10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the Quarterly period ended June 30, 2012             Commission file number 001-35296

FARMERS NATIONAL BANC CORP.

(Exact name of registrant as specified in its charter)

OHIO	34-1371693
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No)
20 South Broad Street Canfield, OH	44406
(Address of principal executive offices)	(Zip Code)

(330) 533-3341

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No   x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at July 31, 2012
Common Stock, No Par Value	18,821,741 shares

PART I — FINANCIAL INFORMATION
		Page Number
Item 1	Financial Statements (Unaudited)
	Included in Part I of this report:
	Farmers National Banc Corp. and Subsidiaries
	Consolidated Balance Sheets		3
	Consolidated Statements of Income		4
	Consolidated Statements of Comprehensive Income		5
	Consolidated Statements of Cash Flows		6
	Notes to Unaudited Consolidated Financial Statements		7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3	Quantitative and Qualitative Disclosures About Market Risk		38
Item 4	Controls and Procedures		39
PART II — OTHER INFORMATION
Item 1	Legal Proceedings		39
Item 1A	Risk Factors		39
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		40
Item 3	Defaults Upon Senior Securities		40
Item 4	Mine Safety Disclosures		40
Item 5	Other Information		40
Item 6	Exhibits		40
SIGNATURES			41
10-Q Certifications
Section 906 Certifications

CONSOLIDATED BALANCE SHEETS

FARMERS NATIONAL BANC CORP. AND SUBSIDIARIES

(Unaudited)

	(In Thousands of Dollars)
	June 30, 2012		December 31, 2011
ASSETS
Cash and due from banks	$	14,410	$	14,161
Federal funds sold and other		61,149		38,261
TOTAL CASH AND CASH EQUIVALENTS		75,559		52,422
Securities available for sale		420,147		400,029
Loans held for sale		3,718		677
Loans		572,453		571,806
Less allowance for loan losses		9,048		9,820
NET LOANS		563,405		561,986
Premises and equipment, net		17,616		16,461
Goodwill		3,709		3,709
Other intangibles		2,528		2,732
Bank owned life insurance		15,275		15,015
Other assets		14,876		14,840
TOTAL ASSETS	$	1,116,833	$	1,067,871
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	109,222	$	96,117
Interest-bearing		777,371		744,008
TOTAL DEPOSITS		886,593		840,125
Short-term borrowings		96,465		98,088
Long-term borrowings		10,583		11,263
Other liabilities		4,254		3,950
TOTAL LIABILITIES		997,895		953,426
Commitments and contingent liabilities
Stockholders' Equity:
Common Stock – Authorized 25,000,000 shares; issued 18,802,282 in 2012 and 18,757,437 in 2011		104,504		104,261
Retained earnings		5,250		2,133
Accumulated other comprehensive income		9,184		8,051
Treasury stock, at cost; 13 shares in 2012 and 2011		0		0
TOTAL STOCKHOLDERS’ EQUITY		118,938		114,445
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,116,833	$	1,067,871

See accompanying notes

3

CONSOLIDATED STATEMENTS OF INCOME

FARMERS NATIONAL BANC CORP. AND SUBSIDIARIES

(Unaudited)

	(In Thousands except Per Share Data)
	For the Three Months Ended				For the Six Months Ended
	June 30, 2012		June 30, 2011		June 30, 2012		June 30, 2011
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	7,987	$	8,354	$	15,983	$	16,820
Taxable securities		2,128		2,048		4,234		3,917
Tax exempt securities		706		729		1,419		1,468
Dividends		52		53		102		99
Federal funds sold and other interest income		30		10		51		19
TOTAL INTEREST AND DIVIDEND INCOME		10,903		11,194		21,789		22,323
INTEREST EXPENSE
Deposits		1,460		1,684		2,985		3,382
Short-term borrowings		25		104		67		201
Long-term borrowings		98		249		196		500
TOTAL INTEREST EXPENSE		1,583		2,037		3,248		4,083
NET INTEREST INCOME		9,320		9,157		18,541		18,240
Provision for loan losses		400		1,075		400		2,950
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		8,920		8,082		18,141		15,290
NONINTEREST INCOME
Service charges on deposit accounts		485		500		959		973
Bank owned life insurance income, including death benefits		125		119		260		278
Trust fees		1,365		1,365		2,783		2,703
Insurance agency commissions		25		28		61		92
Investment commissions		249		263		435		454
Net gains on sale of loans		138		0		203		0
Other operating income		538		419		952		811
TOTAL NONINTEREST INCOME		2,925		2,694		5,653		5,311
NONINTEREST EXPENSES
Salaries and employee benefits		4,939		4,483		9,668		8,671
Occupancy and equipment		1,080		922		2,051		1,838
State and local taxes		304		238		611		485
Professional fees		456		403		863		810
Advertising		210		211		458		356
FDIC insurance		183		244		369		592
Intangible amortization		103		112		205		255
Core processing charges		332		310		720		624
Other operating expenses		1,270		1,169		2,571		2,275
TOTAL NONINTEREST EXPENSES		8,877		8,092		17,516		15,906
INCOME BEFORE INCOME TAXES		2,968		2,684		6,278		4,695
INCOME TAXES		682		567		1,472		888
NET INCOME	$	2,286	$	2,117	$	4,806	$	3,807
NET INCOME PER SHARE – basic and diluted	$	0.12	$	0.11	$	0.26	$	0.21

See accompanying notes

4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FARMERS NATIONAL BANC CORP. AND SUBSIDIARIES

(Unaudited)

	(In Thousands except Per Share Data)
	For the Three Months Ended						For the Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
NET INCOME	$	2,286		$	2,117		$	4,806		$	3,807
Other comprehensive income:
Net unrealized holding gains (losses) on available for sale securities		2,599			5,797			1,743			5,863
Reclassification adjustment for (gains) losses realized in income		0			0			0			0
Net unrealized holding gains (losses)		2,599			5,797			1,743			5,863
Income tax effect		(910	)		(2,028	)		(610	)		(2,051	)
Net of tax comprehensive income (loss)		1,689			3,769			1,133			3,812
TOTAL COMPREHENSIVE INCOME	$	3,975		$	5,886		$	5,939		$	7,619

See accompanying notes

5

CONSOLIDATED STATEMENTS OF CASH FLOWS

FARMERS NATIONAL BANC CORP. AND SUBSIDIARIES

(Unaudited)

	(In Thousands of Dollars)
	Six Months Ended
	June 30, 2012			June 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	4,806		$	3,807
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses		400			2,950
Depreciation and amortization		848			829
Net amortization of securities		1,225			671
(Gain) loss on sale of other real estate owned		(91	)		29
Increase in bank owned life insurance		(260	)		(278	)
Origination of loans held for sale		(13,669	)		0
Proceeds from loans held for sale		10,831			0
Net gain on sale of loans		(203	)		0
Net change in other assets and liabilities		(564	)		(1,139	)
NET CASH FROM OPERATING ACTIVITIES		3,323			6,869
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and repayments of securities available for sale		35,245			21,120
Proceeds from sales of securities available for sale		0			3,361
Purchases of securities available for sale		(54,846	)		(63,277	)
Loan originations and payments, net		(3,106	)		19,845
Proceeds from sale of other real estate owned		1,551			141
Purchase of bank owned life insurance		0			(3,000	)
Proceeds from BOLI death benefit		0			108
Additions to premises and equipment		(1,748	)		(1,179	)
NET CASH FROM INVESTING ACTIVITIES		(22,904	)		(22,881	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits		46,468			9,013
Net change in short-term borrowings		(1,623	)		3,086
Repayment of Federal Home Loan Bank borrowings and other debt		(680	)		(1,161	)
Cash dividends paid		(1,690	)		(1,119	)
Proceeds from dividend reinvestment		243			255
Net proceeds from issuance of common shares		0			13,772
NET CASH FROM FINANCING ACTIVITIES		42,718			23,846
NET CHANGE IN CASH AND CASH EQUIVALENTS		23,137			7,834
Beginning cash and cash equivalents		52,422			37,305
Ending cash and cash equivalents	$	75,559		$	45,139
Supplemental cash flow information:
Interest paid	$	3,284		$	4,108
Income taxes paid	$	855		$	2,085
Supplemental noncash disclosures:
Transfer of loans to other real estate	$	1,287		$	437

See accompanying notes

6

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Principles of Consolidation:

Farmers National Banc Corp. (the “Company”) is a one-bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Company provides full banking services through its nationally chartered subsidiary, The Farmers National Bank of Canfield (the “Bank”). The Company provides trust services through its subsidiary, Farmers Trust Company (the “Trust”), and insurance services through the Bank’s subsidiary, Farmers National Insurance. The consolidated financial statements include the accounts of the Company, the Bank and its subsidiary and the Trust. All significant intercompany balances and transactions have been eliminated in the consolidation.

Basis of Presentation:

The unaudited condensed consolidated financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2011 Annual Report to Shareholders included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The interim consolidated financial statements include all adjustments (consisting of only normal recurring items) that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year. Certain items included in the prior period financial statements were reclassified to conform to the current period presentation. There was no effect on net income or total stockholders’ equity.

Estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The allowance for loan losses, deferred tax assets, carrying amount of goodwill and other intangibles and fair values of financial instruments are particularly subject to change.

Allowance for Loan Losses:

The Company changed its methodology for estimating the valuation allowance for probable incurred loan losses for the three and six month periods ended June 30, 2012. During the most recent period end, management computed the historical loss percentage based upon the loss history of the past 12 quarters. In previous years, management used a historical loss percentage based on the past 8 quarters. Using a 12 quarter loss history resulted in a larger historical loss ratio than what would have been computed using an 8 quarter history. The primary factor for the change was the lower historical loss percentage applied to homogeneous and pass rated loans due to recent lower levels of net charge-offs. This new 12 quarter history methodology resulted in a $400 thousand loan loss provision for the three and six month periods ended June 30, 2012.

Segments:

The Company provides a broad range of financial services to individuals and companies in northeastern Ohio. While the Company’s chief decision makers monitor the revenue streams of the various products and services, operations are managed and financial performance is primarily aggregated and reported in two lines of business, the Bank segment and the Trust segment.

7

Comprehensive Income:

Comprehensive income consists of net income and other comprehensive income or loss. Other comprehensive income or loss consists solely of the change in net unrealized gains and losses on securities available for sale, net of reclassification for gains or losses recognized in income.

Recent Accounting Pronouncements

In May 2011, the FASB issued an amendment to achieve common fair value measurement and disclosure requirements between U.S. and International accounting principles. Overall, the guidance is consistent with existing U.S. accounting principles; however, there are some amendments that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this guidance are effective for interim and annual reporting periods beginning after December 15, 2011. The effect of adopting this standard did not have a material effect on the Company’s operating results or financial condition, but the additional disclosures are included in the Fair Value footnote.

In June 2011, the FASB amended existing guidance and eliminated the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendment requires that comprehensive income be presented in either a single continuous statement or in two separate consecutive statements. The amendments in this guidance are effective as of the beginning of a fiscal reporting year, and interim periods within that year, that begins after December 15, 2011. Early adoption is permitted. The Company adopted this amendment for the year ended December 31, 2011, by presenting comprehensive income in new Consolidated Statements of Comprehensive Income. The new statements follow the Consolidated Statements of Income.

Securities:

The following table summarizes the amortized cost and fair value of the available-for-sale investment securities portfolio at June 30, 2012 and December 31, 2011 and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income:

(In Thousands of Dollars) June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities	$	56,492	$	1,932	$	0		$	58,424
State and political subdivisions		77,089		4,984		(12	)		82,061
Corporate bonds		1,236		11		0			1,247
Mortgage-backed securities - residential		237,306		6,380		(68	)		243,618
Collateralized mortgage obligations		33,531		635		0			34,166
Small business administration		224		1		(2	)		223
Equity securities		139		274		(5	)		408
Totals	$	406,017	$	14,217	$	(87	)	$	420,147
(In Thousands of Dollars) December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities	$	53,689	$	2,300	$	(1	)	$	55,988
State and political subdivisions		78,288		4,446		(44	)		82,690

8

Corporate bonds		758		11		0			769
Mortgage-backed securities - residential		217,644		5,384		(310	)		222,718
Collateralized mortgage obligations		36,806		416		0			37,222
Small business administration		318		1		(4	)		315
Equity securities		139		194		(6	)		327
Totals	$	387,642	$	12,752	$	(365	)	$	400,029

There were no security sales during the three and six months ended June 30, 2012. There was one security sale during the three and six month periods ended June 30, 2011. Proceeds from the sale were $3.4 million with no gain or loss recognized.

The amortized cost and fair value of the debt securities portfolio are shown by expected maturity. Expected maturities may differ from contractual maturities if issuers have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed, CMO and SBA securities are not due at a single maturity date and are shown separately.

	June 30, 2012
(In Thousands of Dollars)	Amortized Cost		Fair Value
Maturity
Within one year	$	21,086	$	21,450
One to five years		66,379		69,844
Five to ten years		34,287		36,455
Beyond ten years		13,065		13,983
Mortgage-backed, CMO and SBA securities		271,061		278,007
Total	$	405,878	$	419,739

The following table summarizes the investment securities with unrealized losses at June 30, 2012 and December 31, 2011, aggregated by major security type and length of time in a continuous unrealized loss position. Unrealized losses for U.S. Treasury and U.S. government sponsored entities and corporate bonds rounded to less than $1 thousand for the periods ended June 30, 2012 and December 31, 2011, respectively.

	Less Than 12 Months					12 Months or Longer					Total
(In Thousands of Dollars)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2012
Available-for-sale
U.S. Treasury and U.S. government sponsored entities	$	100	$	0		$	0	$	0		$	100	$	0
State and political subdivisions		0		0			321		(12	)		321		(12	)
Mortgage-backed securities – residential		15,322		(68	)		23		0			15,345		(68	)
Small business administration		0		0			114		(2	)		114		(2	)
Equity securities		0		0			8		(5	)		8		(5	)
Total	$	15,422	$	(68	)	$	466	$	(19	)	$	15,888	$	(87	)

9

	Less Than 12 Months					12 Months or Longer					Total
(In Thousands of Dollars)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2011
Available-for-sale
U.S. Treasury and U.S. government sponsored entities	$	249	$	(1	)	$	0	$	0		$	249	$	(1	)
State and political subdivisions		0		0			2,420		(44	)		2,420		(44	)
Corporate bonds		507		0			0		0			507		0
Mortgage-backed securities – residential		43,426		(203	)		9,652		(107	)		53,078		(310	)
Small business administration		0		0			233		(4	)		233		(4	)
Equity securities		0		0			7		(6	)		7		(6	)
Total	$	44,182	$	(204	)	$	12,312	$	(161	)	$	56,494	$	(365	)

Other-Than-Temporary-Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. Investment securities are generally evaluated for OTTI under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 320, Investments — Debt and Equity Securities. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, whether the market decline was affected by macroeconomic conditions and whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its agencies, or U.S. government sponsored enterprises, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. If an entity intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income or loss. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

As of June 30, 2012, the Company’s security portfolio consisted of 416 securities, 18 of which were in an unrealized loss position. The majority of the unrealized losses on the Company’s securities are related to its holdings of mortgage-backed securities as discussed below.

Unrealized losses on debt securities issued by U.S. government-sponsored entities have not been recognized into income because the securities are of high credit quality, management does not have the intent to sell these securities before their anticipated recovery and the decline in fair value is largely due to fluctuations in market interest rates and not credit quality. Consequently, the fair value of such debt securities is expected to recover as the securities approach their maturity date.

10

Unrealized losses on debt securities issued by state and political subdivisions have not been recognized into income. Generally these securities have maintained their investment grade ratings and management does not have the intent to sell these securities before their anticipated recovery. The fair value is expected to recover as the securities approach their maturity date.

All of the Company’s holdings of mortgage-backed securities-residential were issued by U.S. government-sponsored entities. Unrealized losses on mortgage-backed securities-residential have not been recognized into income. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities-residential and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be OTTI.

Unrealized losses on small business administration securities issued by U.S. government-sponsored entities have not been recognized into income because the securities are of high credit quality, management does not have the intent to sell these securities before their anticipated recovery and the decline in fair value is largely due to fluctuations in market interest rates and not credit quality. Consequently, the fair value of such debt securities is expected to recover as the securities approach their maturity date.

The Company’s equity securities are made up of local and regional bank holdings. The unrealized losses associated with these holdings have not been recognized into income. Generally these securities have suffered as most banking securities have suffered during the recent economic cycle. The fair value is expected to recover as the banking sector recovers. Management does not have the intent to sell these securities before their anticipated recovery.

Loans:

Loan balances were as follows:

(In Thousands of Dollars)	June 30, 2012			December 31, 2011
Commercial real estate
Owner occupied	$	94,908		$	100,710
Non-owner occupied		86,839			80,585
Other		22,472			17,394
Commercial		77,635			74,875
Residential real estate
1-4 family residential		139,305			145,743
Home equity lines of credit		22,178			21,943
Consumer
Indirect		114,483			115,681
Direct		11,373			11,596
Other		1,397			1,520
Subtotal		570,590			570,047
Net deferred loan costs		1,863			1,759
Allowance for loan losses		(9,048	)		(9,820	)
Net loans	$	563,405		$	561,986

11

The following tables present the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2012 and 2011:

Three Months Ended June 30, 2012

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	5,060		$	1,518		$	1,642		$	1,049		$	177		$	9,446
Provision for loan losses		(175	)		392			309			8			(134	)		400
Loans charged off		(283	)		(171	)		(363	)		(198	)		0			(1,015	)
Recoveries		24			13			19			161			0			217
Ending balance	$	4,626		$	1,752		$	1,607		$	1,020		$	43		$	9,048
Six Months Ended June 30, 2012
(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	4,880		$	1,529		$	1,802		$	972		$	637		$	9,820
Provision for loan losses		55			405			381			153			(594	)		400
Loans charged off		(368	)		(213	)		(608	)		(447	)		0			(1,636	)
Recoveries		59			31			32			342			0			464
Ending balance	$	4,626		$	1,752		$	1,607		$	1,020		$	43		$	9,048
Three Months Ended June 30, 2011
(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	6,020		$	1,878		$	1,261		$	842		$	136		$	10,137
Provision for loan losses		582			51			34			272			136			1,075
Loans charged off		(555	)		(55	)		(155	)		(270	)		—			(1,035	)
Recoveries		6			12			402			279			—			699
Ending balance	$	6,053		$	1,886		$	1,542		$	1,123		$	272		$	10,876
Six Months Ended June 30, 2011
(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	5,780		$	1,707		$	881		$	875		$	64		$	9,307
Provision for loan losses		905			334			1,154			349			208			2,950
Loans charged off		(640	)		(189	)		(896	)		(569	)		—			(2,294	)
Recoveries		8			34			403			468			—			913
Ending balance	$	6,053		$	1,886		$	1,542		$	1,123		$	272		$	10,876

12

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2012 and December 31, 2011. The recorded investment in loans includes the unpaid principal balance and unamortized loan origination fees and costs, but excludes accrued interest receivable, which is not considered to be material:

June 30, 2012
(In Thousands of Dollars) Allowance for loan losses:	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	556	$	448	$	0	$	0	$	0	$	1,004
Collectively evaluated for impairment		4,070		1,304		1,607		1,020		43		8,044
Total ending allowance balance	$	4,626	$	1,752	$	1,607	$	1,020	$	43	$	9,048
Loans:
Loans individually evaluated for impairment	$	8,956	$	1,495	$	725	$	0	$	0	$	11,176
Loans collectively evaluated for impairment		194,626		76,140		160,141		130,370		0		561,277
Total ending loans balance	$	203,582	$	77,635	$	160,866	$	130,370	$	0	$	572,453
December 31, 2011
(In Thousands of Dollars) Allowance for loan losses:	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	748	$	237	$	0	$	0	$	0	$	985
Collectively evaluated for impairment		4,132		1,292		1,802		972		637		8,835
Total ending allowance balance	$	4,880	$	1,529	$	1,802	$	972	$	637	$	9,820
Loans:
Loans individually evaluated for impairment	$	8,317	$	1,341	$	697	$	0	$	0	$	10,355
Loans collectively evaluated for impairment		189,724		73,534		166,334		131,859		0		561,451
Total ending loans balance	$	198,041	$	74,875	$	167,031	$	131,859	$	0	$	571,806

The following tables present information related to impaired loans by class of loans as of June 30, 2012 and December 31, 2011:

(In Thousands of Dollars) June 30, 2012	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial real estate
Owner occupied	$	1,302	$	1,303	$	0
Non-owner occupied		287		288		0
Other		0		0		0
Commercial		890		890		0
Residential real estate
1-4 family residential		723		725		0
Subtotal		3,202		3,206		0

13

With an allowance recorded:
Commercial real estate
Owner occupied		4,673		4,683		315
Non-owner occupied		2,678		2,682		241
Other		0		0		0
Commercial		603		605		448
Subtotal		7,954		7,970		1,004
Total	$	11,156	$	11,176	$	1,004

(In Thousands of Dollars) December 31, 2011	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial real estate
Owner occupied	$	759	$	762	$	0
Non-owner occupied		339		340		0
Other		589		590		0
Commercial		1,062		1,063		0
Residential real estate
1-4 family residential		695		697		0
Subtotal		3,444		3,452		0
With an allowance recorded:
Commercial real estate
Owner occupied		4,164		4,169		309
Non-owner occupied		2,455		2,456		439
Other		0		0		0
Commercial		278		278		237
Subtotal		6,897		6,903		985
Total	$	10,341	$	10,355	$	985

The following table presents the average recorded investment in impaired loans by class for the three and six month periods ended June 30, 2012 and 2011:

(In Thousands of Dollars)	Average Recorded Investment for Three Months Ended June 30,				Average Recorded Investment for Six Months Ended June 30,
	2012		2011		2012		2011
With no related allowance recorded:
Commercial real estate
Owner occupied	$	1,207	$	1,211	$	1,104	$	1,236
Non-owner occupied		302		0		313		0
Other		0		0		0		0
Commercial		922		655		946		671
Residential real estate
1-4 family residential		726		0		728		0
Subtotal		3,157		1,866		3,091		1,907
With an allowance recorded:
Commercial real estate
Owner occupied		4,726		2,375		4,764		2,405
Non-owner occupied		3,112		833		3,438		894
Other		0		802		0		812
Commercial		628		445		638		459
Subtotal		8,466		4,455		8,840		4,570
Total	$	11,623	$	6,321	$	11,931	$	6,477

14

Interest income recognized during impairment for the three and six month periods was immaterial.

Nonaccrual loans and loans past due 90 days or more still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The following table presents the recorded investment in nonaccrual and loans past due 90 days or more still on accrual by class of loans as of June 30, 2012 and December 31, 2011:

	June 30, 2012				December 31, 2011
(In Thousands of Dollars)	Nonaccrual		Loans Past Due 90 Days or More Still Accruing		Nonaccrual		Loans Past Due 90 Days or More Still Accruing
Commercial real estate
Owner occupied	$	3,553	$	0	$	2,640	$	0
Non-owner occupied		2,296		0		2,795		0
Other		0		0		590		0
Commercial		909		46		527		0
Residential real estate
1-4 family residential		2,565		195		3,897		121
Home equity lines of credit		288		0		299		0
Consumer
Indirect		11		61		12		114
Direct		0		3		0		13
Other		0		1		0		2
Total	$	9,622	$	306	$	10,760	$	250

The following table presents the aging of the recorded investment in past due loans as of June 30, 2012 and December 31, 2011 by class of loans:

(In Thousands of Dollars) June 30, 2012	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Nonaccrual		Total Past Due		Loans Not Past Due		Total
Commercial real estate
Owner occupied	$	207	$	0	$	3,553	$	3,760	$	90,577	$	94,337
Non-owner occupied		11		0		2,296		2,307		84,261		86,568
Other		153		0		0		153		22,524		22,677
Commercial		25		24		741		790		76,845		77,635
Residential real estate
1-4 family residential		953		135		2,974		4,062		134,626		138,688
Home equity lines of credit		0		0		288		288		21,890		22,178
Consumer
Indirect		979		187		72		1,238		116,362		117,600
Direct		92		20		3		115		11,258		11,373
Other		8		13		1		22		1,375		1,397
Total	$	2,428	$	379	$	9,928	$	12,735	$	559,718	$	572,453

15

(In Thousands of Dollars) December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Nonaccrual		Total Past Due		Loans Not Past Due		Total
Commercial real estate
Owner occupied	$	111	$	0	$	2,640	$	2,751	$	97,630	$	100,381
Non-owner occupied		13		0		2,795		2,808		77,515		80,323
Other		0		0		590		590		16,747		17,337
Commercial		26		0		527		553		74,322		74,875
Residential real estate
1-4 family residential		973		361		4,018		5,352		139,736		145,088
Home equity lines of credit		128		0		299		427		21,516		21,943
Consumer
Indirect		1,458		218		126		1,802		116,941		118,743
Direct		120		41		13		174		11,422		11,596
Other		19		3		2		24		1,496		1,520
Total	$	2,848	$	623	$	11,010	$	14,481	$	557,325	$	571,806

Troubled Debt Restructurings:

Total troubled debt restructurings were $6.5 million and $4.3 million at June 30, 2012 and December 31, 2011, respectively. The Company has allocated $91 thousand and $48 thousand of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2012 and December 31, 2011. There are no commitments to lend additional amounts to borrowers with loans that are classified as troubled debt restructurings at June 30, 2012 and December 31, 2011.

During the three and six month periods ended June 30, 2012, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

Troubled debt restructuring modifications involved a reduction of the notes stated interest rate in the range of 1% and 3.6% on loans with maturity periods ranging from 5 months to 41months. One loan involved an extension of the maturity date by 5 years.

The following table presents loans by class modified as troubled debt restructurings that occurred during the six month period ended June 30, 2012:

(In Thousands of Dollars) Troubled debt restructurings	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial real estate
Owner occupied		2	$	787	$	792
Non-owner occupied		3		2,376		2,419
Residential real estate
1-4 family residential		1		52		52
Total		6	$	3,215	$	3,263

The troubled debt restructurings described above decreased the allowance for loan losses by $416 thousand during the six month period ended June 30, 2012. There were no charge offs as a result of the allowance adjustments.

16

There were two residential real estate loans modified as troubled debt restructurings for which there were payment defaults within the previous twelve months, for the period ended June 30, 2012. The loans were not past due at June 30, 2012. There was no additional provision or any impact to the allowance for losses associated with these loans. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company establishes a risk rating at origination for all commercial loan and commercial real estate relationships. For relationships over $300 thousand management monitors the loans on an ongoing basis for any changes in the borrower’s ability to service their debt. Management also affirms the risk ratings for the loans and leases in their respective portfolios on an annual basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Substandard loans are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of June 30, 2012 and December 31, 2011, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

(In Thousands of Dollars) June 30, 2012	Pass		Special Mention		Sub- standard		Doubtful		Not Rated		Total
Commercial real estate
Owner occupied	$	79,716	$	2,069	$	12,552	$	0	$	0	$	94,337
Non-owner occupied		76,039		3,163		7,366		0		0		86,568
Other		20,403		1,044		1,230		0		0		22,677
Commercial		70,784		4,030		2,821		0		0		77,635
Total	$	246,942	$	10,306	$	23,969	$	0	$	0	$	281,217

(In Thousands of Dollars) December 31, 2011	Pass		Special Mention		Sub- standard		Doubtful		Not Rated		Total
Commercial real estate
Owner occupied	$	80,770	$	6,359	$	13,201	$	51	$	0	$	100,381
Non-owner occupied		68,806		2,575		8,942		0		0		80,323
Other		14,491		301		2,545		0		0		17,337
Commercial		65,198		5,963		3,454		260		0		74,875
Total	$	229,265	$	15,198	$	28,142	$	311	$	0	$	272,916

17

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential, consumer indirect and direct loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential, consumer indirect and direct auto loans based on payment activity as of June 30, 2012 and December 31, 2011. Nonperforming loans are loans past due 90 days or more and still accruing interest and nonaccrual loans.

(In Thousands of Dollars) June 30, 2012	Residential Real Estate				Consumer
	1-4 Family Residential		Home Equity Lines of Credit		Indirect		Direct		Other
Performing	$	135,714	$	21,890	$	117,528	$	11,370	$	1,396
Nonperforming		2,974		288		72		3		1
Total	$	138,688	$	22,178	$	117,600	$	11,373	$	1,397

(In Thousands of Dollars) December 31, 2011	Residential Real Estate				Consumer
	1-4 Family Residential		Home Equity Lines of Credit		Indirect		Direct		Other
Performing	$	141,070	$	21,644	$	118,617	$	11,583	$	1,518
Nonperforming		4,018		299		126		13		2
Total	$	145,088	$	21,943	$	118,743	$	11,596	$	1,520

Earnings Per Share:

The computation of basic and diluted earnings per share is shown in the following table:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands, except Share and Per Share Data)	2012		2011		2012		2011
Basic EPS computation
Numerator – Net income	$	2,286	$	2,117	$	4,806	$	3,807
Denominator – Weighted average shares outstanding		18,800,122		18,674,213		18,782,968		17,820,254
Basic earnings per share	$	.12	$	.11	$	.26	$	.21
Diluted EPS computation
Numerator – Net income	$	2,286	$	2,117	$	4,806	$	3,807
Denominator – Weighted average shares outstanding for basic earnings per share		18,800,122		18,674,213		18,782,968		17,820,254
Effect of Stock Options		0		0		0		0
Weighted averages shares for diluted earnings per share		18,800,122		18,674,213		18,782,968		17,820,254
Diluted earnings per share	$	.12	$	.11	$	.26	$	.21

18

Stock options for 5,000 and 28,500 shares were not considered in the computing of diluted earnings per share for the three and six months ended June 30, 2012 and 2011, respectively, because they were antidilutive.

Stock Based Compensation:

The Company’s Stock Option Plan (the “Plan”), permitted the grant of share options to its directors, officers and employees. Under the terms of the Plan no additional shares can be issued. Option awards were granted with an exercise price equal to the market price of the Company’s common shares at the date of grant, with a vesting period of 5 years and have 10-year contractual terms. At June 30, 2012 there were 5,000 outstanding options of which 3,000 were fully vested and exercisable.

The fair value of each option award is estimated on the date of grant using a Black-Scholes model. Total compensation cost charged against income for the stock option plan for the three and six month period ended June 30, 2012 was not material. No related income tax benefit was recorded.

Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value:

Investment Securities: The Company used a third party service to estimate fair value on available for sale securities on a monthly basis. This service provider is considered a leading evaluation pricing service for U.S. domestic fixed income securities. They subscribe to multiple third-party pricing vendors, and supplement that information with matrix pricing methods. The fair values for investment securities are determined by quoted market prices in active markets, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on quoted prices for similar assets in active markets, quoted prices for similar assets in markets that are not active or inputs other than quoted prices, which provide a reasonable basis for fair value determination. Such inputs may include interest rates and yield curves, volatilities, prepayment speeds, credit risks and default rates. Finally, inputs used are derived principally from observable market data (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). The fair values of Level 3 investment securities are determined by using unobservable inputs to measure fair value of assets for which there is little, if any market activity at the measurement date, using reasonable inputs and assumptions based on the best information at the time, to the extent that inputs are available without undue cost and effort by the Company’s Chief Financial Officer and Controller. For the period ended June 30, 2012 the fair value of Level 3 investment securities was immaterial.

19

Impaired Loans: At the time loans are considered impaired, collateral dependent impaired loans are valued at the lower of cost or fair value and non-collateral dependent loans are valued based on discounted cash flows. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. For collateral dependent loans fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair values are commonly based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial and commercial real estate properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the Appraisal Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with via independent data sources such as recent market data or industry-wide statistics. On an annual basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what adjustments should be made to appraisals to arrive at fair value.

Assets measured at fair value on a recurring basis, including financial assets for which the Company has elected the fair value option, are summarized below:

			Fair Value Measurements at June 30, 2012 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Investment securities available-for sale
U.S. Treasury and U.S. government sponsored entities	$	58,424	$	0	$	58,424	$	0
State and political subdivisions		82,061		0		82,061		0
Corporate bonds		1,247		0		1,247		0
Mortgage-backed securities-residential		243,618		0		243,607		11

20

Collateralized mortgage obligations		34,166		0		34,166		0
Small business administration		223		0		223		0
Equity securities		408		408		0		0
Total investment securities	$	420,147	$	408	$	419,728	$	11

			Fair Value Measurements at December 31, 2011 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level2)		Significant Unobservable Inputs ( Level 3)
Financial Assets
Investment securities available-for sale
U.S. Treasury and U.S. government sponsored entities	$	55,988	$	0	$	55,988	$	0
State and political subdivisions		82,690		0		82,690		0
Corporate bonds		769		0		769		0
Mortgage-backed securities-residential		222,718		0		222,706		12
Collateralized mortgage obligations		37,222		0		37,222		0
Small business administration		315		0		315		0
Equity securities		327		327		0		0
Total investment securities	$	400,029	$	327	$	399,690	$	12

There were no significant transfers between Level 1 and Level 2 during the three and six month periods ended June 30, 2012 and 2011.

The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	Investment Securities Available-for-sale (Level 3)
	Three Months Ended June 30,					Six Months Ended June 30,
(In Thousands of Dollars)	2012			2011		2012			2011
Beginning balance	$	12		$	12	$	12		$	12
Total unrealized gains or losses:
Included in other comprehensive income or loss		0			0		0			0
Repayments		(1	)		0		(1	)		0
Transfer in and/or out of Level 3		0			0		0			0
Ending balance	$	11		$	12	$	11		$	12

21

Assets measured at fair value on a non-recurring basis are summarized below:

	Fair Value Measurements at June 30, 2012 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Impaired loans
Commercial real estate
Owner occupied	$	2,162	$	0	$	0	$	2,162
Non-owner occupied		492		0		0		492
Other		0		0		0		0
Commercial		155		0		0		155
Other real estate owned
Commercial real estate		187		0		0		187
1 – 4 family residential		89		0		0		89

	Fair Value Measurements at December 31, 2011 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
Financial assets:
Impaired loans
Commercial real estate
Owner occupied	$	1,606	$	0	$	0	$	1,606
Non-owner occupied		2,017		0		0		2,017
Other		0		0		0		0
Commercial		41		0		0		41
Other real estate owned
Commercial real estate		270		0		0		270
1 – 4 family residential		76		0		0		76

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $3.7 million with a valuation allowance of $864 thousand at June 30, 2012, resulting in an additional provision for loan losses of $339 thousand and $420 thousand for the three and six month periods ended June 30, 2012. At December 31, 2011, impaired loans had a principal balance of $4.6 million, with a valuation allowance of $936 thousand. The additional provision for loan losses was $66 thousand for the three months ended June 30, 2011 and $397 thousand for the six months ended June 30, 2011, for loans carried at fair value. Excluded from the fair value of impaired loans, at June 30, 2012 and December 31, 2011, discussed above are $4.3 million and $2.3 million of loans classified as troubled debt restructurings, which are not carried at fair value.

Impaired commercial real estate loans, both owner occupied and non-owner occupied are valued by independent external appraisals. These external appraisals are prepared using the sales comparison approach and income approach valuation techniques. Management makes subsequent unobservable adjustments to the impaired loan appraisals. Impaired loans other than commercial real estate and other real estate owned are not considered material.

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The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2012:

(In Thousands of Dollars)	Fair value		Valuation Technique(s)	Unobservable Input(s)	Range(Weighted Average)
Impaired loans
Commercial real estate	$	2,654	Sales comparison	Adjustment for differences between comparable sales	-44.2% -70.0% (-12.5%)
			Income approach	Adjustment for differences in net operating income	-36.8% -78.2% (14.9%)
Commercial		155	Sales comparison	Adjustment for differences between comparable sales	-39.8% -48.9% (9.3%)

Other real estate owned measured at fair value less costs to sell, had a net carrying amount of $276 thousand at June 30, 2012. The Company sold nine other real estate owned properties during the six month period ended June 30, 2012. The Company recorded $73 thousand in write downs on four other real estate owned properties during the six month period ended June 30, 2012. At December 31, 2011, other real estate owned had a net carrying amount of $346 thousand. During the year ended December 31, 2011 five properties were charged down reflecting updated appraisals which resulted in a write-down of $115 thousand.

The carrying amounts and estimated fair values of financial instruments, at June 30, 2012 and December 31, 2011 are as follows:

			Fair Value Measurements at June 30, 2012 Using:
(In Thousands of Dollars)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	75,559	$	14,410	$	61,149	$	0	$	75,559
Securities available-for-sale		420,147		408		419,728		11		420,147
Restricted stock		4,224		n/a		n/a		n/a		n/a
Loans held for sale		3,718		0		3,784		0		3,784
Loans, net		563,405		0		0		575,142		575,142
Accrued interest receivable		3,749		0		1,089		2,660		3,749
Financial liabilities
Deposits		886,593		641,629		251,245		0		892,874
Short-term borrowings		96,465		0		96,465		0		96,465
Long-term borrowings		10,583		0		11,956		0		11,956
Accrued interest payable		550		5		545		0		550

.

(In Thousands of Dollars)
December 31, 2011	Carrying Amount		Fair Value
Financial assets
Cash and cash equivalents	$	52,422	$	52,422
Securities available-for-sale		400,029		400,029
Restricted stock		4,224		n/a
Loans held for sale		677		677
Loans, net		561,986		574,391
Accrued interest receivable		3,794		3,794

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Financial liabilities
Deposits	840,125	846,412
Short-term borrowings	98,088	98,088
Long-term borrowings	11,263	12,719
Accrued interest payable	585	585

The methods and assumptions used to estimate fair value, not previously described, are described as follows:

Cash and Cash Equivalents: The carrying amounts of cash and short-term instruments approximate fair values and are classified as either Level 1 or Level 2. The Company has determined that cash on hand and non-interest bearing due from bank accounts are Level 1 whereas interest bearing fed funds sold and other are Level 2.

Restricted Stock: It is not practical to determine the fair value of restricted stock due to restrictions placed on its transferability.

Loans: Fair values of loans, excluding loans held for sale, are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Loans held for sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Accrued Interest Receivable/Payable: The carrying amounts of accrued interest receivable and payable approximate fair value resulting in a Level 2 or Level 3 classification. The classification is the result of the association with securities, loans and deposits.

Deposits: The fair values disclosed for demand deposits – interest and non-interest checking, passbook savings, and money market accounts - are, by definition, equal to the amount payable on demand at the reporting date resulting in a Level 1 classification. The carrying amounts of variable rate certificates of deposit approximate their fair values at the reporting date resulting Level 2 classification. Fair value for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Short-term Borrowings: The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification.

Long-term Borrowings: The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Off-balance Sheet Instruments: The fair value of commitments is not considered material.

Segment Information

The reportable segments are determined by the products and services offered, primarily distinguished between banking and trust operations. They are also distinguished by the level of information provided to the chief operating decision makers in the Company, who use such information to review performance of various components of the business, which are then aggregated. Loans, investments, and deposits provide the revenues in the banking operation, and trust service fees provide the revenue in trust operations. All operations are domestic.

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Significant segment totals are reconciled to the financial statements as follows:

(In Thousands of Dollars) June 30, 2012	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Assets
Cash and cash equivalents	$	2,383	$	73,258	$	(82	)	$	75,559
Securities available for sale		2,865		417,119		163			420,147
Loans held for sale		0		3,718		0			3,718
Net loans		0		563,405		0			563,405
Premises and equipment, net		89		17,527		0			17,616
Goodwill and other intangibles		6,237		0		0			6,237
Other assets		544		28,990		617			30,151
Total Assets	$	12,118	$	1,104,017	$	698		$	1,116,833
Liabilities and Stockholders’ Equity
Deposits, borrowings and other liabilities	$	658	$	1,001,366	$	(4,129	)	$	997,895
Stockholders’ equity		11,460		102,651		4,827			118,938
Total Liabilities and Stockholders’ Equity	$	12,118	$	1,104,017	$	698		$	1,116,833

(In Thousands of Dollars) December 31, 2011	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Assets
Cash and cash equivalents	$	2,208	$	50,327	$	(113	)	$	52,422
Securities available for sale		2,388		397,513		128			400,029
Loans held for sale		0		677		0			677
Net loans		0		561,986		0			561,986
Premises and equipment, net		101		16,360		0			16,461
Goodwill and other intangibles		6,441		0		0			6,441
Other assets		463		28,904		488			29,855
Total Assets	$	11,601	$	1,055,767	$	503		$	1,067,871
Liabilities and Stockholders’ Equity
Deposits, borrowings and other liabilities	$	345	$	957,780	$	(4,699	)	$	953,426
Stockholders’ equity		11,256		97,987		5,202			114,445
Total Liabilities and Stockholders’ Equity	$	11,601	$	1,055,767	$	503		$	1,067,871

(In Thousands of Dollars) For the Three Months Ended June 30, 2012	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	12	$	9,310	$	(2	)	$	9,320
Provision for loan losses		0		400		0			400
Service fees, security gains and other noninterest income		1,382		1,617		(74	)		2,925
Noninterest expense		1,263		7,395		219			8,877
Income before taxes		131		3,132		(295	)		2,968
Income taxes		47		735		(100	)		682
Net Income	$	84	$	2,397	$	(195	)	$	2,286

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(In Thousands of Dollars) For the Six Months Ended June 30, 2012	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	22	$	18,533	$	(14	)	$	18,541
Provision for loan losses		0		400		0			400
Service fees, security gains and other noninterest income		2,819		2,971		(137	)		5,653
Noninterest expense		2,527		14,636		353			17,516
Income before taxes		314		6,468		(504	)		6,278
Income taxes		110		1,533		(171	)		1,472
Net Income	$	204	$	4,935	$	(333	)	$	4,806
(In Thousands of Dollars) For the Three Months Ended June 30, 2011	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	11	$	9,158	$	(12	)	$	9,157
Provision for loan losses		0		1,075		0			1,075
Service fees, security gains and other noninterest income		1,377		1,356		(39	)		2,694
Noninterest expense		1,149		6,743		200			8,092
Income before taxes		239		2,696		(251	)		2,684
Income taxes		82		570		(85	)		567
Net Income	$	157	$	2,126	$	(166	)	$	2,117
(In Thousands of Dollars) For the Six Months Ended June 30, 2011	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	22	$	18,243	$	(25	)	$	18,240
Provision for loan losses		0		2,950		0			2,950
Service fees, security gains and other noninterest income		2,727		2,661		(77	)		5,311
Noninterest expense		2,349		13,255		302			15,906
Income before taxes		400		4,699		(404	)		4,695
Income taxes		137		888		(137	)		888
Net Income	$	263	$	3,811	$	(267	)	$	3,807

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, 2011.

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:

26

• 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.

Overview

Net income for the three months ended June 30, 2012 was $2.3 million, compared to $2.1 million for the same three month period in 2011. On a per share basis, net income for the second quarter ended June 30, 2012 was $0.12 per diluted share, compared to $0.11 for the second quarter ended June 30, 2011. Net income for the six months ended June 30, 2012 was $4.8 million, compared to $3.8 million for the same six month period in 2011. On a per share basis, net income for the six months ended June 30, 2012 was $0.26, an increase of 23.8% compared to the same six month period in 2011. The tangible common equity ratio increased to 10.15% at June 30, 2012, compared to 10.11% at June 30, 2011, mainly as a result of net income. Farmers’ total assets reported at June 30, 2012 were $1.12 billion, representing a 4.6% increase compared to $1.07 billion in total assets recorded at December 31, 2011.

Net income increased to $2.3 million for the three months ended June 30, 2012, which represents an 8% increase over the $2.1 million reported for the same period in 2011. Noninterest income increased 8.6% during the same three month period, which is consistent with the strategy to diversify revenue. Asset quality continues to improve, evidenced by the reduction in the provision for loan losses from $1.1 million for the three month period ended June 30, 2011 to $400 thousand for the three months ended June 30, 2012. There has also been a decline in the 30-89 day delinquencies, from $3.8 million at June 30, 2011 to $2.8 million at June 30, 2012.

Net loans increased $1.4 million in comparing the June 30, 2012 balance to the December 31, 2011. Most of the loan growth in the current year has occurred in the commercial and commercial real estate portfolios. Net loans were reported at $563.4 million at June 30, 2012, which compares to $562.0 million at December 31, 2011. Deposits increased $46.5 million, or 5.5%, from $840.1 million at December 31, 2011 to $886.6 million at June 30, 2012, as customers continue to seek the safety and security of FDIC insured deposit accounts.

27

Stockholders’ equity totaled $118.9 million, or 10.6% of total assets, at June 30, 2012, an increase of $4.5 million, or 3.9%, compared to $114.4 million at December 31, 2011. The increase is mainly the result of net income and fair value adjustments in investment securities, offset by cash dividends paid to shareholders during the past six months. Shareholders received a total of $0.15 per share in cash dividends paid in the past four quarters, including a special one-time $0.03 cash dividend on February 28, 2012. Book value per share increased 3.8% from $6.10 per share at December 31, 2011 to $6.33 per share at June 30, 2012. Farmers’ tangible book value per share also increased 4.0% from $5.76 per share at December 31, 2012 to $5.99 per share at June 30, 2012.

Results of Operations

The following is a comparison of selected financial ratios and other results at or for the three and six months ended June 30, 2012 and 2011:

	At or for the Three Months Ended June 30,						At or for the Six Months Ended June 30,
(In Thousands, except Per Share Data)	2012			2011			2012			2011
Total Assets	$	1,116,833		$	1,014,221		$	1,116,833		$	1,014,221
Net Income	$	2,286		$	2,117		$	4,806		$	3,807
Basic and Diluted Earnings Per Share	$	.12		$	.11		$	.26		$	.21
Return on Average Assets (Annualized)		.82	%		.83	%		.88	%		.76	%
Return on Average Equity (Annualized)		7.81	%		8.05	%		8.32	%		7.69	%
Efficiency Ratio (tax equivalent basis)		68.54	%		64.42	%		68.48	%		63.50	%
Equity to Asset Ratio		10.65	%		10.71	%		10.65	%		10.71	%
Tangible Common Equity Ratio *		10.15	%		10.11	%		10.15	%		10.11	%
Dividends to Net Income		24.67	%		26.45	%		35.16	%		29.39	%
Net Loans to Assets		50.45	%		55.00	%		50.45	%		55.00	%
Loans to Deposits		64.57	%		73.85	%		64.57	%		73.85	%

* 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 June 30, 2012 and 2011, 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)	June 30, 2012		June 30, 2011
Reconciliation of Common Stockholders’ Equity to Tangible Common Equity
Stockholders’ Equity	$	118,938	$	108,576
Less Goodwill and other intangibles		6,237		6,665
Tangible Common Equity	$	112,701	$	101,911

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(In Thousands of Dollars)	June 30, 2012		June 30, 2011
Reconciliation of Total Assets to Tangible Assets
Total Assets	$	1,116,833	$	1,014,221
Less Goodwill and other intangibles		6,237		6,665
Tangible Assets	$	1,110,596	$	1,007,556

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.

29

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

	Three Months Ended June 30, 2012								Three Months Ended June 30, 2011
	AVERAGE BALANCE			INTEREST		RATE (1)			AVERAGE BALANCE			INTEREST		RATE (1)
EARNING ASSETS
Loans (3) (5) (6)	$	562,329		$	8,056		5.75	%	$	562,446		$	8,444		6.02	%
Taxable securities (4)		330,970			2,128		2.58			269,339			2,048		3.05
Tax-exempt securities (4) (6)		73,324			1,074		5.88			76,049			1,111		5.86
Equity securities (2) (6)		4,363			52		4.78			4,343			53		4.89
Federal funds sold and other		57,643			30		0.21			40,287			10		0.10
Total earning assets		1,028,629			11,340		4.42			952,464			11,666		4.91
NONEARNING ASSETS
Cash and due from banks		19,912								18,820
Premises and equipment		17,411								13,794
Allowance for loan losses		(9,242	)							(10,563	)
Unrealized gains (losses) on securities		13,247								6,073
Other assets (3)		46,098								43,244
Total assets	$	1,116,055							$	1,023,832
INTEREST-BEARING LIABILITIES
Time deposits	$	250,141		$	1,196		1.92	%	$	248,816		$	1,280		2.06	%
Savings deposits		411,859			252		0.25			332,426			385		0.46
Demand deposits		115,475			12		0.04			109,679			19		0.07
Short term borrowings		98,187			25		0.10			117,610			104		0.35
Long term borrowings		10,606			98		3.71			23,643			249		4.22
Total interest-bearing liabilities		886,268			1,583		0.72			832,174			2,037		0.98
NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits		108,584								82,715
Other liabilities		3,468								3,399
Stockholders' equity		117,735								105,544
Total liabilities and stockholders' equity	$	1,116,055							$	1,023,832
Net interest income and interest rate spread				$	9,757		3.70	%				$	9,629		3.93	%
Net interest margin							3.80	%							4.05	%

(1) Rates are calculated on an annualized basis.

(2) Equity securities include restricted stock, which is included in other assets on the consolidated balance sheets.

(3) Non-accrual loans and overdraft deposits are included in other assets.

(4) Includes unamortized discounts and premiums. Average balance and yield are computed using the average historical amortized cost.

(5) Interest on loans includes fee income of $610 thousand and $401 thousand for 2012 and 2011 respectively and is reduced by amortization of $458 thousand and $441 thousand for 2012 and 2011 respectively.

(6) For 2012, adjustments of $69 thousand and $368 thousand respectively are made to tax equate income on tax exempt loans and tax exempt securities. For 2011, adjustments of $90 thousand and $382 thousand respectively are made to tax equate income on tax exempt loans and tax exempt securities. These adjustments are based on a marginal federal income tax rate of 35%, less disallowances.

30

Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

	Six Months Ended June 30, 2012								Six Months Ended June 30, 2011
	AVERAGE BALANCE			INTEREST		RATE (1)			AVERAGE BALANCE			INTEREST		RATE (1)
EARNING ASSETS
Loans (3) (5) (6)	$	563,028		$	16,128		5.76	%	$	567,849		$	16,998		6.04	%
Taxable securities (4)		321,940			4,234		2.64			252,588			3,917		3.13
Tax-exempt securities (4) (6)		73,693			2,158		5.89			76,557			2,235		5.89
Equity securities (2) (6)		4,363			102		4.70			4,235			99		4.71
Federal funds sold and other		50,756			51		0.20			34,920			19		0.11
Total earning assets		1,013,780			22,673		4.49			936,149			23,268		5.01
NONEARNING ASSETS
Cash and due from banks		21,072								22,943
Premises and equipment		17,101								13,840
Allowance for loan losses		(9,463	)							(10,064	)
Unrealized gains (losses) on securities		13,148								4,851
Other assets (3)		44,121								42,412
Total assets	$	1,099,759							$	1,010,131
INTEREST-BEARING LIABILITIES
Time deposits	$	253,607		$	2,412		1.91	%	$	250,811		$	2,588		2.08	%
Savings deposits		401,859			550		0.28			328,139			757		0.47
Demand deposits		114,181			23		0.04			110,469			37		0.07
Short term borrowings		94,233			67		0.14			111,586			201		0.36
Long term borrowings		10,648			196		3.70			23,819			500		4.23
Total interest-bearing liabilities		874,528			3,248		0.75			824,824			4,083		1.00
NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits		105,427								82,074
Other liabilities		3,588								3,356
Stockholders' equity		116,216								99,877
Total liabilities and stockholders' equity	$	1,099,759							$	1,010,131
Net interest income and interest rate spread				$	19,425		3.74	%				$	19,185		4.01	%
Net interest margin							3.85	%							4.14	%

(1) Rates are calculated on an annualized basis.

(2) Equity securities include restricted stock, which is included in other assets on the consolidated balance sheets.

(3) Non-accrual loans and overdraft deposits are included in other assets.

(4) Includes unamortized discounts and premiums. Average balance and yield are computed using the average historical amortized cost.

(5) Interest on loans includes fee income of $1.1 million and $837 thousand for 2012 and 2011 respectively and is reduced by amortization of $929 thousand and $888 thousand for 2012 and 2011 respectively.

(6) For 2012, adjustments of $145 thousand and $739 thousand respectively are made to tax equate income on tax exempt loans and tax exempt securities. For 2011, adjustments of $178 thousand and $767 thousand respectively are made to tax equate income on tax exempt loans and tax exempt securities. These adjustments are based on a marginal federal income tax rate of 35%, less disallowances.

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Net interest income. Net interest income was $9.3 million for the second quarter of 2012, compared to $9.2 million in the second quarter of 2011. The net interest margin to average earning assets on a fully taxable equivalent basis decreased 25 basis points to 3.80% for the three months ended June 30, 2012, compared to 4.05% for the same period in the prior year. The decrease in net interest margin is largely a result of the change in the mix of interest earning assets. Loans, which yield more than securities, comprised a smaller level of interest-earning assets in the current year. For the three months ended June 30, 2012, loans were 55% of average earning assets, compared to 59% for the three months ended June 30, 2011. In comparing the quarters ending June 30, 2012 and 2011, yields on earning assets decreased 49 basis points, while the cost of interest bearing liabilities decreased 26 basis points as the decline in funding costs has slowed.

On a year-to-date basis, net interest income improved to $18.5 million for the six month period ended June 30 2012, compared to $18.2 million in the same period in 2011. The annualized net interest margin to average earning assets on a fully taxable equivalent basis was 3.85% for the six months ended June 30 2012, compared to 4.14% for the same period in the prior year. The decline in margin for the six month period was consistent with the reason for the decline in the three month period.

Noninterest Income. Noninterest income was $2.9 million for the second quarter of 2012, increasing 8.6% from $2.7 million compared to the same quarter of 2011. Income from the sale of residential real estate loans increased from $0 in the second quarter of 2011 to $138 thousand in the second quarter of 2012 as the Company continues to develop its secondary mortgage operations.

Noninterest income for the six months ended June 30 2012 was $5.7 million, compared to $5.3 million for the same period in 2011. The increase in noninterest income is primarily due to income from the sale of loans, increasing from $0 for the six months ended June 30, 2011 to $203 thousand for the same six month period in 2012. Income from trust fees was also $80 thousand higher in 2012.

Noninterest Expense. Noninterest expense totaled $8.9 million for the second quarter of 2012, which is $785 thousand more than the $8.1 million in the same quarter in 2011. Most of this increase is a result of a $456 thousand or 10.2% increase in salaries and employee benefits, due to a higher number of employees in the current quarter. The higher employee count is attributed primarily to our secondary mortgage project expansions. Additionally, employee health insurance costs increased $188 thousand as a result of a higher level of claims. Occupancy and equipment expense also increased $158 thousand as a result of depreciation expense and small equipment costs related to new facilities.

Noninterest expenses for the six months ended June 30, 2012 was $17.5 million, compared to $15.9 million for the same period in 2011, representing an increase of $1.6 million, or 10.1%. The increase is mainly the result of the previously mentioned increase in salaries and employee benefits, resulting from a higher number of employees in the current year and a $331 thousand or 38% increase in health insurance costs, and a $213 thousand increase in occupancy and equipment expense related to new facilities.

The following is a detail of noninterest expense line items classified between the Trust and the other entities in the Company for the three and six month periods ended June 30, 2012 and 2011:

	For the Three Months Ended
(In Thousands of Dollars)	June 30, 2012						June 30, 2011
Noninterest expense	Trust Company		Bank and Others		Total Company		Trust Company		Bank and Others		Total Company
Salaries and employee benefits	$	792	$	4,147	$	4,939	$	704	$	3,779	$	4,483
Occupancy and equipment		76		1,004		1,080		130		792		922
State and local taxes		27		277		304		24		214		238
Professional fees		125		331		456		93		310		403
Advertising		0		210		210		3		208		211
FDIC insurance		0		183		183		0		244		244
Intangible amortization		103		0		103		112		0		112
Core processing charges		68		264		332		65		245		310
Other operating expenses		72		1,198		1,270		18		1,151		1,169
Total noninterest expense	$	1,263	$	7,614	$	8,877	$	1,149	$	6,943	$	8,092

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	For the Six Months Ended
(In Thousands of Dollars)	June 30, 2012						June 30, 2011
Noninterest expense	Trust Company		Bank and Others		Total Company		Trust Company		Bank and Others		Total Company
Salaries and employee benefits	$	1,515	$	8,153	$	9,668	$	1,416	$	7,255	$	8,671
Occupancy and equipment		167		1,884		2,051		269		1,569		1,838
State and local taxes		53		558		611		49		436		485
Professional fees		246		617		863		190		620		810
Advertising		2		456		458		3		353		356
FDIC insurance		0		369		369		0		592		592
Intangible amortization		205		0		205		255		0		255
Core processing charges		155		565		720		134		490		624
Other operating expenses		184		2,387		2,571		33		2,242		2,275
Total noninterest expense	$	2,527	$	14,989	$	17,516	$	2,349	$	13,557	$	15,906

The Company’s tax equivalent efficiency ratio for the three month period ended June 30, 2012 was 68.5% compared to 64.4% for the same period in 2011. The decline in the efficiency ratio was the result of the $694 thousand increase in noninterest expenses as explained in the previous paragraph.

The Company’s tax equivalent efficiency ratio for the six month period ended June 30, 2012 was 68.5%, compared to 63.5% for the prior year’s same six month period. The decline in the efficiency ratio was the result of a $1.5 million increase in noninterest expense, partially offset by the $552 thousand increase in net interest income and noninterest income.

Income Taxes. Income tax expense totaled $682 thousand for the quarter ended June 30, 2012 and $567 thousand for the quarter ended June 30, 2011. The increase in the current quarter tax expense can be attributed to the $284 thousand increase in income before taxes. The effective tax rate for the three month period ended June 30, 2012 was 23.0%, compared to 21.1% for the same period in 2011. The effective tax rate increase over the same period in 2011 was primarily due to the reduction in the amount of tax exempt municipal securities income as a percentage of total income for the period.

Income tax expense was $1.5 million for the first six months of 2012 and $888 thousand for the first six months of 2011. The effective tax rate for the six month period of 2012 was 23.4%, compared to 18.9% for the same period in 2011. The effective tax rate increase over the same period in 2011 was due to the reduction of tax exempt municipal securities income as mentioned in the quarter discussion from above.

Other Comprehensive Income. For the quarter ended June 30, 2012, the change in net unrealized gains on securities, net of reclassifications, resulted in an unrealized gain, net of tax, of $1.7 million, compared to an unrealized gain of $3.8 million for the same period in 2011. Management believes the increases in fair value for the three month periods ending June 30, in 2012 and 2011 are the result of the continued low interest rate environment that exists in the debt securities market.

For the first six months of 2012, the change in net unrealized gains on securities, net of reclassifications, resulted in an unrealized gain, net of tax, of $1.1 million, compared to an unrealized gain of $3.8 million for the same period in 2011. As with the three month period management believes the increase in fair value for these six month periods in 2012 and 2011 is largely due to lower market interest rates.

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Financial Condition

Cash and cash equivalents. Cash and cash equivalents increased $23.1 million during the first six months of 2012. The Company expects these levels to remain steady over the next few months. The increase is largely due to the scarcity of viable investment options that produce a reasonable yield for the risk and management’s effort to maintain a larger balance at the Federal Reserve Bank for future liquidity needs.

Securities. Securities available-for-sale increased by $20.1 million since December 31, 2011. Securities were purchased in an effort to increase returns on some of the cash available from the additional core deposit account balances and repurchase agreements sold during the period.

Loans. Gross loans increased $647 thousand since December 31, 2011. Most of the loan growth occurred in the commercial and commercial real estate loan portfolios. The increase in loans is related to the subtle economic growth being experienced in the Mahoning Valley. The demand experience for the Bank’s business and consumer credit is consistent with the experience of other banks in the Federal Reserve’s Fourth District and banks nationally per the Federal Reserve Beige Book. The increase in loan balances was not enough to overcome the low interest rate environment that caused a lower level of loan income for the current quarter compared to the same quarter in 2011. On a fully tax equivalent basis, loans contributed 71.1% of total interest income for the six months ended June 30, 2012 and 73.1% for the same period in 2011.

Allowance for Loan Losses. The following table indicates key asset quality ratios that management evaluates on an ongoing basis. The unpaid principal balance of non-performing loans and non-performing assets was used in the calculation of amounts and ratios on the table below.

Asset Quality History

(In Thousands of Dollars)

	6/30/12			3/31/12			12/31/11			9/30/11			6/30/11
Nonperforming loans	$	9,900		$	11,030		$	10,984		$	10,884		$	7,865
Nonperforming loans as a % of total loans		1.73	%		1.91	%		1.92	%		1.92	%		1.38	%
Loans delinquent 30-89 days	$	2,778		$	2,890		$	3,431		$	3,386		$	3,758
Loans delinquent 30-89 days as a % of total loans		0.49	%		0.50	%		0.60	%		0.60	%		0.66	%
Allowance for loan losses	$	9,048		$	9,446		$	9,820		$	10,984		$	10,876
Allowance for loan losses as a % of loans		1.58	%		1.64	%		1.72	%		1.93	%		1.91	%
Allowance for loan losses as a % of nonperforming loans		91.39	%		85.64	%		89.40	%		100.92	%		138.28	%
Annualized net charge-offs to average net loans outstanding		0.57	%		0.27	%		0.84	%		0.43	%		0.24	%
Non-performing assets	$	10,312		$	11,574		$	11,569		$	11,453		$	8,664
Non-performing assets as a % of total assets		0.92	%		1.05	%		1.08	%		1.05	%		0.85	%
Net charge-offs for the quarter	$	798		$	374		$	1,165		$	591		$	336

For the three months ended June 30, 2012, management recorded a $400 thousand provision to the allowance for loan losses, compared to providing $1.1 million over the same three month period in the prior year. Although non-performing loans declined more in the three months ended June 30, 2011 than the three months ended

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June 30, 2012 and that net charge-offs for the quarter ending June 30, 2012 increased to $797 thousand, compared to $336 thousand for the second quarter of 2011, other factors lead to the recording of a smaller provision in the second quarter of 2012. One factor leading to the recording of a smaller provision for the second quarter of 2012 was the lower level of loans delinquent 30 – 89 days. At June 30, 2012 there was $2.8 million of loans that were delinquent for 30 – 89 days which was fairly consistent with March 31, 2012 totals. While loans delinquent 30-89 days were $3.8 million at June 30, 2011 which was an increase from March 31, 2011. Improvement in the historical loss percentage was also a factor in determining an adequate quarterly provision and ultimately the adequacy of the allowance for loan losses. Beginning in the first quarter of 2012, management computed the historical loss percentage based upon the loss history of the past 12 quarters. In previous periods, management used a historical loss percentage based on the past 8 quarters. The Company believes that using a loss history of the previous 12 quarters will mitigate quarterly volatility in the loan portfolio.

For the six months ended June 30, 2012, management provided $400 thousand to the allowance for loan losses, a decrease of $2.6 million, or 86.4%, over the same six month period in the prior year. This decrease is primarily due to fewer charge-offs and a lower historical loss ratio compared to the year ago period. Net charge-offs declined from $1.4 million for the first six months of 2011 to $1.2 million for the current six month period.

Based on the evaluation of the adequacy of the allowance for loan losses, management believes that the allowance for loan losses at June 30, 2012 to be adequate and reflects probable incurred losses in the portfolio. The provision for loan losses is based on management’s judgment after taking into consideration all factors connected with the collectability of the existing loan portfolio. Management evaluates the loan portfolio in light of economic conditions, changes in the nature and volume of the loan portfolio, industry standards and other relevant factors. Specific factors considered by management in determining the amounts charged to operating expenses include previous credit loss experience, the status of past due interest and principal payments, the quality of financial information supplied by loan customers and the general condition of the industries in the community to which loans have been made.

Deposits. Total deposits increased $46.5 million, or 5.53%, since December 31, 2011. Balances in the Company’s non-interest bearing deposits increased $13.1 million, or 13.6%, between December 31, 2011 and June 30, 2012. Money market accounts also increased $23.8 million between year end 2011 and June 30, 2012. Savings and other interest bearing demand deposits increased $19.9 million between December 31, 2011 and June 30, 2012. The Company’s deposits are also being affected positively by the recent development of the Marcellus and Utica shale activity within the local region. At June 30, 2012 the Company had deposits totaling approximately $41.1 million that customers have received from energy exploration companies from the leasing or sale of mineral rights. The Company’s focus continues to be on core deposit growth and the Company will price deposit rates to remain competitive within the market and to retain customers. At June 30, 2012, core deposits — savings and money market accounts, time deposits less than $100,000 and demand deposits — represented approximately 90.0% of total deposits.

Borrowings. Total borrowings decreased $2.3 million, or 2.1%, since December 31, 2011. The decrease in borrowings is the result of an $873 thousand and $649 thousand decrease in securities sold under repurchase agreements and federal home loan bank advances, respectively. The decrease in repurchase agreements is due to public funds deposits moving to money market deposit accounts in an effort to maximize interest rate return.

Capital Resources. Total stockholders’ equity increased from $114.4 million at December 31, 2011 to $118.9 million at June 30, 2012. The increase is the result of net income and fair value adjustments in the Company’s investment securities and partially offset by cash dividends paid to shareholders during the past six months. Shareholders received a $0.09 per share cash dividend during the first six months of 2012 which included a one-time special $0.03 dividend. Book value per share increased 3.8% from $6.10 per share at December 31, 2011 to $6.33 per share at June 30, 2012. This increase is mainly the result of net income from the period ended June 30, 2012.

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The capital management function is a regular process that consists of providing capital for both the current financial position and the anticipated future growth of the Company. As of June 30, 2012 the Company’s total risk-based capital ratio stood at 17.68%, and the Tier I risk-based capital ratio and Tier I leverage ratio were at 16.40% and 9.44%, respectively. Management believes that the Company and the Bank meet all capital adequacy requirements to which they are subject, as of June 30, 2012.

Due to the continuing growth in the Bank’s business and the higher levels of its allowance for loan losses associated with current economic conditions, senior management and the Board have determined that higher levels of capital are appropriate. The Office of the Comptroller of the Currency (the “OCC”) concurred in the Board’s view that additional capital would be beneficial in supporting its continued growth and operations. As a result, effective February 2, 2010, the OCC proposed and the Bank accepted the following individual minimum capital requirements for the Bank: Tier I Capital to Adjusted Total Assets of 7.20% and Total Capital to Risk-Weighted Assets of 11.00%. At June 30, 2012, the Bank is in compliance with these minimum capital requirements.

Critical Accounting Policies

The Company follows financial accounting and reporting policies that are in accordance with U.S. GAAP. These policies are presented in Note 1 of the consolidated audited financial statements in the Company’s Annual Report to Shareholders included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. Critical accounting policies are those policies that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company has identified two accounting policies that are critical accounting policies and an understanding of these policies is necessary to understand the Company’s financial statements. These policies relate to determining the adequacy of the allowance for loan losses and other-than-temporary impairment of securities. The change in methodology for historical loss experience used in calculating the unallocated portion of the allowance for loan losses from 8 previous quarters to now using the 12 previous quarters was previously discussed. Additional information regarding these policies is included in the notes to the aforementioned 2011 consolidated financial statements, Note 1 (Summary of Significant Accounting Policies), Note 2 (Securities), Note 3 (Loans), and the sections captioned “Loan Portfolio” and “Investment Securities”.

Management believes that the accounting for goodwill and other intangible assets also involves a higher degree of judgment than most other significant accounting policies. U.S.GAAP establishes standards for the amortization of acquired intangible assets and the impairment assessment of goodwill. Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired. The Company’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of the Company’s trust subsidiary to provide quality, cost-effective trust services in a competitive marketplace. The goodwill value is supported by revenue that is in part driven by the volume of business transacted. A decrease in earnings resulting from a decline in the customer base or the inability to deliver cost-effective services over sustained periods can lead to impairment of goodwill that could adversely impact earnings in future periods. U.S. GAAP requires an annual evaluation of goodwill for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The fair value of the goodwill, which resides on the books of the Trust, is estimated by reviewing the past and projected operating results for the subsidiary and trust banking industry comparable information.

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Liquidity

The Company maintains, in the opinion of management, liquidity sufficient to satisfy depositors’ requirements and meet the credit needs of customers. The Company depends on its ability to maintain its market share of deposits as well as acquiring new funds. The Company’s ability to attract deposits and borrow funds depends in large measure on its profitability, capitalization and overall financial condition. The Company’s objective in liquidity management is to maintain the ability to meet loan commitments, purchase securities or to repay deposits and other liabilities in accordance with their terms without an adverse impact on current or future earnings. Principal sources of liquidity for the Company include assets considered relatively liquid, such as federal funds sold, cash and due from banks, as well as cash flows from maturities and repayments of loans, and securities.

Along with its liquid assets, the Bank has additional sources of liquidity available which help to ensure that adequate funds are available as needed. These other sources include, but are not limited to, loan repayments, the ability to obtain deposits through the adjustment of interest rates and the purchasing of federal funds and borrowings on approved lines of credit at major domestic banks. At June 30, 2012, these lines of credit totaled $24.5 million and the Bank had not borrowed against these lines. In addition, the Company has a $1.5 million revolving line of credit with a correspondent bank. The outstanding balance at June 30, 2012 was $350 thousand. Management feels that its liquidity position is adequate and continues to monitor the position on a monthly basis. As of June 30, 2012, the Bank had outstanding balances with the Federal Home Loan Bank of Cincinnati (“FHLB”) of $10.5 million with additional borrowing capacity of approximately $87.5 million with the FHLB as well as access to the Federal Reserve Discount Window, which provides an additional source of funds. The Bank views its membership in the FHLB as a solid source of liquidity.

The primary investing activities of the Company are originating loans and purchasing securities. During the first six months of 2012, net cash used by investing activities amounted to $22.9 million, compared to $22.9 million used by investing activities for the same period in 2011. Proceeds from maturities and repayments of securities was $35.2 million for the six month period ended June 30, 2012 compared to $21.1 million provided in the same prior year period. Purchases of securities amounted to $54.8 million used during the first six months of 2012 compared to $63.3 million used during the same period in 2011. There was $3.1 million used for loan originations and payments during the first six months of 2012, compared to $19.8 million in net cash provided by loan originations and payments during the same period in 2011. The cash used by lending activities during this year’s first six month period can be attributed to the activity in the commercial real estate portfolio.

The primary financing activities of the Company are obtaining deposits, repurchase agreements and other borrowings. Net cash provided by financing activities amounted to $42.7 million for the first six months of 2012, compared to $23.8 million provided by financing activities for the same period in 2011. The majority of this change was in the net change in deposits. During the first six months of 2012 cash provided was $46.5 million while during the same period in 2011 the cash provided amounted to $9.0 million. The Company’s common and treasury shares public offering during the first quarter of 2011 provided $13.8 million and $0 during 2012.

Off-Balance Sheet Arrangements

In the normal course of business, to meet the financial needs of our customers, we are a party to financial instruments with off-balance sheet risk. These financial instruments generally include commitments to originate mortgage, commercial and consumer loans, and involve to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the Consolidated Balance Sheets. The Bank’s maximum exposure to credit loss in the event of nonperformance by the borrower is represented by the contractual amount of those instruments. Because some commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The same credit policies are used in making commitments as are used for on-balance sheet instruments. Collateral is required in instances where deemed necessary. Undisbursed balances of loans closed include funds not disbursed but

37

committed for construction projects. Unused lines of credit include funds not disbursed, but committed for, home equity, commercial and consumer lines of credit. Financial standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Those guarantees are primarily used to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Total unused commitments were $91.5 million at June 30, 2012 and $86.4 million at December 31, 2011.

Recent Market and Regulatory Developments

In response to the recent national and international economic recession, and in an effort to stabilize and strengthen the financial markets and banking industries, the United States Congress and governmental agencies have taken a number of significant actions over the past several years, including the passage of legislation and the implementation of a number of programs. The most recent of these actions was the passage into law, on July 21, 2010, of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Dodd-Frank Act is the most comprehensive change to banking laws and the financial regulatory environment since the Great Depression of the 1930s. The Dodd-Frank Act affects almost every aspect of the nation’s financial services industry and mandates change in several key areas, including regulation and compliance, securities regulation, executive compensation, regulation of derivatives, corporate governance, and consumer protection.

The extent to which the Dodd-Frank Act and initiatives thereunder will succeed in addressing the credit markets or otherwise result in an improvement in the national economy is uncertain. In addition, because many aspects of this legislation still remain subject to intensive agency rulemaking and subsequent public comment prior to implementation over the next several months, it is difficult to predict at this time the ultimate effect of the Dodd-Frank Act on the Company. It is likely, however, that the Company’s expenses will increase as a result of new compliance requirements.

Various legislation affecting financial institutions and the financial industry will likely continue to be introduced in Congress, and such legislation may further change banking statutes and the operating environment of the Company in substantial and unpredictable ways, and could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance depending upon whether any of this potential legislation will be enacted, and if enacted, the effect that it or any implementing regulations, would have on the financial condition or results of operations of the Company or any of its subsidiaries. With the enactment of the Dodd-Frank Act, the nature and extent of future legislative and regulatory changes affecting financial institutions remains very unpredictable at this time.

Also, such statutes, regulations and policies are continually under review by Congress and state legislatures and federal and state regulatory agencies and are subject to change at any time, particularly in the current economic and regulatory environment. Any such change in statutes, regulations or regulatory policies applicable to the Company could have a material effect on the business of the Company.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s ability to maximize net income is dependent, in part, on management’s ability to plan and control net interest income through management of the pricing and mix of assets and liabilities. Because a large portion of assets and liabilities of the Company are monetary in nature, changes in interest rates and monetary or fiscal policy affect its financial condition and can have significant impact on the net income of the Company. Additionally, the Company’s balance sheet is currently liability sensitive and in the low interest rate environment that exists today, the Company’s net interest margin should maintain current levels throughout the near future.

The Company considers the primary market exposure to be interest rate risk. Simulation analysis is used to monitor the Company’s exposure to changes in interest rates, and the effect of the change to

38

net interest income. The following table shows the effect on net interest income and the net present value of equity in the event of a sudden and sustained increase or decrease in market interest rates:

Changes In Interest Rate	June 30, 2012	December 31, 2011	ALCO
(basis points)	Result	Result	Guidelines
Net Interest Income Change
+300	-1.44%	-4.40%	15.00%
+200	-0.67%	-2.58%	10.00%
+100	-0.09%	-1.05%	5.00%
-100	-3.01%	-2.32%	5.00%
Net Present Value
Of Equity Change
+300	3.52%	-1.42%	20.00%
+200	5.76%	2.51%	15.00%
+100	4.35%	2.66%	10.00%
-100	-15.29%	16.81%	10.00%

The simulation provides probable results that could be expected in an environment where interest rates rise 100, 200 and 300 basis points or fall 100 basis points over a 12 month period, using June 30, 2012 amounts as a base case, and considering the increase in deposit liabilities, and the volatile financial markets. It should be noted that the change in the net present value of equity exceeded policy when the simulation model assumed a sudden decrease in rates of 100 basis points. This was primarily because the positive impact on the fair value of assets would not be as great as the negative impact on the fair value of certain liabilities. Specifically, because core deposits typically bear relatively low interest rates, their fair value would be negatively impacted as the rates could not be adjusted by the full extent of the sudden decrease in rates. Management does not believe that a 100 basis rate decline is realistic in the current interest rate environment. The remaining results of this analysis comply with internal limits established by the Company. A report on interest rate risk is presented to the Board of Directors and the Asset/Liability Committee on a quarterly basis. The Company has no market risk sensitive instruments held for trading purposes, nor does it hold derivative financial instruments, and does not plan to purchase these instruments in the near future.

Item 4. Controls and Procedures

Based on their evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s Chief Executive Officer and Chief Financial Officer have concluded the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are effective. There were no changes in the Company’s internal controls over financial reporting (as defined in Rule 13a – 15(f) under the Exchange Act) that occurred during the fiscal quarter ended June 30, 2012, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

In the opinion of management there are no outstanding legal actions that will have a material adverse effect on the Company’s financial condition or results of operations.

Item 1A. Risk Factors

There have been no material changes to the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable.

Item 6. Exhibits

The following exhibits are filed or incorporated by reference as part of this report:

3.1	Articles of Incorporation of Farmers National Banc Corp., as amended (incorporated by reference from Exhibit 4.1 to the Company’s Registration Statement on Form S-3 filed with the SEC on October 3, 2001 (File No. 333-70806).
3.2	Amended Code of Regulations of Farmers National Banc Corp. (incorporated by reference from Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011 filed with the SEC on August 9, 2011).
4	Agreement to furnish instruments and agreements defining rights of holders of long-term debt (incorporated by reference from Exhibit 4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2012 filed with the SEC on May 9, 2012).
10.1	Farmers National Banc Corp. 2012 Equity Incentive Plan (filed herewith)
31.1	Rule 13a-14(a)/15d-14(a) Certification of John S. Gulas, President and Chief Executive Officer of the Company (filed herewith).
31.2	Rule 13a-14(a)/15d-14(a) Certification of Carl D. Culp, Executive Vice President, Chief Financial Officer and Treasurer of the Company (filed herewith).
32.1	Certification pursuant to 18 U.S.C. Section 1350 of John S. Gulas, President and Chief Executive Officer of the Company (filed herewith).
32.2	Certification pursuant to 18 U.S.C. Section 1350 of Carl D. Culp, Executive Vice President, Chief Financial Officer and Treasurer of the Company (filed herewith).
101*	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.

* As provided in Rule 406T of Regulation S-T, this information shall not be deemed “filed” for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FARMERS NATIONAL BANC CORP.

Dated: August 7, 2012

/s/ John S. Gulas

John S. Gulas

President and Chief Executive Officer

Dated: August 7, 2012

/s/ Carl D. Culp

Carl D. Culp

Executive Vice President

and Treasurer

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EX-10.1

FARMERS NATIONAL BANC CORP.

2012 EQUITY INCENTIVE PLAN

The purpose of the Plan is to promote the Company’s long-term financial success and increase shareholder value by motivating performance through incentive compensation. The Plan also is intended to encourage Participants to acquire ownership interests in the Company, attract and retain talented employees and directors and enable Participants to participate in the Company’s long-term growth and financial success.

ARTICLE I

DEFINITIONS

When used in the Plan, the following capitalized words, terms and phrases shall have the meanings set forth in this Article I. For purposes of the Plan, the form of any word, term or phrase shall include any and all of its other forms.

1.1 “Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto.

1.2 “Affiliate” shall mean any entity with whom the Company would be considered a single employer under Section 414(b) or (c) of the Code, but modified as permitted under Treasury Regulations promulgated under any Code section relevant to the purpose for which the definition is applied.

1.3 “Award” shall mean any Restricted Stock, Stock Unit, Performance Based Award or Share Award granted pursuant to the Plan.

1.4 “Award Agreement” shall mean any written or electronic agreement between the Company and a Participant that describes the terms and conditions of an Award. If there is a conflict between the terms of the Plan and the terms of an Award Agreement, the terms of the Plan shall govern.

1.5 “Board” shall mean the Board of Directors of the Company.

1.6 “Cause” shall mean, unless otherwise provided in the related Award Agreement or in any employment agreement between the Participant and the Company or any Affiliate or in any other agreement between the Participant and the Company or any Affiliate (but only within the context of the events contemplated by the employment agreement or other agreement, as applicable), a Participant’s: (a) commission of any intentional, reckless, or grossly negligent act which may result in material injury to the good will, business or business reputation of the Company or any Affiliate; (b) participation in any fraud, dishonesty, theft, conviction of a crime, or unethical business conduct; (c) violation of any written policy, rule, regulation or covenant with respect to non-competition, non-solicitation, non-disparagement, cooperation or otherwise with respect to the Company or any Affiliate; or (d) failure to adequately perform the Participant’s job duties or to follow lawful and ethical directions provided to the Participant, which failure, if amenable to cure, has not been cured in all material respects within 20 days after receiving notice of such failure from the Company.

1.7 “Change in Control” shall mean, unless otherwise provided in any employment agreement between the Participant and the Company or any Affiliate or in any other agreement between the Participant and the Company or any Affiliate (but only within the context of events contemplated by the employment agreement or other agreement, as applicable), the occurrence of any of the following:

(a) any person (as defined in Act) becomes a direct or indirect beneficial owner of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities; or

(ii) the merger or consolidation of the Company with another entity, and as a result of such merger or consolidation, less than 75% of the outstanding voting securities of the surviving or resulting entity shall be owned in the aggregate by the former shareholders of the Company; or

(c) during any two consecutive years, individuals who at the beginning of such period constitute the Board, cease for any reason to constitute at least a majority thereof, unless the election of each director who is not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of the directors at the beginning of the period.

A “change in control” will only be deemed to have occurred if one of the three above-listed scenarios occurs and, as a result thereof, the Participant is not offered a position that is substantially similar to the Participant’s position immediately prior to the transaction, in terms of duties, responsibilities, pay and benefits.

Notwithstanding the foregoing, with respect to the payment, exercise or settlement of any Award that is subject to Section 409A of the Code (and for which no exception applies), a Change in Control shall be deemed not to have occurred unless the events or circumstances constituting a Change in Control also constitute a “change in control event” within the meaning of Section 409A of the Code and the Treasury Regulations promulgated thereunder.

1.8 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

1.9 “Committee” shall mean the Compensation Committee of the Board, which will be comprised of at least two (2) directors, each of whom is a “non-employee” director within the meaning of Rule 16b-3 under the Act.

1.10 “Company” shall mean Farmers National Banc Corp., an Ohio corporation, and any successor thereto.

1.11 “Director” shall mean a person who is a member of the Board, excluding any member who is an Employee.

1.12 “Disability” shall mean:

(a) with respect to an Incentive Stock Option, “disability” as defined in Section 22(e)(3) of the Code;

(b) with respect to the payment or settlement of any Award that is (or becomes) subject to Section 409A of the Code (and for which no exception applies), (i) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, (ii) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Employees of the Participant’s employer, or (iii) the Participant is determined to be totally disabled by the Social Security Administration or Railroad Retirement Board; and

(c) with respect to the payment or settlement of any Award not described in subsection (a) or (b) of this definition, a Participant’s inability (established by an independent physician selected by the Committee and reasonably acceptable to the Participant or to the Participant’s legal representative) due to illness, accident or otherwise to perform his or her duties, which is expected to be permanent or for an indefinite duration longer than twelve (12) months.

1.13 “Employee” shall mean any person who is a common law employee of the Company or any Affiliate. A person who is classified as other than a common-law employee but who is subsequently reclassified as a common law employee of the Company or any Affiliate for any reason and on any basis shall be treated as a common law employee only from the date that reclassification occurs and shall not retroactively be reclassified as an Employee for any purpose under the Plan.

1.14 “Fair Market Value” shall mean the value of one Share on any relevant date, determined under the following rules:

(a) If the Shares are traded on an exchange, the reported “closing price” on the relevant date if it is a trading day, otherwise on the next trading day;

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(b) If the Shares are traded over-the-counter with no reported closing price, the mean between the lowest bid and the highest asked prices on that quotation system on the relevant date if it is a trading day, otherwise on the next trading day; or

(c) If neither (a) nor (b) applies, (i) with respect to Options, Stock Appreciation Rights and any Award that is subject to Section 409A of the Code, the value as determined by the Committee through the reasonable application of a reasonable valuation method, taking into account all information material to the value of the Company, within the meaning of Section 409A of the Code and the Treasury Regulations promulgated thereunder, and (ii) with respect to all other Awards, the fair market value as determined by the Committee in good faith.

1.15 “Good Reason” shall mean, unless otherwise specified in the Award Agreement or another agreement between the Participant and the Company or any Affiliate, or in any other agreement between the Participant and the Company or any Affiliate (but only within the context of events contemplated by the employment agreement or other agreement, as applicable), the occurrence of any of the following without the Participant’s consent (provided the Company or Affiliate does not fully cure the effect of such event within 30 days following its receipt of written notice of such event from the Participant: (a) a material diminution in the Participant’s Base Salary; or (b) a material reduction in, or the permanent assignment to, the Participant of duties that are materially inconsistent with the Participant’s position (including, without limitation, the Participant’s status, office and title), authority, duties or responsibilities; or (c) a material change in the geographic location in which the Participant must perform services under this Agreement. Notwithstanding the foregoing, Good Reason shall cease to exist for an event on the 90th day following the later of its occurrence or the Participant’s knowledge thereof, unless the Participant has given the Employer written notice of such event prior to such date.

1.16 “Participant” shall mean an Employee or Director who is granted an Award under the Plan.

1.17 “Performance-Based Award” shall mean an Award described in Article VIII of the Plan.

1.18 “Performance Criteria” shall mean any of the following: (a) revenue; (b) net earnings or net income (before or after taxes); (c) earnings per share; (d) deposit or asset growth; (e) net operating income; (f) return measures (including return on assets and equity); (g) fee income; (h) earnings before or after taxes, interest, depreciation and/or amortization; (i) interest spread; (j) productivity ratios; (k) share price (including, but not limited to, growth measures and total shareholder return); (l) expense targets; (m) credit quality; (n) efficiency ratio; (o) market share; (p) customer satisfaction; (q) asset quality measures (e.g., Texas Ratio, ALLL etc.); (r) net income after cost of capital (NIACC); (s) strategic objectives (including, branding, mergers and acquisitions, succession management, dynamic market response, new product build out, expense reduction initiatives, risk management and regulatory compliance); or (t) such other measures as the Committee may select from time to time.

1.19 “Plan” shall mean the Farmers National Banc Corp. 2012 Equity Incentive Plan, as set forth herein and as may be amended from time to time.

1.20 “Restricted Stock” shall mean an Award granted pursuant to Article V of the Plan under which a Participant is issued a right to receive a specified number of Shares or a cash payment equal to a specified number of Shares, the settlement of which is subject to specified restrictions on vesting and transferability.

1.21 “Retirement” shall mean, with respect to an Employee, termination after the attainment of age 65, unless another definition is provided in the related Award Agreement.

1.22 “Shares” shall mean the common shares, par value $1.00 per share, of the Company or any security of the Company issued in satisfaction, exchange or in place of these shares.

1.23 “Share Award” shall mean an Award granted pursuant to Section VII of the Plan consisting on an award of unrestricted Shares.

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1.24 “Stock Unit” shall mean an Award granted pursuant to Section VI of the Plan through which a Participant is granted the right to receive Shares in the future.

ARTICLE II

SHARES SUBJECT TO THE PLAN

2.1 Number of Shares Available for Awards. Subject to this Article II, the aggregate number of Shares with respect to which Awards may be granted under the Plan shall be 500,000. The Shares may consist, in whole or in part, of treasury Shares, authorized but unissued Shares not reserved for any other purpose or Shares purchased by the Company or an independent agent in either a private transaction or in the open market. Subject to this Article II, the number of Shares available for issuance under the Plan shall be reduced by one Share for each Share subject to a grant of an Award and any Shares underlying such an Award that become available for future grant under the Plan pursuant to Section 2.2 shall be added back to the Plan in an amount equal to the number of Shares subject to such an Award that become available for future grant under the Plan pursuant to Section 2.2.

2.2 Share Usage. In addition to the number of Shares provided for in Section 2.1, the following Shares shall be available for Awards under the Plan: (a) Shares covered by an Award that expires or is forfeited, canceled, surrendered or otherwise terminated without the issuance of such Shares; (b) Shares covered by an Award that, by its terms, may be settled only in cash; (c) Shares granted through the assumption of, or in substitution for, outstanding awards granted by a company to individuals who become Employees or Directors as the result of a merger, consolidation, acquisition or other corporate transaction involving such company and the Company or any of its Affiliates; and (d) any Shares from awards exercised for or settled in vested and nonforfeitable Shares that are later returned to the Company pursuant to any compensation recoupment policy, provision or agreement. Notwithstanding the foregoing, no Shares covered by an Award that are withheld to satisfy any applicable taxes shall again be available for issuance as Awards under this Plan.”

2.3 Adjustments. In the event of any Share dividend, Share split, recapitalization (including payment of an extraordinary dividend), merger, reorganization, consolidation, combination, spin-off, distribution of assets to stockholders, exchange of Shares or any other change affecting the Shares, the Committee shall make such substitutions and adjustments, if any, as it deems equitable and appropriate to: (a) the aggregate number of Shares that may be issued under the Plan; and (b) the number of Shares and other terms or limitations applicable to outstanding Awards. Notwithstanding the foregoing, an adjustment pursuant to this Section 2.3 shall be made only to the extent such adjustment complies, to the extent applicable, with Section 409A of the Code.

ARTICLE III

ADMINISTRATION

3.1 In General. The Plan shall be administered by the Committee. The Committee shall have full power and authority to: (a) interpret the Plan and any Award Agreement; (b) establish, amend and rescind any rules and regulations relating to the Plan; (c) select Participants; (d) establish the terms and conditions of any Award consistent with the terms and conditions of the Plan; and (e) make any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan shall be made in the Committee’s sole and absolute discretion and shall be final, conclusive and binding on all persons.

3.2 Delegation of Duties. In its sole discretion, the Committee may delegate any ministerial duties associated with the Plan to any person (including Employees) it deems appropriate; provided, however, that the Committee may not delegate (a) any duties that it is required to discharge to comply with applicable law; (b) its authority to grant Awards to any Participant who is subject to Section 16 of the Act; and (c) its authority under the Company’s equity award granting policy that may be in effect from time to time.

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ARTICLE IV

ELIGIBILITY

Any Employee or Director selected by the Committee shall be eligible to be a Participant in the Plan.

ARTICLE V

RESTRICTED STOCK

5.1 Grant of Restricted Stock. Subject to the terms and conditions of the Plan, Shares of Restricted Stock may be granted to Participants in such number, and upon such terms and conditions, as shall be determined by the Committee in its sole discretion.

5.2 Award Agreement. Each Award of Restricted Stock shall be evidenced by an Award Agreement that shall specify the number of Shares of Restricted Stock, the restricted period(s) applicable to the Shares of Restricted Stock, the conditions upon which the restrictions on the Shares of Restricted Stock will lapse and such other terms and conditions as the Committee shall determine and which are not inconsistent with the terms and conditions of the Plan.

5.3 Terms, Conditions and Restrictions.

(a) The Committee shall impose such other terms, conditions and/or restrictions on any Shares of Restricted Stock as it may deem advisable, including, without limitation, restrictions based on the achievement of specific performance goals (which may be based on one or more of the Performance Criteria), time-based restrictions or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock.

(b) To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all terms, conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

(c) Unless otherwise provided in the related Award Agreement or required by applicable law, the restrictions imposed on Shares of Restricted Stock shall lapse upon the expiration or termination of the applicable restricted period and the satisfaction of any other applicable terms and conditions.

5.4 Rights Associated with Restricted Stock during Restricted Period. During any restricted period applicable to Shares of Restricted Stock:

(a) Such Shares of Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated.

(b) Unless otherwise provided in the related Award Agreement, (i) the Participant shall be entitled to exercise full voting rights associated with such Shares of Restricted Stock and (ii) the Participant shall be entitled to all dividends and other distributions paid with respect to such Shares of Restricted Stock during the restricted period; provided, however, that receipt of any such dividends or other distributions will be subject to the same terms and conditions as the Shares of Restricted Stock with respect to which they are paid.

ARTICLE VI

STOCK UNITS

6.1 Grant of Stock Units. Subject to the terms and conditions of the Plan, Participants may be granted Stock Units in such number, and upon such terms and conditions, as shall be determined by the Committee in its sole discretion.

6.2 Award Agreement. Each Award of Stock Units shall be evidenced by an Award Agreement that shall specify the number of Shares underlying the Award, the restricted period(s), the conditions upon which the restrictions on the Stock Units will lapse, the time at and form in which the Stock Units will be settled, and such other terms and conditions as the Committee shall determine and which are not inconsistent with the terms and conditions of the Plan.

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6.3 Terms, Conditions and Restrictions. The Committee shall impose such other terms, conditions and/or restrictions on any Award of Stock Units as it may deem advisable, including, without limitation, conditions and/or restrictions based on the achievement of specific performance goals (which may be based on one or more of the Performance Criteria), time-based conditions and/or restrictions or holding requirements or sale conditions and/or restrictions placed on the Shares by the Company upon vesting of such Stock Units.

6.4 Form of Settlement. An Award of Stock Units may be settled in full Shares, cash or a combination thereof, as specified by the Committee in the related Award Agreement.

6.5 Dividend Equivalents. Awards of Stock Units may provide the Participant with dividend equivalents, as determined by the Committee in its sole discretion and set forth in the related Award Agreement. In no event will a Participant have any voting rights with respect to the Shares underlying the Stock Units.

ARTICLE VII

SHARE AWARDS

Subject to the terms and conditions of the Plan, Share Awards consisting of unrestricted Shares may be granted to Participants in such number, and upon such terms and conditions, as shall be determined by the Committee in its sole discretion.

ARTICLE VIII

PERFORMANCE-BASED AWARDS

8.1 In General. Notwithstanding anything in the Plan to the contrary, any Award may be granted as a Performance-Based Award. As determined by the Committee in its sole discretion, the grant, vesting and/or settlement of any Performance-Based Award shall be conditioned on the attainment of performance goals based upon one or more Performance Criteria during a performance period established by the Committee. Any such Performance-Based Award must meet the requirements of this Article VIII. Performance Criteria may relate to the individual Participant, the Company, the Company and one or more Affiliate or one or more of their respective divisions or business units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, in each case, as determined by the Committee in its sole discretion.

8.2 Modifying Performance-Based Awards. Performance goals relating to Performance-Based Awards may be calculated without regard to extraordinary items or adjusted, as the Committee deems equitable, in recognition of unusual or non-recurring events affecting the Company and/or its Affiliates or changes in applicable tax laws or accounting principles.

8.3 Negative Discretion. In the Committee’s sole discretion, the amount of a Performance-Based Award actually paid to a Participant may be less than the amount otherwise payable based on the satisfaction of the performance goals and other materials terms of the Performance-Based Award.

ARTICLE IX

TERMINATION OF EMPLOYMENT OR SERVICE

9.1 Death; Disability; Retirement. Unless otherwise specified in the Award Agreement, or as subsequently determined by the Committee (but only to the extent permitted under Section 409A of the Code), a Participant shall vest in all Awards in full (and, if the Award was granted subject to the attainment of Performance Objectives, as though the Performance Objectives were achieved at the “target” level of performance) in the event of a Participant’s death, Disability or Retirement.

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9.2 Termination for Cause. A Participant shall forfeit all Awards whether or not vested in the event that the Participant is terminated for Cause.

9.3 Other Terminations. The Committee shall determine the extent to which an Award shall vest and the extent to which the Participant shall have the right to receive settlement of the Award on or following the Participant’s termination of employment or services with the Company and/or any of its Affiliates for any reason other than set forth in Sections 9.1 or 9.2. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the related Award Agreement, need not be uniform among all Awards granted under the Plan and may reflect distinctions based on the reasons for termination.

ARTICLE X

CHANGE IN CONTROL

10.1 Rights in the Event of a Change in Control. The Committee, in its sole discretion, may take such actions, if any, as it deems necessary or desirable with respect to any Award that is outstanding as of the date of the consummation of a Change in Control. Such actions may include, without limitation: (a) the acceleration of the vesting and/or settlement of an Award; (b) the payment of a cash amount in exchange for the cancellation of an Award equal to the value of the consideration to be paid in the Change in Control to holders of the same number of Shares as the number of Shares underlying the Award being cancelled (or, if no consideration is paid in the Change in Control, the Fair Market Value of the Shares underlying the Award being canceled); and/or (c) the issuance of substitute Awards that substantially preserve the value, rights and benefits of any affected Awards. Any action relating to an Award that is subject to Section 409A of the Code shall be consistent with the requirements thereof.

10.2 Effect of Change in Control. Except as otherwise provided in the related Award Agreement, in the event of a Change in Control, a Participant shall vest in all unvested Awards in full (and, if the Award was granted subject to the attainment of Performance Objectives, as though the Performance Objectives were achieved at the “target” level of performance) if either: (a) the Participant is terminated by the Company without Cause or voluntarily terminates for Good Reason within 12 months following a Change in Control; or (b) the Awards are canceled and the Participant is not granted substitute Awards that substantially preserve the value, rights and benefits of any affected Awards.

10.3 Golden Parachute Limitations. Except as otherwise provided in any other written agreement between the Company or any Affiliate and a Participant, including any Award Agreement, if the sum of the amounts payable under the Plan and those provided under all other plans, programs or agreements between the Participant and the Company or any Affiliate constitutes a “parachute payment” as defined in Section 280G of the Code, the Company will reduce any payments to the minimum extent necessary to avoid the imposition of an excise tax under Section 4999 of the Code or a loss of deduction under Section 280G of the Code. Any reduction pursuant to this Section 10.3 shall be made in compliance with Section 409A of the Code.

ARTICLE XI

AMENDMENT OR TERMINATION OF THE PLAN

The Board or the Committee may amend or terminate the Plan at any time; provided, however, that no amendment or termination shall be made without the approval of the Company’s stockholders to the extent that (a) the amendment materially increases the benefits accruing to Participants under the Plan, (b) the amendment materially increases the aggregate number of Shares authorized for grant under the Plan (excluding an increase in the number of Shares that may be issued under the Plan as a result of Section 2.3, (c) the amendment materially modifies the requirements as to eligibility for participation in the Plan, or (d) such approval is required by any law, regulation or stock exchange rule.

ARTICLE XII

TRANSFERABILITY

12.1 Awards Not Transferable. Except as described in Section 12.2 or as provided in a related Award Agreement, an Award may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution Notwithstanding any provision contained in this Article XII, no Award may be transferred by a Participant for value or consideration.

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12.2 Beneficiary Designation. Unless otherwise specifically designated by the Participant in writing, a Participant’s beneficiary under the Plan shall be the Participant’s spouse or, if no spouse survives the Participant, the Participant’s estate.

ARTICLE XIII

MISCELLANEOUS

13.1 No Right to Continue Services or to Awards. The granting of an Award under the Plan shall impose no obligation on the Company or any Affiliate to continue the employment or services of a Participant or interfere with or limit the right of the Company or any Affiliate to terminate the services of any Employee or Director at any time. In addition, no Employee or Director shall have any right to be granted any Award, and there is no obligation for uniformity of treatment of Participants. The terms and conditions of Awards and the Committee’s interpretations and determinations with respect thereto need not be the same with respect to each Participant.

13.2 Tax Withholding.

(a) The Company or an Affiliate, as applicable, shall have the power and the right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to an Award granted under the Plan. This amount may, as determined by the Committee in its sole discretion, be (i) withheld from other amounts due to the Participant, (ii) withheld from the value of any Award being settled or any Shares being transferred in connection with the settlement of an Award or (iii) withheld from the vested portion of any Award (including the Shares transferable thereunder), whether or not being settled at the time the taxable event arises, or (iv) collected directly from the Participant.

(b) Subject to the approval of the Committee, a Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction; provided that such Shares would otherwise be distributable to the Participant at the time of the withholding and if such Shares are not otherwise distributable at the time of the withholding, provided that the Participant has a vested right to distribution of such Shares at such time. All such elections shall be irrevocable and made in writing and shall be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.

13.3 Requirements of Law. The grant of Awards and the issuance of Shares shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system. Without limiting the foregoing, the Company shall have no obligation to issue Shares under the Plan prior to (a) receipt of any approvals from any governmental agencies or national securities exchange, market or quotation system that the Committee deems necessary and (b) completion of registration or other qualification of the Shares under any applicable federal or state law or ruling of any governmental agency that the Committee deems necessary.

13.4 Legends. Certificates for Shares delivered under the Plan may be subject to such stock transfer orders and other restrictions that the Committee deems advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange or other recognized market or quotation system upon which the Shares are then listed or traded, or any other applicable federal or state securities law. The Committee may cause a legend or legends to be placed on any certificates issued under the Plan to make appropriate reference to restrictions within the scope of this Section 14.4.

13.5 Uncertificated Shares. To the extent that the Plan provides for the issuance of certificates to reflect the transfer of Shares, the transfer of Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.

13.6 Governing Law. The Plan and all Award Agreements shall be governed by and construed in accordance with the laws of (other than laws governing conflicts of laws) the State of Ohio, except to the extent that the laws of the state in which the Company is incorporated are mandatorily applicable.

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13.7 No Impact on Benefits. Awards are not compensation for purposes of calculating a Participant’s rights under any employee benefit plan that does not specifically require the inclusion of Awards in calculating benefits.

13.8 Rights as a Shareholder. Except as otherwise provided in the Plan or in a related Award Agreement, a Participant shall have none of the rights of a shareholder with respect to Shares covered by an Award unless and until the Participant becomes the record holder of such Shares.

13.9 Successors and Assigns. The Plan shall be binding on all successors and assigns of the Company and each Participant, including without limitation, the estate of such Participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors.

13.10 Section 409A of the Code.

(a) Awards granted pursuant to the Plan that are subject to Section 409A of the Code, or that are subject to Section 409A but for which an exception from Section 409A of the Code applies, are intended to comply with or be exempt from Section 409A of the Code and the Treasury Regulations promulgated thereunder, and the Plan shall be interpreted, administered and operated accordingly.

(b) If a Participant is determined to be a “specified employee” (within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees), the Participant shall not be entitled to payment or to distribution of any portion of an Award that is subject to Section 409A of the Code (and for which no exception applies) and is payable or distributable on account of the Participant’s “separation from service” (within the meaning of Section 409A of the Code) until the expiration of six (6) months from the date of such separation from service (or, if earlier, the Participant’s death). Such Award, or portion thereof, shall be paid or distributed on the first business day of the seventh month following such separation from service.

(c) Nothing in the Plan shall be construed as an entitlement to or guarantee of any particular tax treatment to a Participant, and none of the Company, its Affiliates, the Board or the Committee shall have any liability with respect to any failure to comply with the requirements of Section 409A of the Code.

13.11 Savings Clause. In the event that any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

ARTICLE XIV

EFFECTIVE DATE AND TERM OF THE PLAN

This Plan shall become effective upon its approval by the Company’s shareholders. No Awards may be granted under the Plan after the tenth anniversary of the date the Plan was approved by the Board. Notwithstanding the foregoing, the termination of the Plan shall not preclude the Company from complying with the terms of Awards outstanding on the date the Plan terminates.

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

Certification of Chief Executive Officer

CERTIFICATION FOR QUARTERLY REPORT ON FORM 10-Q

I, John S. Gulas certify that:

1) I have reviewed this quarterly report on Form 10-Q of Farmers National Banc Corp.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 7, 2012

/s/ John S. Gulas

John S. Gulas

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

Certification of Chief Financial Officer

CERTIFICATION FOR QUARTERLY REPORT ON FORM 10-Q

I, Carl D. Culp certify that:

1) I have reviewed this quarterly report on Form 10-Q of Farmers National Banc Corp.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 7, 2012

/s/ Carl D. Culp

Carl D. Culp

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Farmers National Banc Corp. (the “Corporation”) on Form 10-Q for the period ended June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I John S. Gulas, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ John S. Gulas

John S. Gulas

Chief Executive Officer

August 7, 2012

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Farmers National Banc Corp. (the “Corporation”) on Form 10-Q for the period ended June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Carl D. Culp, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Carl D. Culp

Carl D. Culp

Chief Financial Officer

August 7, 2012

XML

Loans (Details 5) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	$ 9,622	$ 10,760
Loans Past Due 90 Days or More Still Accruing	306	250
Commercial real estate, Owner occupied [Member]
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	3,553	2,640
Loans Past Due 90 Days or More Still Accruing	0	0
Commercial real estate, Non-owner occupied [Member]
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	2,296	2,795
Loans Past Due 90 Days or More Still Accruing	0	0
Commercial real estate, Other[Member]
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	0	590
Loans Past Due 90 Days or More Still Accruing	0	0
Commercial [Member]
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	909	527
Loans Past Due 90 Days or More Still Accruing	46	0
Residential real estate, 1-4 family residential [Member]
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	2,565	3,897
Loans Past Due 90 Days or More Still Accruing	195	121
Residential real estate, Home equity lines of credit [Member]
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	288	299
Loans Past Due 90 Days or More Still Accruing	0	0
Consumer, Indirect [Member]
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	11	12
Loans Past Due 90 Days or More Still Accruing	61	114
Consumer, Direct [Member]
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	0	0
Loans Past Due 90 Days or More Still Accruing	3	13
Consumer, Other [Member]
Recorded investment in nonaccrual and loans past due over 90 days
Nonaccrual	0	0
Loans Past Due 90 Days or More Still Accruing	$ 1	$ 2

XML

Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 75,559		$ 75,559		$ 52,422
Securities available for sale	420,147		420,147		400,029
Loans held for sale	3,718		3,718		677
Net loans	563,405		563,405		561,986
Premises and equipment, net	17,616		17,616		16,461
Goodwill and other intangibles	6,237		6,237		6,441
Other assets	14,876		14,876		14,840
Total Assets	1,116,833		1,116,833		1,067,871
Liabilities and Stockholders' Equity
Deposits, borrowings and other liabilities	997,895		997,895		953,426
Stockholders' equity	118,938		118,938		114,445
Total Liabilities and Stockholders' Equity	1,116,833		1,116,833		1,067,871
Income Statement
Net interest income	9,320	9,157	18,541	18,240
Provision for loan losses	400	1,075	400	2,950
Service fees, security gains and other noninterest income	2,925	2,694	5,653	5,311
Noninterest expense	8,877	8,092	17,516	15,906
Income before taxes	2,968	2,684	6,278	4,695
Income taxes	682	567	1,472	888
Net income	2,286	2,117	4,806	3,807
Trust Segment [Member]
Assets
Cash and cash equivalents	2,383		2,383		2,208
Securities available for sale	2,865		2,865		2,388
Loans held for sale	0		0		0
Net loans	0		0		0
Premises and equipment, net	89		89		101
Goodwill and other intangibles	6,237		6,237		6,441
Other assets	544		544		463
Total Assets	12,118		12,118		11,601
Liabilities and Stockholders' Equity
Deposits, borrowings and other liabilities	658		658		345
Stockholders' equity	11,460		11,460		11,256
Total Liabilities and Stockholders' Equity	12,118		12,118		11,601
Income Statement
Net interest income	12	11	22	22
Provision for loan losses	0	0	0	0
Service fees, security gains and other noninterest income	1,382	1,377	2,819	2,727
Noninterest expense	1,263	1,149	2,527	2,349
Income before taxes	131	239	314	400
Income taxes	47	82	110	137
Net income	84	157	204	263
Bank Segment [Member]
Assets
Cash and cash equivalents	73,258		73,258		50,327
Securities available for sale	417,119		417,119		397,513
Loans held for sale	3,718		3,718		677
Net loans	563,405		563,405		561,986
Premises and equipment, net	17,527		17,527		16,360
Goodwill and other intangibles	0		0		0
Other assets	28,990		28,990		28,904
Total Assets	1,104,017		1,104,017		1,055,767
Liabilities and Stockholders' Equity
Deposits, borrowings and other liabilities	1,001,366		1,001,366		957,780
Stockholders' equity	102,651		102,651		97,987
Total Liabilities and Stockholders' Equity	1,104,017		1,104,017		1,055,767
Income Statement
Net interest income	9,310	9,158	18,533	18,243
Provision for loan losses	400	1,075	400	2,950
Service fees, security gains and other noninterest income	1,617	1,356	2,971	2,661
Noninterest expense	7,395	6,743	14,636	13,255
Income before taxes	3,132	2,696	6,468	4,699
Income taxes	735	570	1,533	888
Net income	2,397	2,126	4,935	3,811
Eliminations and Others [Member]
Assets
Cash and cash equivalents	(82)		(82)		(113)
Securities available for sale	163		163		128
Loans held for sale	0		0		0
Net loans	0		0		0
Premises and equipment, net	0		0		0
Goodwill and other intangibles	0		0		0
Other assets	617		617		488
Total Assets	698		698		503
Liabilities and Stockholders' Equity
Deposits, borrowings and other liabilities	(4,129)		(4,129)		(4,699)
Stockholders' equity	4,827		4,827		5,202
Total Liabilities and Stockholders' Equity	698		698		503
Income Statement
Net interest income	(2)	(12)	(14)	(25)
Provision for loan losses	0	0	0	0
Service fees, security gains and other noninterest income	(74)	(39)	(137)	(77)
Noninterest expense	219	200	353	302
Income before taxes	(295)	(251)	(504)	(404)
Income taxes	(100)	(85)	(171)	(137)
Net income	$ (195)	$ (166)	$ (333)	$ (267)

XML

Fair Value (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Assets measured at fair value on a recurring basis
Securities available for sale	$ 420,147	$ 400,029
Recurring [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	420,147	400,029
Recurring [Member] | U.S. Treasury and U.S. government sponsored entities [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	58,424	55,988
Recurring [Member] | State and political subdivisions [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	82,061	82,690
Recurring [Member] | Corporate bonds [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	1,247	769
Recurring [Member] | Mortgage-backed securities-residential [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	243,618	222,718
Recurring [Member] | Collateralized mortgage obligations [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	34,166	37,222
Recurring [Member] | Small business administration [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	223	315
Recurring [Member] | Equity securities [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	408	327
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	408	327
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury and U.S. government sponsored entities [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | State and political subdivisions [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate bonds [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Mortgage-backed securities-residential [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Collateralized mortgage obligations [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Small business administration [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Equity securities [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	408	327
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	419,728	399,690
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury and U.S. government sponsored entities [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	58,424	55,988
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | State and political subdivisions [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	82,061	82,690
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate bonds [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	1,247	769
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mortgage-backed securities-residential [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	243,607	222,706
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Collateralized mortgage obligations [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	34,166	37,222
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Small business administration [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	223	315
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Equity securities [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	11	12
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Treasury and U.S. government sponsored entities [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | State and political subdivisions [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate bonds [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Mortgage-backed securities-residential [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	11	12
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Collateralized mortgage obligations [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Small business administration [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	0	0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Equity securities [Member]
Assets measured at fair value on a recurring basis
Securities available for sale	$ 0	$ 0

XML

Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Basic EPS computation
Numerator - Net income	$ 2,286	$ 2,117	$ 4,806	$ 3,807
Denominator - Weighted average shares outstanding	18,800,122	18,674,213	18,782,968	17,820,254
Basic earnings per share	$ 0.12	$ 0.11	$ 0.26	$ 0.21
Diluted EPS computation
Numerator - Net income	$ 2,286	$ 2,117	$ 4,806	$ 3,807
Denominator - Weighted average shares outstanding for basic earnings per share	18,800,122	18,674,213	18,782,968	17,820,254
Effect of Stock Options	0	0	0	0
Weighted averages shares for diluted earnings per share	18,800,122	18,674,213	18,782,968	17,820,254
Diluted earnings per share	$ 0.12	$ 0.11	$ 0.26	$ 0.21
Earnings Per Share (Textual) [Abstract]
Stock options not considered in computing of diluted earnings per share	5,000	28,500	5,000	28,500

XML

Securities (Details Textual) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2012 sec	Jun. 30, 2011 sec	Jun. 30, 2012 sec	Jun. 30, 2011 sec	Dec. 31, 2011
Securities (Textual) [Abstract]
Number of securities sales	0	1	0	1
Proceeds from the sale			$ 3,400,000
Securities, gain or loss recognized			0
Number of securities	416		416
Number of securities on unrealized loss position	18		18
Unrealized losses for U.S. Treasury and U.S. government sponsored entities and corporate bonds			$ 1,000		$ 1,000

XML

Credit Quality Indicators (Tables)

6 Months Ended

Jun. 30, 2012

Credit Quality Indicators [Abstract]

Risk category of loans by class of loans

(In Thousands of Dollars) June 30, 2012	Pass		Special Mention		Sub- standard		Doubtful		Not Rated		Total
Commercial real estate
Owner occupied	$	79,716	$	2,069	$	12,552	$	0	$	0	$	94,337
Non-owner occupied		76,039		3,163		7,366		0		0		86,568
Other		20,403		1,044		1,230		0		0		22,677
Commercial		70,784		4,030		2,821		0		0		77,635
Total	$	246,942	$	10,306	$	23,969	$	0	$	0	$	281,217

(In Thousands of Dollars) December 31, 2011	Pass		Special Mention		Sub- standard		Doubtful		Not Rated		Total
Commercial real estate
Owner occupied	$	80,770	$	6,359	$	13,201	$	51	$	0	$	100,381
Non-owner occupied		68,806		2,575		8,942		0		0		80,323
Other		14,491		301		2,545		0		0		17,337
Commercial		65,198		5,963		3,454		260		0		74,875
Total	$	229,265	$	15,198	$	28,142	$	311	$	0	$	272,916

Investment in residential, consumer and indirect auto loans based on payment activity

(In Thousands of Dollars) June 30, 2012	Residential Real Estate				Consumer
	1-4 Family Residential		Home Equity Lines of Credit		Indirect		Direct		Other
Performing	$	135,714	$	21,890	$	117,528	$	11,370	$	1,396
Nonperforming		2,974		288		72		3		1
Total	$	138,688	$	22,178	$	117,600	$	11,373	$	1,397

(In Thousands of Dollars) December 31, 2011	Residential Real Estate				Consumer
	1-4 Family Residential		Home Equity Lines of Credit		Indirect		Direct		Other
Performing	$	141,070	$	21,644	$	118,617	$	11,583	$	1,518
Nonperforming		4,018		299		126		13		2
Total	$	145,088	$	21,943	$	118,743	$	11,596	$	1,520

XML

Fair Value (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	$ 11,176	$ 10,355
Nonrecurring [Member] | Commercial real estate, Owner occupied [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	2,162	1,606
Nonrecurring [Member] | Commercial real estate, Non-owner occupied [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	492	2,017
Nonrecurring [Member] | Commercial real estate, Other[Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Commercial [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	155	41
Nonrecurring [Member] | Other real estate owned - Commercial real estate [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	187	270
Nonrecurring [Member] | Residential real estate, 1-4 family residential [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	89	76
Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Commercial real estate, Owner occupied [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Commercial real estate, Non-owner occupied [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Commercial real estate, Other[Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Commercial [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other real estate owned - Commercial real estate [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Residential real estate, 1-4 family residential [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Commercial real estate, Owner occupied [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Commercial real estate, Non-owner occupied [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Commercial real estate, Other[Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Commercial [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other real estate owned - Commercial real estate [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Residential real estate, 1-4 family residential [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Commercial real estate, Owner occupied [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	2,162	1,606
Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Commercial real estate, Non-owner occupied [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	492	2,017
Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Commercial real estate, Other[Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	0	0
Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Commercial [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	155	41
Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other real estate owned - Commercial real estate [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	187	270
Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Residential real estate, 1-4 family residential [Member]
Fair value assets measured on non-recurring basis
Assets measured on non-recurring basis	$ 89	$ 76

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Troubled Debt Restructurings (Details Textual) (USD $)	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Financing Receivable, Modifications [Line Items]
Total troubled debt restructurings		$ 6,500,000	$ 4,300,000
Specific reserves to customers	91,000	91,000	48,000
Commitments to lend additional amounts to borrowers classified as troubled debt restructurings	0	0	0
Maturity period of loans		5 years
Post-modification outstanding recorded investment	4,300,000	4,300,000	2,300,000
Allowance adjustment charge offs		0
Additional provision or impact to allowance for losses associated with loan		0
Payment default loan period	12 months	30 days
Troubled Debt Restructuring (Textual) [Abstract]
Decrease in the allowance for loan losses		$ 416,000
Maximum [Member]
Financing Receivable, Modifications [Line Items]
Reduction of the notes stated interest rate	1.00%	1.00%
Maturity period of loans		5 months
Minimum [Member]
Financing Receivable, Modifications [Line Items]
Reduction of the notes stated interest rate	3.60%	3.60%
Maturity period of loans		41 months

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Loans (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Unpaid Principal Balance
Unpaid Principal Balance	$ 11,156	$ 10,341
Recorded Investment
Recorded Investment	11,176	10,355
Allowance for Loan Losses Allocated
Allowance for Loan Losses Allocated	1,004	985
Commercial real estate, Owner occupied [Member]
Unpaid Principal Balance
Unpaid Principal Balance, With no related allowance recorded	1,302	759
Unpaid Principal Balance, With an allowance recorded	4,673	4,164
Recorded Investment
Recorded Investment, With no related allowance recorded	1,303	762
Recorded Investment, With an allowance recorded	4,683	4,169
Allowance for Loan Losses Allocated
Allowance for Loan Losses Allocated, With no related allowance recorded	0	0
Allowance for Loan Losses Allocated, With an allowance recorded	315	309
Commercial real estate, Non-owner occupied [Member]
Unpaid Principal Balance
Unpaid Principal Balance, With no related allowance recorded	287	339
Unpaid Principal Balance, With an allowance recorded	2,678	2,455
Recorded Investment
Recorded Investment, With no related allowance recorded	288	340
Recorded Investment, With an allowance recorded	2,682	2,456
Allowance for Loan Losses Allocated
Allowance for Loan Losses Allocated, With no related allowance recorded	0	0
Allowance for Loan Losses Allocated, With an allowance recorded	241	439
Commercial real estate, Other[Member]
Unpaid Principal Balance
Unpaid Principal Balance, With no related allowance recorded	0	589
Unpaid Principal Balance, With an allowance recorded	0	0
Recorded Investment
Recorded Investment, With no related allowance recorded	0	590
Recorded Investment, With an allowance recorded	0	0
Allowance for Loan Losses Allocated
Allowance for Loan Losses Allocated, With no related allowance recorded	0	0
Allowance for Loan Losses Allocated, With an allowance recorded	0	0
Commercial [Member]
Unpaid Principal Balance
Unpaid Principal Balance, With no related allowance recorded	890	1,062
Unpaid Principal Balance, With an allowance recorded	603	278
Recorded Investment
Recorded Investment, With no related allowance recorded	890	1,063
Recorded Investment, With an allowance recorded	605	278
Allowance for Loan Losses Allocated
Allowance for Loan Losses Allocated, With no related allowance recorded	0	0
Allowance for Loan Losses Allocated, With an allowance recorded	448	237
Residential real estate, 1-4 family residential [Member]
Unpaid Principal Balance
Unpaid Principal Balance, With no related allowance recorded	723	695
Recorded Investment
Recorded Investment, With no related allowance recorded	725	697
Allowance for Loan Losses Allocated
Allowance for Loan Losses Allocated, With no related allowance recorded	0	0
No related allowance [Member]
Unpaid Principal Balance
Unpaid Principal Balance	3,202	3,444
Recorded Investment
Recorded Investment	3,206	3,452
Allowance for Loan Losses Allocated
Allowance for Loan Losses Allocated	0	0
Allowance [Member]
Unpaid Principal Balance
Unpaid Principal Balance	7,954	6,897
Recorded Investment
Recorded Investment	7,970	6,903
Allowance for Loan Losses Allocated
Allowance for Loan Losses Allocated	$ 1,004	$ 985

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Fair Value (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Financial assets
Cash and cash equivalents, Carrying Amount	$ 75,559	$ 52,422
Cash and cash equivalents, Fair Value	75,559	52,422
Securities available-for-sale, Carrying Amount	420,147	400,029
Securities available-for-sale, Fair Value	420,147	400,029
Restricted stock, Carrying Amount	4,224	4,224
Restricted stock, Fair Value
Loans held for sale, Carrying Amount	3,718	677
Loans held for sale, Fair Value	3,784	677
Loans, net, Carrying Amount	563,405	561,986
Loans, net, Fair Value	575,142	574,391
Accrued interest receivable, Carrying Amount	3,749	3,794
Accrued interest receivable, Fair Value	3,749	3,794
Financial liabilities
Deposits, Carrying Amount	886,593	840,125
Deposits, Fair Value	892,874	846,412
Short-term borrowings, Carrying Amount	96,465	98,088
Short-term borrowings, Fair Value	96,465	98,088
Long-term borrowings, Carrying Amount	10,583	11,263
Long-term borrowings, Fair Value	11,956	12,719
Accrued interest payable, Carrying Amount	550	585
Accrued interest payable, Fair value	550	585
Level 1 [Member]
Financial assets
Cash and cash equivalents, Fair Value	14,410
Securities available-for-sale, Fair Value	408
Restricted stock, Fair Value
Loans held for sale, Fair Value	0
Loans, net, Fair Value	0
Accrued interest receivable, Fair Value	0
Financial liabilities
Deposits, Fair Value	641,629
Short-term borrowings, Fair Value	0
Long-term borrowings, Fair Value	0
Accrued interest payable, Fair value	5
Level 2 [Member]
Financial assets
Cash and cash equivalents, Fair Value	61,149
Securities available-for-sale, Fair Value	419,728
Restricted stock, Fair Value
Loans held for sale, Fair Value	3,784
Loans, net, Fair Value	0
Accrued interest receivable, Fair Value	1,089
Financial liabilities
Deposits, Fair Value	251,245
Short-term borrowings, Fair Value	96,465
Long-term borrowings, Fair Value	11,956
Accrued interest payable, Fair value	545
Level 3 [Member]
Financial assets
Cash and cash equivalents, Fair Value	0
Securities available-for-sale, Fair Value	11
Restricted stock, Fair Value
Loans held for sale, Fair Value	0
Loans, net, Fair Value	575,142
Accrued interest receivable, Fair Value	2,660
Financial liabilities
Deposits, Fair Value	0
Short-term borrowings, Fair Value	0
Long-term borrowings, Fair Value	0
Accrued interest payable, Fair value	$ 0

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Stock Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Stock Based Compensation (Textual) [Abstract]
Vesting period under stock option plan		5 years
Contractual terms under stock option plan		10 years
Outstanding options under stock option plan	5,000	5,000
Options, fully vested and exercisable under stock option plan	3,000	3,000
Income tax benefit recorded against income for stock option plan	$ 0	$ 0

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Estimates

6 Months Ended

Jun. 30, 2012

Estimates [Abstract]

Estimates

Estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The allowance for loan losses, deferred tax assets, carrying amount of goodwill and other intangibles and fair values of financial instruments are particularly subject to change.

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Credit Quality Indicators (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Risk category of loans by class of loans
Total risk category of loans by class of loans	$ 281,217	$ 272,916
Pass [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	246,942	229,265
Special Mention [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	10,306	15,198
Sub-standard [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	23,969	28,142
Doubtful [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	0	311
Not Rated [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	0	0
Commercial real estate, Owner occupied [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	94,337	100,381
Commercial real estate, Owner occupied [Member] | Pass [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	79,716	80,770
Commercial real estate, Owner occupied [Member] | Special Mention [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	2,069	6,359
Commercial real estate, Owner occupied [Member] | Sub-standard [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	12,552	13,201
Commercial real estate, Owner occupied [Member] | Doubtful [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	0	51
Commercial real estate, Owner occupied [Member] | Not Rated [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	0	0
Commercial real estate, Non-owner occupied [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	86,568	80,323
Commercial real estate, Non-owner occupied [Member] | Pass [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	76,039	68,806
Commercial real estate, Non-owner occupied [Member] | Special Mention [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	3,163	2,575
Commercial real estate, Non-owner occupied [Member] | Sub-standard [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	7,366	8,942
Commercial real estate, Non-owner occupied [Member] | Doubtful [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	0	0
Commercial real estate, Non-owner occupied [Member] | Not Rated [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	0	0
Commercial real estate, Other[Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	22,677	17,337
Commercial real estate, Other[Member] | Pass [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	20,403	14,491
Commercial real estate, Other[Member] | Special Mention [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	1,044	301
Commercial real estate, Other[Member] | Sub-standard [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	1,230	2,545
Commercial real estate, Other[Member] | Doubtful [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	0	0
Commercial real estate, Other[Member] | Not Rated [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	0	0
Commercial [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	77,635	74,875
Commercial [Member] | Pass [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	70,784	65,198
Commercial [Member] | Special Mention [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	4,030	5,963
Commercial [Member] | Sub-standard [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	2,821	3,454
Commercial [Member] | Doubtful [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	0	260
Commercial [Member] | Not Rated [Member]
Risk category of loans by class of loans
Total risk category of loans by class of loans	$ 0	$ 0

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Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Allowance for Loan Losses (Textual) [Abstract]
Loan loss	$ 400	$ 400

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2012

Segment Information [Abstract]

Schedule of segment reporting information

(In Thousands of Dollars) June 30, 2012	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Assets
Cash and cash equivalents	$	2,383	$	73,258	$	(82	)	$	75,559
Securities available for sale		2,865		417,119		163			420,147
Loans held for sale		0		3,718		0			3,718
Net loans		0		563,405		0			563,405
Premises and equipment, net		89		17,527		0			17,616
Goodwill and other intangibles		6,237		0		0			6,237
Other assets		544		28,990		617			30,151
Total Assets	$	12,118	$	1,104,017	$	698		$	1,116,833
Liabilities and Stockholders’ Equity
Deposits, borrowings and other liabilities	$	658	$	1,001,366	$	(4,129	)	$	997,895
Stockholders’ equity		11,460		102,651		4,827			118,938
Total Liabilities and Stockholders’ Equity	$	12,118	$	1,104,017	$	698		$	1,116,833

(In Thousands of Dollars) December 31, 2011	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Assets
Cash and cash equivalents	$	2,208	$	50,327	$	(113	)	$	52,422
Securities available for sale		2,388		397,513		128			400,029
Loans held for sale		0		677		0			677
Net loans		0		561,986		0			561,986
Premises and equipment, net		101		16,360		0			16,461
Goodwill and other intangibles		6,441		0		0			6,441
Other assets		463		28,904		488			29,855
Total Assets	$	11,601	$	1,055,767	$	503		$	1,067,871
Liabilities and Stockholders’ Equity
Deposits, borrowings and other liabilities	$	345	$	957,780	$	(4,699	)	$	953,426
Stockholders’ equity		11,256		97,987		5,202			114,445
Total Liabilities and Stockholders’ Equity	$	11,601	$	1,055,767	$	503		$	1,067,871

(In Thousands of Dollars) For the Three Months Ended June 30, 2012	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	12	$	9,310	$	(2	)	$	9,320
Provision for loan losses		0		400		0			400
Service fees, security gains and other noninterest income		1,382		1,617		(74	)		2,925
Noninterest expense		1,263		7,395		219			8,877
Income before taxes		131		3,132		(295	)		2,968
Income taxes		47		735		(100	)		682
Net Income	$	84	$	2,397	$	(195	)	$	2,286

(In Thousands of Dollars) For the Six Months Ended June 30, 2012	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	22	$	18,533	$	(14	)	$	18,541
Provision for loan losses		0		400		0			400
Service fees, security gains and other noninterest income		2,819		2,971		(137	)		5,653
Noninterest expense		2,527		14,636		353			17,516
Income before taxes		314		6,468		(504	)		6,278
Income taxes		110		1,533		(171	)		1,472
Net Income	$	204	$	4,935	$	(333	)	$	4,806
(In Thousands of Dollars) For the Three Months Ended June 30, 2011	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	11	$	9,158	$	(12	)	$	9,157
Provision for loan losses		0		1,075		0			1,075
Service fees, security gains and other noninterest income		1,377		1,356		(39	)		2,694
Noninterest expense		1,149		6,743		200			8,092
Income before taxes		239		2,696		(251	)		2,684
Income taxes		82		570		(85	)		567
Net Income	$	157	$	2,126	$	(166	)	$	2,117
(In Thousands of Dollars) For the Six Months Ended June 30, 2011	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	22	$	18,243	$	(25	)	$	18,240
Provision for loan losses		0		2,950		0			2,950
Service fees, security gains and other noninterest income		2,727		2,661		(77	)		5,311
Noninterest expense		2,349		13,255		302			15,906
Income before taxes		400		4,699		(404	)		4,695
Income taxes		137		888		(137	)		888
Net Income	$	263	$	3,811	$	(267	)	$	3,807

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Credit Quality Indicators (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	$ 572,453	$ 571,806
Residential real estate, 1-4 family residential [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	138,688	145,088
Residential real estate, 1-4 family residential [Member] | Performing [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	135,714	141,070
Residential real estate, 1-4 family residential [Member] | Nonperforming [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	2,974	4,018
Residential real estate, Home equity lines of credit [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	22,178	21,943
Residential real estate, Home equity lines of credit [Member] | Performing [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	21,890	21,644
Residential real estate, Home equity lines of credit [Member] | Nonperforming [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	288	299
Consumer, Indirect [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	117,600	118,743
Consumer, Indirect [Member] | Performing [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	117,528	118,617
Consumer, Indirect [Member] | Nonperforming [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	72	126
Consumer, Direct [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	11,373	11,596
Consumer, Direct [Member] | Performing [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	11,370	11,583
Consumer, Direct [Member] | Nonperforming [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	3	13
Consumer, Other [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	1,397	1,520
Consumer, Other [Member] | Performing [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	1,396	1,518
Consumer, Other [Member] | Nonperforming [Member]
Investment in residential, consumer and indirect auto loans based on payment activity
Loans	$ 1	$ 2

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Securities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Amortized cost and fair value of the available-for-sale investment securities
Amortized Cost	$ 406,017	$ 387,642
Gross Unrealized Gains	14,217	12,752
Gross Unrealized Losses	(87)	(365)
Fair Value	420,147	400,029
U.S. Treasury and U.S. government sponsored entities [Member]
Amortized cost and fair value of the available-for-sale investment securities
Amortized Cost	56,492	53,689
Gross Unrealized Gains	1,932	2,300
Gross Unrealized Losses	0	(1)
Fair Value	58,424	55,988
State and political subdivisions [Member]
Amortized cost and fair value of the available-for-sale investment securities
Amortized Cost	77,089	78,288
Gross Unrealized Gains	4,984	4,446
Gross Unrealized Losses	(12)	(44)
Fair Value	82,061	82,690
Corporate bonds [Member]
Amortized cost and fair value of the available-for-sale investment securities
Amortized Cost	1,236	758
Gross Unrealized Gains	11	11
Gross Unrealized Losses	0	0
Fair Value	1,247	769
Mortgage-backed securities-residential [Member]
Amortized cost and fair value of the available-for-sale investment securities
Amortized Cost	237,306	217,644
Gross Unrealized Gains	6,380	5,384
Gross Unrealized Losses	(68)	(310)
Fair Value	243,618	222,718
Collateralized mortgage obligations [Member]
Amortized cost and fair value of the available-for-sale investment securities
Amortized Cost	33,531	36,806
Gross Unrealized Gains	635	416
Gross Unrealized Losses	0	0
Fair Value	34,166	37,222
Small business administration [Member]
Amortized cost and fair value of the available-for-sale investment securities
Amortized Cost	224	318
Gross Unrealized Gains	1	1
Gross Unrealized Losses	(2)	(4)
Fair Value	223	315
Equity securities [Member]
Amortized cost and fair value of the available-for-sale investment securities
Amortized Cost	139	139
Gross Unrealized Gains	274	194
Gross Unrealized Losses	(5)	(6)
Fair Value	$ 408	$ 327

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Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Amortized cost and fair value of the debt securities maturity
Amortized Cost, Within one year	$ 21,086
Amortized Cost, One to five years	66,379
Amortized Cost, Five to ten years	34,287
Amortized Cost, Beyond ten years	13,065
Amortized Cost, Mortgage-backed, CMO and SBA securities	271,061
Amortized Cost, Total	405,878
Fair Value, Within one year	21,450
Fair Value, One to five years	69,844
Fair Value, Five to ten years	36,455
Fair Value, Beyond ten years	13,983
Fair Value, Mortgage-backed, CMO and SBA securities	278,007
Fair Value, Total	$ 419,739

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Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Basis of Presentation:

The unaudited condensed consolidated financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2011 Annual Report to Shareholders included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The interim consolidated financial statements include all adjustments (consisting of only normal recurring items) that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year. Certain items included in the prior period financial statements were reclassified to conform to the current period presentation. There was no effect on net income or total stockholders’ equity.

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Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	$ 15,422	$ 44,182
Unrealized Losses, Less Than 12 Months	(68)	(204)
Fair Value, 12 Months or Longer	466	12,312
Unrealized Losses, 12 Months or Longer	(19)	(161)
Fair Value, Total	15,888	56,494
Unrealized Losses, Total	(87)	(365)
U.S. Treasury and U.S. government sponsored entities [Member]
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	100	249
Unrealized Losses, Less Than 12 Months	0	(1)
Fair Value, 12 Months or Longer	0	0
Unrealized Losses, 12 Months or Longer	0	0
Fair Value, Total	100	249
Unrealized Losses, Total	0	(1)
State and political subdivisions [Member]
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	0	0
Unrealized Losses, Less Than 12 Months	0	0
Fair Value, 12 Months or Longer	321	2,420
Unrealized Losses, 12 Months or Longer	(12)	(44)
Fair Value, Total	321	2,420
Unrealized Losses, Total	(12)	(44)
Corporate bonds [Member]
Investment securities with unrealized losses
Fair Value, Less Than 12 Months		507
Unrealized Losses, Less Than 12 Months		0
Fair Value, 12 Months or Longer		0
Unrealized Losses, 12 Months or Longer		0
Fair Value, Total		507
Unrealized Losses, Total		0
Mortgage-backed securities-residential [Member]
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	15,322	43,426
Unrealized Losses, Less Than 12 Months	(68)	(203)
Fair Value, 12 Months or Longer	23	9,652
Unrealized Losses, 12 Months or Longer	0	(107)
Fair Value, Total	15,345	53,078
Unrealized Losses, Total	(68)	(310)
Small business administration [Member]
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	0	0
Unrealized Losses, Less Than 12 Months	0	0
Fair Value, 12 Months or Longer	114	233
Unrealized Losses, 12 Months or Longer	(2)	(4)
Fair Value, Total	114	233
Unrealized Losses, Total	(2)	(4)
Equity securities [Member]
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	0	0
Unrealized Losses, Less Than 12 Months	0	0
Fair Value, 12 Months or Longer	8	7
Unrealized Losses, 12 Months or Longer	(5)	(6)
Fair Value, Total	8	7
Unrealized Losses, Total	$ (5)	$ (6)

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Loans (Details 6) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Schedule of investment in past due loans
30-59 Days Past Due	$ 2,428	$ 2,848
60-89 Days Past Due	379	623
90 Days or More Past Due and Nonaccrual	9,928	11,010
Total Past Due	12,735	14,481
Loans Not Past Due	559,718	557,325
Total ending loans balance	572,453	571,806
Commercial real estate, Owner occupied [Member]
Schedule of investment in past due loans
30-59 Days Past Due	207	111
60-89 Days Past Due	0	0
90 Days or More Past Due and Nonaccrual	3,553	2,640
Total Past Due	3,760	2,751
Loans Not Past Due	90,577	97,630
Total ending loans balance	94,337	100,381
Commercial real estate, Non-owner occupied [Member]
Schedule of investment in past due loans
30-59 Days Past Due	11	13
60-89 Days Past Due	0	0
90 Days or More Past Due and Nonaccrual	2,296	2,795
Total Past Due	2,307	2,808
Loans Not Past Due	84,261	77,515
Total ending loans balance	86,568	80,323
Commercial real estate, Other[Member]
Schedule of investment in past due loans
30-59 Days Past Due	153	0
60-89 Days Past Due	0	0
90 Days or More Past Due and Nonaccrual	0	590
Total Past Due	153	590
Loans Not Past Due	22,524	16,747
Total ending loans balance	22,677	17,337
Commercial [Member]
Schedule of investment in past due loans
30-59 Days Past Due	25	26
60-89 Days Past Due	24	0
90 Days or More Past Due and Nonaccrual	741	527
Total Past Due	790	553
Loans Not Past Due	76,845	74,322
Total ending loans balance	77,635	74,875
Residential real estate, 1-4 family residential [Member]
Schedule of investment in past due loans
30-59 Days Past Due	953	973
60-89 Days Past Due	135	361
90 Days or More Past Due and Nonaccrual	2,974	4,018
Total Past Due	4,062	5,352
Loans Not Past Due	134,626	139,736
Total ending loans balance	138,688	145,088
Residential real estate, Home equity lines of credit [Member]
Schedule of investment in past due loans
30-59 Days Past Due	0	128
60-89 Days Past Due	0	0
90 Days or More Past Due and Nonaccrual	288	299
Total Past Due	288	427
Loans Not Past Due	21,890	21,516
Total ending loans balance	22,178	21,943
Consumer, Indirect [Member]
Schedule of investment in past due loans
30-59 Days Past Due	979	1,458
60-89 Days Past Due	187	218
90 Days or More Past Due and Nonaccrual	72	126
Total Past Due	1,238	1,802
Loans Not Past Due	116,362	116,941
Total ending loans balance	117,600	118,743
Consumer, Direct [Member]
Schedule of investment in past due loans
30-59 Days Past Due	92	120
60-89 Days Past Due	20	41
90 Days or More Past Due and Nonaccrual	3	13
Total Past Due	115	174
Loans Not Past Due	11,258	11,422
Total ending loans balance	11,373	11,596
Consumer, Other [Member]
Schedule of investment in past due loans
30-59 Days Past Due	8	19
60-89 Days Past Due	13	3
90 Days or More Past Due and Nonaccrual	1	2
Total Past Due	22	24
Loans Not Past Due	1,375	1,496
Total ending loans balance	$ 1,397	$ 1,520

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Fair Value (Details Textual) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 Property	Jun. 30, 2011	Dec. 31, 2011 Property
Fair Value (Textual) [Abstract]
Impaired loans collateral dependent loans principal balance	$ 3,700,000		$ 3,700,000		$ 4,600,000
Impaired loans collateral dependent loans valuation allowance	864,000		864,000		936,000
Additional provision for loan losses	339,000	66,000	420,000,000	397,000
Troubled debt restructurings not carried at fair value	4,300,000		4,300,000		2,300,000
Other real estate owned measured at fair value less costs to sell	276,000		276,000
Real estate owned properties sold			9
Net carrying amount of other real estate owned					346,000
Number of properties charged down reflecting updated appraisals					5
Write down of other real estate owned			$ 73,000		$ 115,000

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
ASSETS
Cash and due from banks	$ 14,410	$ 14,161
Federal funds sold and other	61,149	38,261
TOTAL CASH AND CASH EQUIVALENTS	75,559	52,422
Securities available for sale	420,147	400,029
Loans held for sale	3,718	677
Loans	572,453	571,806
Less allowance for loan losses	9,048	9,820
NET LOANS	563,405	561,986
Premises and equipment, net	17,616	16,461
Goodwill	3,709	3,709
Other intangibles	2,528	2,732
Bank owned life insurance	15,275	15,015
Other assets	14,876	14,840
TOTAL ASSETS	1,116,833	1,067,871
Deposits:
Noninterest-bearing	109,222	96,117
Interest-bearing	777,371	744,008
TOTAL DEPOSITS	886,593	840,125
Short-term borrowings	96,465	98,088
Long-term borrowings	10,583	11,263
Other liabilities	4,254	3,950
TOTAL LIABILITIES	997,895	953,426
Commitments and contingent liabilities
Stockholders' Equity:
Common Stock - Authorized 25,000,000 shares; issued 18,802,282 in 2012 and 18,757,437 in 2011	104,504	104,261
Retained earnings	5,250	2,133
Accumulated other comprehensive income	9,184	8,051
Treasury stock, at cost; 13 shares in 2012 and 2011	0	0
TOTAL STOCKHOLDERS' EQUITY	118,938	114,445
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,116,833	$ 1,067,871

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Credit Quality Indicators (Details Textual) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Credit Quality Indicators (Textual) [Abstract]
Maximum commercial loan and commercial real estate relationships	$ 300

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 4,806	$ 3,807
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses	400	2,950
Depreciation and amortization	848	829
Net amortization of securities	1,225	671
(Gain) loss on sale of other real estate owned	(91)	29
Increase in bank owned life insurance	(260)	(278)
Origination of loans held for sale	(13,669)	0
Proceeds from loans held for sale	10,831	0
Net gain on sale of loans	(203)	0
Net change in other assets and liabilities	(564)	(1,139)
NET CASH FROM OPERATING ACTIVITIES	3,323	6,869
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and repayments of securities available for sale	35,245	21,120
Proceeds from sales of securities available for sale	0	3,361
Purchases of securities available for sale	(54,846)	(63,277)
Loan originations and payments, net	(3,106)	19,845
Proceeds from sale of other real estate owned	1,551	141
Purchase of bank owned life insurance	0	(3,000)
Proceeds from BOLI death benefit	0	108
Additions to premises and equipment	(1,748)	(1,179)
NET CASH FROM INVESTING ACTIVITIES	(22,904)	(22,881)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits	46,468	9,013
Net change in short-term borrowings	(1,623)	3,086
Repayment of Federal Home Loan Bank borrowings and other debt	(680)	(1,161)
Cash dividends paid	(1,690)	(1,119)
Proceeds from dividend reinvestment	243	255
Net proceeds from issuance of common shares	0	13,772
NET CASH FROM FINANCING ACTIVITIES	42,718	23,846
NET CHANGE IN CASH AND CASH EQUIVALENTS	23,137	7,834
Beginning cash and cash equivalents	52,422	37,305
Ending cash and cash equivalents	75,559	45,139
Supplemental cash flow information:
Interest paid	3,284	4,108
Income taxes paid	855	2,085
Supplemental noncash disclosures:
Transfer of loans to other real estate	$ 1,287	$ 437

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Loans (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
The activity in the allowance for loan losses
Activity in the allowance for loan losses, beginning balance	$ 9,446	$ 10,137	$ 9,820	$ 9,307
Provision for loan losses	400	1,075	400	2,950
Loans charged off	(1,015)	(1,035)	(1,636)	(2,294)
Recoveries	217	699	464	913
Activity in the allowance for loan losses, ending balance	9,048	10,876	9,048	10,876
Commercial Real Estate [Member]
The activity in the allowance for loan losses
Activity in the allowance for loan losses, beginning balance	5,060	6,020	4,880	5,780
Provision for loan losses	(175)	582	55	905
Loans charged off	(283)	(555)	(368)	(640)
Recoveries	24	6	59	8
Activity in the allowance for loan losses, ending balance	4,626	6,053	4,626	6,053
Commercial [Member]
The activity in the allowance for loan losses
Activity in the allowance for loan losses, beginning balance	1,518	1,878	1,529	1,707
Provision for loan losses	392	51	405	334
Loans charged off	(171)	(55)	(213)	(189)
Recoveries	13	12	31	34
Activity in the allowance for loan losses, ending balance	1,752	1,886	1,752	1,886
Residential Real Estate [Member]
The activity in the allowance for loan losses
Activity in the allowance for loan losses, beginning balance	1,642	1,261	1,802	881
Provision for loan losses	309	34	381	1,154
Loans charged off	(363)	(155)	(608)	(896)
Recoveries	19	402	32	403
Activity in the allowance for loan losses, ending balance	1,607	1,542	1,607	1,542
Consumer [Member]
The activity in the allowance for loan losses
Activity in the allowance for loan losses, beginning balance	1,049	842	972	875
Provision for loan losses	8	272	153	349
Loans charged off	(198)	(270)	(447)	(569)
Recoveries	161	279	342	468
Activity in the allowance for loan losses, ending balance	1,020	1,123	1,020	1,123
Unallocated [Member]
The activity in the allowance for loan losses
Activity in the allowance for loan losses, beginning balance	177	136	637	64
Provision for loan losses	(134)	136	(594)	208
Loans charged off	0		0
Recoveries	0		0
Activity in the allowance for loan losses, ending balance	$ 43	$ 272	$ 43	$ 272

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Securities (Tables)

6 Months Ended

Jun. 30, 2012

Securities [Abstract]

Summary the amortized cost and fair value of the available-for-sale investment securities corresponding amounts of unrealized gains and losses

(In Thousands of Dollars) June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities	$	56,492	$	1,932	$	0		$	58,424
State and political subdivisions		77,089		4,984		(12	)		82,061
Corporate bonds		1,236		11		0			1,247
Mortgage-backed securities - residential		237,306		6,380		(68	)		243,618
Collateralized mortgage obligations		33,531		635		0			34,166
Small business administration		224		1		(2	)		223
Equity securities		139		274		(5	)		408
Totals	$	406,017	$	14,217	$	(87	)	$	420,147
(In Thousands of Dollars) December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities	$	53,689	$	2,300	$	(1	)	$	55,988
State and political subdivisions		78,288		4,446		(44	)		82,690
Corporate bonds		758		11		0			769
Mortgage-backed securities - residential		217,644		5,384		(310	)		222,718
Collateralized mortgage obligations		36,806		416		0			37,222
Small business administration		318		1		(4	)		315
Equity securities		139		194		(6	)		327
Totals	$	387,642	$	12,752	$	(365	)	$	400,029

Amortized cost and fair value of the debt securities maturity

	June 30, 2012
(In Thousands of Dollars)	Amortized Cost		Fair Value
Maturity
Within one year	$	21,086	$	21,450
One to five years		66,379		69,844
Five to ten years		34,287		36,455
Beyond ten years		13,065		13,983
Mortgage-backed, CMO and SBA securities		271,061		278,007
Total	$	405,878	$	419,739

Investment securities with unrealized losses

	Less Than 12 Months					12 Months or Longer					Total
(In Thousands of Dollars)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2012
Available-for-sale
U.S. Treasury and U.S. government sponsored entities	$	100	$	0		$	0	$	0		$	100	$	0
State and political subdivisions		0		0			321		(12	)		321		(12	)
Mortgage-backed securities – residential		15,322		(68	)		23		0			15,345		(68	)
Small business administration		0		0			114		(2	)		114		(2	)
Equity securities		0		0			8		(5	)		8		(5	)
Total	$	15,422	$	(68	)	$	466	$	(19	)	$	15,888	$	(87	)

	Less Than 12 Months					12 Months or Longer					Total
(In Thousands of Dollars)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2011
Available-for-sale
U.S. Treasury and U.S. government sponsored entities	$	249	$	(1	)	$	0	$	0		$	249	$	(1	)
State and political subdivisions		0		0			2,420		(44	)		2,420		(44	)
Corporate bonds		507		0			0		0			507		0
Mortgage-backed securities – residential		43,426		(203	)		9,652		(107	)		53,078		(310	)
Small business administration		0		0			233		(4	)		233		(4	)
Equity securities		0		0			7		(6	)		7		(6	)
Total	$	44,182	$	(204	)	$	12,312	$	(161	)	$	56,494	$	(365	)

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Loans (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$ 1,004		$ 985
Collectively evaluated for impairment	8,044		8,835
Total ending allowance balance	9,048	9,446	9,820	10,876	10,137	9,307
Loans:
Loans individually evaluated for impairment	11,176		10,355
Loans collectively evaluated for impairment	561,277		561,451
Total ending loans balance	572,453		571,806
Commercial Real Estate [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	556		748
Collectively evaluated for impairment	4,070		4,132
Total ending allowance balance	4,626	5,060	4,880	6,053	6,020	5,780
Loans:
Loans individually evaluated for impairment	8,956		8,317
Loans collectively evaluated for impairment	194,626		189,724
Total ending loans balance	203,582		198,041
Commercial [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	448		237
Collectively evaluated for impairment	1,304		1,292
Total ending allowance balance	1,752	1,518	1,529	1,886	1,878	1,707
Loans:
Loans individually evaluated for impairment	1,495		1,341
Loans collectively evaluated for impairment	76,140		73,534
Total ending loans balance	77,635		74,875
Residential Real Estate [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	1,607		1,802
Total ending allowance balance	1,607	1,642	1,802	1,542	1,261	881
Loans:
Loans individually evaluated for impairment	725		697
Loans collectively evaluated for impairment	160,141		166,334
Total ending loans balance	160,866		167,031
Consumer [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	1,020		972
Total ending allowance balance	1,020	1,049	972	1,123	842	875
Loans:
Loans individually evaluated for impairment	0		0
Loans collectively evaluated for impairment	130,370		131,859
Total ending loans balance	130,370		131,859
Unallocated [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	43		637
Total ending allowance balance	43	177	637	272	136	64
Loans:
Loans individually evaluated for impairment	0		0
Loans collectively evaluated for impairment	0		0
Total ending loans balance	$ 0		$ 0

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Troubled Debt Restructurings (Tables)

6 Months Ended

Jun. 30, 2012

Troubled Debt Restructurings [Abstract]

Schedule of loans by class modified as troubled debt restructurings

(In Thousands of Dollars) Troubled debt restructurings	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial real estate
Owner occupied		2	$	787	$	792
Non-owner occupied		3		2,376		2,419
Residential real estate
1-4 family residential		1		52		52
Total		6	$	3,215	$	3,263

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Principles of Consolidation

6 Months Ended

Jun. 30, 2012

Principles of Consolidation [Abstract]

Principles of Consolidation

Principles of Consolidation:

Farmers National Banc Corp. (the “Company”) is a one-bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Company provides full banking services through its nationally chartered subsidiary, The Farmers National Bank of Canfield (the “Bank”). The Company provides trust services through its subsidiary, Farmers Trust Company (the “Trust”), and insurance services through the Bank’s subsidiary, Farmers National Insurance. The consolidated financial statements include the accounts of the Company, the Bank and its subsidiary and the Trust. All significant intercompany balances and transactions have been eliminated in the consolidation.

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Consolidated Balance Sheets (Parenthetical) (Unaudited)	Jun. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	18,802,282	18,757,437
Treasury stock, shares	13	13

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Credit Quality Indicators

6 Months Ended

Jun. 30, 2012

Credit Quality Indicators [Abstract]

Credit Quality Indicators

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company establishes a risk rating at origination for all commercial loan and commercial real estate relationships. For relationships over $300 thousand management monitors the loans on an ongoing basis for any changes in the borrower’s ability to service their debt. Management also affirms the risk ratings for the loans and leases in their respective portfolios on an annual basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Substandard loans are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of June 30, 2012 and December 31, 2011, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

(In Thousands of Dollars) June 30, 2012	Pass		Special Mention		Sub- standard		Doubtful		Not Rated		Total
Commercial real estate
Owner occupied	$	79,716	$	2,069	$	12,552	$	0	$	0	$	94,337
Non-owner occupied		76,039		3,163		7,366		0		0		86,568
Other		20,403		1,044		1,230		0		0		22,677
Commercial		70,784		4,030		2,821		0		0		77,635
Total	$	246,942	$	10,306	$	23,969	$	0	$	0	$	281,217

(In Thousands of Dollars) December 31, 2011	Pass		Special Mention		Sub- standard		Doubtful		Not Rated		Total
Commercial real estate
Owner occupied	$	80,770	$	6,359	$	13,201	$	51	$	0	$	100,381
Non-owner occupied		68,806		2,575		8,942		0		0		80,323
Other		14,491		301		2,545		0		0		17,337
Commercial		65,198		5,963		3,454		260		0		74,875
Total	$	229,265	$	15,198	$	28,142	$	311	$	0	$	272,916

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential, consumer indirect and direct loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential, consumer indirect and direct auto loans based on payment activity as of June 30, 2012 and December 31, 2011. Nonperforming loans are loans past due 90 days or more and still accruing interest and nonaccrual loans.

(In Thousands of Dollars) June 30, 2012	Residential Real Estate				Consumer
	1-4 Family Residential		Home Equity Lines of Credit		Indirect		Direct		Other
Performing	$	135,714	$	21,890	$	117,528	$	11,370	$	1,396
Nonperforming		2,974		288		72		3		1
Total	$	138,688	$	22,178	$	117,600	$	11,373	$	1,397

(In Thousands of Dollars) December 31, 2011	Residential Real Estate				Consumer
	1-4 Family Residential		Home Equity Lines of Credit		Indirect		Direct		Other
Performing	$	141,070	$	21,644	$	118,617	$	11,583	$	1,518
Nonperforming		4,018		299		126		13		2
Total	$	145,088	$	21,943	$	118,743	$	11,596	$	1,520

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Jul. 31, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	FARMERS NATIONAL BANC CORP /OH/
Entity Central Index Key	0000709337
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,821,741

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Earnings Per Share

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share:

The computation of basic and diluted earnings per share is shown in the following table:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands, except Share and Per Share Data)	2012		2011		2012		2011
Basic EPS computation
Numerator – Net income	$	2,286	$	2,117	$	4,806	$	3,807
Denominator – Weighted average shares outstanding		18,800,122		18,674,213		18,782,968		17,820,254
Basic earnings per share	$	.12	$	.11	$	.26	$	.21
Diluted EPS computation
Numerator – Net income	$	2,286	$	2,117	$	4,806	$	3,807
Denominator – Weighted average shares outstanding for basic earnings per share		18,800,122		18,674,213		18,782,968		17,820,254
Effect of Stock Options		0		0		0		0
Weighted averages shares for diluted earnings per share		18,800,122		18,674,213		18,782,968		17,820,254
Diluted earnings per share	$	.12	$	.11	$	.26	$	.21

Stock options for 5,000 and 28,500 shares were not considered in the computing of diluted earnings per share for the three and six months ended June 30, 2012 and 2011, respectively, because they were antidilutive.

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Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
INTEREST AND DIVIDEND INCOME
Loans, including fees	$ 7,987	$ 8,354	$ 15,983	$ 16,820
Taxable securities	2,128	2,048	4,234	3,917
Tax exempt securities	706	729	1,419	1,468
Dividends	52	53	102	99
Federal funds sold and other interest income	30	10	51	19
TOTAL INTEREST AND DIVIDEND INCOME	10,903	11,194	21,789	22,323
INTEREST EXPENSE
Deposits	1,460	1,684	2,985	3,382
Short-term borrowings	25	104	67	201
Long-term borrowings	98	249	196	500
TOTAL INTEREST EXPENSE	1,583	2,037	3,248	4,083
NET INTEREST INCOME	9,320	9,157	18,541	18,240
Provision for loan losses	400	1,075	400	2,950
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	8,920	8,082	18,141	15,290
NONINTEREST INCOME
Service charges on deposit accounts	485	500	959	973
Bank owned life insurance income, including death benefits	125	119	260	278
Trust fees	1,365	1,365	2,783	2,703
Insurance agency commissions	25	28	61	92
Investment commissions	249	263	435	454
Net gains on sale of loans	138	0	203	0
Other operating income	538	419	952	811
TOTAL NONINTEREST INCOME	2,925	2,694	5,653	5,311
NONINTEREST EXPENSES
Salaries and employee benefits	4,939	4,483	9,668	8,671
Occupancy and equipment	1,080	922	2,051	1,838
State and local taxes	304	238	611	485
Professional fees	456	403	863	810
Advertising	210	211	458	356
FDIC insurance	183	244	369	592
Intangible amortization	103	112	205	255
Core processing charges	332	310	720	624
Other operating expenses	1,270	1,169	2,571	2,275
TOTAL NONINTEREST EXPENSES	8,877	8,092	17,516	15,906
INCOME BEFORE INCOME TAXES	2,968	2,684	6,278	4,695
INCOME TAXES	682	567	1,472	888
NET INCOME	$ 2,286	$ 2,117	$ 4,806	$ 3,807
NET INCOME PER SHARE - basic and diluted	$ 0.12	$ 0.11	$ 0.26	$ 0.21

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Comprehensive Income

6 Months Ended

Jun. 30, 2012

Comprehensive Income [Abstract]

Comprehensive Income

Comprehensive Income:

Comprehensive income consists of net income and other comprehensive income or loss. Other comprehensive income or loss consists solely of the change in net unrealized gains and losses on securities available for sale, net of reclassification for gains or losses recognized in income.

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Segments

6 Months Ended

Jun. 30, 2012

Segments [Abstract]

Segments

Segments:

The Company provides a broad range of financial services to individuals and companies in northeastern Ohio. While the Company’s chief decision makers monitor the revenue streams of the various products and services, operations are managed and financial performance is primarily aggregated and reported in two lines of business, the Bank segment and the Trust segment.

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Loans (Tables)

6 Months Ended

Jun. 30, 2012

Loans [Abstract]

Schedule of loan balances

(In Thousands of Dollars)	June 30, 2012			December 31, 2011
Commercial real estate
Owner occupied	$	94,908		$	100,710
Non-owner occupied		86,839			80,585
Other		22,472			17,394
Commercial		77,635			74,875
Residential real estate
1-4 family residential		139,305			145,743
Home equity lines of credit		22,178			21,943
Consumer
Indirect		114,483			115,681
Direct		11,373			11,596
Other		1,397			1,520
Subtotal		570,590			570,047
Net deferred loan costs		1,863			1,759
Allowance for loan losses		(9,048	)		(9,820	)
Net loans	$	563,405		$	561,986

Activity in the allowance for loan losses by portfolio segment

Three Months Ended June 30, 2012

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	5,060		$	1,518		$	1,642		$	1,049		$	177		$	9,446
Provision for loan losses		(175	)		392			309			8			(134	)		400
Loans charged off		(283	)		(171	)		(363	)		(198	)		0			(1,015	)
Recoveries		24			13			19			161			0			217
Ending balance	$	4,626		$	1,752		$	1,607		$	1,020		$	43		$	9,048
Six Months Ended June 30, 2012
(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	4,880		$	1,529		$	1,802		$	972		$	637		$	9,820
Provision for loan losses		55			405			381			153			(594	)		400
Loans charged off		(368	)		(213	)		(608	)		(447	)		0			(1,636	)
Recoveries		59			31			32			342			0			464
Ending balance	$	4,626		$	1,752		$	1,607		$	1,020		$	43		$	9,048
Three Months Ended June 30, 2011
(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	6,020		$	1,878		$	1,261		$	842		$	136		$	10,137
Provision for loan losses		582			51			34			272			136			1,075
Loans charged off		(555	)		(55	)		(155	)		(270	)		—			(1,035	)
Recoveries		6			12			402			279			—			699
Ending balance	$	6,053		$	1,886		$	1,542		$	1,123		$	272		$	10,876
Six Months Ended June 30, 2011
(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	5,780		$	1,707		$	881		$	875		$	64		$	9,307
Provision for loan losses		905			334			1,154			349			208			2,950
Loans charged off		(640	)		(189	)		(896	)		(569	)		—			(2,294	)
Recoveries		8			34			403			468			—			913
Ending balance	$	6,053		$	1,886		$	1,542		$	1,123		$	272		$	10,876

Allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method

June 30, 2012
(In Thousands of Dollars) Allowance for loan losses:	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	556	$	448	$	0	$	0	$	0	$	1,004
Collectively evaluated for impairment		4,070		1,304		1,607		1,020		43		8,044
Total ending allowance balance	$	4,626	$	1,752	$	1,607	$	1,020	$	43	$	9,048
Loans:
Loans individually evaluated for impairment	$	8,956	$	1,495	$	725	$	0	$	0	$	11,176
Loans collectively evaluated for impairment		194,626		76,140		160,141		130,370		0		561,277
Total ending loans balance	$	203,582	$	77,635	$	160,866	$	130,370	$	0	$	572,453
December 31, 2011
(In Thousands of Dollars) Allowance for loan losses:	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	748	$	237	$	0	$	0	$	0	$	985
Collectively evaluated for impairment		4,132		1,292		1,802		972		637		8,835
Total ending allowance balance	$	4,880	$	1,529	$	1,802	$	972	$	637	$	9,820
Loans:
Loans individually evaluated for impairment	$	8,317	$	1,341	$	697	$	0	$	0	$	10,355
Loans collectively evaluated for impairment		189,724		73,534		166,334		131,859		0		561,451
Total ending loans balance	$	198,041	$	74,875	$	167,031	$	131,859	$	0	$	571,806

Loans individually evaluated for impairment by class of loans

(In Thousands of Dollars) June 30, 2012	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial real estate
Owner occupied	$	1,302	$	1,303	$	0
Non-owner occupied		287		288		0
Other		0		0		0
Commercial		890		890		0
Residential real estate
1-4 family residential		723		725		0
Subtotal		3,202		3,206		0
With an allowance recorded:
Commercial real estate
Owner occupied		4,673		4,683		315
Non-owner occupied		2,678		2,682		241
Other		0		0		0
Commercial		603		605		448
Subtotal		7,954		7,970		1,004
Total	$	11,156	$	11,176	$	1,004

(In Thousands of Dollars) December 31, 2011	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial real estate
Owner occupied	$	759	$	762	$	0
Non-owner occupied		339		340		0
Other		589		590		0
Commercial		1,062		1,063		0
Residential real estate
1-4 family residential		695		697		0
Subtotal		3,444		3,452		0
With an allowance recorded:
Commercial real estate
Owner occupied		4,164		4,169		309
Non-owner occupied		2,455		2,456		439
Other		0		0		0
Commercial		278		278		237
Subtotal		6,897		6,903		985
Total	$	10,341	$	10,355	$	985

Average recorded investment by class

(In Thousands of Dollars)	Average Recorded Investment for Three Months Ended June 30,				Average Recorded Investment for Six Months Ended June 30,
	2012		2011		2012		2011
With no related allowance recorded:
Commercial real estate
Owner occupied	$	1,207	$	1,211	$	1,104	$	1,236
Non-owner occupied		302		0		313		0
Other		0		0		0		0
Commercial		922		655		946		671
Residential real estate
1-4 family residential		726		0		728		0
Subtotal		3,157		1,866		3,091		1,907
With an allowance recorded:
Commercial real estate
Owner occupied		4,726		2,375		4,764		2,405
Non-owner occupied		3,112		833		3,438		894
Other		0		802		0		812
Commercial		628		445		638		459
Subtotal		8,466		4,455		8,840		4,570
Total	$	11,623	$	6,321	$	11,931	$	6,477

Schedule of investment in nonaccrual and loans past due 90 days or more still on accrual by class of loans

	June 30, 2012				December 31, 2011
(In Thousands of Dollars)	Nonaccrual		Loans Past Due 90 Days or More Still Accruing		Nonaccrual		Loans Past Due 90 Days or More Still Accruing
Commercial real estate
Owner occupied	$	3,553	$	0	$	2,640	$	0
Non-owner occupied		2,296		0		2,795		0
Other		0		0		590		0
Commercial		909		46		527		0
Residential real estate
1-4 family residential		2,565		195		3,897		121
Home equity lines of credit		288		0		299		0
Consumer
Indirect		11		61		12		114
Direct		0		3		0		13
Other		0		1		0		2
Total	$	9,622	$	306	$	10,760	$	250

Schedule of investment in past due loans

(In Thousands of Dollars) June 30, 2012	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Nonaccrual		Total Past Due		Loans Not Past Due		Total
Commercial real estate
Owner occupied	$	207	$	0	$	3,553	$	3,760	$	90,577	$	94,337
Non-owner occupied		11		0		2,296		2,307		84,261		86,568
Other		153		0		0		153		22,524		22,677
Commercial		25		24		741		790		76,845		77,635
Residential real estate
1-4 family residential		953		135		2,974		4,062		134,626		138,688
Home equity lines of credit		0		0		288		288		21,890		22,178
Consumer
Indirect		979		187		72		1,238		116,362		117,600
Direct		92		20		3		115		11,258		11,373
Other		8		13		1		22		1,375		1,397
Total	$	2,428	$	379	$	9,928	$	12,735	$	559,718	$	572,453

(In Thousands of Dollars) December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Nonaccrual		Total Past Due		Loans Not Past Due		Total
Commercial real estate
Owner occupied	$	111	$	0	$	2,640	$	2,751	$	97,630	$	100,381
Non-owner occupied		13		0		2,795		2,808		77,515		80,323
Other		0		0		590		590		16,747		17,337
Commercial		26		0		527		553		74,322		74,875
Residential real estate
1-4 family residential		973		361		4,018		5,352		139,736		145,088
Home equity lines of credit		128		0		299		427		21,516		21,943
Consumer
Indirect		1,458		218		126		1,802		116,941		118,743
Direct		120		41		13		174		11,422		11,596
Other		19		3		2		24		1,496		1,520
Total	$	2,848	$	623	$	11,010	$	14,481	$	557,325	$	571,806

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Stock Based Compensation

6 Months Ended

Jun. 30, 2012

Stock Based Compensation [Abstract]

Stock Based Compensation

Stock Based Compensation:

The Company’s Stock Option Plan (the “Plan”), permitted the grant of share options to its directors, officers and employees. Under the terms of the Plan no additional shares can be issued. Option awards were granted with an exercise price equal to the market price of the Company’s common shares at the date of grant, with a vesting period of 5 years and have 10-year contractual terms. At June 30, 2012 there were 5,000 outstanding options of which 3,000 were fully vested and exercisable.

The fair value of each option award is estimated on the date of grant using a Black-Scholes model. Total compensation cost charged against income for the stock option plan for the three and six month period ended June 30, 2012 was not material. No related income tax benefit was recorded.

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Loans

6 Months Ended

Jun. 30, 2012

Loans [Abstract]

Loans

Loans:

Loan balances were as follows:

(In Thousands of Dollars)	June 30, 2012			December 31, 2011
Commercial real estate
Owner occupied	$	94,908		$	100,710
Non-owner occupied		86,839			80,585
Other		22,472			17,394
Commercial		77,635			74,875
Residential real estate
1-4 family residential		139,305			145,743
Home equity lines of credit		22,178			21,943
Consumer
Indirect		114,483			115,681
Direct		11,373			11,596
Other		1,397			1,520
Subtotal		570,590			570,047
Net deferred loan costs		1,863			1,759
Allowance for loan losses		(9,048	)		(9,820	)
Net loans	$	563,405		$	561,986

The following tables present the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2012 and 2011:

Three Months Ended June 30, 2012

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	5,060		$	1,518		$	1,642		$	1,049		$	177		$	9,446
Provision for loan losses		(175	)		392			309			8			(134	)		400
Loans charged off		(283	)		(171	)		(363	)		(198	)		0			(1,015	)
Recoveries		24			13			19			161			0			217
Ending balance	$	4,626		$	1,752		$	1,607		$	1,020		$	43		$	9,048
Six Months Ended June 30, 2012
(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	4,880		$	1,529		$	1,802		$	972		$	637		$	9,820
Provision for loan losses		55			405			381			153			(594	)		400
Loans charged off		(368	)		(213	)		(608	)		(447	)		0			(1,636	)
Recoveries		59			31			32			342			0			464
Ending balance	$	4,626		$	1,752		$	1,607		$	1,020		$	43		$	9,048
Three Months Ended June 30, 2011
(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	6,020		$	1,878		$	1,261		$	842		$	136		$	10,137
Provision for loan losses		582			51			34			272			136			1,075
Loans charged off		(555	)		(55	)		(155	)		(270	)		—			(1,035	)
Recoveries		6			12			402			279			—			699
Ending balance	$	6,053		$	1,886		$	1,542		$	1,123		$	272		$	10,876
Six Months Ended June 30, 2011
(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	5,780		$	1,707		$	881		$	875		$	64		$	9,307
Provision for loan losses		905			334			1,154			349			208			2,950
Loans charged off		(640	)		(189	)		(896	)		(569	)		—			(2,294	)
Recoveries		8			34			403			468			—			913
Ending balance	$	6,053		$	1,886		$	1,542		$	1,123		$	272		$	10,876

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2012 and December 31, 2011. The recorded investment in loans includes the unpaid principal balance and unamortized loan origination fees and costs, but excludes accrued interest receivable, which is not considered to be material:

June 30, 2012
(In Thousands of Dollars) Allowance for loan losses:	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	556	$	448	$	0	$	0	$	0	$	1,004
Collectively evaluated for impairment		4,070		1,304		1,607		1,020		43		8,044
Total ending allowance balance	$	4,626	$	1,752	$	1,607	$	1,020	$	43	$	9,048
Loans:
Loans individually evaluated for impairment	$	8,956	$	1,495	$	725	$	0	$	0	$	11,176
Loans collectively evaluated for impairment		194,626		76,140		160,141		130,370		0		561,277
Total ending loans balance	$	203,582	$	77,635	$	160,866	$	130,370	$	0	$	572,453
December 31, 2011
(In Thousands of Dollars) Allowance for loan losses:	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	748	$	237	$	0	$	0	$	0	$	985
Collectively evaluated for impairment		4,132		1,292		1,802		972		637		8,835
Total ending allowance balance	$	4,880	$	1,529	$	1,802	$	972	$	637	$	9,820
Loans:
Loans individually evaluated for impairment	$	8,317	$	1,341	$	697	$	0	$	0	$	10,355
Loans collectively evaluated for impairment		189,724		73,534		166,334		131,859		0		561,451
Total ending loans balance	$	198,041	$	74,875	$	167,031	$	131,859	$	0	$	571,806

The following tables present information related to impaired loans by class of loans as of June 30, 2012 and December 31, 2011:

(In Thousands of Dollars) June 30, 2012	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial real estate
Owner occupied	$	1,302	$	1,303	$	0
Non-owner occupied		287		288		0
Other		0		0		0
Commercial		890		890		0
Residential real estate
1-4 family residential		723		725		0
Subtotal		3,202		3,206		0
With an allowance recorded:
Commercial real estate
Owner occupied		4,673		4,683		315
Non-owner occupied		2,678		2,682		241
Other		0		0		0
Commercial		603		605		448
Subtotal		7,954		7,970		1,004
Total	$	11,156	$	11,176	$	1,004

(In Thousands of Dollars) December 31, 2011	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial real estate
Owner occupied	$	759	$	762	$	0
Non-owner occupied		339		340		0
Other		589		590		0
Commercial		1,062		1,063		0
Residential real estate
1-4 family residential		695		697		0
Subtotal		3,444		3,452		0
With an allowance recorded:
Commercial real estate
Owner occupied		4,164		4,169		309
Non-owner occupied		2,455		2,456		439
Other		0		0		0
Commercial		278		278		237
Subtotal		6,897		6,903		985
Total	$	10,341	$	10,355	$	985

The following table presents the average recorded investment in impaired loans by class for the three and six month periods ended June 30, 2012 and 2011:

(In Thousands of Dollars)	Average Recorded Investment for Three Months Ended June 30,				Average Recorded Investment for Six Months Ended June 30,
	2012		2011		2012		2011
With no related allowance recorded:
Commercial real estate
Owner occupied	$	1,207	$	1,211	$	1,104	$	1,236
Non-owner occupied		302		0		313		0
Other		0		0		0		0
Commercial		922		655		946		671
Residential real estate
1-4 family residential		726		0		728		0
Subtotal		3,157		1,866		3,091		1,907
With an allowance recorded:
Commercial real estate
Owner occupied		4,726		2,375		4,764		2,405
Non-owner occupied		3,112		833		3,438		894
Other		0		802		0		812
Commercial		628		445		638		459
Subtotal		8,466		4,455		8,840		4,570
Total	$	11,623	$	6,321	$	11,931	$	6,477

Interest income recognized during impairment for the three and six month periods was immaterial.

Nonaccrual loans and loans past due 90 days or more still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The following table presents the recorded investment in nonaccrual and loans past due 90 days or more still on accrual by class of loans as of June 30, 2012 and December 31, 2011:

	June 30, 2012				December 31, 2011
(In Thousands of Dollars)	Nonaccrual		Loans Past Due 90 Days or More Still Accruing		Nonaccrual		Loans Past Due 90 Days or More Still Accruing
Commercial real estate
Owner occupied	$	3,553	$	0	$	2,640	$	0
Non-owner occupied		2,296		0		2,795		0
Other		0		0		590		0
Commercial		909		46		527		0
Residential real estate
1-4 family residential		2,565		195		3,897		121
Home equity lines of credit		288		0		299		0
Consumer
Indirect		11		61		12		114
Direct		0		3		0		13
Other		0		1		0		2
Total	$	9,622	$	306	$	10,760	$	250

The following table presents the aging of the recorded investment in past due loans as of June 30, 2012 and December 31, 2011 by class of loans:

(In Thousands of Dollars) June 30, 2012	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Nonaccrual		Total Past Due		Loans Not Past Due		Total
Commercial real estate
Owner occupied	$	207	$	0	$	3,553	$	3,760	$	90,577	$	94,337
Non-owner occupied		11		0		2,296		2,307		84,261		86,568
Other		153		0		0		153		22,524		22,677
Commercial		25		24		741		790		76,845		77,635
Residential real estate
1-4 family residential		953		135		2,974		4,062		134,626		138,688
Home equity lines of credit		0		0		288		288		21,890		22,178
Consumer
Indirect		979		187		72		1,238		116,362		117,600
Direct		92		20		3		115		11,258		11,373
Other		8		13		1		22		1,375		1,397
Total	$	2,428	$	379	$	9,928	$	12,735	$	559,718	$	572,453

(In Thousands of Dollars) December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Nonaccrual		Total Past Due		Loans Not Past Due		Total
Commercial real estate
Owner occupied	$	111	$	0	$	2,640	$	2,751	$	97,630	$	100,381
Non-owner occupied		13		0		2,795		2,808		77,515		80,323
Other		0		0		590		590		16,747		17,337
Commercial		26		0		527		553		74,322		74,875
Residential real estate
1-4 family residential		973		361		4,018		5,352		139,736		145,088
Home equity lines of credit		128		0		299		427		21,516		21,943
Consumer
Indirect		1,458		218		126		1,802		116,941		118,743
Direct		120		41		13		174		11,422		11,596
Other		19		3		2		24		1,496		1,520
Total	$	2,848	$	623	$	11,010	$	14,481	$	557,325	$	571,806

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2012

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2011, the FASB issued an amendment to achieve common fair value measurement and disclosure requirements between U.S. and International accounting principles. Overall, the guidance is consistent with existing U.S. accounting principles; however, there are some amendments that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this guidance are effective for interim and annual reporting periods beginning after December 15, 2011. The effect of adopting this standard did not have a material effect on the Company’s operating results or financial condition, but the additional disclosures are included in the Fair Value footnote.

In June 2011, the FASB amended existing guidance and eliminated the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendment requires that comprehensive income be presented in either a single continuous statement or in two separate consecutive statements. The amendments in this guidance are effective as of the beginning of a fiscal reporting year, and interim periods within that year, that begins after December 15, 2011. Early adoption is permitted. The Company adopted this amendment for the year ended December 31, 2011, by presenting comprehensive income in new Consolidated Statements of Comprehensive Income. The new statements follow the Consolidated Statements of Income.

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Securities

6 Months Ended

Jun. 30, 2012

Securities [Abstract]

Securities

Securities:

The following table summarizes the amortized cost and fair value of the available-for-sale investment securities portfolio at June 30, 2012 and December 31, 2011 and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income:

(In Thousands of Dollars) June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities	$	56,492	$	1,932	$	0		$	58,424
State and political subdivisions		77,089		4,984		(12	)		82,061
Corporate bonds		1,236		11		0			1,247
Mortgage-backed securities - residential		237,306		6,380		(68	)		243,618
Collateralized mortgage obligations		33,531		635		0			34,166
Small business administration		224		1		(2	)		223
Equity securities		139		274		(5	)		408
Totals	$	406,017	$	14,217	$	(87	)	$	420,147
(In Thousands of Dollars) December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities	$	53,689	$	2,300	$	(1	)	$	55,988
State and political subdivisions		78,288		4,446		(44	)		82,690
Corporate bonds		758		11		0			769
Mortgage-backed securities - residential		217,644		5,384		(310	)		222,718
Collateralized mortgage obligations		36,806		416		0			37,222
Small business administration		318		1		(4	)		315
Equity securities		139		194		(6	)		327
Totals	$	387,642	$	12,752	$	(365	)	$	400,029

There were no security sales during the three and six months ended June 30, 2012. There was one security sale during the three and six month periods ended June 30, 2011. Proceeds from the sale were $3.4 million with no gain or loss recognized.

The amortized cost and fair value of the debt securities portfolio are shown by expected maturity. Expected maturities may differ from contractual maturities if issuers have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed, CMO and SBA securities are not due at a single maturity date and are shown separately.

	June 30, 2012
(In Thousands of Dollars)	Amortized Cost		Fair Value
Maturity
Within one year	$	21,086	$	21,450
One to five years		66,379		69,844
Five to ten years		34,287		36,455
Beyond ten years		13,065		13,983
Mortgage-backed, CMO and SBA securities		271,061		278,007
Total	$	405,878	$	419,739

The following table summarizes the investment securities with unrealized losses at June 30, 2012 and December 31, 2011, aggregated by major security type and length of time in a continuous unrealized loss position. Unrealized losses for U.S. Treasury and U.S. government sponsored entities and corporate bonds rounded to less than $1 thousand for the periods ended June 30, 2012 and December 31, 2011, respectively.

	Less Than 12 Months					12 Months or Longer					Total
(In Thousands of Dollars)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2012
Available-for-sale
U.S. Treasury and U.S. government sponsored entities	$	100	$	0		$	0	$	0		$	100	$	0
State and political subdivisions		0		0			321		(12	)		321		(12	)
Mortgage-backed securities – residential		15,322		(68	)		23		0			15,345		(68	)
Small business administration		0		0			114		(2	)		114		(2	)
Equity securities		0		0			8		(5	)		8		(5	)
Total	$	15,422	$	(68	)	$	466	$	(19	)	$	15,888	$	(87	)

	Less Than 12 Months					12 Months or Longer					Total
(In Thousands of Dollars)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2011
Available-for-sale
U.S. Treasury and U.S. government sponsored entities	$	249	$	(1	)	$	0	$	0		$	249	$	(1	)
State and political subdivisions		0		0			2,420		(44	)		2,420		(44	)
Corporate bonds		507		0			0		0			507		0
Mortgage-backed securities – residential		43,426		(203	)		9,652		(107	)		53,078		(310	)
Small business administration		0		0			233		(4	)		233		(4	)
Equity securities		0		0			7		(6	)		7		(6	)
Total	$	44,182	$	(204	)	$	12,312	$	(161	)	$	56,494	$	(365	)

Other-Than-Temporary-Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. Investment securities are generally evaluated for OTTI under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 320, Investments — Debt and Equity Securities. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, whether the market decline was affected by macroeconomic conditions and whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its agencies, or U.S. government sponsored enterprises, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. If an entity intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income or loss. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

As of June 30, 2012, the Company’s security portfolio consisted of 416 securities, 18 of which were in an unrealized loss position. The majority of the unrealized losses on the Company’s securities are related to its holdings of mortgage-backed securities as discussed below.

Unrealized losses on debt securities issued by U.S. government-sponsored entities have not been recognized into income because the securities are of high credit quality, management does not have the intent to sell these securities before their anticipated recovery and the decline in fair value is largely due to fluctuations in market interest rates and not credit quality. Consequently, the fair value of such debt securities is expected to recover as the securities approach their maturity date.

Unrealized losses on debt securities issued by state and political subdivisions have not been recognized into income. Generally these securities have maintained their investment grade ratings and management does not have the intent to sell these securities before their anticipated recovery. The fair value is expected to recover as the securities approach their maturity date.

All of the Company’s holdings of mortgage-backed securities-residential were issued by U.S. government-sponsored entities. Unrealized losses on mortgage-backed securities-residential have not been recognized into income. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities-residential and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be OTTI.

Unrealized losses on small business administration securities issued by U.S. government-sponsored entities have not been recognized into income because the securities are of high credit quality, management does not have the intent to sell these securities before their anticipated recovery and the decline in fair value is largely due to fluctuations in market interest rates and not credit quality. Consequently, the fair value of such debt securities is expected to recover as the securities approach their maturity date.

The Company’s equity securities are made up of local and regional bank holdings. The unrealized losses associated with these holdings have not been recognized into income. Generally these securities have suffered as most banking securities have suffered during the recent economic cycle. The fair value is expected to recover as the banking sector recovers. Management does not have the intent to sell these securities before their anticipated recovery.

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Troubled Debt Restructurings

6 Months Ended

Jun. 30, 2012

Troubled Debt Restructurings [Abstract]

Troubled Debt Restructurings

Troubled Debt Restructurings:

Total troubled debt restructurings were $6.5 million and $4.3 million at June 30, 2012 and December 31, 2011, respectively. The Company has allocated $91 thousand and $48 thousand of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2012 and December 31, 2011. There are no commitments to lend additional amounts to borrowers with loans that are classified as troubled debt restructurings at June 30, 2012 and December 31, 2011.

During the three and six month periods ended June 30, 2012, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

Troubled debt restructuring modifications involved a reduction of the notes stated interest rate in the range of 1% and 3.6% on loans with maturity periods ranging from 5 months to 41months. One loan involved an extension of the maturity date by 5 years.

The following table presents loans by class modified as troubled debt restructurings that occurred during the six month period ended June 30, 2012:

(In Thousands of Dollars) Troubled debt restructurings	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial real estate
Owner occupied		2	$	787	$	792
Non-owner occupied		3		2,376		2,419
Residential real estate
1-4 family residential		1		52		52
Total		6	$	3,215	$	3,263

The troubled debt restructurings described above decreased the allowance for loan losses by $416 thousand during the six month period ended June 30, 2012. There were no charge offs as a result of the allowance adjustments.

There were two residential real estate loans modified as troubled debt restructurings for which there were payment defaults within the previous twelve months, for the period ended June 30, 2012. The loans were not past due at June 30, 2012. There was no additional provision or any impact to the allowance for losses associated with these loans. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

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Loans (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010
Loan balances
Subtotal	$ 570,590		$ 570,047
Net deferred loan (fees) costs	1,863		1,759
Allowance for loan losses	(9,048)	(9,446)	(9,820)	(10,876)	(10,137)	(9,307)
NET LOANS	563,405		561,986
Commercial real estate, Owner occupied [Member]
Loan balances
Commercial real estate	94,908		100,710
Commercial real estate, Non-owner occupied [Member]
Loan balances
Commercial real estate	86,839		80,585
Commercial real estate, Other[Member]
Loan balances
Commercial real estate	22,472		17,394
Commercial [Member]
Loan balances
Commercial	77,635		74,875
Residential real estate, 1-4 family residential [Member]
Loan balances
Residential real estate	139,305		145,743
Residential real estate, Home equity lines of credit [Member]
Loan balances
Residential real estate	22,178		21,943
Consumer, Indirect [Member]
Loan balances
Consumer	114,483		115,681
Consumer, Direct [Member]
Loan balances
Consumer	11,373		11,596
Consumer, Other [Member]
Loan balances
Consumer	$ 1,397		$ 1,520

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Fair Value (Details 3) (Nonrecurring [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Commercial real estate [Member] | Sales comparison valuation technique [Member]
Fair value measurements for financial instruments
Fair value	$ 2,654
Fair value measurements, Valuation technique(s), Description	Sales comparison
Commercial real estate [Member] | Income approach valuation technique [Member]
Fair value measurements for financial instruments
Fair value measurements, Valuation technique(s), Description	Income approach
Commercial real estate [Member] | Maximum [Member] | Sales comparison valuation technique [Member]
Fair value measurements for financial instruments
Adjustment for differences between comparable sales, Percent	70.00%
Commercial real estate [Member] | Maximum [Member] | Income approach valuation technique [Member]
Fair value measurements for financial instruments
Adjustment for differences in net operating income, Percent	78.20%
Commercial real estate [Member] | Minimum [Member] | Sales comparison valuation technique [Member]
Fair value measurements for financial instruments
Adjustment for differences between comparable sales, Percent	(44.20%)
Commercial real estate [Member] | Minimum [Member] | Income approach valuation technique [Member]
Fair value measurements for financial instruments
Adjustment for differences in net operating income, Percent	(36.80%)
Commercial real estate [Member] | Weighted Average [Member] | Sales comparison valuation technique [Member]
Fair value measurements for financial instruments
Adjustment for differences between comparable sales, Percent	(12.50%)
Commercial real estate [Member] | Weighted Average [Member] | Income approach valuation technique [Member]
Fair value measurements for financial instruments
Adjustment for differences in net operating income, Percent	14.90%
Commercial [Member] | Sales comparison valuation technique [Member]
Fair value measurements for financial instruments
Fair value	$ 155
Fair value measurements, Valuation technique(s), Description	Sales comparison
Commercial [Member] | Maximum [Member] | Sales comparison valuation technique [Member]
Fair value measurements for financial instruments
Adjustment for differences between comparable sales, Percent	48.90%
Commercial [Member] | Minimum [Member] | Sales comparison valuation technique [Member]
Fair value measurements for financial instruments
Adjustment for differences between comparable sales, Percent	(39.80%)
Commercial [Member] | Weighted Average [Member] | Sales comparison valuation technique [Member]
Fair value measurements for financial instruments
Adjustment for differences between comparable sales, Percent	9.30%

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Segment Information

6 Months Ended

Jun. 30, 2012

Segment Information [Abstract]

Segment Information

Segment Information

The reportable segments are determined by the products and services offered, primarily distinguished between banking and trust operations. They are also distinguished by the level of information provided to the chief operating decision makers in the Company, who use such information to review performance of various components of the business, which are then aggregated. Loans, investments, and deposits provide the revenues in the banking operation, and trust service fees provide the revenue in trust operations. All operations are domestic.

Significant segment totals are reconciled to the financial statements as follows:

(In Thousands of Dollars) June 30, 2012	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Assets
Cash and cash equivalents	$	2,383	$	73,258	$	(82	)	$	75,559
Securities available for sale		2,865		417,119		163			420,147
Loans held for sale		0		3,718		0			3,718
Net loans		0		563,405		0			563,405
Premises and equipment, net		89		17,527		0			17,616
Goodwill and other intangibles		6,237		0		0			6,237
Other assets		544		28,990		617			30,151
Total Assets	$	12,118	$	1,104,017	$	698		$	1,116,833
Liabilities and Stockholders’ Equity
Deposits, borrowings and other liabilities	$	658	$	1,001,366	$	(4,129	)	$	997,895
Stockholders’ equity		11,460		102,651		4,827			118,938
Total Liabilities and Stockholders’ Equity	$	12,118	$	1,104,017	$	698		$	1,116,833

(In Thousands of Dollars) December 31, 2011	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Assets
Cash and cash equivalents	$	2,208	$	50,327	$	(113	)	$	52,422
Securities available for sale		2,388		397,513		128			400,029
Loans held for sale		0		677		0			677
Net loans		0		561,986		0			561,986
Premises and equipment, net		101		16,360		0			16,461
Goodwill and other intangibles		6,441		0		0			6,441
Other assets		463		28,904		488			29,855
Total Assets	$	11,601	$	1,055,767	$	503		$	1,067,871
Liabilities and Stockholders’ Equity
Deposits, borrowings and other liabilities	$	345	$	957,780	$	(4,699	)	$	953,426
Stockholders’ equity		11,256		97,987		5,202			114,445
Total Liabilities and Stockholders’ Equity	$	11,601	$	1,055,767	$	503		$	1,067,871

(In Thousands of Dollars) For the Three Months Ended June 30, 2012	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	12	$	9,310	$	(2	)	$	9,320
Provision for loan losses		0		400		0			400
Service fees, security gains and other noninterest income		1,382		1,617		(74	)		2,925
Noninterest expense		1,263		7,395		219			8,877
Income before taxes		131		3,132		(295	)		2,968
Income taxes		47		735		(100	)		682
Net Income	$	84	$	2,397	$	(195	)	$	2,286

(In Thousands of Dollars) For the Six Months Ended June 30, 2012	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	22	$	18,533	$	(14	)	$	18,541
Provision for loan losses		0		400		0			400
Service fees, security gains and other noninterest income		2,819		2,971		(137	)		5,653
Noninterest expense		2,527		14,636		353			17,516
Income before taxes		314		6,468		(504	)		6,278
Income taxes		110		1,533		(171	)		1,472
Net Income	$	204	$	4,935	$	(333	)	$	4,806
(In Thousands of Dollars) For the Three Months Ended June 30, 2011	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	11	$	9,158	$	(12	)	$	9,157
Provision for loan losses		0		1,075		0			1,075
Service fees, security gains and other noninterest income		1,377		1,356		(39	)		2,694
Noninterest expense		1,149		6,743		200			8,092
Income before taxes		239		2,696		(251	)		2,684
Income taxes		82		570		(85	)		567
Net Income	$	157	$	2,126	$	(166	)	$	2,117
(In Thousands of Dollars) For the Six Months Ended June 30, 2011	Trust Segment		Bank Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	22	$	18,243	$	(25	)	$	18,240
Provision for loan losses		0		2,950		0			2,950
Service fees, security gains and other noninterest income		2,727		2,661		(77	)		5,311
Noninterest expense		2,349		13,255		302			15,906
Income before taxes		400		4,699		(404	)		4,695
Income taxes		137		888		(137	)		888
Net Income	$	263	$	3,811	$	(267	)	$	3,807

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

Computation of basic and diluted earnings per share

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands, except Share and Per Share Data)	2012		2011		2012		2011
Basic EPS computation
Numerator – Net income	$	2,286	$	2,117	$	4,806	$	3,807
Denominator – Weighted average shares outstanding		18,800,122		18,674,213		18,782,968		17,820,254
Basic earnings per share	$	.12	$	.11	$	.26	$	.21
Diluted EPS computation
Numerator – Net income	$	2,286	$	2,117	$	4,806	$	3,807
Denominator – Weighted average shares outstanding for basic earnings per share		18,800,122		18,674,213		18,782,968		17,820,254
Effect of Stock Options		0		0		0		0
Weighted averages shares for diluted earnings per share		18,800,122		18,674,213		18,782,968		17,820,254
Diluted earnings per share	$	.12	$	.11	$	.26	$	.21

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Fair Value (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs
Beginning balance	$ 12	$ 12	$ 12	$ 12
Total unrealized gains or losses:
Included in other comprehensive income or loss	0	0	0	0
Repayments	(1)	0	(1)	0
Transfer in and/or out	0	0	0	0
Ending balance	$ 11	$ 12	$ 11	$ 12

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Troubled Debt Restructurings (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Schedule of loans by class modified as troubled debt restructurings
Number of Loans	$ 6
Pre-Modification Outstanding Recorded Investment	3,215,000
Post-Modification Outstanding Recorded Investment	3,263,000
Financing Receivable, Modifications, Post-Modification Recorded Investment	4,300,000	2,300,000
Commercial real estate, Owner occupied [Member]
Schedule of loans by class modified as troubled debt restructurings
Number of Loans	2
Pre-Modification Outstanding Recorded Investment	787,000
Post-Modification Outstanding Recorded Investment	792,000
Commercial real estate, Non-owner occupied [Member]
Schedule of loans by class modified as troubled debt restructurings
Number of Loans	3
Pre-Modification Outstanding Recorded Investment	2,376,000
Post-Modification Outstanding Recorded Investment	2,419,000
Residential real estate, 1-4 family residential [Member]
Schedule of loans by class modified as troubled debt restructurings
Number of Loans	1
Pre-Modification Outstanding Recorded Investment	52,000
Post-Modification Outstanding Recorded Investment	$ 52,000

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Consolidated Statements of Comprehensive Income [Abstract]
NET INCOME	$ 2,286	$ 2,117	$ 4,806	$ 3,807
Other comprehensive income:
Net unrealized holding gains (losses) on available for sale securities	2,599	5,797	1,743	5,863
Reclassification adjustment for (gains) losses realized in income	0	0	0	0
Net unrealized holding gains (losses)	2,599	5,797	1,743	5,863
Income tax effect	(910)	(2,028)	(610)	(2,051)
Net of tax comprehensive income (loss)	1,689	3,769	1,133	3,812
TOTAL COMPREHENSIVE INCOME	$ 3,975	$ 5,886	$ 5,939	$ 7,619

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Allowance For Loan Losses

6 Months Ended

Jun. 30, 2012

Allowance for Loan Losses [Abstract]

Allowance for Loan Losses

Allowance for Loan Losses:

The Company changed its methodology for estimating the valuation allowance for probable incurred loan losses for the three and six month periods ended June 30, 2012. During the most recent period end, management computed the historical loss percentage based upon the loss history of the past 12 quarters. In previous years, management used a historical loss percentage based on the past 8 quarters. Using a 12 quarter loss history resulted in a larger historical loss ratio than what would have been computed using an 8 quarter history. The primary factor for the change was the lower historical loss percentage applied to homogeneous and pass rated loans due to recent lower levels of net charge-offs. This new 12 quarter history methodology resulted in a $400 thousand loan loss provision for the three and six month periods ended June 30, 2012.

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value [Abstract]

Assets measured at fair value on a recurring basis

			Fair Value Measurements at June 30, 2012 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Investment securities available-for sale
U.S. Treasury and U.S. government sponsored entities	$	58,424	$	0	$	58,424	$	0
State and political subdivisions		82,061		0		82,061		0
Corporate bonds		1,247		0		1,247		0
Mortgage-backed securities-residential		243,618		0		243,607		11
Collateralized mortgage obligations		34,166		0		34,166		0
Small business administration		223		0		223		0
Equity securities		408		408		0		0
Total investment securities	$	420,147	$	408	$	419,728	$	11

			Fair Value Measurements at December 31, 2011 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level2)		Significant Unobservable Inputs ( Level 3)
Financial Assets
Investment securities available-for sale
U.S. Treasury and U.S. government sponsored entities	$	55,988	$	0	$	55,988	$	0
State and political subdivisions		82,690		0		82,690		0
Corporate bonds		769		0		769		0
Mortgage-backed securities-residential		222,718		0		222,706		12
Collateralized mortgage obligations		37,222		0		37,222		0
Small business administration		315		0		315		0
Equity securities		327		327		0		0
Total investment securities	$	400,029	$	327	$	399,690	$	12

Reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs

	Investment Securities Available-for-sale (Level 3)
	Three Months Ended June 30,					Six Months Ended June 30,
(In Thousands of Dollars)	2012			2011		2012			2011
Beginning balance	$	12		$	12	$	12		$	12
Total unrealized gains or losses:
Included in other comprehensive income or loss		0			0		0			0
Repayments		(1	)		0		(1	)		0
Transfer in and/or out of Level 3		0			0		0			0
Ending balance	$	11		$	12	$	11		$	12

Assets measured at fair value on a non-recurring basis

	Fair Value Measurements at June 30, 2012 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Impaired loans
Commercial real estate
Owner occupied	$	2,162	$	0	$	0	$	2,162
Non-owner occupied		492		0		0		492
Other		0		0		0		0
Commercial		155		0		0		155
Other real estate owned
Commercial real estate		187		0		0		187
1 – 4 family residential		89		0		0		89

	Fair Value Measurements at December 31, 2011 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
Financial assets:
Impaired loans
Commercial real estate
Owner occupied	$	1,606	$	0	$	0	$	1,606
Non-owner occupied		2,017		0		0		2,017
Other		0		0		0		0
Commercial		41		0		0		41
Other real estate owned
Commercial real estate		270		0		0		270
1 – 4 family residential		76		0		0		76

Fair value measurements for financial instruments

(In Thousands of Dollars)	Fair value		Valuation Technique(s)	Unobservable Input(s)	Range(Weighted Average)
Impaired loans
Commercial real estate	$	2,654	Sales comparison	Adjustment for differences between comparable sales	-44.2% -70.0% (-12.5%)
			Income approach	Adjustment for differences in net operating income	-36.8% -78.2% (14.9%)
Commercial		155	Sales comparison	Adjustment for differences between comparable sales	-39.8% -48.9% (9.3%)

Carrying amounts and estimated fair values of financial instruments

			Fair Value Measurements at June 30, 2012 Using:
(In Thousands of Dollars)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	75,559	$	14,410	$	61,149	$	0	$	75,559
Securities available-for-sale		420,147		408		419,728		11		420,147
Restricted stock		4,224		n/a		n/a		n/a		n/a
Loans held for sale		3,718		0		3,784		0		3,784
Loans, net		563,405		0		0		575,142		575,142
Accrued interest receivable		3,749		0		1,089		2,660		3,749
Financial liabilities
Deposits		886,593		641,629		251,245		0		892,874
Short-term borrowings		96,465		0		96,465		0		96,465
Long-term borrowings		10,583		0		11,956		0		11,956
Accrued interest payable		550		5		545		0		550

.

(In Thousands of Dollars)
December 31, 2011	Carrying Amount		Fair Value
Financial assets
Cash and cash equivalents	$	52,422	$	52,422
Securities available-for-sale		400,029		400,029
Restricted stock		4,224		n/a
Loans held for sale		677		677
Loans, net		561,986		574,391
Accrued interest receivable		3,794		3,794
Financial liabilities
Deposits		840,125		846,412
Short-term borrowings		98,088		98,088
Long-term borrowings		11,263		12,719
Accrued interest payable		585		585

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Loans (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Average recorded investment
Average Recorded Investment	$ 11,623	$ 6,321	$ 11,931	$ 6,477
Commercial real estate, Owner occupied [Member]
Average recorded investment
Average Recorded Investment, With no related allowance recorded	1,207	1,211	1,104	1,236
Average Recorded Investment, With an allowance recorded	4,726	2,375	4,764	2,405
Commercial real estate, Non-owner occupied [Member]
Average recorded investment
Average Recorded Investment, With no related allowance recorded	302	0	313	0
Average Recorded Investment, With an allowance recorded	3,112	833	3,438	894
Commercial real estate, Other[Member]
Average recorded investment
Average Recorded Investment, With no related allowance recorded	0	0	0	0
Average Recorded Investment, With an allowance recorded	0	802	0	812
Commercial [Member]
Average recorded investment
Average Recorded Investment, With no related allowance recorded	922	655	946	671
Average Recorded Investment, With an allowance recorded	628	445	638	459
Residential real estate, 1-4 family residential [Member]
Average recorded investment
Average Recorded Investment, With no related allowance recorded	726	0	728	0
No related allowance [Member]
Average recorded investment
Average Recorded Investment	3,157	1,866	3,091	1,907
Allowance [Member]
Average recorded investment
Average Recorded Investment	$ 8,466	$ 4,455	$ 8,840	$ 4,570

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Fair Value

6 Months Ended

Jun. 30, 2012

Fair Value [Abstract]

Fair Value

Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value:

Investment Securities: The Company used a third party service to estimate fair value on available for sale securities on a monthly basis. This service provider is considered a leading evaluation pricing service for U.S. domestic fixed income securities. They subscribe to multiple third-party pricing vendors, and supplement that information with matrix pricing methods. The fair values for investment securities are determined by quoted market prices in active markets, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on quoted prices for similar assets in active markets, quoted prices for similar assets in markets that are not active or inputs other than quoted prices, which provide a reasonable basis for fair value determination. Such inputs may include interest rates and yield curves, volatilities, prepayment speeds, credit risks and default rates. Finally, inputs used are derived principally from observable market data (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). The fair values of Level 3 investment securities are determined by using unobservable inputs to measure fair value of assets for which there is little, if any market activity at the measurement date, using reasonable inputs and assumptions based on the best information at the time, to the extent that inputs are available without undue cost and effort by the Company’s Chief Financial Officer and Controller. For the period ended June 30, 2012 the fair value of Level 3 investment securities was immaterial.

Impaired Loans: At the time loans are considered impaired, collateral dependent impaired loans are valued at the lower of cost or fair value and non-collateral dependent loans are valued based on discounted cash flows. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. For collateral dependent loans fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair values are commonly based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial and commercial real estate properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the Appraisal Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with via independent data sources such as recent market data or industry-wide statistics. On an annual basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what adjustments should be made to appraisals to arrive at fair value.

Assets measured at fair value on a recurring basis, including financial assets for which the Company has elected the fair value option, are summarized below:

			Fair Value Measurements at June 30, 2012 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Investment securities available-for sale
U.S. Treasury and U.S. government sponsored entities	$	58,424	$	0	$	58,424	$	0
State and political subdivisions		82,061		0		82,061		0
Corporate bonds		1,247		0		1,247		0
Mortgage-backed securities-residential		243,618		0		243,607		11
Collateralized mortgage obligations		34,166		0		34,166		0
Small business administration		223		0		223		0
Equity securities		408		408		0		0
Total investment securities	$	420,147	$	408	$	419,728	$	11

			Fair Value Measurements at December 31, 2011 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level2)		Significant Unobservable Inputs ( Level 3)
Financial Assets
Investment securities available-for sale
U.S. Treasury and U.S. government sponsored entities	$	55,988	$	0	$	55,988	$	0
State and political subdivisions		82,690		0		82,690		0
Corporate bonds		769		0		769		0
Mortgage-backed securities-residential		222,718		0		222,706		12
Collateralized mortgage obligations		37,222		0		37,222		0
Small business administration		315		0		315		0
Equity securities		327		327		0		0
Total investment securities	$	400,029	$	327	$	399,690	$	12

There were no significant transfers between Level 1 and Level 2 during the three and six month periods ended June 30, 2012 and 2011.

The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	Investment Securities Available-for-sale (Level 3)
	Three Months Ended June 30,					Six Months Ended June 30,
(In Thousands of Dollars)	2012			2011		2012			2011
Beginning balance	$	12		$	12	$	12		$	12
Total unrealized gains or losses:
Included in other comprehensive income or loss		0			0		0			0
Repayments		(1	)		0		(1	)		0
Transfer in and/or out of Level 3		0			0		0			0
Ending balance	$	11		$	12	$	11		$	12

Assets measured at fair value on a non-recurring basis are summarized below:

	Fair Value Measurements at June 30, 2012 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Impaired loans
Commercial real estate
Owner occupied	$	2,162	$	0	$	0	$	2,162
Non-owner occupied		492		0		0		492
Other		0		0		0		0
Commercial		155		0		0		155
Other real estate owned
Commercial real estate		187		0		0		187
1 – 4 family residential		89		0		0		89

	Fair Value Measurements at December 31, 2011 Using:
(In Thousands of Dollars)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
Financial assets:
Impaired loans
Commercial real estate
Owner occupied	$	1,606	$	0	$	0	$	1,606
Non-owner occupied		2,017		0		0		2,017
Other		0		0		0		0
Commercial		41		0		0		41
Other real estate owned
Commercial real estate		270		0		0		270
1 – 4 family residential		76		0		0		76

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $3.7 million with a valuation allowance of $864 thousand at June 30, 2012, resulting in an additional provision for loan losses of $339 thousand and $420 thousand for the three and six month periods ended June 30, 2012. At December 31, 2011, impaired loans had a principal balance of $4.6 million, with a valuation allowance of $936 thousand. The additional provision for loan losses was $66 thousand for the three months ended June 30, 2011 and $397 thousand for the six months ended June 30, 2011, for loans carried at fair value. Excluded from the fair value of impaired loans, at June 30, 2012 and December 31, 2011, discussed above are $4.3 million and $2.3 million of loans classified as troubled debt restructurings, which are not carried at fair value.

Impaired commercial real estate loans, both owner occupied and non-owner occupied are valued by independent external appraisals. These external appraisals are prepared using the sales comparison approach and income approach valuation techniques. Management makes subsequent unobservable adjustments to the impaired loan appraisals. Impaired loans other than commercial real estate and other real estate owned are not considered material.

The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2012:

(In Thousands of Dollars)	Fair value		Valuation Technique(s)	Unobservable Input(s)	Range(Weighted Average)
Impaired loans
Commercial real estate	$	2,654	Sales comparison	Adjustment for differences between comparable sales	-44.2% -70.0% (-12.5%)
			Income approach	Adjustment for differences in net operating income	-36.8% -78.2% (14.9%)
Commercial		155	Sales comparison	Adjustment for differences between comparable sales	-39.8% -48.9% (9.3%)

Other real estate owned measured at fair value less costs to sell, had a net carrying amount of $276 thousand at June 30, 2012. The Company sold nine other real estate owned properties during the six month period ended June 30, 2012. The Company recorded $73 thousand in write downs on four other real estate owned properties during the six month period ended June 30, 2012. At December 31, 2011, other real estate owned had a net carrying amount of $346 thousand. During the year ended December 31, 2011 five properties were charged down reflecting updated appraisals which resulted in a write-down of $115 thousand.

The carrying amounts and estimated fair values of financial instruments, at June 30, 2012 and December 31, 2011 are as follows:

			Fair Value Measurements at June 30, 2012 Using:
(In Thousands of Dollars)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	75,559	$	14,410	$	61,149	$	0	$	75,559
Securities available-for-sale		420,147		408		419,728		11		420,147
Restricted stock		4,224		n/a		n/a		n/a		n/a
Loans held for sale		3,718		0		3,784		0		3,784
Loans, net		563,405		0		0		575,142		575,142
Accrued interest receivable		3,749		0		1,089		2,660		3,749
Financial liabilities
Deposits		886,593		641,629		251,245		0		892,874
Short-term borrowings		96,465		0		96,465		0		96,465
Long-term borrowings		10,583		0		11,956		0		11,956
Accrued interest payable		550		5		545		0		550

.

(In Thousands of Dollars)
December 31, 2011	Carrying Amount		Fair Value
Financial assets
Cash and cash equivalents	$	52,422	$	52,422
Securities available-for-sale		400,029		400,029
Restricted stock		4,224		n/a
Loans held for sale		677		677
Loans, net		561,986		574,391
Accrued interest receivable		3,794		3,794
Financial liabilities
Deposits		840,125		846,412
Short-term borrowings		98,088		98,088
Long-term borrowings		11,263		12,719
Accrued interest payable		585		585

The methods and assumptions used to estimate fair value, not previously described, are described as follows:

Cash and Cash Equivalents: The carrying amounts of cash and short-term instruments approximate fair values and are classified as either Level 1 or Level 2. The Company has determined that cash on hand and non-interest bearing due from bank accounts are Level 1 whereas interest bearing fed funds sold and other are Level 2.

Restricted Stock: It is not practical to determine the fair value of restricted stock due to restrictions placed on its transferability.

Loans: Fair values of loans, excluding loans held for sale, are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Loans held for sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Accrued Interest Receivable/Payable: The carrying amounts of accrued interest receivable and payable approximate fair value resulting in a Level 2 or Level 3 classification. The classification is the result of the association with securities, loans and deposits.

Deposits: The fair values disclosed for demand deposits – interest and non-interest checking, passbook savings, and money market accounts - are, by definition, equal to the amount payable on demand at the reporting date resulting in a Level 1 classification. The carrying amounts of variable rate certificates of deposit approximate their fair values at the reporting date resulting Level 2 classification. Fair value for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Short-term Borrowings: The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification.

Long-term Borrowings: The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Off-balance Sheet Instruments: The fair value of commitments is not considered material.