Financial Data and Key Metrics Changes - The company reported net income of $12.8 million, or $0.68 per diluted share, representing a 53% increase from Q3 2024 and a 16% increase from the linked quarter [2] - Pre-provision net revenue increased by $4.9 million, or 45% year-over-year, and by $1.9 million, or 14% sequentially [3] - Net interest income totaled $34.5 million, consistent with the linked quarter, while the net interest margin declined by six basis points to 3.58% [3] - Non-interest income increased by $3 million, or 46.2% over the linked quarter, and was consistent with Q3 2024 [5] Business Line Data and Key Metrics Changes - Non-interest income for the quarter was $9.6 million, consistent with the prior year's third quarter, despite a $494,000 decline in leasing fees [6] - The company experienced a $55.1 million decline in total loans and leases, with significant declines in commercial and agricultural loans and non-owner occupied commercial real estate [8] - Residential loans increased by $27 million, indicating a shift in loan origination focus [9] Market Data and Key Metrics Changes - Total deposits grew by $33.4 million, with a $56.4 million increase in core deposit funding during the quarter [11][12] - The loan-to-deposit ratio was 95.8%, down from the linked quarter, with expectations to reduce this further post-acquisition of Farmers Savings Bank [14] Company Strategy and Development Direction - The company completed a follow-on common stock offering, raising $80.5 million to support organic growth and investments in technology and infrastructure [4] - The merger with Farmers Savings Bank is expected to enhance liquidity and expand the customer base, with preparations for system conversion underway [4][18] - The focus remains on organic growth, deepening customer relationships, and enhancing fee income through capital investments in technology and automation [25][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic environment across their footprint, noting strong credit quality and stable credit metrics [16] - The company anticipates loan growth returning to a mid-single-digit range for Q4 and increasing into mid to high single digits in 2026 [10][34] - The effective tax rate for the quarter was 18.5%, with expectations to remain in the 16% to 16.5% range for the remainder of the year [28] Other Important Information - The company announced a quarterly dividend of $0.17 per share, consistent with the prior quarter, representing a 3.3% yield [5] - The tangible common equity ratio increased from 6.7% to 9.21% due to strong earnings and successful capital raise, with expectations of a decline post-merger [15] Q&A Session Summary Question: Margin outlook with potential rate cuts - Management anticipates a margin expansion of about five basis points in Q4, considering potential rate cuts [23] Question: Capital priorities post-Farmers acquisition - The focus will be on organic growth and increasing tangible book value, with a disciplined approach to M&A [24][25] Question: Confidence in achieving loan growth targets - Management expressed confidence due to a strong pipeline and historical loan-generating capabilities [34] Question: Fee income outlook - Anticipated fee income for Q4 is projected to be around $9.2 million, including contributions from Farmers Savings Bank [39] Question: Loan yield decline explanation - The decline was attributed to a mix shift and competitive pricing, with expectations for yield improvement as loans reprice [42][44] Question: Timing of Farmers acquisition closure - The acquisition is expected to close shortly after the shareholder meeting on November 4 [50]

Financial Data and Key Metrics Changes - The company reported net income of $12.8 million, or $0.68 per diluted share, representing a 53% increase from Q3 2024 and a 16% increase from the linked quarter [2] - Pre-provision net revenue increased by $4.9 million, or 45%, compared to Q3 2024, and by $1.9 million, or 14%, from the linked quarter [3] - Net interest income totaled $34.5 million, consistent with the linked quarter, while the net interest margin declined by 6 basis points to 3.58% [3] - Non-interest income increased by $3 million, or 46.2%, over the linked quarter, remaining consistent with Q3 2024 [6] Business Line Data and Key Metrics Changes - Non-interest income for the quarter was $9.6 million, consistent with the prior year's third quarter, despite a decline in leasing fees [7] - The company experienced a $55.1 million decline in total loans and leases, with significant declines in commercial and agricultural loans and non-owner occupied commercial real estate [9] - Residential loans increased by $27 million, indicating a shift in loan origination focus [10] Market Data and Key Metrics Changes - Total deposits grew by $33.4 million, with a $56.4 million increase in core deposit funding during the quarter [12] - The loan-to-deposit ratio was 95.8%, down from the linked quarter, with expectations to reduce this ratio further post-acquisition [15] - The securities portfolio had $44.5 million of unrealized losses, a reduction of $8.9 million since December 31, 2024 [15] Company Strategy and Development Direction - The company completed a follow-on common stock offering, raising $80.5 million to support organic growth and investments in technology and infrastructure [4] - The merger with Farmers Savings Bank is expected to enhance the company's deposit base and overall growth strategy [4][19] - The focus remains on organic growth, deepening customer relationships, and expanding digital services [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic environment across their footprint, noting strong credit quality and stable credit metrics [17] - The company anticipates loan growth returning to a mid-single-digit range for Q4 and increasing into the mid to high single digits in 2026 [11] - Management highlighted the importance of capital investments in technology and automation to improve efficiency and profitability [28] Other Important Information - The company announced a quarterly dividend of $0.17 per share, consistent with the prior quarter, representing a 3.3% yield [5] - The effective tax rate for the quarter was 18.5%, with expectations to remain in the 16%-16.5% range for the remainder of the year [29] Q&A Session Summary Question: Margin outlook with potential rate cuts - Management anticipates a margin expansion of about 5 basis points in Q4, considering potential rate cuts [24] Question: Capital priorities post-Farmers acquisition - The focus will be on organic growth and increasing tangible book value, with M&A opportunities evaluated on a disciplined basis [25][26] Question: Confidence in achieving loan growth targets - Management expressed confidence due to a strong pipeline and historical loan-generating capabilities [35] Question: Fee income outlook - Anticipated fee income for Q4 is projected to be around $9.2 million, including contributions from Farmers [40] Question: Loan yield decline explanation - The decline was attributed to a mix shift and non-recurring items from the previous quarter, with expectations for yield improvement from upcoming repricing [43][44] Question: Timing of Farmers acquisition closure - The acquisition is expected to close shortly after the shareholder meeting on November 4, likely before mid-November [52] Question: Loan competition and pricing - Competition has increased, with rates falling below 6.5%, but demand remains consistent across markets [55][57]

Financial Data and Key Metrics Changes - The company reported net income of $12.8 million or $0.68 per diluted share, a 53% increase from Q3 2024 and a 16% increase from the linked quarter [5] - Pre-provision net revenue increased by $4.9 million or 45% compared to Q3 2024 and by $1.9 million or 14% from the linked quarter [5] - Net interest income totaled $34.5 million, consistent with the linked quarter, while net interest margin declined by six basis points to 3.58% [5][6] - Non-interest income increased by $3 million or 46.2% over the linked quarter, totaling $9.6 million, consistent with Q3 2024 [8][10] Business Line Data and Key Metrics Changes - Non-interest income for the quarter was $9.6 million, with a $494,000 decline in leasing fees offset by increases in other categories [10] - The company experienced a decline in total loans and leases by $55.1 million, primarily due to over $120 million in payoffs [12] - Significant declines were noted in commercial and agricultural loans by $36 million and non-owner occupied commercial real estate by $48 million [13] Market Data and Key Metrics Changes - Total deposits grew by $33.4 million, with a reduction in brokered deposits by $23 million [16] - The loan-to-deposit ratio was 95.8%, down from the linked quarter, with expectations to reduce this further post-acquisition of Farmers Savings Bank [18] Company Strategy and Development Direction - The company plans to use new capital to reduce overnight borrowings and strengthen tangible common equity, while focusing on organic growth and technology investments [6][7] - The merger with Farmers Savings Bank is expected to close shortly after November 4, enhancing the company's deposit base and operational capabilities [7][20] - The company aims to streamline deposit accounts and enhance digital services to attract new customers and deepen existing relationships [17][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic environment across their footprint, noting strong credit quality and stable credit metrics [21][22] - The company anticipates organic loan growth returning to mid-single digits in Q4 and increasing into mid to high single digits in 2026 [15][40] - The effective tax rate for the quarter was 18.5%, with expectations to remain in the 16% to 16.5% range for the remainder of the year [34] Other Important Information - The company announced a quarterly dividend of $0.17 per share, consistent with the prior quarter, representing a 3.3% yield [8] - The tangible common equity ratio increased from 6.7% to 9.21% due to strong earnings and a successful capital raise [20] Q&A Session Summary Question: Margin outlook with potential rate cuts - Management anticipates margin expansion by five basis points in Q4 if rate cuts occur as expected [27] Question: Capital priorities post-Farmers acquisition - The focus will be on organic growth and increasing tangible book value, with M&A opportunities evaluated on a disciplined basis [28][30] Question: Confidence in achieving loan growth targets - Management noted a strong pipeline and historical loan generation capabilities, despite recent payoffs [39][40] Question: Fee income outlook - Anticipated fee income for Q4 is around $9.2 million, including contributions from Farmers [45] Question: Loan yield decline explanation - The decline was attributed to a mix shift and pricing competition, with expectations for yield improvement as loans reprice [48][49] Question: Timing of Farmers acquisition closure - The acquisition is expected to close shortly after the shareholder meeting on November 4 [54][55]

Core Insights - The company reported a net income of $11.0 million, or $0.71 per share, representing a 56% increase year-over-year and an $847,000 increase over the prior quarter [5][17] - A follow-on capital raise generated $76.3 million net, which will be used to reduce overnight borrowings and fund new loans over time [8][22] - The company announced the acquisition of Farmers Savings Bank, expected to close in the fourth quarter, which will enhance core deposit funding and improve capital ratios [8][20] Financial Performance - Net interest income increased to $34.8 million, up $2.0 million or 6.2% sequentially, driven by a rise in earning asset yields [6][18] - Pre-provision net revenue rose by $3.3 million, or 37.5%, year-over-year, and by $770,000, or 6.7%, over the linked quarter [5][17] - Noninterest income decreased by $1.3 million, or 16.2%, from the previous quarter, primarily due to reduced leasing and residential fee revenues [3][22] Loan and Deposit Metrics - The loan-to-deposit ratio increased to 98.6%, higher than desired, with expectations for reduction following deposit initiatives and the Farmers acquisition [4][31] - Total loans and leases grew by $47.1 million, representing an annualized growth rate of 6.1%, with residential loans being the largest segment increase [6][26] - Total deposits declined by $42.7 million, or 1.3%, mainly due to the exit of a single municipal customer [7][29] Capital and Credit Quality - Pro forma capital ratios are projected to improve, with the tangible common equity ratio rising to 8.6% and the tier one leverage ratio to 10.6% post-capital raise and acquisition [9][33] - The allowance for credit losses to total loans was 1.28%, with an allowance for credit losses to nonperforming loans at 175%, up from 122% at the end of 2024 [9][35] - Criticized credits decreased by $2 million, indicating stable credit quality metrics [9][34] Strategic Initiatives - The company launched a new digital account opening platform aimed at attracting customers outside current branch locations [10][30] - Management aims to reduce the loan-to-deposit ratio to a target range of 90-95% through various deposit initiatives [31] - The acquisition of Farmers Savings Bank is seen as a strategic move to leverage their low-cost core deposits and enhance loan growth opportunities [20][21]