Attached files
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| 8-K - FORM 8-K - FARMERS NATIONAL BANC CORP /OH/ | d676838d8k.htm |
Exhibit 99.1
| 1 Investor Presentation December 31, 2013 |
| 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, 2012 and Quarterly Report on Form 10-Q for the period ended September 30, 2013 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 Overview NASDAQ: FMNB Headquarters: Canfield, Ohio Stock Price: (12-31-13) $6.55 Market Cap: $122.98 million Dividend (yield): $0.12 (1.83%) 2013 Year-end Highlights 2013 Year-end Highlights Revenue $49.0 million Net Income $7.8 million Net Income per Diluted Share $0.41 Book Value $6.02 Total Assets $1.14 billion Total Deposits $915.2 million Cash Dividends $2.2 million |
| 4 Who We Are Leading community bank in Ohio with deposit market share in the top ten in the core counties in which we operate Founded over 126 years ago 18 branches and 18 ATMs Sound franchise with many opportunities for growth Profitable throughout cycle and growing tangible book value per share Diversified and growing revenue streams Compelling valuation: 1.20x of tangible book value 12.4x LTM pre-tax pre-provision earnings 16.0x LTM EPS 1.83% dividend yield |
| 5 Note: Deposit data as of June 30, 2012 Source: SNL * Began Operations in Stark County in 2010 Opportunity for growth with approximately 10.60% 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 Stark Top 10 Stark Top 10 Stark Top 10 Stark Top 10 Stark Top 10 2013 Rank Company Branches Dep. ($000) Market Share 1 Firstmerit Bank, NA 17 1,498,826 26.28 2 The Huntington National Bank 27 1,407,877 24.69 3 JP Morgan Chase Bank NA 13 714,458 12.53 4 RBS Citizens, NA 14 597,938 10.49 5 KeyBank NA 14 592,547 10.39 6 PNC Bank, NA 10 308,807 5.42 7 Consumers National Bank 7 158,722 2.78 8 Premier Bank & Trust, NA 2 136,036 2.39 9 Fifth Third Bank 5 77,251 1.35 17 Farmers National Bank of Canfield 1 5,831 0.10 Total for Institutions in the Market 128 5,702,735 100.00 Columbiana Top 10 Columbiana Top 10 Columbiana Top 10 Columbiana Top 10 Columbiana Top 10 2013 Rank Company Branches Dep. ($M) Market Share 1 Huntington National Bank 11 332,137 24.33 2 Home Savings and Loan Co. of Youngstown 7 300,436 22.01 3 Farmers National Bank of Canfield 4 139,339 10.21 4 PNC Bank NA 6 131,503 9.63 5 JPMorgan Chase Bank NA 3 110,192 8.07 6 Consumers National Bank 3 96,574 7.07 7 1st National Community Bank 4 95,650 7.01 8 CFBank 2 67,433 4.94 9 RBS Citizens NA 1 44,982 3.30 10 KeyBank NA 1 44,512 3.26 Total for Institutions in the Market 44 1,365,054 100.00 Mahoning Top 10 Mahoning Top 10 Mahoning Top 10 Mahoning Top 10 Mahoning Top 10 2013 Rank Company Branches Dep. ($M) Market Share 1 Huntington National Bank 21 1,277,106 29.63 2 Home Savings and Loan Co. of Youngstown 10 742,041 17.22 3 Farmers National Bank of Canfield 8 541,721 12.57 4 PNC Bank NA 9 523,107 12.14 5 First Place Bank 12 433,595 10.06 6 JPMorgan Chase Bank NA 7 380,824 8.84 7 First National Bank of Pennsylvania 5 203,826 4.73 8 RBS Citizens NA 3 92,181 2.14 9 KeyBank National Association 4 76,756 1.78 10 Cortland Savings and Banking Co. 2 37,406 0.87 Total for Institutions in the Market 82 4,309,664 100.00 Trumbull Top 10 Trumbull Top 10 Trumbull Top 10 Trumbull Top 10 Trumbull Top 10 2013 Rank Company Branches Dep. ($M) Market Share 1 Huntington National Bank 16 582,383 20.71 2 First Place Bank 7 580,513 20.64 3 JPMorgan Chase Bank NA 10 394,104 14.01 4 Cortland Savings and Banking Co. 7 344,040 12.23 5 PNC Bank NA 7 261,382 9.29 6 Farmers National Bank of Canfield 7 218,783 7.78 7 Home Savings and Loan Co. of Youngstown 4 129,590 4.61 8 First National Bank of Pennsylvania 3 86,765 3.09 9 Home FS&LA of Niles 1 63,073 2.24 10 The Middlefield Banking Company 1 48,388 1.72 Total for Institutions in the Market 68 2,812,155 100.00 |
| 6 Rated one of the Top 200 Community Banks in 2013, by American Banker Magazine for the second consecutive year 5-Star, Superior Rating from the Bauer Financial Group - the highest rating awarded by the financial group. Listed in Top 100 Best Banks, $1B - $5B, as scored by Bank Director Magazine , July 2013 97% Customer Satisfaction Rate, according to an Independent Research Study Farmers' Texas Ratio, 8.0%, remains lower than similarly-sized banks and Mid-west banks Growing Franchise |
| 7 Increasing Shareholder Value Stable Dividend Policy Always paid a quarterly cash dividend Current yield 1.83% Dividend payout in 2013 was 28.9% of net income Stock Up 82% Since '08 |
| 8 Headquartered in Mahoning Valley Compelling Demographics Approximately 75 - 100 miles from Cleveland, Pittsburgh & Erie 6.8 million people 18 Fortune 500 company world headquarters 95 colleges and universities campus locations 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. Land acquisition, construction and labor costs are significantly below national averages. |
| 9 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 & 2012 Industrial Growth Returning to The Valley Steelmaker Vallourec's $650 million expansion - 350 jobs created. ($57 million Finishing Plant) Exterran $13 million plant - Approximately 100 jobs will be created once production begins. General Motors announced in August 2012 a three-year commitment and an investment of more than $200 million to manufacture the all-new Chevrolet Cruze at the Lordstown Assembly Plant, retaining about 4,500 jobs in the Valley Growing Interest in Utica Gas Formation Development Since 2011, 832 horizontal well permits have been issued and 466 wells drilled in eastern Ohio's Utica shale. 122 of those wells are now in production, ODNR reports. Pennant Midstream, LLC constructing $300 million pipeline and natural gas processing plant in eastern Mahoning County. The Hickory Bend Pipeline System and associated cryogenic gas- processing plant is expected to be operational by the end of 2013. Ohio's Natural Gas/Crude Oil Exploration Production Industry and the Utica Gas Formation impact: Jobs (204,000 created or supported by 2015) Income (Economic Output will increase by over $22 billion by 2015) Regional Growth Opportunities |
| Farmers' Strategy for Growth Growth of Non Interest Income Through Wealth Management and Bank Fee Revenues Grow Loan Production Volume Technology and the Automated Virtual Bank Expense Control Company Culture Enterprise Risk Management Acquisition or "Lift Outs" Shareholder Management |
| 11 Farmers' Family Billboard |
| Established and experienced management team with over 206 years of combined experience, 99 of which has been with Farmers. Experienced Management Team |
| 13 Focus for Growth Continued organic growth in current markets Growth opportunities in new markets with Private Banking, Trust and Investments Targeted acquisitions include fee-based business and banks Target Metrics for Acquisition Accretive to earnings near term (excluding one-time charges) Manageable initial tangible book value dilution recoverable near term Growth of fee revenue to 30+% of total revenue A compelling IRR in low double digits Must enhance shareholder value Must sustain our culture Not materially change our investment merits Sustain our TCE and regulatory ratios Growth Focus and Target Metrics |
| 14 Butler Wick Trust Company Acquisition Acquired for cash on March 31, 2009 Only locally owned trust company in the Mahoning Valley Rebranded to Farmers Trust Company Assets increased approximately 76% since acquisition Contributed $5.6 million to non-interest income in 2013 National Associates, Inc. Acquisition Acquired on July 1, 2013 from owner for cash and stock A leading independent consultant to retirement plans. Offers actuarial, plan design, compliance and administrative services Located in Cleveland, Ohio 200 retirement plans with assets under administration of $500 million Acquisitions to Enhance Fee-Based Revenue |
| 15 High net interest margin which has exceeded Midwest banks1 peer average 3.53% 4Q 2013 3.58% Year-end 2013 Strong record of profitability 124 consecutive quarters of profitability Average ROAA and ROAE from 2009 through 2013 of 0.79% and 8.32%, respectively ROAA impacted by investment into new markets and services such as private client services Continue to invest in operations to support ongoing growth, yet maintain a strong balance sheet Historical Operating Results 1 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 Source: SNL Financial |
| 16 Net income per diluted share for three months ended December 31, 2013 was $0.12, compared to $0.09 for the third quarter, 2013 Efficiency ratio for the fourth quarter improved to 67.96%, compared to 72.48% for the same quarter in 2012 Loans increased 7.5% since December 31, 2012 Non-performing assets to total assets remain at low levels, 0.81% at December 31, 2013 Announces expansion to Rocky River, Ohio Continued Strong Results - Overview of Q4 2013 |
| 17 Growing and Diverse Revenue Stream Note: Revenue defined as net interest income plus non-interest income. Excludes $860m net gain on securities |
| 18 Diverse loan mix No national lending No sub-prime lending Farmers' practice is to lend primarily within its market area Less than 2% of loan portfolio is participations purchased Less than 3% of loan portfolio is construction loans Loan Portfolio Mix - December 31, 2013 Overview of Loan Portfolio Note: Dollars in thousands |
| 19 Excellent Asset Quality Note: Dollars in millions; Asset quality ratios exclude troubled debt restructuring 12/31/2013 Nonaccrual loans $8.4 Accruing loans past due 90 days or more 0.7 OREO 0.2 Total nonperforming assets (NPAs) $9.3 Troubled Debt Restructuring (TDR) $8.3 Loans 30-89 days delinquent 3.6 Gross portfolio loans 630.7 Loans held for sale (HFS) 0.2 Allowance for loan losses (ALL) 7.6 Total Assets $1,137.3 NPLs & 90 days past due/Gross loans (excl. HFS) 1.44% NPAs/Total Assets 0.81% TDR/Gross loans (excl. HFS) 0.73% 30-89 days delinquent/Gross loans (excl. HFS) 0.59% ALL/NPLs & 90 days past due 83.25% ALL/Gross loans (excl. HFS) 1.20% Nonaccrual Loans by Type |
| Relative to similar sized Midwest banks and similar quality Nationwide banks, FMNB is undervalued FMNB Comparative Valuation Note: Peer data is the median value for the peer group; market data as of January 31, 2014; All asset quality ratios exclude troubled debt restructurings 1 Selected Midwest Banks with Assets $1.0 Billion - $2.0 Billion and traded on the NASDAQ, NYSE and NYSE AMEX exchanges. Includes: BKYF, FFKT, HBNC, MOFG, MCBC, WTBA, MBWM, MFSF, FBIZ, ATLO, LNBB, MBTF, FCZA, HWBK, PBIB 2 Selected Capital & Credit Quality Banks with Assets $1.0 Billion - $2.0 Billion; No TARP; TCE / TA >= 8.5%; NPAs / Assets < 2.0%, Positive LTM ROAA and traded on the NASDAQ, NYSE and NYSE AMEX exchanges. Includes: MOFG, NRIM, PGC, AMNB, BHB, HTBK, HEOP, CACB, SUBK, ACNB, PSTB, BBNK, YDKN, GBNK, IBTX, FUBC, BKYF, OLBK, NKSH, CUNB, FBIZ, CZNC, PCBK, TCFC, MBRG, PLMT, PWOD, MBWM, MNRK, WTBA, ATLO, BMRC, OKSB, PPBI, and HFWA 3 Last 12 months pre-tax, pre-provision earnings ^ Texas Ratio calculated as: NPAs (Excluding troubled debt restructurings) & 90+ DPD / Tangible Common Equity + Reserves Source: SNL Financial |
| 21 Supplemental Information |
| 22 GAAP to Non-GAPP Reconciliation Reconciliation of Common Stockholders' Equity to Tangible Common Equity Reconciliation of Common Stockholders' Equity to Tangible Common Equity Reconciliation of Common Stockholders' Equity to Tangible Common Equity Reconciliation of Common Stockholders' Equity to Tangible Common Equity Reconciliation of Common Stockholders' Equity to Tangible Common Equity Reconciliation of Common Stockholders' Equity to Tangible Common Equity Reconciliation of Common Stockholders' Equity to Tangible Common Equity Dec 31, Dec 31, Sept 30, Sept 30, June 30, June 30, March 31, March 31, Dec 31, 2013 2013 2013 2013 2013 2013 2013 2013 2012 Stockholders' Equity $113,007 $113,007 $112,524 $112,524 $114,316 $114,316 $120,576 $120,576 $120,792 Less Goodwill and other intangibles 10,343 10,343 10,546 10,546 5,836 5,836 5,934 5,934 6,032 Tangible Common Equity $102,664 $102,664 $101,978 $101,978 $108,480 $108,480 $114,642 $114,642 $114,760 Reconciliation of Total Assets to Tangible Assets Reconciliation of Total Assets to Tangible Assets Reconciliation of Total Assets to Tangible Assets Dec 31, Dec 31, Sept 30, Sept 30, June 30, June 30, March 31, March 31, Dec 31, 2013 2013 2013 2013 2013 2013 2013 2013 2012 Total Assets $1,137,326 $1,137,326 $1,148,119 $1,148,119 $1,123,489 $1,123,489 $1,143,099 $1,143,099 $1,139,695 Less Goodwill and other intangibles 10,343 10,343 10,546 10,546 5,836 5,836 5,934 5,934 6,032 Tangible Assets $1,126,983 $1,126,983 $1,137,573 $1,137,573 $1,117,653 $1,117,653 $1,137,165 $1,137,165 $1,133,663 Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Twelve Months Ended For the Twelve Months Ended Dec 31, Sept 30, Sept 30, June 30, June 30, March 31, March 31, Dec 31, Dec 31, Dec 31, Dec 31, 2013 2013 2013 2013 2013 2013 2013 2012 2012 2013 2012 Income before income taxes $2,936 $1,755 $1,755 $2,272 $2,272 $2,500 $2,500 $3,462 $3,462 $9,463 $12,987 Provision for loan losses 525 340 340 170 170 255 255 0 0 1,290 725 Pre-tax, pre-provision income $3,461 $2,095 $2,095 $2,442 $2,442 $2,755 $2,755 $3,462 $3,462 $10,753 $13,712 |
| 23 Consolidated Statements of Income Consolidated Statements of Income For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Twelve Months Ended For the Twelve Months Ended For the Twelve Months Ended Dec 31, Sept 30, June 30, March 31, Dec 31, Dec 31, Dec 31, Percent 2013 2013 2013 2013 2012 2013 2012 Change Total interest income $10,298 $10,122 $10,273 $10,266 $10,691 $40,959 $43,110 -5.0% Total interest expense 1,257 1,274 1,234 1,298 1,435 5,063 6,212 -18.5% Net interest income 9,041 8,848 9,039 8,968 9,256 35,896 36,898 -2.7% Provision for loan losses 525 340 170 255 0 1,290 725 77.9% Other income 3,641 4,173 3,225 2,875 3,671 13,914 12,578 10.6% Other expense 9,221 10,926 9,822 9,088 9,465 39,057 35,764 9.2% Income before income taxes 2,936 1,755 2,272 2,500 3,462 9,463 12,987 -27.1% Income taxes 641 143 404 495 825 1,683 3,055 -44.9% Net income $2,295 $1,612 $1,868 $2,005 $2,637 $7,780 $9,932 -21.7% |
| 24 Consolidated Statements of Financial Condition Consolidated Statements of Financial Condition Consolidated Statements of Financial Condition Dec 31, Sept 30, June 30, March 31, Dec 31, 2013 2013 2013 2013 2012 Assets Cash and cash equivalents $27,513 $40,303 $26,587 $57,312 $37,759 Securities available for sale 422,985 438,127 443,833 439,540 464,088 Loans held for sale 158 1,016 4,612 4,330 3,624 Loans 630,684 611,349 596,838 592,520 586,592 Less allowance for loan losses 7,568 7,369 7,590 7,508 7,629 Net Loans 623,116 603,980 589,248 585,012 578,963 Other assets 63,554 64,693 59,209 56,905 55,261 Total Assets $1,137,326 $1,148,119 $1,123,489 $1,143,099 $1,139,695 Liabilities and Stockholders' Equity Deposits $915,216 $903,410 $901,886 $915,855 $919,009 Other interest-bearing liabilities 101,439 118,322 101,589 101,659 90,309 Other liabilities 7,664 13,863 5,698 5,009 9,585 Total liabilities 1,024,319 1,035,595 1,009,173 1,022,523 1,018,903 Stockholders' Equity 113,007 112,524 114,316 120,576 120,792 Total Liabilities and Stockholders' Equity $1,137,326 $1,148,119 $1,123,489 $1,143,099 $1,139,695 |