Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - FARMERS NATIONAL BANC CORP /OH/ | d262050d8k.htm |
 Farmers National Banc Corp.
Canfield, OH
(NASDAQ: FMNB)
Investor Presentation
September 30, 2011
Exhibit 99.1 |
 2
Disclosure Statement
Forward-Looking Statements
This
presentation
contains
forward-looking
statements
within
the
meaning
of
the
Private
Securities
Litigation
Reform
Act
of
1995.
Forward-looking
statements
express
management’s
current
expectations,
forecasts
of
future
events
or
long-term-goals
and,
by
their
nature,
are
subject
to
assumptions,
risks
and
uncertainties.
Actual
results
could
differ
materially
from
those
indicated.
Farmers
National
Banc
Corp.
(“Farmers”)
refers
you
to
its
periodic
reports
and
registration
statements
filed
with
the
Securities
and
Exchange
Commission,
including
its
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2010
and
Quarterly
Report
on
Form
10-Q
for
the
period
ended
September
30,
2011
which
have
been
filed
with
the
Securities
and
Exchange
Commission
and
are
available
on
Farmers’
website
(www.farmersbankgroup.com)
and
on
the
Securities
and
Exchange
Commission’s
website
(www.sec.gov),
for
additional
discussion
of
these
assumptions,
risks
and
uncertainties.
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
undertakes
no
obligation
to
update
forward-looking
statements,
whether
as
a
result
of
new
information,
future
events
or
otherwise,
except
as
may
be
required
by
law.
Use of Non-GAAP Financial Measures
This
presentation
contains
certain
financial
information
determined
by
methods
other
than
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
(“GAAP”).
These
non-GAAP
financial
measures
include
“Core
Deposits”
and
“Pre-tax,
Pre-
provision
Earnings”.
Farmers
believes
that
these
non-GAAP
financial
measures
provide
both
management
and
investors
a
more
complete
understanding
of
the
Company’s
deposit
profile
and
profitability.
These
non-GAAP
financial
measures
are
supplemental
and
are
not
a
substitute
for
any
analysis
based
on
GAAP
financial
measures.
Because
not
all
companies
use
the
same
calculation
of
“Core
Deposits”
and
“Pre-tax,
Pre-provision
Earnings”,
this
presentation
may
not
be
comparable
to
other
similarly
titled
measures
as
calculated
by other companies. |
 3
Sound franchise with many opportunities for growth
Profitable throughout cycle and growing tangible book value per share
Diversified and growing revenue streams
Stable asset quality and strong core deposit franchise
Strong capital position and did not take TARP CPP
Operational excellence and brand development
Seasoned management team with knowledge of the Northeast Ohio
marketplace
Commence trading on NASDAQ effective September 15, 2011 (“FMNB”)
Compelling valuation:
0.78x of tangible book value
4.7x LTM pre-tax pre-provision earnings
Farmers offers a unique and strong platform for growth
Investment Highlights
7.7x LTM EPS
2.68% dividend yield |
 4
Founded over 120 years ago
18 branches and 17 ATMs
Approximately 75 -
100 miles from
Cleveland, Pittsburgh & Erie
Branch Map in Mahoning Valley
Erie
Pittsburgh
Youngstown
Akron
Cleveland
Trumbull County
Mahoning
County
Columbiana County
Branch Locations
Trust Locations
Canton |
 5
Note: Deposit data as of June 30, 2011
Source: FDIC
Opportunity for growth with approximately 9.5% deposit market share in the Mahoning
Valley Large regional competitors lack focus
Community competitors inwardly focused
Attractive Deposit Franchise –
Deposit Market Share by MSA & County
2011
Rank
Company
Branches
Dep.
($M)
Market
Share
1
Home Savings & Loan Co.
7
309.6
$
23.66%
2
Huntington National Bank
12
305.5
$
23.35%
3
PNC Bank National Assn
6
134.9
$
10.31%
4
Farmers National Bank of Canfield
4
123.6
$
9.44%
5
JPMorgan Chase Bank NA
3
90.3
$
6.90%
6
Consumers National Bank
3
85.6
$
6.54%
7
1st National Community Bank
4
85.2
$
6.51%
8
CFBank
2
78.9
$
6.03%
9
Keybank National Assn
1
48.8
$
3.73%
10
RBS Citizens National Assn
1
44.4
$
3.39%
Total For Institutions In Market
45
1,308.3
$
Columbiana - Top 10
2011
Rank
Company
Branches
Dep. ($M)
Market
Share
1
Huntington National Bank
42
1,978.9
$
24.16%
2
Homes Savings & Loan
21
1,241.3
$
15.16%
3
First Place Bank
19
1,188.0
$
14.51%
4
PNC Bank National Assn
23
909.2
$
11.10%
5
Farmers National Bank of Canfield
17
776.4
$
9.48%
6
JPMorgan Chase Bank NA
20
752.1
$
9.18%
7
Cortland Savings & Banking Co.
10
346.5
$
4.23%
8
First NB of Pennsylvania
8
246.2
$
3.01%
9
Keybank National Assn
6
172.2
$
2.10%
10
RBS Citizens National Assn
6
165.4
$
2.02%
Total For Institutions In Market
196
8,189.7
$
Tri-County - Top 10
2011
Rank
Company
Branches
Dep.
($M)
Market
Share
1
Huntington National Bank
17
$1,135.5
27.00%
2
Home Savings & Loan Co.
10
$776.1
18.45%
3
First Place Bank
12
$578.9
13.76%
4
PNC Bank Naitonal Assn
10
$527.1
12.53%
5
Farmers National Bank of Canfield
7
$478.8
11.38%
6
JPMorgan Chase Bank NA
7
$316.5
7.52%
7
First NB of Pennsylvania
5
$168.3
4.00%
8
Keybank National Assn
4
$87.9
2.09%
9
RBS Citizens National Assn
3
$87.1
2.07%
10
Cortland Savings & Banking Co.
2
$26.3
0.63%
Total For Institutions In Market
81
$4,205.8
Mahoning - Top 10
2011
Rank
Company
Branches
Dep.
($M)
Market
Share
1
First Place Bank
7
609.2
$
22.77%
2
Huntington National Bank
13
538.0
$
20.11%
3
JPMorgan Chase Bank NA
10
345.4
$
12.91%
4
Cortland Savings & Banking Co.
8
320.2
$
11.97%
5
PNC Bank National Assn
7
247.2
$
9.24%
6
Farmers National Bank of Canfield
6
174.0
$
6.50%
7
Home Savings & Loan Co.
4
155.6
$
5.81%
8
First NB of Pennsylvania
3
77.8
$
2.91%
9
Home FS&LA of Niles
1
61.5
$
2.30%
10
Middlefield Banking Co.
1
43.7
$
1.63%
Total For Institutions In Market
70
2,675.7
$
Trumbull - Top 10 |
 6
Source: Regional Chamber, Youngstown-Warren, Ohio Metropolitan Profile
Valley Leads in Industrial Job Growth in NE Ohio, The Vindicator
Ohio’s Economic Impact Study –
September, 2011
Resources and infrastructure within 100 miles of the Mahoning Valley
Recently the Mahoning Valley has seen several important investments in new business
including:
Steelmaker V&M Star’s $650 million expansion
•
350,000 tons of steel tubing per year for the drilling of shale gas in the U.S.
•
About 350 jobs will be created once production begins
The
acquisition
of
WCI
Steel
by
OAO
Severstal
–
$327
million
investment
General
Motors
Lordstown
plant
building
the
Chevrolet
Cruze
next
generation
small
car
–
$230
million
investment
Ohio’s Natural Gas and Crude Oil Exploration and Production Industry and the
Emerging Utica Gas Formation
Impact regarding to:
•
Jobs (204,000 created or supported by 2015)
•
Income (Economic Output will increase by over $22 billion by 2015)
Economic Overview of Market Area
6.8 million people
18 Fortune 500 company world headquarters
95 colleges and universities campus locations
2 international airports; 3 regional airports
Lake Erie shipping
Ohio River ports
Northeast Ohio’s manufacturing productivity is on
track to outpace the rest of the nation by 10 percent
as early as 2015, according to a report released by
Team Northeast Ohio.
Youngstown-Warren metro area had the third-highest
job growth in the U.S. in the last 12 months.
Land acquisition, construction and labor costs are
significantly below national averages |
 7
•
Performance-driven culture
•
Advancing automation and use of technology
•
Metrics-oriented accountability
•
Scaling organization to support growth
•
Diligent risk management
•
Expand fee-based business
•
Integrate sales efforts
•
Continue to drive name awareness
•
Unification of brand
•
Top graded talent to drive performance growth
•
De novo expansion and strategic acquisitions
•
Customer intimacy/decisions close to customer
•
Identify target markets and customer segments
•
Lead with commercial business/expand wallet share
Acquire Share of
Market/Share of
Customer
Operational
Excellence
Risk Management
Evolve Trust,
Insurance & Financial
Services
Brand Development
Talent
Farmers’
Strategy for Growth |
 8
Established and experienced management team with over 173 years of combined
experience, 97 of which has been with Farmers
Experienced Management Team
FMNB
Industry
Previous Experience
John S. Gulas
(53)
President & CEO
3+
27+
Past executive roles with Key Bank, Sky Bank and Wachovia. Prior to Farmers, Mr. Gulas
served as President and CEO of Sky Trust Company and was responsible for a $6.0BN
trust company, a $1.2BN brokerage company and a $1.1BN private bank.
James H. Sisek
(65)
President & CEO of Farmers Trust
15+
36+
President and CEO of the Farmers Trust Company.
Carl D. Culp
(48)
EVP & CFO
22+
26+
25 years of experience in finance and accounting in the banking industry, and is a
Certified Public Accountant.
Mark L. Graham
(56)
SVP & Chief Credit Officer
34+
34+
Has been with Farmers for 33 years and has held a variety of positions within the bank,
all in the credit area.
Kevin J. Helmick
(39)
SVP of Retail Services
16+
16+
Responsible for the management of Farmers National Investments, Farmers Insurance
and all branch sales and operational functions. Mr. Helmick holds an MBA and CFP
designation.
Amber B. Wallace
(45)
SVP & Director of Marketing
3+
3+
Prior to joining the Farmers team, Ms. Wallace served as the Assistant Vice President of
Marketing and Physician Relations at Trumbull Memorial Hospital, where she managed a
$14MM endowment, a $1.5MM marketing budget and all physician contracts.
Mark A. Nicastro
(40)
VP & Director of Human Resources
2+
13+
Brings an MBA and more than 12 years experience in HR Management from both large
multi-national banks and regional community banks, including U.S. Bank and Sky Bank.
Brian Jackson
(42)
VP & Chief Information Officer
2+
18+
More than 17 years experience in the IT field.
Yrs. Of Experience |
 9
March 2009 –
opportunistic acquisition of Butler Wick Trust Company, the largest trust
department in the Mahoning Valley
Assets under management have grown approximately 48% since acquisition to $901
million currently From December 31, 2008 through December 31, 2010:
Revenue¹
has grown $16.6 million or 52.9%
Total assets have increased $102.4 million or 11.6%
•
Loans have grown $38.4 million or 7.0%
Total deposits have increased $113.0 million or 17.4%
•
Core deposits²
have grown $113.3 million or 20.6%
Tangible book value per share has grown $0.12 or 2.1%
Fiserv Premier –
core operating system
Flexible system that offers unlimited accounts
Keeps current with compliance and regulatory changes
Offers multiple products and services that integrate into core system (i.e.
internet banking, ATMs, and GL) One of the top core system providers in the
nation SAN & Virtualization –
data management system
Data Storage: reduces disk space expenditures; allow for better utilization of
disk space Data Backup: consistent backups of all data and replicated at
DR Site
Disaster Recovery: able to recover from disaster in minutes
Overall reduced IT costs
Scalable to various network configurations
¹
Revenue defined as net interest income plus non-interest income;
excludes securities gains / losses;
²
Core
deposits
defined
as
Total
Deposits
–
Jumbo
Deposits
Recent Growth |
 10
Butler Wick Trust Company Acquisition
Acquired
from
United
Community
Financial
Corporation
for
cash
on
March
31,
2009
Only locally owned trust company in the Mahoning Valley
Rebranded to Farmers Trust Company
Assets increased approximately 48% since acquisition
Contributed $4.9 million to non-interest income in 2010
Farmers Trust Company |
 11
Meaningfully profitable every quarter during this cycle
Always paid quarterly cash dividend
High net interest margin which has expanded every year since 2006
4.10% December 31, 2010
Strong record of profitability
Average ROAA and ROAE from 2006 through 2010 of 0.75% and 8.60%,
respectively
Continue to invest in operations to support ongoing growth, yet maintain a strong
balance sheet
Historical Operating Results |
 12
Pre-tax income excluding security gains and losses increased 12% from the third
quarter of 2010.
Investment commissions and trust fees for the third quarter of 2011 increased 63%
and 8%, respectively, from the third quarter of 2010.
Provision for loan losses for the third quarter of 2011 decreased $800 thousand
from the third quarter of 2010.
Annualized net charge-offs to average net loans outstanding improved to 0.43%
at September 30, 2011, compared to 1.31% at September 30, 2010.
Loans 30-89 days delinquent decreased to $3.4 million at September 30, 2011,
compared to $5.9 million at September 30, 2010.
Continued Strong Results –
Overview of Q3 2011 |
 13
•
2010 net interest income increased 13%
over prior year period due to increase in
loan balances and lower cost of funds
•
Acquisition of Trust Company increased
non-interest income by 13.8% since first
quarter 2009¹
Growing and Diverse Revenue Stream
Note:
Revenue defined as net interest income plus non-interest income;
Excludes $225K gain on settlement of trust business and $2.7MM net gain on
securities ¹
Calculated as Q4 2010 trust revenue / Q1 2009 total revenue
Net Interest Margin
3.29%
3.33%
3.58%
3.88%
4.10%
3.00%
3.25%
3.50%
3.75%
4.00%
4.25%
4.50%
2006
2007
2008
2009
2010 |
 14
Diverse loan mix
No national lending
No sub-prime lending
Farmers’
practice is to lend
primarily within its market area
Less than 1% of loan portfolio is
participations purchased
Less than 2% of loan portfolio is
construction loans
Loan Portfolio Mix
(September 30, 2011)
Overview of Loan Portfolio
Note: Dollars in thousands |
 15
Excellent Asset Quality
Note:
Dollars
in
millions;
Asset
quality
ratios
exclude
troubled
debt
restructuring
9/30/2011
Nonaccrual loans
$10.6
Accruing loans past due 90 days or more
0.3
OREO
0.6
Total nonperforming assets (NPAs)
$11.5
Troubled Debt Restructuring (TDR)
$4.0
Loans 30-89 days delinquent
3.4
Gross portfolio loans
568.0
Loans held for sale (HFS)
0.0
Allowance for loan losses (ALL)
11.0
Total Assets
$1,086.4
NPLs & 90 days past due/Gross loans (excl. HFS)
1.92%
NPLs & 90 days past due/Gross loans (incl. HFS)
1.92%
NPAs/Total Assets
1.05%
TDR/Gross loans (excl. HFS)
0.70%
30-89 days delinquent/Gross loans (excl. HFS)
0.60%
ALL/NPLs & 90 days past due
100.92%
ALL/Gross loans (excl. HFS)
1.93% |
  Financial Data for the
Period Ended September 30, 2011 Condition and Performance Metrics
Valuation Metrics
LTM
Core
Price/
Core
Price/
Price/
TCE/
LTM
LTM
PTPP ³/
Loans/
Dep/
NPAs/
NPL/
Res./
Res./
Tan.
Dep.
LTM
LTM
Div.
TA
ROAA
NIM
ROAA
Dep.
Tot Dep
Assets
Loans
Loans
NPLs
Book
Prem.
PTPP ³/
EPS
Yield
(%)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
(x)
(%)
(x)
(x)
(%)
Peers
Midwest Banks ¹
7.12
0.49
3.57
1.40
81.7
86.3
2.62
3.06
2.05
72.8
0.82
(1.8)
3.9
11.4
1.16
National Banks ²
8.91
1.00
3.91
1.68
74.3
86.6
1.25
1.45
1.60
92.6
1.14
1.8
6.4
10.9
3.18
FMNB.OB
9.94
0.92
4.14
1.69
70.5
88.3
1.06
1.92
1.93
100.7
0.79
(3.2)
4.9
7.8
2.67
16
Relative to Comparable Midwest and National banks, Farmers is attractively
valued Farmers has an Attractive Valuation
Note: Peer data is the median value for the peer group; market data is as of
November 16, 2011; asset quality ratios exclude troubled debt restructurings
¹
Selected Midwest Banks with Assets $800 Million -
$2.0 Billion
²
Selected Capital & Credit Quality Banks with Assets $800 Million -
$2.0 Billion; No TARP; TCE / TA >= 7.0%; NPAs / Assets < 2.5% and Positive
LTM Net Income ³
Last 12 months pre-tax, pre-provision earnings
Source: SNL Financial |