Business Wire | Jan 28, 2021 08:00AM EST

Farmers National Banc Corp. Announces 2020 Fourth Quarter and Annual Financial Results

Jan. 28, 2021

CANFIELD, Ohio--(BUSINESS WIRE)--Jan. 28, 2021--Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months and year ended December 31, 2020.

Net income for the three months ended December 31, 2020 was $11.4 million, or $0.40 per diluted share, which compares to $9.7 million, or $0.35 per diluted share, for the three months ended December 31, 2019 and $10.9 million or $0.38 per diluted share for the linked quarter. Net income excluding acquisition costs (non-GAAP) for the quarter ended December 31, 2020 was $12.8 million or $0.45 per share, compared to $9.8 million or $0.35 per share for the same quarter in 2019 and $10.9 million or $0.39 per share for the most recent prior quarter.

Annualized return on average assets and annualized return on average equity were 1.49% and 13.10%, respectively, for the three month period ending December 31, 2020, compared to 1.58% and 12.78% for the same three month period in 2019, and 1.46% and 12.87% for the linked quarter. Farmers' annualized return on average tangible equity (non-GAAP) was 15.48% for the quarter ended December 31, 2020 compared to 15.03% for the same quarter in 2019 and 15.30% for the linked quarter.

Net income for the twelve months ended December 31, 2020 was $41.9 million, or $1.47 per diluted share, compared to $35.8 million or $1.28 per diluted share for the same twelve month period in 2019. Return on average assets and return on average equity were 1.46% and 12.80%, respectively, for the twelve months ended December 31, 2020, compared to 1.50% and 12.56% for the same period in 2019.

Kevin J. Helmick, President and CEO, stated, "In an unprecedented year, I must take time to reflect on the challenges we faced this year with the onset of the pandemic. Farmers Associates stood strong by delivering creative and steadfast customer service and support to our stakeholders. I would like to thank all of our Associates for helping deliver another outstanding quarter and year of record results. Our record fourth quarter financial results demonstrate that when our customers and communities win, we win, and we remain focused on ensuring our customers are well positioned to achieve their financial goals."

Farmers is offering special financial assistance to support customers who are experiencing financial hardships related to the COVID-19 pandemic. The following table reports the number and amount of payment deferrals by loan type as of dates listed:

March 31, 2020 June 30, 2020 Sept. 30, 2020 Dec. 31, 2020

(dollars in Outstanding Number Outstanding Number Outstanding Number Outstanding Numberthousands) Balance of Balance of Balance of Balance of Loans Loans Loans Loans

Commercial $ 75,809 78 $ 43,954 44 $ 155 1 $ 5,900 2real estate

Commercial 11,839 81 8,515 69 0 0 489 1

Agricultural 1,492 11 8,340 22 469 2 0 0

Residential 5,506 41 3,785 37 222 1 0 0real estate

Consumer 2,840 127 1,858 100 2 1 2 1

Total $ 97,486 338 $ 66,452 272 $ 848 5 $ 6,391 4

The Company offered three month deferrals upon request by the borrowers. The deferral requests began in the middle of March, 2020 and concluded at the end of the three month deferral period. The decline in deferred loans and balances was due to the ending of the deferment period and not all borrowers requested additional deferments as most continued to pay under the original terms of their loan.

Farmers is also a preferred SBA lender and dedicated significant additional staff and other resources to help our customers complete and submit their applications and supporting documentation for loans offered under the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, so they could obtain SBA approval and receive funding as quickly as possible. During the period of the initial PPP program, the Company facilitated PPP assistance to 1,714 business customers totaling $199.8 million. The Company, on behalf of its customers, began processing borrower applications for PPP forgiveness at the beginning of September 2020. The SBA has up to ninety days to review an application for PPP forgiveness and provide a decision at the end of that review. Once forgiveness of the PPP loans has been communicated and payment is received from the SBA, the Company will record the cash received from the SBA, pay-off the loans based on the amount of forgiveness provided and accelerate the amount of net deferred loan fees/costs recognized for the portion of the PPP loans that are forgiven. At December 31, 2020, the Company had received payments from the SBA for forgiveness of loans totaling $67.6 million, or approximately 33.8% of the total PPP loans. The Company has begun processing new applications for the second round of PPP loan funding.

2020 Fourth Quarter Financial Highlights

* Loans

Total loans were $2.08 billion at December 31, 2020, compared to $1.81 billion at December 31, 2019, representing an increase of 14.7%. Excluding the $182.1 million of loans added from the Maple Leaf acquisition, loan growth was 4.7%. The increase in loans was a direct result of Farmers' focus on loan growth utilizing a talented lending and credit team, while adhering to a sound underwriting discipline. The increase in loans has occurred primarily in the PPP category, with $128.1 million, net of deferred fees, in outstanding balances. Loans now comprise 74.4% of the Bank's average earning assets for the quarter ended December 31, 2020, compared to 79.5% for the same period in 2019. The growth in the second quarter of 2020 from PPP loans has resulted in an 11.8% increase in tax equated loan interest income, including fees, in the fourth quarter of 2020 compared to the same quarter in 2019. A summary of loans summarized by industries that have particular vulnerability to the effects of COVID-19 and their outstanding balance as a percentage of total loans, as of December 31, 2020, is shown in the following table:

(dollars in thousands) Outstanding % of total loans Balance

Restaurants and Catering Facilities $45,147 2.17%

Hotels 40,888 1.97%

Golf Courses 7,262 0.35%

Energy 690 0.03%

Total $93,987 4.52%

* Deposits and Liquidity

Farmers maintains, in the opinion of management, liquidity sufficient to satisfy depositors' requirements and meet the credit needs of its customers. The Company's non-brokered deposits increased 34% from $1.9 billion at December 31, 2019 to $2.6 billion at December 31, 2020. As a result of the large increase in deposits, the loan to deposit ratio at December 31, 2020 stands at 79.6%, a decrease compared to 90.2% one year ago. The Company has additional borrowing capacity at the Federal Home Loan Bank of Cincinnati and approved lines of credit at two domestic banks.

* Loan quality

Non-performing assets to total assets remain at a low level, currently at 0.45%, but increased from the 0.26% reported one year ago. Early stage delinquencies were $9.3 million, or 0.45% of total loans, at December 31, 2020, compared to $10.1 million, or 0.47% of total loans, for the quarter ended September 30, 2020. Net charge-offs for the current quarter were $197 thousand, compared to $374 thousand in the same quarter in 2019. Total net charge-offs as a percentage of average net loans outstanding is 0.04% for the quarter ended December 31, 2020 unchanged compared to the most recent quarter.

The Company increased its provision for loan losses to $3.0 million, an increase of $400 thousand compared to the $2.6 million provision recorded in the most recent quarter. This additional provision is the amount determined to be required as a result of the impact of increased negative factors that exist in the current economic environment. As an overall percentage of loans, the allowance for loan losses increased to 1.07% for the current quarter compared to 0.90% for the quarter ended September 30, 2020. Excluding the PPP loans, this allowance for loan losses to gross loans ratio increases to 1.14% (non-GAAP). The ratio of the allowance for loan losses to gross loans, excluding PPP loans and acquired loans is 1.31% (non-GAAP).

In accordance with the accounting relief provisions of the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, that was signed into law in late December 2020, the Bank has postponed adoption of the current expected credit losses ("CECL") accounting standards, primarily due to the impact the COVID-19 pandemic is having on the economy and the lack of reasonable and supportable economic forecasts.

* Net interest margin

The net interest margin for the three months ended December 31, 2020 was 3.73%, an 11 basis points decrease from the quarter ended December 31, 2019, but 14 basis points more than the 3.59% reported for the linked quarter. In comparing the fourth quarter of 2020 to the same period in 2019, asset yields decreased 51 basis points, while the cost of interest-bearing liabilities decreased 53 basis points. Most of the decrease in the asset yields was the result of lower rates earned on loans, declining from 5.05% to 4.83% due to the decrease in the prime lending rate and the addition of the lower yielding PPP loans. The cost of interest bearing liabilities decreased as the Federal Funds target rate was lowered to a target of 0-0.25% at the start of the COVID-19 pandemic in the United States. Each of the major interest-bearing liability categories experienced cost decreases compared to one year ago. The net interest margin for the quarter ended December 31, 2020 excluding interest and fees from PPP loans is 3.61% (non-GAAP). The net interest margin is also impacted by the additional accretion as a result of the discounted loan portfolios acquired in previous mergers, which increased the net interest margin by 4 basis points for the quarters ended December 31, 2020 and 2019.

* Noninterest income

Noninterest income increased 36.7% to $10.7 million for the quarter ended December 31, 2020 compared to $7.8 million in the same quarter in 2019. Gains on the sales of mortgage loans increased $2.4 million or 157.15%, as lower interest rates prompted an increase in mortgage loan refinancing and new home purchases. Security gains increased $151 thousand, insurance agency commissions increased $80 thousand or 11.49% and debit card interchange fees increased $139 thousand or 15.08%, but those increases were offset by a $209 thousand or 18.35% decrease in deposit account service charge income due to a change in consumer behavior during the COVID-19 pandemic. Other operating income was $204 thousand or 31.34% higher due to captive insurance company reimbursements related to the class action lawsuit settlement expense recorded in the prior year.

* Noninterest expenses

Farmers has remained committed to managing the level of noninterest expenses. Total noninterest expenses for the fourth quarter of 2020 increased 19.73% to $19.8 million compared to $16.5 million in the same quarter in 2019, primarily as a result of increases in salaries and employee benefits of $510 thousand or 5.6% and occupancy expense of $393 thousand or 23.58%. Acquisition related costs increased $1.7 million related to the Geauga Savings Bank acquisition completed earlier in the year. Other operating expenses also increased $1.2 million or 53.95% as a result of increased mortgage servicing rights expense and captive insurance company losses from members of the pool made claims for COVID-19 costs. Annualized noninterest expenses excluding acquisition costs (non-GAAP) measured as a percentage of quarterly average assets decreased from 2.68% in the fourth quarter of 2019 to 2.35% in the fourth quarter of 2020.

* Efficiency ratio

The efficiency ratio for the quarter ended December 31, 2020 improved to 50.25% compared to 54.51% for the same quarter in 2019. The improvement in mortgage banking income and net interest income, accompanied with careful management of noninterest expenses were the main drivers of the improvement.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $3 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 41 banking locations in Mahoning, Trumbull, Columbiana, 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 December 31, 2020 are $2.8 billion. Farmers National Insurance, LLC and Bowers Insurance Agency, Inc., wholly-owned subsidiaries of The Farmers National Bank of Canfield, offer 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 and net income excluding costs related to acquisition activities, 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 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; and the other factors contained in Farmers' Annual Report on Form 10-K for the year ended December 31, 2019, 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.

FarmersNationalBanc Corp.andSubsidiaries

ConsolidatedFinancialHighlights

(Amounts inthousands,except pershareresults)Unaudited



ConsolidatedStatements For the Three Months Ended For the Twelve Months Endedof Income

Dec. Sept. June March Dec. Dec. 31, Dec. 31, Percent 31, 30, 30, 31, 31,

2020 2020 2020 2020 2019 2020 2019 Change

Totalinterest $28,833 $27,635 $28,142 $27,717 $25,847 $112,327 $101,986 10.1%income

Totalinterest 3,030 3,470 4,221 5,415 4,682 16,136 19,608 -17.7%expense

Net interest 25,803 24,165 23,921 22,302 21,165 96,191 82,378 16.8%income

Provisionfor loan 3,000 2,600 2,400 1,100 600 9,100 2,450 271.4%losses

Noninterest 10,682 9,467 9,136 7,870 7,814 37,155 28,602 29.9%income

Acquisitionrelated 1,798 58 48 1,319 104 3,223 197 1536.0%costs

Other 17,979 17,662 17,692 17,418 16,414 70,751 65,258 8.4%expense

Incomebefore 13,708 13,312 12,917 10,335 11,861 50,272 43,075 16.7%income taxes

Income taxes 2,351 2,443 1,906 1,696 2,186 8,396 7,315 14.8%

Net income $11,357 $10,869 $11,011 $8,639 $9,675 $41,876 $35,760 17.1%

Averagediluted 28,322 28,291 28,280 28,710 27,829 28,394 27,876 sharesoutstanding

Basicearnings per 0.40 0.39 0.39 0.30 0.35 1.48 1.29 share

Dilutedearnings per 0.40 0.38 0.39 0.30 0.35 1.47 1.28 share

Cash 3,100 3,101 3,100 3,104 2,767 12,405 10,538 dividends

Cashdividends 0.11 0.11 0.11 0.11 0.10 0.44 0.38 per share

Performance Ratios

Net InterestMargin 3.73% 3.59% 3.74% 3.75% 3.84% 3.70% 3.82% (Annualized)

EfficiencyRatio (Tax 50.25% 50.66% 50.75% 59.72% 54.51% 52.82% 56.59% equivalentbasis)

Return onAverage 1.49% 1.46% 1.56% 1.32% 1.58% 1.46% 1.50% Assets(Annualized)

Return onAverage 13.10% 12.87% 14.02% 11.53% 12.78% 12.80% 12.56% Equity(Annualized)

Dividends to 27.30% 28.53% 28.15% 35.93% 28.60% 29.62% 29.47% Net Income

OtherPerformance Ratios(Non-GAAP)

Return onAverage 1.52% 1.50% 1.58% 1.33% 1.62% 1.48% 1.53% TangibleAssets

Return onAverage 15.48% 15.30% 16.69% 13.81% 15.03% 15.07% 14.81% TangibleEquity

Return onAverageTangibleEquity 17.43% 15.37% 16.75% 15.50% 15.17% 16.00% 14.88% excludingacquisitioncosts

Consolidated Statements of Financial Condition

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

2020

2020

2020

2020

2019

Assets

Cash and cash equivalents

$254,621

$199,575

$103,954

$83,107

$70,760

Securities available for sale

575,600

481,509

475,614

448,043

432,233

Equity securities

6,881

8,307

8,375

8,080

7,909

Loans held for sale

4,766

7,076

3,395

3,272

2,600

Loans

2,078,044

2,147,158

2,149,690

1,976,582

1,811,539

Less allowance for loan losses

22,144

19,341

16,960

14,952

14,487

Net Loans

2,055,900

2,127,817

2,132,730

1,961,630

1,797,052

Other assets

173,380

164,895

161,612

164,256

138,604

Total Assets

$3,071,148

$2,989,179

$2,885,680

$2,668,388

$2,449,158

Liabilities and Stockholders' Equity

Deposits

Noninterest-bearing

$608,791

$577,334

$593,162

$449,952

$434,126

Interest-bearing

2,002,087

1,960,998

1,846,323

1,796,325

1,574,838

Total deposits

2,610,878

2,538,332

2,439,485

2,246,277

2,008,964

Other interest-bearing liabilities

78,906

81,690

80,115

96,852

122,197

Other liabilities

31,267

29,189

34,728

21,523

18,688

Total liabilities

2,721,051

2,649,211

2,554,328

2,364,652

2,149,849

Stockholders' Equity

350,097

339,968

331,352

303,736

299,309

Total Liabilitiesand Stockholders' Equity

$3,071,148

$2,989,179

$2,885,680

$2,668,388

$2,449,158

Period-end shares outstanding

28,190

28,186

28,180

28,127

27,671

Book value per share

$12.42

$12.06

$11.76

$10.80

$10.82

Tangible book value per share (Non-GAAP)*

10.66

10.23

9.92

8.94

9.28

* Tangible book value per share is calculated by dividing tangible common equity by average outstanding shares

Capital and Liquidity

Common Equity Tier 1 Capital Ratio (a)

12.81%

12.98%

12.65%

12.26%

12.94%

Total Risk Based Capital Ratio (a)

13.82%

14.36%

13.92%

13.43%

13.82%

Tier 1 Risk Based Capital Ratio (a)

12.91%

13.43%

13.10%

12.70%

13.06%

Tier 1 Leverage Ratio (a)

10.18%

9.67%

9.71%

10.18%

10.69%

Equity to Asset Ratio

11.40%

11.37%

11.48%

11.38%

12.22%

Tangible Common Equity Ratio (b)

9.94%

9.82%

9.86%

9.61%

10.67%

Net Loans to Assets

66.94%

71.18%

73.91%

73.51%

73.37%

Loans to Deposits

79.59%

84.59%

88.12%

87.99%

90.17%

Asset Quality

Non-performing loans

$13,835

$11,841

$12,225

$11,845

$6,345

Other Real Estate Owned

0

73

41

131

19

Non-performing assets

13,835

11,914

12,266

11,976

6,364

Loans 30 - 89 days delinquent

9,297

10,134

10,336

19,067

11,893

Charged-off loans

387

393

524

749

519

Recoveries

190

174

132

114

145

Net Charge-offs

197

219

392

635

374

Annualized Net Charge-offs to Average Net Loans Outstanding

0.04%

0.04%

0.08%

0.13%

0.09%

Allowance for Loan Losses to Total Loans

1.07%

0.90%

0.79%

0.76%

0.80%

Non-performing Loans to Total Loans

0.67%

0.55%

0.57%

0.60%

0.35%

Allowance to Non-performing Loans

160.06%

163.34%

138.73%

126.23%

228.32%

Non-performing Assets to Total Assets

0.45%

0.40%

0.43%

0.45%

0.26%

(a) December 31, 2020 ratio is estimated

(b) This is a non-GAAP financial measure. A reconciliation to GAAP is shown below

Consolidated Statements ofFinancial Condition

Dec. 31, Sept. 30, June 30, March 31, Dec. 31,

2020 2020 2020 2020 2019

Assets

Cash and cash $254,621 $199,575 $103,954 $83,107 $70,760equivalents

Securities 575,600 481,509 475,614 448,043 432,233available for sale

Equity securities 6,881 8,307 8,375 8,080 7,909

Loans held for sale 4,766 7,076 3,395 3,272 2,600

Loans 2,078,044 2,147,158 2,149,690 1,976,582 1,811,539

Less allowance for 22,144 19,341 16,960 14,952 14,487loan losses

Net Loans 2,055,900 2,127,817 2,132,730 1,961,630 1,797,052

Other assets 173,380 164,895 161,612 164,256 138,604

Total Assets $3,071,148 $2,989,179 $2,885,680 $2,668,388 $2,449,158

Liabilities andStockholders'Equity

Deposits

Noninterest-bearing $608,791 $577,334 $593,162 $449,952 $434,126

Interest-bearing 2,002,087 1,960,998 1,846,323 1,796,325 1,574,838

Total deposits 2,610,878 2,538,332 2,439,485 2,246,277 2,008,964

Otherinterest-bearing 78,906 81,690 80,115 96,852 122,197liabilities

Other liabilities 31,267 29,189 34,728 21,523 18,688

Total liabilities 2,721,051 2,649,211 2,554,328 2,364,652 2,149,849

Stockholders' 350,097 339,968 331,352 303,736 299,309Equity

Total Liabilitiesand Stockholders' $3,071,148 $2,989,179 $2,885,680 $2,668,388 $2,449,158Equity

Period-end shares 28,190 28,186 28,180 28,127 27,671outstanding

Book value per $12.42 $12.06 $11.76 $10.80 $10.82share

Tangible book valueper share 10.66 10.23 9.92 8.94 9.28(Non-GAAP)*

* Tangible book value per share is calculated by dividing tangible commonequity by average outstanding shares

Capital andLiquidity

Common Equity Tier 12.81% 12.98% 12.65% 12.26% 12.94%1 Capital Ratio (a)

Total Risk Based 13.82% 14.36% 13.92% 13.43% 13.82%Capital Ratio (a)

Tier 1 Risk Based 12.91% 13.43% 13.10% 12.70% 13.06%Capital Ratio (a)

Tier 1 Leverage 10.18% 9.67% 9.71% 10.18% 10.69%Ratio (a)

Equity to Asset 11.40% 11.37% 11.48% 11.38% 12.22%Ratio

Tangible Common 9.94% 9.82% 9.86% 9.61% 10.67%Equity Ratio (b)

Net Loans to Assets 66.94% 71.18% 73.91% 73.51% 73.37%

Loans to Deposits 79.59% 84.59% 88.12% 87.99% 90.17%

Asset Quality

Non-performing $13,835 $11,841 $12,225 $11,845 $6,345loans

Other Real Estate 0 73 41 131 19Owned

Non-performing 13,835 11,914 12,266 11,976 6,364assets

Loans 30 - 89 days 9,297 10,134 10,336 19,067 11,893delinquent

Charged-off loans 387 393 524 749 519

Recoveries 190 174 132 114 145

Net Charge-offs 197 219 392 635 374

Annualized NetCharge-offs to 0.04% 0.04% 0.08% 0.13% 0.09%Average Net LoansOutstanding

Allowance for LoanLosses to Total 1.07% 0.90% 0.79% 0.76% 0.80%Loans

Non-performingLoans to Total 0.67% 0.55% 0.57% 0.60% 0.35%Loans

Allowance toNon-performing 160.06% 163.34% 138.73% 126.23% 228.32%Loans

Non-performingAssets to Total 0.45% 0.40% 0.43% 0.45% 0.26%Assets



(a) December 31,2020 ratio is estimated

(b) This is a non-GAAP financial measure. Areconciliation to GAAP is shown below

Reconciliation of Total Assets to Tangible AssetsFor the Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

2020

2020

2020

2020

2019

2020

2019

Total Assets

$3,071,148

$2,989,179

$2,885,680

$2,668,388

$2,449,158

$3,071,148

$2,449,158

Less Goodwill and other intangibles

49,617

51,608

51,866

52,337

42,645

49,617

42,645

Tangible Assets

$3,021,531

$2,937,571

$2,833,814

$2,616,051

$2,406,513

$3,021,531

$2,406,513

Average Assets

3,033,005

2,957,702

2,842,730

2,641,597

2,424,574

2,869,394

2,383,236

Less average Goodwill and other intangibles

51,476

51,754

52,052

51,103

42,859

49,363

43,345

Average Tangible Assets

$2,981,529

$2,905,948

$2,790,678

$2,590,494

$2,381,715

$2,820,031

$2,339,891

Reconciliation of Common Stockholders' Equity to Tangible Common Equity

For the Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

2020

2020

2020

2020

2019

2020

2019

Stockholders' Equity

$350,097

$339,968

$331,352

$303,736

$299,309

$350,097

$299,309

Less Goodwill and other intangibles

49,617

51,608

51,866

52,337

42,645

49,617

42,645

Tangible Common Equity

$300,480

$288,360

$279,486

$251,399

$256,664

$300,480

$256,664

Average Stockholders' Equity

344,949

335,982

315,988

301,408

300,355

327,175

284,759

Less average Goodwill and other intangibles

51,476

51,754

52,052

51,103

42,859

49,363

43,345

Average Tangible Common Equity

$293,473

$284,228

$263,936

$250,305

$257,496

$277,812

$241,414

Reconciliation of Total For the Twelve MonthsAssets to Tangible Assets Ended

Dec. 31, Sept. 30, June 30, March 31, Dec. 31, Dec. 31, Dec. 31,

2020 2020 2020 2020 2019 2020 2019

Total Assets $3,071,148 $2,989,179 $2,885,680 $2,668,388 $2,449,158 $3,071,148 $2,449,158

Less Goodwilland other 49,617 51,608 51,866 52,337 42,645 49,617 42,645intangibles

Tangible $3,021,531 $2,937,571 $2,833,814 $2,616,051 $2,406,513 $3,021,531 $2,406,513Assets

Average 3,033,005 2,957,702 2,842,730 2,641,597 2,424,574 2,869,394 2,383,236Assets

Less averageGoodwill and 51,476 51,754 52,052 51,103 42,859 49,363 43,345otherintangibles

AverageTangible $2,981,529 $2,905,948 $2,790,678 $2,590,494 $2,381,715 $2,820,031 $2,339,891Assets



Reconciliation of Common Stockholders' Equity to For the Twelve MonthsTangible Common Equity Ended

Dec. 31, Sept. 30, June 30, March 31, Dec. 31, Dec. 31, Dec. 31,

2020 2020 2020 2020 2019 2020 2019

Stockholders' $350,097 $339,968 $331,352 $303,736 $299,309 $350,097 $299,309Equity

Less Goodwilland other 49,617 51,608 51,866 52,337 42,645 49,617 42,645intangibles

Tangible $300,480 $288,360 $279,486 $251,399 $256,664 $300,480 $256,664Common Equity

AverageStockholders' 344,949 335,982 315,988 301,408 300,355 327,175 284,759Equity

Less averageGoodwill and 51,476 51,754 52,052 51,103 42,859 49,363 43,345otherintangibles

AverageTangible $293,473 $284,228 $263,936 $250,305 $257,496 $277,812 $241,414Common Equity

Reconciliation of Net Income, Excluding Acquisition Related Costs

For the Three Months Ended

For the Twelve Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Dec. 31,

Dec. 31,

2020

2020

2020

2020

2019

2020

2019

Net income

$11,357

$10,869

$11,011

$8,639

$9,675

$41,876

$35,760

Acquisition related costs - tax equated

1,431

50

41

1,063

90

2,585

167

Net income - Adjusted

$12,788

$10,919

$11,052

$9,702

$9,765

$44,461

$35,927

Diluted EPS excluding acquisition costs

$0.45

$0.39

$0.39

$0.34

$0.35

$1.57

$1.29

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

End of Period Loan Balances

2020

2020

2020

2020

2019

Commercial real estate

$713,936

$710,730

$715,342

$714,477

$616,778

Commercial

404,492

481,593

472,012

283,033

255,823

Residential real estate

524,193

526,627

528,853

541,534

500,024

Consumer

203,061

209,883

208,374

210,173

209,271

Agricultural loans

232,129

219,896

221,556

223,977

226,333

Total, excluding net deferred loan costs

$2,077,811

$2,148,729

$2,146,137

$1,973,194

$1,808,229

Reconciliation of Net Income, ExcludingAcquisition Related Costs

For the Twelve For the Three Months Ended Months Ended

Dec. 31, Sept. 30, June 30, March 31, Dec. 31, Dec. Dec. 31, 31,

2020 2020 2020 2020 2019 2020 2019

Net income $11,357 $10,869 $11,011 $8,639 $9,675 $41,876 $35,760

Acquisitionrelated 1,431 50 41 1,063 90 2,585 167costs - taxequated

Net income - $12,788 $10,919 $11,052 $9,702 $9,765 $44,461 $35,927Adjusted

Diluted EPSexcluding $0.45 $0.39 $0.39 $0.34 $0.35 $1.57 $1.29acquisitioncosts

Dec. 31, Sept. 30, June 30, March 31, Dec. 31,

End ofPeriod Loan 2020 2020 2020 2020 2019 Balances

Commercial $713,936 $710,730 $715,342 $714,477 $616,778 real estate

Commercial 404,492 481,593 472,012 283,033 255,823

Residential 524,193 526,627 528,853 541,534 500,024 real estate

Consumer 203,061 209,883 208,374 210,173 209,271

Agricultural 232,129 219,896 221,556 223,977 226,333 loans

Total,excluding $2,077,811 $2,148,729 $2,146,137 $1,973,194 $1,808,229 net deferredloan costs

For the Three Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Noninterest Income

2020

2020

2020

2020

2019

Service charges on deposit accounts

$930

$904

$753

$1,095

$1,139

Bank owned life insurance income

187

196

204

208

192

Trust fees

1,950

1,973

1,852

1,857

1,891

Insurance agency commissions

776

784

681

883

696

Security gains (losses)

179

70

(26)

157

28

Retirement plan consulting fees

394

341

408

380

343

Investment commissions

450

353

304

423

435

Net gains on sale of loans

3,901

3,348

3,658

1,366

1,517

Debit card and EFT fees

1,061

1,048

967

851

922

Other operating income

854

450

335

650

651

Total Noninterest Income

$10,682

$9,467

$9,136

$7,870

$7,814

For the Three Months Ended

Dec. Sept. June March Dec. 31, 30, 30, 31, 31,

Noninterest Income 2020 2020 2020 2020 2019

Service charges on deposit $930 $904 $753 $1,095 $1,139accounts

Bank owned life insurance 187 196 204 208 192income

Trust fees 1,950 1,973 1,852 1,857 1,891

Insurance agency commissions 776 784 681 883 696

Security gains (losses) 179 70 (26) 157 28

Retirement plan consulting 394 341 408 380 343fees

Investment commissions 450 353 304 423 435

Net gains on sale of loans 3,901 3,348 3,658 1,366 1,517

Debit card and EFT fees 1,061 1,048 967 851 922

Other operating income 854 450 335 650 651

Total Noninterest Income $10,682 $9,467 $9,136 $7,870 $7,814

For the Three Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

Noninterest Expense

2020

2020

2020

2020

2019

Salaries and employee benefits

$9,638

$10,244

$9,713

$10,231

$9,128

Occupancy and equipment

2,060

1,719

1,675

1,800

1,667

State and local taxes

515

576

583

464

416

Professional fees

341

753

823

816

787

Merger related costs

1,798

58

48

1,319

104

Advertising

478

460

322

271

607

FDIC insurance

100

200

225

225

79

Intangible amortization

332

332

331

332

326

Core processing charges

831

925

934

861

876

Telephone and data

154

182

348

203

235

Other operating expenses

3,530

2,271

2,738

2,215

2,293

Total Noninterest Expense

$19,777

$17,720

$17,740

$18,737

$16,518

For the Three Months Ended

Dec. Sept. June March Dec. 31, 30, 30, 31, 31,

Noninterest Expense 2020 2020 2020 2020 2019

Salaries and employee $9,638 $10,244 $9,713 $10,231 $9,128benefits

Occupancy and equipment 2,060 1,719 1,675 1,800 1,667

State and local taxes 515 576 583 464 416

Professional fees 341 753 823 816 787

Merger related costs 1,798 58 48 1,319 104

Advertising 478 460 322 271 607

FDIC insurance 100 200 225 225 79

Intangible amortization 332 332 331 332 326

Core processing charges 831 925 934 861 876

Telephone and data 154 182 348 203 235

Other operating expenses 3,530 2,271 2,738 2,215 2,293

Total Noninterest Expense $19,777 $17,720 $17,740 $18,737 $16,518

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

Three Months Ended

Three Months Ended

December 31, 2020

December 31, 2019

AVERAGE

AVERAGE

BALANCE

INTEREST (1)

RATE (1)

BALANCE

INTEREST (1)

RATE (1)

EARNING ASSETS

Loans (2)

$2,094,276

$25,409

4.83%

$1,784,421

$22,725

5.05%

Taxable securities

223,306

1,335

2.38

181,894

1,162

2.53

Tax-exempt securities (2)

262,829

2,514

3.81

227,259

2,205

3.85

Equity securities

15,138

128

3.36

12,059

130

4.28

Federal funds sold and other

221,052

67

0.12

37,914

170

1.78

Total earning assets

2,816,601

29,453

4.16

2,243,547

26,392

4.67

Nonearning assets

216,404

181,027

Total assets

$3,033,005

$2,424,574

INTEREST-BEARING LIABILITIES

Time deposits

$458,340

$1,591

1.38%

$418,722

$2,089

1.98%

Brokered time deposits

43,685

98

0.89

85,973

446

2.06

Savings deposits

489,071

236

0.19

402,464

320

0.32

Demand deposits

995,977

804

0.32

683,143

1,506

0.87

Short term borrowings

3,859

7

0.72

35,838

99

1.10

Long term borrowings

76,400

294

1.53

45,203

222

1.95

Total interest-bearing liabilities

$2,067,332

3,030

0.58

$1,671,343

4,682

1.11

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY

Demand deposits

593,955

434,778

Other liabilities

26,769

18,098

Stockholders' equity

344,949

300,355

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$3,033,005

$2,424,574

Net interest income and interest rate spread

$26,423

3.58%

$21,710

3.56%

Net interest margin

3.73%

3.84%

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

Three Months Ended Three Months Ended

December 31, 2020 December 31, 2019

AVERAGE AVERAGE

BALANCE INTEREST RATE BALANCE INTEREST RATE (1) (1) (1) (1)

EARNING ASSETS

Loans (2) $2,094,276 $25,409 4.83% $1,784,421 $22,725 5.05%

Taxable securities 223,306 1,335 2.38 181,894 1,162 2.53

Tax-exempt securities 262,829 2,514 3.81 227,259 2,205 3.85(2)

Equity securities 15,138 128 3.36 12,059 130 4.28

Federal funds sold 221,052 67 0.12 37,914 170 1.78and other

Total earning assets 2,816,601 29,453 4.16 2,243,547 26,392 4.67

Nonearning assets 216,404 181,027

Total assets $3,033,005 $2,424,574

INTEREST-BEARINGLIABILITIES

Time deposits $458,340 $1,591 1.38% $418,722 $2,089 1.98%

Brokered time 43,685 98 0.89 85,973 446 2.06deposits

Savings deposits 489,071 236 0.19 402,464 320 0.32

Demand deposits 995,977 804 0.32 683,143 1,506 0.87

Short term borrowings 3,859 7 0.72 35,838 99 1.10

Long term borrowings 76,400 294 1.53 45,203 222 1.95

Totalinterest-bearing $2,067,332 3,030 0.58 $1,671,343 4,682 1.11liabilities



NONINTEREST-BEARINGLIABILITIES ANDSTOCKHOLDERS' EQUITY

Demand deposits 593,955 434,778

Other liabilities 26,769 18,098

Stockholders' equity 344,949 300,355



TOTAL LIABILITIES AND $3,033,005 $2,424,574 STOCKHOLDERS' EQUITY

Net interest incomeand interest rate $26,423 3.58% $21,710 3.56%spread

Net interest margin 3.73% 3.84%

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.

(2) For 2020, adjustments of $101 thousand and $519 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2019, adjustments of $99 thousand and $446 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.

(1) Interest and yields are calculated on a tax-equivalent basis whereapplicable.

(2) For 2020, adjustments of $101 thousand and $519 thousand, respectively,were made to tax equate income on tax exempt loans and tax exempt securities.For 2019, adjustments of $99 thousand and $446 thousand, respectively, weremade to tax equate income on tax exempt loans and tax exempt securities. Theseadjustments were based on a marginal federal income tax rate of 21%, lessdisallowances.

Twelve Months Ended

Twelve Months Ended

December 31, 2020

December 31, 2019

AVERAGE

AVERAGE

BALANCE

INTEREST (1)

RATE (1)

BALANCE

INTEREST (1)

RATE (1)

EARNING ASSETS

Loans (2)

$2,062,936

$98,779

4.79%

$1,757,799

$89,517

5.09%

Taxable securities

209,817

5,423

2.58

190,944

4,840

2.53

Tax-exempt securities

250,394

9,675

3.86

216,586

8,418

3.89

Equity securities (2)

16,073

543

3.38

12,057

627

5.20

Federal funds sold and other

124,447

298

0.24

34,948

729

2.09

Total earning assets

2,663,667

114,718

4.31

2,212,334

104,131

4.71

Nonearning assets

205,727

170,902

Total assets

$2,869,394

$2,383,236

INTEREST-BEARING LIABILITIES

Time deposits

$480,302

$8,083

1.68%

$401,317

$7,847

1.96%

Brokered time deposits

72,472

1,057

1.46

83,311

1,921

2.31

Savings deposits

462,021

1,080

0.23

410,672

1,285

0.31

Demand deposits

856,462

4,161

0.49

641,461

5,807

0.91

Short term borrowings

20,764

359

1.73

96,145

2,250

2.34

Long term borrowings

82,451

1,396

1.69

23,318

498

2.14

Total interest-bearing liabilities

$1,974,472

16,136

0.82

$1,656,224

19,608

1.18

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY

Demand deposits

$546,177

$429,289

Other liabilities

21,570

12,964

Stockholders' equity

327,175

284,759

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$2,869,394

$2,383,236

Net interest income and interest rate spread

$98,582

3.49%

$84,523

3.53%

Net interest margin

3.70%

3.82%

Twelve Months Ended Twelve Months Ended

December 31, 2020 December 31, 2019

AVERAGE AVERAGE

BALANCE INTEREST RATE BALANCE INTEREST RATE (1) (1) (1) (1)

EARNING ASSETS

Loans (2) $2,062,936 $98,779 4.79% $1,757,799 $89,517 5.09%

Taxable securities 209,817 5,423 2.58 190,944 4,840 2.53

Tax-exempt securities 250,394 9,675 3.86 216,586 8,418 3.89

Equity securities (2) 16,073 543 3.38 12,057 627 5.20

Federal funds sold and 124,447 298 0.24 34,948 729 2.09other

Total earning assets 2,663,667 114,718 4.31 2,212,334 104,131 4.71

Nonearning assets 205,727 170,902

Total assets $2,869,394 $2,383,236

INTEREST-BEARINGLIABILITIES

Time deposits $480,302 $8,083 1.68% $401,317 $7,847 1.96%

Brokered time deposits 72,472 1,057 1.46 83,311 1,921 2.31

Savings deposits 462,021 1,080 0.23 410,672 1,285 0.31

Demand deposits 856,462 4,161 0.49 641,461 5,807 0.91

Short term borrowings 20,764 359 1.73 96,145 2,250 2.34

Long term borrowings 82,451 1,396 1.69 23,318 498 2.14

Total interest-bearing $1,974,472 16,136 0.82 $1,656,224 19,608 1.18liabilities

NONINTEREST-BEARINGLIABILITIES ANDSTOCKHOLDERS' EQUITY

Demand deposits $546,177 $429,289

Other liabilities 21,570 12,964

Stockholders' equity 327,175 284,759



TOTAL LIABILITIES AND $2,869,394 $2,383,236 STOCKHOLDERS' EQUITY

Net interest incomeand interest rate $98,582 3.49% $84,523 3.53%spread

Net interest margin 3.70% 3.82%





(1) Interest and yields are calculated on a tax-equivalent basis where applicable.

(2) For 2020, adjustments of $400 thousand and $2.0 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2019, adjustments of $414 thousand and $1.7 million, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210128005309/en/

CONTACT: Kevin J. Helmick, President and CEO 330.533.3341 Email: exec@farmersbankgroup.com