Attached files
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| 8-K - FORM 8-K - FARMERS NATIONAL BANC CORP /OH/ | d909190d8k.htm |
 Annual Meeting of Shareholders
Thursday, April 16, 2015
Exhibit 99.1 |
 |
 3
Additional Information for Stockholders
In
connection
with
the
proposed
merger
with
National
Bancshares,
Farmers
will
file
with
the
Securities
and
Exchange
Commission
("SEC") a Registration Statement on Form S-4 that will
include a joint proxy statement and a Farmers prospectus, as
well as other relevant documents concerning the proposed transaction.
SHAREHOLDERS OF FARMERS AND NATIONAL BANCSHARES AND OTHER INVESTORS ARE
URGED TO CAREFULLY READ THE PROXY STATEMENT/PROSPECTUS TO BE
INCLUDED IN THE REGISTRATION STATEMENT
ON
FORM
S-4,
WHICH
FARMERS
WILL
FILE
WITH
THE
SEC
IN
CONNECTION
WITH
THE
PROPOSED MERGER, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT
FARMERS, NATIONAL BANCSHARES, THE MERGER, THE PERSONS SOLICITING
PROXIES WITH RESPECT TO THE PROPOSED MERGER AND THEIR INTERESTS
IN THE PROPOSED MERGER AND RELATED MATTERS. The
respective
directors
and
executive
officers
of
Farmers
and
National
Bancshares
and
other
persons
may
be
deemed
to
be participants in the solicitation of proxies from National Bancshares
and Farmers shareholders with respect to the proposed merger.
Information regarding the directors and executive officers of Farmers is available in its proxy statement
filed with the
SEC
on
March 13, 2015. Information regarding directors and executive officers
of National Bancshares is available on its website at
http://www.discoverfirstnational.com/. Other information regarding the participants in the
solicitation and a description of their direct and indirect interests,
by security holdings or otherwise, will
be
contained
in
the
proxy
statement/prospectus
and
other
relevant
materials
to
be
filed
with
the
SEC
when
they
become available.
Investors and security holders will be able to obtain free copies of
the registration statement (when available) and other
documents
filed
with
the
SEC
by
Farmers
through
the
website
maintained
by
the
SEC
at
http://www.sec.gov.
Copies
of
the documents filed with the
SEC
by Farmers will be available free of charge on Farmers' website at
https://www.farmersbankgroup.com. |
 Kevin J. Helmick
President & Chief Executive Officer |
 5
Introduction
$842
$970
$1,031
$1,035
$1,118
$1,142
$1,141
2008
2009
2010
2011
2012
2013
2014
Total average assets up 36% since 2008
History of Acquisition
and
Business Development
–
Contributed $6.2 million to non-
interest income in 2014
–
200 retirement plans with assets
under administration of $648
million
Farmers has become a leading, diversified financial institution with
a history of stable growth and profitability
•
2009 acquired the Butler Wick Trust
Company
•
2010 created Farmers National
Insurance
•
2012 rolled out Private Client Services
•
2013 acquired National Associates |
 6
Headquartered in Mahoning Valley
Compelling Demographics
•
Approximately 75 -
100 miles from
Cleveland, Pittsburgh & Erie
•
6.8 million people within 100 mile radius
•
17 Fortune 500 companies 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 |
 7
Commitment to Independence
•
Acquisitive strategies for past five years
•
Four pillars
–
Shareholders
o
2014 strategic initiative
o
Increased communication plan
–
Customers
o
Small business support
o
45% of small business
lending
comes from community banks*
–
Associates
o
331 associates
o
Top 100 employer in the region
–
Community
o
2014 annual giving: $191,059
*Source:
FDIC
Quarterly
Banking
Profile
-
Second
Quarter
2014
Education/Higher
Education
23%
Social Services
24%
Health &
Wellness
22%
Civic
22%
Arts
6%
Community
Athletics
2%
Religious
1% |
 Farmers National Banc Corp.
National Bancshares Corporation
Proposed Merger |
 Creates Prominent NE Ohio Franchise
9
(1)
Community Banks defined as those with assets less than $20.0
billion. Northeast Ohio includes area codes 216, 330 and 440
(2)
Based on FMNB’s stock price of $7.66 on January 28, 2015.
Source: SNL Financial
FMNB Branches
NBOH Branches
Pro Forma Highlights
Branches
33
Assets
$1.7 Billion
Loans
$1.1 Billion
Deposits
$1.3 Billion
Market Cap
$196
Million
2
•
Creates the third largest community bank
1
by
asset size headquartered in Northeastern
Ohio
•
Complementary business lines & compelling
cultural fit
–
Combines NBOH’s strong loan growth
with Farmers’
wealth management
resources and strong capital base
–
Highly compatible cultures with similar
strategies, customer focus and strong
service and community orientation
•
Enhanced board of directors and
management team bringing strengths and
best practices from both sides
•
Catalyst for additional growth opportunities
Strategic Rationale |
 Transaction Overview
10
•
Each shareholder of NBOH will elect to receive $32.15 per share
in cash or 4.034 shares of FMNB, subject to 80% of the shares
being exchanged for stock and 20% for cash
Structure/Consideration
•
$74.0 million based on FMNB’s 20-day volume weighted
average price of $7.97 as of January 26, 2015
•
Deal value/tangible book value of 155%
1
•
Deal value/ LTM Earnings of 12.5x
1
•
Core deposit premium of 6.8%
1,2
Purchase Price
•
FMNB will add two NBOH directors to its Board of Directors:
James R. Smail
& Howard J. Wenger
•
Mark Witmer to join FMNB as Senior Executive Vice President,
Chief Community Banking Officer
Board/Management
•
Customary regulatory approvals and shareholder approvals of
both FMNB and NBOH
•
Estimated close 1
st
half of 2015
Required Approvals/
Timing
(1)
Deal pricing metrics based on aggregate $74.0 million deal value and
NBOH 12/31/14 financials
(2)
Core deposit premium defined as aggregate deal value less NBOH’s
tangible equity divided by NBOH’s deposits less time deposits > $100k |
 •
Maintains community bank in Wayne County
•
Combined Company synergies
–
Wealth management
–
Agricultural lending
–
Mortgage lending/operations
•
Increases legal lending limit
•
Develops deeper comprehensive platform for banking
•
Maintains similar cultures
•
Creates greater liquidity for shareholders
11
First National Bank’s Rationale |
 •
High performing Northeastern Ohio
community bank with 2014 ROAA of 1.16%
•
Compounded annualized growth rate for
gross loans of 23% since Q1 2012
•
Net income compounded annualized growth
rate of 31% from 2011FY to 2014FY
12
National Bancshares Corporation
Overview
Gross Loans ($M)
ROAA
Net Income (000’s)
Source: SNL Financial and internal management reports
|
 •
Farmers will welcome NBOH Board members Jim Smail and Howard Wenger as
new FMNB Board Members to help provide leadership and guidance
in the Wayne County market
•
Mark Witmer, CEO of National Bancshares Corporation and First National
Bank, is a capable and respected leader and has agreed to join
Farmers as Senior Executive Vice President, Chief Community
Banking Officer •
Mark has assembled a successful and loyal management team with which
Farmers is pleased to partner
•
Since Mark joined as CEO in January 2012, NBOH has seen impressive
growth: •
We are pleased to offer continued employment to key management
personnel and virtually all of NBOH’s lenders, business
development and customer-facing personnel 13
Talented Management and Staff
NBOH Historical Performance
($M)
FYE 2011
FYE 2014
CAGR
Loans
$217
$403
23%
Deposits
$341
$418
7%
ROAA
0.66%
1.16%
-
ROAE
6.39%
11.92%
-
Net Income
$2.6
$5.9
31% |
 Favorable Financial Metrics
14
(1)
Tangible book value per share earnback period defined as number of
years for pro forma tangible book value per share to exceed projected standalone tangible book value per share (“crossover”)
Farmers expects the transaction to be accretive to
2016 earnings per share by over 20% assuming
fully phased in cost savings
Estimated internal rate of return in excess of 20%
Manageable level of tangible book value dilution
earned back in approximately 4 years using the
“crossover”
method of calculation
1
Estimated tangible common equity/tangible assets of
approximately 9% at close
NBOH shareholders will own approximately 28% of
the combined company enabling both sets of
shareholders to benefit from the synergies of the
merger |
 Merger Status
•
Definitive
agreement
–
January
27,
2015
•
S-4
–
filed
March
17,
2015
–
pending
SEC
review
•
Shareholder materials to be distributed
•
Special
meeting
–
T.B.D.
(mid-late
June
2015)
•
We need your support! |
 Carl D. Culp
Executive Vice President
Chief Financial Officer |
 Financial Overview
Strong capital position
–
10.2% tangible common equity ratio
Experienced senior management team
–
276 years of combined experience
–
113 with Farmers
Assets
$1.14 billion
Total loans
$663.9 million
Total deposits
$915.7 million |
 •
Stable net interest margin
–
Low cost core deposit funding
•
Strong record of profitability
–
128 consecutive quarters of profitability
–
Average ROAA and ROAE from 2009 through 2014 of 0.79% and 8.18%,
respectively
o
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
18
Historical Operating Results
3.53
3.56
3.54
3.58
3.63
2
2.5
3
3.5
4
2013 fq4
2014 fq1
2014 fq2
2014 fq3
2014 fq4
Farmers National Banc Corp. |
 19
% Increase
2014
2013
(Decrease)
Net income per share
$0.48
$0.41
17.07%
Noninterest income
$15,303
$13,914
9.98%
Noninterest expense
$38,162
$39,057
(2.29%)
Efficiency ratio
70.24%
74.82%
(6.12%)
Total loans
$663,852
$630,684
5.26%
Nonperforming assets to total assets
0.76%
0.81%
(6.17%)
Continued Strong Results –
2014 Overview |
 Total Return Performance
Farmers National Banc Corp.
NASDAQ Composite
NASDAQ Bank
SNL Microcap Bank Index
50
75
100
125
150
175
200
225
250
12/31/09
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14 |
 Odd Lot
Announced odd lot buyback program on July 29, 2014
Goal of the program to reduce servicing and
administrative costs associated with shareholders who
own 99 or fewer shares
155 shareholders elected to participate in the program for
a total of 6,568 shares purchased
–
Reducing the number of shareholders who own 99 or fewer
shares 10.59% |
 Repurchase Program
•
Farmers repurchased 365,800 shares of its common stock
at an average price of $7.74 for a total purchase of $2.8
million
•
Combination of the odd lot buyback and repurchase
programs reduced Farmers total common shares
outstanding 2% from December 31, 2013
•
Farmers remains committed to returning capital to
shareholders
–
Over the past three years Farmers has repurchased $4.5 million
of its common stock and distributed $7.8 million in dividends to
shareholders |
 23
Farmers –
2014 Business Highlights
Record year for wealth management
Leveraging technology
–
Virtual bank
–
Enhanced online and mobile banking
Branch and LPO expansion |
 24
The Health of Our Wealth
•
Wealth Management creates fee-based income
–
Fee income 2009: 14.5% of total gross income
o
Noninterest income excluding security gains
–
Fee
income
2014:
28.8%
of
total
gross
income
o
Noninterest income excluding security gains
–
Revenues increased to over $1 million in 2014 and have achieved a 25%
annual growth rate over the last seven years
–
Assets under management at December 31, 2014 were up 10% at $256
million and have increased at a 26% annual growth rate over the last
seven years
•
Farmers National Investments
–
Achieved
record
total
assets
exceeding
$1.1
billion
in
2014
year
end
–
Total revenue increased 9% during 2014
–
The Charitable Foundation Division distributed nearly $7 million
to area non-profit organizations
•
Farmers Trust Company |
 Virtual Bank
25 |
 Mobile Banking
26 |
 Fairlawn
Loan production office
Opened December 15, 2014
Staffing to include
–
Two mortgage officers
–
Two commercial bankers
–
Private Client Services relationship manager
–
Financial advisor |
 Alliance Branch
Opening June, 2015 |
 Alliance Branch |
 Questions and Answers |