EX-99.1 2 d552841dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

October 25, 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 THIRD QUARTER OF 2023

 

  •  

Earnings per diluted share of $0.36 ($0.40 excluding certain items, non-GAAP) for the third quarter of 2023

 

  •  

163 consecutive quarters of profitability

 

  •  

Purchased hedges to improve asset sensitivity

 

  •  

Additional FHLB borrowing capacity of $892.6 million as of September 30, 2023

 

  •  

Available for sale securities not pledged totaled $353.8 million at September 30, 2023

 

  •  

Strong asset quality with non-performing asset to total assets of 0.58% as of September 30, 2023

 

  •  

Return on average assets of 1.06% for the third quarter of 2023

 

  •  

ROAE and ROATE (non-GAAP) of 14.5% and 30.3%, respectively, for the third quarter of 2023

CANFIELD, Ohio (October 25, 2023) – Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB) today announced net income of $13.3 million, or $0.36 per diluted share, for the three months ended September 30, 2023, compared to $15.4 million, or $0.46 per diluted share, for the three months ended September 30, 2022. Net income for the third quarter of 2023 included pretax items of $268,000 for acquisition related costs, $785,000 for the settlement of a lawsuit and combined net losses of $764,000 on the sale of securities and the sale of other assets. Excluding these items (non-GAAP), net income for the third quarter of 2023 would have been $14.8 million, or $0.40 per diluted share.

Kevin J. Helmick, President and CEO, stated “Despite the rapid increase in interest rates over the past year and a half, Farmers produced solid third quarter financial results reflecting the benefits of our diverse business model as well as our focus on maintaining strong asset quality and controlling operating expenses. These core banking principals create a solid foundation for Farmers to navigate an increasingly uncertain near-term economic environment, while supporting our long-term growth strategies.”

Balance Sheet

Total assets at September 30, 2023, were $4.97 billion compared to $5.07 billion at June 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 $1.05 billion in assets in the first quarter of 2023. Loans (excluding loans held for sale) have increased by $763.8 million since December 31, 2022 and $13.4 million, or 1.7% annualized, since June 30, 2023. Emclaire was responsible for $740.7 million of the increase in loans since December 31, 2022.

Securities available for sale have declined to $1.21 billion at September 30, 2023 from $1.32 billion at June 30, 2023 and $1.27 billion at December 31, 2022. The decrease since December is due to the gross amount of unrealized losses which totaled $266.5 million at December 31, 2022, compared to a gross unrealized loss of $320.0 million at September 30, 2023. The Company also had sales and runoff from the portfolio during the nine months ended September 30, 2023. These decreases were offset by the addition of $127.0 million in available for sale securities from Emclaire. Bond market volatility is expected to continue through 2023, and the Company expects that it will continue to allow the size of the securities portfolio to shrink to optimize profitability.

Total customer deposits (excluding brokered time deposits) were $4.26 billion at September 30, 2023, compared to $4.25 billion at June 30, 2023, and $3.42 billion at December 31, 2022. The increase from December was driven by $875.8 million in deposits assumed in the acquisition of Emclaire. Competition for deposits remains high and the Company expects this will continue to place pressure on funding costs and deposit volumes.

Total stockholders’ equity equaled $316.0 million at September 30, 2023 compared to $367.0 million at June 30, 2023, and $292.3 million at December 31, 2022. The increase since December is primarily due to the acquisition of Emclaire and an increase in retained earnings offset by an increase in the unrealized loss from accumulated other comprehensive income. The accumulated other comprehensive loss has increased $41.7 million between December 31, 2022 and September 30, 2023 as market rates spiked sharply during the third quarter of 2023.

Liquidity

At September 30, 2023, the Company’s loan to deposit ratio was 70.2% and the Company’s average deposit balance per account (excluding collateralized deposits) was $27,646. The Company has access to an additional $892.6 million of FHLB borrowing capacity at September 30, 2023 along with $353.8 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.

Credit Quality

The Company’s non-performing loans totaled $18.4 million at September 30, 2023, compared to $18.0 million at June 30, 2023, and $14.8 million at December 31, 2022. The increase since December was primarily due to the addition of Emclaire. Non-performing loans to total loans ratio was 0.58% at September 30, 2023, 0.57% at June 30, 2023, and 0.62% at December 31, 2022. Non-performing assets to total assets was 0.37% at September 30, 2023, and 0.36% at both June 30, 2023, and December 31, 2022. The Company also continues to experience low levels of early stage delinquencies, defined as 30-89 days delinquent. At September 30, 2023, these delinquencies totaled $13.3 million, or 0.42% of total loans. They were $12.3 million, or 0.39% of total loans at June 30, 2023, compared to $9.6 million, or 0.40% of total loans, at December 31, 2022.

The provision for credit losses and unfunded commitments was $243,000 for the third quarter of 2023 compared to $25,000 for the second quarter of 2023 and $448,000 for the third quarter of 2022. Annualized net charge-offs as a percentage of average loans were 0.05% for the three months ended September 30, 2023, compared to 0.10% for the same period in 2022. The allowance for credit losses to total loans was 1.10% at September 30, 2023, compared to 1.11% at June 30, 2023, and 1.12% at December 31, 2022.

Net Interest Income

The Company reported net interest income of $33.8 million in the third quarter of 2023 compared to $34.6 million in the second quarter of 2023 and $31.8 million for the third quarter of 2022. Earning assets were greater in 2023 due to the acquisition of Emclaire but this was partially offset by a decline of 35 basis point in the net interest margin. The net interest margin was 2.86% in the third quarter of 2023 compared to 2.92% for the second quarter of 2023 and 3.21% for the third 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 third quarter of 2023 was 2.61% compared to 2.68% for the second quarter of 2023 and 3.19% for the third quarter of 2022. The decline in net interest margin between the third quarter of 2023 and the third 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 more costly wholesale funding. To help offset the continued compression in the Company’s net interest margin, the Company purchased $100.0 million of pay-fixed/receive variable interest rate swaps during the quarter to improve asset sensitivity and net interest income. The hedges have a final maturity of three years and at inception had a pay rate of 4.35%. Based on rates at September 30, 2023, the swaps are expected to generate approximately $960,000 of annualized net interest income.

Noninterest Income

Noninterest income totaled $9.8 million for the three months ended September 30, 2023, compared to $8.8 million for the three months ended September 30, 2022. Service charges on deposit accounts increased to $1.7 million in the third quarter of 2023 compared to 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 third quarter of 2023 compared to the third quarter of 2022 due to the Emclaire acquisition. Insurance agency commissions are flat in the third quarter of 2023 compared to the second quarter of 2022 but growth for the year has been solid as growth in the insurance business and increased annuity sales have bolstered income. Security losses in the third quarter of 2023 totaled $624,000 compared to losses of $17,000 in the third quarter of 2022. The Company sold securities during the quarter to improve net interest margin in future periods. Investment commissions are up slightly for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022, as customers have been more interested in the annuities mentioned above as opposed to traditional investment products. Net gains on the sale of loans have increased but are still sluggish due to the high level of interest rates and lack of loan volume.

Noninterest Expense

Noninterest expense was $27.7 million for the quarter ended September 30, 2023, compared to $21.4 million for the quarter ended September 30, 2022. The increase in expense is primarily due to the acquisition of Emclaire. Salaries and employee benefits increased $3.5 million to $14.2 million in the third quarter of 2023 compared to the same period in 2022. The acquisition of Emclaire along with normal raise activity were the primary reasons for the increase. Occupancy and equipment expense increased $782,000 primarily due to the acquisition. FDIC and state and local taxes increased due to the acquisition and the increase in the rate paid for FDIC insurance in 2023. Intangible amortization expense and core processing charges increased due to the acquisition. Merger related costs were $268,000 for the third quarter of 2023 compared to $872,000 in the third quarter of 2022. Other noninterest expense increased due the acquisition and due to the recognition of $785,000 in expense related to the settlement of a lawsuit.

About Farmers National Banc Corp.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $5.0 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 September 30, 2023 are $3.2 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 Nine Months Ended  
     Sept. 30,     June 30,     March 31,     Dec. 31,     Sept. 30,     Sept. 30,     Sept. 30,     Percent  
     2023     2023     2023     2022     2022     2023     2022     Change  

Total interest income

    $ 54,229     $ 52,804     $ 51,233     $ 38,111     $ 36,410     $ 158,266     $ 103,975       52.2 % 

Total interest expense

      20,461       18,226       14,623       8,679       4,629       53,310       9,241       476.9 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income

      33,768       34,578       36,610       29,432       31,781       104,956       94,734       10.8 % 

Provision (credit) for credit losses

      243       25       8,599       416       448       8,867       706       1155.9 % 

Noninterest income

      9,831       9,449       10,425       8,200       8,827       29,705       36,002       -17.5 % 

Acquisition related costs

      268       442       4,313       584       872       5,022       3,486       44.1 % 

Other expense

      27,448       25,944       26,409       20,511       20,527       79,802       69,830       14.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

      15,640       17,616       7,714       16,121       18,761       40,970       56,714       -27.8 % 

Income taxes

      2,326       2,650       639       2,765       3,315       5,614       9,473       -40.7 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 13,314     $ 14,966     $ 7,075     $ 13,356     $ 15,446     $ 35,356     $ 47,241       -25.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average diluted shares outstanding

      37,379       37,320       37,933       33,962       33,932       37,533       33,925    

Basic earnings per share

      0.36       0.40       0.19       0.39       0.46       0.94       1.40    

Diluted earnings per share

      0.36       0.40       0.19       0.39       0.46       0.94       1.39    

Cash dividends per share

      0.17       0.17       0.17       0.17       0.16       0.51       0.48    

Performance Ratios

                 

Net Interest Margin (Annualized)

      2.86 %      2.92 %      3.07 %      2.99 %      3.21 %      2.95 %      3.24 %   

Efficiency Ratio (Tax equivalent basis)

      60.11 %      56.28 %      62.53 %      52.59 %      50.55 %      59.70 %      54.00 %   

Return on Average Assets (Annualized)

      1.06 %      1.18 %      0.56 %      1.31 %      1.48 %      0.93 %      1.51 %   

Return on Average Equity (Annualized)

      14.49 %      16.12 %      7.71 %      20.16 %      18.71 %      12.79 %      16.55 %   

Dividends to Net Income

      47.82 %      42.54 %      90.50 %      43.10 %      35.06 %      36.21 %      34.39 %   

Other Performance Ratios (Non-GAAP)

 

          

Return on Average Tangible Assets

      1.09 %      1.23 %      0.58 %      1.34 %      1.52 %      0.97 %      1.55 %   

Return on Average Tangible Equity

      30.29 %      33.55 %      16.31 %      32.81 %      27.06 %      26.80 %      22.62 %   

Consolidated Statements of Financial Condition 

 

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

Assets

               

Cash and cash equivalents

    $ 93,923      $ 116,063      $ 128,001      $ 75,551      $ 79,981  

Securities available for sale

      1,210,736        1,316,878        1,355,449        1,268,025        1,295,133  

Other investments

      35,342        44,975        39,670        33,444        34,399  

Loans held for sale

      1,910        2,197        1,703        858        2,142  

Loans

      3,168,554        3,155,200        3,152,339        2,404,750        2,399,981  

Less allowance for credit losses

      34,753        34,957        36,011        26,978        27,282  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Loans

      3,133,801        3,120,243        3,116,328        2,377,772        2,372,699  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Other assets

      495,451        473,098        468,735        326,550        335,668  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Assets

    $ 4,971,163      $ 5,073,454      $ 5,109,886      $ 4,082,200      $ 4,120,022  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities and Stockholders’ Equity

 

         

Deposits

               

Noninterest-bearing

    $ 1,039,524      $ 1,084,232      $ 1,106,870      $ 896,957      $ 934,638  

Interest-bearing

      3,217,869        3,165,381        3,207,121        2,526,760        2,590,054  

Brokered time deposits

      254,257        21,135        82,169        138,051        42,459  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total deposits

      4,511,650        4,270,748        4,396,160        3,561,768        3,567,151  

Other interest-bearing liabilities

      88,550        388,437        292,324        183,211        243,098  

Other liabilities

      54,981        47,278        46,760        44,926        44,154  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

      4,655,181        4,706,463        4,735,244        3,789,905        3,854,403  

Stockholders’ Equity

      315,982        366,991        374,642        292,295        265,619  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Liabilities and Stockholders’ Equity

    $ 4,971,163      $ 5,073,454      $ 5,109,886      $ 4,082,200      $ 4,120,022  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Period-end shares outstanding

      37,489       37,457       37,439       34,055       34,060  

Book value per share

    $ 8.43     $ 9.80     $ 10.01     $ 8.58     $ 7.80  

Tangible book value per share (Non-GAAP)*

      3.33       4.67       4.84       5.60       4.79  

*  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)

      10.54 %      10.25 %      10.04 %      13.71 %      13.36 % 

Total Risk Based Capital Ratio (a)

      14.06 %      13.76 %      13.60 %      17.79 %      17.44 % 

Tier 1 Risk Based Capital Ratio (a)

      11.04 %      10.74 %      10.54 %      14.32 %      13.97 % 

Tier 1 Leverage Ratio (a)

      7.85 %      7.68 %      7.43 %      9.84 %      10.24 % 

Equity to Asset Ratio

      6.36 %      7.23 %      7.33 %      7.16 %      6.45 % 

Tangible Common Equity Ratio (b)

      2.61 %      3.58 %      3.69 %      4.79 %      4.06 % 

Net Loans to Assets

      63.04 %      61.50 %      60.99 %      58.25 %      57.59 % 

Loans to Deposits

      70.23 %      73.88 %      71.71 %      67.52 %      67.28 % 

Asset Quality

           

Non-performing loans

    $ 18,368     $ 17,956     $ 17,959     $ 14,803     $ 12,976  

Non-performing assets

      18,522       18,167       18,053       14,876       13,042  

Loans 30 - 89 days delinquent

      13,314       12,321       10,219       9,605       6,659  

Charged-off loans

      525       971       469       754       783  

Recoveries

      139       172       198       184       178  

Net Charge-offs

      386       799       271       570       605  

Annualized Net Charge-offs to Average Net Loans

      0.05 %      0.10 %      0.03 %      0.10 %      0.10 % 

Allowance for Credit Losses to Total Loans

      1.10 %      1.11 %      1.14 %      1.12 %      1.14 % 

Non-performing Loans to Total Loans

      0.58 %      0.57 %      0.57 %      0.62 %      0.54 % 

Allowance to Non-performing Loans

      189.20 %      194.68 %      200.52 %      182.25 %      210.25 % 

Non-performing Assets to Total Assets

      0.37 %      0.36 %      0.35 %      0.36 %      0.32 % 

 

(a)

September 30, 2023 ratio is estimated

(b)

This is a non-GAAP financial measure. A reconciliation to GAAP is shown below

 

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

Commercial real estate

    $ 1,295,847      $ 1,284,974      $ 1,286,830      $ 1,028,050      $ 1,028,484  

Commercial

      357,691        362,664        361,845        293,643        296,932  

Residential real estate

      842,729        849,533        853,074        475,791        474,014  

HELOC

      140,772        138,535        137,319        132,179        132,267  

Consumer

      261,136        260,326        260,596        221,260        222,706  

Agricultural loans

      261,738        250,807        244,938        246,937        239,081  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total, excluding net deferred loan costs

    $ 3,159,913      $ 3,146,839      $ 3,144,602      $ 2,397,860      $ 2,393,484  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

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

Noninterest-bearing demand

    $ 1,039,524      $ 1,084,232      $ 1,106,870      $ 896,957      $ 934,638  

Interest-bearing demand

      1,426,349        1,383,326        1,473,001        1,224,884        1,399,227  

Money market

      588,043        610,051        599,037        435,369        393,005  

Savings

      488,991        511,642        535,321        441,978        460,709  

Certificate of deposit

      714,486        660,362        599,762        424,529        337,113  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total customer deposits

    $ 4,257,393      $ 4,249,613      $ 4,313,991      $ 3,423,717      $ 3,524,692  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

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

Service charges on deposit accounts

    $ 1,712     $ 1,501      $ 1,432      $ 1,203     $ 1,229     $ 4,646     $ 3,513  

Bank owned life insurance income, including death benefits

      694       584        547        590       406       1,825       1,220  

Trust fees

      2,617       2,248        2,587        2,373       2,370       7,453       7,265  

Insurance agency commissions

      1,116       1,332        1,456        1,133       1,136       3,904       3,269  

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

      (624 )      13        121        (366 )      (17 )      (490 )      (88 ) 

Retirement plan consulting fees

      360       382        307        337       332       1,049       1,052  

Investment commissions

      520       476        393        508       424       1,389       1,675  

Net gains on sale of loans

      395       406        310        242       326       1,111       1,820  

Other mortgage banking fee income (loss), net

      185       234        153        98       94       571       193  

Debit card and EFT fees

      1,763       1,810        1,789        1,407       1,463       5,362       4,407  

Other noninterest income

      1,093       463        1,330        675       1,064       2,885       11,676  
  

 

 

    

 

 

     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total Noninterest Income

    $ 9,831     $ 9,449      $ 10,425      $ 8,200     $ 8,827     $ 29,705     $ 36,002  
  

 

 

    

 

 

     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

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

Salaries and employee benefits

    $ 14,233      $ 13,625      $ 14,645      $ 11,385      $ 10,724      $ 42,503      $ 33,628  

Occupancy and equipment

      3,810        3,859        3,869        2,753        3,028        11,538        8,626  

FDIC insurance and state and local taxes

      1,648        1,494        1,222        1,010        1,017        4,365        2,941  

Professional fees

      1,043        1,190        1,114        938        985        3,347        5,176  

Merger related costs

      268        442        4,313        584        872        5,022        3,486  

Advertising

      492        478        409        472        596        1,379        1,475  

Intangible amortization

      725        1,222        909        702        432        2,856        1,271  

Core processing charges

      1,274        1,144        1,164        742        738        3,582        2,606  

Other noninterest expenses

      4,223        2,932        3,077        2,509        3,007        10,232        14,107  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Noninterest Expense

    $ 27,716      $ 26,386      $ 30,722      $ 21,095      $ 21,399      $ 84,824      $ 73,316  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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  
     September 30, 2023     September 30, 2022  
     AVERAGE             YIELD/     AVERAGE             YIELD/  
     BALANCE      INTEREST (1)      RATE (1)     BALANCE      INTEREST (1)      RATE (1)  

EARNING ASSETS

                 

Loans (2)

    $ 3,153,309      $ 43,928        5.57 %    $ 2,386,184      $ 27,570        4.62 % 

Taxable securities

      1,132,959        6,492        2.29       1,112,411        5,477        1.97  

Tax-exempt securities (2)

      413,117        3,251        3.15       473,677        3,814        3.22  

Other investments

      42,581        487        4.57       33,524        199        2.37  

Federal funds sold and other

      78,922        751        3.81       59,289        205        1.38  
  

 

 

     

 

 

       

 

 

     

 

 

     

Total earning assets

      4,820,888        54,909        4.56       4,065,085        37,265        3.67  

Nonearning assets

      215,445             99,770        
  

 

 

          

 

 

        

Total assets

    $ 5,036,333           $ 4,164,855        
  

 

 

          

 

 

        

INTEREST-BEARING LIABILITIES

                 

Time deposits

    $ 677,291      $ 5,308        3.13 %    $ 338,794      $ 586        0.69 % 

Brokered time deposits

      145,839        1,882        5.16       50,494        142        1.12  

Savings deposits

      1,099,682        2,625        0.95       832,828        165        0.08  

Demand deposits - interest bearing

      1,412,922        7,647        2.16       1,426,801        2,317        0.65  

Short term borrowings

      141,717        1,961        5.53       90,978        533        2.34  

Long term borrowings

      88,494        1,038        4.69       88,031        886        4.03  
  

 

 

     

 

 

       

 

 

     

 

 

     

Total interest-bearing liabilities

    $ 3,565,945        20,461        2.30     $ 2,827,926        4,629        0.65  
          

 

 

        

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY

                 

Demand deposits - noninterest bearing

      1,052,062             969,700        

Other liabilities

      50,726             36,929        

Stockholders’ equity

      367,600             330,300        
  

 

 

          

 

 

        

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

    $ 5,036,333           $ 4,164,855        
  

 

 

     

 

 

       

 

 

     

 

 

     

Net interest income and interest rate spread

       $ 34,448        2.26 %       $ 32,636        3.02 % 
     

 

 

     

 

 

       

 

 

     

 

 

  

Net interest margin

            2.86 %            3.21 % 
        

 

 

          

 

 

  

 

(1)

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

(2)

For 2023, adjustments of $90 thousand and $590 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $76 thousand and $779 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. 

     Nine Months Ended     Nine Months Ended  
     September 30, 2023     September 30, 2022  
     AVERAGE             YIELD/     AVERAGE             YIELD/  
     BALANCE      INTEREST (1)      RATE (1)     BALANCE      INTEREST (1)      RATE (1)  

EARNING ASSETS

                 

Loans (2)

    $ 3,144,817      $ 127,293        5.40 %    $ 2,346,542      $ 79,008        4.49 % 

Taxable securities

      1,153,804        19,697        2.28       1,074,020        15,287        1.90  

Tax-exempt securities (2)

      422,151        10,048        3.17       469,878        11,372        3.23  

Other investments

      40,211        1,457        4.83       32,901        545        2.21  

Federal funds sold and other

      78,224        1,911        3.26       82,031        348        0.57  
  

 

 

     

 

 

       

 

 

     

 

 

     

Total earning assets

      4,839,207        160,406        4.42       4,005,372        106,560        3.55  

Nonearning assets

      219,762             160,975        
  

 

 

          

 

 

        

Total assets

    $ 5,058,969           $ 4,166,347        
  

 

 

          

 

 

        

INTEREST-BEARING LIABILITIES

                 

Time deposits

    $ 636,939      $ 13,171        2.76 %    $ 357,241      $ 1,782        0.67 % 

Brokered time deposits

      145,115        4,889        4.49       37,400        206        0.73  

Savings deposits

      1,128,760        6,981        0.82       837,937        473        0.07  

Demand deposits - interest bearing

      1,421,208        19,619        1.84       1,422,583        3,644        0.34  

Short term borrowings

      145,509        5,608        5.14       45,568        631        1.85  

Long term borrowings

      88,382        3,043        4.59       87,915        2,505        3.80  
  

 

 

     

 

 

       

 

 

     

 

 

     

Total interest-bearing liabilities

    $ 3,565,913        53,311        1.99     $ 2,788,644        9,241        0.44  

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY

                 

Demand deposits - noninterest bearing

    $ 1,075,493           $ 966,173        

Other liabilities

      48,936             30,904        

Stockholders’ equity

      368,627             380,626        
  

 

 

          

 

 

        

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

    $ 5,058,969           $ 4,166,347        
  

 

 

     

 

 

       

 

 

     

 

 

     

Net interest income and interest rate spread

       $ 107,095        2.43 %       $ 97,319        3.11 % 
     

 

 

     

 

 

       

 

 

     

 

 

  

Net interest margin

            2.95 %            3.24 % 
        

 

 

          

 

 

  

 

(1)

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

(2)

For 2023, adjustments of $268 thousand and $1.9 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $238 thousand and $2.3 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 Nine Months Ended  
     Sept. 30,     June 30,     March 31,     Dec. 31,     Sept. 30,     Sept. 30,     Sept. 30,  
     2023     2023     2023     2022     2022     2023     2022  

Total Assets

    $ 4,971,163     $ 5,073,454     $ 5,109,886     $ 4,082,200     $ 4,120,022     $ 4,971,163     $ 4,120,022  

Less Goodwill and other intangibles

      191,326       192,052       193,273       101,666       102,368       191,326       102,368  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible Assets

    $ 4,779,837     $ 4,881,402     $ 4,916,613     $ 3,980,534     $ 4,017,654     $ 4,779,837     $ 4,017,654  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average Assets

      5,058,969       5,070,444       5,085,009       4,080,497       4,164,855       5,058,969       4,166,347  

Less average Goodwill and other intangibles

      191,804       192,972       193,368       102,126       101,981       192,709       102,160  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average Tangible Assets

    $ 4,867,165     $ 4,877,472     $ 4,891,641     $ 3,978,371     $ 4,062,874     $ 4,866,260     $ 4,064,187  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Reconciliation of Common Stockholders’ Equity to Tangible Common Equity

 

 

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

Stockholders’ Equity

    $ 315,982     $ 366,991     $ 374,642     $ 292,295     $ 265,619     $ 315,982     $ 265,619  

Less Goodwill and other intangibles

      191,326       192,052       193,273       101,666       102,368       191,326       102,368  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible Common Equity

    $ 124,656     $ 174,939     $ 181,369     $ 190,629     $ 163,251     $ 124,656     $ 163,251  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average Stockholders’ Equity

      367,600       371,421       366,851       264,939       330,300       368,627       380,626  

Less average Goodwill and other intangibles

      191,804       192,972       193,368       102,126       101,981       192,709       102,160  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average Tangible Common Equity

    $ 175,796     $ 178,449     $ 173,483     $ 162,813     $ 228,319     $ 175,918     $ 278,466  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Reconciliation of Net Income, Less Merger and Certain Items

 

 

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

Net income

    $ 13,314     $ 14,966     $ 7,075     $ 13,356     $ 15,446     $ 35,356     $ 47,241  

Acquisition related costs - after tax

      234       354       3,449       475       711       4,037       2,815  

Acquisition related provision - after tax

      0       0       6,077       0       0       6,077       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

      620       0       0       0       0       620       0  

Charitable donation - after tax

      0       0       0       0       0       0       4,740  

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

      604       (5 )      (72 )      268       4       527       76  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income - Adjusted

    $ 14,772     $ 15,315     $ 16,529     $ 14,099     $ 16,161     $ 46,617     $ 49,895  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Diluted EPS excluding merger and certain items

    $ 0.40     $ 0.41     $ 0.44     $ 0.42     $ 0.48     $ 1.24     $ 1.47  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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

      1.17 %      1.21 %      1.30 %      1.36 %      1.55 %      1.23 %      1.60 % 

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

      16.07 %      16.49 %      18.02 %      21.29 %      19.57 %      16.86 %      17.48 % 

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

      33.61 %      34.33 %      38.11 %      34.64 %      28.31 %      35.33 %      23.89 % 

 

Efficiency ratio excluding certain items 

 

 

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

Net interest income, tax equated

    $ 34,448     $ 35,273     $ 37,374     $ 30,212     $ 32,636     $ 107,095     $ 97,319  

Noninterest income

      9,831       9,449       10,425       8,200       8,827       29,705       36,002  

Legal settlement income

      0       0       0       0       0       0       (8,375 ) 

Net loss (gain) on asset/security sales

      764       (6 )      (91 )      338       6       667       97  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income and noninterest income adjusted

      45,043       44,716       47,708       38,750       41,469       137,467       125,043  

Noninterest expense less intangible amortization

      26,991       25,163       29,813       20,393       20,967       81,968       72,045  

Charitable donation

      0       0       0       0       0       0       6,000  

Legal settlement expense

      785       0       0       0       0       785       0  

Contingent legal settlement expense

      0       0       0       0       0       0       2,075  

Acquisition related costs

      268       442       4,313       584       872       5,022       3,486  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Noninterest expense adjusted

      25,938       24,721       25,500       19,809       20,095       76,161       60,484  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Efficiency ratio excluding certain items

      57.58 %      55.28 %      53.45 %      51.12 %      48.46 %      55.40 %      48.37 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net interest margin excluding acquisition marks and PPP interest and fees

 

 

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

Net interest income, tax equated

    $ 34,448     $ 35,273     $ 37,374     $ 30,212     $ 32,636     $ 107,095     $ 97,319  

Acquisition marks

      2,959       2,884       2,628       174       215       8,471       1,584  

PPP interest and fees

      1       3       0       10       62       4       1,382  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted and annualized net interest income

      125,952       129,544       138,984       120,112       129,436       131,493       125,804  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average earning assets

      4,820,888       4,830,910       4,866,263       4,047,343       4,065,085       4,839,207       4,005,372  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Less PPP average balances

      247       277       310       485       1,586       262       15,766  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted average earning assets

      4,820,641       4,830,633       4,865,953       4,046,858       4,063,499       4,838,945       3,989,606  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net interest margin excluding marks and PPP interest and fees

      2.61 %      2.68 %      2.86 %      2.97 %      3.19 %      2.72 %      3.15 %