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Farmers National Banc Corp. Announces First Quarter Results

  • Earnings per diluted share of $0.47 ($0.51 excluding certain items, non-GAAP) for the first quarter of 2022
  • Completed the systems integration with previously acquired Cortland Bancorp
  • 157 consecutive quarters of profitability
  • Efficiency ratio, (excluding one-time items, non-GAAP), of 48.2% for the first quarter of 2022
  • Return on average assets, (excluding certain items, non-GAAP), was 1.65% for the first quarter of 2022
  • ROAE and ROATE, (excluding certain items, non-GAAP), 15.1% and 19.5%, respectively, for first quarter of 2022

Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB) today announced financial results for the three months ended March 31, 2022.

Net income for the first quarter of 2022 was $15.8 million, or $0.47 per diluted share, compared to $14.6 million, or $0.51 per diluted share, for the first quarter of 2021. The results for the first quarter of 2022 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 $6.0 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. The Company determined to use the legal settlement funds to make the large contribution to the charitable foundation so that the foundation can increase the scale of its commitments to the communities the Company serves. Excluding these items (non-GAAP), net income for the quarter ended March 31, 2022, would have been $17.2 million, or $0.51 per diluted share.

On March 23, 2022, Farmers entered into an agreement and plan of merger with Emclaire Financial Corp. (NASDAQ: EMCF), a Pennsylvania corporation (“Emclaire”), and the parent company of The Farmers National Bank of Emlenton (“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. The transaction will mark the Company’s expansion into Pennsylvania including the attractive Pittsburgh market. Emclaire operates 19 branches in ten 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.

Kevin J. Helmick, President and CEO, commented, “We produced outstanding results again in the first quarter amidst an increasingly volatile economic landscape. 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. 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 continued, “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.”

Balance Sheet

Total assets grew to $4.21 billion at March 31, 2022 compared to $4.14 billion at December 31, 2021. Gross loans (excluding loans held for sale) were $2.30 billion at March 31, 2022, compared to $2.33 billion at December 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, but the pipelines are solid as the Company enters the second quarter and the Company expects to hit mid-single digit loan growth for fiscal year 2022. At March 31, 2022, the Company 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.

Available for sale securities increased to $1.46 billion at March 31, 2022 from $1.43 billion at December 31, 2021. The Company continued to purchase securities in the first quarter of 2022 to invest excess cash and to take advantage of the increase in U.S. treasury rates. While providing more attractive rates for investment purposes, the rise in U.S. treasury rates during the quarter also resulted in a gross unrealized loss of $100.7 million at March 31, 2022, compared to a gross unrealized gain of $11.7 million at December 31, 2021. The volatility in the bond market is expected to continue in 2022, which may result in increased volatility in the fair value of the Company’s available for sale securities.

Total deposits at March 31, 2022, were $3.69 billion compared to $3.55 billion at December 31, 2021. The increase of $146.6 million since December 31, 2021 is due to seasonality in public fund balances and continued growth in business and consumer deposits. In addition, the Company added $40.0 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 December 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. As mentioned previously, the rapid increase in U.S. treasury rates had a negative effect on the value of the Company’s available for sale securities, and in turn, the dollar amount that flows through accumulated other comprehensive income. This also had a negative impact on the Company’s tangible book value per share (non-GAAP), which declined to $8.58 at March 31, 2022 from $10.91 at December 31, 2021.

Credit Quality

Non-performing loans to loans declined to 0.61% at March 31, 2022, compared to 0.69% at December 31, 2021 as the Company sold the note of one large non-performing loan and wrote off a large portion of another non-performing loan, which was specifically reserved. Early stage delinquencies, defined as 30-89 days delinquent, were $7.3 million, or 0.32% of total loans, at March 31, 2022, compared to $8.9 million, or 0.38% of total loans at December 31, 2021.

The allowance for credit losses for the first quarter of 2022 includes net charge-offs of $1.4 million and a recovery for credit losses of $930,000 offset by a provision for unfunded loans of $572,000. This compares to net charge-offs of $84,000 and a provision for credit losses of $425,000 for the same period in 2021. The net charge-offs were driven by the one loan mentioned above. As an overall percentage of loans, the allowance for credit losses declined to 1.17% at March 31, 2022, compared to 1.26% at December 31, 2021. Total net charge-offs as a percentage of average net loans was 25 basis points for the quarter ended March 31, 2022, compared to 2 basis points for the first quarter of 2021.

Net Interest Income

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 (“Cortland”), offset by a decline in net interest margin of 27 basis points. The 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. The decline in net interest margin in the first quarter of 2022 compared to the first quarter of 2021 was driven by the acquisition of Cortland, lower PPP income in 2022 compared to 2021 and a greater percentage of earning assets invested in securities rather than loans. Excluding the impact of acquisition marks and related accretion and PPP interest and fees, the net interest margin (non-GAAP) for the first quarter of 2022 was 3.12% compared to 3.21% for the fourth quarter of 2021 and 3.35% for the first quarter of 2021.

Noninterest Income

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. The first quarter of 2022 increased over the same period in 2021 primarily due to $8.4 million in income related to the proceeds of a one-time legal settlement and increases in other noninterest income categories offset by a decline in security gains of $499,000 and a decline in net gains on the sale of loans of $1.8 million. The net gain on sale of loans has declined because of lower origination volumes due to increasing rates along with tighter gain on sale margins. Other categories of noninterest income that increased year over year include service charges on deposit accounts - $337,000 increase, bank owned life insurance - $125,000 increase, trust fees - $283,000 increase, investment commissions - $190,000 increase and debit card and EFT fees - $245,000 increase.

Noninterest Expense

Total noninterest expense for the quarter ended March 31, 2022 was $30.5 million compared to $17.3 million in the first quarter of 2021. The increase in expense year over year was due to the Company making a charitable contribution of $6.0 million to the Farmers Charitable Foundation, $2.1 million in legal expense associated with the legal settlement and $1.9 million in merger expense incurred in the first quarter of 2022. The increase in the other categories of noninterest expense was due to the Cortland acquisition which closed on November 1, 2021. The system conversion for Cortland also didn’t take place until late February so the Company did not have a full quarter of cost savings in place for the first quarter of 2022.

About Farmers National Banc Corp.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $4.2 billion in banking assets. Farmers National Banc Corp.’s wholly-owned subsidiaries are comprised of The Farmers National Bank of Canfield, a full-service national bank engaged in commercial and retail banking with 46 banking locations in Mahoning, Trumbull, Columbiana, Portage, Stark, Wayne, Medina, Geauga and Cuyahoga Counties in Ohio and Beaver County in Pennsylvania, and Farmers Trust Company, which operates five trust offices and offers services in the same geographic markets. Total wealth management assets under care at March 31, 2022 are $3.1 billion. Farmers National Insurance, LLC, a wholly-owned subsidiary of The Farmers National Bank of Canfield, offers a variety of insurance products.

Non-GAAP Disclosure

This press release includes disclosures of Farmers’ tangible common equity ratio, return on average tangible assets, return on average tangible equity, net income excluding costs related to acquisition activities, net interest margin excluding acquisition marks and related accretion and PPP interest and fees, efficiency ratio less one-time expenses, and allowance for credit losses to gross loans, excluding PPP loans and acquired loans, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers’ marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures to their GAAP equivalents are included in the tables following Consolidated Financial Highlights below.

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Farmers’ financial condition, results of operations, asset quality trends and profitability. Forward-looking statements are not historical facts but instead represent only management’s current expectations and forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside of Farmers’ control. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions, as well as any statements related to future expectations of performance or conditional verbs, such as “will,” “would,” “should,” “could” or “may.” Farmers’ actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Factors that could cause Farmers’ actual results to differ materially from those described in the forward-looking statements include impacts from the COVID-19 pandemic, including further resurgence in the spread of COVID-19, on local, national and global economic conditions; higher default rates on loans made to our customers related to COVID-19 and its impact on our customers’ operations and financial condition; unexpected changes in interest rates or disruptions in the mortgage markets related to COVID-19 or other responses to the health crisis; impacts of the upcoming U.S. elections on the regulatory landscape, capital markets, and response to and management of the COVID-19 pandemic including further economic stimulus from the federal government; Farmers’ failure to integrate Emclaire and Emlenton with Farmers in accordance with expectations; deviations from performance expectations related to Emclaire and Emlenton; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (SEC) and available on Farmers’ website (www.farmersbankgroup.com) and on the SEC’s website (www.sec.gov). Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management’s views as of any subsequent date. Farmers does not undertake any obligation to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

IMPORTANT ADDITIONAL INFORMATION

In connection with the proposed merger with Emclaire, the Company will file with the SEC a Registration Statement on Form S-4 that will include a proxy statement of Emclaire and a prospectus of the Company, as well as other relevant documents concerning the proposed transaction.

SHAREHOLDERS OF EMCLAIRE AND OTHER INVESTORS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT AND PROSPECTUS TO BE INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-4, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, EMCLAIRE, THE PROPOSED MERGER, THE PERSONS SOLICITING PROXIES WITH RESPECT TO THE PROPOSED MERGER, AND THEIR INTERESTS IN THE PROPOSED MERGER AND RELATED MATTERS.

Investors and security holders will be able to obtain free copies of the Registration Statement on Form S-4 (when available) and other documents filed with the SEC by the Company through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by the Company will be available free of charge on the Company’s website at https://www.farmersbankgroup.com or may be obtained from the Company by written request to Farmers National Banc Corp., 20 South Broad Street, Canfield, Ohio 44406, Attention: Investor Relations.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale is unlawful before registration or qualification of the securities under the securities laws of the jurisdiction. No offer of securities shall be made except by means of a prospectus satisfying the requirements of Section 10 of the Securities Act.

The respective directors and executive officers of the Company and Emclaire and other persons may be deemed to be participants in the solicitation of proxies from Emclaire shareholders with respect to the proposed merger. Information regarding the directors of the Company is available in its proxy statement filed with the SEC on March 17, 2022 in connection with its 2022 Annual Meeting of Shareholders and information regarding the executive officers of the Company is available in its Form 10-K filed with the SEC on March 9, 2022. Information regarding the directors and executive officers of Emclaire is available in its Form 10-K filed with the SEC on March 16, 2022 and other documents filed by Emclaire with the SEC. Other information regarding the participants in the solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and prospectus to be included in the Registration Statement on Form S-4 and other relevant materials to be filed with the SEC when they become available.

Farmers National Banc Corp. and Subsidiaries
Consolidated Financial Highlights
(Amounts in thousands, except per share results) Unaudited
 
 
Consolidated Statements of Income

For the Three Months Ended

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

2022

 

2021

 

2021

 

2021

 

2021

Total interest and dividend income

$

33,279

 

$

31,685

 

$

28,375

 

$

28,609

 

$

27,790

 

Total interest expense

 

2,037

 

 

1,986

 

 

1,841

 

 

2,119

 

 

2,523

 

Net interest income

 

31,242

 

 

29,699

 

 

26,534

 

 

26,490

 

 

25,267

 

(Credit) provision for credit losses

 

(358

)

 

5,366

 

 

(948

)

 

50

 

 

425

 

Noninterest income

 

17,698

 

 

9,538

 

 

9,015

 

 

9,508

 

 

10,132

 

Acquisition related costs

 

1,940

 

 

6,521

 

 

472

 

 

104

 

 

12

 

Other expense

 

28,516

 

 

21,140

 

 

16,656

 

 

16,966

 

 

17,305

 

Income before income taxes

 

18,842

 

 

6,210

 

 

19,369

 

 

18,878

 

 

17,657

 

Income taxes

 

2,998

 

 

508

 

 

3,358

 

 

3,303

 

 

3,101

 

Net income

$

15,844

 

$

5,702

 

$

16,011

 

$

15,575

 

$

14,556

 

 
Average diluted shares outstanding

 

33,937

 

 

32,074

 

 

28,361

 

 

28,353

 

 

28,336

 

Basic earnings per share

 

0.47

 

 

0.18

 

 

0.57

 

 

0.55

 

 

0.52

 

Diluted earnings per share

 

0.47

 

 

0.18

 

 

0.56

 

 

0.55

 

 

0.51

 

Cash dividends per share

 

0.16

 

 

0.14

 

 

0.11

 

 

0.11

 

 

0.11

 

Performance Ratios
Net Interest Margin (Annualized)

 

3.27

%

 

3.33

%

 

3.47

%

 

3.52

%

 

3.54

%

Efficiency Ratio (Tax equivalent basis)

 

61.36

%

 

63.61

%

 

46.04

%

 

45.70

%

 

47.76

%

Return on Average Assets (Annualized)

 

1.52

%

 

0.58

%

 

1.92

%

 

1.90

%

 

1.87

%

Return on Average Equity (Annualized)

 

13.89

%

 

5.24

%

 

16.93

%

 

17.17

%

 

16.81

%

Dividends to Net Income

 

34.18

%

 

82.99

%

 

19.41

%

 

19.95

%

 

21.35

%

Other Performance Ratios (Non-GAAP)
Return on Average Tangible Assets

 

1.55

%

 

0.60

%

 

1.97

%

 

1.93

%

 

1.87

%

Return on Average Tangible Equity

 

17.92

%

 

6.57

%

 

19.63

%

 

19.81

%

 

19.30

%

 
Consolidated Statements of Financial Condition

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

2022

 

2021

 

2021

 

2021

 

2021

Assets
Cash and cash equivalents

$

137,627

 

$

112,790

 

$

79,808

 

$

149,357

 

$

326,385

 

Securities available for sale

 

1,463,626

 

 

1,427,677

 

 

1,183,361

 

 

996,271

 

 

802,866

 

Other investments

 

34,019

 

 

30,459

 

 

19,041

 

 

20,573

 

 

21,317

 

Loans held for sale

 

1,904

 

 

4,545

 

 

2,628

 

 

1,922

 

 

3,993

 

Loans

 

2,304,971

 

 

2,331,082

 

 

1,894,216

 

 

1,959,865

 

 

2,037,404

 

Less allowance for credit losses

 

27,015

 

 

29,386

 

 

23,136

 

 

24,806

 

 

24,935

 

Net Loans

 

2,277,956

 

 

2,301,696

 

 

1,871,080

 

 

1,935,059

 

 

2,012,469

 

 
Other assets

 

290,723

 

 

265,582

 

 

161,129

 

 

156,876

 

 

157,494

 

Total Assets

$

4,205,855

 

$

4,142,749

 

$

3,317,047

 

$

3,260,058

 

$

3,324,524

 

 
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing

$

963,143

 

$

916,237

 

$

675,938

 

$

663,640

 

$

675,045

 

Interest-bearing

 

2,730,668

 

 

2,630,998

 

 

2,190,475

 

 

2,115,183

 

 

2,158,009

 

Total deposits

 

3,693,811

 

 

3,547,235

 

 

2,866,413

 

 

2,778,823

 

 

2,833,054

 

Borrowings

 

87,872

 

 

87,758

 

 

49,649

 

 

78,369

 

 

79,683

 

Other liabilities

 

30,286

 

 

35,324

 

 

23,461

 

 

35,958

 

 

64,432

 

Total liabilities

 

3,811,969

 

 

3,670,317

 

 

2,939,523

 

 

2,893,150

 

 

2,977,169

 

Stockholders' Equity

 

393,886

 

 

472,432

 

 

377,524

 

 

366,908

 

 

347,355

 

Total Liabilities and Stockholders' Equity

$

4,205,855

 

$

4,142,749

 

$

3,317,047

 

$

3,260,058

 

$

3,324,524

 

 
Period-end shares outstanding

 

34,008

 

 

33,898

 

 

28,322

 

 

28,322

 

 

28,308

 

Book value per share

$

11.58

 

$

13.94

 

$

13.33

 

$

12.95

 

$

12.27

 

Tangible book value per share (Non-GAAP)*

 

8.58

 

 

10.91

 

 

11.61

 

 

11.23

 

 

10.53

 

 
* Tangible book value per share is calculated by dividing tangible common equity by period-end shares outstanding
 
Capital and Liquidity
Common Equity Tier 1 Capital Ratio (a)

 

13.51

%

 

13.16

%

 

14.58

%

 

13.95

%

 

13.49

%

Total Risk Based Capital Ratio (a)

 

17.85

%

 

17.60

%

 

16.25

%

 

15.54

%

 

15.10

%

Tier 1 Risk Based Capital Ratio (a)

 

14.16

%

 

13.82

%

 

15.18

%

 

14.39

%

 

13.93

%

Tier 1 Leverage Ratio (a)

 

9.56

%

 

10.12

%

 

10.17

%

 

9.70

%

 

9.69

%

Equity to Asset Ratio

 

9.37

%

 

11.40

%

 

11.38

%

 

11.25

%

 

10.45

%

Tangible Common Equity Ratio (b)

 

7.11

%

 

9.15

%

 

10.06

%

 

9.90

%

 

9.10

%

Net Loans to Assets

 

54.16

%

 

55.56

%

 

56.41

%

 

59.36

%

 

60.53

%

Loans to Deposits

 

62.40

%

 

65.72

%

 

66.08

%

 

70.53

%

 

71.92

%

Asset Quality
Non-performing loans

$

14,046

 

$

16,195

 

$

14,744

 

$

13,873

 

$

11,640

 

Other Real Estate Owned

 

0

 

 

0

 

 

0

 

 

30

 

 

30

 

Non-performing assets

 

14,046

 

 

16,195

 

 

14,744

 

 

13,903

 

 

11,670

 

Loans 30 - 89 days delinquent

 

7,304

 

 

8,891

 

 

6,944

 

 

7,606

 

 

7,183

 

Charged-off loans

 

1,590

 

 

470

 

 

411

 

 

502

 

 

284

 

Recoveries

 

149

 

 

157

 

 

125

 

 

323

 

 

200

 

Net Charge-offs

 

1,441

 

 

313

 

 

286

 

 

179

 

 

84

 

Annualized Net Charge-offs to
Average Net Loans Outstanding

 

0.25

%

 

0.06

%

 

0.06

%

 

0.04

%

 

0.02

%

Allowance for Credit Losses to Total Loans

 

1.17

%

 

1.26

%

 

1.22

%

 

1.27

%

 

1.22

%

Non-performing Loans to Total Loans

 

0.61

%

 

0.69

%

 

0.78

%

 

0.71

%

 

0.57

%

Allowance to Non-performing Loans

 

192.33

%

 

181.45

%

 

156.92

%

 

178.81

%

 

214.22

%

Non-performing Assets to Total Assets

 

0.33

%

 

0.39

%

 

0.44

%

 

0.43

%

 

0.35

%

 
(a) March 31, 2022 ratio is estimated
(b) This is a non-GAAP financial measure. A reconciliation to GAAP is shown below.
 

End of Period Loan Balances

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

2022

 

2021

 

2021

 

2021

 

2021

Commercial real estate

$

1,000,972

 

$

1,011,891

 

$

690,407

 

$

704,809

 

$

702,556

 

Commercial

 

298,903

 

 

313,836

 

 

302,356

 

 

351,261

 

 

406,064

 

Residential real estate

 

455,501

 

 

453,635

 

 

376,901

 

 

383,187

 

 

400,982

 

HELOC

 

128,221

 

 

127,433

 

 

106,750

 

 

107,153

 

 

107,501

 

Consumer

 

192,586

 

 

189,522

 

 

189,497

 

 

190,064

 

 

193,295

 

Agricultural loans

 

224,845

 

 

232,365

 

 

226,896

 

 

223,427

 

 

227,073

 

Total, excluding net deferred loan costs

$

2,301,028

 

$

2,328,682

 

$

1,892,807

 

$

1,959,901

 

$

2,037,471

 

 
 

For the Three Months Ended

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

Noninterest Income

2022

 

2021

 

2021

 

2021

 

2021

Service charges on deposit accounts

$

1,145

 

$

1,138

 

$

924

 

$

790

 

$

808

 

Bank owned life insurance income, including death benefits

 

409

 

 

414

 

 

340

 

 

300

 

 

284

 

Trust fees

 

2,519

 

 

2,509

 

 

2,335

 

 

2,358

 

 

2,236

 

Insurance agency commissions

 

1,047

 

 

706

 

 

799

 

 

948

 

 

1,003

 

Security gains (losses), including fair value changes for equity securities

 

(11

)

 

25

 

 

459

 

 

32

 

 

488

 

Retirement plan consulting fees

 

397

 

 

378

 

 

334

 

 

389

 

 

320

 

Investment commissions

 

694

 

 

611

 

 

638

 

 

523

 

 

504

 

Net gains on sale of loans

 

1,129

 

 

1,728

 

 

1,466

 

 

2,191

 

 

2,900

 

Other mortgage banking fee income (loss), net

 

60

 

 

2

 

 

32

 

 

(55

)

 

(115

)

Debit card and EFT fees

 

1,416

 

 

1,424

 

 

1,227

 

 

1,322

 

 

1,171

 

Other operating income

 

8,893

 

 

603

 

 

461

 

 

710

 

 

533

 

Total Noninterest Income

$

17,698

 

$

9,538

 

$

9,015

 

$

9,508

 

$

10,132

 

 
 

For the Three Months Ended

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

Noninterest Expense

2022

 

2021

 

2021

 

2021

 

2021

Salaries and employee benefits

$

11,831

 

$

10,230

 

$

9,321

 

$

9,866

 

$

9,976

 

Occupancy and equipment

 

2,680

 

 

2,422

 

 

1,899

 

 

1,890

 

 

2,275

 

State and local taxes

 

678

 

 

620

 

 

552

 

 

551

 

 

554

 

Professional fees

 

1,041

 

 

1,296

 

 

1,009

 

 

830

 

 

1,056

 

Merger related costs

 

1,940

 

 

6,521

 

 

472

 

 

104

 

 

12

 

Advertising

 

392

 

 

776

 

 

466

 

 

357

 

 

260

 

FDIC insurance

 

267

 

 

152

 

 

140

 

 

120

 

 

170

 

Intangible amortization

 

420

 

 

414

 

 

316

 

 

316

 

 

316

 

Core processing charges

 

745

 

 

880

 

 

860

 

 

831

 

 

627

 

Other noninterest expenses

 

10,462

 

 

4,350

 

 

2,093

 

 

2,205

 

 

2,071

 

Total Noninterest Expense

$

30,456

 

$

27,661

 

$

17,128

 

$

17,070

 

$

17,317

 

 
Average Balance Sheets and Related Yields and Rates
(Dollar Amounts in Thousands)
 

Three Months Ended

 

Three Months Ended

March 31, 2022

 

March 31, 2021

AVERAGE

 

 

 

 

 

AVERAGE

 

 

 

 

BALANCE

 

INTEREST (1)

 

YIELD/RATE (1)

 

BALANCE

 

INTEREST (1)

 

YIELD/RATE (1)

EARNING ASSETS
Loans (2)

$

2,312,712

 

$

25,646

 

 

4.44

%

$

2,054,925

 

$

23,900

 

4.72

%

Taxable securities

 

1,007,963

 

 

4,587

 

 

1.82

 

 

329,903

 

 

1,719

 

2.11

 

Tax-exempt securities (2)

 

461,793

 

 

3,726

 

 

3.23

 

 

282,044

 

 

2,613

 

3.76

 

Other investments

 

31,122

 

 

130

 

 

1.67

 

 

14,840

 

 

121

 

3.31

 

Federal funds sold and other

 

117,916

 

 

48

 

 

0.16

 

 

287,323

 

 

71

 

0.10

 

Total earning assets

 

3,931,506

 

 

34,137

 

 

3.47

 

 

2,969,035

 

 

28,424

 

3.88

 

Nonearning assets

 

247,112

 

 

186,660

 

Total assets

$

4,178,618

 

$

3,155,695

 

INTEREST-BEARING LIABILITIES
Time deposits

$

378,675

 

$

643

 

 

0.68

%

$

440,452

 

$

1,255

 

1.16

%

Brokered time deposits

 

15,555

 

 

15

 

 

0.39

 

 

32,000

 

 

46

 

0.58

 

Savings deposits

 

843,371

 

 

167

 

 

0.08

 

 

495,832

 

 

193

 

0.16

 

Demand deposits - interest bearing

 

1,412,291

 

 

418

 

 

0.12

 

 

1,083,597

 

 

732

 

0.27

 

Short term borrowings

 

2,222

 

 

1

 

 

0.18

 

 

2,808

 

 

4

 

0.58

 

Long term borrowings

 

87,798

 

 

793

 

 

3.61

 

 

76,007

 

 

293

 

1.56

 

Total interest-bearing liabilities

$

2,739,912

 

 

2,037

 

 

0.30

 

$

2,130,696

 

 

2,523

 

0.48

 

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits - noninterest bearing

 

956,499

 

 

650,588

 

Other liabilities

 

26,001

 

 

23,221

 

Stockholders' equity

 

456,206

 

 

351,190

 

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY

$

4,178,618

 

$

3,155,695

 

Net interest income and interest rate spread

$

32,100

 

 

3.17

%

$

25,901

 

3.40

%

Net interest margin

 

3.27

%

3.54

%

 
(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2022, adjustments of $84 thousand and $774 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2021, adjustments of $95 thousand and $539 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. These adjustments were based on a marginal federal income tax rate of 21%, less disallowances.
 
 
Reconciliation of Total Assets to Tangible Assets

For the Three Months Ended

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

2022

 

2021

 

2021

 

2021

 

2021

Total Assets

$

4,205,855

 

$

4,142,749

 

$

3,317,047

 

$

3,260,058

 

$

3,324,524

 

Less Goodwill and other intangibles

 

102,187

 

 

102,606

 

 

48,670

 

 

48,985

 

 

49,301

 

Tangible Assets

$

4,103,668

 

$

4,040,143

 

$

3,268,377

 

$

3,211,073

 

$

3,275,223

 

Average Assets

 

4,178,618

 

 

3,879,901

 

 

3,304,708

 

 

3,280,316

 

 

3,155,695

 

Less average Goodwill and other intangibles

 

102,462

 

 

84,580

 

 

48,879

 

 

49,193

 

 

49,509

 

Average Tangible Assets

$

4,076,156

 

$

3,795,321

 

$

3,255,829

 

$

3,231,123

 

$

3,106,186

 

 
 
Reconciliation of Common Stockholders' Equity to Tangible Common Equity

For the Three Months Ended

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

2022

 

2021

 

2021

 

2021

 

2021

Stockholders' Equity

$

393,886

 

$

472,432

 

$

377,524

 

$

366,908

 

$

347,355

 

Less Goodwill and other intangibles

 

102,187

 

 

102,606

 

 

48,670

 

 

48,985

 

 

49,301

 

Tangible Common Equity

$

291,699

 

$

369,826

 

$

328,854

 

$

317,923

 

$

298,054

 

Average Stockholders' Equity

 

456,206

 

 

431,709

 

 

375,208

 

 

363,753

 

 

351,190

 

Less average Goodwill and other intangibles

 

102,462

 

 

84,580

 

 

48,879

 

 

49,193

 

 

49,509

 

Average Tangible Common Equity

$

353,744

 

$

347,129

 

$

326,329

 

$

314,560

 

$

301,681

 

 
 
Reconciliation of Net Income, Less Merger and Certain Items

For the Three Months Ended

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

2022

 

2021

 

2021

 

2021

 

2021

Net income

$

15,844

 

$

5,702

 

$

16,011

 

$

15,575

 

$

14,556

 

Acquisition related costs - after tax

 

1,540

 

 

5,232

 

 

468

 

 

83

 

 

9

 

Acquisition related provision - after tax

 

0

 

 

3,846

 

 

0

 

 

0

 

 

0

 

Lawsuit settlement income - after tax

 

(6,616

)

 

0

 

 

0

 

 

0

 

 

0

 

Lawsuit settlement contingent legal expense - after tax

 

1,639

 

 

0

 

 

0

 

 

0

 

 

0

 

Charitable donation - after tax

 

4,740

 

 

0

 

 

0

 

 

0

 

 

0

 

FHLB prepayment penalties - after tax

 

0

 

 

1,425

 

 

257

 

 

0

 

 

0

 

Net loss (gain) on asset/security sales - after tax

 

97

 

 

134

 

 

(362

)

 

(26

)

 

(344

)

Gain on sale of credit card portfolio - after tax

 

0

 

 

(189

)

 

0

 

 

0

 

 

0

 

Net income - Adjusted

$

17,244

 

$

16,150

 

$

16,374

 

$

15,632

 

$

14,221

 

 
Diluted EPS excluding merger and one-time items

$

0.51

 

$

0.50

 

$

0.58

 

$

0.55

 

$

0.50

 

Return on Average Assets excluding merger and one-time items (Annualized)

 

1.65

%

 

1.65

%

 

1.97

%

 

1.91

%

 

1.83

%

Return on Average Equity excluding merger and one-time items (Annualized)

 

15.12

%

 

14.84

%

 

17.31

%

 

17.24

%

 

16.42

%

Return on Average Tangible Equity excluding merger and one-time items (Annualized)

 

19.50

%

 

18.46

%

 

19.91

%

 

19.93

%

 

19.12

%

 
 
Efficiency ratio excluding certain items

For the Three Months Ended

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

2022

 

2021

 

2021

 

2021

 

2021

Net interest income - taxable equivalent

$

32,100

 

$

30,486

 

$

27,256

 

$

27,192

 

$

25,901

 

Noninterest income

 

17,698

 

 

9,538

 

 

9,015

 

 

9,508

 

 

10,132

 

Legal settlement income

 

(8,375

)

 

0

 

 

0

 

 

0

 

 

0

 

Net loss (gain) on asset/security sales

 

123

 

 

170

 

 

(458

)

 

(33

)

 

(436

)

Gain on sale of credit card portfolio

 

0

 

 

(239

)

 

0

 

 

0

 

 

0

 

Net interest income and noninterest income adjusted

 

41,546

 

 

39,955

 

 

35,813

 

 

36,667

 

 

35,597

 

Noninterest expense less intangible amortization

 

30,036

 

 

27,247

 

 

16,813

 

 

16,755

 

 

17,002

 

Charitable donation

 

6,000

 

 

0

 

 

0

 

 

0

 

 

0

 

Contingent legal settlement expense

 

2,075

 

 

0

 

 

0

 

 

0

 

 

0

 

Acquisition related costs

 

1,940

 

 

6,521

 

 

472

 

 

104

 

 

12

 

FHLB prepayment penalties

 

0

 

 

1,804

 

 

325

 

 

0

 

 

0

 

Noninterest income adjusted

 

20,021

 

 

18,922

 

 

16,016

 

 

16,651

 

 

16,990

 

Efficiency ratio excluding one-time items

 

48.19

%

 

47.36

%

 

44.72

%

 

45.41

%

 

47.73

%

 
 
Net interest margin excluding acquisition marks and PPP interest and fees

For the Three Months Ended

March 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

March 31,

2022

 

2021

 

2021

 

2021

 

2021

Net interest income - taxable equivalent

$

32,100

 

$

30,486

 

$

27,256

 

$

27,192

 

$

25,901

 

Acquisition marks

 

957

 

 

496

 

 

(35

)

 

200

 

 

271

 

PPP interest and fees

 

686

 

 

979

 

 

1,402

 

 

2,097

 

 

2,144

 

Adjusted and annualized net interest income

 

121,828

 

 

115,098

 

 

102,712

 

 

99,854

 

 

95,249

 

Average earning assets

 

3,931,506

 

 

3,631,320

 

 

3,120,336

 

 

3,101,630

 

 

2,969,035

 

Less PPP average balances

 

30,003

 

 

47,939

 

 

76,990

 

 

131,856

 

 

125,168

 

Adjusted average earning assets

 

3,901,503

 

 

3,583,381

 

 

3,043,346

 

 

2,969,774

 

 

2,843,867

 

Net interest margin excluding marks and PPP interest and fees

 

3.12

%

 

3.21

%

 

3.37

%

 

3.36

%

 

3.35

%

 

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