EX-99.2 3 d556175dex992.htm EX-99.2

EX-99.2

Exhibit 99.2

July 18, 2018

Press Release

Source: Farmers National Banc Corp.Kevin J. Helmick, President and CEO 20 South Broad Street, P.O. Box 555 Canfield, OH 44406 330.533.3341 Email: exec@farmersbankgroup.com

FARMERS NATIONAL BANC CORP. ANNOUNCES

2018 SECOND QUARTER FINANCIAL RESULTS

• Record net income for the quarter of $8.1 million, 41% higher than the same quarter in 2017

• 142 consecutive quarters of profitability

• Annualized return on average assets was 1.47% and annualized return on average equity 13.28% for the quarter ended June 30, 2018

• 8.9% loan growth since June 30, 2017

• Non-performing assets to total assets remain at low levels, 0.38% at June 30, 2018

CANFIELD, Ohio (July 18, 2018) – Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months ended June 30, 2018.

Net income for the three months ended June 30, 2018 was $8.1 million, or $0.29 per diluted share, which compares to $5.7 million, or $0.21 per diluted share, for the three months ended June 30, 2017 and $7.7 million, or $0.28 per diluted share, for the linked quarter. Annualized return on average assets and return on average equity were 1.47% and 13.28%, respectively, for the three month period ending June 30, 2018, compared to 1.11% and 10.25% for the same three month period in 2017, and 1.45% and 13.03% for the linked quarter. Farmers’ return on average tangible equity (Non-GAAP) also improved to 16.24% for the quarter ended June 30, 2018 compared to 12.77% for the same quarter in 2017 and 15.84% for the linked quarter.

Net income for the six months ended June 30, 2018 was $15.8 million, or $0.57 per diluted share, compared to $11.5 million or $0.42 per diluted share for the same six month period in 2017. Return on average assets and return on average equity were 1.46% and 13.13%, respectively, for the six months ended June 30, 2018, compared to 1.14% and 10.52% for the same period in 2017.

On December 22, 2017, H.R.1, known as the “Tax Cuts and Jobs Act,” was signed into law. H.R.1, among other things, reduced the corporate income tax rate to 21% effective January 1, 2018. As a result of passage of the new tax law, Farmers effective tax rate decreased from 25.7% for the six months ended June 30, 2017 to 15.7% for the six months ended June 30, 2018. It is important to note that also as a result of the new tax law, Farmers determined that its net deferred tax assets needed to be reduced in the fourth quarter of 2017 by approximately $1.8 million, representing an impact on earnings per share of approximately $0.06 per diluted share for that fourth quarter, based on that quarter’s weighted average diluted shares outstanding of approximately 27.5 million.

Kevin J. Helmick, President and CEO, stated, “We are pleased to report record earnings which are the result of the successful integration of previous mergers, continued strong loan growth, higher levels of noninterest income and a lower effective income tax rate.”

2018 Second Quarter Financial Highlights

• Loan growth

Total loans were $1.64 billion at June 30, 2018, compared to $1.51 billion at June 30, 2017, representing an increase of 8.9%. The increase in loans is 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 in the commercial and commercial real estate, residential real estate and agricultural loan portfolios. Loans now comprise 78.6% of the Bank’s average earning assets for the quarter ended June 30, 2018, an improvement compared to 77.6% for the same period in 2017. This improvement, along with the growth in earning assets, has resulted in a 12.3% increase in loan income in the second quarter of 2018 compared to the same quarter in 2017.

• Loan quality

Non-performing assets to total assets remain at a low level, currently at 0.38%. Early stage delinquencies also continue to remain at low levels, at $10.6 million, or 0.65% of total loans, at June 30, 2018. Net charge-offs for the current quarter were $536 thousand, compared to $523 thousand in the same quarter in 2017 and annualized net charge-offs as a percentage of average net loans outstanding is only 0.13% for the quarter ended June 30, 2018. Lending to the energy sector is insignificant and less than 1% of the loan portfolio.

• Net interest margin

The net interest margin for the three months ended June 30, 2018 was 3.93%, a 12 basis points decrease from the quarter ended June 30, 2017, but 1 basis point higher than the first quarter of 2018. In comparing the second quarter of 2018 to the same period in 2017, asset yields increased 9 basis points, while the cost of interest-bearing liabilities increased 30 basis points. Most of this increase was the result of higher rates paid on short-term borrowings and time deposits, consistent with increases in the federal funds sold rate. The net interest margin is impacted by the additional accretion as a result of the discounted loan portfolios acquired in the previous mergers, which increased the net interest margin by 5 and 2 basis points for the quarters ended June 30, 2018 and 2017, respectively.

• Noninterest income

Noninterest income increased 4.2% to $6.3 million for the quarter ended June 30, 2018 compared to $6.1 million in the same quarter of 2017. Trust fees increased $217 thousand or 14.3% in comparing the second quarter of 2018 to the same quarter in 2017, retirement plan consulting fees increased $66 thousand or 16.5% and investment commissions increased $62 thousand or 24.5%. These increases were offset by a drop in the gains on the sale of mortgage loans of $285 thousand or 32%; however, the current quarter’s income of $606 thousand was $119 thousand or 24% higher than the linked quarter.

• Noninterest expenses

Farmers has remained committed to managing its level of noninterest expenses. Total noninterest expenses for the second quarter of 2018 decreased 1.9% to $15.5 million compared to $15.8 million in the same quarter in 2017, primarily a result of decreases in other operating expenses of $136 thousand and merger related costs of $104 thousand. It is important to note that annualized noninterest expenses measured as a percentage of quarterly average assets decreased from 3.08% in the first quarter of 2017 to 2.82% in the first quarter of 2018.

• Efficiency ratio

The efficiency ratio for the quarter ended June 30, 2018 improved to 57.31% compared to 60.79% for the same quarter in 2017. The main factors leading to this improvement were the increase in net interest income and noninterest income and a slightly lower level of noninterest expenses relative to average assets as explained in the preceding paragraphs.    

2018 Outlook

Mr. Helmick added, “We are encouraged by our financial results for the first half of 2018 and look to use this momentum to sustain strong performance for all of 2018. As always, we will remain focused on delivering for the businesses, families and communities we serve.”

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $2.2 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 41 banking locations in Mahoning, Trumbull, Columbiana, Stark, Wayne, Medina and Cuyahoga Counties in Ohio and Beaver County in Pennsylvania, Farmers Trust Company, which operates four trust offices and offers services in the same geographic markets, and National Associates, Inc. Total wealth management assets under care at June 30, 2018 are $2.6 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 can be found in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2017, which has been filed with the Securities and Exchange Commission (SEC) and is 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.

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																				For the Six Months Ended
		June 30, 2018				March 31, 2018				Dec. 31, 2017				Sept. 30, 2017				June 30, 2017				June 30, 2018				June 30, 2017				Percent Change
Total interest income		$	22,474			$	21,282			$	21,084			$	20,551			$	20,042			$	43,756			$	38,892				12.5	%
Total interest expense			2,912				2,336				2,017				1,876				1,669				5,248				2,988				75.6	%
Net interest income			19,562				18,946				19,067				18,675				18,373				38,508				35,904				7.3	%
Provision for loan losses			750				775				400				950				950				1,525				2,000				-23.8	%
Noninterest income			6,306				6,010				6,051				6,058				6,055				12,316				11,942				3.1	%
Acquisition related costs			0				25				88				270				104				25				166				-84.9	%
Other expense			15,458				15,071				15,311				15,521				15,660				30,529				30,211				1.1	%
Income before income taxes			9,660				9,085				9,319				7,992				7,714				18,745				15,469				21.2	%
Income taxes			1,587				1,359				4,084				2,009				2,004				2,946				3,976				-25.9	%
Net income		$	8,073			$	7,726			$	5,235			$	5,983			$	5,710			$	15,799			$	11,493				37.5	%
Average shares outstanding			27,641				27,918				27,941				27,654				27,395				27,610				27,371
Basic and diluted earnings per share			0.29				0.28				0.19				0.22				0.21				0.57				0.42
Cash dividends			1,935				1,935				1,653				1,653				1,353				3,870				2,707
Cash dividends per share			0.07				0.07				0.06				0.06				0.05				0.14				0.10
Performance Ratios
Net Interest Margin (Annualized)			3.93	%			3.92	%			3.98	%			3.96	%			4.05	%			3.92	%			4.03	%
Efficiency Ratio (Tax equivalent basis)			57.31	%			57.98	%			59.13	%			59.93	%			60.79	%			57.64	%			59.81	%
Return on Average Assets (Annualized)			1.47	%			1.45	%			0.96	%			1.12	%			1.11	%			1.46	%			1.14	%
Return on Average Equity (Annualized)			13.28	%			13.03	%			8.60	%			10.15	%			10.25	%			13.13	%			10.52	%
Dividends to Net Income			23.97	%			25.05	%			31.58	%			27.63	%			23.70	%			24.50	%			23.55	%
Other Performance Ratios (Non-GAAP)
Return on Average Tangible Assets			1.50	%			1.46	%			0.99	%			1.15	%			1.14	%			1.48	%			1.16	%
Return on Average Tangible Equity			16.24	%			15.84	%			10.69	%			12.69	%			12.77	%			15.99	%			13.10	%
Return on Average Tangible Equity excluding acquisition costs and deferred tax asset adjustments			16.24	%			15.88	%			14.25	%			13.09	%			12.98	%			16.01	%			13.26	%

Consolidated Statements of Financial Condition

		June 30, 2018				March 31, 2018				Dec. 31, 2017				Sept. 30, 2017				June 30, 2017
Assets
Cash and cash equivalents		$	76,623			$	52,149			$	57,614			$	84,006			$	64,640
Securities available for sale			389,325				384,396				392,937				395,235				391,628
Loans held for sale			1,987				399				272				502				583
Loans			1,639,191				1,599,339				1,577,381				1,551,437				1,505,273
Less allowance for loan losses			12,764				12,550				12,315				12,104				11,746
Net Loans			1,626,427				1,586,789				1,565,066				1,539,333				1,493,527
Other assets			143,577				143,784				143,180				142,949				135,286
Total Assets		$	2,237,939			$	2,167,517			$	2,159,069			$	2,162,025			$	2,085,664
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing		$	420,991			$	402,499			$	412,346			$	413,991			$	387,596
Interest-bearing			1,229,346				1,234,660				1,192,373				1,195,533				1,153,407
Total deposits			1,650,337				1,637,159				1,604,719				1,609,524				1,541,003
Other interest-bearing liabilities			322,565				274,816				296,559				295,270				298,827
Other liabilities			17,527				14,302				15,717				19,348				19,147
Total liabilities			1,990,429				1,926,277				1,916,995				1,924,142				1,858,977
Stockholders’ Equity			247,510				241,240				242,074				237,883				226,687
Total Liabilities and Stockholders’ Equity		$	2,237,939			$	2,167,517			$	2,159,069			$	2,162,025			$	2,085,664
Period-end shares outstanding			27,544				27,641				27,544				27,544				27,067
Book value per share		$	8.99			$	8.73			$	8.79			$	8.64			$	8.38
Tangible book value per share (Non-GAAP)*			7.36				7.10				7.14				6.98				6.73

* 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)			12.16	%			12.06	%			11.86	%			12.00	%			11.80	%
Total Risk Based Capital Ratio (a)			12.89	%			12.94	%			12.73	%			12.86	%			12.67	%
Tier 1 Risk Based Capital Ratio (a)			12.16	%			12.19	%			11.99	%			12.13	%			11.93	%
Tier 1 Leverage Ratio (a)			9.73	%			9.68	%			9.50	%			9.70	%			9.47	%
Equity to Asset Ratio			11.06	%			11.13	%			11.21	%			11.00	%			10.87	%
Tangible Common Equity Ratio			9.25	%			9.24	%			9.31	%			9.08	%			8.93	%
Net Loans to Assets			72.68	%			73.21	%			72.49	%			71.20	%			71.61	%
Loans to Deposits			99.32	%			97.69	%			98.30	%			96.39	%			97.68	%
Asset Quality
Non-performing loans		$	8,406			$	7,893			$	7,695			$	6,900			$	6,355
Other Real Estate Owned			0				59				171				219				236
Non-performing assets			8,406				7,952				7,866				7,119				6,591
Loans 30 - 89 days delinquent			10,636				6,973				10,191				8,680				7,053
Charged-off loans			777				782				809				809				725
Recoveries			241				242				620				217				202

Net Charge-offs			536				540				189				592				523
Annualized Net Charge-offs to Average Net Loans Outstanding			0.13	%			0.14	%			0.05	%			0.16	%			0.14	%
Allowance for Loan Losses to Total Loans			0.78	%			0.78	%			0.78	%			0.78	%			0.78	%
Non-performing Loans to Total Loans			0.51	%			0.49	%			0.49	%			0.44	%			0.42	%
Allowance to Non-performing Loans			151.84	%			159.00	%			160.04	%			175.42	%			184.83	%
Non-performing Assets to Total Assets			0.38	%			0.37	%			0.36	%			0.33	%			0.32	%

(a) June 30, 2018 ratio is estimated

Reconciliation of Total Assets to Tangible Assets

																						For the Six Months Ended
		June 30, 2018				March 31, 2018				Dec. 31, 2017				Sept. 30, 2017				June 30, 2017				June 30, 2018				June 30, 2017
Total Assets		$	2,237,939			$	2,167,517			$	2,159,069			$	2,162,025			$	2,085,664			$	2,237,939			$	2,085,664
Less Goodwill and other intangibles			44,661				45,015				45,369				45,755				44,425				44,661				44,425
Tangible Assets		$	2,193,278			$	2,122,502			$	2,113,700			$	2,116,270			$	2,041,239			$	2,193,278			$	2,041,239
Average Assets			2,199,960				2,162,706				2,158,895				2,118,170				2,055,758				2,181,431				2,025,939
Less average Goodwill and other intangibles			44,893				45,248				45,622				45,263				44,665				45,070				44,845
Average Tangible Assets		$	2,155,067			$	2,117,458			$	2,113,273			$	2,072,907			$	2,011,093			$	2,136,361			$	1,981,094

Reconciliation of Common Stockholders’ Equity to Tangible Common Equity

																						For the Six Months Ended
		June 30, 2018				March 31, 2018				Dec. 31, 2017				Sept. 30, 2017				June 30, 2017				June 30, 2018				June 30, 2017
Stockholders’ Equity		$	247,510			$	241,240			$	242,074			$	237,883			$	226,687			$	247,510			$	226,687
Less Goodwill and other intangibles			44,661				45,015				45,369				45,755				44,425				44,661				44,425
Tangible Common Equity		$	202,849			$	196,225			$	196,705			$	192,128			$	182,262			$	202,849			$	182,262
Average Stockholders’ Equity			243,792				240,387				241,554				233,843				223,544				242,682				220,308
Less Average Goodwill and other intangibles			44,893				45,248				45,622				45,263				44,665				45,070				44,845
Average Tangible Common Equity		$	198,899			$	195,139			$	195,932			$	188,580			$	178,879			$	197,612			$	175,463

Reconciliation of Net Income, Excluding Acquisition Related Costs and Deferred Tax Asset Adjustments

		For the Three Months Ended																				For the Six Months Ended
		June 30, 2018				March 31, 2018				Dec. 31, 2017				Sept. 30, 2017				June 30, 2017				June 30, 2018				June 30, 2017
Net income		$	8,073			$	7,726			$	5,235			$	5,983			$	5,710			$	15,799			$	11,493
Acquisition related costs - tax equated			0				22				(48	)			190				94				22				141
Deferred tax asset adjustments			0				0				1,793				0				0				0				0
Net income - Adjusted		$	8,073			$	7,748			$	6,980			$	6,173			$	5,804			$	15,821			$	11,634
Average shares outstanding			27,641				27,918				27,941				27,654				27,395				27,610				27,371
EPS excluding acquisition costs and deferred tax asset adjustments		$	0.29			$	0.28			$	0.25			$	0.22			$	0.21			$	0.57			$	0.43

		For the Three Months Ended
End of Period Loan Balances		June 30, 2018				March 31, 2018				Dec. 31, 2017				Sept. 30, 2017				June 30, 2017
Commercial real estate		$	523,417			$	511,628			$	513,707			$	500,426			$	476,844
Commercial			232,672				231,498				220,441				218,946				215,676
Residential real estate			479,486				472,350				469,442				459,702				445,991
Consumer			219,138				210,088				207,851				213,918				220,454
Agricultural loans			181,173				170,725				163,081				155,336				142,687
Total, excluding net deferred loan costs		$	1,635,886			$	1,596,289			$	1,574,522			$	1,548,328			$	1,501,652
		For the Three Months Ended
Noninterest Income		June 30, 2018				March 31, 2018				Dec. 31, 2017				Sept. 30, 2017				June 30, 2017
Service charges on deposit accounts		$	985			$	1,003			$	1,060			$	1,077			$	989
Bank owned life insurance income			219				222				246				193				191
Trust fees			1,740				1,807				1,622				1,608				1,523
Insurance agency commissions			713				699				530				531				672
Security gains			27				18				5				0				(14	)
Retirement plan consulting fees			465				379				465				480				399
Investment commissions			315				256				260				184				253
Net gains on sale of loans			606				487				810				758				891
Debit card and EFT fees			870				806				830				770				836
Other operating income			366				333				223				457				315
Total Noninterest Income		$	6,306			$	6,010			$	6,051			$	6,058			$	6,055
		For the Three Months Ended
Noninterest Expense		June 30, 2018				March 31, 2018				Dec. 31, 2017				Sept. 30, 2017				June 30, 2017
Salaries and employee benefits		$	8,828			$	8,738			$	8,697			$	8,922			$	8,853
Occupancy and equipment			1,611				1,704				1,528				1,546				1,631
State and local taxes			479				459				386				436				424
Professional fees			737				698				643				726				775
Merger related costs			0				25				88				270				104
Litigation settlement expense			0				0				0				0				155
Advertising			379				275				561				405				317
FDIC insurance			225				222				165				235				234
Intangible amortization			355				354				386				379				364
Core processing charges			794				739				806				702				717
Telephone and data			238				237				241				249				242
Other operating expenses			1,812				1,645				1,898				1,921				1,948
Total Noninterest Expense		$	15,458			$	15,096			$	15,399			$	15,791			$	15,764

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

		Three Months Ended June 30, 2018												Three Months Ended June 30, 2017
		AVERAGE BALANCE				INTEREST (1)				RATE (1)				AVERAGE BALANCE				INTEREST (1)				RATE (1)
EARNING ASSETS
Loans (2)		$	1,606,993			$	19,636				4.90	%		$	1,472,575			$	17,572				4.79	%
Taxable securities			202,588				1,228				2.43				216,414				1,265				2.34
Tax-exempt securities (2)			190,494				1,737				3.66				164,369				1,791				4.37
Equity securities			11,214				154				5.51				10,216				123				4.83
Federal funds sold and other			33,541				167				2.00				33,053				82				1.00
Total earning assets			2,044,830				22,922				4.50				1,896,627				20,833				4.41
Nonearning assets			155,130												159,131
Total assets		$	2,199,960											$	2,055,758
INTEREST-BEARING LIABILITIES
Time deposits		$	283,429			$	957				1.35	%		$	234,952			$	652				1.11	%
Savings deposits			477,365				256				0.22				526,398				183				0.14
Demand deposits			469,609				510				0.44				399,413				281				0.28
Short term borrowings			298,802				1,140				1.53				271,313				501				0.74
Long term borrowings			6,674				49				2.94				9,705				52				2.15
Total interest-bearing liabilities		$	1,535,879				2,912				0.76			$	1,441,781				1,669				0.46
NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY
Demand deposits			408,567												378,499
Other liabilities			11,722												11,934
Stockholders’ equity			243,792												223,544
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	2,199,960											$	2,055,758
Net interest income and interest rate spread						$	20,010				3.74	%						$	19,164				3.95	%
Net interest margin											3.93	%											4.05	%

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

(2) For 2018, adjustments of $91 thousand and $357 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2017, adjustments of $170 thousand and $621 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.

		Six Months Ended June 30, 2018												Six Months Ended June 30, 2017
		AVERAGE BALANCE				INTEREST (1)				RATE (1)				AVERAGE BALANCE				INTEREST (1)				RATE (1)
EARNING ASSETS
Loans (2)		$	1,586,140			$	38,145				4.85	%		$	1,454,599			$	34,210				4.74	%
Taxable securities			204,455				2,461				2.43				214,076				2,383				2.24
Tax-exempt securities			188,041				3,417				3.66				158,674				3,430				4.36
Equity securities (2)			11,051				300				5.47				10,071				238				4.77
Federal funds sold and other			34,308				312				1.83				33,637				145				0.87
Total earning assets			2,023,995				44,635				4.45				1,871,057				40,406				4.35
Nonearning assets			157,436												154,882
Total assets		$	2,181,431											$	2,025,939
INTEREST-BEARING LIABILITIES
Time deposits		$	277,408			$	1,770				1.29	%		$	235,036			$	1,152				0.99	%
Savings deposits			479,870				438				0.18				523,257				353				0.14
Demand deposits			460,503				926				0.41				392,049				525				0.27
Short term borrowings			290,617				2,021				1.40				260,469				828				0.64
Long term borrowings			6,768				93				2.77				10,991				130				2.39
Total interest-bearing liabilities		$	1,515,166				5,248				0.70			$	1,421,802				2,988				0.42
NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY
Demand deposits		$	409,705											$	370,790
Other liabilities			13,878												13,039
Stockholders’ equity			242,682												220,308
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	2,181,431											$	2,025,939
Net interest income and interest rate spread						$	39,387				3.75	%						$	37,418				3.93	%
Net interest margin											3.92	%											4.03	%

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

(2) For 2018, adjustments of $173 thousand and $706 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2017, adjustments of $325 thousand and $1.2 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.