaire Financial Corp. (formerly NASDAQ: EMCF), a Pennsylvania corporation (“Emclaire”), and the parent company of The Farmers National Bank of Emlenton (“Emlenton”) on March 23, 2022, the transaction was approved by Emclaire’s shareholders on July 20, 2022, received final regulatory approvals on December 2, 2022, and closed on January 1, 2023.

At the closing of the merger, Farmers issued 4.2 million shares of its common stock along with cash of $33.4 million, which represents a transaction value of approximately $92.6 million based on Farmers closing price of $14.12 on December 31, 2022. The transaction value has been allocated to assets acquired and liabilities assumed, including $741.7 million in gross loans, $216.2 million in other tangible assets, $875.8 million in deposits, $75.0 million in FHLB advances, $7.1 million in other liabilities and $92.6 million in goodwill and other intangible assets. Prior to closing, Emlenton incurred $4.6 million of merger-related costs.

Balance Sheet

The Company’s total assets increased to $5.11 billion at March 31, 2023 compared to $4.08 billion at December 31, 2022. The increase was primarily due to the acquisition of Emlenton which added $1.05 billion in assets to the balance sheet. Gross loans (excluding loans held for sale) increased by $747.6 million in the first quarter of 2023. This figure included $741.7 million in gross loans added from Emlenton and $5.9 million in organic loan growth.

Securities available for sale increased to $1.36 billion at March 31, 2023 from $1.27 billion at December 31, 2022.    This increase was due to the addition of $127.0 million in available for sale securities from Emlenton and a reduction in the gross amount of unrealized losses which totaled $266.5 million at December 31, 2022 compared to a gross unrealized loss of $223.7 million at March 31, 2023.    Offsetting these increases, the Company also had sales and runoff from the portfolio that totaled approximately $82.4 million in the first three months of 2023. The Company will continue to look to opportunistically shrink the size of the securities portfolio to increase liquidity and optimize profitability. The volatility in the bond market, however, is expected to continue in 2023, which may result in increased volatility in the fair value of the Company’s available for sale securities.

During the first quarter of 2023, total customer deposits (excluding brokered time deposits) increased to $4.31 billion from $3.42 billion at December 31, 2022. The increase was driven by the $875.8 million in deposits assumed in the acquisition of Emlenton along with $14.5 million in organic growth during the quarter. The Company continues to experience heightened competition from other banks, money market funds and the treasury market itself. In addition, it appears that some customers are utilizing deposit balances to counter the higher cost of living or running a business brought on by the higher inflationary environment. The Company expects competition for deposits to remain highly elevated for the foreseeable future which will continue to place pressure on funding costs.    

Total stockholders’ equity increased from $292.3 million at December 31, 2022 to $374.6 million at March 31, 2023. The increase was primarily driven by the acquisition of Emlenton along with a decrease in the loss from accumulated other comprehensive income offset by increased treasury stock activity. The Company repurchased 850,799 shares of its common stock during the quarter. The accumulated other comprehensive loss declined $33.8 million between December 31, 2022 and March 31, 2023 as rates on U.S. treasury securities declined during the first quarter of 2023 and pricing on available for sale securities improved. The Company’s tangible book value per share (non-GAAP) was $4.84 at March 31, 2023 compared to $5.60 at December 31, 2022.

Liquidity

With the turmoil that the banking industry experienced in the first quarter of 2023, the Company has continued to monitor its deposit base and balance sheet composition as well as its access to other sources of liquidity. The Company continues to run a modest loan to customer deposit ratio of approximately 73.1% and the Company’s average deposit balance per account is only $28,918. In addition, the Company’s ratio of uninsured deposits is approximately 19.2% which is low compared to the banking institutions that experienced difficulty in the first quarter.

The Company also has access to an additional $656.1 million of FHLB borrowing capacity at March 31, 2023 along with $539.9 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 handle any future liquidity stress.    

Credit Quality

During the first quarter of 2023, the Company recorded a provision for credit losses and unfunded commitments of $8.6 million. Of this figure, $7.7 million was due to the Emlenton acquisition. In connection with the acquisition, the Company recorded a provision for credit losses related to non-purchased credit deteriorated loans of $7.5 million along with a provision for unfunded commitments of $235,000. The Company also experienced net charge-offs of $271,000 during the first quarter of 2023. Net charge-offs as a percentage of average loans was 3 basis points for the quarter ended March 31, 2023.

The allowance for credit losses to total loans increased to 1.14% at March 31, 2023 compared to 1.12% at December 31, 2022. The Company recorded $1.0 million in the allowance for credit losses for Emlenton’s purchase credit deteriorated loans.

Non-performing loans (NPLs) were $18.0 million at March 31, 2023 compared to $14.8 million at December 31, 2022. This increase was primarily due to the addition of Emlenton. The NPL to loans ratio was 0.57% at March 31, 2023 compared to 0.62% at December 31, 2022. Non-performing assets to assets was 0.35% at March 31, 2023, down slightly from 0.36% at December 31, 2022. Early stage delinquencies, defined as 30-89 days delinquent, were $10.2 million, or 0.32% at March 31, 2023, compared to $9.6 million, or 0.40% of total loans, at December 31, 2022.

Net Interest Income

Net interest income totaled $36.6 million in the first quarter of 2023 compared to $31.2 million for the first quarter of 2022. A larger earning asset base due to the acquisition of Emlenton was the primary driver of this increase offset by a 20 basis point decline in the net interest margin. The net interest margin was 3.07% in the first quarter of 2023 compared to 2.99% in the fourth quarter of 2022 and 3.27% for the first quarter of 2022. The increase in net interest margin during the first quarter of 2023 compared to the prior quarter was due to the acquisition of Emlenton. The decline in net interest margin between the first quarter of 2023 and the first 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 continued Federal Reserve rate hiking cycle and runoff of deposit balances which are being replaced by much costlier wholesale funding. Excluding the impact of acquisition marks and related accretion and PPP interest and fees, the net interest margin (non-GAAP) for the first quarter of 2023 was 2.86% compared to 2.97% for the fourth quarter of 2022 and 3.12% for the first quarter of 2022.

Noninterest Income

For the three months ended March 31, 2023, noninterest income totaled $10.4 million compared to $17.7 million for the first quarter of 2022. The primary reason for the decrease in 2023 was the recognition of $8.4 million in income in 2022 for a legal settlement. Several categories of noninterest income increased year over year due to growth including trust fees and insurance commissions while other categories grew due to growth and the acquisition of Emlenton. Categories that increased year over year due to both reasons included service charges on deposit accounts, bank owned life insurance income, debit card income and other noninterest income. Net gains on the sale of loans dropped from $1.1 million in the first quarter of 2022 to $310,000 for the first quarter of 2023. This drop was caused by lower mortgage production compared to the prior year due to the dramatic increase in interest rates in the last year. The Company also recognized $121,000 in gains on the sale of securities for the first three months of 2023 compared to a loss on the sale of securities of $11,000 for the first quarter of 2022.    

Noninterest Expense

Noninterest expense increased from $30.5 million during the three months ended March 31, 2022, to $30.7 million for the same period in 2023. During the first quarter of 2022, the Company made a charitable contribution of $6.0 million to the Farmers Charitable Foundation and incurred $2.1 million in legal costs associated with the legal settlement discussed above. Excluding these two items in 2022, noninterest expense increased $8.3 million in the first quarter of 2023 compared to the first quarter of 2022.

Salaries and employee benefits increased $2.8 million to $14.7 million in the first quarter of 2023 compared to the same period in 2022. The acquisition of Emlenton along with normal raise activity was the primary reason for the increase. Occupancy and equipment, FDIC and state and local taxes, intangible amortization and core processing charges all saw increases year over year primarily as a result of the Emlenton acquisition. Merger related costs were $4.3 million in the first quarter of 2023 compared to $1.9 million in the first quarter of 2022. Professional fees were $2.0 million lower in the first quarter of 2023 compared to the first quarter of 2022 due to the legal costs discussed previously while other noninterest expense was down $5.3 million for the first three months of 2023 due primarily to the charitable contribution.

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 65 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 March 31, 2023 are $3.1 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, 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.

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 and Emlenton with Farmers in accordance with expectations; deviations from performance expectations related to Emclaire and Emlenton; 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  
     March 31,     Dec. 31,     Sept. 30,     June 30,     March 31,  
     2023     2022     2022     2022     2022  

Total interest income

    $ 51,233     $ 38,111     $ 36,410     $ 34,286     $ 33,279  

Total interest expense

      14,623       8,679       4,629       2,575       2,037  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income

      36,610       29,432       31,781       31,711       31,242  

Provision (credit) for credit losses

      8,599       416       448       616       (358 ) 

Noninterest income

      10,425       8,200       8,827       9,477       17,698  

Acquisition related costs

      4,313       584       872       674       1,940  

Other expense

      26,409       20,511       20,527       20,787       28,516  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

      7,714       16,121       18,761       19,111       18,842  

Income taxes

      639       2,765       3,315       3,160       2,998  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 7,075     $ 13,356     $ 15,446     $ 15,951     $ 15,844  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
          

Average diluted shares outstanding

      37,933       33,962       33,932       33,923       33,937  

Basic earnings per share

      0.19       0.39       0.46       0.47       0.47  

Diluted earnings per share

      0.19       0.39       0.46       0.47       0.47  

Cash dividends per share

      0.17       0.17       0.16       0.16       0.16  

Performance Ratios

           

Net Interest Margin (Annualized)

      3.07 %      2.99 %      3.21 %      3.25 %      3.27 % 

Efficiency Ratio (Tax equivalent basis)

      62.53 %      52.59 %      50.55 %      49.95 %      61.36 % 

Return on Average Assets (Annualized)

      0.56 %      1.31 %      1.48 %      1.54 %      1.52 % 

Return on Average Equity (Annualized)

      7.71 %      20.16 %      18.71 %      17.97 %      13.89 % 

Dividends to Net Income

      90.50 %      43.10 %      35.06 %      33.95 %      34.18 % 

Other Performance Ratios (Non-GAAP)

           

Return on Average Tangible Assets

      0.58 %      1.34 %      1.52 %      1.57 %      1.55 % 

Return on Average Tangible Equity

      16.31 %      32.81 %      27.06 %      25.23 %      17.92 % 

Consolidated Statements of Financial Condition    

 

     March 31,      Dec. 31,      Sept. 30,      June 30,      March 31,  
     2023      2022      2022      2022      2022  

Assets

               

Cash and cash equivalents

    $ 128,001      $ 75,551      $ 79,981      $ 65,458      $ 137,627  

Securities available for sale

      1,355,449        1,268,025        1,295,133        1,361,682        1,463,626  

Other investments

      39,670        33,444        34,399        34,451        34,019  

Loans held for sale

      1,703        858        2,142        2,714        1,904  

Loans

      3,152,339        2,404,750        2,399,981        2,374,485        2,304,971  

Less allowance for credit losses

      36,011        26,978        27,282        27,454        27,015  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Loans

      3,116,328        2,377,772        2,372,699        2,347,031        2,277,956  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Other assets

      468,735        326,550        335,668        303,028        290,723  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Assets

    $ 5,109,886      $ 4,082,200      $ 4,120,022      $ 4,114,364      $ 4,205,855  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities and Stockholders’ Equity

               

Deposits

               

Noninterest-bearing

    $ 1,106,870      $ 896,957      $ 934,638      $ 983,713      $ 963,143  

Interest-bearing

      3,207,121        2,526,760        2,590,054        2,586,829        2,690,668  

Brokered time deposits

      82,169        138,051        42,459        54,996        40,000  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total deposits

      4,396,160        3,561,768        3,567,151        3,625,538        3,693,811  

Other interest-bearing liabilities

      292,324        183,211        243,098        137,985        87,872  

Other liabilities

      46,760        44,926        44,154        29,392        30,286  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

      4,735,244        3,789,905        3,854,403        3,792,915        3,811,969  

Stockholders’ Equity

      374,642        292,295        265,619        321,449        393,886  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Liabilities and Stockholders’ Equity

    $ 5,109,886      $ 4,082,200      $ 4,120,022      $ 4,114,364      $ 4,205,855  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Period-end shares outstanding

      37,439        34,055        34,060        34,032        34,008  

Book value per share

    $ 10.01      $ 8.58      $ 7.80      $ 9.45      $ 11.58  

Tangible book value per share (Non-GAAP)*

      4.84        5.60        4.79        6.46        8.58  

 

*

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)

      10.19 %      13.71 %      13.36 %      13.30 %      13.31 % 

Total Risk Based Capital Ratio (a)

      13.80 %      17.79 %      17.44 %      17.46 %      17.59 % 

Tier 1 Risk Based Capital Ratio (a)

      10.70 %      14.32 %      13.97 %      13.92 %      13.95 % 

Tier 1 Leverage Ratio (a)

      7.38 %      9.84 %      10.24 %      9.56 %      9.56 % 

Equity to Asset Ratio

      7.33 %      7.16 %      6.45 %      7.81 %      9.37 % 

Tangible Common Equity Ratio (b)

      3.69 %      4.79 %      4.06 %      5.47 %      7.11 % 

Net Loans to Assets

      60.99 %      58.25 %      57.59 %      57.04 %      54.16 % 

Loans to Deposits

      71.71 %      67.52 %      67.28 %      65.49 %      62.40 % 

Asset Quality

           

Non-performing loans

    $ 17,959     $ 14,803     $ 12,976     $ 14,107     $ 14,046  

Non-performing assets

      18,053       14,876       13,042       14,107       14,046  

Loans 30 - 89 days delinquent

      10,219       9,605       6,659       8,716       7,304  

Charged-off loans

      469       754       783       177       1,590  

Recoveries

      198       184       178       135       149  

Net Charge-offs

      271       570       605       42       1,441  

Annualized Net Charge-offs to Average Net Loans

      0.03 %      0.10 %      0.10 %      0.01 %      0.25 % 

Allowance for Credit Losses to Total Loans

      1.14 %      1.12 %      1.14 %      1.16 %      1.17 % 

Non-performing Loans to Total Loans

      0.57 %      0.62 %      0.54 %      0.59 %      0.61 % 

Allowance to Non-performing Loans

      200.52 %      182.25 %      210.25 %      194.61 %      192.33 % 

Non-performing Assets to Total Assets

      0.35 %      0.36 %      0.32 %      0.34 %      0.33 % 

 

(a)

March 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  
     March 31,      Dec. 31,      Sept. 30,      June 30,      March 31,  
End of Period Loan Balances    2023      2022      2022      2022      2022  

Commercial real estate

    $ 1,286,830      $ 1,028,050      $ 1,028,484      $ 1,040,243      $ 1,000,972  

Commercial

      361,845        293,643        296,932        285,981        298,903  

Residential real estate

      853,074        475,791        474,014        464,489        455,501  

HELOC

      137,319        132,179        132,267        129,392        128,221  

Consumer

      260,596        221,260        222,706        218,219        192,586  

Agricultural loans

      244,938        246,937        239,081        230,477        224,845  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total, excluding net deferred loan costs

    $ 3,144,602      $ 2,397,860      $ 2,393,484      $ 2,368,801      $ 2,301,028  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

     For the Three Months Ended  
     March 31,      Dec. 31,      Sept. 30,      June 30,      March 31,  
End of Period Customer Deposit Balances    2023      2022      2022      2022      2022  

Noninterest-bearing demand

    $ 1,106,870      $ 896,957      $ 934,638      $ 983,713      $ 963,143  

Interest-bearing demand

      1,473,001        1,224,884        1,399,227        1,416,129        1,476,092  

Money market

      599,037        435,369        393,005        372,723        389,375  

Savings

      535,321        441,978        460,709        455,555        455,353  

Certificate of deposit

      599,762        424,529        337,113        342,422        369,848  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total customer deposits

    $ 4,313,991      $ 3,423,717      $ 3,524,692      $ 3,570,542      $ 3,653,811  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

     For the Three Months Ended  
     March 31,      Dec. 31,     Sept. 30,     June 30,     March 31,  
Noninterest Income    2023      2022     2022     2022     2022  

Service charges on deposit accounts

    $ 1,432      $ 1,203     $ 1,229     $ 1,139     $ 1,145  

Bank owned life insurance income, including death benefits

      547        590       406       405       409  

Trust fees

      2,587        2,373       2,370       2,376       2,519  

Insurance agency commissions

      1,456        1,133       1,136       1,086       1,047  

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

      121        (366 )      (17 )      (60 )      (11 ) 

Retirement plan consulting fees

      307        337       332       323       397  

Investment commissions

      393        508       424       557       694  

Net gains on sale of loans

      310        242       326       365       1,129  

Other mortgage banking fee income (loss), net

      153        98       94       39       60  

Debit card and EFT fees

      1,789        1,407       1,463       1,528       1,416  

Other noninterest income

      1,330        675       1,064       1,719       8,893  
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total Noninterest Income

    $ 10,425      $ 8,200     $ 8,827     $ 9,477     $ 17,698  
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

     For the Three Months Ended  
     March 31,      Dec. 31,      Sept. 30,      June 30,      March 31,  
Noninterest Expense    2023      2022      2022      2022      2022  

Salaries and employee benefits

    $ 14,645      $ 11,385      $ 10,724      $ 11,073      $ 11,831  

Occupancy and equipment

      3,869        2,753        3,028        2,918        2,680  

FDIC insurance and state and local taxes

      1,222        1,010        1,017        979        945  

Professional fees

      1,114        938        985        1,056        3,135  

Merger related costs

      4,313        584        872        674        1,940  

Advertising

      409        472        596        487        392  

Intangible amortization

      909        702        432        419        420  

Core processing charges

      1,164        742        738        1,123        745  

Other noninterest expenses

      3,077        2,509        3,007        2,732        8,368  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Noninterest Expense

    $ 30,722      $ 21,095      $ 21,399      $ 21,461      $ 30,456  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

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

      16,103  

Bank owned life insurance

      22,485  

Core deposit intangible

      19,249  

Current and deferred taxes

      17,246  

Other assets

      6,387  
  

 

 

  

Total assets acquired

      977,159  

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

    $ 19,242  

Goodwill created

      73,400  
  

 

 

  

Total net assets acquired

    $ 92,642  
  

 

 

  

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

 

     Three Months Ended     Three Months Ended  
     March 31, 2023     March 31, 2022  
     AVERAGE             YIELD/     AVERAGE             YIELD/  
     BALANCE      INTEREST (1)      RATE (1)     BALANCE      INTEREST (1)      RATE (1)  

EARNING ASSETS

                 

Loans (2)

    $ 3,136,494      $ 40,942        5.22 %    $ 2,312,712      $ 25,646        4.44 % 

Taxable securities

      1,171,596        6,550        2.24       1,007,963        4,587        1.82  

Tax-exempt securities (2)

      438,614        3,519        3.21       461,793        3,726        3.23  

Other investments

      36,564        376        4.11       31,122        130        1.67  

Federal funds sold and other

      82,995        610        2.94       117,916        48        0.16  
  

 

 

     

 

 

       

 

 

     

 

 

     

Total earning assets

      4,866,263        51,997        4.27       3,931,506        34,137        3.47  

Nonearning assets

      218,746             247,112        
  

 

 

          

 

 

        

Total assets

    $ 5,085,009           $ 4,178,618        
  

 

 

          

 

 

        

INTEREST-BEARING LIABILITIES

                 

Time deposits

    $ 590,412      $ 3,339        2.26 %    $ 378,675      $ 643        0.68 % 

Brokered time deposits

      231,040        2,321        4.02       15,555        15        0.39  

Savings deposits

      1,153,588        1,954        0.68       843,371        167        0.08  

Demand deposits - interest bearing

      1,417,955        5,093        1.44       1,412,291        418        0.12  

Short term borrowings

      80,589        921        4.57       2,222        1        0.18  

Long term borrowings

      88,269        995        4.51       87,798        793        3.61  
  

 

 

     

 

 

       

 

 

     

 

 

     

Total interest-bearing liabilities

    $ 3,561,853        14,623        1.64     $ 2,739,912        2,037        0.30  
          

 

 

        

NONINTEREST-BEARING LIABILITIES

                 

AND STOCKHOLDERS’ EQUITY

                 

Demand deposits - noninterest bearing

      1,107,422             956,499        

Other liabilities

      48,883             26,001        

Stockholders’ equity

      366,851             456,206        
  

 

 

          

 

 

        

TOTAL LIABILITIES AND

                 

STOCKHOLDERS’ EQUITY

    $ 5,085,009           $ 4,178,618        
  

 

 

     

 

 

       

 

 

     

 

 

     

Net interest income and interest rate spread

       $ 37,374        2.63 %       $ 32,100        3.17 % 
     

 

 

     

 

 

       

 

 

     

 

 

  

Net interest margin

            3.07 %            3.27 % 
        

 

 

          

 

 

  

 

(1)

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

(2)

For 2023, adjustments of $86 thousand and $678 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $84 thousand and $774 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.

Reconciliation of Total Assets to Tangible Assets    

 

     For the Three Months Ended  
     March 31,      Dec. 31,      Sept. 30,      June 30,      March 31,  
     2023      2022      2022      2022      2022  

Total Assets

    $ 5,109,886      $ 4,082,200      $ 4,120,022      $ 4,114,364      $ 4,205,855  

Less Goodwill and other intangibles

      193,273        101,666        102,368        101,767        102,187  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Tangible Assets

    $ 4,916,613      $ 3,980,534      $ 4,017,654      $ 4,012,597      $ 4,103,668  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Average Assets

      5,085,009        4,080,497        4,164,855        4,155,719        4,178,618  

Less average Goodwill and other intangibles

      193,368        102,126        101,981        102,042        102,462  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Average Tangible Assets

    $ 4,891,641      $ 3,978,371      $ 4,062,874      $ 4,053,677      $ 4,076,156  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Reconciliation of Common Stockholders’ Equity to Tangible Common Equity    

 

     For the Three Months Ended  
     March 31,      Dec. 31,      Sept. 30,      June 30,      March 31,  
     2023      2022      2022      2022      2022  

Stockholders’ Equity

    $ 374,642      $ 292,295      $ 265,619      $ 321,449      $ 393,886  

Less Goodwill and other intangibles

      193,273        101,666        102,368        101,767        102,187  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Tangible Common Equity

    $ 181,369      $ 190,629      $ 163,251      $ 219,682      $ 291,699  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Average Stockholders’ Equity

      366,851        264,939        330,300        354,981        456,206  

Less average Goodwill and other intangibles

      193,368        102,126        101,981        102,042        102,462  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Average Tangible Common Equity

    $ 173,483      $ 162,813      $ 228,319      $ 252,939      $ 353,744  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Reconciliation of Net Income, Less Merger and Certain Items    

 

     For the Three Months Ended  
     March 31,     Dec. 31,     Sept. 30,     June 30,     March 31,  
     2023     2022     2022     2022     2022  

Net income

    $ 7,075     $ 13,356     $ 15,446     $ 15,951     $ 15,844  

Acquisition related costs - after tax

      3,449       475       711       564       1,540  

Acquisition related provision - after tax

      6,077       0       0       0       0  

Lawsuit settlement income - after tax

      0       0       0       0       (6,616 ) 

Lawsuit settlement contingent legal expense - after tax

      0       0       0       0       1,639  

Charitable donation - after tax

      0       0       0       0       4,740  

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

      (72 )      268       4       (25 )      97  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income - Adjusted

    $ 16,529     $ 14,099     $ 16,161     $ 16,490     $ 17,244  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Diluted EPS excluding merger and one-time items

    $ 0.44     $ 0.42     $ 0.48     $ 0.49     $ 0.51  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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

      1.30 %      1.36 %      1.55 %      1.59 %      1.65 % 

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

      18.02 %      21.29 %      19.57 %      18.58 %      15.12 % 

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

      38.11 %      34.64 %      28.31 %      26.08 %      19.50 % 

Efficiency ratio excluding certain items    

 

     For the Three Months Ended  
     March 31,     Dec. 31,     Sept. 30,     June 30,     March 31,  
     2023     2022     2022     2022     2022  

Net interest income, tax equated

    $ 37,374     $ 30,212     $ 32,636     $ 32,583     $ 32,100  

Noninterest income

      10,425       8,200       8,827       9,477       17,698  

Legal settlement income

      0       0       0       0       (8,375 ) 

Net loss (gain) on asset/security sales

      (91 )      338       6       (32 )      123  

Net interest income and noninterest income adjusted

      47,708       38,750       41,469       42,028       41,546  

Noninterest expense less intangible amortization

      29,813       20,393       20,967       21,042       30,036  

Charitable donation

      0       0       0       0       6,000  

Contingent legal settlement expense

      0       0       0       0       2,075  

Acquisition related costs

      4,313       584       872       674       1,940  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Noninterest expense adjusted

      25,500       19,809       20,095       20,368       20,021  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Efficiency ratio excluding one-time items

      53.45 %      51.12 %      48.46 %      48.46 %      48.19 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net interest margin excluding acquisition marks and PPP interest and fees    

 

     For the Three Months Ended  
     March 31,     Dec. 31,     Sept. 30,     June 30,     March 31,  
     2023     2022     2022     2022     2022  

Net interest income, tax equated

    $ 37,374     $ 30,212     $ 32,636     $ 32,583     $ 32,100  

Acquisition marks

      2,597       174       215       349       926  

PPP interest and fees

      0       10       62       634       686  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted and annualized net interest income

      139,108       120,112       129,436       126,400       121,828  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average earning assets

      4,866,263       4,047,343       4,065,085       4,015,385       3,931,506  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Less PPP average balances

      310       485       1,586       16,019       30,003  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted average earning assets

      4,865,953       4,046,858       4,063,499       3,999,366       3,901,503  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net interest margin excluding marks and PPP interest and fees

      2.86 %      2.97 %      3.19 %      3.16 %      3.12 %