FARMERS NATIONAL BANC CORP. Cautionary Note Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the safe harbor provisions of theU.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are not statements of historical fact, but rather statements based on the Company's current expectations, beliefs and assumptions regarding the future of Farmers' business, future plans and strategies, projections, anticipated events and trends, its intended results and future performance, the economy and other future conditions. Forward-looking statements are preceded by terms such as "will," "would," "should," "could," "may," "expect," "estimate," "believe," "anticipate," "intend," "plan," "project," or variations of these words, or similar expressions. Forward-looking statements are not a guarantee of future performance and actual future results could differ materially from those contained in forward-looking information. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Numerous uncertainties, risks, and changes could cause or contribute to Farmers' actual results, performance, and achievements to be materially different from those expressed or implied by the forward-looking statements.
Factors that could cause or contribute to such differences include, without
limitation, risks and uncertainties detailed from time to time in the Company's
filings with the
Many of these factors are beyond the Company's ability to control or predict, and readers are cautioned not to put undue reliance on those forward-looking statements. The following, which is not intended to be an all-encompassing list, summarizes several factors that could cause the Company's actual results to differ materially from those anticipated or expected in any forward-looking statement:
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general economic conditions in markets where the Company conducts business, which could materially impact credit quality trends;
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the length and extent of the economic impacts of the COVID-19 pandemic;
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actions by the
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disruptions in the mortgage and lending markets and significant or unexpected fluctuations in interest rates related to governmental responses to inflation, including financial stimulus packages and interest rate changes;
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general business conditions in the banking industry;
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the regulatory environment;
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general fluctuations in interest rates;
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demand for loans in the market areas where the Company conducts business;
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rapidly changing technology and evolving banking industry standards;
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competitive factors, including increased competition with regional and national financial institutions;
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Farmers' ability to attract, recruit and retain skilled employees; and
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new service and product offerings by competitors and price pressures.
Other factors not currently anticipated may also materially and adversely affect the Company's results of operations, cash flows and financial position. There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in the presentation are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. The Company does not undertake, and expressly disclaims, any obligation to update or alter any statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.
Results of Operations. The results of operation, and comparisons to results from
the first quarter of 2022, are materially impacted by the acquisition of
Emlenton which closed on
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The following is a comparison of selected financial ratios and other results at
or for the three month periods ended
At or for the Three Months
Ended March 31,
(In Thousands, except Per Share Data) 2023 2022
Total assets $ 5,109,886 $ 4,205,855
Net income $ 7,075 $ 15,844
Diluted earnings per share $ 0.19 $ 0.47
Return on average assets (annualized) 0.56 % 1.52 %
Return on average equity (annualized) 7.71 % 13.89 %
Equity to asset ratio 7.33 % 9.37 %
Dividends to net income 90.50 % 34.18 %
Net loans to assets 60.99 % 54.16 %
Loans to deposits 71.71 % 62.40 %
Net Income. The Company's net income for the quarter ended March 31, 2023
totaled $7.1 million , or $0.19 per diluted share, compared to $15.8 million , or
$0.47 per diluted share, for the three months ended March 31, 2022 . The change
in net income during the first quarter of 2023, compared with the first quarter
of 2022, was impacted by acquisition-related expenses for the Emclaire
transaction that closed on January 1, 2023 . The first quarter of 2023 results of
operations included merger-related expenses of $4.3 million compared to merger
related costs of $1.9 million for the first quarter of 2022. The first quarter
of 2023 also included Day 1 provision for credit losses and provision for
unfunded loans under the CECL model of $7.7 million .
Net Interest Income. The following schedule details the various components of
net interest income for the periods indicated. All asset yields are calculated
on a tax-equivalent basis where applicable. Security yields are based on
amortized cost.
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Average Balance Sheets and Related Yields and Rates
(Dollar Amounts in Thousands)
Three Months Ended Three Months Ended
March 31, 2023 March 31, 2022
AVERAGE AVERAGE
BALANCE INTEREST RATE (1) BALANCE INTEREST RATE (1)
EARNING ASSETS
Loans (2) (3) $ 3,136,494 $ 40,942 5.22 % $ 2,312,712 $ 25,646 4.44 %
Taxable securities (2) 1,171,596 6,550 2.24 1,007,963 4,587 1.82
Tax-exempt securities (2) (3) 438,614 3,519 3.21 461,793 3,726 3.23
Other investments 36,564 376 4.11 31,122 130 1.67
Federal funds sold and other 82,995 610 2.94 117,916 48 0.16
TOTAL EARNING ASSETS 4,866,263 51,997 4.27 3,931,506 34,137 3.47
NONEARNING ASSETS
Cash and due from banks 27,198 28,772
Premises and equipment 54,681 37,573
Allowance for credit losses (33,298 ) (29,008 )
Unrealized gains (losses) on
securities (247,231 ) (17,673 )
Other assets 417,396 227,448
TOTAL ASSETS $ 5,085,009 $ 4,178,618
INTEREST-BEARING LIABILITIES
Time deposits $ 590,412 $ 3,339 2.26 % $ 378,675 $ 643 0.68 %
Brokered time deposits 231,040 2,321 4.02 15,555 15 0.39
Savings deposits 1,153,588 1,954 0.68 843,371 167 0.08
Demand deposits - interest
bearing 1,417,955 5,093 1.44 1,412,291 418 0.12
Short term borrowings 80,589 921 4.57 2,222 1 0.18
Long term borrowings 88,269 995 4.51 87,798 793 3.61
TOTAL INTEREST-BEARING
LIABILITIES 3,561,853 14,623 1.64 2,739,912 2,037 0.30© Edgar Online, source
