Farmers’ Net Income Falls Because of Merger Expense

CANFIELD, Ohio – Farmers National Banc Corp, holding company of Farmers National Bank and Farmers Trust Co., Monday reported second-quarter net income of $812,000, or four cents per share, and first-half net income of $3.02 million, or 16 cents per share.

This compares to first-quarter net income of $2.21 million, or 12 cents per share, and year-ago second-quarter net income of $2.35 million, or 13 cents a share. First-half 2014 net income was $4.54 million, or 24 cents a share. So first-half profits are 33.4% lower than a year ago.

Excluding expenses related to its acquisition of National Bancshares Corp., first-half net income would have been $4.7 million, or 25 cents per share, Farmers said.

In a written statement, the president and CEO, Kevin J. Helmick, said, “We are pleased to have closed our merger with National Bancshares Corp. [holding company of First National Bank of Orrville], and to have announced our proposed merger with Tri-State 1st Banc Inc. [based in East Liverpool] during our second quarter. We are also delighted to report that organic loan growth has increased 10% over the past 12 months and that our level of noninterest income [fees, service charges and commissions] continues to improve.

Key performance ratios (first three annualized) for the quarters ended June 30, March 31 and June 30, 2014:

  • Net interest margin, 3.66%, 3.64%, 3.54%.
  • Return on average assets, 0.27%, 0.79%, 0.83%.
  • Return on average equity, 2.74%, 7.14%, 7.85%.
  • Efficiency ratio (tax equivalent basis), 81.03%, 70.71%, 69.68%.

Because of the acquisition of First National Bank of Orrville, total loans at June 30 were $1.135 billion compared to $637.77 million a year earlier. Organic loan growth was $430 million, Farmers said, and was “a direct result of Farmers’ focus on loan growth … most of which occurred in commercial real estate, commercial and industrial [lending] and residential real estate loan portfolios. Loans now comprise 64.2% of the bank’s average earning assets, an improvement compared to 58.5% in 2014.”

Nonperforming assets (which include loans 90 and more days past due) to total assets “remain as a safe level [$9.11 million],” Farmers said, “0.54%. Early stage delinquencies (loans more than 30 days but less than 89 days past due) also continue to remain at low levels, $7.15 million or 0.63% of total loans at June 30. The allowance of nonperforming loan ratio improved to 91.26% at June 30 from 90.37% at June 30, 2014.”

Other real estate owned, or repossessed real estate, rose to $1.13 million from $144,000 at March 31 and $352,000 a year ago.

Noninterest expense – wages and benefits, rents, data processing, marketing, Federal Deposit Insurance Corp. premiums – was $12.09 million compared to $9.75 million the preceding quarter and $9.38 million the year-ago quarter.

Net interest income was $9.75 million compared to $8.99 million the quarter ended March 31 and $8.95 million the quarter ended June 30, 2014. Other income (fees, service charges, commissions) was $4.41 million compared to $4.04 million the previous quarter and $3.80 million the year-ago quarter.

With the addition of First National Bank of Orrville, Farmers’ deposits rose to $1.321 billion from $909.41 million at March 31 and assets rose to $1.672 billion from $1.134 billion.

Average shares outstanding were 19.37 million, up from 18.41 million the preceding quarter.

Copyright 2022 The Business Journal, Youngstown, Ohio.