Exhibit 99.1

January 24, 2024

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. REPORTS

SOLID RESULTS FOR FOURTH QUARTER OF 2023

 

•

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

CANFIELD, Ohio (January 24, 2024) – 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	%