Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months ended March 31, 2014.
Net income for the three months ended March 31, 2014 was $2.2 million, or $0.12 per diluted share, which compares favorably to $2.0 million, or $0.11 per diluted share for the first quarter ended March 31, 2013.
Kevin J. Helmick, President and CEO, stated, “Net income for the first quarter of 2014 increased 9.28% to $2.2 million compared to the first quarter of 2013, and our efficiency ratio also improved to 69.87% from 72.57% during the same time period. The improvement in our efficiency ratio is consistent with our strategy to increase fee income and decrease noninterest expenses. It is important to note that noninterest income has increased 19.4% in comparing the first quarter of 2014 to the first quarter of 2013, while noninterest expenses increased only 0.58%. We are also pleased to report that loans increased 5.7% in the past twelve months.”
2014 First Quarter Financial Highlights
- Loan growth
Total loans were $626.2 million at March 31, 2014, compared to $592.5 million at March 31, 2013. This represents an increase of 5.7%. 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, residential real estate and indirect loan portfolios. Loans comprised 58.2% of the Bank's average earning assets in 2014, compared to 55.2% in 2013.
- Loan quality
Non-performing assets to total assets remain at a safe level, currently at 0.76%. Early stage delinquencies also continue to decrease, down $1.1 million from March 31, 2013 to $2.5 million at March 31, 2014.
- Net interest margin
The net interest margin for the quarter ended March 31, 2014 was 3.56%, an improvement of 3 basis points over the 3.53% reported for the quarter ended December 31, 2013. Asset yields increased 3 basis points, while the cost of interest-bearing liabilities remain unchanged.
- Noninterest income
Noninterest income was $3.43 million for the first quarter of 2014, a 19.4% improvement compared to the same quarter in 2013. Trust fees increased $151 thousand or 11% and service charges on deposit accounts also increased $99 thousand or 20%. The company also added $364 thousand in retirement plan consulting fees earned from the entity acquired in July 2013, National Associates, Inc.
- Cost saving initiatives
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. In addition to the cost savings initiatives, the Company also made adjustments to the fee structure for its retail and commercial banking products and services. As a result of these actions, the Company’s efficiency ratio improved to 69.87% for the quarter ended March 31, 2014, which compares favorably to the 72.57% reported in the first quarter in 2013.
2014 Outlook
Mr. Helmick continued: “Although loan production was moderate in the first quarter of 2014, we 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 and pre-tax, pre-provision income, excluding gains (losses) on sales of securities, 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 Income | For the Three Months Ended | |||||||||
| March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||
| 2014 | 2013 | 2013 | 2013 | 2013 | ||||||
| Total interest income | $10,063 | $10,298 | $10,122 | $10,273 | $10,266 | |||||
| Total interest expense | 1,207 | 1,257 | 1,274 | 1,234 | 1,298 | |||||
| Net interest income | 8,856 | 9,041 | 8,848 | 9,039 | 8,968 | |||||
| Provision for loan losses | 330 | 525 | 340 | 170 | 255 | |||||
| Other income | 3,433 | 3,641 | 4,173 | 3,225 | 2,875 | |||||
| Other expense | 9,141 | 9,221 | 10,926 | 9,822 | 9,088 | |||||
| Income before income taxes | 2,818 | 2,936 | 1,755 | 2,272 | 2,500 | |||||
| Income taxes | 627 | 641 | 143 | 404 | 495 | |||||
| Net income | $2,191 | $2,295 | $1,612 | $1,868 | $2,005 | |||||
| Average shares outstanding | 18,778 | 18,776 | 18,776 | 18,747 | 18,795 | |||||
| Pre-tax pre-provision income | $3,148 | $3,461 | $2,095 | $2,442 | $2,755 | |||||
| Basic and diluted earnings per share | 0.12 | 0.12 | 0.09 | 0.10 | 0.11 | |||||
| Cash dividends | 563 | 563 | 563 | 557 | 564 | |||||
| Cash dividends per share | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | |||||
| Performance Ratios | ||||||||||
| Net Interest Margin (Annualized) | 3.56% | 3.53% | 3.47% | 3.63% | 3.68% | |||||
| Efficiency Ratio (Tax equivalent basis) | 69.87% | 67.96% | 81.64% | 77.16% | 72.57% | |||||
Return on Average Assets (Annualized) | 0.78% | 0.78% | 0.56% | 0.82% | 0.72% | |||||
Return on Average Equity (Annualized) | 7.65% | 7.23% | 5.60% | 6.21% | 6.70% | |||||
| Dividends to Net Income | 25.70% | 24.53% | 34.93% | 29.82% | 28.13% | |||||
| Consolidated Statements of Financial Condition | ||||||||||
| March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||
| 2014 | 2013 | 2013 | 2013 | 2013 | ||||||
| Assets | ||||||||||
| Cash and cash equivalents | $29,333 | $27,513 | $40,303 | $26,587 | $57,312 | |||||
| Securities available for sale | 427,625 | 422,985 | 438,127 | 443,833 | 439,540 | |||||
| Loans held for sale | 1,026 | 158 | 1,016 | 4,612 | 4,330 | |||||
| Loans | 626,186 | 630,684 | 611,349 | 596,838 | 592,520 | |||||
| Less allowance for loan losses | 7,387 | 7,568 | 7,369 | 7,590 | 7,508 | |||||
| Net Loans | 618,799 | 623,116 | 603,980 | 589,248 | 585,012 | |||||
| Other assets | 64,217 | 63,554 | 64,693 | 59,209 | 56,905 | |||||
| Total Assets | $1,141,000 | $1,137,326 | $1,148,119 | $1,123,489 | $1,143,099 | |||||
| Liabilities and Stockholders' Equity | ||||||||||
| Deposits | $923,033 | $915,216 | $903,410 | $901,886 | $915,855 | |||||
| Other interest-bearing liabilities | 92,815 | 101,439 | 118,322 | 101,589 | 101,659 | |||||
| Other liabilities | 7,829 | 7,664 | 13,863 | 5,698 | 5,009 | |||||
| Total liabilities | 1,023,677 | 1,024,319 | 1,035,595 | 1,009,173 | 1,022,523 | |||||
| Stockholders' Equity | 117,323 | 113,007 | 112,524 | 114,316 | 120,576 | |||||
| Total Liabilities | ||||||||||
| and Stockholders' Equity | $1,141,000 | $1,137,326 | $1,148,119 | $1,123,489 | $1,143,099 | |||||
| Period-end shares outstanding | 18,781 | 18,776 | 18,776 | 18,547 | 18,795 | |||||
| Book value per share | $6.25 | $6.02 | $5.99 | $6.16 | $6.42 | |||||
| Tangible book value per share | 5.71 | 5.47 | 5.43 | 5.85 | 6.10 | |||||
| Capital and Liquidity | ||||||||||
| Total Capital to Risk Weighted Assets (a) | 16.60% | 16.26% | 16.28% | 17.25% | 17.48% | |||||
| Tier 1 Capital to Risk Weighted Assets (a) | 15.55% | 15.19% | 15.22% | 16.08% | 16.31% | |||||
Tier 1 Capital to Average Assets (a) | 9.73% | 9.36% | 9.29% | 9.64% | 9.77% | |||||
| Equity to Asset Ratio | 10.28% | 9.94% | 9.80% | 10.18% | 10.55% | |||||
| Tangible Common Equity Ratio | 9.48% | 9.11% | 8.96% | 9.71% | 10.08% | |||||
| Net Loans to Assets | 54.23% | 54.79% | 52.61% | 52.45% | 51.18% | |||||
| Loans to Deposits | 67.84% | 68.91% | 67.67% | 66.18% | 64.70% | |||||
Asset Quality | ||||||||||
| Non-performing loans | $8,494 | $9,091 | $9,124 | $8,079 | $7,368 | |||||
| Other Real Estate Owned | 174 | 171 | 208 | 295 | 410 | |||||
| Non-performing assets | 8,668 | 9,262 | 9,332 | 8,374 | 7,778 | |||||
| Loans 30 - 89 days delinquent | 2,473 | 3,600 | 2,348 | 2,497 | 3,536 | |||||
| Charged-off loans | 836 | 620 | 915 | 456 | 663 | |||||
| Recoveries | 325 | 294 | 354 | 367 | 287 | |||||
| Net Charge-offs | 511 | 326 | 561 | 89 | 376 | |||||
| Annualized Net Charge-offs to | ||||||||||
| Average Net Loans Outstanding | 0.34% | 0.22% | 0.38% | 0.06% | 0.26% | |||||
| Allowance for Loan Losses to Total Loans | 1.18% | 1.20% | 1.21% | 1.27% | 1.27% | |||||
| Non-performing Loans to Total Loans | 1.36% | 1.44% | 1.49% | 1.35% | 1.24% | |||||
| Allowance to Non-performing Loans | 86.97% | 83.25% | 80.77% | 93.95% | 101.90% | |||||
| Non-performing Assets to Total Assets | 0.76% | 0.81% | 0.81% | 0.75% | 0.68% | |||||
| (a) March 31, 2014 ratio is estimated | ||||||||||
| Reconciliation of Common Stockholders' Equity to Tangible Common Equity | ||||||||||
| March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||
| 2014 | 2013 | 2013 | 2013 | 2013 | ||||||
| Stockholders' Equity | $117,323 | $113,007 | $112,524 | $114,316 | $120,576 | |||||
| Less Goodwill and other intangibles | 10,151 | 10,343 | 10,546 | 5,836 | 5,934 | |||||
| Tangible Common Equity | $107,172 | $102,664 | $101,978 | $108,480 | $114,642 | |||||
| Reconciliation of Total Assets to Tangible Assets | ||||||||||
| March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||
| 2014 | 2013 | 2013 | 2013 | 2013 | ||||||
| Total Assets | $1,141,000 | $1,137,326 | $1,148,119 | $1,123,489 | $1,143,099 | |||||
| Less Goodwill and other intangibles | 10,151 | 10,343 | 10,546 | 5,836 | 5,934 | |||||
| Tangible Assets | $1,130,849 | $1,126,983 | $1,137,573 | $1,117,653 | $1,137,165 | |||||
| Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income | ||||||||||
| For the Three Months Ended | ||||||||||
| March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||
| 2014 | 2013 | 2013 | 2013 | 2013 | ||||||
| Income before income taxes | $2,818 | $2,936 | $1,755 | $2,272 | $2,500 | |||||
| Provision for loan losses | 330 | 525 | 340 | 170 | 255 | |||||
| Pre-tax, pre-provision income | $3,148 | $3,461 | $2,095 | $2,442 | $2,755 | |||||
Contacts:
Kevin J. Helmick, President and CEO,
330-533-3341
Email: exec@farmersbankgroup.com
