Business Acquisitions

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Business Acquisitions

Business Acquisitions:

On June 23, 2015, Tri-State 1st Banc, Inc. (“Tri-State”), the parent company of 1st National Community Bank (“FNCB”),

Farmers National Banc Corp. (the “Company”), the parent company of The Farmers National Bank of Canfield (“Farmers Bank”),

and FMNB Merger Subsidiary, LLC, a newly-formed wholly-owned subsidiary of the Company (“Merger Sub”), entered into an

Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Tri-State will merge with and into Merger Sub (the

“Merger”). Promptly following consummation of the Merger, it is expected that Merger Sub will be dissolved and liquidated, and

FNCB will merge with and into Farmers Bank.

Pursuant to the terms of the Merger Agreement, common shareholders of Tri-State will be entitled to receive 1.747 common

shares, without par value, of the Company (the “Company Common Shares”), or $14.20 in cash, for each common share, without par

value, of Tri-State (the “Tri-State Common Shares”), subject to proration provisions specified in the Merger Agreement that provide

for a targeted aggregate split of total consideration consisting of 75% Company Common Shares and 25% cash. Preferred

shareholders of Tri-State will be entitled to receive $13.60 in cash for each share of Series A Preferred Stock, without par value, of

Tri-State.

On June 19, 2015, the Company completed the acquisition of all outstanding stock of National Bancshares Corporation (“NBOH”), the parent company of First National Bank of Orrville (“First National Bank”). The transaction involved both cash and 7,262,955 shares of stock totaling $74.8 million. First National Bank of Orrville branches became branches of Farmers National Bank of Canfield.  Pursuant to the Agreement, each shareholder of NBOH received 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 NBOH being exchanged for stock and 20% for cash.

Goodwill of $26.7 million, which is recorded on the balance sheet of the Bank, arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the companies.  The goodwill is not expected to be deductible for income tax purposes.  The fair value of other intangible assets of $4.4 million is related to core deposits.  The following table summarizes the consideration paid for NBOH and the amounts of the assets acquired and liabilities assumed on the closing date of the acquisition.

(In Thousands of Dollars)
Consideration
Cash	$	15,732
Stock		59,048
Fair value of total consideration transferred	$	74,780
Assets acquired and liabilities assumed
Cash and due from financial institutions	$	37,035
Securities available for sale		51,340
Net loans		430,035
Premises and equipment		6,105
Bank owned life insurance		2,891
Core deposit intangible		4,409
Other assets		7,996
Total assets		539,811
Fair value of liabilities assumed
Deposits		423,661
Short-term borrowings		13,531
Long-term borrowings		52,006
Accrued interest payable and other liabilities		2,514
Total liabilities		491,712
Net assets acquired	$	48,099
Goodwill created		26,681
Total net assets acquired	$	74,780

Valuation of some assets acquired or created including but not limited to net loans and goodwill are preliminary and could be subject to change.

The following table presents pro forma information as if the acquisition had occurred at the beginning of 2014.  The pro forma information includes adjustments for amortization of intangibles arising from the transaction and the related income tax effects. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been effective on the assumed dates.

	For Three Months Ended June 30,				For Six Months Ended June 30,
(In thousands of dollars except per share results)	2015		2014		2015		2014
Net interest income	$	14,598	$	13,235	$	28,278	$	26,217
Net income	$	3,390	$	3,734	$	7,216	$	7,125
Basic and diluted earnings per share	$	0.13	$	0.15	$	0.28	$	0.28

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 estimated payment has been calculated and an additional $849 thousand expense was recorded during the three month period ended June 30, 2015.  The current liability on the books of the Company is $1.0 million and is expected to be adequate to satisfy the contingent cash payment section of the agreement.