Farmers Reports 3Q Net Income of $1.86 Million

CANFIELD, Ohio – Farmers National Banc Corp. Wednesday reported third-quarter net income of $1.86 million, or seven cents per diluted share.

This compares to second-quarter net income of $812,000, or four cents a share, and third-quarter 2014 net income of $2.28 million, or 12 cents a share.

Farmers is the parent of Farmers National Bank and Farmers Trust Co.

Excluding the expenses it recognized in the third quarter related to acquiring First National Bank of Orrville, net income for that period would have been $3.7 million, or 15 cents a share, Farmers said in its earnings release. All acquisition-related costs during the quarter came to $2.499 million pre-tax, Farmers said.

Farmers completed its acquisition of 1st National Community Bank, East Liverpool, on the first day of the fourth quarter, Oct. 1, adding $135 million in assets to its balance sheet and four offices, three more in Columbiana County and one in Midland, Pa.

Said Kevin J. Helmick, president and CEO of the holding company and Farmers Bank, “We are pleased to complete our first full quarter after the merger with National Bancshares Corp. [parent of First National Bank of Orrville], and to have announced the completion of our merger with Tri-State 1st Banc Inc. [parent of 1st National Community Bank], at the beginning of the fourth quarter. We are delighted to report that organic loan growth has increased 16% during the past 12 months and that our level of net income continues to improve.”

Key performance rations for the quarters ended Sept. 30, June 30, and Sept. 30, 2014:

  • Net interest margin (annualized), 3.84%, 3.66%, 3.58%.
  • Efficiency ratio, 76.55%, 81.03%, 70.17%.
  • Return on average assets (annualized), 0.43%, 0.27%, 0.79%.
  • Return on average equity (annualized), 3.97%, 2.74%, 7.37%.

The efficiency ratio would have fallen to 61.94% for the third quarter had the acquisition-related expenses been excluded, Farmers said.

Other highlights Farmers cited were an increase in non-interest income (fees, service charges and commissions) during the quarter that were 20.8% higher than the year-ago quarter, $4.69 million versus $3.88 million, and its credit quality. “Nonperforming assets to total assets remain at low levels, 0.62%,” Farmers said. Nonperforming assets were $10.67 million Sept. 30 while total assets were $1.708 billion.

Total loans grew to $1.183 billion during the quarter from $1.135 billion the preceding quarter and $646.98 million at Sept. 30, 2014. Sixteen percent of that growth over the year was organic, Farmers noted, that is, in addition to the $430 million in loans First National Bank of Orrville brought in its portfolio it.

Most of the loan growth came from commercial real estate, commercial and industrial lending and residential mortgages, Farmers said. Loans constitute 73.8% of Farmers Bank’s average earning assets, the company said.

Credit quality remains strong, the company said, as evidenced by early stage delinquencies – loans 30 to 89 days past due — $6.97 million, or 0.58% of total loans – compared to $7.15 million the second quarter. Total nonperforming loans (those 90 days or more past due) were $9.62 million compared to $7.98 million the previous quarter. Net charge-offs for the quarter were $211,000 compared to $1.29 million the quarter ended June 30.

Net interest income was $14.54 million compared to $9.75 million the second quarter and $9.29 million the year-ago quarter.

Noninterest expense (includes salaries and benefits, rents, data procession, marketing, Federal Deposit Insurance Corp. premiums) was $13.02 million, up from $10.18 million the second quarter and $9.78 million the year-ago quarter. Third-quarter figures reflect the employees and offices of the former First National Bank.

“Excluding expenses related to acquisition,” Farmers noted, noninterest expenses measured as a percentage of quarterly average assets decreased from 3.39% in the third quarter of 2014 to 3.03% in the third quarter of 2015. Salaries and employee benefits excluding severance benefits related to the [acquisition] as a percent of average assets decreased to 1.68% from %1.85%.”

SOURCE: Farmers National Banc Corp.

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