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FMNB > SEC Filings for FMNB > Form 10-Q on 9-May-2013All Recent SEC Filings

Show all filings for FARMERS NATIONAL BANC CORP /OH/ | Request a Trial to NEW EDGAR Online Pro



Quarterly Report

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

Discussions in this report that are not statements of historical fact (including statements that include terms such as "will," "may," "should," "believe," "expect," "anticipate," "estimate," "project," intend," and "plan") are forward-looking statements that involve risks and uncertainties. Any forward-looking statement is not a guarantee of future performance and actual future results could differ materially from those contained in forward-looking information. Factors that could cause or contribute to such differences include, without limitation, risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission, including without limitation, the risk factors disclosed in Item 1A, "Risk Factors," in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

Many of these factors are beyond the Company's ability to control or predict, and readers are cautioned not to put undue reliance on those forward-looking statements. The following list, which is not intended to be an all-encompassing list of risks and uncertainties affecting the Company, summarizes several factors that could cause the Company's actual results to differ materially from those anticipated or expected in these forward-looking statements:

general economic conditions in market areas where we conduct business, which could materially impact credit quality trends;

business conditions in the banking industry;

the regulatory environment;

fluctuations in interest rates;

demand for loans in the market areas where we conduct business;

rapidly changing technology and evolving banking industry standards;

competitive factors, including increased competition with regional and national financial institutions;

new service and product offerings by competitors and price pressures; and other like items.

Other factors not currently anticipated may also materially and adversely affect the Company's results of operations, cash flows and financial position. There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in this report are reasonable, the reader should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. The Company does not undertake, and expressly disclaims, any obligation to update or alter any statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.


Net income for the three months ended March 31, 2013 was $2.0 million, compared to $2.5 million for the same three month period in 2012. On a per share basis, net income for the first quarter ended March 31, 2013 was $0.11 per diluted share, compared to $0.13 for the first quarter ended March 31, 2012. The tangible book value decreased to $6.10 per share at March 31, 2013, compared to $6.11 per share at December 31, 2012. Farmers' reported $1.14 billion in total assets at March 31, 2013 and December 31, 2012.

Net loans increased $6.0 million between December 31, 2012 and March 31, 2013. Most of the loan growth in the past three months has occurred in the commercial real estate and commercial and industrial loan portfolio. Net loans were reported at $585.0 million at March 31, 2013, which compares to $579.0 million at December 31, 2012. Deposits decreased from $919.0 million at December 31, 2012 to $915.9 million at March 31, 2013. At March 31, 2013, core deposits - savings and money market accounts, time deposits less than $100 thousand, demand deposits and interest bearing demand deposits - represent approximately 91% of total deposits.

Stockholders' equity totaled $120.6 million, or 10.6% of total assets, at March 31, 2013, a slight decrease of $200 thousand from $120.8 million at December 31, 2012. The decrease is mainly the result of net income, offset by the reduction in accumulated other comprehensive income during the past three months. Shareholders received a $0.03 per share cash dividend paid during the first quarter of 2013. Book value per share decreased $6.43 per share at December 31, 2012 to $6.42 per share at March 31, 2013.

Results of Operations

The following is a comparison of selected financial ratios and other results at
or for the three months ended March 31, 2013 and 2012:

                                                  At or for the Three Months
      (In Thousands, except Per Share Data)             Ended March 31,
                                                     2013              2012
      Total Assets                              $    1,143,099      $ 1,106,445
      Net Income                                $        2,005      $     2,520
      Basic and Diluted Earnings Per Share      $         0.11      $       .13
      Return on Average Assets (Annualized)               0.72 %           0.94 %
      Return on Average Equity (Annualized)               6.70 %           8.82 %
      Efficiency Ratio (tax equivalent basis)            72.57 %          68.40 %
      Equity to Asset Ratio                              10.55 %          10.43 %
      Tangible Common Equity Ratio *                     10.08 %           9.91 %
      Dividends to Net Income                            28.13 %          44.68 %
      Net Loans to Assets                                51.18 %          51.26 %
      Loans to Deposits                                  64.70 %          65.04 %

*The tangible common equity ratio is calculated by dividing total common stockholders' equity by total assets, after reducing both amounts by intangible assets. The tangible common equity ratio is not required by U.S.GAAP or by applicable bank regulatory requirements, but is a metric used by management to evaluate the adequacy of the Company's capital levels. Since there is no authoritative requirement to calculate the tangible common equity ratio, the Company's tangible common equity ratio is not necessarily comparable to similar capital measures disclosed or used by other companies in the financial services industry. Tangible common equity and tangible assets are non-U.S.GAAP financial measures and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with U.S.GAAP. With respect to the calculation of the actual unaudited tangible common equity ratio as of March 31, 2013 and 2012, reconciliations of tangible common equity to U.S.GAAP total common stockholders' equity and tangible assets to U.S.GAAP total assets are set forth below:

(In Thousands of Dollars)                           March 31,       December 31,       March 31,
                                                      2013              2012             2012
Reconciliation of Common Stockholders' Equity to
Tangible Common Equity
Stockholders' Equity                               $   120,576     $      120,792     $   115,404
Less Goodwill and other intangibles                      5,934              6,032           6,339

Tangible Common Equity                             $   114,642     $      114,760     $   109,065

(In Thousands of Dollars)                           March 31,       December 31,       March 31,
                                                      2013              2012             2012

Reconciliation of Total Assets to Tangible
Total Assets                                       $ 1,143,099     $    1,139,695     $ 1,106,445
Less Goodwill and other intangibles                      5,934              6,032           6,339

Tangible Assets                                    $ 1,137,165     $    1,133,663     $ 1,100,106

Net Interest Income. The following schedules detail the various components of net interest income for the periods indicated. All asset yields are calculated on a tax-equivalent basis where applicable. Security yields are based on amortized cost.

              Average Balance Sheets and Related Yields and Rates

                         (Dollar Amounts in Thousands)

                                                   Three Months Ended                             Three Months Ended
                                                     March 31, 2013                                 March 31, 2012
                                          AVERAGE                                        AVERAGE
                                          BALANCE        INTEREST       RATE (1)         BALANCE        INTEREST       RATE (1)

Loans (3) (5) (6)                       $   576,627      $   7,681           5.40 %    $   563,175      $   8,077           5.78 %
Taxable securities (4)                      360,971          1,908           2.14          312,909          2,106           2.71
Tax-exempt securities (4) (6)                81,706          1,107           5.49           74,061          1,084           5.89
Equity securities (2) (6)                     4,360             53           4.93            4,363             50           4.61
Federal funds sold and other                 18,427             10           0.22           43,500             21           0.19

Total earning assets                      1,042,091         10,759           4.19          998,008         11,338           4.57


Cash and due from banks                      20,485                                         22,599
Premises and equipment                       18,331                                         16,790
Allowance for loan losses                    (7,546 )                                       (9,684 )
Unrealized gains (losses) on
securities                                   10,526                                         13,050
Other assets (3)                             44,204                                         42,705

Total assets                            $ 1,128,091                                    $ 1,083,468


Time deposits                           $   232,907      $     993           1.73 %    $   257,074      $   1,216           1.90 %
Savings deposits                            413,899            185           0.18          391,860            298           0.31
Demand deposits                             125,147              9           0.03          112,886             11           0.04
Short term borrowings                        81,256             12           0.06           90,281             42           0.19
Long term borrowings                         18,557             99           2.16           10,690             98           3.69

Total interest-bearing liabilities          871,766          1,298           0.60          862,791          1,665           0.78

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