Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three and twelve months ended December 31, 2016.

Net income for the three months ended December 31, 2016 was $5.4 million, or $0.20 per diluted share, which compares to $3.2 million, or $0.12 per diluted share, for the three months ended December 31, 2015. Excluding expenses related to acquisition activities, net income for the two periods was $5.4 million or $0.20 per diluted share and $4.3 million or $0.16 per diluted share, respectively.

Annualized return on average assets and return on average equity were 1.08% and 9.74%, respectively, for the three month period ending December 31, 2016, compared to 0.68% and 6.51% for the same three month period in 2015. Excluding expenses related to acquisition activities, the annualized return on average assets and return on average equity for the quarter ended December 31, 2016 were 1.08% and 9.77% compared to 0.93% and 8.87% for the same quarter in 2015.

Net income for the year ended December 31, 2016 was $20.6 million, or $0.76 per diluted share, compared to $8.1 million or $0.36 per diluted share for 2015. Return on average assets and return on average equity were 1.07% and 9.72%, respectively, for the year ending December 31, 2016, compared to 0.54% and 4.97% for the same period in 2015. Excluding expenses related to acquisition activities net income for the two years was $21.0 million, or $0.78 per share and $12.9 million or $0.57 per share, respectively. The annualized return on average assets and return on average equity excluding acquisition costs were 1.09% and 9.92% in 2016, compared to 0.87% and 7.95% in 2015, respectively.

On June 1, 2016 Farmers completed the acquisition of Bowers Insurance Agency, Inc. (“Bowers Group”). The Bowers Group will continue to operate under its name from its current location in Cortland, Ohio as part of Farmers’ wholly-owned insurance agency subsidiary Farmers National Insurance, LLC. The strategic acquisition is expected to enhance Farmers’ current company and product line up, and offer broader options of commercial, farm, home, and auto property/casualty insurance to meet all the needs of all Farmers’ customers.

Kevin J. Helmick, President and CEO, stated, “We are happy to report a record year in net income, which has been achieved through the successful integration of our recent mergers, our 10% organic loan growth, and our continued focus on increasing noninterest income and careful management of noninterest expenses.”

2016 Fourth Quarter Financial Highlights

  • Loan growth

Total loans were $1.43 billion at December 31, 2016, compared to $1.30 billion at December 31, 2015, representing an increase of 10.1%. 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. Most of the increase in loans has occurred in the commercial real estate, agricultural, residential real estate and consumer loan portfolios. Loans now comprise 76.3% of the Bank's average earning assets for the year ended December 31, 2016, an improvement compared to 70.1% for the same period in 2015. This improvement along with the growth in earning assets has resulted in a 41% increase in tax equated loan income from 2015 to 2016.

  • Loan quality

Non-performing assets to total assets remain at a safe level, currently at 0.44%. Early stage delinquencies also continue to remain at low levels, at $12.7 million, or 0.89% of total loans, at December 31, 2016. Net charge-offs for the current quarter were $656 thousand, up $360 thousand compared to $296 thousand in the same quarter in 2015, however total net charge-offs as a percentage of average net loans outstanding decreased from 0.23% for the year ended December 31, 2015 to 0.15% in 2016. 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 December 31, 2016 was 3.95%, a 4 basis points decrease from the quarter ended December 31, 2015. In comparing the fourth quarter of 2016 to the same period in 2015, asset yields decreased 1 basis point, while the cost of interest-bearing liabilities increased 3 basis points. The net interest margin is impacted by the additional accretion as a result of the discounted loan portfolios acquired in the NBOH and Tri-State mergers. Excluding the amortization of premium on time deposits and FHLB advances along with the accretion of the acquired loan discount, the net interest margin would have been 7 basis points lower or 3.88% for the quarter ended December 31, 2016.

  • Noninterest income

Noninterest income increased 17.4% to $6.1 million for the quarter ended December 31, 2016 compared to $5.2 million in 2015. Gains on the sale of mortgage loans increased $431 thousand, or 106% in the current year’s quarter compared to the same quarter in 2015. Insurance agency commissions increased $384 thousand in comparing the same two quarters due mainly to the acquisition of the Bowers Group. Other operating income increased $148 thousand or 14% in 2016, mainly as a result of an increase in income from an investment in a Small Business Investment Company (SBIC) fund.

  • Noninterest expenses

Farmers has remained committed to managing the level of noninterest expenses. Total noninterest expenses for the fourth quarter of 2016 decreased to $15.0 million compared to $16.6 million in the same quarter in 2015, primarily as a result of a $1.7 million decrease in merger related costs. Annualized noninterest expenses measured as a percentage of quarterly average assets decreased from 3.58% in the fourth quarter of 2015 to 3.03% in the fourth quarter of 2016.

  • Efficiency ratio

The efficiency ratio for the quarter ended December 31, 2016 improved to 60.37% compared to 73.07% for the same quarter in 2015. The main factors leading to the improvement in the efficiency ratio were the increase in net interest income and noninterest income, the decrease in merger related costs, along with the stabilized level of noninterest expenses relative to average assets as explained in the preceding paragraphs.

2017 Outlook

Mr. Helmick added, “We are pleased with our financial results for 2016. We remain well positioned to grow and create value for all our stakeholders, as our commitment to provide innovative solutions for our customers, associates, shareholders, and local communities continues.”

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $2 billion in banking assets and $1 billion in trust 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 39 banking locations in Mahoning, Trumbull, Columbiana, Stark, Wayne, Medina and Cuyahoga Counties in Ohio and Beaver County in Pennsylvania, Farmers Trust Company, which operates three trust offices and offers services in the same geographic markets and National Associates, Inc.. 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, 2015, as amended, 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 Twelve Months Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, Dec. 31, Dec. 31, Percent
2016 2016 2016 2016 2015 2016 2015 Change
Total interest income $ 18,469 $ 18,332 $ 17,950 $ 17,747 $ 17,481 $ 72,498 $ 53,827 34.7 %
Total interest expense   1,178   1,139   1,061   1,000   1,023   4,378   4,090   7.0 %
Net interest income 17,291 17,193 16,889 16,747 16,458 68,120 49,737 37.0 %
Provision for loan losses 990 1,110 990 780 990 3,870 3,510 10.3 %
Other income 6,076 6,485 5,737 4,946 5,175 23,244 18,306 27.0 %
Merger related costs 19 31 224 289 1,736 563 6,392 -91.2 %
Other expense   14,981   15,194   14,559   14,155   14,884   58,889   47,587   23.8 %
Income before income taxes 7,377 7,343 6,853 6,469 4,023 28,042 10,554 165.7 %
Income taxes   2,014   1,967   1,833   1,671   848   7,485   2,499   199.5 %
Net income $ 5,363 $ 5,376 $ 5,020 $ 4,798 $ 3,175 $ 20,557 $ 8,055   155.2 %
 
Average shares outstanding 27,048 27,048 26,965 26,937 27,027 27,000 22,678
Basic and diluted earnings per share 0.20 0.20 0.19 0.18 0.12 0.76 0.36
Cash dividends 1,082 1,082 1,083 1,077 809 4,324 2,683
Cash dividends per share 0.04 0.04 0.04 0.04 0.03 0.16 0.12
Performance Ratios
Net Interest Margin (Annualized) 3.95 % 3.97 % 4.06 % 4.07 % 3.99 % 4.01 % 3.81 %
Efficiency Ratio (Tax equivalent basis) 60.37 % 60.85 % 62.60 % 62.65 % 73.07 % 61.59 % 75.26 %
Return on Average Assets (Annualized) 1.08 % 1.10 % 1.06 % 1.03 % 0.68 % 1.07 % 0.54 %
Return on Average Equity (Annualized) 9.74 % 9.97 % 9.69 % 9.41 % 6.51 % 9.72 % 4.97 %
Dividends to Net Income 20.18 % 20.13 % 21.57 % 22.45 % 25.48 % 21.03 % 33.31 %
Other Performance Ratios (Non-GAAP)
Return on Average Tangible Assets 1.11 % 1.13 % 1.08 % 1.04 % 0.70 % 1.09 % 0.55 %
Return on Average Tangible Equity 12.34 % 12.73 % 12.22 % 11.83 % 8.44 % 12.30 % 5.92 %
 
 
Consolidated Statements of Financial Condition
  Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2016 2016 2016 2016 2015
Assets
Cash and cash equivalents $ 41,778 $ 67,372 $ 62,184 $ 34,619 $ 56,014
Securities available for sale 369,995 368,729 378,432 387,093 394,312
 
Loans held for sale 355 2,148 1,737 488 1,769
Loans 1,427,635 1,395,620 1,358,484 1,315,501 1,296,865
Less allowance for loan losses   10,852   10,518   9,720   9,390   8,978
Net Loans   1,416,783   1,385,102   1,348,764   1,306,111   1,287,887
 
Other assets   137,202   137,657   134,002   131,996   129,920
Total Assets $ 1,966,113 $ 1,961,008 $ 1,925,119 $ 1,860,307 $ 1,869,902
 
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $ 366,870 $ 352,441 $ 339,364 $ 334,391 $ 314,650
Interest-bearing   1,157,886   1,139,724   1,108,078   1,111,491   1,094,397
Total deposits 1,524,756 1,492,165 1,447,442 1,445,882 1,409,047
Other interest-bearing liabilities 213,496 235,757 247,934 192,078 247,985
Other liabilities   14,645   17,649   17,252   18,365   14,823
Total liabilities 1,752,897 1,745,571 1,712,628 1,656,325 1,671,855
Stockholders' Equity   213,216   215,437   212,491   203,982   198,047
Total Liabilities
and Stockholders' Equity $ 1,966,113 $ 1,961,008 $ 1,925,119 $ 1,860,307 $ 1,869,902
 
Period-end shares outstanding 27,048 27,048 27,048 26,924 26,944
Book value per share $ 7.88 $ 7.96 $ 7.86 $ 7.58 $ 7.35
Tangible book value per share (Non-GAAP) 6.21 6.29 6.17 5.99 5.76
Capital and Liquidity
Common Equity Tier 1 Capital Ratio (a) 11.73 % 11.67 % 11.61 % 11.82 % 11.59 %
Total Risk Based Capital Ratio (a) 12.44 % 12.51 % 12.41 % 12.63 % 12.37 %
Tier 1 Risk Based Capital Ratio (a) 11.73 % 11.81 % 11.75 % 11.97 % 11.74 %
Tier 1 Leverage Ratio (a) 9.32 % 9.35 % 9.37 % 9.34 % 9.21 %
Equity to Asset Ratio 10.84 % 10.99 % 11.04 % 10.96 % 10.59 %
Tangible Common Equity Ratio 8.75 % 8.88 % 8.87 % 8.88 % 8.50 %
Net Loans to Assets 72.06 % 70.63 % 70.06 % 70.21 % 68.87 %
Loans to Deposits 93.63 % 93.53 % 93.85 % 90.98 % 92.04 %
Asset Quality
Non-performing loans $ 8,170 $ 8,003 $ 8,360 $ 9,710 $ 10,445
Other Real Estate Owned 482 506 572 555 942
Non-performing assets 8,652 8,509 8,932 10,265 11,387
Loans 30 - 89 days delinquent 12,747 10,986 11,371 10,072 9,130
Charged-off loans 841 562 820 578 447
Recoveries 185 250 160 210 151
Net Charge-offs 656 312 660 368 296
Annualized Net Charge-offs to
Average Net Loans Outstanding 0.20 % 0.09 % 0.20 % 0.11 % 0.09 %
Allowance for Loan Losses to Total Loans 0.76 % 0.75 % 0.72 % 0.71 % 0.69 %
Non-performing Loans to Total Loans 0.57 % 0.57 % 0.62 % 0.74 % 0.81 %
Allowance to Non-performing Loans 132.83 % 131.43 % 116.27 % 96.70 % 85.96 %
Non-performing Assets to Total Assets 0.44 % 0.43 % 0.46 % 0.55 % 0.61 %
                     
(a) December 31, 2016 ratio is estimated
 
           
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,
2016 2016 2016 2016 2015 2016 2015
Stockholders' Equity $ 213,216 $ 215,437 $ 212,491 $ 203,982 $ 198,047 $ 213,216 $ 198,047
Less Goodwill and other intangibles   45,154   45,299   45,718   42,574   42,911   45,154   42,911
Tangible Common Equity $ 168,062 $ 170,138 $ 166,773 $ 161,408 $ 155,136 $ 168,062 $ 155,136
Average Stockholders' Equity 219,028 214,484 207,776 204,986 193,446 211,408 162,086
Less Average Goodwill and other intangibles   45,173   45,575   43,475   42,796   43,028   44,284   26,128
Average Tangible Common Equity $ 173,855 $ 168,909 $ 164,301 $ 162,190 $ 150,418 $ 167,124 $ 135,958
 
Reconciliation of Total Assets to Tangible Assets For the Twelve Months Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, Dec. 31, Dec. 31,
2016 2016 2016 2016 2015 2016 2015
Total Assets $ 1,966,113 $ 1,961,008 $ 1,925,119 $ 1,860,307 $ 1,869,902 $ 1,966,113 $ 1,869,902
Less Goodwill and other intangibles   45,154   45,299   45,718   42,574   42,911   45,154   42,911
Tangible Assets $ 1,920,959 $ 1,915,709 $ 1,879,401 $ 1,817,733 $ 1,826,991 $ 1,920,959 $ 1,826,991
Average Assets 1,977,589 1,949,204 1,897,068 1,881,458 1,854,586 1,924,914 1,482,527
Less average Goodwill and other intangibles   45,173   45,575   43,475   42,796   43,028   44,284   26,128
Average Tangible Assets $ 1,932,416 $ 1,903,629 $ 1,853,593 $ 1,838,662 $ 1,811,558 $ 1,880,630 $ 1,456,399
 
Reconciliation of Net Income, Excluding Costs Related to Acquisition Activities
For the Three Months Ended For the Twelve Months Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, Dec. 31, Dec. 31,
2016 2016 2016 2016 2015 2016 2015
Income before income taxes - Reported $ 7,377 $ 7,343 $ 6,853 $ 6,469 $ 4,023 $ 28,042 $ 10,554
Acquisition Costs   19   31   224   289   1,736   563   6,392
Income before income taxes - Adjusted 7,396 7,374 7,077 6,758 5,759 28,605 16,946
Income tax expense (b)   2,018   1,973   1,899   1,746   1,434   7,636   4,060
Net income - Adjusted $ 5,378 $ 5,401 $ 5,178 $ 5,012 $ 4,325 $ 20,969 $ 12,886
Average shares outstanding 27,048 27,048 26,965 26,937 27,027 27,000 22,678
EPS excluding acquisition costs $ 0.20 $ 0.20 $ 0.19 $ 0.19 $ 0.16 $ 0.78 $ 0.57

(b) The income tax expense change from actual income tax expense relates to the deductibility of certain acquisition costs.

Reconciliation of Return on Average Assets and Average Equity, Excluding Acquisition 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,
2016 2016 2016 2016 2015 2016 2015
ROA excluding acquisition costs (c)   1.09 %   1.11 %   1.09 %   1.07 %   0.93 %   1.09 %   0.87 %
ROE excluding acquisition costs (d) 9.82 % 10.07 % 9.97 % 9.78 % 8.94 % 9.92 % 7.95 %
 
(c) Net income -adjusted divided by average assets
(d) Net income - adjusted divided by average equity
 
 
For the Three Months Ended
Dec. 31,   Sept. 30,   June 30,   March 31,   Dec. 31,
End of Period Loan Balances 2016 2016 2016 2016 2015
Commercial real estate $ 446,975 $ 426,657 $ 418,269 $ 414,119 $ 409,326
Commercial 204,771 207,228 201,796 197,708 199,843
Residential real estate 430,674 423,009 418,693 405,560 394,728
Consumer 212,836 205,466 192,232 180,791 180,837
Agricultural loans   128,981   129,959   124,551   114,625   109,400
Total, excluding net deferred loan costs $ 1,424,237 $ 1,392,319 $ 1,355,541 $ 1,312,803 $ 1,294,134
 
For the Three Months Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
Noninterest Income 2016 2016 2016 2016 2015
Service charges on deposit accounts $ 1,031 $ 1,057 $ 987 $ 935 $ 1,049
Bank owned life insurance income 208 194 201 212 214
Trust fees 1,482 1,693 1,564 1,496 1,518
Insurance agency commissions 559 569 293 139 175
Security gains 1 31 41 0 46
Retirement plan consulting fees 444 561 496 489 425
Investment commissions 310 308 356 236 286
Net gains on sale of loans 838 1,063 540 402 407
Other operating income   1,203   1,009   1,259   1,037   1,055
Total Noninterest Income $ 6,076 $ 6,485 $ 5,737 $ 4,946 $ 5,175
 
For the Three Months Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
Noninterest Expense 2016 2016 2016 2016 2015
Salaries and employee benefits $ 8,248 $ 8,366 $ 7,740 $ 7,554 $ 8,220
Occupancy and equipment 1,748 1,587 1,616 1,664 1,772
State and local taxes 363 394 394 393 283
Professional fees 803 671 754 529 833
Merger related costs 19 31 224 289 1,736
Advertising 241 383 363 345 482
FDIC insurance 199 287 286 283 326
Intangible amortization 368 421 335 337 345
Core processing charges 743 738 580 638 770
Other operating expenses   2,268   2,347   2,491   2,412   1,853
Total Noninterest Expense $ 15,000 $ 15,225 $ 14,783 $ 14,444 $ 16,620
 
 
Average Balance Sheets and Related Yields and Rates
(Dollar Amounts in Thousands)
               
Three Months Ended Three Months Ended
December 31, 2016 December 31, 2015
AVERAGE AVERAGE
BALANCE INTEREST (1) RATE (1) BALANCE INTEREST (1) RATE (1)
EARNING ASSETS
Loans (2) $ 1,397,289 $ 16,328 4.65 % $ 1,262,480 $ 15,113 4.75 %
Taxable securities 223,731 1,173 2.09 283,571 1,480 2.07
Tax-exempt securities (2) 140,113 1,483 4.21 133,837 1,361 4.03
Equity securities 9,644 112 4.62 9,520 145 6.04
Federal funds sold and other   37,473 47 0.50   11,523 9 0.31
Total earning assets 1,808,250 19,143 4.21 1,700,931 18,108 4.22
Nonearning assets   169,339   153,655
Total assets $ 1,977,589 $ 1,854,586
INTEREST-BEARING LIABILITIES
Time deposits $ 240,415 $ 463 0.77 % $ 246,113 $ 490 0.79 %
Savings deposits 537,292 184 0.14 539,227 163 0.12
Demand deposits 364,443 215 0.23 324,295 161 0.20
Short term borrowings 206,852 204 0.39 188,352 91 0.19
Long term borrowings   17,403 111 2.54   19,835 118 2.36
Total interest-bearing liabilities $ 1,366,405 1,177 0.34 $ 1,317,822 1,023 0.31

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY

Demand deposits 376,463 324,887
Other liabilities 15,693 18,431
Stockholders' equity   219,028   193,446
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,977,589     $ 1,854,586    
Net interest income and interest rate spread $ 17,966   3.87 % $ 17,085   3.91 %
Net interest margin   3.95 %   3.99 %
 
(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2016, adjustments of $160 thousand and $531 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2015, adjustments of $159 thousand and $470 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 35%, less disallowances.
   
Twelve Months Ended Twelve Months Ended
December 31, 2016 December 31, 2015
AVERAGE       AVERAGE      
BALANCE INTEREST (1) RATE (1) BALANCE INTEREST (1) RATE (1)
EARNING ASSETS
Loans (2) $ 1,344,308 $ 63,757 4.74 % $ 955,415 $ 45,242 4.74 %
Taxable securities 240,087 5,058 2.11 279,808 5,903 2.11
Tax-exempt securities 132,550 5,581 4.21 103,947 4,510 4.34
Equity securities (2) 9,613 515 5.36 6,561 287 4.37
Federal funds sold and other   34,579 166 0.48   16,855 29 0.17
Total earning assets 1,761,137 75,077 4.26 $ 1,362,586 55,971 4.11
Nonearning assets 163,777 119,941
Total assets $ 1,924,914 $ 1,482,527
INTEREST-BEARING LIABILITIES
Time deposits $ 245,384 $ 1,834 0.75 % $ 227,412 $ 2,610 1.15 %
Savings deposits 540,626 685 0.13 468,123 534 0.11
Demand deposits 333,712 701 0.21 219,257 345 0.16
Short term borrowings 211,713 689 0.33 107,850 177 0.16
Long term borrowings   19,886 468 2.35   34,799 424 1.22
Total interest-bearing liabilities $ 1,351,321 $ 4,377 0.32 $ 1,057,441 4,090 0.39

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY

Demand deposits $ 248,003 $ 250,628
Other liabilities 14,182 12,372
Stockholders' equity 211,408 162,086
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,824,914     $ 1,482,527    
Net interest income and interest rate spread $ 70,700   3.94 % $ 51,881   3.72 %
Net interest margin   4.01 %   3.81 %
 
(1) Interest and yields are calculated on a tax-equivalent basis where applicable.
(2) For 2016, adjustments of $648 thousand and $1.9 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2015, adjustments of $585 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 35%, less disallowances.