Farmers Bank Posts $16M Net Income in 3Q

CANFIELD, Ohio – On Wednesday, Farmers National Banc Corp. reported net income of $16 million, or 56 cents per diluted share, for the third quarter of 2021.

That’s up from the $10.9 million, or 38 cents per share, reported in the comparable quarter of 2020 and the $15.6 million, or 55 cents per share, in the second quarter of this year.

“We are pleased with our ability to post record earnings and find ways to win even as the impact from PPP loans begins to wane,” said President Kevin J. Helmick in a statement. “Out strong net interest margin and fee businesses, outstanding credit quality and tight expense control have contributed to this record performance. With the closing of the Cortland Bank acquisition in November, we are poised to realize additional economies of scale which should allow us to continue our momentum into 2022.”

On Oct. 26, shareholders of Cortland Bancorp, the holding company of Cortland Savings and Banking Co., approved an agreement to merge with Farmers, according to documents filed with the U.S. Securities and Exchange Commission the morning of Oct. 27. The transaction is expected to close Nov. 1.

Farmers National Bank and Cortland Bank announced the proposed merger in late June 2021. The combined entity will have about $4.1 billion in assets and 48 locations. All Cortland Bank branches will become Farmers National Bank sites.

During the first phase of the Paycheck Protection Program, Farmers provided $199.8 million in loans to 1,714 borrowers. As of Sept. 30, 99.2% of those loans – $198.4 million – have been forgiven. In the second round of PPP funding that ran from early January through the end of May, Farmers processed $84 million in new loans. Thus far this year, 34.7% of those loans – $29.2 million – have been forgiven.

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

  • Total loans of $1.89 billion, compared to $1.96 billion as of June 30, 2021, and $2.15 billion as of Sept. 30, 2020. Over the first three quarters of 2021, total loans have declined $183.8 million because of a $71.8 million decrease in PPP loans, a $36.9 million drop in 1-4 family residential loans and declines in commercial and commercial real estate.
  • Nonperforming assets to total assets remains at a low level, currently at 0.44%, compared to 0.40% as of Sept. 30, 2020. Early stage delinquencies, defined as 30-89 days past due, were $6.9 million, or 0.37% of total loans, at Sept. 30 compared to $7.6 million, or 0.39% of total loans, for the prior quarter.
  • Net interest margin in the second quarter was 3.47%, down eight basis points from the second quarter, when the margin was 3.52%. It’s also lower than the 3.55% net interest margin reported in the third quarter of 2020. 
  • Noninterest income was down slightly to $9 million for the third quarter, compared to the $9.2 million in the same quarter a year ago.

Key performance ratios for the quarters ended Sept. 30, June 30 and Sept. 30, 2020 are:

  • Return on average assets annualized: 1.92%, 1.9%, 1.46%.
  • Return on average equity annualized: 16.93%, 17.17%, 12.87%.
  • Efficiency ratio tax-equivalent basis: 46.04%, 45.70%, 50.37%.

Total assets for Farmers National Banc Corp. – which includes Farmers National Bank, Farmers Trust Co. and Farmers National Insurance – was $3.32 billion, up from $3.26 billion in the previous quarter and up from $2.99 billion in the year-ago quarter.

Copyright 2022 The Business Journal, Youngstown, Ohio.