EX-99.1 2 d522003dex991.htm EX-99.1

Exhibit 99.1

July 26, 2023

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. REPORTS

RESULTS FOR SECOND QUARTER OF 2023

| • |  | Earnings per diluted share of $0.40 ($0.41 excluding certain items, non-GAAP) for the second quarter of 2023

| • |  | 162 consecutive quarters of profitability

| • |  | Additional FHLB borrowing capacity of $707.8 million as of June 30, 2023

| • |  | Uninsured deposits (excluding collateralized deposits) are approximately 15.0% of customer deposit base

| • |  | Available for sale securities not pledged totaled $290.0 million at June 30, 2023

| • |  | Efficiency ratio of 56.3%, or 55.3% excluding certain items, non-GAAP, for the second quarter of 2023

| • |  | Return on average assets of 1.18% for the second quarter of 2023

| • |  | ROAE and ROATE (non-GAAP) of 16.1% and 33.6%, respectively, for the second quarter of 2023

CANFIELD, Ohio (July 26, 2023) – Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB) reported today net income of $15.0 million, or $0.40 per diluted share, for the three months ended June 30, 2023, compared to $16.0 million, or $0.47 per diluted share, for the three months ended June 30, 2022. Net income for the second quarter of 2023 included pretax items of $442,000 for acquisition related costs and combined net gains of $6,000 on the sale of securities and the sale of other assets. Excluding these items (non-GAAP), net income for the second quarter of 2023 would have been $15.3 million, or $0.41 per diluted share.

Kevin J. Helmick, President and CEO, stated “As we navigate an extremely fluid banking landscape, we will continue to focus on prudent expense management, growing revenue, and maintaining a strong balance sheet, while supporting our communities and investing in our growth strategies. We believe this approach will drive long-term shareholder value as we emerge from this challenging period a stronger and more profitable company,” concluded Mr. Helmick.

Balance Sheet

The Company’s total assets were $5.07 billion at June 30, 2023 compared to $5.11 billion at March 31, 2023 and $4.08 billion at December 31, 2022. The increase from December was primarily due to the acquisition of Emclaire Financial Corp. (“Emclaire”) which added $1.05 billion in assets in the first quarter of 2023. Gross loans (excluding loans held for sale) have increased by $750.5 million since December 31, 2022 and $2.9 million since March 31, 2023. Emclaire was responsible for $740.7 million of the increase in loans since December 31, 2022.

Securities available for sale were $1.32 billion at June 30, 2023, compared to $1.36 billion at March 31, 2023, and $1.27 billion at December 31, 2022. The increase since December is due to the addition of $127.0 million in available for sale securities from Emclaire and a reduction in the gross amount of unrealized losses which totaled $266.5 million at December 31, 2022 compared to a gross unrealized loss of $245.0 million at June 30, 2023. Offsetting these increases, the Company also had sales and runoff from the portfolio in the first six months of 2023. While bond market volatility is expected to continue throughout 2023, the Company will continue to look to opportunistically shrink the size of the securities portfolio to increase liquidity and optimize profitability.

Total customer deposits (excluding brokered time deposits) were $4.25 billion at June 30, 2023, compared to $4.31 billion at March 31, 2023 and $3.42 billion at December 31, 2022. The increase from December was driven by $875.8 million in deposits assumed in the acquisition of Emclaire. Competition for deposits remains high and the Company expects this will continue to place pressure on funding costs and deposit volumes.

Total stockholders’ equity was $367.0 million at June 30, 2023 compared to $374.6 million at March 31, 2023, and $292.3 million at December 31, 2022. The increase since December is primarily due to the acquisition of Emclaire and an increase in retained earnings along with a decrease in the loss from accumulated other comprehensive income offset by increased treasury stock activity. The Company repurchased 850,799 shares of its common stock during the first quarter of 2023 but did not repurchase any shares during the second quarter. The accumulated other comprehensive loss has declined $17.0 million between December 31, 2022 and June 30, 2023 as market rates declined during the first half of 2023 and pricing on available for sale securities improved.

Liquidity

The Company continues to monitor its deposit base and balance sheet composition as well as its access to other sources of liquidity. At June 30, 2023, the Company’s loan to deposit ratio was 73.9% and the Company’s average deposit balance per account was $27,539. In addition, the Company’s ratio of uninsured deposits (excluding collateralized deposits) is approximately 15.0% which remains significantly lower than the banking institutions that failed in the first quarter of 2023.

The Company has access to an additional $707.8 million of FHLB borrowing capacity at June 30, 2023 along with $290.0 million of available for sale securities that are not pledged. With a deep and diverse deposit base and access to a large amount of additional funding capacity, the Company is well positioned to navigate the current banking landscape.

Credit Quality

The provision for credit losses and unfunded commitments was $25,000 for the second quarter of 2023 compared to $616,000 for the second quarter of 2022. Annualized net charge-offs as a percentage of average loans was 0.10% for the three months ended June 30, 2023, compared to 0.01% for the same period in 2022. The allowance for credit losses to total loans was 1.11% at June 30, 2023 compared to 1.14% at March 31, 2023, and 1.12% at December 31, 2022.

Non-performing loans (NPLs) were $18.0 million at June 30, 2023 compared to $18.0 million at March 31, 2023, and $14.8 million at December 31, 2022. The increase since December was primarily due to the addition of Emclaire. The NPL to loans ratio was 0.57% at June 30, 2023 compared to 0.57% at March 31, 2023 and 0.62% at December 31, 2022. Non-performing assets to assets was 0.36% at June 30, 2023, compared to 0.35% at March 31, 2023, and 0.36% at December 31, 2022. Early stage delinquencies, defined as 30-89 days delinquent, were $12.3 million, or 0.39% of total loans, at June 30, 2023, compared to $9.6 million, or 0.40% of total loans, at December 31, 2022.

Net Interest Income

The Company recorded net interest income of $34.6 million in the second quarter of 2023 compared to $31.7 million for the second quarter of 2022. The Company had more earning assets in 2023 due to the acquisition of Emclaire but this was partially offset by a decline of 33 basis point in the net interest margin. The net interest margin was 2.92% for the second quarter of 2023 compared to 3.07% in the first quarter of 2023 and 3.25% for the second quarter of 2022. The decline in net interest margin between the second quarter of 2023 and the second quarter of 2022 was due to increases in funding costs outstripping the increase in yields on earning assets. This increase in funding costs has been due to the rapid increase in deposit rates due to intense competition for deposits, the continued Federal Reserve rate hiking cycle, and runoff of deposit balances which are being replaced by more costly wholesale funding. Excluding the impact of acquisition marks and related accretion and PPP interest and fees, the net interest margin (non-GAAP) for the second quarter of 2023 was 2.68% compared to 2.86% for the first quarter of 2023 and 3.16% for the second quarter of 2022.

Noninterest Income

Noninterest income totaled $9.4 million for the three months ended June 30, 2023, compared to $9.5 million for the three months ended June 30, 2022. Service charges on deposit accounts have increased by $362,000 in the second quarter of 2023 compared to the second quarter of 2022. The increase is primarily due to the acquisition of Emclaire. Bank owned life insurance income, other mortgage banking fee income and debit card income have also increased in the second quarter of 2023 compared to the second quarter of 2022 due to the Emclaire acquisition. Insurance agency commissions are up $246,000 in the second quarter of 2023 compared to the second quarter of 2022 as growth in the insurance business and increased annuity sales have bolstered income. Investment commissions are down slightly for the quarter ended June 30, 2023 compared to the quarter ended June 30, 2022, as customers have been more interested in the annuities mentioned above as opposed to traditional investment products. Net gains on the sale of loans have increased but are still sluggish due to the high level of interest rates and lack of loan volume. Other noninterest income has declined by $1.3 million for the quarter ending June 30, 2023 compared to the second quarter of 2022. This decrease is primarily due to a decline in the income associated with the Company’s investments in SBA/SBIC funds. The performance of these funds in 2022 was much better than had been experienced historically and 2023 has returned to more normal levels of profitability.

Noninterest Expense

Noninterest expense was $26.4 million for the three months ended June 30, 2023, compared to $21.5 million for the three months ended June 30, 2022. The increase in expense is primarily due to the acquisition of Emclaire. Salaries and employee benefits increased $2.6 million to $13.6 million in the second quarter of 2023 compared to the same period in 2022. The acquisition of Emclaire along with normal raise activity were the primary reasons for the increase. Occupancy and equipment expense increased primarily due to the

acquisition. FDIC and state and local taxes increased due to the acquisition and the increase in the rate paid for FDIC insurance in 2023. Intangible amortization expense increased due to the acquisition and due to some acceleration of the core deposit intangible recorded in the Cortland Bancorp acquisition in 2021. The Company recorded an additional $359,000 of intangible amortization in the second quarter of 2023 related to the Cortland acquisition. Merger related costs were $442,000 for the second quarter of 2023 compared to $674,000 in the second 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 $5.1 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 65 banking locations in Mahoning, Trumbull, Columbiana, Portage, Stark, Wayne, Medina, Geauga and Cuyahoga Counties in Ohio and Beaver, Butler, Allegheny, Jefferson, Clarion, Venango, Clearfield, Mercer, Elk and Crawford Counties 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 June 30, 2023 are $3.2 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 and certain items, return on average assets excluding merger costs and certain items, return on average equity excluding merger costs and certain items, net interest margin excluding acquisition marks and related accretion and PPP interest and fees and efficiency ratio less certain items, 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.

Cautionary Statements Regarding Forward-Looking Statements

We make statements in this news release and our related investor conference call, and we may from time to time make other statements, that are 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 certain forward-looking statements include significant changes in near-term local, regional, and U.S. economic conditions including those resulting from continued high rates of inflation, tightening monetary policy of the Board of Governors of the Federal Reserve, and possibility of a recession; Farmers’ failure to integrate Emclaire with Farmers in accordance with expectations; deviations from performance expectations related to Emclaire; continuing impacts from the length and extent of the economic impacts of the COVID-19 pandemic; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2022 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.

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, |  |  | March 31, |  |  | Dec. 31, |  |  | Sept. 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |  |  | Percent |
|  | 2023 |  |  | 2023 |  |  | 2022 |  |  | 2022 |  |  | 2022 |  |  | 2023 |  |  | 2022 |  |  | Change |
Total interest income |  | $ | 52,804 |  |  | $ | 51,233 |  |  | $ | 38,111 |  |  | $ | 36,410 |  |  | $ | 34,286 |  |  | $ | 104,037 |  |  | $ | 67,565 |  |  |  | 54.0 | %
Total interest expense |  |  | 18,226 |  |  |  | 14,623 |  |  |  | 8,679 |  |  |  | 4,629 |  |  |  | 2,575 |  |  |  | 32,849 |  |  |  | 4,612 |  |  |  | 612.3 | %
Net interest income |  |  | 34,578 |  |  |  | 36,610 |  |  |  | 29,432 |  |  |  | 31,781 |  |  |  | 31,711 |  |  |  | 71,188 |  |  |  | 62,953 |  |  |  | 13.1 | %
Provision (credit) for credit losses |  |  | 25 |  |  |  | 8,599 |  |  |  | 416 |  |  |  | 448 |  |  |  | 616 |  |  |  | 8,624 |  |  |  | 258 |  |  |  | 3242.6 | %
Noninterest income |  |  | 9,449 |  |  |  | 10,425 |  |  |  | 8,200 |  |  |  | 8,827 |  |  |  | 9,477 |  |  |  | 19,874 |  |  |  | 27,175 |  |  |  | -26.9 | %
Acquisition related costs |  |  | 442 |  |  |  | 4,313 |  |  |  | 584 |  |  |  | 872 |  |  |  | 674 |  |  |  | 4,755 |  |  |  | 2,614 |  |  |  | 81.9 | %
Other expense |  |  | 25,944 |  |  |  | 26,409 |  |  |  | 20,511 |  |  |  | 20,527 |  |  |  | 20,787 |  |  |  | 52,353 |  |  |  | 49,303 |  |  |  | 6.2 | %
Income before income taxes |  |  | 17,616 |  |  |  | 7,714 |  |  |  | 16,121 |  |  |  | 18,761 |  |  |  | 19,111 |  |  |  | 25,330 |  |  |  | 37,953 |  |  |  | -33.3 | %
Income taxes |  |  | 2,650 |  |  |  | 639 |  |  |  | 2,765 |  |  |  | 3,315 |  |  |  | 3,160 |  |  |  | 3,289 |  |  |  | 6,158 |  |  |  | -46.6 | %
Net income |  | $ | 14,966 |  |  | $ | 7,075 |  |  | $ | 13,356 |  |  | $ | 15,446 |  |  | $ | 15,951 |  |  | $ | 22,041 |  |  | $ | 31,795 |  |  |  | -30.7 | %
Average diluted shares outstanding |  |  | 37,320 |  |  |  | 37,933 |  |  |  | 33,962 |  |  |  | 33,932 |  |  |  | 33,923 |  |  |  | 37,624 |  |  |  | 33,927 |  |  |  |  |
Basic earnings per share |  |  | 0.40 |  |  |  | 0.19 |  |  |  | 0.39 |  |  |  | 0.46 |  |  |  | 0.47 |  |  |  | 0.59 |  |  |  | 0.94 |  |  |  |  |
Diluted earnings per share |  |  | 0.40 |  |  |  | 0.19 |  |  |  | 0.39 |  |  |  | 0.46 |  |  |  | 0.47 |  |  |  | 0.59 |  |  |  | 0.94 |  |  |  |  |
Cash dividends per share |  |  | 0.17 |  |  |  | 0.17 |  |  |  | 0.17 |  |  |  | 0.16 |  |  |  | 0.16 |  |  |  | 0.34 |  |  |  | 0.32 |  |  |  |  |
Performance Ratios |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net Interest Margin (Annualized) |  |  | 2.92 | % |  |  | 3.07 | % |  |  | 2.99 | % |  |  | 3.21 | % |  |  | 3.25 | % |  |  | 3.00 | % |  |  | 3.25 | % |  |  |  |
Efficiency Ratio (Tax equivalent basis) |  |  | 56.28 | % |  |  | 62.53 | % |  |  | 52.59 | % |  |  | 50.55 | % |  |  | 49.95 | % |  |  | 59.50 | % |  |  | 55.56 | % |  |  |  |
Return on Average Assets (Annualized) |  |  | 1.18 | % |  |  | 0.56 | % |  |  | 1.31 | % |  |  | 1.48 | % |  |  | 1.54 | % |  |  | 0.87 | % |  |  | 1.53 | % |  |  |  |
Return on Average Equity (Annualized) |  |  | 16.12 | % |  |  | 7.71 | % |  |  | 20.16 | % |  |  | 18.71 | % |  |  | 17.97 | % |  |  | 11.94 | % |  |  | 15.67 | % |  |  |  |
Dividends to Net Income |  |  | 42.54 | % |  |  | 90.50 | % |  |  | 43.10 | % |  |  | 35.06 | % |  |  | 33.95 | % |  |  | 58.09 | % |  |  | 34.07 | % |  |  |  |
Other Performance Ratios (Non-GAAP) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Return on Average Tangible Assets |  |  | 1.23 | % |  |  | 0.58 | % |  |  | 1.34 | % |  |  | 1.52 | % |  |  | 1.57 | % |  |  | 0.90 | % |  |  | 1.56 | % |  |  |  |
Return on Average Tangible Equity |  |  | 33.55 | % |  |  | 16.31 | % |  |  | 32.81 | % |  |  | 27.06 | % |  |  | 25.23 | % |  |  | 25.05 | % |  |  | 20.96 | % |  |  |  |

Consolidated Statements of Financial Condition

|  | June 30, |  |  | March 31, |  |  | Dec. 31, |  |  | Sept. 30, |  |  | June 30, |
|  | 2023 |  |  | 2023 |  |  | 2022 |  |  | 2022 |  |  | 2022 |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 116,063 |  |  | $ | 128,001 |  |  | $ | 75,551 |  |  | $ | 79,981 |  |  | $ | 65,458 |
Securities available for sale |  |  | 1,316,878 |  |  |  | 1,355,449 |  |  |  | 1,268,025 |  |  |  | 1,295,133 |  |  |  | 1,361,682 |
Other investments |  |  | 44,975 |  |  |  | 39,670 |  |  |  | 33,444 |  |  |  | 34,399 |  |  |  | 34,451 |
Loans held for sale |  |  | 2,197 |  |  |  | 1,703 |  |  |  | 858 |  |  |  | 2,142 |  |  |  | 2,714 |
Loans |  |  | 3,155,200 |  |  |  | 3,152,339 |  |  |  | 2,404,750 |  |  |  | 2,399,981 |  |  |  | 2,374,485 |
Less allowance for credit losses |  |  | 34,957 |  |  |  | 36,011 |  |  |  | 26,978 |  |  |  | 27,282 |  |  |  | 27,454 |
Net Loans |  |  | 3,120,243 |  |  |  | 3,116,328 |  |  |  | 2,377,772 |  |  |  | 2,372,699 |  |  |  | 2,347,031 |
Other assets |  |  | 473,098 |  |  |  | 468,735 |  |  |  | 326,550 |  |  |  | 335,668 |  |  |  | 303,028 |
Total Assets |  | $ | 5,073,454 |  |  | $ | 5,109,886 |  |  | $ | 4,082,200 |  |  | $ | 4,120,022 |  |  | $ | 4,114,364 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing |  | $ | 1,084,232 |  |  | $ | 1,106,870 |  |  | $ | 896,957 |  |  | $ | 934,638 |  |  | $ | 983,713 |
Interest-bearing |  |  | 3,165,381 |  |  |  | 3,207,121 |  |  |  | 2,526,760 |  |  |  | 2,590,054 |  |  |  | 2,586,829 |
Brokered time deposits |  |  | 21,135 |  |  |  | 82,169 |  |  |  | 138,051 |  |  |  | 42,459 |  |  |  | 54,996 |
Total deposits |  |  | 4,270,748 |  |  |  | 4,396,160 |  |  |  | 3,561,768 |  |  |  | 3,567,151 |  |  |  | 3,625,538 |
Other interest-bearing liabilities |  |  | 388,437 |  |  |  | 292,324 |  |  |  | 183,211 |  |  |  | 243,098 |  |  |  | 137,985 |
Other liabilities |  |  | 47,278 |  |  |  | 46,760 |  |  |  | 44,926 |  |  |  | 44,154 |  |  |  | 29,392 |
Total liabilities |  |  | 4,706,463 |  |  |  | 4,735,244 |  |  |  | 3,789,905 |  |  |  | 3,854,403 |  |  |  | 3,792,915 |
Stockholders’ Equity |  |  | 366,991 |  |  |  | 374,642 |  |  |  | 292,295 |  |  |  | 265,619 |  |  |  | 321,449 |
Total Liabilities and Stockholders’ Equity |  | $ | 5,073,454 |  |  | $ | 5,109,886 |  |  | $ | 4,082,200 |  |  | $ | 4,120,022 |  |  | $ | 4,114,364 |

Period-end shares outstanding |  |  | 37,457 |  |  |  | 37,439 |  |  |  | 34,055 |  |  |  | 34,060 |  |  |  | 34,032 |
Book value per share |  | $ | 9.80 |  |  | $ | 10.01 |  |  | $ | 8.58 |  |  | $ | 7.80 |  |  | $ | 9.45 |
Tangible book value per share (Non-GAAP)* |  |  | 4.67 |  |  |  | 4.84 |  |  |  | 5.60 |  |  |  | 4.79 |  |  |  | 6.46 |
*  Tangible book value per share is calculated by dividing tangible common equity by outstanding shares |
Capital and Liquidity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common Equity Tier 1 Capital Ratio (a) |  |  | 10.39 | % |  |  | 10.04 | % |  |  | 13.71 | % |  |  | 13.36 | % |  |  | 13.30 | %
Total Risk Based Capital Ratio (a) |  |  | 13.94 | % |  |  | 13.60 | % |  |  | 17.79 | % |  |  | 17.44 | % |  |  | 17.46 | %
Tier 1 Risk Based Capital Ratio (a) |  |  | 10.89 | % |  |  | 10.54 | % |  |  | 14.32 | % |  |  | 13.97 | % |  |  | 13.92 | %
Tier 1 Leverage Ratio (a) |  |  | 7.68 | % |  |  | 7.43 | % |  |  | 9.84 | % |  |  | 10.24 | % |  |  | 9.56 | %
Equity to Asset Ratio |  |  | 7.23 | % |  |  | 7.33 | % |  |  | 7.16 | % |  |  | 6.45 | % |  |  | 7.81 | %
Tangible Common Equity Ratio (b) |  |  | 3.58 | % |  |  | 3.69 | % |  |  | 4.79 | % |  |  | 4.06 | % |  |  | 5.47 | %
Net Loans to Assets |  |  | 61.50 | % |  |  | 60.99 | % |  |  | 58.25 | % |  |  | 57.59 | % |  |  | 57.04 | %
Loans to Deposits |  |  | 73.88 | % |  |  | 71.71 | % |  |  | 67.52 | % |  |  | 67.28 | % |  |  | 65.49 | %
Asset Quality |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-performing loans |  | $ | 17,956 |  |  | $ | 17,959 |  |  | $ | 14,803 |  |  | $ | 12,976 |  |  | $ | 14,107 |
Non-performing assets |  |  | 18,167 |  |  |  | 18,053 |  |  |  | 14,876 |  |  |  | 13,042 |  |  |  | 14,107 |
Loans 30 - 89 days delinquent |  |  | 12,321 |  |  |  | 10,219 |  |  |  | 9,605 |  |  |  | 6,659 |  |  |  | 8,716 |
Charged-off loans |  |  | 971 |  |  |  | 469 |  |  |  | 754 |  |  |  | 783 |  |  |  | 177 |
Recoveries |  |  | 172 |  |  |  | 198 |  |  |  | 184 |  |  |  | 178 |  |  |  | 135 |
Net Charge-offs |  |  | 799 |  |  |  | 271 |  |  |  | 570 |  |  |  | 605 |  |  |  | 42 |
Annualized Net Charge-offs to Average Net Loans |  |  | 0.10 | % |  |  | 0.03 | % |  |  | 0.10 | % |  |  | 0.10 | % |  |  | 0.01 | %
Allowance for Credit Losses to Total Loans |  |  | 1.11 | % |  |  | 1.14 | % |  |  | 1.12 | % |  |  | 1.14 | % |  |  | 1.16 | %
Non-performing Loans to Total Loans |  |  | 0.57 | % |  |  | 0.57 | % |  |  | 0.62 | % |  |  | 0.54 | % |  |  | 0.59 | %
Allowance to Non-performing Loans |  |  | 194.68 | % |  |  | 200.52 | % |  |  | 182.25 | % |  |  | 210.25 | % |  |  | 194.61 | %
Non-performing Assets to Total Assets |  |  | 0.36 | % |  |  | 0.35 | % |  |  | 0.36 | % |  |  | 0.32 | % |  |  | 0.34 | %

(a) | June 30, 2023 ratio is estimated

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

|  | For the Three Months Ended |
End of Period Loan Balances |  | June 30, 2023 |  |  | March 31, 2023 |  |  | Dec. 31, 2022 |  |  | Sept. 30, 2022 |  |  | June 30, 2022 |
Commercial real estate |  | $ | 1,284,974 |  |  | $ | 1,286,830 |  |  | $ | 1,028,050 |  |  | $ | 1,028,484 |  |  | $ | 1,040,243 |
Commercial |  |  | 362,664 |  |  |  | 361,845 |  |  |  | 293,643 |  |  |  | 296,932 |  |  |  | 285,981 |
Residential real estate |  |  | 849,533 |  |  |  | 853,074 |  |  |  | 475,791 |  |  |  | 474,014 |  |  |  | 464,489 |
HELOC |  |  | 138,535 |  |  |  | 137,319 |  |  |  | 132,179 |  |  |  | 132,267 |  |  |  | 129,392 |
Consumer |  |  | 260,326 |  |  |  | 260,596 |  |  |  | 221,260 |  |  |  | 222,706 |  |  |  | 218,219 |
Agricultural loans |  |  | 250,807 |  |  |  | 244,938 |  |  |  | 246,937 |  |  |  | 239,081 |  |  |  | 230,477 |
Total, excluding net deferred loan costs |  | $ | 3,146,839 |  |  | $ | 3,144,602 |  |  | $ | 2,397,860 |  |  | $ | 2,393,484 |  |  | $ | 2,368,801 |
|  | For the Three Months Ended |
End of Period Customer Deposit Balances |  | June 30, 2023 |  |  | March 31, 2023 |  |  | Dec. 31, 2022 |  |  | Sept. 30, 2022 |  |  | June 30, 2022 |
Noninterest-bearing demand |  | $ | 1,084,232 |  |  | $ | 1,106,870 |  |  | $ | 896,957 |  |  | $ | 934,638 |  |  | $ | 983,713 |
Interest-bearing demand |  |  | 1,383,326 |  |  |  | 1,473,001 |  |  |  | 1,224,884 |  |  |  | 1,399,227 |  |  |  | 1,416,129 |
Money market |  |  | 610,051 |  |  |  | 599,037 |  |  |  | 435,369 |  |  |  | 393,005 |  |  |  | 372,723 |
Savings |  |  | 511,642 |  |  |  | 535,321 |  |  |  | 441,978 |  |  |  | 460,709 |  |  |  | 455,555 |
Certificate of deposit |  |  | 660,362 |  |  |  | 599,762 |  |  |  | 424,529 |  |  |  | 337,113 |  |  |  | 342,422 |
Total customer deposits |  | $ | 4,249,613 |  |  | $ | 4,313,991 |  |  | $ | 3,423,717 |  |  | $ | 3,524,692 |  |  | $ | 3,570,542 |

|  | For the Three Months Ended |  |  | For the Six Months Ended |
Noninterest Income |  | June 30, 2023 |  |  | March 31, 2023 |  |  | Dec. 31, 2022 |  |  | Sept. 30, 2022 |  |  | June 30, 2022 |  |  | June 30, 2023 |  |  | June 30, 2022 |
Service charges on deposit accounts |  | $ | 1,501 |  |  | $ | 1,432 |  |  | $ | 1,203 |  |  | $ | 1,229 |  |  | $ | 1,139 |  |  | $ | 2,933 |  |  | $ | 2,284 |
Bank owned life insurance income, including death benefits |  |  | 584 |  |  |  | 547 |  |  |  | 590 |  |  |  | 406 |  |  |  | 405 |  |  |  | 1,131 |  |  |  | 814 |
Trust fees |  |  | 2,248 |  |  |  | 2,587 |  |  |  | 2,373 |  |  |  | 2,370 |  |  |  | 2,376 |  |  |  | 4,835 |  |  |  | 4,895 |
Insurance agency commissions |  |  | 1,332 |  |  |  | 1,456 |  |  |  | 1,133 |  |  |  | 1,136 |  |  |  | 1,086 |  |  |  | 2,788 |  |  |  | 2,133 |
Security gains (losses), including fair value changes for equity securities |  |  | 13 |  |  |  | 121 |  |  |  | (366 | ) |  |  | (17 | ) |  |  | (60 | ) |  |  | 134 |  |  |  | (71 | )
Retirement plan consulting fees |  |  | 382 |  |  |  | 307 |  |  |  | 337 |  |  |  | 332 |  |  |  | 323 |  |  |  | 689 |  |  |  | 720 |
Investment commissions |  |  | 476 |  |  |  | 393 |  |  |  | 508 |  |  |  | 424 |  |  |  | 557 |  |  |  | 869 |  |  |  | 1,251 |
Net gains on sale of loans |  |  | 406 |  |  |  | 310 |  |  |  | 242 |  |  |  | 326 |  |  |  | 365 |  |  |  | 716 |  |  |  | 1,494 |
Other mortgage banking fee income (loss), net |  |  | 234 |  |  |  | 153 |  |  |  | 98 |  |  |  | 94 |  |  |  | 39 |  |  |  | 387 |  |  |  | 99 |
Debit card and EFT fees |  |  | 1,810 |  |  |  | 1,789 |  |  |  | 1,407 |  |  |  | 1,463 |  |  |  | 1,528 |  |  |  | 3,599 |  |  |  | 2,944 |
Other noninterest income |  |  | 463 |  |  |  | 1,330 |  |  |  | 675 |  |  |  | 1,064 |  |  |  | 1,719 |  |  |  | 1,793 |  |  |  | 10,612 |
Total Noninterest Income |  | $ | 9,449 |  |  | $ | 10,425 |  |  | $ | 8,200 |  |  | $ | 8,827 |  |  | $ | 9,477 |  |  | $ | 19,874 |  |  | $ | 27,175 |

|  | For the Three Months Ended |  |  | For the Six Months Ended |
Noninterest Expense |  | June 30, 2023 |  |  | March 31, 2023 |  |  | Dec. 31, 2022 |  |  | Sept. 30, 2022 |  |  | June 30, 2022 |  |  | June 30, 2023 |  |  | June 30, 2022 |
Salaries and employee benefits |  | $ | 13,625 |  |  | $ | 14,645 |  |  | $ | 11,385 |  |  | $ | 10,724 |  |  | $ | 11,073 |  |  | $ | 28,270 |  |  | $ | 22,904 |
Occupancy and equipment |  |  | 3,859 |  |  |  | 3,869 |  |  |  | 2,753 |  |  |  | 3,028 |  |  |  | 2,918 |  |  |  | 7,728 |  |  |  | 5,598 |
FDIC insurance and state and local taxes |  |  | 1,494 |  |  |  | 1,222 |  |  |  | 1,010 |  |  |  | 1,017 |  |  |  | 979 |  |  |  | 2,716 |  |  |  | 1,924 |
Professional fees |  |  | 1,190 |  |  |  | 1,114 |  |  |  | 938 |  |  |  | 985 |  |  |  | 1,056 |  |  |  | 2,304 |  |  |  | 4,191 |
Merger related costs |  |  | 442 |  |  |  | 4,313 |  |  |  | 584 |  |  |  | 872 |  |  |  | 674 |  |  |  | 4,755 |  |  |  | 2,614 |
Advertising |  |  | 478 |  |  |  | 409 |  |  |  | 472 |  |  |  | 596 |  |  |  | 487 |  |  |  | 887 |  |  |  | 879 |
Intangible amortization |  |  | 1,222 |  |  |  | 909 |  |  |  | 702 |  |  |  | 432 |  |  |  | 419 |  |  |  | 2,131 |  |  |  | 839 |
Core processing charges |  |  | 1,144 |  |  |  | 1,164 |  |  |  | 742 |  |  |  | 738 |  |  |  | 1,123 |  |  |  | 2,308 |  |  |  | 1,868 |
Other noninterest expenses |  |  | 2,932 |  |  |  | 3,077 |  |  |  | 2,509 |  |  |  | 3,007 |  |  |  | 2,732 |  |  |  | 6,009 |  |  |  | 11,100 |
Total Noninterest Expense |  | $ | 26,386 |  |  | $ | 30,722 |  |  | $ | 21,095 |  |  | $ | 21,399 |  |  | $ | 21,461 |  |  | $ | 57,108 |  |  | $ | 51,917 |

Business Combination

Consideration |  |  |  |
Cash |  | $ | 33,440 |
Stock |  |  | 59,202 |
Fair value of total consideration transferred |  | $ | 92,642 |
Fair value of assets acquired |  |  |  |
Cash and cash equivalents |  | $ | 20,265 |
Securities available for sale |  |  | 126,970 |
Other investments |  |  | 7,795 |
Loans, net |  |  | 740,659 |
Premises and equipment |  |  | 16,103 |
Bank owned life insurance |  |  | 22,485 |
Core deposit intangible |  |  | 19,249 |
Current and deferred taxes |  |  | 17,246 |
Other assets |  |  | 6,387 |
Total assets acquired |  |  | 977,159 |
Fair value of liabilities assumed |
Deposits |  |  | 875,813 |
Short-term borrowings |  |  | 75,000 |
Accrued interest payable and other liabilities |  |  | 7,104 |
Total liabilities |  |  | 957,917 |
Net assets acquired |  | $ | 19,242 |
Goodwill created |  |  | 73,400 |
Total net assets acquired |  | $ | 92,642 |

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

|  | Three Months Ended |  |  | Three Months Ended |
|  | June 30, 2023 |  |  | June 30, 2022 |
|  | AVERAGE |  |  |  |  |  | YIELD/ |  |  | AVERAGE |  |  |  |  |  | YIELD/ |
|  | BALANCE |  |  | INTEREST (1) |  |  | RATE (1) |  |  | BALANCE |  |  | INTEREST (1) |  |  | RATE (1) |
EARNING ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans (2) |  | $ | 3,144,461 |  |  | $ | 42,422 |  |  |  | 5.40 | % |  | $ | 2,337,251 |  |  | $ | 25,792 |  |  |  | 4.41 | %
Taxable securities |  |  | 1,157,284 |  |  |  | 6,654 |  |  |  | 2.30 |  |  |  | 1,100,538 |  |  |  | 5,223 |  |  |  | 1.90 |
Tax-exempt securities (2) |  |  | 415,003 |  |  |  | 3,278 |  |  |  | 3.16 |  |  |  | 474,034 |  |  |  | 3,832 |  |  |  | 3.23 |
Other investments |  |  | 41,361 |  |  |  | 594 |  |  |  | 5.74 |  |  |  | 34,030 |  |  |  | 216 |  |  |  | 2.54 |
Federal funds sold and other |  |  | 72,801 |  |  |  | 551 |  |  |  | 3.03 |  |  |  | 69,532 |  |  |  | 95 |  |  |  | 0.55 |
Total earning assets |  |  | 4,830,910 |  |  |  | 53,499 |  |  |  | 4.43 |  |  |  | 4,015,385 |  |  |  | 35,158 |  |  |  | 3.50 |
Nonearning assets |  |  | 225,131 |  |  |  |  |  |  |  |  |  |  |  | 140,334 |  |  |  |  |  |  |  |  |
Total assets |  | $ | 5,056,041 |  |  |  |  |  |  |  |  |  |  | $ | 4,155,719 |  |  |  |  |  |  |  |  |
INTEREST-BEARING LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Time deposits |  | $ | 646,782 |  |  | $ | 4,525 |  |  |  | 2.80 | % |  | $ | 354,692 |  |  | $ | 552 |  |  |  | 0.62 | %
Brokered time deposits |  |  | 59,402 |  |  |  | 686 |  |  |  | 4.62 |  |  |  | 45,767 |  |  |  | 49 |  |  |  | 0.43 |
Savings deposits |  |  | 1,133,371 |  |  |  | 2,402 |  |  |  | 0.85 |  |  |  | 837,726 |  |  |  | 141 |  |  |  | 0.07 |
Demand deposits - interest bearing |  |  | 1,428,409 |  |  |  | 6,878 |  |  |  | 1.93 |  |  |  | 1,430,273 |  |  |  | 909 |  |  |  | 0.25 |
Short term borrowings |  |  | 213,549 |  |  |  | 2,727 |  |  |  | 5.11 |  |  |  | 42,527 |  |  |  | 97 |  |  |  | 0.91 |
Long term borrowings |  |  | 88,382 |  |  |  | 1,008 |  |  |  | 4.56 |  |  |  | 87,914 |  |  |  | 827 |  |  |  | 3.76 |
Total interest-bearing liabilities |  | $ | 3,569,895 |  |  |  | 18,226 |  |  |  | 2.04 |  |  | $ | 2,798,899 |  |  |  | 2,575 |  |  |  | 0.37 |
NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand deposits - noninterest bearing |  |  | 1,067,605 |  |  |  |  |  |  |  |  |  |  |  | 972,174 |  |  |  |  |  |  |  |  |
Other liabilities |  |  | 47,120 |  |  |  |  |  |  |  |  |  |  |  | 29,665 |  |  |  |  |  |  |  |  |
Stockholders’ equity |  |  | 371,421 |  |  |  |  |  |  |  |  |  |  |  | 354,981 |  |  |  |  |  |  |  |  |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |  | $ | 5,056,041 |  |  |  |  |  |  |  |  |  |  | $ | 4,155,719 |  |  |  |  |  |  |  |  |
Net interest income and interest rate spread |  |  |  |  |  | $ | 35,273 |  |  |  | 2.39 | % |  |  |  |  |  | $ | 32,583 |  |  |  | 3.13 | %
Net interest margin |  |  |  |  |  |  |  |  |  |  | 2.92 | % |  |  |  |  |  |  |  |  |  |  | 3.25 | %

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

(2) | For 2023, adjustments of $91 thousand and $604 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $78 thousand and $794 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 |  |  | Six Months Ended |
|  | June 30, 2023 |  |  | June 30, 2022 |
|  | AVERAGE |  |  |  |  |  | YIELD/ |  |  | AVERAGE |  |  |  |  |  | YIELD/ |
|  | BALANCE |  |  | INTEREST (1) |  |  | RATE (1) |  |  | BALANCE |  |  | INTEREST (1) |  |  | RATE (1) |
EARNING ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans (2) |  | $ | 3,140,500 |  |  | $ | 83,365 |  |  |  | 5.31 | % |  | $ | 2,326,392 |  |  | $ | 51,438 |  |  |  | 4.42 | %
Taxable securities |  |  | 1,164,400 |  |  |  | 13,204 |  |  |  | 2.27 |  |  |  | 1,054,506 |  |  |  | 9,810 |  |  |  | 1.86 |
Tax-exempt securities (2) |  |  | 426,743 |  |  |  | 6,797 |  |  |  | 3.19 |  |  |  | 467,947 |  |  |  | 7,559 |  |  |  | 3.23 |
Other investments |  |  | 38,976 |  |  |  | 970 |  |  |  | 4.98 |  |  |  | 32,584 |  |  |  | 346 |  |  |  | 2.12 |
Federal funds sold and other |  |  | 77,870 |  |  |  | 1,161 |  |  |  | 2.98 |  |  |  | 93,591 |  |  |  | 143 |  |  |  | 0.31 |
Total earning assets |  |  | 4,848,489 |  |  |  | 105,497 |  |  |  | 4.35 |  |  |  | 3,975,020 |  |  |  | 69,296 |  |  |  | 3.49 |
Nonearning assets |  |  | 221,955 |  |  |  |  |  |  |  |  |  |  |  | 192,085 |  |  |  |  |  |  |  |  |
Total assets |  | $ | 5,070,444 |  |  |  |  |  |  |  |  |  |  | $ | 4,167,105 |  |  |  |  |  |  |  |  |
INTEREST-BEARING LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Time deposits |  | $ | 618,637 |  |  | $ | 7,864 |  |  |  | 2.54 | % |  | $ | 366,617 |  |  | $ | 1,196 |  |  |  | 0.65 | %
Brokered time deposits |  |  | 144,747 |  |  |  | 3,007 |  |  |  | 4.15 |  |  |  | 30,745 |  |  |  | 64 |  |  |  | 0.42 |
Savings deposits |  |  | 1,143,539 |  |  |  | 4,356 |  |  |  | 0.76 |  |  |  | 840,533 |  |  |  | 308 |  |  |  | 0.07 |
Demand deposits - interest bearing |  |  | 1,423,211 |  |  |  | 11,971 |  |  |  | 1.68 |  |  |  | 1,420,957 |  |  |  | 1,327 |  |  |  | 0.19 |
Short term borrowings |  |  | 147,436 |  |  |  | 3,648 |  |  |  | 4.95 |  |  |  | 22,486 |  |  |  | 98 |  |  |  | 0.87 |
Long term borrowings |  |  | 88,326 |  |  |  | 2,003 |  |  |  | 4.54 |  |  |  | 87,856 |  |  |  | 1,619 |  |  |  | 3.69 |
Total interest-bearing liabilities |  | $ | 3,565,896 |  |  |  | 32,849 |  |  |  | 1.84 |  |  | $ | 2,769,194 |  |  |  | 4,612 |  |  |  | 0.33 |
NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand deposits - noninterest bearing |  | $ | 1,087,403 |  |  |  |  |  |  |  |  |  |  | $ | 964,380 |  |  |  |  |  |  |  |  |
Other liabilities |  |  | 47,996 |  |  |  |  |  |  |  |  |  |  |  | 27,842 |  |  |  |  |  |  |  |  |
Stockholders’ equity |  |  | 369,149 |  |  |  |  |  |  |  |  |  |  |  | 405,689 |  |  |  |  |  |  |  |  |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |  | $ | 5,070,444 |  |  |  |  |  |  |  |  |  |  | $ | 4,167,105 |  |  |  |  |  |  |  |  |
Net interest income and interest rate spread |  |  |  |  |  | $ | 72,648 |  |  |  | 2.51 | % |  |  |  |  |  | $ | 64,684 |  |  |  | 3.16 | %
Net interest margin |  |  |  |  |  |  |  |  |  |  | 3.00 | % |  |  |  |  |  |  |  |  |  |  | 3.25 | %

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

(2) | For 2023, adjustments of $178 thousand and $1.3 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $162 thousand and $1.6 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.

Reconciliation of Total Assets to Tangible Assets

|  | For the Three Months Ended |  |  | For the Six Months Ended |
|  | June 30, |  |  | March 31, |  |  | Dec. 31, |  |  | Sept. 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2023 |  |  | 2023 |  |  | 2022 |  |  | 2022 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Total Assets |  | $ | 5,073,454 |  |  | $ | 5,109,886 |  |  | $ | 4,082,200 |  |  | $ | 4,120,022 |  |  | $ | 4,114,364 |  |  | $ | 5,073,454 |  |  | $ | 4,114,364 |
Less Goodwill and other intangibles |  |  | 192,052 |  |  |  | 193,273 |  |  |  | 101,666 |  |  |  | 102,368 |  |  |  | 101,767 |  |  |  | 192,052 |  |  |  | 101,767 |
Tangible Assets |  | $ | 4,881,402 |  |  | $ | 4,916,613 |  |  | $ | 3,980,534 |  |  | $ | 4,017,654 |  |  | $ | 4,012,597 |  |  | $ | 4,881,402 |  |  | $ | 4,012,597 |
Average Assets |  |  | 5,070,444 |  |  |  | 5,085,009 |  |  |  | 4,080,497 |  |  |  | 4,164,855 |  |  |  | 4,155,719 |  |  |  | 5,070,444 |  |  |  | 4,167,105 |
Less average Goodwill and other intangibles |  |  | 192,972 |  |  |  | 193,368 |  |  |  | 102,126 |  |  |  | 101,981 |  |  |  | 102,042 |  |  |  | 193,169 |  |  |  | 102,251 |
Average Tangible Assets |  | $ | 4,877,472 |  |  | $ | 4,891,641 |  |  | $ | 3,978,371 |  |  | $ | 4,062,874 |  |  | $ | 4,053,677 |  |  | $ | 4,877,275 |  |  | $ | 4,064,854 |
Reconciliation of Common Stockholders’ Equity to Tangible Common Equity |
|  | For the Three Months Ended |  |  | For the Six Months Ended |
|  | June 30, |  |  | March 31, |  |  | Dec. 31, |  |  | Sept. 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2023 |  |  | 2023 |  |  | 2022 |  |  | 2022 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Stockholders’ Equity |  | $ | 366,991 |  |  | $ | 374,642 |  |  | $ | 292,295 |  |  | $ | 265,619 |  |  | $ | 321,449 |  |  | $ | 366,991 |  |  | $ | 321,449 |
Less Goodwill and other intangibles |  |  | 192,052 |  |  |  | 193,273 |  |  |  | 101,666 |  |  |  | 102,368 |  |  |  | 101,767 |  |  |  | 192,052 |  |  |  | 101,767 |
Tangible Common Equity |  | $ | 174,939 |  |  | $ | 181,369 |  |  | $ | 190,629 |  |  | $ | 163,251 |  |  | $ | 219,682 |  |  | $ | 174,939 |  |  | $ | 219,682 |
Average Stockholders’ Equity |  |  | 371,421 |  |  |  | 366,851 |  |  |  | 264,939 |  |  |  | 330,300 |  |  |  | 354,981 |  |  |  | 369,149 |  |  |  | 405,689 |
Less average Goodwill and other intangibles |  |  | 192,972 |  |  |  | 193,368 |  |  |  | 102,126 |  |  |  | 101,981 |  |  |  | 102,042 |  |  |  | 193,169 |  |  |  | 102,251 |
Average Tangible Common Equity |  | $ | 178,449 |  |  | $ | 173,483 |  |  | $ | 162,813 |  |  | $ | 228,319 |  |  | $ | 252,939 |  |  | $ | 175,980 |  |  | $ | 303,438 |
Reconciliation of Net Income, Less Merger and Certain Items |  |  |  |  |
|  | For the Three Months Ended |  |  | For the Six Months Ended |
|  | June 30, |  |  | March 31, |  |  | Dec. 31, |  |  | Sept. 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2023 |  |  | 2023 |  |  | 2022 |  |  | 2022 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Net income |  | $ | 14,966 |  |  | $ | 7,075 |  |  | $ | 13,356 |  |  | $ | 15,446 |  |  | $ | 15,951 |  |  | $ | 22,041 |  |  | $ | 31,795 |
Acquisition related costs - after tax |  |  | 354 |  |  |  | 3,449 |  |  |  | 475 |  |  |  | 711 |  |  |  | 564 |  |  |  | 3,803 |  |  |  | 2,104 |
Acquisition related provision - after tax |  |  | 0 |  |  |  | 6,077 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 6,077 |  |  |  | 0 |
Lawsuit settlement income - after tax |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (6,616 | )
Lawsuit settlement contingent legal expense - after tax |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 1,639 |
Charitable donation - after tax |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,740 |
Net loss (gain) on asset/security sales - after tax |  |  | (5 | ) |  |  | (72 | ) |  |  | 268 |  |  |  | 4 |  |  |  | (25 | ) |  |  | (77 | ) |  |  | 72 |
Net income - Adjusted |  | $ | 15,315 |  |  | $ | 16,529 |  |  | $ | 14,099 |  |  | $ | 16,161 |  |  | $ | 16,490 |  |  | $ | 31,844 |  |  | $ | 33,734 |
Diluted EPS excluding merger and one-time items |  | $ | 0.41 |  |  | $ | 0.44 |  |  | $ | 0.42 |  |  | $ | 0.48 |  |  | $ | 0.49 |  |  | $ | 0.85 |  |  | $ | 0.99 |
Return on Average Assets excluding merger and certain items (Annualized) |  |  | 1.21 | % |  |  | 1.30 | % |  |  | 1.36 | % |  |  | 1.55 | % |  |  | 1.59 | % |  |  | 1.26 | % |  |  | 1.62 | %
Return on Average Equity excluding merger and certain items (Annualized) |  |  | 16.49 | % |  |  | 18.02 | % |  |  | 21.29 | % |  |  | 19.57 | % |  |  | 18.58 | % |  |  | 17.25 | % |  |  | 16.63 | %
Return on Average Tangible Equity excluding acquisition costs and certain items (Annualized) |  |  | 34.33 | % |  |  | 38.11 | % |  |  | 34.64 | % |  |  | 28.31 | % |  |  | 26.08 | % |  |  | 36.19 | % |  |  | 22.23 | %

Efficiency ratio excluding certain items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | For the Three Months Ended |  |  | For the Six Months Ended |
|  | June 30, |  |  | March 31, |  |  | Dec. 31, |  |  | Sept. 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2023 |  |  | 2023 |  |  | 2022 |  |  | 2022 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Net interest income, tax equated |  | $ | 35,273 |  |  | $ | 37,374 |  |  | $ | 30,212 |  |  | $ | 32,636 |  |  | $ | 32,583 |  |  | $ | 72,648 |  |  | $ | 64,684 |
Noninterest income |  |  | 9,449 |  |  |  | 10,425 |  |  |  | 8,200 |  |  |  | 8,827 |  |  |  | 9,477 |  |  |  | 19,874 |  |  |  | 27,175 |
Legal settlement income |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (8,375 | )
Net loss (gain) on asset/security sales |  |  | (6 | ) |  |  | (91 | ) |  |  | 338 |  |  |  | 6 |  |  |  | (32 | ) |  |  | (97 | ) |  |  | 91 |
Net interest income and noninterest income adjusted |  |  | 44,716 |  |  |  | 47,708 |  |  |  | 38,750 |  |  |  | 41,469 |  |  |  | 42,028 |  |  |  | 92,425 |  |  |  | 83,575 |
Noninterest expense less intangible amortization |  |  | 25,163 |  |  |  | 29,813 |  |  |  | 20,393 |  |  |  | 20,967 |  |  |  | 21,042 |  |  |  | 54,976 |  |  |  | 51,078 |
Charitable donation |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 6,000 |
Contingent legal settlement expense |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 2,075 |
Acquisition related costs |  |  | 442 |  |  |  | 4,313 |  |  |  | 584 |  |  |  | 872 |  |  |  | 674 |  |  |  | 4,755 |  |  |  | 2,614 |
Noninterest income adjusted |  |  | 24,721 |  |  |  | 25,500 |  |  |  | 19,809 |  |  |  | 20,095 |  |  |  | 20,368 |  |  |  | 50,221 |  |  |  | 40,389 |
Efficiency ratio excluding one-time items |  |  | 55.28 | % |  |  | 53.45 | % |  |  | 51.12 | % |  |  | 48.46 | % |  |  | 48.46 | % |  |  | 54.34 | % |  |  | 48.33 | %
Net interest margin excluding acquisition marks and PPP interest and fees |
|  | For the Three Months Ended |  |  | For the Six Months Ended |
|  | June 30, |  |  | March 31, |  |  | Dec. 31, |  |  | Sept. 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2023 |  |  | 2023 |  |  | 2022 |  |  | 2022 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Net interest income, tax equated |  | $ | 35,273 |  |  | $ | 37,374 |  |  | $ | 30,212 |  |  | $ | 32,636 |  |  | $ | 32,583 |  |  | $ | 72,648 |  |  | $ | 64,684 |
Acquisition marks |  |  | 2,884 |  |  |  | 2,628 |  |  |  | 174 |  |  |  | 215 |  |  |  | 349 |  |  |  | 5,512 |  |  |  | 1,338 |
PPP interest and fees |  |  | 3 |  |  |  | 0 |  |  |  | 10 |  |  |  | 62 |  |  |  | 634 |  |  |  | 3 |  |  |  | 1,320 |
Adjusted and annualized net interest income |  |  | 129,544 |  |  |  | 138,984 |  |  |  | 120,112 |  |  |  | 129,436 |  |  |  | 126,400 |  |  |  | 134,266 |  |  |  | 124,052 |
Average earning assets |  |  | 4,830,910 |  |  |  | 4,866,263 |  |  |  | 4,047,343 |  |  |  | 4,065,085 |  |  |  | 4,015,385 |  |  |  | 4,848,489 |  |  |  | 3,975,020 |
Less PPP average balances |  |  | 277 |  |  |  | 310 |  |  |  | 485 |  |  |  | 1,586 |  |  |  | 16,019 |  |  |  | 271 |  |  |  | 22,972 |
Adjusted average earning assets |  |  | 4,830,633 |  |  |  | 4,865,953 |  |  |  | 4,046,858 |  |  |  | 4,063,499 |  |  |  | 3,999,366 |  |  |  | 4,848,218 |  |  |  | 3,952,048 |
Net interest margin excluding marks and PPP interest and fees |  |  | 2.68 | % |  |  | 2.86 | % |  |  | 2.97 | % |  |  | 3.19 | % |  |  | 3.16 | % |  |  | 2.77 | % |  |  | 3.14 | %