News Column

Farmers National Banc Corp. Announces 2014 Second Quarter Financial Results

July 23, 2014

  • 126 consecutive quarters of profitability
  • Net income per diluted share for three months ended June 30, 2014 was $0.13, an increase of 30% compared to $0.10 for the second quarter, 2013
  • Efficiency ratio for the second quarter improved to 69.68%, compared to 77.16% for the same quarter in 2013
  • Loans increased 6.9% since June 30, 2013
  • Non-performing assets to total assets remain at low levels, 0.75% at June 30, 2014

    CANFIELD, Ohio--(BUSINESS WIRE)-- Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three and six months ended June 30, 2014.

    Net income for the three months ended June 30, 2014 was $2.4 million, or $0.13 per diluted share, which compares favorably to $1.9 million, or $0.10 per diluted share for the second quarter ended June 30, 2013. Net income for the six months ended June 30, 2014 was $4.5 million, a 17.3% increase compared to $3.9 million for the same period in 2013. On a per share basis, net income for the six months ended June 30, 2014 was $0.24, an increase of 14.3% compared to the six month period ended June 30, 2013.

    Kevin J. Helmick, President and CEO, stated, “Our improvement in net income for the six months ended June 30, 2014 and the second quarter of 2014 is a result of our continued focus on increasing fee income and control of noninterest expenses. The continued focus on increasing fee-based revenues and reducing expenses has also contributed to an improvement in our efficiency ratio to 69.8% from 74.9% during the first six months of 2014 compared to the same period in 2013. It is important to note that noninterest income has increased 17.7% in comparing the second quarter of 2014 to the second quarter of 2013, while noninterest expenses decreased 4.5%. We are also pleased to report that loans increased 6.9% in the past twelve months.”

    2014 Second Quarter Financial Highlights

  • Loan growth

    Total loans were $637.8 million at June 30, 2014, compared to $596.8 million at June 30, 2013. This represents an increase of 6.9%. The increase in loans is a direct result of Farmers’ focus on loan growth utilizing a talented lending and credit team while adhering to a sound underwriting discipline. Most of the increase in loans has occurred in the commercial real estate, commercial and industrial and residential real estate loan portfolios. Loans comprised 58.8% of the Bank's average earning assets in 2014, an improvement compared to 56.1% in 2013.
  • Loan quality

    Non-performing assets to total assets remain at a safe level, currently at 0.75%. Early stage delinquencies also continue to remain at low levels, at $3.5 million or 0.54% of total loans at June 30, 2014.
  • Net interest margin

    The net interest margin for the quarter ended June 30, 2014 was 3.54%, a decrease of 2 basis points from 3.56% reported for the quarter ended March 31, 2014. Asset yields decreased 5 basis points, while the cost of interest-bearing liabilities decreased 2 basis points.
  • Noninterest income

    Noninterest income was $3.8 million for the second quarter of 2014, a 17.7% improvement compared to the same quarter in 2013. Trust fees increased $161 thousand or 11.6% and service charges on deposit accounts also increased $90 thousand or 17.2%. The company also added $272 thousand in retirement plan consulting fees earned from the entity acquired in July 2013, National Associates, Inc.
  • Noninterest expenses

    The Company underwent a cost reduction program in 2013 that included the closure of two retail branch locations and the elimination of several full time positions. During the first six months of 2014, the company has remained committed to keeping noninterest expenses at a more manageable level. As a result of these actions, the Company’s noninterest expenses decreased to $9.4 million for the quarter ended June 30, 2014, compared to the $9.8 million reported in the second quarter in 2013.

    2014 Outlook

    Mr. Helmick continued: “Following a slow first quarter in terms of loan growth and fee income, we were pleased with improvements in both of these areas during the second quarter. We continue to look forward to the ensuing quarters as the economic outlook begins to improve. We also continue our discipline of closely monitoring levels of non-interest expense while growing non-interest revenues.”

    Farmers National Banc Corp. is the bank holding company for the Farmers National Bank of Canfield, Farmers National Insurance, LLC, Farmers Trust Company and National Associates, Inc. Farmers’ operates eighteen banking offices throughout Mahoning, Trumbull, Columbiana and Stark Counties and two trust offices located in Boardman and Howland. Farmers offers a wide range of banking and investment services to companies and individuals, and maintains a website at www.farmersbankgroup.com.

    Non-GAAP Disclosure

    This press release includes disclosures of Farmers tangible common equity ratio and pre-tax, pre-provision income, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers’ marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures are included in the tables following Consolidated Financial Highlights below.

    Forward-Looking Statements

    This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Farmers’ financial condition, results of operations, asset quality trends and profitability. Forward-looking statements are not historical facts but instead represent only management’s current expectations and forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside of Farmers’ control. Farmers’ actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Factors that could cause Farmers’ actual results to differ materially from those described in the forward-looking statements can be found in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2013, which has been filed with the Securities and Exchange Commission and is available on Farmers’ website (www.farmersbankgroup.com) and on the Securities and Exchange Commission’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 IncomeFor the Three Months EndedFor the Six Months Ended
    June 30,March 31,Dec. 30,Sept 30,June 30,June 30,June 30,Percent
    2014   2014   2013   2013   2013   2014   2013   Change
    Total interest income $10,118$10,063$10,298$10,122$10,273$20,181$20,539 -1.7%
    Total interest expense 1,166   1,207   1,257   1,274   1,234   2,373   2,532   -6.3%
    Net interest income 8,952 8,856 9,041 8,848 9,039 17,808 18,007 -1.1%
    Provision for loan losses 300 330 525 340 170 630 425 48.2%
    Other income 3,797 3,433 3,641 4,173 3,225 7,230 6,100 18.5%
    Other expense 9,378   9,141   9,221   10,926   9,822   18,519   18,910   -2.1%
    Income before income taxes 3,071 2,818 2,936 1,755 2,272 5,889 4,772 23.4%
    Income taxes 720   627   641   143   404   1,347   899   49.8%
    Net income$2,351   $2,191   $2,295   $1,612   $1,868   $4,542   $3,873   17.3%
     
    Average shares outstanding 18,781 18,778 18,776 18,776 18,747 18,780 18,771
    Pre-tax pre-provision income $3,371$3,148$3,461$2,095$2,442$6,519$5,197
    Basic and diluted earnings per share 0.13 0.12 0.12 0.09 0.10 0.24 0.21
    Cash dividends 563 563 563 563 557 1,127 1,121
    Cash dividends per share 0.03 0.03 0.03 0.03 0.03 0.06 0.06
    Performance Ratios
    Net Interest Margin (Annualized) 3.54% 3.56% 3.53% 3.47% 3.63% 3.55% 3.65%
    Efficiency Ratio (Tax equivalent basis) 69.68% 69.87% 67.96% 81.64% 77.16% 69.77% 74.88%
    Return on Average Assets (Annualized) 0.83% 0.78% 0.78% 0.56% 0.66% 0.80% 0.69%
    Return on Average Equity (Annualized) 7.85% 7.65% 7.23% 5.60% 6.21% 7.74% 6.48%
    Dividends to Net Income 23.95% 25.70% 24.53% 34.93% 29.82% 24.81% 28.94%
     
    Consolidated Statements of Financial Condition
    June 30,March 31,Dec. 30,Sept 30,June 30,
    20142014201320132013
    Assets
    Cash and cash equivalents $28,070$29,333$27,513$40,303$26,587
    Securities available for sale 409,285 427,625 422,985 438,127 443,833
     
    Loans held for sale 275 1,026 158 1,016 4,612
    Loans 637,774 626,186 630,684 611,349 596,838
    Less allowance for loan losses 7,356   7,387   7,568   7,369   7,590
    Net Loans 630,418   618,799   623,116   603,980   589,248
     
    Other assets 65,238   64,217   63,554   64,693   59,209
    Total Assets$1,133,286   $1,141,000   $1,137,326   $1,148,119   $1,123,489
     
    Liabilities and Stockholders' Equity
    Deposits $907,443$923,033$915,216$903,410$901,886
    Other interest-bearing liabilities 93,807 92,815 101,439 118,322 101,589
    Other liabilities 11,016   7,829   7,664   13,863   5,698
    Total liabilities 1,012,266 1,023,677 1,024,319 1,035,595 1,009,173
    Stockholders' Equity 121,020   117,323   113,007   112,524   114,316
    Total Liabilities
    and Stockholders' Equity$1,133,286   $1,141,000   $1,137,326   $1,148,119   $1,123,489
     
    Period-end shares outstanding 18,781 18,781 18,776 18,776 18,547
    Book value per share $6.44$6.25$6.02$5.99$6.16
    Tangible book value per share 5.91 5.71 5.47 5.43 5.85
    Capital and Liquidity
    Total Capital to Risk Weighted Assets (a) 16.71% 16.51% 16.26% 16.28% 17.25%
    Tier 1 Capital to Risk Weighted Assets (a) 15.67% 15.47% 15.19% 15.22% 16.08%
    Tier 1 Capital to Average Assets (a) 9.89% 9.73% 9.36% 9.29% 9.64%
    Equity to Asset Ratio 10.68% 10.28% 9.94% 9.80% 10.18%
    Tangible Common Equity Ratio 9.89% 9.48% 9.11% 8.96% 9.71%
    Net Loans to Assets 55.63% 54.23% 54.79% 52.61% 52.45%
    Loans to Deposits 70.28% 67.84% 68.91% 67.67% 66.18%
    Asset Quality
    Non-performing loans (b) $8,140$8,494$9,091$9,124$8,079
    Other Real Estate Owned 352 174 171 208 295
    Non-performing assets 8,492 8,668 9,262 9,332 8,374
    Loans 30 - 89 days delinquent (b) 3,460 2,473 3,600 2,348 2,497
    Charged-off loans 650 836 620 915 456
    Recoveries 319 325 294 354 367
    Net Charge-offs 331 511 326 561 89
    Annualized Net Charge-offs to
    Average Net Loans Outstanding 0.21% 0.34% 0.22% 0.38% 0.06%
    Allowance for Loan Losses to Total Loans 1.15% 1.18% 1.20% 1.21% 1.27%
    Non-performing Loans to Total Loans 1.28% 1.36% 1.44% 1.49% 1.35%
    Allowance to Non-performing Loans 90.37% 86.97% 83.25% 80.77% 93.95%
    Non-performing Assets to Total Assets 0.75% 0.76% 0.81% 0.81% 0.75%
                                     
    (a) June 30, 2014 ratio is estimated
    (b) Amounts reported are unpaid principal balance
     
     
    Reconciliation of Common Stockholders' Equity to Tangible Common Equity
    June 30,March 31,Dec. 30,Sept 30,June 30,
    20142014201320132013
    Stockholders' Equity $121,020$117,323$113,007$112,524$114,316
    Less Goodwill and other intangibles 9,960   10,151   10,343   10,546   5,836
    Tangible Common Equity $111,060   $107,172   $102,664   $101,978   $108,480
     
    Reconciliation of Total Assets to Tangible Assets
    June 30,March 31,Dec. 30,Sept 30,June 30,
    20142014201320132013
    Total Assets $1,133,286$1,141,000$1,137,326$1,148,119$1,123,489
    Less Goodwill and other intangibles 9,960   10,151   10,343   10,546   5,836
    Tangible Assets $1,123,326   $1,130,849   $1,126,983   $1,137,573   $1,117,653
     
    Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income
    For the Three Months EndedFor the Six Months Ended
    June 30,March 31,Dec. 30,Sept 30,June 30,June 30,June 30,
    2014201420132013201320142013
    Income before income taxes $3,071$2,818$2,936$1,755$2,272$5,889$4,772
    Provision for loan losses 300   330   525   340   170   630   425
    Pre-tax, pre-provision income $3,371   $3,148   $3,461   $2,095   $2,442   $6,519   $5,197





    Farmers National Banc Corp.

    Kevin J. Helmick, President and CEO, 330-533-3341

    Email: exec@farmersbankgroup.com

    Source: Farmers National Banc Corp.


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