- 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
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 marginThe 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 incomeNoninterest
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 expensesThe 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 Income For the Three Months
Ended For 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, 2014
2014 2013 2013 2013 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,
2014 2014 2013 2013 2013
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, 2014 2014 2013 2013
2013 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 Ended For the Six Months Ended June 30,
March 31, Dec. 30, Sept 30, June 30,
June 30, June 30, 2014 2014 2013
2013 2013 2014 2013 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,
330-533-3341Email: exec@farmersbankgroup.com
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