Farmers Posts $15.8M in Net Income for First Quarter

CANFIELD, Ohio — Farmers National Banc Corp. reported first quarter net income of $15.8 million, or 47 cents per diluted share, marking 157 consecutive quarters of profitability.

That’s up from $14.6 million or 51 cents per share in the same quarter of 2021, the parent of Farmers National Bank reported Wednesday. The results included pretax items of $1.9 million for merger related costs, $8.4 million in other noninterest income for the net proceeds of a legal settlement, a $6 million charitable contribution to the Farmers Charitable Foundation, $2.1 million in legal expenses associated with the legal settlement, security losses of $11,000, and a loss of $112,000 on the sale of assets.

Farmers used the legal settlement funds to make the contribution to the charitable foundation, according to the release.

“We produced outstanding results again in the first quarter amidst an increasingly volatile economic landscape,” Kevin Helmick, Farmers president and CEO, said in the release. “Our loan pipelines are very strong as we enter the second quarter and, as always, we will continue to look for opportunities to effectively manage our balance sheet and expense levels while looking to expand our fee based businesses.”

On March 23, Farmers entered into an agreement and plan of merger with Emclaire Financial Corp., a Pennsylvania corporation and parent of The Farmers National Bank of Emlenton. The transaction is subject to receipt of Emclaire shareholder approval and customary regulatory approvals and is expected to close in the second half of 2022.

It will mark Farmers’ expansion into Pennsylvania. Emclaire operates 19 branches in 10 counties throughout western Pennsylvania. As of March 31, 2022, Emclaire had total assets of $1.1 billion, gross loans of $794.9 million, deposits of $936.0 million and equity of $86.7 million.

“Our recently announced acquisition of Emclaire Financial Corp. opens up growth opportunities in Pennsylvania, including the attractive Pittsburgh markets, and we look forward to welcoming Emclaire’s team into the Farmers family.” Helmick said. “We also demonstrated our continued commitment to the communities in which we serve with a significant contribution to the Farmers Charitable Foundation which was established several years ago. We are extremely proud of the work that is done through the foundation.”

Gross loans (excluding loans held for sale) were $2.3 billion at March 31, 2022, compared to $2.33 billion at Dec. 31, 2021. Gross loans declined $26.1 million for the quarter, but excluding the run off in PPP balances during the quarter the decline was $12.4 million.

The loss of some commercial loan originators hurt results in the first quarter, Farmers reports, but “the pipelines are solid” as it enters the second quarter and looks to hit mid-single digit loan growth for fiscal year 2022. At March 31, 2022, Farmers has $23.2 million of PPP loans before deferred fees still to be forgiven, and $672,000 in net deferred fees associated with these loans yet to be recognized into income.

Among the first-quarter highlights Farmers provided in its quarterly earnings report are:

• Total deposits at March 31, 2022, were $3.69 billion compared to $3.55 billion at Dec. 31, 2021. The $146.6 million increase is due to seasonality in public fund balances and continued growth in business and consumer deposits. In addition, Farmers added $40 million in brokered deposits during the quarter.
• Total stockholders’ equity decreased to $393.9 million at March 31, 2022, compared to $472.4 million at Dec. 31, 2021. The decrease in stockholders’ equity was primarily due to an $88.8 million decline in accumulated other comprehensive income and dividends paid to stockholders offset by net income for the quarter.
• Return on average assets, (excluding certain items, non-GAAP), was 1.65% for the first quarter of 2022.
• Net interest income was $31.2 million for the first quarter of 2022 compared to $25.3 million for the first quarter of 2021. The increase was due to growth in average interest earning assets, including the acquisition of Cortland Bancorp, offset by a decline in net interest margin of 27 basis points.
• Net interest margin was 3.27% for the first quarter of 2022 compared to 3.33% for the fourth quarter of 2021 and 3.54% for the first quarter of 2021.
• Noninterest income increased to $17.7 million for the first quarter of 2022 compared to $10.1 million for the quarter ended March 31, 2021.

Key performance ratios for the quarters ended March 31, 2022; Dec. 31, 2021; and March 31, 2021 are:

• Return on average assets annualized: 1.52%, 0.58%, 1.87%.
• Return on average equity annualized: 13.89%, 5.24%, 16.81%.
• Efficiency ratio tax-equivalent basis: 61.36%, 63.61%, 47.76%.

Total assets for Farmers National Banc Corp. increased to $4.21 billion at March 31, 2022 compared to $4.14 billion at Dec. 31, 2021.

Published by The Business Journal, Youngstown, Ohio.