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Farmers National Banc Corp. Reports Results for Second Quarter 2011

^{Published on 2011-07-27 13:16:14 - Market Wire}
 

CANFIELD, Ohio--([ BUSINESS WIRE ])--Farmers National Banc Corp. (OTCBB: FMNB) today reported net income of $2.1 million for the quarter ended June 30, 2011, compared to $2.0 million for the second quarter of 2010 and $1.7 million for the first quarter of 2011. Net income for the six months ended June 30, 2011 was $3.8 million, compared to $2.9 million for the same six month period in 2010. On a per share basis, net income for the second quarter ended June 30, 2011 was $0.11 per diluted share, compared $0.15 for the second quarter ended June 30, 2010 and $0.10 for the first quarter ended March 31, 2011. The tangible common equity ratio increased to 10.11% at June 30, 2011, compared to 7.92% at June 30, 2010, mainly as a result of the successful common share offering completed in the first quarter of 2011. The Companya™s total assets reported at June 30, 2011 were $1.01 billion, which remains unchanged compared to $1.01 billion in total assets recorded at June 30, 2010.

John S. Gulas, President and CEO, stated, aOur net income increased to $3.8 million for the first six months of 2011, which represents a 32% increase over the $2.9 million reported for the same period in 2010. Income from trust fees and investment commissions increased 18% during the same six month period. The increases reflect the continued benefit from our strategy to diversify income streams. The provision for loan losses decreased from $4.4 million for the six month period ending June 30, 2010 to $3.0 million for the six months ended June 30, 2011. This 33% decrease is a result of improved credit quality, as net charge-offs have declined from $3.5 million for the first six months of 2010 to $1.4 million for the same period in 2011. We have also seen a decline in our 30-89 day delinquencies, from $5.7 million at June 30, 2010 to $3.8 million at June 30, 2011.a

Net loans were reported at $557.8 million at June 30, 2011, versus $605.0 million at the same time in 2010, a decrease of $47.2 million, or 7.8%. The decline in loans, particularly in the first quarter of 2011, is related to seasonality in the retail lending portfolio and slow economic growth. The decline in loan balances resulted in a lower level of loan income for the current quarter. Over this same period, deposits increased $9.4 million, or 1.2%, from $760.7 million at June 30, 2010 to $770.1 million at June 30, 2011.

Stockholdersa™ equity totaled $108.6 million, or 10.7% of total assets, at June 30, 2011, an increase of $21.6 million, or 24.8%, compared to $87.0 million at June 30, 2010. The increase in equity was primarily the result of the successful common share offering completed in the first quarter of 2011, adding approximately $14 million in capital. The increase is also the result of net income and mark to market adjustments in the Companya™s investment securities, offset by cash dividends paid to shareholders during the past twelve months. Shareholders received a $0.03 per share cash dividend on June 30, 2011 and a total of $0.12 per share cash dividends paid in the past four quarters. Book value per share decreased 9.4% from $6.41 per share at June 30, 2010 to $5.81 per share at June 30, 2011. This decrease is mainly the result of the increase in shares outstanding, which includes the 5 million shares issued in the first quarter 2011 common share offering. The Companya™s tangible book value per share also decreased 7.3% from $5.88 per share at June 30, 2010 to $5.45 per share at June 30, 2011.

Net Interest Income --- Net interest income was $9.2 million for the second quarter of 2011, which compared to $9.2 million in the second quarter of 2010. The net interest margin to average earning assets on a fully taxable equivalent basis improved 3 basis points to 4.05% for the three months ended June 30, 2011, compared to 4.02% for the same period in the prior year. In comparing the quarters ending June 30, 2011 and 2010, yields on earning assets decreased 34 basis points, while the cost of interest bearing liabilities decreased 36 basis points.

On a year-to-date basis, net interest income improved to $18.2 million for the six month period ended June 30, 2011, compared to $18.0 million in the same period in 2010. The annualized net interest margin to average earning assets on a fully taxable equivalent basis was 4.14% for the six months ended June 30, 2011, compared to 4.02% for the same period in the prior year.

Noninterest Income --- Noninterest income was $2.7 million for the second quarter of 2011, which compares to $2.7 million for the same quarter of 2010. Trust fees were $1.4 million for the quarter ended June 30, 2011, an increase of $168 thousand, or 14.0%, compared to the same quarter in 2010. Investment commissions also increased for the quarter ended June 30, 2011 to $263 thousand compared to $129 thousand in the same quarter in 2010.

Noninterest income for the six months ended June 30, 2011 was $5.3 million, compared to $5.1 million for the same period in 2010. The increase in noninterest income is primarily due to increases in trust fee income and investment commissions in 2011 of $274 thousand and $214 thousand, respectively.

Noninterest Expense --- Noninterest expense totaled $8.1 million for the second quarter of 2011, which is $447 thousand more than the $7.6 million in the same quarter in 2010. Most of this increase is a result of a $384 thousand increase in salaries and employee benefits, resulting from a higher number of employees in the current period.

Noninterest expenses for the six months ended June 30, 2011 was $15.9 million, compared to $15.2 million for the same period in 2010, representing an increase of $729 thousand, or 4.8%. The increase is mainly the result of a $595 thousand increase in salaries and employee benefits, resulting from a higher number of employees in the current year.

The Companya™s tax equivalent efficiency ratio for the three month period ended June 30, 2011 was 64.42% compared to 62.15% for the same period in 2010. The decline in the efficiency ratio was the result of the $46 thousand decrease in net interest income and noninterest income, and a $447 thousand increase in noninterest expense.

Asset Quality --- Non-performing loans equaled 1.38% of total loans at June 30, 2011, compared to 1.62% at June 30, 2010. Loans 30a"89 days delinquent decreased $1.9 million, or 33.5%, to $3.8 million since June 30, 2010. Non-performing loans totaled $7.9 million at June 30, 2011, a decrease of $3.1 million and $2.1 million, compared to March 31, 2011 and June 30, 2010, respectively. The decrease compared to the prior quarter is primarily related to lower levels of non-performing commercial real estate, commercial and residential real estate loans. On June 30, 2011, the ratio of the allowance for loan losses (ALLL) to non-performing loans was 138%, compared to 92% at March 31, 2011 and 83% at June 30, 2010. At June 30, 2011, the ALLL/total loan ratio was 1.91% compared to 1.35% at June 30, 2010. For the three months ended June 30, 2011, management provided $1.1 million to the allowance for loan losses, a decrease of $800 thousand from the preceding quarter and a decrease of $525 thousand over the same three month period in the prior year. Net charge-offs for the quarter ending June 30, 2011 were $336 thousand compared to $1.05 million and $1.6 million for the first quarter of 2011 and the second quarter of 2010, respectively. The provision for loan losses exceeded net charge-offs for the three month period ended June 30, 2011.

Farmers National Banc Corp. is the bank holding company for the Farmers National Bank of Canfield, Farmers National Insurance, LLC and Farmers Trust Company. Farmersa™ operates sixteen banking offices throughout Mahoning, Trumbull and Columbiana Counties and two trust offices located in Youngstown and Howland. The bank offers a wide range of banking and investment services to companies and individuals, and maintains a website at [ www.farmersbankgroup.com ].

Non-GAAP Disclosure

This press release includes disclosures of our tangible common equity ratio and pre-tax, pre-provision income and pre-tax,pre-provision income, excluding gains (losses) on sales of securities, which are non-GAAP financial measures. 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 generally accepted accounting principles in the United States (GAAP). The Company believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and the Company's 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 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 the Companya™s financial condition, results of operations, asset quality trends and profitability. Forward-looking statements are not historical facts but instead represent only managementa™s current expectations and forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside of the Companya™s control. The Companya™s 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 the Companya™s actual results to differ materially from those described in the forward-looking statements can be found in the Companya™s Annual Report on Form 10-K for the year ended December 31, 2010, which has been filed with the Securities and Exchange Commission and is available on the Companya™s website ([ www.farmersbankgroup.com ]) and on the Securities and Exchange Commissiona™s website ([ www.sec.gov ]). Forward-looking statements are not guarantees of future performance and should not be relied upon as representing managementa™s views as of any subsequent date. The Company 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.