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8-K - 8-K - FARMERS NATIONAL BANC CORP /OH/d915052d8k.htm
EX-99.2 - EX-99.2 - FARMERS NATIONAL BANC CORP /OH/d915052dex992.htm

Exhibit 99.1

April 22, 2015

Press Release

 

Source: Farmers National Banc Corp.
Kevin J. Helmick, President and CEO
20 South Broad Street P.O. Box 555
Canfield, OH 44406
330.533.3341
Email: exec@farmersbankgroup.com

FARMERS NATIONAL BANC CORP. ANNOUNCES

2015 FIRST QUARTER FINANCIAL RESULTS

 

    129 consecutive quarters of profitability

 

    Net income for quarter ended March 31, 2015 was $2.2 million compared to $2.1 million for most recent quarter

 

    Efficiency ratio improved to 70.7%, compared to 71.2% for most recent quarter

 

    Noninterest income increased 17.6% compared to same quarter in 2014

 

    Loans increased 7.6% since March 31, 2014

 

    Non-performing assets to total assets remain at low levels, 0.71% at March 31, 2015

CANFIELD, Ohio (April 22, 2015) – Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months ended March 31, 2015.

Net income for the three months ended March 31, 2015 was $2.2 million, or $0.12 per diluted share, which compares to $2.2 million, or $0.12 per diluted share for the first quarter ended March 31, 2014. In comparing the first quarter’s results to the most recent previous quarter, net income of $2.2 million increased 3% compared to $2.1 million for the quarter ended December 31, 2014.

Kevin J. Helmick, President and CEO, stated, “We are pleased with our improvement in net income for the quarter ended March 31, 2015. The increase in earnings is a result of the growth of our loan portfolio, the continued improvement in our level of noninterest income and stable asset quality. We have also experienced an increase in our net interest margin, mainly as a result of lower funding costs.”

2015 First Quarter Financial Highlights

 

    Loan growth

Total loans were $673.8 million at March 31, 2015, compared to $626.2 million at March 31, 2014. This represents an increase of 7.6%. 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, commercial and industrial and residential real estate loan portfolios. Loans comprised 62.5% of the Bank’s average earning assets in 2015, an improvement compared to 58.2% in 2014. This improvement has resulted in a 2.8% increase in tax equated loan income from the first quarter of 2014 to the same quarter in 2015.

 

    Loan quality

Non-performing assets to total assets remain at a safe level, currently at 0.71%. Early stage delinquencies also continue to remain at low levels, at $4.3 million or 0.64% of total loans at March 31, 2015. The allowance to non-performing loans ratio improved from 86.97% at March 31, 2014 to 97.28% at March 31, 2015.

 

    Net interest margin

The net interest margin for the quarter ended March 31, 2015 was 3.64%, an 8 basis points increase from the quarter ended March 31, 2014. In comparing the first quarter of 2015 to the same quarter in 2014, asset yields decreased 1 basis point, while the cost of interest-bearing liabilities decreased 7 basis points.

 

    Noninterest income

Noninterest income increased 17.6% to $4.0 million for the quarter ended March 31, 2015 compared to $3.4 million in 2014. Trust fees increased $150 thousand or 10% and retirement plan consulting fees also increased $140 thousand or 38.5% in the current year’s quarter compared to the same quarter in 2014. Investment commissions also increased $104 thousand or 54% in comparing the same two quarters.


2015 Outlook

Mr. Helmick added, “We are excited about our recently announced merger with National Bancshares Corporation. We believe that the combination of our Company with National Bancshares, a strong community bank headquartered in Orrville, Ohio, will create a top-performing Midwest community bank that has the scale, product depth and efficiencies to compete effectively and deliver best-in-class service to our combined customers, while creating long-term value for our shareholders. This transaction is an important step in the long-term strategy to expand our footprint and enhance profitability.”

Important Additional Information About the Merger.

In connection with the proposed merger, Farmers has filed with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that includes 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 FINAL EFFECTIVE REGISTRATION STATEMENT ON FORM S-4, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT FARMERS, NATIONAL BANCSHARES, THE PROPOSED 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 shareholders of Farmers and National Bancshares 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 to be included in the Registration Statement on Form S-4 and other relevant materials 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.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale is unlawful before registration or qualification of the securities under the securities laws of the jurisdiction. No offer of securities shall be made except by means of a prospectus satisfying the requirements of Section 10 of the Securities Act.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with more than $1.1 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 19 banking locations in Mahoning, Trumbull, Columbiana, Stark and Cuyahoga Counties in Ohio, Farmers Trust Company, which operates two trust offices and offers services in the same geographic markets and National Associates, Inc. Farmers National Insurance, LLC, a wholly-owned subsidiary of The Farmers National Bank of Canfield, offers a variety of insurance products.

Non-GAAP Disclosure

This press release includes disclosures of Farmers tangible common equity ratio and pre-tax, pre-provision income, 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. 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, 2014, which has been filed with the Securities and Exchange Commission and is available on Farmers’ website (www.farmersbankgroup.com) and on the Securities and Exchange Commission’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  
     March 31,
2015
    Dec. 31,
2014
    Sept. 30,
2014
    June 30,
2014
    March 31,
2014
 

Total interest income

   $ 9,999      $ 10,321      $ 10,413      $ 10,118      $ 10,063   

Total interest expense

     1,007        1,078        1,128        1,166        1,207   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

  8,992      9,243      9,285      8,952      8,856   

Provision for loan losses

  450      825      425      300      330   

Other income

  4,037      4,193      3,880      3,797      3,433   

Other expense

  9,751      9,867      9,776      9,378      9,141   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

  2,828      2,744      2,964      3,071      2,818   

Income taxes

  617      597      688      720      627   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

$ 2,211    $ 2,147    $ 2,276    $ 2,351    $ 2,191   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average shares outstanding

  18,409      18,436      18,706      18,781      18,778   

Pre-tax pre-provision income

$ 3,278    $ 3,569    $ 3,389    $ 3,371    $ 3,148   

Basic and diluted earnings per share

  0.12      0.12      0.12      0.13      0.12   

Cash dividends

  552      552      559      563      563   

Cash dividends per share

  0.03      0.03      0.03      0.03      0.03   

Performance Ratios

Net Interest Margin (Annualized)

  3.64   3.63   3.58   3.54   3.56

Efficiency Ratio (Tax equivalent basis)

  70.71   71.20   70.17   69.68   69.87

Return on Average Assets (Annualized)

  0.79   0.75   0.79   0.83   0.78

Return on Average Equity (Annualized)

  7.14   6.91   7.37   7.85   7.65

Dividends to Net Income

  24.97   25.71   24.56   23.95   25.70
Consolidated Statements of Financial Condition
     March 31,
2015
    Dec. 31,
2014
    Sept. 30,
2014
    June 30,
2014
    March 31,
2014
 

Assets

          

Cash and cash equivalents

   $ 26,929      $ 27,428      $ 28,294      $ 28,070      $ 29,333   

Securities available for sale

     369,919        389,829        404,895        409,285        427,625   

Loans held for sale

     146        511        895        275        1,026   

Loans

     673,784        663,852        646,981        637,774        626,186   

Less allowance for loan losses

     7,723        7,632        7,333        7,356        7,387   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Loans

  666,061      656,220      639,648      630,418      618,799   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other assets

  70,596      62,979      66,007      65,238      64,217   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

$ 1,133,651    $ 1,136,967    $ 1,139,739    $ 1,133,286    $ 1,141,000   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Liabilities and Stockholders’ Equity

Deposits

$ 909,408    $ 915,703    $ 913,000    $ 907,443    $ 923,033   

Other interest-bearing liabilities

  80,338      87,517      90,649      93,807      92,815   

Other liabilities

  17,134      10,187      14,689      11,016      7,829   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

  1,006,328      1,013,407      1,018,338      1,012,266      1,023,677   

Stockholders’ Equity

  126,771      123,560      121,401      121,020      117,323   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

$ 1,133,651    $ 1,136,967    $ 1,139,739    $ 1,133,286    $ 1,141,000   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Period-end shares outstanding

  18,409      18,409      18,559      18,781      18,781   

Book value per share

$ 6.89    $ 6.71    $ 6.54    $ 6.44    $ 6.25   

Tangible book value per share

  6.42      6.23      6.02      5.91      5.71   

Capital and Liquidity

Tier 1 Common Capital Ratio (a)

  14.26   N/A      N/A      N/A      N/A   

Total Capital to Risk Weighted Assets (a)

  15.22   16.48   16.54   16.60   16.51

Tier 1 Capital to Risk Weighted Assets (a)

  14.26   15.43   15.52   15.57   15.47

Tier 1 Capital to Average Assets (a)

  10.26   10.03   9.89   9.87   9.73

Equity to Asset Ratio

  11.18   10.87   10.65   10.68   10.28

Tangible Common Equity Ratio

  10.50   10.17   9.88   9.89   9.48

Net Loans to Assets

  58.75   57.72   56.12   55.63   54.23

Loans to Deposits

  74.09   72.50   70.86   70.28   67.84

Asset Quality

Non-performing loans

$ 7,939    $ 8,481    $ 7,219    $ 8,140    $ 8,494   

Other Real Estate Owned

  144      148      381      352      174   

Non-performing assets

  8,083      8,629      7,600      8,492      8,668   

Loans 30 - 89 days delinquent

  4,344      5,426      4,938      3,460      2,473   

Charged-off loans

  618      891      756      650      836   

Recoveries

  259      365      308      319      325   

Net Charge-offs

  359      526      448      331      511   

Annualized Net Charge-offs to Average Net Loans Outstanding

  0.22   0.33   0.28   0.21   0.34

Allowance for Loan Losses to Total Loans

  1.15   1.15   1.13   1.15   1.18

Non-performing Loans to Total Loans

  1.18   1.28   1.12   1.28   1.36

Allowance to Non-performing Loans

  97.28   89.99   101.58   90.37   86.97

Non-performing Assets to Total Assets

  0.71   0.76   0.67   0.75   0.76

 

(a) March 31, 2015 ratio is estimated

Reconciliation of Common Stockholders’ Equity to Tangible Common Equity

 

     March 31,      Dec. 31,      Sept. 30,      June 30,      March 31,  
     2015      2014      2014      2014      2014  

Stockholders’ Equity

   $ 126,771       $ 123,560       $ 121,401       $ 121,020       $ 117,323   

Less Goodwill and other intangibles

     8,646         8,813         9,768         9,960         10,151   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible Common Equity

$ 118,125    $ 114,747    $ 111,633    $ 111,060    $ 107,172   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


Reconciliation of Total Assets to Tangible Assets

 

     March 31,      Dec. 31,      Sept. 30,      June 30,      March 31,  
     2015      2014      2014      2014      2014  

Total Assets

   $ 1,133,651       $ 1,136,967       $ 1,139,739       $ 1,133,286       $ 1,141,000   

Less Goodwill and other intangibles

     8,646         8,813         9,768         9,960         10,151   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible Assets

$ 1,125,005    $ 1,128,154    $ 1,129,971    $ 1,123,326    $ 1,130,849   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income   
     For the Three Months Ended  
     March 31,      Dec. 31,      Sept. 30,      June 30,      March 31,  
     2015      2014      2014      2014      2014  

Income before income taxes

   $ 2,828       $ 2,744       $ 2,964       $ 3,071       $ 2,818   

Provision for loan losses

     450         825         425         300         330   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Pre-tax, pre-provision income

$ 3,278    $ 3,569    $ 3,389    $ 3,371    $ 3,148