Business Acquisitions

3 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

Business Acquisitions

Business Acquisitions:

On January 27, 2015, the Company announced that it had entered into an Agreement and Plan of Merger (the “Merger Agreement”) with National Bancshares Corporation (“National Bancshares”), the parent company of First National Bank of Orrville (“First National Bank”), pursuant to which National Bancshares will merge with and into the Company (the “Merger”).  Promptly following consummation of the Merger, it is expected that First National Bank will merge with and into the Bank. At the completion of the Merger, First National Bank of Orrville branches will become branches of Farmers National Bank of Canfield.  Pursuant to the Agreement, each shareholder of National Bancshares will be entitled to elect to receive either $32.15 per share in cash or 4.034 shares of Farmers’ common stock, subject to an overall limitation of 80% of the shares of National Bancshares being exchanged for stock and 20% for cash.  Based on Farmers’ volume weighted average stock price over the last 20 trading days of $7.97, as of January 26, 2015, the transaction is valued at approximately $74.0 million.  The merger is expected to qualify as a tax-free reorganization for those shareholders electing to receive Farmers’ stock.  The transaction is subject to receipt of National Bancshares’ shareholder approval, Farmers’ shareholder approval and customary regulatory approvals.  The Company expects the transaction to close in the first half of 2015.

On July 1, 2013, the Company completed the acquisition of all outstanding stock of the retirement planning consultancy National Associates, Inc. (“NAI”) of Rocky River, Ohio. The transaction involved both cash and stock totaling $4.4 million, including up to $1.5 million of future cash payments contingent upon NAI meeting income performance targets based on growth in EBITDA. The measurement period is defined, in essence, as “the twelve month period ending on the second anniversary of the closing date.” Based upon the closing date of July 1, 2013, the payment is due within five business days of final determination of the amount of the payment based upon EBITDA from August 1, 2014, to July 31, 2015. The payment is tiered as follows:

i) If the calculated growth percentage of EBITDA is equal to or less than the base percentage (6.00%), the payment will be $0;

ii) If the calculated growth percentage of EBITDA is greater than or equal to the maximum percentage (12.00%), the payment will be $1.5 million; and

iii) If the calculated growth percentage of EBITDA is between the base and maximum percentages, a factor of the growth is interpolated and multiplied by the maximum $1.5 million payment.

The acquisition-date fair value of contingent consideration was estimated to be $920,000 and was recorded in other liabilities on the consolidated balance sheet. In the third quarter of 2014, management determined it was no longer probable that amount would be paid and reduced the liability through a reduction of other expense by $764,000, the same amount as goodwill impairment expense recorded in the same line.  As a result, the liability for contingent consideration included in other liabilities totaled $156,000 at March 31, 2015 and December 31, 2014.  The continent consideration and related liability will be settled in the third quarter of 2015.