10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2015

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

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, Ohio	44406
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 330-533-3341

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares, no par value	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No   x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

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 Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

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 the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨		Accelerated filer	x
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	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

As of June 30, 2015, the estimated aggregate market value of the ’registrant’s common shares, no par value (the only common equity of the registrant), held by non-affiliates of the registrant was approximately $211.8 million based upon the last sales price as of June 30, 2015 reported on NASDAQ. (The exclusion from such amount of the market value of the common shares owned by any person shall not be deemed an admission by the registrant that such person is an affiliate of the registrant).

As of March 7, 2016, the registrant had outstanding 26,935,484 common shares, no par value.

DOCUMENTS INCORPORATED BY REFERENCE

Document	Part of Form 10-K into which Document is Incorporated
Portions of the registrant’s definitive proxy statement for the 2016	III
Annual Meeting of Shareholders

FARMERS NATIONAL BANC CORP.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014

TABLE OF CONTENTS

	PART I
Item 1.	Business.	1
Item 1A.	Risk Factors.	11
Item 1B.	Unresolved Staff Comments.	19
Item 2.	Properties.	19
Item 3.	Legal Proceedings.	21
Item 4.	Mine Safety Disclosures.	21
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	22
Item 6.	Selected Financial Data.	23
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	27
Item 7A.	Quantitative and Qualitative Disclosure about Market Risk.	41
Item 8.	Financial Statements and Supplementary Financial Data.	43
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	92
Item 9A.	Controls and Procedures.	92
Item 9B.	Other Information.	93
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	94
Item 11.	Executive Compensation.	96
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	96
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	96
Item 14.	Principal Accountant Fees and Services.	96
	PART IV
Item 15.	Exhibits, Financial Statement Schedules.	96
SIGNATURES		97

PART I

Item 1. Business.

General

Farmers National Banc Corp.

Farmers National Banc Corp. (the “Company,” “Farmers,” “we,” “our” or “us”), is a one-bank holding company organized in 1983 under the laws of the State of Ohio and registered under the Bank Holding Company Act of 1956, as amended (the “BHCA”). The Company operates principally through its wholly-owned subsidiaries, The Farmers National Bank of Canfield (the “Bank” or “Farmers Bank”), Farmers Trust Company (“Trust” or “Farmers Trust”) and National Associates, Inc. (“NAI”).  Farmers National Insurance, LLC (“Insurance” or “Farmers Insurance”) and Farmers of Canfield Investment Co. (“Investments or “Farmers Investments”) are wholly-owned subsidiaries of the Bank. The Company and its subsidiaries operate in the domestic banking, trust, retirement consulting, insurance and financial management industries.

The Company’s principal business consists of owning and supervising its subsidiaries. Although Farmers’ directs the overall policies of its subsidiaries, including lending practices and financial resources, most day-to-day affairs are managed by their respective officers. Farmers and its subsidiaries had 432 full-time equivalent employees at December 31, 2015.

The Company’s principal executive offices are located at 20 South Broad Street, Canfield, Ohio 44406, and its telephone number is (330) 533-3341. Farmers’ common shares, no par value, are listed on the NASDAQ Capital Market (the “NASDAQ”) under the symbol “FMNB.” Farmers’ business activities are managed and financial performance is primarily aggregated and reported in three lines of business, the Bank segment, the Trust segment and the Retirement planning/consulting segment. For a discussion of Farmers’ financial performance for the fiscal year ended December 31, 2015, see the Consolidated Financial Statements and Notes to the Consolidated Financial Statements found in Item 8 of this Annual Report on Form 10-K.

The Farmers National Bank of Canfield

During 2015 the Company acquired all outstanding stock of National Bancshares Corporation (“NBOH”), the parent company of First National Bank of Orrville (“First National Bank”) and Tri-State 1stBanc, Inc. (“Tri-State”), the parent company of 1^st National Community Bank (“FNCB”).  Additional discussion about the acquisitions can be found in the Notes to Consolidated Financial Statements in item 8 of this Annual Report on Form 10-K. The Bank is a full-service national banking association engaged in commercial and retail banking mainly in Mahoning, Trumbull, Columbiana, Wayne, Medina and Stark Counties in Ohio and with the acquisition of Tri-State, one location in Beaver County, Pennsylvania. The Bank’s commercial and retail banking services include checking accounts, savings accounts, time deposit accounts, commercial, mortgage and installment loans, home equity loans, home equity lines of credit, night depository, safe deposit boxes, money orders, bank checks, automated teller machines, internet banking, travel cards, “E” Bond transactions, MasterCard and Visa credit cards, brokerage services and other miscellaneous services normally offered by commercial banks.

A discussion of the general development of the Bank’s business and information regarding its financial performance throughout 2015, is discussed in Item 7, Management Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.

The Bank faces significant competition in offering financial services to customers. Ohio has a high density of financial service providers, many of which are significantly larger institutions that have greater financial resources than the Bank, and all of which are competitors to varying degrees. Competition for loans comes principally from savings banks, savings and loan associations, commercial banks, mortgage banking companies, credit unions, insurance companies and other financial service companies. The most direct competition for deposits has historically come from savings and loan associations, savings banks, commercial banks and credit unions. Additional competition for deposits comes from non-depository competitors such as the mutual fund industry, securities and brokerage firms and insurance companies.

Farmers Trust Company

Farmers Trust offers a full complement of personal and corporate trust services in the areas of estate settlement, trust administration and employee benefit plans. Farmers Trust operates two offices located in Boardman and Howland, Ohio.

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National Associates, Inc.

During 2013, the Company completed the acquisition of all outstanding stock of the retirement planning consultancy National Associates, Inc. of Cleveland, Ohio.  The transaction involved both cash and stock totaling $4.4 million, including up to $1.5 million of future payments, contingent upon NAI meeting income performance targets.  The acquisition is part of the Company’s plan to increase the levels of noninterest income and to complement the existing retirement service currently being offered.  NAI operates from its office located in Rocky River, Ohio.

Farmers National Insurance, LLC

Farmers Insurance was formed during 2009 and offers a variety of insurance products through licensed representatives. Farmers Insurance is a subsidiary of Farmers Bank and does not account for a material portion of the revenue and, therefore, will not be discussed individually, but as part of the Bank.

Farmers of Canfield Investment Company

Farmers of Canfield Investment Company was formed during 2014 with the primary purpose of investing in municipal securities. Farmers Investments is a subsidiary of Farmers Bank and does not account for a material portion of the revenue and, therefore, will not be discussed individually, but as part of the Bank.

Investor Relations

The Company maintains an Internet site at http://www.farmersbankgroup.com, which contains an Investor Relations section that provides access to the Company’s filings with the Securities and Exchange Commission (the “Commission”) Farmers makes available free of charge on or through its website the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such documents filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after the Company has filed these documents with the Commission. In addition, the Company’s filings with the Commission may be read and copied at the Commission’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. These filings are also available on the Commission’s web-site at http://www.sec.gov free of charge as soon as reasonably practicable after the Company has filed the above referenced reports.

Supervision and Regulation

Introduction

The Company and its subsidiaries are subject to extensive regulation by federal and state regulatory agencies. The regulation of bank holding companies and their subsidiaries is intended primarily for the protection of consumers, depositors, borrowers, the Deposit Insurance Fund and the banking system as a whole and not for the protection of shareholders. This intensive regulatory environment, among other things, may restrict the Company’s ability to diversify into certain areas of financial services, acquire depository institutions in certain markets or pay dividends on its common shares. It also may require the Company to provide financial support to its banking and other subsidiaries, maintain capital balances in excess of those desired by management and pay higher deposit insurance premiums as a result of the deterioration in the financial condition of depository institutions in general.

Significant aspects of the laws and regulations that have, or could have a material impact on Farmers and its subsidiaries are described below. These descriptions are qualified in their entirety by reference to the full text of the applicable statutes, legislation, regulations and policies, as they may be amended or revised by the U.S. Congress or state legislatures and federal or state regulatory agencies, as the case may be. Changes in these statutes, legislation, regulations and policies may have a material adverse effect on the Company and its business, financial condition or results of operations.

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Regulatory Agencies

Bank Holding Company. As a bank holding company, Farmers is subject to regulation under the BHCA and to inspection, examination and supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). The Federal Reserve Board has extensive enforcement authority over bank holding companies and may initiate enforcement actions for violations of laws and regulations and unsafe or unsound practices. The Federal Reserve Board may assess civil money penalties, issue cease and desist or removal orders and may require that a bank holding company divest subsidiaries, including subsidiary banks. Farmers is also required to file reports and other information with the Federal Reserve Board regarding its business operations and those of its subsidiaries.

Subsidiary Bank. The Bank is subject to regulation and examination primarily by the Office of the Comptroller of the Currency (the “OCC”) and secondarily by the Federal Deposit Insurance Corporation (the “FDIC”). OCC regulations govern permissible activities, capital requirements, dividend limitations, investments, loans and other matters. The OCC has extensive enforcement authority over Farmers Bank and may impose sanctions on Farmers Bank and, under certain circumstances, may place Farmers Bank into receivership.

Farmers Bank is also subject to certain restrictions imposed by the Federal Reserve Act and Federal Reserve Board regulations regarding such matters as the maintenance of reserves against deposits, extensions of credit to Farmers or any of its subsidiaries, investments in the stock or other securities of Farmers or its subsidiaries and the taking of such stock or securities as collateral for loans to any borrower.

Non-Banking Subsidiaries. Farmers’ non-banking subsidiaries are also subject to regulation by the Federal Reserve Board and other applicable federal and state agencies. In particular, Farmers National Insurance is subject to regulation by the Ohio Department of Insurance, which requires, amongst other things, the education and licensing of agencies and individual agents and imposes business conduct rules.

Securities and Exchange Commission and The NASDAQ Stock Market LLC. The Company is also under the regulation and supervision of the Commission and certain state securities commissions for matters relating to the offering and sale of its securities. The Company is subject to disclosure and regulatory requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act, and the regulations promulgated there under. Farmers common shares are listed on the NASDAQ under the symbol “FMNB” and the Company is subject to the rules for NASDAQ listed companies.

Federal Home Loan Bank. Farmers Bank is a member of the Federal Home Loan Bank of Cincinnati (the “FHLB”), which provides credit to its members in the form of advances. As a member of the FHLB, the Bank must maintain an investment in the capital stock of the FHLB in a specified amount. Upon the origination or renewal of a loan or advance, the FHLB is required by law to obtain and maintain a security interest in certain types of collateral. The FHLB is required to establish standards of community investment or service that its members must maintain for continued access to long-term advances from the FHLB. The standards take into account a member’s performance under the Community Reinvestment Act of 1977 (the “CRA”) and its record of lending to first-time home buyers.

The Federal Deposit Insurance Corporation. The FDIC is an independent federal agency that insures the deposits, up to prescribed statutory limits, of federally-insured banks and savings associations and safeguards the safety and soundness of the financial institution industry. The Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC and subject to deposit insurance assessments to maintain the Deposit Insurance Fund.

The FDIC may terminate insurance coverage upon a finding that an insured depository institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition, or has violated any applicable law, regulation, rule, order or condition enacted or imposed by the institution’s regulatory agency.

Dodd-Frank Act

In July 2013, the Federal banking regulators approved a final rule to implement the revised capital adequacy standards of the Basel Committee on Banking Supervision, commonly called Basel III, and to address relevant provisions of the Dodd-Frank Act.  The final rule strengthens the definition of regulatory capital, increases risk-based capital requirements, makes selected changes to the calculation of risk-weighted assets, and adjusts the prompt corrective action thresholds.  Community banking organizations, such as the Company and the Bank, became subject to the new rule on January 1, 2015 and certain provisions of the new rule will be phased in over the period of 2015 through 2019.

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The final rule:

· Permits banking organizations that had less than $15 billion in total consolidated assets as of December 31, 2009 to include in Tier 1 capital trust preferred securities and cumulative perpetual preferred stock that were issued and included in Tier 1 capital prior to May 19, 2010, subject to a limit of 25% of Tier 1 capital elements, excluding any non-qualifying capital instruments and after all regulatory capital deductions and adjustments have been applied to Tier 1 capital.

· Establishes new qualifying criteria for regulatory capital, including new limitations on the inclusion of deferred tax assets and mortgage servicing rights.

· Requires a minimum ratio of common equity Tier 1 capital to risk-weighted assets of 4.5%.

· Increases the minimum Tier 1 capital to risk-weighted assets ratio requirement from 4% to 6%.

· Retains the minimum total capital to risk-weighted assets ratio requirement of 8%.

· Establishes a minimum leverage ratio requirement of 4%.

· Retains the existing regulatory capital framework for 1-4 family residential mortgage exposures.

· Permits banking organizations that are not subject to the advanced approaches rule, such as the Company and the Bank, to retain, through a one-time election, the existing treatment for most accumulated other comprehensive income, such that unrealized gains and losses on securities available for sale will not affect regulatory capital amounts and ratios.

· Implements a new capital conservation buffer requirement for a banking organization to maintain a common equity capital ratio more than 2.5% above the minimum common equity Tier 1 capital, Tier 1 capital and total risk-based capital ratios in order to avoid limitations on capital distributions, including dividend payments, and certain discretionary bonus payments. The capital conservation buffer requirement will be phased in beginning on January 1, 2016 at 0.625% and will be fully phased in at 2.50% by January 1, 2019.  A banking organization with a buffer of less than the required amount would be subject to increasingly stringent limitations on such distributions and payments as the buffer approaches zero. The new rule also generally prohibits a banking organization from making such distributions or payments during any quarter if its eligible retained income is negative and its capital conservation buffer ratio was 2.5% or less at the end of the previous quarter. The eligible retained income of a banking organization is defined as its net income for the four calendar quarters preceding the current calendar quarter, based on the organization’s quarterly regulatory reports, net of any distributions and associated tax effects not already reflected in net income.

· Increases capital requirements for past-due loans, high volatility commercial real estate exposures, and certain short-term commitments and securitization exposures.

· Expands the recognition of collateral and guarantors in determining risk-weighted assets.

· Removes references to credit ratings consistent with the Dodd Frank Act and establishes due diligence requirements for securitization exposures.

The Company’s continues to evaluate the provisions of the final rule. Many aspects of the Dodd Frank Act continue to be subject to rulemaking and will take effect over several additional years, making it difficult to anticipate the overall financial impact on the Company.

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.

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Bank Holding Company Regulation

As a bank holding company, Farmers’ activities are subject to extensive regulation by the Federal Reserve Board under the BHCA. Generally, the BHCA limits the business of bank holding companies to banking, managing or controlling banks and other activities that the Federal Reserve Board has determined to be closely related to banking as to be a proper incident thereto. Under Federal Reserve Board policy, a bank holding company is expected to serve as a source of financial and managerial strength to each subsidiary bank and to commit resources to support those subsidiary banks. Under this policy, the Federal Reserve Board may require a bank holding company to contribute additional capital to an undercapitalized subsidiary bank and may disapprove of the payment of dividends to the holding company’s shareholders if the Federal Reserve Board believes the payment of such dividends would be an unsafe or unsound practice. The Dodd-Frank Act codified this policy as a statutory requirement.

The BHCA requires prior approval by the Federal Reserve Board for a bank holding company to directly or indirectly acquire more than a 5.0% voting interest in any bank or its parent holding company. Factors taken into consideration in making such a determination include the effect of the acquisition on competition, the public benefits expected to be received from the acquisition, the projected capital ratios and levels on a post-acquisition basis, and the acquiring institution’s record of addressing the credit needs of the communities it serves.

The BHCA also governs interstate banking and restricts Farmers’ nonbanking activities to those determined by the Federal Reserve Board to be financial in nature, or incidental or complementary to such financial activity, without regard to territorial restrictions. Transactions among the Bank and its affiliates are also subject to certain limitations and restrictions of the Federal Reserve Board, as described more fully under the caption “Dividends and Transactions with Affiliates” in this Item 1.

The Gramm-Leach-Bliley Act of 1999 permits a qualifying bank holding company to elect to become a financial holding company and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature and not otherwise permissible for a bank holding company. Farmers has not elected to seek financial holding company status.

Regulation of Nationally-Chartered Banks

As a national banking association, Farmers Bank is subject to regulation under the National Banking Act and is periodically examined by the OCC. OCC regulations govern permissible activities, capital requirements, dividend limitations, investments, loans and other matters. Furthermore, Farmers Bank is subject, as a member bank, to certain rules and regulations of the Federal Reserve Board, many of which restrict activities and prescribe documentation to protect consumers. Under the Bank Merger Act, the prior approval of the OCC is required for a national bank to merge with, or purchase the assets or assume the deposits of, another bank. In reviewing applications to approve merger and other acquisition transactions, the OCC and other bank regulatory authorities may include among their considerations the competitive effect and public benefits of the transactions, the capital position of the combined organization, the applicant’s performance under the CRA, and fair housing laws, and the effectiveness of the entities in restricting money laundering activities. In addition, the establishment of branches by Farmers Bank is subject to the prior approval of the OCC. The OCC has the authority to impose sanctions on the Bank and, under certain circumstances, may place Farmers Bank into receivership.

The Bank is also an insured institution as a member of the Deposit Insurance Fund. As a result, it is subject to regulation and deposit insurance assessments by the FDIC.

Dividends and Transactions with Affiliates

The Company is a legal entity separate and distinct from the Bank and its other subsidiaries. The Company’s principal source of funds to pay dividends on its common shares and service its debt is dividends from Farmers Bank and its other subsidiaries. Various federal and state statutory provisions and regulations limit the amount of dividends that Farmers Bank may pay to Farmers without regulatory approval. Farmers Bank generally may not, without prior regulatory approval, pay a dividend in an amount greater than its undivided profits after deducting statutory bad debt in excess of the bank’s allowance for loan losses. In addition, prior approval of the OCC is required for the payment of a dividend if the total of all dividends declared in a calendar year would exceed the total of Farmers Bank’s net income for the year combined with its retained net income for the two preceding years.

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In addition, Farmers and Farmers Bank are subject to other regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The federal banking agencies are authorized to determine under certain circumstances that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. The federal banking agencies have stated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings. In addition, in the current financial and economic environment, the Federal Reserve Board has indicated that bank holding companies should carefully review their dividend policy and has discouraged payment ratios that are at maximum allowable levels, unless both asset quality and capital are very strong. Thus, the ability of Farmers to pay dividends in the future is currently influenced, and could be further influenced, by bank regulatory policies and capital guidelines.

The Bank is subject to restrictions under federal law that limit the transfer of funds or other items of value to the Company and its nonbanking subsidiaries and affiliates, whether in the form of loans and other extensions of credit, investments and asset purchases, or other transactions involving the transfer of value from a subsidiary to an affiliate or for the benefit of an affiliate. These regulations limit the types and amounts of transactions (including loans due and extensions of credit) that may take place and generally require those transactions to be on an arm’s-length basis. In general, these regulations require that any “covered transaction” by Farmers Bank with an affiliate must be secured by designated amounts of specified collateral and must be limited, as to any one of Farmers or its non-bank subsidiaries, to 10% of Farmers Bank’s capital stock and surplus, and, as to Farmers and all such non-bank subsidiaries in the aggregate, to 20% of Farmers Bank’s capital stock and surplus. The Dodd-Frank Act significantly expanded the coverage and scope of the limitations on affiliate transactions within a banking organization including, for example, the requirement that the 10% of capital limit on covered transactions apply to financial subsidiaries. “Covered transactions” are defined by statute to include a loan or extension of credit, as well as a purchase of securities issued by an affiliate, a purchase of assets (unless otherwise exempted by the Federal Reserve Board) from the affiliate, certain derivative transactions that create a credit exposure to an affiliate, the acceptance of securities issued by the affiliate as collateral for a loan, and the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate.

Capital loans from the Company to the Bank are subordinate in right of payment to deposits and certain other indebtedness of the Bank. In the event of Farmers’ bankruptcy, any commitment by Farmers to a federal bank regulatory agency to maintain the capital of Farmers Bank will be assumed by the bankruptcy trustee and entitled to a priority of payment.

The Federal Deposit Insurance Act of 1950, as amended, provides that, in the event of the “liquidation or other resolution” of an insured depository institution such as the Bank, the insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, nondeposit creditors, including the Company, with respect to any extensions of credit they have made to such insured depository institution.

Capital Adequacy

Both Farmers and Farmers Bank are subject to risk-based capital requirements imposed by their respective primary federal banking regulator. The Federal Reserve Bank monitors the capital adequacy of Farmers and the FDIC monitors the capital adequacy of Farmers Bank. The revised risk-based capital requirements applicable to bank holding companies and insured depository institutions, including the Company and the Bank, to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision (“Basel III”) became effective for the Company and the Bank on January 1, 2015. The Basel III Rules require the maintenance of minimum amounts and ratios of common equity tier 1 capital, tier 1 capital and total capital to risk-weighted assets, and of tier 1 capital to adjusted quarterly average assets.

Under the Basel III Rules, common equity tier 1 capital consists of common stock and paid-in capital (net of treasury stock) and retained earnings. Common equity tier 1 capital is reduced by goodwill, certain intangible assets, net of associated deferred tax liabilities, deferred tax assets that arise from tax credit and net operating loss carryforwards, net of any valuation allowance, and certain other items as specified by the Basel III Rules.

Tier 1 capital includes common equity tier 1 capital and certain additional tier 1 items as provided under the Basel III Rules.

Basel III Rules allow for insured depository institutions to make a one-time election not to include most elements of accumulated other comprehensive income in regulatory capital and instead effectively use the existing treatment under the general risk-based capital rules. The Company and Bank made this opt-out election in the first quarter of 2015 to avoid significant variations in the level of capital depending upon the impact of interest rate fluctuations on the fair value of our investment securities portfolio.

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The Basel III Rules also changed the risk-weights of assets in an effort to better reflect credit risk and other risk exposures. These include a 150% risk weight (up from 100%) for certain high volatility commercial real estate acquisition, development and construction loans and the unsecured portion of non-residential mortgage loans that are 90 days past due or otherwise on nonaccrual status; a 20% (up from 0%) credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable; a 250% risk weight (up from 100%) for mortgage servicing rights and deferred tax assets that are not deducted from capital; and increased risk weights (from 0% to up to 600%) for equity exposures.

The Basel III Rules limit capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity tier 1 capital, tier 1 capital and total capital to risk-weighted assets in addition to the amount necessary to meet minimum risk-based capital requirements. The capital conservation buffer will be phased in beginning January 1, 2016, at 0.625% of risk-weighted assets, increasing each year by that amount until fully implemented at 2.5% on January 1, 2019. When fully phased in on January 1, 2019, the Basel III Rules will require the Company and Bank to maintain (i) a minimum ratio of common equity tier 1 capital to risk-weighted assets of at least 4.5%, plus a 2.5% capital conservation buffer, which effectively results in a minimum ratio of 7.0% upon full implementation, (ii) a minimum ratio of tier 1 capital to risk-weighted assets of at least 6.0%, plus a 2.5% capital conservation buffer, which effectively results in a minimum ratio of 8.50% upon full implementation, (iii) a minimum ratio of total capital to risk-weighted assets of at least 8.0%, plus a 2.5% capital conservation buffer, which effectively results in a minimum ratio of 10.5% upon full implementation and (iv) a minimum leverage ratio of 4.0%.

Prior to January 1, 2015, federal regulatory agencies required the Company and Bank to maintain minimum tier 1 and total capital to risk-weighted assets of 4.0% and 8.0%, respectively, and tier 1 capital to average assets (tier 1 leverage ratio) of at least 4.0%. In order to be considered well capitalized under the rules in effect prior to January 1, 2015, the Company had to maintain tier 1 and total capital to risk-weighted assets of 6.0% and 10.0%, respectively, and a leverage ratio of 5.0%. Tier 1 capital consisted of common equity, retained earnings, certain types of preferred stock, qualifying minority interest and trust preferred securities, subject to limitations, and excluded goodwill and various intangible assets.

When fully phased in on January 1, 2019, Basel III will require banks to maintain: (i) as a newly adopted international standard, a minimum ratio of Common Equity Tier 1 (“CET1”) to risk-weighted assets of 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% CET1 ratio as that buffer is phased in, which will effectively result in a minimum ratio of CET1 to risk-weighted assets of 7.0%); (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% on full implementation); (iii) a minimum ratio of Total (Tier 1 plus Tier 2) capital to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation); and (iv) as a newly adopted international standard, a minimum leverage ratio of 3.0%, calculated as the ratio of Tier 1 capital to balance sheet exposures plus certain off-balance sheet exposures (computed as the average for each quarter of the month-end ratios for the quarter).

The Basel III final framework provides for a number of new deductions from and adjustments to CET1, including the deduction of mortgage servicing rights, deferred tax assets dependent upon future taxable income and significant investments in non-consolidated financial entities if any one such category exceeds 10.0% of CET1 or if all such categories in the aggregate exceed 15.0% of CET1.

The following is a summary of the other major changes from the current general risk-based capital rule:

· replacement of the external credit ratings approach to standards of creditworthiness with a simplified supervisory formula approach;

· stricter limitations on the extent to which mortgage servicing assets, deferred tax assets and significant investments in unconsolidated financial institutions may be included in common equity tier 1 capital and the risk weight to be assigned to any amounts of such assets not deducted; and    

· increased risk weights for past-due loans, certain commercial real estate loans and some equity exposures, and selected other changes in risk weights and credit conversion factors.

Notwithstanding its release of the Basel III framework as a final framework, the Basel Committee is considering further amendments to Basel III, including imposition of additional capital surcharges on globally systemically important financial institutions. In addition to Basel III, the Dodd-Frank Act requires or permits federal banking agencies to adopt regulations affecting capital requirements in a number of respects, including potentially more stringent capital requirements for systemically important financial institutions. Accordingly, the regulations ultimately applicable to the Company may differ substantially from the currently published final Basel III framework. Requirements of higher capital levels or higher levels of liquid assets could adversely impact the Company’s net income and return on equity.

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Volcker Rule

In December 2013, five federal agencies adopted a final regulation implementing the Volcker Rule provision of the Dodd-Frank Act (the "Volcker Rule").  The Volcker Rule places limits on the trading activity of insured depository institutions and entities affiliated with a depository institution, subject to certain exceptions.  The trading activity includes a purchase or sale as principal of a security, derivative, commodity future or option on any such instrument in order to benefit from short-term price movements or to realize short-term profits.  The Volcker Rule exempts specified U.S. Government, agency and/or municipal obligations, and it excepts trading conducted in certain capacities, including as a broker or other agent, through a deferred compensation or pension plan, as a fiduciary on behalf of customers, to satisfy a debt previously contracted, repurchase and securities lending agreements and risk-mitigating hedging activities.  

The Volcker Rule also prohibits a banking entity from having an ownership interest in, or certain relationships with, a hedge fund or private equity fund, with a number of exceptions.

The Bank does not engage in any of the trading activities or own any of the types of funds prohibited by the Volcker Rule.

Prompt Corrective Action

The federal banking agencies have established a system of prompt corrective action to resolve certain of the problems of undercapitalized institutions. This system is based on five capital level categories for insured depository institutions: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.”

The federal banking agencies may (or in some cases must) take certain supervisory actions depending upon a bank’s capital level. For example, the banking agencies must appoint a receiver or conservator for a bank within 90 days after it becomes “critically undercapitalized” unless the bank’s primary regulator determines, with the concurrence of the FDIC, that other action would better achieve regulatory purposes. Banking operations otherwise may be significantly affected depending on a bank’s capital category. For example, a bank that is not “well capitalized” generally is prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, and the holding company of any undercapitalized depository institution must guarantee, in part, specific aspects of the bank’s capital plan for the plan to be acceptable.

Federal law permits the OCC to order the pro rata assessment of shareholders of a national bank whose capital stock has become impaired, by losses or otherwise, to relieve a deficiency in such national bank’s capital stock. This statute also provides for the enforcement of any such pro rata assessment of shareholders of such national bank to cover such impairment of capital stock by sale, to the extent necessary, of the capital stock owned by any assessed shareholder failing to pay the assessment. As the sole shareholder of Farmers Bank, the Company is subject to such provisions.

Deposit Insurance

Substantially all of the deposits of the Bank are insured up to applicable limits by the Deposit Insurance Fund of the FDIC, and Farmers Bank is assessed deposit insurance premiums to maintain the Deposit Insurance Fund. Insurance premiums for each insured institution are determined based upon the institution’s capital level and supervisory rating provided to the FDIC by the institution’s primary federal regulator and other information deemed by the FDIC to be relevant to the risk posed to the Deposit Insurance Fund by the institution. The assessment rate is then applied to the amount of the institution’s deposits to determine the institution’s insurance premium.

On February 7, 2011, the FDIC approved a final rule that changed the deposit insurance assessment base, as required by the Dodd-Frank Act. As adopted, the final rule changed the deposit insurance assessment base from domestic deposits to average assets minus average tangible equity. In addition, the final rule also adopted a new large-bank pricing assessment scheme and established a target size for the Deposit Insurance Fund. Specifically, the final rule set a target size for the Deposit Insurance Fund at 2 percent of insured deposits and implements a lower assessment rate schedule when the fund reaches 1.15 percent and, in lieu of dividends, provides for a lower rate schedule when the reserve ratio reaches 2 percent and 2.5 percent. The final rule also created a scorecard-based assessment system for banks with more than $10 billion in assets. The final rule went into effect beginning with the second quarter of 2011.

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As insurer, the FDIC is authorized to conduct examinations of and to require reporting by federally-insured institutions. It also may prohibit any federally-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the Deposit Insurance Fund. The FDIC also has the authority to take enforcement actions against insured institutions. Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged or is engaging in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or written agreement entered into with the FDIC. The management of the Bank does not know of any practice, condition or violation that might lead to termination of deposit insurance.

Fiscal and Monetary Policies

The Company’s business and earnings are affected significantly by the fiscal and monetary policies of the federal government and its agencies. The Company is particularly affected by the policies of the Federal Reserve Board, which regulates the supply of money and credit in the United States in order to influence general economic conditions, primarily through open market operations in U.S. government securities, changes in the discount rate on bank borrowings and changes in the reserve requirements against depository institutions’ deposits. These policies and regulations significantly affect the overall growth and distribution of loans, investments and deposits, as well as interest rates charged on loans and paid on deposits.

The monetary policies of the Federal Reserve board have had a significant effect on operations and results of financial institutions in the past and are expected to have significant effects in the future. In view of the changing conditions in the economy, the money markets and activities of monetary and fiscal authorities, Farmers can make no predictions as to future changes in interest rates, credit availability or deposit levels.

Community Reinvestment Act

The CRA requires depository institutions to assist in meeting the credit needs of their market areas consistent with safe and sound banking practice. Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low- and moderate-income individuals and communities. Depository institutions are periodically examined for compliance with the CRA and are assigned ratings. In order for a bank holding company to commence any new activity permitted by the BHCA, or to acquire any company engaged in any new activity permitted by the BHCA, each insured depository institution subsidiary of the bank holding company must have received a rating of at least “satisfactory” in its most recent examination under the CRA. Furthermore, banking regulators take into account CRA ratings when considering approval of a proposed transaction. Farmers received a rating of “satisfactory” in its most recent CRA examination.

Customer Privacy

Farmers Bank is subject to regulations limiting the ability of financial institutions to disclose non-public information about consumers to nonaffiliated third parties. These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow customers to prevent disclosure of certain personal information to a nonaffiliated third party. These regulations affect how consumer information is transmitted and conveyed to outside vendors.

Anti-Money Laundering and the USA Patriot Act

The Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA Patriot Act”) and its related regulations require insured depository institutions, broker-dealers and certain other financial institutions to have policies, procedures, and controls to detect, prevent, and report money laundering and terrorist financing. The USA Patriot Act and its regulations also provide for information sharing, subject to conditions, between federal law enforcement agencies and financial institutions, as well as among financial institutions, for counter-terrorism purposes. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution. In addition, federal banking agencies are required, when reviewing bank holding company acquisition and bank merger applications, to take into account the effectiveness of the anti-money laundering policies, procedures and controls of the applicants.

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Corporate Governance

The Sarbanes-Oxley Act of 2002 effected broad reforms to areas of corporate governance and financial reporting for public companies under the jurisdiction of the Commission. The Company’s corporate governance policies include an Audit Committee Charter, a Compensation Committee Charter, Corporate Governance and Nominating Committee Charter, and Code of Business Conduct and Ethics. The Board of Directors reviews the Company’s corporate governance practices on a continuing basis. These and other corporate governance policies have been provided previously to shareholders and are available, along with other information on Farmers’ corporate governance practices, on the Company’s website at www.farmersbankgroup.com.

As directed by Section 302(a) of the Sarbanes-Oxley Act, the Company’s chief executive officer and chief financial officer are each required to certify that the Company’s Quarterly and Annual Reports do not contain any untrue statement of a material fact. The rules have several requirements, including having these officers certify that: they are responsible for establishing, maintaining, and regularly evaluating the effectiveness of the Company’s internal controls, they have made certain disclosures about the Company’s internal controls to its auditors and the audit committee of the Board of Directors, and they have included information in the Company’s Quarterly and Annual Reports about their evaluation and whether there have been significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the evaluation.

Executive and Incentive Compensation

In June 2010, the Federal Reserve Board, OCC and FDIC issued joint interagency guidance on incentive compensation policies (the “Joint Guidance”) intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking. This principles-based guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should: (i) provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage risks; (ii) be compatible with effective internal controls and risk management; and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.

Pursuant to the Joint Guidance, the Federal Reserve Board will review as part of a regular, risk-focused examination process, the incentive compensation arrangements of financial institutions such as Farmers. Such reviews will be tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements. The findings of the supervisory initiatives will be included in reports of examination and deficiencies will be incorporated into the institution’s supervisory ratings, which can affect the institution’s ability to make acquisitions and take other actions. Enforcement actions may be taken against an institution if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization’s safety and soundness and prompt and effective measures are not being taken to correct the deficiencies.

On February 7, 2011, the federal banking agencies jointly issued proposed rules on incentive-based compensation arrangements under applicable provisions of the Dodd-Frank Act (the “Proposed Rules”). The Proposed Rules generally apply to financial institutions with $1.0 billion or more in assets that maintain incentive-based compensation arrangements for certain covered employees. The Proposed Rules: (i) prohibit covered financial institutions from maintaining incentive-based compensation arrangements that encourage covered persons to expose the institution to inappropriate risk by providing the covered person with “excessive” compensation; (ii) prohibit covered financial institutions from establishing or maintaining incentive-based compensation arrangements for covered persons that encourage inappropriate risks that could lead to a material financial loss; (iii) require covered financial institutions to maintain policies and procedures appropriate to their size, complexity and use of incentive-based compensation to help ensure compliance with the Proposed Rules; and (iv) require covered financial institutions to provide enhanced disclosure to regulators regarding their incentive-based compensation arrangements for covered persons within 90 days following the end of the fiscal year.

Public companies will also be required, once stock exchanges impose additional listing requirements under the Dodd-Frank Act, to implement “clawback” procedures for incentive compensation payments and to disclose the details of the procedures which allow recovery of incentive compensation that was paid on the basis of erroneous financial information necessitating a restatement due to material noncompliance with financial reporting requirements. This clawback policy is intended to apply to compensation paid within a three year look-back window of the restatement and would cover all executives who received incentive awards.

The Dodd-Frank Act also provides shareholders the opportunity to cast a non-binding vote on executive compensation practices, imposes new executive compensation disclosure requirements, and contains additional considerations of the independence of compensation advisors.

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Future Legislation

Various and significant legislation affecting financial institutions and the financial industry is from time to time introduced in the U.S. Congress and state legislatures, as well as by regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation could change the operating environment for Farmers and its subsidiaries in substantial and unpredictable ways and could significantly increase or decrease the costs of doing business, limit or expand permissible activities or affect the competitive balance among financial institutions. With the enactment of the Dodd-Frank Act and the continuing implementation of final rules and regulations thereunder, the nature and extent of future legislative and regulatory changes affecting financial institutions remains very unpredictable. Farmers cannot predict the scope and timing of any such future legislation and, if enacted, the effect that it could have on its business, financial condition or results of operations.

Summary

To the extent that the foregoing information describes statutory and regulatory provisions applicable to the Company or its subsidiaries, it is qualified in its entirety by reference to the full text of those provisions or agreements. Also, such statutes, regulations and policies are continually under review by the U.S. Congress and state legislatures as well as 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 applicable statutes, regulations or regulatory policies could have a material effect on Farmers and its business, financial condition or results of operations.

Item 1A. Risk Factors.

The following are certain risk factors that could materially and negatively affect our business, results of operations, cash flows or financial condition. These risk factors should be considered in connection with evaluating the forward-looking statements contained in this Annual Report on Form 10-K because these factors could cause our actual results or financial condition to differ materially from those projected in forward-looking statements. The risks that are discussed below are not the only ones we face. If any of the following risks occur, our business, financial condition or results of operations could be negatively affected. Additional risks that are not presently known or that we presently deem to be immaterial could also have a material, adverse impact on our business, financial condition or results of operations.

Risks Relating to Economic and Market Conditions

Difficult market conditions and economic trends have adversely affected our industry and our business.

Beginning in the latter half of 2007 through 2009, the U.S. economy was in recession and business activity across a wide range of industries and regions in the U. S. was greatly reduced. Although economic conditions have improved, certain sectors, such as real estate and manufacturing, remain weak and unemployment remains high. It is also possible that recent improvements may be reversed if current economic turmoil in Europe becomes global or the United States Congress fails to resolve certain critical fiscal policies it is now facing, including the automatic budget cuts contemplated in the sequester arrangement and raising the federal government’s debt ceiling in time to avoid a default. In addition, many local governments and many businesses are still in serious difficulty due to depressed consumer spending and continued decreased liquidity in the credit markets.

Market conditions have also led to poor financial performance resulting in the failure and merger of a number of financial institutions. These failures, as well as possible future failures, have had a significant negative impact on the capitalization levels and of the Deposit Insurance Fund, which has led to a significant increase in deposit insurance premiums paid by financial institutions.

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Our success depends, to a certain extent, upon economic and political conditions, local and national, as well as governmental monetary policies. Conditions such as inflation, recession, unemployment, changes in interest rates, money supply, governmental fiscal policies, and other factors beyond our control may adversely affect our asset quality, deposit levels and loan demand and, therefore, our earnings. Because we have a significant amount of real estate loans, additional decreases in real estate values could adversely affect the value of property used as collateral and our ability to sell the collateral upon foreclosure. Adverse changes in the economy may also have a negative effect on the ability of our borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings. If during a period of reduced real estate values we are required to liquidate the collateral securing loans to satisfy the debt or to increase our allowance for loan losses, it could materially reduce our profitability and adversely affect our financial condition. Moreover, the Financial Accounting Standards Board may change its requirements for establishing the loan loss allowance. The majority of our loans are to individuals and businesses in Northeast Ohio. Consequently, further significant declines in the economy in the area could have a material adverse effect on our business, financial condition or results of operations. It is uncertain when the negative credit trends in our market will reverse, and, therefore, future earnings are susceptible to further declining credit conditions in the market in which we operate.

Changes in interest rates could adversely affect income and financial condition.

Our earnings and cash flow are dependent upon our net interest income. Net interest income is the difference between the interest income generated by our interest-earning assets (consisting primarily of loans and, to a lesser extent, securities) and the interest expense generated by our interest-bearing liabilities (consisting primarily of deposits and wholesale borrowings). Our level of net interest income is primarily a function of the average balance of our interest-earning assets, the average balance of our interest-bearing liabilities and the spread between the yield on such assets and the cost of such liabilities. These factors are influenced by both the pricing and mix of our interest-earning assets and our interest-bearing liabilities which, in turn, are impacted by external factors, such as the local economy, competition for loans and deposits, the monetary policy of the Federal Reserve Board and market interest rates.

Interest rates are beyond our control, and they fluctuate in response to general economic conditions and the policies of various governmental and regulatory agencies, in particular, the Federal Reserve Board. Changes in monetary policy, including changes in interest rates, will influence the origination of loans, the purchase of investments, the generation of deposits and the rates received on loans and investment securities and paid on deposits. While we have taken measures intended to manage the risks of operating in a changing interest rate environment, there can be no assurance that such measures will be effective in avoiding undue interest rate risk. See additional interest rate risk discussion under the Market Risk section found in Item 7A of this Annual Report on Form 10-K.

Defaults by another larger financial institution could adversely affect financial markets generally.

The commercial soundness of many financial institutions may be closely interrelated as a result of credit, trading, clearing or other relationships between institutions. As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses or defaults by other institutions. This is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges, with which we and our subsidiaries interact on a daily basis, and therefore could adversely affect our business, financial condition or results of operations.

Risks Related to Our Business

We extend credit to a variety of customers based on internally set standards and judgment. We manage credit risk through a program of underwriting standards, the review of certain credit decisions and an on-going process of assessment of the quality of credit already extended. Our credit standards and on-going process of credit assessment might not protect us from significant credit losses.

We take credit risk by virtue of making loans, extending loan commitments and letters of credit and, to a lesser degree, purchasing non-governmental securities. Our exposure to credit risk is managed through the use of consistent underwriting standards that emphasize “in-market” lending, while avoiding highly leveraged transactions as well as excessive industry and other concentrations. Our credit administration function employs risk management techniques to ensure that loans adhere to corporate policy and problem loans are promptly identified. While these procedures are designed to provide us with the information needed to implement policy adjustments where necessary, and to take proactive corrective actions, there can be no assurance that such measures will be effective in avoiding undue credit risk.

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We have significant exposure to risks associated with commercial real estate and residential real estate.

As of December 31, 2015, approximately 68.2% of our loan portfolio consisted of commercial real estate and residential real estate loans, including real estate development, construction and residential and commercial mortgage loans. Consequently, real estate-related credit risks are a significant concern for us. The adverse consequences from real estate-related credit risks tend to be cyclical and are often driven by national economic developments that are not controllable or entirely foreseeable by us or our borrowers. General difficulties in our real estate markets have recently contributed to increases in our non-performing loans, charge-offs, and decreases in our income.

Our business depends significantly on general economic conditions in Ohio. Accordingly, the ability of our borrowers to repay their loans, and the value of the collateral securing such loans, may be significantly affected by economic conditions in the regions we serve or by changes in the local real estate markets. A significant decline in general economic conditions caused by inflation, recession, unemployment, acts of terrorism, or other factors beyond our control could therefore have an adverse effect on our business, financial condition or results of operations.

Our indirect lending exposes us to increased credit risks.

A portion of our current lending involves the purchase of consumer automobile installment sales contracts from automobile dealers located in Northeastern Ohio. These loans are for the purchase of new or late model used cars. We serve customers over a broad range of creditworthiness, and the required terms and rates are reflective of those risk profiles. While these loans have higher yields than many of our other loans, such loans involve significant risks in addition to normal credit risk. Potential risk elements associated with indirect lending include the limited personal contact with the borrower as a result of indirect lending through dealers, the absence of assured continued employment of the borrower, the varying general creditworthiness of the borrower, changes in the local economy, and difficulty in monitoring collateral. While indirect automobile loans are secured, such loans are secured by depreciating assets and characterized by loan to value ratios that could result in us not recovering the full value of an outstanding loan upon default by the borrower. Due to the economic slowdown in our primary market area, we currently are experiencing higher delinquencies, charge-offs and repossessions of vehicles in this portfolio. If the economy continues to contract, we may continue to experience higher levels of delinquencies, repossessions and charge-offs.

Commercial and industrial loans may expose us to greater financial and credit risk than other loans.

As of December 31, 2015, approximately 17.6% of our loan portfolio consisted of commercial and industrial loans. Commercial and industrial loans generally carry larger loan balances and can involve a greater degree of financial and credit risk than other loans. Any significant failure to pay on time by our customers would hurt our earnings and cause a significant increase in non-performing loans. The increased financial and credit risk associated with these types of loans are a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the size of loan balances, the effects of general economic conditions on income-producing properties and the increased difficulty of evaluating and monitoring these types of loans. In addition, when underwriting a commercial or industrial loan, we may take a security interest in commercial real estate, and, in some instances upon a default by the borrower, we may foreclose on and take title to the property, which may lead to potential financial risks. An increase in non-performing loans could result in a net loss of earnings from these loans, an increase in the provision for loan losses and an increase in loan charge-offs, all of which could have a material adverse effect on our business, financial condition or results of operations.

Our allowance for loan loss may not be adequate to cover actual future losses.

We maintain an allowance for loan losses to cover current, probable incurred loan losses. Every loan we make carries a certain risk of non-repayment, and we make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. Through a periodic review and consideration of the loan portfolio, management determines the amount of the allowance for loan losses by considering general market conditions, credit quality of the loan portfolio, the collateral supporting the loans and performance of customers relative to their financial obligations with us. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates, which may be beyond our control, and these losses may exceed current estimates. We cannot fully predict the amount or timing of losses or whether the loss allowance will be adequate in the future. If our assumptions prove to be incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, which will require additions to the allowance. Excessive loan losses and significant additions to our allowance for loan losses could have a material adverse impact on our business, financial condition or results of operations.

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We are subject to certain risks with respect to liquidity.

“Liquidity” refers to our ability to generate sufficient cash flows to support our operations and to fulfill our obligations, including commitments to originate loans, to repay our wholesale borrowings and other liabilities and to satisfy the withdrawal of deposits by our customers. Our primary source of liquidity is our core deposit base, which is raised through our retail branch system. Core deposits – savings and money market accounts, time deposits less than $250 thousand and demand deposits—comprised approximately 96.8% of total deposits at December 31, 2015. Additional available unused wholesale sources of liquidity include advances from the FHLB, issuances through dealers in the capital markets and access to certificates of deposit issued through brokers. Liquidity is further provided by unencumbered, or unpledged, investment securities that totaled $176 million at December 31, 2015. An inability to raise funds through deposits, borrowings, the sale or pledging as collateral of loans and other assets could have a substantial negative effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general. Factors that could negatively affect our access to liquidity sources include a decrease in the level of our business activity due to a market downturn or negative regulatory action against us. Our ability to borrow could also be impaired by factors that are not specific to us, such as severe disruption of the financial markets or negative news and expectations about the prospects for the financial services industry as a whole, as evidenced by recent turmoil in the domestic and worldwide credit markets.

Our business strategy includes continuing our growth plans. Our business, financial condition or results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively.

We intend to continue pursuing a profitable growth strategy both within our existing markets and in new markets. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in significant growth stages of development. We cannot assure that we will be able to expand our market presence in our existing markets or successfully enter new markets or that any such expansion will not adversely affect our results of operations. Failure to manage our growth effectively could have a material adverse effect on our business, future prospects, financial condition or results of operations and could adversely affect our ability to successfully implement our business strategy. Also, if we grow more slowly than anticipated, our operating results could be materially adversely affected.

We may experience difficulties in integrating acquired businesses, or acquisitions may not perform as expected.

In 2015, we completed the acquisitions of NBOH and Tri-State. The successful integration of these acquisitions depends on our ability to manage the operations and personnel of the acquired businesses. Integrating operations is complex and requires significant efforts and expenses. Potential difficulties we may encounter as part of the integration process include the following:

· employees may voluntarily or involuntarily exit the Company because of the acquisitions;

· our management team may have its attention diverted while trying to integrate the acquired companies;

· we may encounter obstacles when incorporating the acquired operations into our operations;

· differences in business backgrounds, corporate cultures and management philosophies;

· potential unknown liabilities and unforeseen increased expenses;

· previously undetected operational or other issues; and

· the acquired operations may not otherwise perform as expected or provide expected results

Any of these factors could adversely affect each company’s ability to maintain relationships with customers, suppliers, employees and other constituencies or our ability to achieve the anticipated benefits of the acquisition or could reduce each company’s earnings or otherwise adversely affect our business and financial results after the acquisition.

We may fail to realize all of the anticipated benefits of acquisitions, which could reduce our anticipated profitability.

We expect that our acquisitions will result in certain synergies, business opportunities and growth prospects, although we may not fully realize these expectations. Our assumptions underlying estimates of expected cost savings may be inaccurate or general industry and business conditions may deteriorate. In addition, our growth and operating strategies for acquired businesses may be different from the strategies that the acquired companies pursued. If these factors limit our ability to integrate or operate the acquired companies successfully or on a timely basis, our expectations of future results of operations, including certain cost savings and synergies expected to result from acquisitions, may not be met.

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We may not be able to attract and retain skilled people.

Our success depends, in large part, on our ability to attract and retain key people. Competition for the best people in most activities in which we engage can be intense, and we may not be able to retain or hire the people we want or need. In order to attract and retain qualified employees, we must compensate them at market levels. If we are unable to continue to attract and retain qualified employees, or do so at rates necessary to maintain our competitive position, our performance, including our competitive position, could suffer, and, in turn, adversely affect our business, financial condition or results of operations.

Strong competition within the markets in which we operate could reduce our ability to attract and retain business.

In our markets, we encounter significant competition from banks, savings and loan associations, credit unions, mortgage banks and other financial service companies. As a result of their size and ability to achieve economies of scale, some of our competitors offer a broader range of products and services than we can offer. In particular, the competition includes major financial companies whose greater resources may afford them a marketplace advantage by enabling them to maintain numerous banking locations and mount extensive promotional and advertising campaigns. Our ability to maintain our history of strong financial performance and return on investment to shareholders will depend in part on our continued ability to compete successfully in our market. Financial performance and return on investment to shareholders will also depend on our ability to expand our scope of available financial services to our customers. In addition to other banks, competitors include securities dealers, brokers, investment advisors, and finance and insurance companies. The increasingly competitive environment is, in part, a result of changes in regulation, changes in technology and product delivery systems, and the accelerating pace of consolidation among financial service providers.

Consumers may decide not to use banks to complete their financial transactions.

Technology and other changes are allowing parties to utilize alternative methods to complete financial transactions that historically have involved banks. For example, consumers can now maintain funds in brokerage accounts or mutual funds that would have historically been held as bank deposits. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. The process of eliminating banks as intermediaries could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on our business, financial condition or results of operations.

We are exposed to operational risk.

Similar to any large organization, we are exposed to many types of operational risk, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems.

Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions and from actions taken by government regulators and community organizations in response to those activities. Negative public opinion can adversely affect our ability to attract and keep customers and can expose us to litigation and regulatory action.

Given the volume of transactions we process, certain errors may be repeated or compounded before they are discovered and successfully rectified. Our necessary dependence upon automated systems to record and process our transaction volume may further increase the risk that technical system flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect. We may also be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control (for example, computer viruses or electrical or telecommunications outages), which may give rise to disruption of service to customers and to financial loss of liability. We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as we are) and to the risk that our (or our vendors’) business continuity and data security systems prove to be inadequate.

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Unauthorized disclosure of sensitive or confidential client or customer information, whether through a breach of our computer systems or otherwise, could severely harm our business.

As part of our financial institution business, we collect, process and retain sensitive and confidential client and customer information on behalf of our subsidiaries and other third parties. Despite the security measures we have in place, our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. If information security is breached, information could be lost or misappropriated, resulting in financial loss or costs to us or damages to others. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer information, whether by us or by our vendors, could severely damage our reputation, expose us to the risks of litigation and liability or disrupt our operations and have a material adverse effect on our business, financial condition or results of operations.

We depend on our subsidiaries for dividends, distributions and other payments.

As a bank holding company, we are a legal entity separate and distinct from our subsidiaries. Our principal source of funds to pay dividends on our common shares is dividends from these subsidiaries. Federal and state statutory provisions and regulations limit the amount of dividends that our banking and other subsidiaries may pay to us without regulatory approval. In the event our subsidiaries become unable to pay dividends to us, we may not be able to pay dividends on our outstanding common shares. Accordingly, our inability to receive dividends from our subsidiaries could also have a material adverse effect on our business, financial condition and results of operations. Further discussion of our ability to pay dividends can be found under the caption “Dividends and Transactions with Affiliates” in Item 1 of this Annual Report on Form 10-K.

We may elect or be compelled to seek additional capital in the future, but that capital may not be available when it is needed.

We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. Federal banking agencies have proposed extensive changes to their capital requirements, including raising required amounts and eliminating the inclusion of certain instruments from the calculation of capital. The final form of such regulations and their impact on the Company is unknown at this time but may require us to raise additional capital. In addition, we may elect to raise capital to support our business or to finance acquisitions, if any, or for other anticipated reasons. Our ability to raise additional capital, if needed, will depend on financial performance, conditions in the capital markets, economic conditions and a number of other factors, including the satisfaction or release of preemptive rights in the event of a common share offering, many of which are outside our control. Therefore, there can be no assurance additional capital can be raised when needed or that capital can be raised on acceptable terms. The inability to raise capital may have a material adverse effect on our business, financial condition or results of operations.

Impairment of investment securities, goodwill, other intangible assets, or deferred tax assets could require charges to earnings, which could result in a negative impact on our results of operations.

In assessing the impairment of investment securities, we consider the length of time and extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuers, whether the market decline was affected by macroeconomic conditions and whether we have the intent to sell the debt security or will be required to sell the debt security before its anticipated recovery. Under current accounting standards, goodwill and certain other intangible assets with indeterminate lives are no longer amortized but, instead, are assessed for impairment periodically or when impairment indicators are present. Assessment of goodwill and such other intangible assets could result in circumstances where the applicable intangible asset is deemed to be impaired for accounting purposes. Under such circumstances, the intangible asset’s impairment would be reflected as a charge to earnings in the period. Deferred tax assets are only recognized to the extent it is more likely than not they will be realized. Should management determine it is not more likely than not that the deferred tax assets will be realized, a valuation allowance with a change to earnings would be reflected in the period.

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Risks Related to the Legal and Regulatory Environment

Increases in FDIC insurance premiums may have a material adverse effect on our earnings.

The FDIC maintains the Deposit Insurance Fund to resolve the cost of bank failures. Since 2007, the number of bank failures has increased significantly, which dramatically increased resolution costs of the FDIC and depleted the Deposit Insurance Fund. Also during this period, the FDIC and the U.S. Congress have instituted a program to further insure customer deposits at FDIC-member banks: (i) deposit accounts are now insured up to $250,000 per customer.

Since late 2008, the FDIC has taken various actions intended to maintain a strong funding position and restore reserve ratios of the Deposit Insurance Fund. These actions have included increasing assessment rates for all insured institutions, requiring riskier institutions to pay a larger share of premiums by factoring in rate adjustments based on secured liabilities and unsecured debt levels, imposing special assessments and requiring insured depository institutions to prepay their quarterly risk-based assessments for the fourth quarter of 2009 and full years 2010 through 2012. In addition, on February 7, 2011, the FDIC approved a final rule that changed the deposit insurance assessment base and assessment rate schedule, adopted a new large-bank pricing assessment scheme, and set a target size for the Deposit Insurance Fund. The rule, as mandated by the Dodd-Frank Act, finalized a target size for the Deposit Insurance Fund at 2 percent of insured deposits. The final rule went into effect beginning with the second quarter of 2011.

We have a limited ability to control the amount of premiums we are required to pay for FDIC insurance. If there are additional financial institution failures or other significant legislative or regulatory changes, the FDIC may be required to increase assessment rates or take actions similar to those taken during 2009. Increases in FDIC insurance assessment rates may materially adversely affect our results of operations and our ability to continue to pay dividends on our common shares at the current rate or at all.

Legislative or regulatory changes or actions, or significant litigation, could adversely impact us or the businesses in which we are engaged.

The financial services industry is extensively regulated. We are subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of our operations. Laws and regulations may change from time to time and are primarily intended for the protection of consumers, depositors and the Deposit Insurance Fund, and not to benefit our shareholders. The impact of any changes to laws and regulations or other actions by regulatory agencies may negatively impact us or our ability to increase the value of our business. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by an institution and the adequacy of an institution’s allowance for loan losses. Additionally, actions by regulatory agencies or significant litigation against us could cause us to devote significant time and resources to defending our business and may lead to penalties that materially affect us and our shareholders.

In addition to laws, regulations and actions directed at the operations of banks, proposals to reform the housing finance market consider winding down Fannie Mae and Freddie Mac, which could negatively affect our sales of loans.

Continued regulatory changes implemented under the Dodd-Frank Act may adversely impact our business, financial condition or results of operations.

On July 21, 2010, the Dodd-Frank Act was signed into law as an intended comprehensive overhaul of the financial services industry within the U.S. There are a number of reform provisions that are likely to significantly impact the ways in which banks and bank holding companies do business. A detailed discussion regarding the Dodd-Frank Act can be found under the caption “Dodd-Frank Act” in Item 1 of this Annual Report on Form 10-K.

While the ultimate effect of the changes effected and to be implemented under the Dodd-Frank Act cannot currently be determined, the law and its implementing rules and regulations are expected to result in increased compliance costs and fees paid to regulators, along with possible restrictions on our banking operations, all of which may have a material adverse effect on our business, financial condition or results of operations.

17

Our results of operations, financial condition or liquidity may be adversely impacted by issues arising in foreclosure practices, including delays in the foreclosure process, related to certain industry deficiencies, as well as potential losses in connection with actual or projected repurchases and indemnification payments related to mortgages sold into the secondary market.

Recent announcements of deficiencies in foreclosure documentation by several large seller/servicer financial institutions have raised various concerns relating to mortgage foreclosure practices. The integrity of the foreclosure process is important to our business, as an originator and servicer of residential mortgages. As a result of our continued focus of concentrating our lending efforts in our primary markets in Ohio, as well as servicing loans for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), we do not anticipate suspending any of our foreclosure activities. During 2010, we reviewed our foreclosure procedures and concluded they are generally conservative in nature and do not present the significant documentation deficiencies underlying other industry foreclosure problems. Nevertheless, we could face delays and challenges in the foreclosure process arising from claims relating to industry practices generally, which could adversely affect recoveries and our financial results, whether through increased expenses of litigation and property maintenance, deteriorating values of underlying mortgaged properties or unsuccessful litigation results generally.

In addition, in connection with the origination and sale of residential mortgages into the secondary market, we make certain representations and warranties, which, if breached, may require us to repurchase such loans, substitute other loans or indemnify the purchasers of such loans for actual losses incurred in respect of such loans. Although we believe that our mortgage documentation and procedures have been appropriate and are generally conservative in nature, it is possible that we will receive repurchase requests in the future and we may not be able to reach favorable settlements with respect to such requests. It is therefore possible that we may increase our reserves or may sustain losses associated with such loan repurchases and indemnification payments.

Environmental liability associated with commercial lending could have a material adverse effect on our business, financial condition or results of operations.

A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, we may be liable for remediation costs, as well as for personal injury and property damage. In addition, we own and operate certain properties that may be subject to similar environmental liability risks.

Environmental laws may require us to incur substantial expenses and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Although we have policies and procedures requiring the performance of an environmental site assessment before initiating any foreclosure action on real property, these assessments may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our business, financial condition or results of operations.

Changes in tax laws could adversely affect our performance.

We are subject to extensive federal, state and local taxes, including income, excise, sales/use, payroll, franchise, withholding and ad valorem taxes. Changes to our taxes could have a material adverse effect on our results of operations. On January 1, 2014 the State of Ohio replaced the current franchise tax for financial institutions with the new Ohio Financial Institutions Tax. The Company has determined that this new tax will have a non-material positive effect on the Company. In addition, our customers are subject to a wide variety of federal, state and local taxes. Changes in taxes paid by our customers may adversely affect their ability to purchase homes or consumer products, which could adversely affect their demand for our loans and deposit products. In addition, such negative effects on our customers could result in defaults on the loans we have made and decrease the value of mortgage-backed securities in which we have invested.

Changes to the healthcare laws in the United States may increase the number of employees who choose to participate in our healthcare plans, which may significantly increase our healthcare costs and negatively impact our financial results.

We offer healthcare coverage to our eligible employees with part of the cost subsidized by the Company. With recent changes to the healthcare laws in the United States becoming effective in 2014, more of our employees may choose to participate in our health insurance plans, which could increase our costs for such coverage and material adversely impact our costs of operations.

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Anti-takeover provisions could delay or prevent an acquisition or change in control by a third party.

Provisions of the Ohio General Corporation Law, our Articles of Incorporation, and our Amended Code of Regulations, including a staggered board and supermajority voting requirements, could make it more difficult for a third party to acquire control of us or could have the effect of discouraging a third party from attempting to acquire control of us.

We may be a defendant from time to time in the future in a variety of litigation and other actions, which could have a material adverse effect on our business, financial condition or results of operations.

We and our subsidiaries may be involved from time to time in the future in a variety of litigation arising out of our business. Our insurance may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should the ultimate judgments or settlements in any litigation exceed our insurance coverage, they could have a material adverse effect on our business, financial condition or results of operations. In addition, we may not be able to obtain appropriate types or levels of insurance in the future, nor may we be able to obtain adequate replacement policies with acceptable terms, if at all.

Item 1B. Unresolved Staff Comments.

There are no matters of unresolved staff comments from the Commission staff.

Item 2. Properties.

Farmers National Banc Corp.’s Properties

The Company does not own any property. The Company’s operations are conducted at Farmers Bank’s main office, which is located at 20 and 30 South Broad Street, Canfield, Ohio.

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Farmers National Bank Property

The Bank’s main office is located at 20 and 30 S. Broad Street, Canfield, Ohio. The other locations of Farmers Bank are:

Office Building	40 & 46 S. Broad St., Canfield, Ohio
Austintown Office	22 N. Niles-Canfield Rd., Youngstown, Ohio
Lake Milton Office	17817 Mahoning Avenue, Lake Milton, Ohio
Cornersburg Office	3619 S. Meridian Rd., Youngstown, Ohio
Colonial Plaza Office	401 E. Main St. Canfield, Ohio
Western Reserve Office	102 W. Western Reserve Rd., Youngstown, Ohio
Salem Office	100 Continental Dr., Salem, Ohio
Columbiana Office	340 State Rt. 14, Columbiana, Ohio
Damascus Office	29053 State Rt. 62 Damascus, Ohio
Poland Office	106 McKinley Way West, Poland, Ohio
Niles Office	1 South Main Street, Niles, Ohio
Niles Drive Up	170 East State Street, Niles, Ohio
Girard Office	121 North State Street, Girard, Ohio
Eastwood Office	5845 Youngstown-Warren Rd, Niles, Ohio
Mineral Ridge Office	3826 South Main Street, Mineral Ridge, Ohio
Niles Operation Center	51 South Main Street, Niles, Ohio
Canton Office	4518 Fulton Dr., Canton, Ohio
McClurg Road Office	42 McClurg Rd., Boardman, Ohio
Howland Office	1625 Niles-Cortland Rd., Warren, Ohio
Fairlawn Office	2820 W. Market St., Suite 120, Akron, Ohio
Wealth Management Building	2 S. Broad Street, Canfield, Ohio
Alliance Office	310 West State St., Alliance, Ohio
Midway Office	7227 East Lincoln Way, Apple Creek, Ohio
Dalton Office	12 West Main St., Dalton, Ohio
Calcutta Office	15703 State Rt., 170, East Liverpool, Ohio
East Liverpool Office	619 Bradshaw Ave., East Liverpool, Ohio
Kidron Office	4950 Kidron Rd., Kidron, Ohio
Lisbon Office	131 East Lincoln Way, Lisbon, Ohio
Lodi Office	106 Ainsworth, Lodi, Ohio
Massillon Office	211 Lincoln Way East, Massillon, Ohio
Mayflower Office	2312 Lincoln Way NW, Massillon, Ohio
Mount Eaton Office	15974 East Main St., Mount Eaton, Ohio
Orrville Main Office	112 W. Market St., Orrville, Ohio
West High Street Office	1320 W. High St., Orrville, Ohio
Seville Office	4885 Atlantic Dr., Seville, Ohio
Smithville Office	153 East Main St., Smithville, Ohio
Burbank Road Office	4192 Burbank Rd., Wooster, Ohio
Cleveland Road Office	1725 Cleveland Rd., Wooster, Ohio
Midland Office	629 Midland Ave., Midland, Pennsylvania

The Bank owns all locations except the Colonial Plaza, Canton, Alliance, East Liverpool and Fairlawn offices, which are leased.

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Farmers Trust Company Property

Farmers Trust Company operates from two locations owned by the Bank:

Boardman Office	42 McClurg Rd., Boardman, Ohio
Howland Office	1625 Niles-Cortland Rd., Warren, Ohio

Farmers National Insurance, LLC Property

Farmers National Insurance operates from one location which is owned by the Bank:

Wealth Management Building 2 S. Broad Street, Canfield, Ohio

National Associates, Inc. Property

National Associates, Inc. operates from one location which is leased:

Rocky River Office 20325 Center Ridge Rd., Cleveland, Ohio

Item 3. Legal Proceedings.

In the normal course of business, the Company and its subsidiaries are at all times subject to pending and threatened legal actions, some for which the relief or damages sought are substantial. Although Farmers is not able to predict the outcome of such actions, after reviewing pending and threatened actions with counsel, management believes that based on the information currently available the outcome of such actions, individually or in the aggregate, will not have a material adverse effect on the results of operations or stockholders’ equity of the Company. However, it is possible that the ultimate resolution of these matters, if unfavorable, may be material to the results of operations in a particular future period as the time and amount of any resolution of such actions and its relationship to the future results of operations are not known.

Item 4. Mine Safety Disclosures

Not applicable.

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Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuers Purchases of Equity Securities

Market Information regarding the Company’s Common Shares.

Farmers’ common shares currently trade under the symbol “FMNB” on the Nasdaq Capital Market.  Farmers had 26,935,484 common shares outstanding and approximately 3,629 holders of record of common shares at March 7, 2016. The following table sets forth price ranges and dividend information for Farmers’ common shares for the calendar quarters indicated. Quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.  Certain limitations and restrictions on the ability of Farmers to continue to pay quarterly dividends are described under the caption “Capital Resources” in Item 7 of this Part II, and under the caption “Dividends and Transactions with Affiliates” in Item 1 of Part I.

Quarter Ended	March 31, 2015		June 30, 2015		September 30, 2015		December 31, 2015
High	$	8.45	$	8.44	$	8.75	$	8.70
Low	$	7.09	$	7.95	$	7.86	$	7.60
Cash dividends paid per share	$	0.03	$	0.03	$	0.03	$	0.03

Quarter Ended	March 31, 2014		June 30, 2014		September 30, 2014		December 31, 2014
High	$	7.75	$	7.89	$	8.71	$	8.68
Low	$	6.53	$	7.35	$	7.10	$	7.40
Cash dividends paid per share	$	0.03	$	0.03	$	0.03	$	0.03

Purchases of Common Shares by Farmers.

In September 2012, the Company announced that its Board of Directors approved a share repurchase program under which the Company was authorized to repurchase up to 920,000 shares of its common stock in the open market or in privately negotiated transactions, subject to market and other conditions (the “Program”). The Program may be modified, suspended or terminated by the Company at any time. During the course of 2015, 2014 and 2013 the Company repurchased 26,800 shares, 372,368 shares and 247,845 shares of its common stock.

The following table summarizes the treasury stock activity under the program during the year ended December 31, 2015.

2015	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Number of Shares that May Yet be Purchased Under the Program
Beginning balance						627,434		292,566
December 1-31		26,800	$	7.92		26,800		265,766
Ending balance		26,800	$	7.92		654,234		265,766

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Item 6. Selected Financial Data.

SELECTED FINANCIAL DATA

(Table Dollar Amounts in Thousands except Per Share Data)

For the Years Ending December 31,	2015			2014			2013			2012			2011
Summary of Earnings
Total Interest and Dividend Income    (including fees on loans)	$	53,827		$	40,915		$	40,959		$	43,110		$	44,434
Total Interest Expense		4,090			4,579			5,063			6,212			7,837
Net Interest Income		49,737			36,336			35,896			36,898			36,597
Provision for Loan Losses		3,510			1,880			1,290			725			3,650
Noninterest Income (1)		18,306			15,303			13,914			12,578			12,539
Noninterest Expense		53,979			38,162			39,057			35,764			33,728
Income Before Income Taxes		10,554			11,597			9,463			12,987			11,758
Income Taxes		2,499			2,632			1,683			3,055			2,540
NET INCOME	$	8,055		$	8,965		$	7,780		$	9,932		$	9,218
Per Share Data
Basic earnings per share	$	0.36		$	0.48		$	0.41		$	0.53		$	0.50
Diluted earnings per share		0.36			0.48			0.41			0.53			0.50
Cash Dividends Paid		0.12			0.12			0.12			0.18			0.12
Book Value at Year-End		7.35			6.71			6.02			6.43			6.10
Tangible Book Value (2)	5.76			6.23			5.47			6.11			5.76
Balances at Year-End
Total Assets	$	1,869,902		$	1,136,967		$	1,137,326		$	1,139,695		$	1,067,871
Earning Assets		1,735,843			1,074,434			1,076,073			1,082,078			1,014,997
Total Deposits		1,409,047			915,703			915,216			919,009			840,125
Short-Term Borrowings		225,832			59,136			81,617			79,886			98,088
Long-Term Borrowings		22,153			28,381			19,822			10,423			11,263
Loans Held for Sale		1,769			511			158			3,624			677
Net Loans		1,287,887			656,220			623,116			578,963			561,986
Total Stockholders' Equity		198,047			123,560			113,007			120,792			114,445
Average Balances
Total Assets	$	1,482,527		$	1,141,047		$	1,141,770		$	1,118,322		$	1,035,392
Total Stockholders' Equity		162,086			120,352			116,735			118,011			105,276
Significant Ratios
Return on Average Assets (ROA)		0.54	%		0.79	%		0.68	%		0.89	%		0.89	%
Return on Average Equity (ROE)		4.97			7.45			6.66			8.42			8.76
Average Earning Assets/Average Assets		91.91			93.02			92.90			92.13			92.64
Average Equity/Average Assets		10.93			10.55			10.22			10.55			10.17
Loans/Deposits		92.04			72.50			68.91			63.83			68.06
Allowance for Loan Losses/Total Loans		0.69			1.15			1.20			1.30			1.72
Allowance for Loan Losses/Non-Acquired Loans		1.08			1.15			1.20			1.30			1.72
Allowance for Loan Losses/Nonperforming Loans		85.96			89.99			83.25			93.01			89.19
Efficiency Ratio (On tax equivalent basis)		75.26			70.24			74.82			69.94			67.14
Net Interest Margin		3.81			3.59			3.58			3.76			4.01
Dividend Payout Rate		33.32			24.95			28.89			34.05			24.31
Tangible Common Equity Ratio (3)		8.50			10.17			9.11			10.12			10.18

(1) Noninterest income includes a securities impairment charge of $3 thousand and $11 thousand for the years ended December 31, 2013 and 2011

(2) Tangible book value per share is Total Stockholders’ Equity minus goodwill and other intangible assets divided by the number of shares outstanding.

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(3) 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 our capital levels. Since there is no authoritative requirement to calculate the tangible common equity ratio, our 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 December 31, 2015, 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:  

Reconciliation of Common Stockholders’ Equity to Tangible Common Equity

December 31,	2015		2014		2013		2012		2011
Stockholders' Equity	$	198,047	$	123,560	$	113,007	$	120,792	$	114,445
Less Goodwill and other intangibles		42,911		8,813		10,343		6,032		6,441
Tangible Common Equity	$	155,136	$	114,747	$	102,664	$	114,760	$	108,004

Reconciliation of Total Assets to Tangible Assets

December 31,	2015		2014		2013		2012		2011
Total Assets	$	1,869,902	$	1,136,967	$	1,137,326	$	1,139,695	$	1,067,871
Less Goodwill and other intangibles		42,911		8,813		10,343		6,032		6,441
Tangible Assets	$	1,826,991	$	1,128,154	$	1,126,983	$	1,133,663	$	1,061,430

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Average Balance Sheets and Related Yields and Rates

(Table Dollar Amounts in Thousands except Per Share Data)

Years ended December 31,	2015								2014								2013
	AVERAGE								AVERAGE								AVERAGE
	BALANCE			INTEREST		RATE			BALANCE			INTEREST		RATE			BALANCE			INTEREST		RATE
EARNING ASSETS
Loans (1) (3) (5)	$	955,415		$	45,242		4.74	%	$	631,011		$	31,390		4.97	%	$	595,560		$	31,211		5.24	%
Taxable securities (2)		279,808			5,903		2.11			332,273			7,282		2.19			351,898			7,062		2.01
Tax-exempt securities (2) (5)		103,947			4,510		4.34			81,529			3,839		4.71			87,001			4,487		5.16
Equity securities (4) (5)		6,561			287		4.37			4,282			190		4.44			4,323			196		4.53
Federal funds sold and other cash		16,855			29		0.17			12,331			19		0.15			21,964			35		0.16
Total earning assets		1,362,586			55,971		4.11			1,061,426			42,720		4.02			1,060,746			42,991		4.05
NONEARNING ASSETS
Cash and due from banks		24,862								20,355								20,085
Premises and equipment		21,007								17,392								17,912
Allowance for Loan Losses		(7,976	)							(7,338	)							(7,451	)
Unrealized gains on securities		1,788								(2,003	)							2,623
Other assets (1)		80,260								51,215								47,855
Total Assets	$	1,482,527							$	1,141,047							$	1,141,770
INTEREST-BEARING LIABILITIES
Time deposits	$	227,412		$	2,610		1.15	%	$	217,126		$	3,506		1.61	%	$	230,232		$	3,858		1.68	%
Savings deposits		468,123			534		0.11			408,956			466		0.11			415,179			664		0.16
Demand deposits		219,257			345		0.16			127,066			36		0.03			124,990			38		0.03
Short term borrowings		107,850			177		0.16			72,870			46		0.06			91,653			51		0.06
Long term borrowings		34,799			424		1.22			21,240			525		2.47			16,597			452		2.72
Total Interest-Bearing Liabilities		1,057,441			4,090		0.39			847,258			4,579		0.54			878,651			5,063		0.58
NONINTEREST-BEARING LIABILITIES AND    STOCKHOLDERS' EQUITY
Demand deposits		250,628								163,644								140,111
Other Liabilities		12,372								9,793								6,273
Stockholders' equity		162,086								120,352								116,735
Total Liabilities and
Stockholders' Equity	$	1,482,527							$	1,141,047							$	1,141,770
Net interest income and interest
rate spread				$	51,881		3.72	%				$	38,141		3.48	%				$	37,928		3.47	%
Net interest margin							3.81	%							3.59	%							3.58	%

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

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

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(3) Interest on loans includes fee income of $3.0 million, $2.5 million and $2.4 million for 2015, 2014 and 2013 respectively and is reduced by amortization of $2.3 million, $2.1 million and $2.1 million for 2015, 2014 and 2013 respectively.  

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

(5) For 2015, adjustments of $585 thousand and $1.6 million were made to tax equate income on tax exempt loans and tax exempt securities. For 2014, adjustments of $489 thousand and $1.3 million were made to tax equate income on tax exempt loans and tax exempt securities. For 2013, adjustments of $494 thousand and $1.5 million were 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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RATE AND VOLUME ANALYSIS

(Table Dollar Amounts in Thousands except Per Share Data)

The following table analyzes by rate and volume the dollar amount of changes in the components of the interest differential:

	2015 change from 2014									2014 change from 2013
	Net			Change Due			Change Due			Net			Change Due			Change Due
	Change			To Volume			To Rate			Change			To Volume			To Rate
Tax Equivalent Interest Income
Loans	$	13,852		$	16,138		$	(2,286	)	$	179		$	1,858		$	(1,679	)
Taxable securities		(1,379	)		(1,150	)		(229	)		220			(394	)		614
Tax-exempt securities		671			1,056			(385	)		(648	)		(282	)		(366	)
Equity securities		97			101			(4	)		(6	)		(2	)		(4	)
Funds sold and other cash		10			7			3			(16	)		(15	)		(1	)
Total interest income	$	13,251		$	16,152		$	(2,901	)	$	(271	)	$	1,165		$	(1,436	)
Interest Expense
Time deposits	$	(896	)	$	166		$	(1,062	)	$	(352	)	$	(220	)	$	(132	)
Savings deposits		68			67			1			(198	)		(10	)		(188	)
Demand deposits		309			26			283			(2	)		1			(3	)
Short term borrowings		131			22			109			(5	)		(10	)		5
Long term borrowings		(101	)		335			(436	)		73			126			(53	)
Total interest expense	$	(489	)	$	616		$	(1,105	)	$	(484	)	$	(113	)	$	(371	)
Increase (decrease) in tax equivalent
net interest income	$	13,740		$	15,536		$	(1,796	)	$	213		$	1,278		$	(1,065	)

The amount of change not solely due to rate or volume changes was allocated between the change due to rate and the change due to volume based on the relative size of the rate and volume changes.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following presents a discussion and analysis of Farmers’ financial condition and results of operations by its management. The review highlights the principal factors affecting earnings and the significant changes in balance sheet items for the years 2015, 2014 and 2013.  Financial information for prior years is presented when appropriate. The objective of this financial review is to enhance the reader’s understanding of the accompanying tables and charts, the consolidated financial statements, notes to financial statements, and financial statistics appearing elsewhere in this Annual Report on Form 10-K. Where applicable, this discussion also reflects management’s insights of known events and trends that have or may reasonably be expected to have a material effect on Farmers’ business, financial condition or results of operations.

Cautionary Note Regarding Forward Looking Statements

Discussions in this Annual Report on Form 10-K 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 Farmers’ filings with the Securities and Exchange Commission, including without limitation the risk factors disclosed in Item 1A, “Risk Factors” of this Annual Report on Form 10-K.

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

· general economic conditions in market areas where Farmers conducts 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 Farmers conducts 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 similar items.

Other factors not currently anticipated may also materially and adversely affect Farmers’ business, financial condition, results of operations or cash flows. There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in this Annual Report on Form 10-K 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. Farmers 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.

Results of Operations

Comparison of Operating Results for the Years Ended December 31, 2015 and 2014.

The Company’s net income totaled $8.1 million during 2015, compared to $9.0 million for 2014. On a per share basis, diluted earnings per share were $0.36 as compared to $0.48 diluted earnings per share for 2014.  Excluding expenses related to acquisition activities, net income for 2015 would have been $12.9 million, or $0.57 per share.  Common comparative ratios for results of operations include the return on average assets and return on average stockholders’ equity. For 2015, the return on average equity was 4.97%, compared to 7.45% for 2014. The return on average assets was 0.54% for 2015 and 0.79% for 2014.   Excluding expenses related to acquisition activities, the return on average assets and return on average stockholders’ equity were 0.87% and 7.95%, respectively.

The results for 2015 included $94 thousand in gains on sales of securities, compared to $457 thousand in 2015.

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.

On October 1, 2015, the Company completed the acquisition of Tri-State 1st Banc, Inc. (“Tri-State”), the parent company of 1^st National Community Bank (“FNCB”). Pursuant to the terms of the Merger Agreement, common shareholders of Tri-State were 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 received $13.60 in cash for each share of Series A Preferred Stock, without par value, of Tri-State. Total consideration actually paid was in the form of $3.6 million in cash and $10.7 million worth of the Company’s stock on

October 1, 2015.

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Net Interest Income

Net interest income, the principal source of the Company’s earnings, represents the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. For 2015, taxable equivalent net interest income increased $13.7 million, or 36.0%, from 2014. Interest-earning assets averaged $1.363 billion during 2015, increasing $301.2 million compared to 2014.  The Company’s interest-bearing liabilities increased 24.8% from $847.3 million in 2014 to $1.057 billion in 2015.  The two previously mentioned acquisitions increased interest-earning assets by $647.5 million and interest-bearing liabilities by $605.5 million at their respective completion dates.

The Company finances its earning assets with a combination of interest-bearing and interest-free funds. The interest-bearing funds are composed of deposits, short-term borrowings and long-term debt. Interest paid for the use of these funds is the second factor in the net interest income equation. Interest-free funds, such as demand deposits and stockholders’ equity, require no interest expense and, therefore, contribute significantly to net interest income.

The profit margin, or spread, on invested funds is a key performance measure. The Company monitors two key performance indicators - net interest spread and net interest margin. The net interest spread represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities. The net interest spread in 2015 was 3.72%, increasing from 3.48% in 2014. The net interest margin represents the overall profit margin – net interest income as a percentage of total interest-earning assets. This performance indicator gives effect to interest earned for all investable funds including the substantial volume of interest-free funds. For 2015, the net interest margin, measured on a fully taxable equivalent basis, increased to 3.81%, compared to 3.59% in 2014. The net interest margin, excluding the impact of amortization and accretion from the current year acquisitions, improved 17 basis points to 3.76% for the year ended December 31, 2015. The accretion added $64 thousand per month during the final months of 2015 and will continue over the next several years.  

The increase in net interest margin is largely a result of interest bearing liabilities repricing at lower rates and the shifting of assets from investment securities to higher interest income rates of loans. As long term time deposits mature they are being renewed at lesser rates or moving to more liquid accounts at lower interest rates. Total taxable equivalent interest income was $51.9 million for 2015, which is $13.7 million more than the $38.1 million reported in 2014. In comparing the years ending December 31, 2015 and 2014, yields on earning assets increased 6 basis points while the cost of interest bearing liabilities decreased similarly at 19 basis points. Average loans increased $324.4 million, or 51.41%, in 2015, however the yields decreased from 4.97% in 2014 to 4.74% in 2015. Tax equated income from securities, federal funds and other decreased $601 thousand, or 5.30%, in 2015. Even though tax equated income decreased, Farmers saw its yields on these assets increase slightly from 2.63% in 2014 to 2.64% in 2015. The average balance of investment securities and federal funds sold decreased from $430.4 million in 2014 to $407.2 million in 2015.

Total interest expense amounted to $4.1 million for 2015, a 10.7% decrease from $4.6 million reported in 2014. The decrease in 2015 is the result of lower rates of interest paid on interest-bearing deposits and repurchase agreements. The cost of interest-bearing liabilities decreased from 0.54% in 2014 to 0.39% in 2015.

Management will continue to evaluate future changes in interest rates and the shape of the treasury yield curve so that assets and liabilities may be priced accordingly to minimize the impact on the net interest margin.

Noninterest Income

Total noninterest income increased by $3 million in 2015. The increase in noninterest income is due to several factors. Gains on the sale of mortgage loans increased from $358 thousand to $1.1 million, representing an increase of $743 thousand.  Retirement plan consulting fees also increased to $2.1 million compared to $1.8 million in 2014and service charges on deposit accounts increased from $2.6 million in 2014 to $3.3 million in 2015, reflecting the size of the company of after the two acquisitions. Investment commissions increased $146 thousand or 14%, as management continues to focus on diversifying revenue sources to decrease the reliance on net interest income as the main driver of revenue.  Other operating income also increased $1 million, primarily as a result of the positive impact from account level transaction volumes from the merger related growth.  Included in the increase in other operating income was debit card interchange income, which increased $618 thousand, and ATM fee income, which increased $74 thousand. The Bank and Company expect these amounts to increase during 2016 as the level of activity will be for a full twelve months.  

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Noninterest Expenses

Noninterest expense for 2015 was $54.0 million, compared to $38.2 million in 2014, representing a increase of $15.8 million, or 41.5%. Most of the increase was from merger related costs, which were $6.4 million in 2015, compared to none in 2014.  Salaries and employee benefits also increased $5.8 million, mainly due to an increase in the number of employees resulting from the mergers. The Company’s full time equivalent employees (“FTE”) increased by 105 from December 31, 2014 to December 31, 2015.  Occupancy and equipment costs also increased $947 thousand due to the additional eighteen banking locations resulting from the mergers.    Excluding expenses related to acquisition activities, noninterest expenses measured as a percentage of average assets decreased from 3.34% in 2014 to 3.21% in 2015.

The Company’s tax equivalent efficiency ratio for the twelve month period ended December 31, 2015 was 75.26%, compared to 70.24% for the same period in 2014. Excluding expenses related to acquisition activities, the efficiency ratio for the year ended December 31, 2015 improved to 66.2%.  The main factors leading to the improvement in the efficiency ratio was the increase in net interest income and noninterest income, along with the stabilized level of noninterest expenses relative to average assets as explained in the preceding paragraph. The efficiency ratio is calculated as follows: non-interest expense divided by the sum of tax equivalent net interest income plus non-interest income, excluding security gains and losses and intangible amortization. This ratio is a measure of the expense incurred to generate a dollar of revenue. Management will continue to closely monitor and keep the increases in other expenses to a minimum.  

Income Taxes

Income tax expense totaled $2.5 million for 2015 and $2.6 million in 2014. Income taxes are computed using the appropriate effective tax rates for each period. The small decrease in the current year tax expense can be mainly attributed to the $1.0 million decrease in income before taxes. The effective tax rates are less than the statutory tax rate primarily due to nontaxable interest and dividend income. The effective income tax rate was 23.7% for 2015 and 22.7% for 2014. Refer to Note 16 to the consolidated financial statements for additional information regarding the effective tax rate.

Comparison of Operating Results for the Years Ended December 31, 2014 and 2013.

The Company’s net income totaled $9.0 million during 2014, compared to $7.8 million for 2013. On a per share basis, diluted earnings per share were $0.48 as compared to $0.41 diluted earnings per share for 2013. For 2014, the return on average equity was 7.45%, compared to 6.66% for 2013. The return on average assets was 0.79% for 2014 and 0.68% for 2013.

The results for 2014 included $457 thousand in gains on sales of securities, compared to $863 thousand in 2013.

During 2013, the Company completed the acquisition of all outstanding stock of the retirement planning consultancy National Associates, Inc. of Cleveland, Ohio.  The company is a leading independent consultant to retirement plans and offers actuarial, plan design, compliance and administrative services. As a third party administrator, NAI provides services to 401(k), defined benefit, profit sharing, flexible spending, 403(b), ESOP and other plans.  In acquiring NAI, the Company assumes a professional staff that is highly qualified and credentialed.  Synergies and the cost savings resulting from the combining of the operations of the companies will help drive an increase of non-interest income.

NAI contributed $1.8 million of gross revenues to the Company resulting in a net loss of $671 thousand for the year ended December 31, 2014.  The net loss was mainly due to the $764 thousand goodwill impairment charge. The goodwill was partially impaired as described in Note 6, by an amount equal to the reduction in the contingent consideration payable. The two adjustments offset resulting in a zero impact to the Company’s consolidated statements of income for year ended December 31, 2014.

Net Interest Income

For 2014, taxable equivalent net interest income increased $213 thousand, or 0.56%, from 2013. Interest-earning assets averaged $1.061 billion during 2014, increasing $680 thousand, compared to 2013. The Company’s interest-bearing liabilities decreased 3.57% from $878.7 million in 2013 to $847.3 million in 2014.

Total taxable equivalent interest income was $42.7 million for 2014, which is $271 thousand less than the $43.0 million reported in 2013. In comparing the years ending December 31, 2014 and 2013, yields on earning assets decreased 3 basis points while the cost of interest bearing liabilities decreased 4 basis points. Average loans increased $35.5 million, or 5.95%, in 2014, however the yields decreased from 5.24% in 2013 to 4.97% in 2014. Tax equated income from securities, federal funds and other decreased $450 thousand, or 3.82%, in 2014. Farmers saw its yields on these assets increased from 2.53% in 2013 to 2.63% in 2014. The average balance of investment securities and federal funds sold decreased from $465.2 million in 2013 to $430.4 million in 2014.

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Total interest expense amounted to $4.6 million for 2014, a 9.6% decrease from $5.1 million reported in 2013. The decrease in 2014 is the result of lower rates of interest paid on interest-bearing deposits and repurchase agreements. The cost of interest-bearing liabilities decreased from 0.58% in 2013 to 0.54% in 2014.

Noninterest Income

Total noninterest income increased by $1.4 million in 2014. The increase in noninterest income is due to several factors. Retirement plan consulting fees increased to $1.8 million compared to $628 thousand in 2013 reflecting a full twelve months this year compared to six months of income earned from the newly acquired entity, NAI in 2013. Service charges on deposit accounts increased from $2.4 million in 2013 to $2.6 million in 2014 as the Company made adjustments to the service charge structure of its deposit accounts. Bank owned life insurance income decreased $237 thousand as the Trust fees increased $509 thousand, insurance agency commissions increased $111 thousand and investment commissions increased $37 thousand, as management continues to focus on diversifying revenue sources to decrease the reliance on net interest income as the main driver of revenue.

Noninterest Expenses

Noninterest expense for 2014 was $38.2 million, compared to $39.1 million in 2013, representing a decrease of $895 thousand, or 2.3%. Most of the decrease was a result of a 5.3% decrease in salary and employee benefits, mainly due to severance costs recorded in 2013 and not in 2014.   State and local taxes decreased $435 thousand to $878 thousand in 2014 compared to $1.3 million in 2013. The decrease is the result of the new and reduced financial institution’s tax rate by the state of Ohio in 2014. Merger related costs also decreased $330 thousand in 2014.

Professional fees increased 10.8% as a result of corporate legal and consulting fees related to compensation practices and other business advisory fees. Intangible amortization increased $143 thousand as a result of a full twelve months of amortization of intangible assets related to the acquisition of NAI. Advertising increased $201 thousand.

The Company’s tax equivalent efficiency ratio for the twelve month period ended December 31, 2014 was 70.24%, compared to 74.82% for the same period in 2013. The main factor leading to the improvement in the efficiency ratio was the decrease in noninterest expenses and increase in noninterest income as explained earlier in this section. The efficiency ratio is calculated as follows: non-interest expense divided by the sum of tax equivalent net interest income plus non-interest income, excluding security gains and losses and intangible amortization. This ratio is a measure of the expense incurred to generate a dollar of revenue. Management will continue to closely monitor and keep the increases in other expenses to a minimum.  

Income Taxes

Income tax expense totaled $2.6 million for 2014 and $1.7 million in 2013. The effective income tax rate was 22.7% for 2014 and 17.8% for 2013.  

Liquidity

Farmers 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.

Principal sources of liquidity include assets considered relatively liquid, such as short-term investment securities, federal funds sold and cash and due from banks.

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Along with its liquid assets, Farmers has additional sources of liquidity available which help to insure 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 two major domestic banks. At December 31, 2015, Farmers had not borrowed against these lines of credit. Management feels that its liquidity position is more than adequate and will continue to monitor the position on a monthly basis. The Company also has additional borrowing capacity with the FHLB, as well as access to the Federal Reserve Discount Window, which provides an additional source of funds. The Company views its membership in the FHLB as a solid source of liquidity. As of December 31, 2015, the Bank is eligible to borrow an additional $63.4 million from the FHLB under various fixed rate and variable rate credit facilities. Advances outstanding from the FHLB at December 31, 2015 amounted to $170.1 million.

Farmers’ primary investing activities are originating loans and purchasing securities. During 2015, net cash used by investing activities amounted to $22.5 million, compared to $6.2 million provided in 2014. Net increases in loans were $140 million in 2015, compared to $35.4 million in 2014. The cash used by lending activities during 2015 can be attributed to the activity in the commercial real estate, residential real estate and commercial loan portfolios. Purchases of securities available for sale were $72.7 million in 2015, compared to $64.4 million in 2014 and proceeds from maturities and sales of securities available for sale were $165.6 million in 2015, compared to $106.6 million in 2014. Net cash of $30.7 million was received as a result of the acquisitions of NBOH and Tri-State.

Farmers’ primary financing activities are obtaining deposits, repurchase agreements and other borrowings. Net cash provided by financing activities amounted to $50.7 million for 2015, compared to $18.5 million used in 2014. The majority of this change can be attributed to the change in short-term borrowings. Short-term borrowings increased $101.2 million in 2015 compared to a $22.5 million decrease in 2014. Deposits decreased $39.3 million during 2015 compared to a $487 thousand increase during 2014.

Loan Portfolio

Maturities and Sensitivities of Loans to Interest Rates

The following schedule shows the composition of loans and the percentage of loans in each category at the dates indicated. Balances include unamortized loan origination fees and costs.

Years Ended December 31,	2015				2014				2013				2012				2011
Commercial Real Estate	$	485,973	37.5	%	$	222,573	33.5	%	$	217,362	34.4	%	$	200,651	34.2	%	$	198,041	34.6	%
Commercial		230,748	17.8			120,150	18.1			105,023	16.7			97,112	16.6			74,875	13.1
Residential Real Estate		395,067	30.4			183,853	27.7			170,151	27.0			156,182	26.6			167,031	29.2
Consumer		185,077	14.3			137,276	20.7			138,148	21.9			132,647	22.6			131,859	23.1
Total Loans	$	1,296,865	100.0	%	$	663,852	100.0	%	$	630,684	100.0	%	$	586,592	100.0	%	$	571,806	100.0	%

The following schedule sets forth maturities based on remaining scheduled repayments of principal for commercial and commercial real estate loans listed above as of December 31, 2015:

Types of Loans	1 Year or less		1 to 5 Years		Over 5 Years
Commercial	$	16,934	$	112,447	$	101,367
Commercial Real Estate	$	14,973	$	81,744	$	389,256

The amounts of commercial and commercial real estate loans as of December 31, 2015, based on remaining scheduled repayments of principal, are shown in the following table:

Loan Sensitivities	1 Year or less		Over 1 Year		Total
Floating or Adjustable Rates of Interest	$	17,627	$	488,985	$	506,612
Fixed Rates of Interest		14,281		195,828		210,109
Total Loans	$	31,908	$	684,813	$	716,721

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Total loans were $1.3 billion at year-end 2015, compared to $663.9 million at year-end 2014. Loans grew 20% organically during the past twelve months, which is in addition to the $432 million and $66 million increase in loans resulting from the NBOH and Tri-State acquisitions, respectively.  The organic increase in loans is a direct result of Farmers’ focus on loan growth utilizing a talented lending and credit team, while adhering to a sound underwriting discipline. Most of the increase in loans has occurred in the commercial real estate, commercial and industrial and residential real estate loan portfolios Loans comprised 70.1% of the Bank’s average earning assets in 2015, compared to 59.5% in 2014. The product mix in the loan portfolio includes commercial loans comprising 17.8%, residential real estate loans 30.4%, commercial real estate loans 37.5% and consumer loans 14.3% at December 31, 2015 compared with 18.1%, 27.7%, 33.5% and 20.7%, respectively, at December 31, 2014.

Loans contributed 80.8% of total taxable equivalent interest income in 2015 and 73.5% in 2014. Loan yields were 4.74% in 2015, 63 basis points greater than the average rate for total earning assets. Management recognizes that while the loan portfolio holds some of the Bank’s’ highest yielding assets, it is inherently the most risky portfolio. Accordingly, management attempts to balance credit risk versus return with conservative credit standards. Management has developed and maintains comprehensive underwriting guidelines and a loan review function that monitors credits during and after the approval process. To minimize risks associated with changes in the borrower’s future repayment capacity, the Bank generally requires scheduled periodic principal and interest payments on all types of loans and normally requires collateral. Commercial loans at December 31, 2015 increased 92% from year-end 2014 with outstanding balances of $230.7 million. The Bank’s commercial loans are granted to customers within the immediate trade area of the Bank. The mix is diverse, covering a wide range of borrowers, business types and local municipalities. The Bank monitors and controls concentrations within a particular industry or segment of the economy. These loans are made for purposes such as equipment purchases, capital and leasehold improvements, the purchase of inventory, general working capital and small business lines of credit.

Residential real estate mortgage loans increased to $395.1 million at December 31, 2015, compared to $183.9 million in 2014. Farmers originated both fixed rate and adjustable rate mortgages during 2014. Fixed rate terms are generally limited to fifteen year terms while adjustable rate products are offered with maturities up to thirty years.

Commercial real estate loans increased from $222.6 million at December 31, 2014 to $485.97 million at December 31, 2015, an increase of $263.4 million.  The Company’s commercial real estate loan portfolio includes loans for owner occupied and non-owner occupied real estate.  These loans are made to finance properties such as office and industrial buildings, hotels and retail shopping centers.

The growth in the commercial and commercial real estate loan portfolios was consistent with the improvements in the local economy. Several new projects announced in the Mahoning Valley and Stark County, along with decreased levels of unemployment have led small business owners to expand or make additional investments in their operations.

Summary of Loan Loss Experience

The following is an analysis of the allowance for loan losses for the periods indicated:

Years Ended December 31,	2015			2014			2013			2012			2011
Balance at Beginning of Year	$	7,632		$	7,568		$	7,629		$	9,820		$	9,307
Charge-Offs:
Commercial Real Estate		(536	)		(151	)		(505	)		(1,225	)		(1,246	)
Commercial		(290	)		(185	)		(99	)		(918	)		(414	)
Residential Real Estate		(320	)		(585	)		(326	)		(806	)		(1,736	)
Consumer		(2,058	)		(2,213	)		(1,723	)		(1,002	)		(1,125	)
Total Charge-Offs		(3,204	)		(3,134	)		(2,653	)		(3,951	)		(4,521	)
Recoveries on Previous Charge-Offs:
Commercial Real Estate		130			125			171			253			44
Commercial		9			29			262			50			39
Residential Real Estate		122			77			47			104			452
Consumer		779			1,087			822			628			849
Total Recoveries		1,040			1,318			1,302			1,035			1,384
Net Charge-Offs		(2,164	)		(1,816	)		(1,351	)		(2,916	)		(3,137	)
Provision For Loan Losses		3,510			1,880			1,290			725			3,650
Balance at End of Year	$	8,978		$	7,632		$	7,568		$	7,629		$	9,820
Ratio of Net Charge-offs to Average Loans Outstanding		0.22	%		0.28	%		0.23	%		0.52	%		0.56	%

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Provisions charged to operations amounted to $3.5 million in 2015, compared to $1.9 million in 2014, an increase of $1.6 million. This increase is primarily due to an increase in the level of net charge-offs and the overall 20% organic increase in total loans, which are factors considered in management’s estimate of loan loss provisions and the adequacy of the allowance for loan losses. Net charge-offs for the year ended December 31, 2014 were $2.2 million, $337 thousand higher than net charge-offs for the year ended December 31, 2014. The allowance for loan losses to total loans decreased from 1.15% at December 31, 2014 to 0.69% at December 31, 2015.  The decrease is the result of the additional loan portfolio acquired at fair market value without an allowance for loan losses as displayed in the allowance for loan losses as a percentage of non-acquired loans. When the acquired loans are excluded the ratio is 1.08% and compares similarly with the periods presented in the above table. Additionally, when loans collectively evaluated for impairment, which excludes acquired loans, are compared to the allowance for loan losses for loans collectively evaluated for impairment the ratio is 1.03% for the year ended December 31, 2015 compared to 1.04% for the year ended December 31, 2014. Nonperforming loans to total loans decreased from 1.28% at December 31, 2014 to 0.81% at December 31, 2015. Although non-performing loans increased $2 million in comparing 2015 to 2014, the size of the total loan portfolio almost doubled in the past twelve months. In determining the estimate of the allowance for loan losses, management computes the historical loss percentage based upon the loss history of the past 12 quarters. The Company believes that using a loss history of the previous 12 quarters helps mitigate volatility in the timing of charge-offs and better reflects probable incurred losses.

The provision for loan losses charged to operating expense 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 charge-off 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.

The allowance for loan losses increased $1.3 million during the year. Aside from the various credit quality metrics discussed above, another reason for the increase in the current year allowance for loan losses was an increase in probable incurred losses associated with the commercial real estate loan portfolio.  At December 31, 2015, loans collectively evaluated for impairment totaled $296.9 million with an allowance allocation of $2.7 million compared to commercial real estate loans individually evaluated for impairment of $215.4 million with an allowance for loan losses of $2.1 million at December 31, 2014. The commercial real estate loan portfolio experienced a provision of $857 thousand, compared to a negative $50 thousand provision in 2014.  Impaired loans are carried at the fair value of the underlying collateral, less estimated disposition costs, if repayment of the loan is expected to be solely dependent on the sale of the collateral. Otherwise, impaired loans are carried at the present value of expected cash flows.

Typically, commercial and commercial real estate loans are identified as impaired when they become ninety days past due, or earlier if management believes it is probable that the Company will not collect all amounts due under the terms of the loan agreement. When Farmers identifies a loan as impaired and also concludes that the loan is collateral dependent, Farmers performs an internal collateral valuation as an interim measure. Farmers typically obtains an external appraisal to validate its internal collateral valuation as soon as is practical and adjusts the associated specific loss reserve, if necessary.

The ratio of the allowance for loan losses to non-performing loans at December 31, 2015 was 85.96%, compared to 89.99% at December 31, 2014. Non-performing loan totals actually increased over prior year, but with the additional loan balances acquired with the two mergers this year the ratio of allowance for loan losses to non-performing loans improved. Non-performing commercial loans were the only category that decreased during 2015. The balance in the allowance for loan losses increased in 2015, with the increased loan portfolio size, to $9.0 million compared to $7.6 million in 2014.  

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Nonperforming Assets
December 31,	2015			2014			2013			2012			2011
Nonaccrual loans:
Commercial Real Estate	$	3,876		$	3,356		$	3,211		$	3,915		$	6,025
Commercial		1,609			1,645			1,993			1,081			527
Residential Real Estate		3,116			2,881			2,864			2,636			4,196
Consumer		457			126			363			—			12
Total Nonaccrual Loans	$	9,058		$	8,008		$	8,431		$	7,632		$	10,760
Loans Past Due 90 Days or More		1,387			473			646			596			250
Total Nonperforming Loans	$	10,445		$	8,481		$	9,077		$	8,228		$	11,010
Other Real Estate Owned		942			148			171			334			585
Total Nonperforming Assets	$	11,387		$	8,629		$	9,248		$	8,562		$	11,595
Loans modified in troubled debt restructuring	$	9,325		$	8,110		$	8,280		$	7,642		$	4,277
TDRs included in Nonaccrual Loans	$	4,733		$	1,436		$	1,957		$	818		$	471
Percentage of Nonperforming Loans to Loans		0.81	%		1.28	%		1.44	%		1.40	%		1.93	%
Percentage of Nonperforming Assets to Total Assets		0.61	%		0.76	%		0.81	%		0.75	%		1.09	%
Loans Delinquent 30-89 days		9,129			5,426			3,658			3,702			3,471
Percentage of Loans Delinquent 30-89 days to Total Loans		0.70	%		0.82	%		0.58	%		0.63	%		0.61	%

The Company has forgone interest income of approximately $439 thousand from nonaccrual loans as of December 31, 2015 that would have been earned, over the life of the loans, if all loans had performed in accordance with their original terms.

Net charge-offs as a percentage of average loans outstanding decreased from 0.28% for 2014 to 0.22% for 2015 as a result of the larger loan portfolio and improved loan quality. Net charge-offs did increase from $1.8 million in 2014 to $2.2 million in 2015. The primary reason for the increase was gross charge-offs in the commercial real estate portfolio which increased by $385 thousand or 255.0% from 2014 to 2015.  The majority of the charge-offs in the commercial loan portfolio were related to a small number of loans.

A significant allocation in the allowance for loan losses is for performing commercial and commercial real estate loans classified by the internal loan review as substandard. The loss experience on the average balance of this category of loans for the past three years has been approximately 1.93% of the principal balance of these loans, which is management’s allocation for these loans. This equates to an allocation of approximately $109 thousand at the end of 2015 compared to an allocation of $250 thousand at the end of 2014. The allocation decreased due to a decrease in the historical loss experience for the substandard loans. The actual loss experience may be more or less than the amount allocated. At December 31, 2015, the amount of substandard loans that continue to accrue interest is $5.7 million. As always, management is working to address weaknesses in each of these specific loans that may result in loss.

December 31,	2015					2014					2013					2012					2011
			Loans to					Loans to					Loans to					Loans to					Loans to
	Amount		Total Loans			Amount		Total Loans			Amount		Total Loans			Amount		Total Loans			Amount		Total Loans
Commercial Real Estate	$	3,127		37.5	%	$	2,676		33.5	%	$	2,752		34.4	%	$	3,392		34.2	%	$	4,880		34.6	%
Commercial		1,373		17.8			1,420		18.1			1,219		16.7			1,453		16.6			1,529		13.1
Residential Real Estate		1,845		30.4			1,689		27.7			1,964		27.0			1,569		26.6			1,802		29.2
Consumer		2,160		14.3			1,663		20.7			1,419		21.9			951		22.6			972		23.1
Unallocated		473		0			184		0			214		0			264		0			637		0
	$	8,978		100.0	%	$	7,632		100.0	%	$	7,568		100.0	%	$	7,629		100.0	%	$	9,820		100.0	%

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The allowance allocated to each of the four loan categories should not be interpreted as an indication that charge-offs in 2016 will occur in the same proportions or that the allocation indicates future charge-off trends. The allowance allocated to the one-to-four family real estate loan category and the consumer loan category is based upon the Company’s allowance methodology for homogeneous loans, and increases and decreases in the balances of those portfolios. In previous years, the indirect installment loan category has represented the largest percentage of loan losses. The consumer loan category represents approximately 14.3% of total loans and in 2015, the net loan losses accounted for 59.1% of the losses of the entire loan portfolio. For the commercial loan category, which represents 17.8% of the total loan portfolio, management relies on the Bank’s internal loan review procedures and allocates accordingly based on loan classifications. The net charge-offs in the commercial real estate portfolio which represents 37.5% of the total portfolio, was $406 thousand for 2015.

There were no loans other than those identified above, that management has known information about possible credit problems of borrowers and their ability to comply with the loan repayment terms. Management is actively monitoring certain borrowers’ financial condition and loans which management wants to more closely monitor due to special circumstances. These loans and their potential loss exposure have been considered in management’s analysis of the adequacy of the allowance for loan losses.

Loan Commitments and Lines of Credit

In the normal course of business, the Bank has extended various commitments for credit. Commitments for mortgages, revolving lines of credit and letters of credit generally are extended for a period of one month up to one year. Normally no fees are charged on any unused portion. Normally, an annual fee of two percent is charged for the issuance of a letter of credit.

As of December 31, 2015, there were no concentrations of loans exceeding 10% of total loans that are not disclosed as a category of loans. As of that date also, there were no other interest-earning assets that are either nonaccrual, past due, restructured or non-performing.

Investment Securities

The investment securities portfolio increased $4.5 million in 2015. Maturing security funds were not reinvested and were used to fund loan portfolio growth and deposit runoff.  The Company’s investment strategy is to maintain a diverse investment security portfolio with a higher concentration in mortgage-backed securities that are issued by U.S. Government sponsored enterprises and tax-free municipal securities. Farmers sold $107.5 million in securities in 2015, resulting in net security gains of $94 thousand. Farmers recognized market appreciation on faster paying mortgage-backed securities and lower rated municipal securities, and reinvested in new mortgage-backed securities and higher rated municipal securities to further diversify the securities portfolio. During 2014 the Company created the Investments subsidiary to hold municipal securities and take advantage of more favorable tax treatment.  At December 31, 2015, the Investments entity had a balance of $50.8 million in municipal securities.

Farmers’ objective in managing the investment portfolio is to preserve and enhance corporate liquidity through investment in primarily short and intermediate term securities which are readily marketable and of the highest credit quality. In general, investment in securities is limited to those funds the Bank feels it has in excess of funds used to satisfy loan demand and operating considerations.

The Volcker Rule places limits on the trading activity of insured depository institutions and entities affiliated with a depository institution, subject to certain exceptions. The Bank does not engage in any of the trading activities or own any of the types of funds regulated by the Volcker Rule.

Mortgage-backed securities are created by the pooling of mortgages and issuance of a security. Mortgage-backed securities typically represent a participation interest in a pool of single-family or multi-family mortgages. Prepayment estimates for mortgage-backed securities are performed at purchase to ensure that prepayment assumptions are reasonable considering the underlying collateral for the mortgage-backed securities at issue and current mortgage interest rates and to determine the yield and estimated maturity of the mortgage-backed security portfolio. Prepayments that are faster than anticipated may shorten the life of the security and may result in faster amortization of any premiums paid and thereby reduce the net yield on such securities. During periods of declining mortgage interest rates, refinancing generally increases and accelerates the prepayment of the underlying mortgages and the related security. All holdings of mortgage-backed securities were issued by U.S. Government sponsored enterprises.

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The following table shows the carrying value of investment securities by type of obligation at the dates indicated:

Type

December 31,	2015		2014		2013
U.S. Treasury securities	$	1,192	$	844	$	100
U.S. government sponsored enterprise debt securities		9,914		23,977		51,210
Mortgage-backed securities - residential and collateralized mortgage obligations		223,752		249,537		251,656
Small Business Administration		19,299		22,419		23,573
Obligations of states and political subdivisions		138,723		91,881		94,734
Equity securities		298		240		187
Corporate bonds		1,134		931		1,525
	$	394,312	$	389,829	$	422,985

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A summary of debt securities held at December 31, 2015 classified according to maturity and including weighted average yield for each range of maturities is set forth below:

Type and Maturity Grouping			December 31, 2015
		Fair Value		Weighted Average Yield (1)
U.S. Treasury securities
Maturing within one year	$		100		0.44	%
Maturing after one year but within five years			449		1.63	%
Maturing after five years but within ten years			643		2.05	%
Total U.S. Treasury securities	$		1,192		1.76	%
U.S. government sponsored enterprise debt securities
Maturing within one year	$		4,563		2.54	%
Maturing after one year but within five years			3,512		1.26	%
Maturing after five years but within ten years			1,839		2.07	%
Total U.S. government sponsored enterprise debt securities	$		9,914		2.00	%
Mortgage-backed securities - residential and collateralized mortgage obligations (2)
Maturing within one year	$		29,925		2.12	%
Maturing after one year but within five years			85,189		2.17	%
Maturing after five years but within ten years			60,804		2.23	%
Maturing after ten years			47,834		2.37	%
Total mortgage-backed securities	$		223,752		2.22	%
Small Business Administration
Maturing within one year	$		15		2.60	%
Maturing after one year but within five years			47		2.57	%
Maturing after five years but within ten years			19,237		1.99	%
Total small business administration	$		19,299		1.99	%
Obligations of states and political subdivisions
Maturing within one year	$		12,034		4.25	%
Maturing after one year but within five years			64,123		2.98	%
Maturing after five years but within ten years			50,092		4.26	%
Maturing after ten years			12,474		4.43	%
Total obligations of states and political subdivisions	$		138,723		3.69	%
Corporate bonds
Maturing after one year but within five years	$		933		1.57	%
Maturing after five years but within ten years			201		2.64	%
Total other securities	$		1,134		1.76	%

(1) The weighted average yield has been computed by dividing the total contractual interest income adjusted for amortization of premium or accretion of discount over the life of the security by the par value of the securities outstanding. The weighted average yield of tax-exempt obligations of states and political subdivisions has been calculated on a fully taxable equivalent basis. The amounts of adjustments to interest which are based on the statutory tax rate of 35% were $131 thousand, $432 thousand, $507 thousand and $142 thousand for the four ranges of maturities.

(2) Payments based on contractual maturity.

Premises and Equipment

Premises and equipment had a net increase of $7.1 million in 2015 as a result of the $8.0 million acquired in the mergers. The increase was the result of eighteen additional branch locations as well as furniture and fixtures in those new locations.

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Deposits

Deposits represent the Company’s principal source of funds. The deposit base consists of demand deposits, savings and money market accounts and other time deposits. During the year, the Company’s average total deposits increased from $916.8 million in 2014 to $1.165 billion in 2015. Average interest bearing demand deposits increased $92.2 million and savings deposits increased $59.2 million since December 31, 2014. Additionally, noninterest bearing demand deposits increased $87.0 million during 2015. With interest rates continuing to be low, customers have little incentive to commit funds to term deposit accounts. Time deposits had a modest increase of $10.3 million considering the additional time deposits acquired during the mergers. The Company’s focus is on core deposit growth and Farmers will continue to price deposit rates to remain competitive within the market and to retain customers. At December 31, 2015, core deposits – savings and money market accounts, time deposits less than $250 thousand, demand deposits and interest bearing demand deposits represented approximately 96.8% of total deposits.

Bank Owned Life Insurance

Farmers’ owns bank owned life insurance policies on the lives of certain members of management. The purpose of this transaction is to help fund the costs of employee benefit plans. The cash surrender value of these policies was $29.2 million at December 31, 2015 compared to $16.4 million at December 31, 2014.

Borrowings

Short-term borrowings increased $166.7 million or 281.9% since December 31, 2014 as a result of the acquisitions and the continued strong loan growth. Most of the increase is for short-term Federal Home Loan Advances. Long-term borrowings decreased $6.2 million or 21.9%, as maturing Federal Home Loan Bank advances were refinanced with short-term advances to capitalize on the favorable interest rates. See Note 10 and 11 within Item 8 of this Annual report on Form 10-K for additional detail.

Contractual Obligations, Commitments, Contingent Liabilities and Off-Balance Sheet Arrangements

The following table presents, as of December 31, 2015, the Company’s significant fixed and determinable contractual obligations by payment date. The payment amounts represent those amounts contractually due to the recipient and do not include any unamortized premiums or discounts or other similar carrying value adjustments. Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.

Commitments
12/31/2015
	Note
	Ref.	2016		2017		2018		2019		2020		Thereafter
Deposits without maturity		$	1,169,965
Certificates of deposit	9		108,493		39,007		18,528		27,827		37,494		7,733
Repurchase agreements	10		75,482
Short-term borrowed funds	10		350
Short-term FHLB advances	10		150,000
Long-term FHLB advances	11		7,247		8,089		1,008		931		860		1,919
Operating leases	7		307		319		306		303		267		1,380

Note 12 to the consolidated financial statements discusses in greater detail other commitments and contingencies and the various obligations that exists under those agreements. Examples of these commitments and contingencies include commitments to extend credit and standby letters of credit.

At December 31, 2015, the Company had no unconsolidated, related special purpose entities, nor did the Company engage in derivatives and hedging contracts that may expose the Company to liabilities greater than the amounts recorded on the consolidated balance sheet. Management’s policy is to not engage in derivatives contracts for speculative trading purposes.  The Company does utilize interest-rate swaps as a way of helping manage interest rate risk and not as derivatives for trading purposes. See Note 20 within Item 8 of this Annual report on Form 10-K for additional detail.

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Capital Resources

Total Stockholders’ Equity increased 60.3% from $123.6 million at December 31, 2014 to $198.0 million in 2015. The increase in equity was mainly the result of a $70.3 million increase in common stock that was issued during the acquisitions in 2015. Net income during the past twelve months was partially offset by dividends paid. During the year, shareholders received a total of $0.12 per share cash dividends paid in the past four quarters. Book value increased 9.5% from $6.71 per share at December 31, 2014 to $7.35 per share at December 31, 2015. The Company’s tangible book value decreased from $6.23 per share at December 31, 2014 to $5.77 per share at December 31, 2015. Additionally, the Company repurchased $213 thousand in treasury shares in 2015.  

The Bank, as a national chartered bank, is subject to the dividend restrictions set forth by the OCC. The OCC must approve declaration of any dividends in excess of the sum of profits for the current year and retained net profits for the preceding two years (as defined). Farmers and Farmers Bank are required to maintain minimum amounts of capital to total “risk weighted” assets, as defined by the banking regulators. At December 31, 2015, under the new minimum capital requirements associated with the Basel Committee on capital and liquidity regulation (Basel III), Farmers Bank and Farmers are required to have minimum capital ratios.  Actual and minimum ratios are detailed in Note 14 of the Consolidated Financial Statements.  Farmers Bank and Farmers had capital ratios above the minimum levels at December 31, 2015 and 2014. At year-end 2015 and 2014, the most recent regulatory notifications categorized Farmers Bank as well capitalized under the regulatory framework for prompt corrective action.

During 2013, the Federal banking regulators approved a final rule to implement revised capital adequacy standards of the Basel Committee on Banking Supervision, commonly called Basel III, and to address relevant provisions of the Dodd-Frank Act.  The final rule strengthens the definition of regulatory capital, increases risk-based capital requirements, makes selected changes to the calculation of risk-weighted assets, and adjusts the prompt corrective action thresholds.  Community banking organizations, such as the Company and the Bank, became subject to the new rule on January 1, 2015 and certain provisions of the new rule will be phased in over the period of 2015 through 2019.  The Bank has retained, through a one-time election, the prior treatment for most accumulated other comprehensive income, such that unrealized gains and losses on securities available for sale that did not affect regulatory capital amounts and ratios. As mentioned in the prior paragraph, the Bank falls within the new regulatory capital ratio guidelines.

Critical Accounting Policies

The Company follows financial accounting and reporting policies that are in accordance with generally accepted accounting principles in the United States of America and conform to general practices within the banking industry. Some of these accounting policies are considered to be critical accounting policies. 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 three accounting policies that are critical accounting policies and an understanding of these policies is necessary to understand the financial statements. These policies relate to determining the adequacy of the allowance for loan losses, if there is any impairment of goodwill and other intangibles, and estimating the fair value of assets acquired and liabilities assumed in connection with any merger activity. Additional information regarding these policies is included in the notes to the consolidated financial statements, including Note 1 (Summary of Significant Accounting Policies), Note 4 (Loans) and Note 2 (Business Combinations), and the section above captioned “Loan Portfolio.” Management believes that the judgments, estimates and assumptions used in the preparation of the consolidated financial statements are appropriate given the factual circumstances at the time.

Farmers maintains an allowance for loan losses. The allowance for loan losses is presented as a reserve against loans on the balance sheets. Loan losses are charged off against the allowance for loan losses, while recoveries of amounts previously charged off are credited to the allowance for loan losses. A provision for loan losses is charged to operations based on management’s periodic evaluation of adequacy of the allowance. The provision for credit losses provides for probable losses on loans.

Estimating the amount of the allowance for loan losses requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends and conditions, all of which may be susceptible to significant change. The loan portfolio represents the largest asset category on the consolidated balance sheets. Management’s assessment of the adequacy of the allowance for loan losses considers individually impaired loans, pools of homogeneous loans with similar risk characteristics and other environmental risk factors.

Pools of homogeneous loans with similar risk characteristics are assessed for probable losses. Probable losses are estimated through application of historical loss experience. Historical loss experience data used to establish loss estimates may not precisely correspond to the current portfolio. As a result, the historical loss experience used in the allowance analysis may not be representative of actual unrealized losses inherent in the portfolio.

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Management also evaluates the impact of environmental factors which pose additional risks that may not adequately be addressed in the analyses described above. Such environmental factors could include: levels of, and trends in, delinquencies and impaired loans, charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in lending policies and procedures including those for underwriting, collection, charge-off, and recovery; experience, ability, and depth of lending management and staff; national and local economic trends and conditions; industry and geographic conditions; concentrations of credit such as, but not limited to, local industries, their employees, suppliers; or any other common risk factor that might affect loss experience across one or more components of the portfolio. The determination of this component of the allowances requires considerable management judgment. To the extent actual outcomes differ from management estimates, additional provision for credit losses could be required that could adversely affect earnings or financial position in future periods. The “Loan Portfolio” section of this financial review includes a discussion of the factors driving changes in the allowance for loan losses during the current period.

Management believes that the accounting for goodwill and other intangible assets also involves a higher degree of judgment than most other significant accounting policies. 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 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. 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 goodwill, which resides on the books of Farmers Trust and NAI, is estimated by reviewing the past and projected operating results for the subsidiaries and industry comparable information. At December 31, 2015, on a consolidated basis, Farmers had intangibles of $7.8 million subject to amortization and $35.1 million of goodwill, which was not subject to periodic amortization.

Estimating the fair value of assets acquired and liabilities assumed, in connection with the NBOH and Tri-State acquisitions in 2015, requires significant judgment. In addition to the associated goodwill that was mentioned in the prior paragraph, estimates about the fair values of loans, core deposit intangible assets, premises and equipment, and time deposits were susceptible to estimation. Management’s judgment about real estate and equipment values, as well as the amount and timing of future cash flows associated with loans and deposits are a few of the factors considered.

Recent Accounting Pronouncements and Developments

Note 1 to the consolidated financial statements discusses new accounting policies adopted by Farmers during 2015 and the expected impact of accounting policies recently issued or proposed but not yet required to be adopted. To the extent the adoption of new accounting standards materially affects financial condition, results of operations, or liquidity, the impacts are discussed in the applicable sections of this financial review and notes to the consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Important considerations in asset/liability management are liquidity, the balance between interest rate sensitive assets and liabilities and the adequacy of capital. Interest rate sensitive assets and liabilities are those which have yields on rates subject to change within a future time period due to maturity of the instrument or changes in market rates. While liquidity management involves meeting the funds flow requirements of the Company, the management of interest rate sensitivity focuses on the structure of these assets and liabilities with respect to maturity and repricing characteristics. Balancing interest rate sensitive assets and liabilities provides a means of tempering fluctuating interest rates and maintaining net interest margins through periods of changing interest rates. The Company monitors interest rate sensitive assets and liabilities to determine the overall interest rate position over various time frames.

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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 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 300 basis point increase and 100 basis point decrease in market interest rates:

	2015			2014			ALCO
Changes In Interest Rate (basis points)	Result			Result			Guidelines
Net Interest Income Change
+300		-1.3	%		2.2	%		15	%
+200		-0.6	%		1.9	%		10	%
+100		-0.2	%		1.2	%		5	%
-100		-2.8	%		-4.0	%		5	%
Net Present Value Of Equity Change
+300		-8.4	%		-4.6	%		20	%
+200		-4.5	%		-1.9	%		15	%
+100		-1.3	%		0.8	%		10	%
-100		-3.5	%		-6.7	%		10	%

All interest rate change results fall within policy limits for the year ended December 31, 2015 and 2014. 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.

With the largest amount of interest sensitive assets and liabilities maturing within twelve months, the Company monitors this area most closely. Early withdrawal of deposits, prepayments of loans and loan delinquencies are some of the factors that can impact actual results in comparison to our simulation analysis. In addition, changes in rates on interest sensitive assets and liabilities may not be equal, which could result in a change in net interest margin.

Interest rate sensitivity management provides some degree of protection against net interest income volatility. It is not possible nor necessarily desirable to attempt to eliminate this risk completely by matching interest sensitive assets and liabilities. Other factors, such as market demand, interest rate outlook, regulatory restraint and strategic planning also have an effect on the desired balance sheet structure.

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Item 8. Financial Statements and Supplementary Financial Data.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Farmers National Banc Corp. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(1) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of; our principal executive and principal financial officers and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles and includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the 2013 Internal Control-Integrated Framework. Based on that assessment, we believe that, as of December 31, 2015, our internal control over financial reporting is effective based on those criteria.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting excluded NBOH and Tri-State, of which the Company acquired all outstanding shares during year-end 2015.  These acquired entities represented, in the aggregate, 36% and 23% of consolidated total assets and consolidated net interest income, respectively, of the Company as of and for the year ended December 31, 2015 and are more fully discussed in Note 2 to our consolidated financial statements. Under guidelines established by the SEC, companies are allowed to exclude acquisitions from their first assessment of internal control over financial reporting following the date of the acquisition.

Crowe Horwath LLP has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015, as stated in their report dated March 10, 2016.

/s/ Kevin J. Helmick	/s/ Carl D. Culp
Kevin J. Helmick	Carl D. Culp
President and Chief Executive Officer	Executive Vice President and Treasurer

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Farmers National Banc Corp.

Canfield, Ohio

We have audited the accompanying consolidated balance sheets of Farmers National Banc Corp. (the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2015. We also have audited the Company’s internal control over financial reporting as of December 31, 2015, based on criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  

As permitted, the Corporation excluded the operations of financial institutions acquired during 2015, which is described in Note 2 of the consolidated financial statements, from the scope of management’s report on internal control over financial reporting.  As such, it has also been excluded from the scope of our audit of internal control over financial reporting.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Farmers National Banc Corp. as of December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in the 2013 Internal Control – Integrated Framework issued by COSO.

	Crowe Horwath LLP
Cleveland, Ohio
March 10, 2016

44

CONSOLIDATED BALANCE SHEETS

(Table Dollar Amounts in Thousands except Per Share Data)

December 31,		2015			2014
ASSETS
Cash and due from banks	$	22,500		$	11,410
Federal funds sold and other		33,514			16,018
TOTAL CASH AND CASH EQUIVALENTS		56,014			27,428
Securities available for sale		394,312			389,829
Loans held for sale		1,769			511
Loans		1,296,865			663,852
Less allowance for loan losses		8,978			7,632
NET LOANS		1,287,887			656,220
Premises and equipment, net		24,190			17,049
Goodwill		35,090			5,591
Other intangibles		7,821			3,222
Bank owned life insurance		29,234			16,367
Other assets		33,585			20,750
TOTAL ASSETS	$	1,869,902		$	1,136,967
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	314,650		$	184,697
Interest-bearing		1,094,397			731,006
TOTAL DEPOSITS		1,409,047			915,703
Short-term borrowings		225,832			69,136
Long-term borrowings		22,153			18,381
Other liabilities		14,823			10,187
TOTAL LIABILITIES		1,671,855			1,013,407
Commitments and contingent liabilities (Note 12)
Stockholders' equity
Common Stock - Authorized 35,000,000 shares; issued 27,590,531 in 2015 and    19,031,059 in 2014		176,287			106,021
Retained earnings		26,316			20,944
Accumulated other comprehensive income		133			1,093
Treasury stock, at cost; 646,247 shares in 2015 and 622,447 shares in 2014		(4,689	)		(4,498	)
TOTAL STOCKHOLDERS' EQUITY		198,047			123,560
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,869,902		$	1,136,967

See accompanying notes.

45

CONSOLIDATED STATEMENTS OF INCOME

(Table Dollar Amounts in Thousands except Per Share Data)

Years ended December 31,		2015		2014		2013
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	44,657	$	30,901	$	30,717
Taxable securities		5,903		7,282		7,062
Tax exempt securities		2,951		2,523		2,949
Dividends		287		190		196
Federal funds sold and other interest income		29		19		35
TOTAL INTEREST AND DIVIDEND INCOME		53,827		40,915		40,959
INTEREST EXPENSE
Deposits		3,489		4,008		4,560
Short-term borrowings		177		46		51
Long-term borrowings		424		525		452
TOTAL INTEREST EXPENSE		4,090		4,579		5,063
NET INTEREST INCOME		49,737		36,336		35,896
Provision for loan losses		3,510		1,880		1,290
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		46,227		34,456		34,606
NONINTEREST INCOME
Service charges on deposit accounts		3,253		2,627		2,370
Bank owned life insurance income, including death benefits		702		459		696
Trust fees		6,156		6,092		5,583
Insurance agency commissions		569		354		243
Security gains		94		457		863
Impairment of equity securities		0		0		(3	)
Retirement plan consulting fees		2,130		1,809		628
Investment commissions		1,172		1,026		989
Net gains on sale of loans		1,101		358		505
Other operating income		3,129		2,121		2,040
TOTAL NONINTEREST INCOME		18,306		15,303		13,914
NONINTEREST EXPENSE
Salaries and employee benefits		26,638		20,878		22,054
Occupancy and equipment		5,452		4,505		4,189
State and local taxes		1,171		878		1,313
Professional fees		3,180		2,451		2,212
Merger related costs		6,392		0		330
Advertising		1,325		1,112		911
FDIC insurance		937		733		719
Intangible amortization		983		767		624
Core processing charges		2,176		1,571		1,354
Other operating expenses		5,725		5,267		5,351
TOTAL NONINTEREST EXPENSE		53,979		38,162		39,057
INCOME BEFORE INCOME TAXES		10,554		11,597		9,463
INCOME TAXES		2,499		2,632		1,683
NET INCOME	$	8,055	$	8,965	$	7,780
EARNINGS PER SHARE:
Basic and Diluted	$	0.36	$	0.48	$	0.41

See accompanying notes.

46

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Table Dollar Amounts in Thousands except Per Share Data)

Years ended December 31,		2015			2014			2013
NET INCOME	$	8,055		$	8,965		$	7,780
Other comprehensive income (loss):
Net unrealized holding gains (losses) on available for sale securities		(1,403	)		10,486			(19,310	)
Reclassification adjustment for gains realized in income		(94	)		(457	)		(860	)
Net unrealized holding gains (losses)		(1,497	)		10,029			(20,170	)
Income tax effect		524			(3,510	)		7,060
Unrealized holding gains (losses), net of reclassification and tax		(973	)		6,519			(13,110	)
Change in funded status of post-retirement health plan		20			60			(3	)
Income tax effect		(7	)		(21	)		1
Change in funded status of post-retirement health plan, net of tax		13			39			(2	)
Other comprehensive income (loss), net of tax		(960	)		6,558			(13,112	)
TOTAL COMPREHENSIVE INCOME (LOSS)	$	7,095		$	15,523		$	(5,332	)

See accompanying notes.

47

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Table Dollar Amounts in Thousands except Per Share Data)

Years ended December 31,		2015			2014			2013
COMMON STOCK
Balance at beginning of year	$	106,021		$	105,905		$	104,504
Issued 8,559,472 shares in 2015 and 228,777 in 2013 as part of    business combinations		69,780			0			1,400
Stock compensation expense for 320,980 unvested shares in 2015    and 46,957 in 2014		486			116			1
Balance at end of year		176,287			106,021			105,905
RETAINED EARNINGS
Balance at beginning of year		20,944			14,215			8,683
Net income		8,055			8,965			7,780
Dividends declared:
$.12 cash dividends per share in 2015, 2014 and 2013		(2,683	)		(2,236	)		(2,248	)
Balance at end of year		26,316			20,944			14,215
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance at beginning of year		1,093			(5,465	)		7,647
Other comprehensive income (loss)		(960	)		6,558			(13,112	)
Balance at end of year		133			1,093			(5,465	)
TREASURY STOCK, AT COST
Balance at beginning of year		(4,498	)		(1,648	)		(42	)
Reissued 5,000 treasury shares to satisfy exercised stock options		0			32			0
Reissued 3,000 treasury shares under the Equity Incentive Plan		22			0			0
Purchased 26,800 shares in 2015, 372,368 shares in 2014 and    247,845 shares in 2013		(213	)		(2,882	)		(1,606	)
Balance at end of year		(4,689	)		(4,498	)		(1,648	)
TOTAL STOCKHOLDERS' EQUITY AT END OF YEAR	$	198,047		$	123,560		$	113,007

See accompanying notes.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(Table Dollar Amounts in Thousands except Per Share Data)

Years ended December 31,	2015			2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	8,055		$	8,965		$	7,780
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses		3,510			1,880			1,290
Depreciation and amortization		2,751			1,981			1,945
Net amortization of securities		2,275			1,472			2,646
Security gains		(94	)		(457	)		(863	)
Stock compensation expense		486			116			0
Impairment of equity securities		0			0			3
Loss on sale of other real estate owned		286			53			75
Earnings on bank owned life insurance		(702	)		(459	)		(478	)
Income recognized from death benefit on bank owned life insurance		0			0			(218	)
Origination of loans held for sale		(46,201	)		(15,911	)		(25,085	)
Proceeds from loans held for sale		46,455			15,916			29,056
Net gains on sale of loans		(1,101	)		(358	)		(505	)
Net change in other assets and liabilities		(9,397	)		(946	)		(1,394	)
NET CASH FROM OPERATING ACTIVITIES		6,323			12,252			14,252
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and repayments of securities available for sale		63,243			49,401			75,015
Proceeds from sales of securities available for sale		102,257			57,170			94,016
Purchases of securities available for sale		(72,683	)		(64,400	)		(149,886	)
Loan originations and payments, net		(139,656	)		(35,352	)		(45,529	)
Proceeds from sale of other real estate owned		553			337			282
Purchase of bank owned life insurance		(6,000	)		0			0
Proceeds from BOLI death benefit		0			0			329
Proceeds from sale of land and building		723			0			118
Additions to premises and equipment		(1,299	)		(972	)		(215	)
Net cash received (paid) in business combinations		29,749			0			(2,111	)
NET CASH FROM INVESTING ACTIVITIES		(23,113	)		6,184			(27,981	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits		(44,659	)		487			(3,793	)
Net change in short-term borrowings		91,159			(22,481	)		1,731
Repayments of long-term borrowings		(3,228	)		(1,441	)		(601	)
New advances for long term borrowing		5,000			10,000			10,000
Cash dividends paid		(2,683	)		(2,236	)		(2,248	)
Proceeds from reissuance of treasury shares		0			32			0
Repurchase of common shares		(213	)		(2,882	)		(1,606	)
NET CASH FROM FINANCING ACTIVITIES		45,376			(18,521	)		3,483
NET CHANGE IN CASH AND CASH EQUIVALENTS		28,586			(85	)		(10,246	)
Beginning cash and cash equivalents		27,428			27,513			37,759
Ending cash and cash equivalents	$	56,014		$	27,428		$	27,513
Supplemental cash flow information:
Interest paid	$	4,047		$	4,623		$	5,095
Income taxes paid	$	2,620		$	1,925		$	1,130
Supplemental noncash disclosures:
Transfer of loans and property to other real estate owned	$	888		$	368		$	193
Issuance of stock for business combinations	$	69,780		$	0		$	1,400
Contingent consideration for NAI acquisition	$	0		$	0		$	920
Security purchases not settled	$	1,338		$	0		$	0

See accompanying notes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Table Dollar Amounts In Thousands except Per Share Data)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include the accounts of Farmers National Banc Corp. and its wholly-owned subsidiaries, The Farmers National Bank (“Bank”) of Canfield, Farmers Trust Company (“Trust”) and National Associates, Inc. (“NAI”). The Company acquired First National Bank of Orrville (“First National Bank”) a subsidiary of National Bancshares Corporation (“NBOH”) and 1^st National Community Bank (“FNCB”) a subsidiary of Tri-State 1^st Banc, Inc. (“Tri-State”) during 2015 and consolidated all activity of both acquisitions within the Bank, see Note 2.  The consolidated financial statements also include the accounts of the Farmers National Bank of Canfield’s subsidiaries; Farmers National Insurance (“Insurance”) and Farmers of Canfield Investment Co. (“Investments”).  Together the entities are referred to as “the Company.” All significant intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations: The Company provides full banking services, including wealth management services and mortgage banking activity, through the Bank. As a national bank, the Bank is subject to regulation of the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The primary area served by the Bank is the northeastern region of Ohio through thirty eight (38) locations.  With the acquisition of FNCB the Bank has added one branch location in southwestern Pennsylvania.  The Company provides trust services through its Trust subsidiary, retirement consulting services through its NAI subsidiary and insurance services through the Bank’s Insurance subsidiary.  The primary purpose of Investments, the new subsidiary of the Bank in 2014, is to invest in municipal securities. Farmers Trust Company has a state-chartered bank license to conduct trust business from the Ohio Department of Commerce – Division of Financial Institutions.

Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.

Cash Flows: Cash and cash equivalents include cash on hand, deposits with other financial institutions and federal funds sold. Generally, federal funds are purchased and sold for one-day periods. Net cash flows are reported for loan and deposit transactions, short term borrowings, and other assets and liabilities.

Securities Available for Sale: Debt securities are classified as available for sale when they might be sold before maturity. Equity securities with readily determinable fair values are classified as available for sale. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method. Purchases are recorded on the trade date.

Management evaluates securities for other-than-temporary impairment (OTTI) on at least a quarterly basis, and more frequently when economic or market conditions warrant. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. 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) other-than-temporary impairment (OTTI) related to other factors, which is recognized in other comprehensive income. 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.

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are charged to earnings.

Mortgage loans held for sale are sold with or without servicing rights released. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

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Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, and an allowance for loan losses. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate.

Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level yield method without anticipating prepayments. Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

For all classes of loans, when interest accruals are discontinued, interest accrued but not received for loans placed on non-accrual is reversed against interest income. Interest on such loans is thereafter recorded on a cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Purchased Credit Impaired Loans: The Company purchased loans that have shown evidence of credit deterioration since origination through the acquisition of First National Bank. These loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. The Company estimates the amount and timing of expected cash flows for each loan, and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan. The excess of the loan’s contractual principal and interest over expected cash flows is not recorded.

Over the life of the loan, expected cash flows continue to be estimated.  If the present value of expected cash flows is less than the carrying amount, a loss is recorded as a provision for loan losses.  If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

Derivatives: Derivative financial instruments are recognized as assets or liabilities at fair value. The Company’s derivatives are interest-rate swap agreements, which are used as part of its asset and liability management strategy to help manage its interest rate risk position. The Company does not use derivatives for trading or balance sheet hedging purposes. The derivative transactions are considered instruments with no hedging designation, otherwise known as stand-alone derivatives. Changes in the fair value of the derivatives are reported currently in earnings, as other noninterest income.

Concentration of Credit Risk: There are no significant concentrations of loans to any one industry or customer. However, most of the Company’s business activity is with customers located within Northeastern Ohio. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy of a 9 county area. Loans secured by real estate represent 68% of the total portfolio and changes related to the real estate markets are monitor by management.

Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred loan losses, increased by the provision for loan losses and decreased by charge-offs less recoveries. The allowance is based on management’s judgment taking into consideration past loss experience, reviews of individual loans, current economic conditions and other factors considered relevant by management at the financial statement date. While management uses the best information available to establish the allowance, future adjustments to the allowance may be necessary, which may be material, if economic conditions differ substantially from the assumptions used in estimating the allowance. If additions to the original estimate of the allowance for loan losses are deemed necessary, they will be reported in earnings in the period in which they become reasonably estimable and probable. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.

Acquired loans are individually evaluated and for those purchased loans without evidence of credit deterioration, management evaluates each reviewed loan using an internal grading system with a grade assigned to each loan at the date of acquisition. To the extent that any purchased loan is not specifically reviewed, such loan is assumed to have characteristics similar to the characteristics of the acquired portfolio of purchased loans. The grade for each purchased loan without evidence of credit deterioration is reviewed subsequent to the date of acquisition any time a loan is renewed or extended or at any time information becomes available to the Company that provides material insight regarding the loan’s performance, the status of the borrower or the quality or value of the underlying collateral. To the extent that current information indicates it is probable that the Company will collect all amounts according to the contractual terms thereof, such loan is not considered impaired and is not individually considered in the determination of the required allowance for loan losses. To the extent that current information indicates it is probable that the Company will not be

51

able to collect all amounts according to the contractual terms thereof, such loan is considered impaired and is considered in the determination of the required level of allowance.

In determining the day 1 fair values of purchased loans without evidence of credit deterioration at the date of acquisition, management includes (i) no carry over of any previously recorded allowance for loan losses and (ii) an adjustment of the unpaid principal balance to reflect an appropriate market rate of interest, given the risk profile and grade assigned to each loan. This adjustment is accreted into earnings as a yield adjustment, using the effective yield method, over the remaining life of each loan.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is considered impaired when, based on the current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Loans, for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Impairment is measured on a loan by loan basis for commercial and commercial real estate loans over $750 thousand, individually or in the aggregate, by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans are collectively evaluated for impairment and accordingly, they are not separately identified for impairment disclosures. Non-real estate secured consumer loans in bankruptcy where debt has not been reaffirmed are considered troubled debt restructurings and are evaluated individually to ensure that accurate accounting treatment is in place.

The Company considers the guidance on troubled debt restructuring for individual consumer and residential loans when evaluating for impairment disclosure. Troubled debt restructurings are measured at the present value of estimated future cash flow using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced for the most recent twelve quarters. The formula for calculating the allowance for loan losses requires that the historical loss percentage be applied to homogeneous and all risk rated loans. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The following portfolio segments have been identified:

Commercial Loans. Commercial credit is extended to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or other projects. The majority of these borrowers are customers doing business within our geographic regions. These loans are generally underwritten individually and secured with the assets of the company and the personal guarantee of the business owners. Commercial loans are made based primarily on the historical and projected cash flow of the borrower and the underlying collateral provided by the borrower.

Commercial Real Estate Loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as cash flow loans and the repayment of these loans is largely dependent on the successful operation of the property. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and property type.

Consumer Loans. Consumer loans are primarily comprised of loans made directly to consumers and indirectly through automobile dealerships. These loans have a specific matrix which consists of several factors including debt to income, type of collateral and loan

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to collateral value, credit history and relationship with the borrower. Consumer lending uses risk-based pricing in the underwriting process.

Residential Real Estate Loans. Residential mortgage loans represent loans to consumers for the purchase or refinance of a residence. These loans are generally financed up to 15 years, and in most cases, are extended to borrowers to finance their primary residence. Real estate market values at the time of origination directly affect the amount of credit extended and, in the event of default, subsequent changes in these values may impact the severity of losses.

Servicing Rights:When mortgage loans are sold and servicing rights are retained the servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. The Company compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non‑interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.  Servicing assets are evaluated for impairment based upon the fair value of the assets compared to carrying amount. Any impairment is reported as a valuation allowance, to the extent that fair value is less than the capitalized amount for a grouping. There was no valuation allowance impairment against servicing assets as of December 31, 2015.

Servicing fee income is recorded when earned for servicing loans based on a contractual percentage of the outstanding principal or a fixed amount per loan. The amortization of mortgage servicing rights is netted against loan servicing fee income. Servicing fees, late fees and ancillary fees related to loan servicing are not considered significant for financial reporting.

Foreclosed Assets: 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. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost, less accumulated depreciation. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 5 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 10 years.

Restricted Stock: The Bank is a member of the Federal Home Loan Bank (FHLB) system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. The Bank is also a member of and owns stock in the Federal Reserve Bank. These stocks are carried at cost, classified as restricted securities included in other assets, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Bank Owned Life Insurance: The Company has purchased life insurance policies on certain key officers. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Long-term Assets: Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

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Goodwill and Other Intangible Assets: Goodwill resulting from a business combination is generally determined as the excess of the fair value of the consideration transferred over the fair value of the net assets acquired as of the acquisition date. Goodwill acquired in a purchase business combination and determined to have an indefinite useful life is not amortized, but tested for impairment at least annually. The Company has selected September 30 as the date to perform the annual goodwill impairment tests associated with the acquisition of the Trust, NAI, First National Bank and FNCB. Intangible assets with definite useful lives are amortized over their estimated useful lives. Goodwill is the only intangible asset with an indefinite life on the balance sheet. Core deposit intangible assets arising from bank acquisitions are amortized over their estimated useful lives of 7 to 8 years. Non-compete contracts are amortized on a straight line basis, over the term of the agreements. Customer relationship and trade name intangibles are amortized over an average of 13 years on an accelerated method.

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Stock-Based Compensation: Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. The market price of the Company’s common stock at the grant date is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Retirement Plans: Employee 401(k) and profit sharing plan expense is the amount of matching and discretionary contributions. Deferred compensation and supplemental retirement plan expense allocates the benefits over years of service.

Earnings per Common Share: Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock equity awards. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the financial statements.

Comprehensive Income (Loss): Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized gains and losses on securities available for sale and changes in the funded status of the post-retirement health plan, which are recognized as separate components of equity, net of tax effects.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the financial statements.

Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank (“FRB”) was required to meet regulatory reserve and clearing requirements. The Company had deposits with the FRB of $29.4 million at December 31, 2015 and $14.0 million at December 31, 2014.

Equity: Treasury stock is carried at cost.

Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank and Trust to the holding company or by the holding company to shareholders.

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Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions as more fully disclosed in Note 6. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates.

Operating Segments: While the 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 three lines of business, the Bank, Trust and Retirement Consulting segments. The Company discloses segment information in Note 21.

Reclassification: Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or stockholders’ equity.

Adoption of New Accounting Standards:  In September 2015, the FASB amended existing guidance under Accounting Standards Update (ASU) 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The amendments require that an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. These amendments are effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2015. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-11, "Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures." The new guidance aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as repurchase financings with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The amendments in the ASU require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The amendments in the ASU also require expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The Company adopted the amendments in this ASU effective January 1, 2015. In addition, the expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings were effective for the Company’s reporting period ending June 30, 2015. All of the Company's repurchase agreements are typical in nature (i.e., not repurchase-to-maturity transactions or repurchase agreements executed as a repurchase financing) and are accounted for as secured borrowings. As such, the adoption of ASU No. 2014-11 did not have a material impact on the Company's consolidated financial statements.

Newly Issued, Not Yet Effective Accounting Standards: In January, 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, affecting public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. Requiring most equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income.  The ASU will take effect for fiscal years beginning after December 15, 2017.  The adoption of this standard is not expected to have a material effect on the Company’s consolidated financial statements.

NOTE 2 - BUSINESS COMBINATIONS

On October 1, 2015, the Company completed the acquisition of Tri-State, the parent company of FNCB. The transaction involved both cash and 1,296,517 shares of stock totaling $14.3 million. Pursuant to the terms of the merger agreement, common shareholders of Tri-State received 1.747 common shares, without par value, of the Company or $14.20 in cash, for each common share of Tri-State, subject to proration provisions specified in the merger agreement that provide for a targeted aggregate split of total consideration consisting of 75% shares of Farmers’ common stock and 25% cash. Preferred shareholders of Tri-State received $13.60 in cash for each share of Series A Preferred Stock, without par value, of Tri-State.

Goodwill of $2.8 million, which is recorded on the balance sheet, 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.  

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The fair value of other intangible assets of $1.2 million is related to core deposits.  The following table summarizes the consideration paid for Tri-State and the amounts of the assets acquired and liabilities assumed on the closing date of the acquisition.

Consideration
Cash	$	3,607
Stock		10,733
Fair value of total consideration transferred	$	14,340
Assets acquired and liabilities assumed
Cash and due from financial institutions	$	13,553
Securities available for sale		48,300
Loans, net		66,374
Premises and equipment		1,935
Bank owned life insurance		3,274
Core deposit intangible		1,173
Other assets		1,329
Total assets		135,938
Fair value of liabilities assumed
Deposits		114,342
Long-term borrowings		2,002
Accrued interest payable and other liabilities		8,072
Total liabilities		124,416
Net assets acquired	$	11,522
Goodwill created		2,818
Total net assets acquired	$	14,340

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

On June 19, 2015, the Company completed the acquisition of all outstanding stock of NBOH, the parent company of First National Bank. The transaction involved both cash and 7,262,955 shares of stock totaling $74.8 million. First National Bank branches became branches of Farmers Bank.  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, 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.

The acquisition provides an attractive mix of additional loans and deposits and helps the Company achieve additional operating scale and drives earnings per share growth. In addition to the financial benefits, the merger is a significant step in Company’s strategy to expand its footprint.  The combined company creates a top-performing midwest community bank that has the scale, product depth and efficiency to compete effectively.

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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
Loans, net		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		65,537
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

The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows.  However, the Company believes that all contractual cash flows related to these financial instruments will be collected. As such, these receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans, which have shown evidence of credit deterioration since origination. Receivables acquired that were not subject to these requirements include non-impaired loans and customer receivables with a fair value and gross contractual amounts receivable of $429.7 million on the date of acquisition.

The following table presents pro forma information as if both acquisitions that occurred in 2015 actually took place at the beginning of 2014.  The pro forma information includes adjustments for merger related costs, 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.

	2015		2014
Net interest income	$	62,524	$	58,098
Net income	$	12,750	$	15,316
Basic and diluted earnings per share	$	0.47	$	0.57

On July 1, 2013, the Company completed the acquisition of all outstanding stock of the retirement planning consultancy 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 with an initial fair value of $920 thousand. The measurement period is defined, in essence, as “the twelve month period ending on the second anniversary of the closing date.”  Based on actual EBITDA growth the Company recognized $1.3 million of expense during the year ended December 31, 2015 after writing the fair value of the contingent consideration down to $156 thousand in 2014.  The final payment of $1.5 million was made to satisfy the contingent consideration clause of the agreement during September 2015.

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Goodwill of $2.6 million, which is recorded on the balance sheet, arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies.  The goodwill is not expected to be deductible for income tax purposes.  The goodwill was partially impaired as described in Note 8, by an amount equal to the reduction in the contingent consideration payable. The two adjustments offset resulting in a zero impact to the Company’s consolidated statements of income for year ended December 31, 2014.  After the impairment in 2014 the NAI goodwill was $1.9 million at year ended 2015 and 2014. The fair value of other intangible assets of $2.3 million is related to client relationships, company name and noncompetition agreements.  The intangible assets had a carrying value of $1.3 million at December 31, 2015.

NOTE 3 - SECURITIES AVAILABLE FOR SALE

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at December 31, 2015 and 2014 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized
	2015	Cost		Gains		Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities		$	11,120	$	38	$	(52	)	$	11,106
State and political subdivisions			136,781		2,354		(412	)		138,723
Corporate bonds			1,134		5		(5	)		1,134
Mortgage-backed securities - residential			197,289		1,433		(2,135	)		196,587
Collateralized mortgage obligations			28,035		0		(870	)		27,165
Small Business Administration			19,755		1		(457	)		19,299
Equity securities			203		127		(32	)		298
Totals		$	394,317	$	3,958	$	(3,963	)	$	394,312

				Gross		Gross
		Amortized		Unrealized		Unrealized
	2014	Cost		Gains		Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities		$	24,515	$	418	$	(112	)	$	24,821
State and political subdivisions			90,369		2,183		(671	)		91,881
Corporate bonds			936		3		(8	)		931
Mortgage-backed securities - residential			223,216		2,395		(1,249	)		224,362
Collateralized mortgage obligations			25,988		98		(911	)		25,175
Small Business Administration			23,193		1		(775	)		22,419
Equity securities			120		121		(1	)		240
Totals		$	388,337	$	5,219	$	(3,727	)	$	389,829

The proceeds from sales of available-for-sale securities and the associated gains and losses were as follows:

		2015			2014			2013
Proceeds	$	102,257		$	57,170		$	94,016
Gross gains		908			758			1,924
Gross losses		(814	)		(301	)		(1,061	)

The tax provision related to these net realized gains was $33 thousand, $160 thousand and $301 thousand respectively.

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. Securities not due at a single maturity date are shown separately.

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Available for sale		December 31, 2015
		Amortized
Maturity		Cost		Fair Value
Within one year		$	16,564	$	16,697
One to five years			68,354		69,023
Five to ten years			51,655		52,775
Beyond ten years			12,462		12,468
Mortgage-backed securities, collateralized mortgage obligations and Small Business Administration			245,079		243,051
	Totals	$	394,114	$	394,014

Securities with a carrying amount of $219 million at December 31, 2015, $149 million at December 31, 2014 and $164 million at December 31, 2013 were pledged to secure public deposits and repurchase agreements. The Trust company had securities, with a carrying amount of $100 thousand, at year-end 2015, 2014 and 2013, pledged to qualify as a fiduciary in the State of Ohio.

In each year, there were no holdings of any other issuer that exceeded 10% of stockholders’ equity, other than the U.S. Government,  its agencies and its sponsored entities.

The following table summarizes the investment securities with unrealized losses at December 31, 2015 and 2014 aggregated by major security type and length of time in a continuous unrealized loss position.

2015
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and U.S. government
sponsored entities	$	6,044	$	(51	)	$	199	$	(1	)	$	6,243	$	(52	)
State and political subdivisions		22,016		(167	)		12,635		(245	)		34,651		(412	)
Corporate bonds		102		(1	)		478		(4	)		580		(5	)
Mortgage-backed securities - residential		79,301		(1,044	)		40,794		(1,091	)		120,095		(2,135	)
Collateralized mortgage obligations		14,342		(169	)		12,695		(701	)		27,037		(870	)
Small Business Administration		0		0			19,237		(457	)		19,237		(457	)
Equity securities		88		(32	)		0		0			88		(32	)
Total temporarily impaired	$	121,893	$	(1,464	)	$	86,038	$	(2,499	)	$	207,931	$	(3,963	)

2014
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and U.S. government
sponsored entities	$	498	$	(2	)	$	10,159	$	(110	)	$	10,657	$	(112	)
State and political subdivisions		987		(11	)		24,063		(660	)		25,050		(671	)
Corporate bonds		0		0			476		(8	)		476		(8	)
Mortgage-backed securities - residential		25,770		(202	)		55,576		(1,047	)		81,346		(1,249	)
Collateralized mortgage obligations		0		0			19,541		(911	)		19,541		(911	)
Small Business Administration		0		0			22,319		(775	)		22,319		(775	)
Equity securities		26		(1	)		0		0			26		(1	)
Total temporarily impaired	$	27,281	$	(216	)	$	132,134	$	(3,511	)	$	159,415	$	(3,727	)

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The Company’s equity securities include local and regional bank holdings. During the year ended December 31, 2013 a $3 thousand pre-tax charge was recognized for the other-than-temporary decline in fair value on these equity holdings. No other-than-temporary impairments were recognized during 2015 or 2014.  If an other-than-temporary impairment were to occur, the amount of the impairment recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it would be required to sell the security before recovery of its amortized cost basis. The previous amortized cost basis less the impairment recognized in earnings becomes the new amortized cost basis of the investment.

As of December 31, 2015, the Company’s security portfolio consisted of 486 securities, 178 of which were in an unrealized loss position. The majority of unrealized losses are related to the Company’s holdings in securities issued by state and political subdivisions, mortgage-backed securities - residential, collateralized mortgage obligations and Small Business Administration, as discussed below:

Securities issued by State and Political subdivisions

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 and does not expect to be required to sell these securities before their anticipated recovery. The fair value is expected to recover as the securities approach their maturity date.

Mortgage-backed securities - residential

All of the Company’s holdings of mortgage-backed securities—residential at year end 2015 and 2014 were issued by U.S. Government sponsored enterprises. 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 other-than-temporarily impaired at December 31, 2015 and 2014.

Collateralized mortgage obligations

The Company’s portfolio includes collateralized mortgage obligations issued by U.S. Government sponsored enterprises. The decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality. The Company does not have the intent to sell these collateralized mortgage obligations and it is likely that it will not be required to sell the securities before their anticipated recovery. The Company monitors all securities to ensure adequate credit support and as of December 31, 2015 and 2014, the Company believes there is no other-than-temporary impairment.

Small Business Administration

The Company’s holdings of Small Business Administration securities are issued and backed by the full faith and credit of the U.S. Government. Unrealized losses on these Small Business Administration securities 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 securities 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 other-than-temporarily impaired at December 31, 2015 and 2014.

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NOTE 4 - LOANS

Loans at year end were as follows:

	2015			2014
Originated loans:
Commercial real estate
Owner occupied	$	113,160		$	74,829
Non-owner occupied		139,502			122,228
Other		50,855			26,137
Commercial		157,447			120,493
Residential real estate
1-4 family residential		179,657			153,055
Home equity lines of credit		41,171			31,255
Consumer
Indirect		127,335			120,931
Direct		17,325			9,071
Other		4,508			3,626
Subtotal		830,960			661,625
Net deferred loan costs		2,731			2,227
Allowance for loan losses		(8,978	)		(7,632	)
Total originated loans		824,713			656,220
Acquired loans:
Commercial real estate
Owner occupied		131,673			0
Non-owner occupied		28,045			0
Other		23,536			0
Commercial		73,621			0
Residential real estate
1-4 family residential		133,701			0
Home equity lines of credit		40,929			0
Consumer
Direct		31,465			0
Other		204			0
Total acquired loans		463,174			0
Net loans	$	1,287,887		$	656,220

Purchased credit impaired loans

As part of the NBOH acquisition during 2015 the Company acquired various loans that displayed evidence of deterioration of credit quality since origination and which was probable that all contractually required payments would not be collected.  The carrying amounts and contractually required payments of these loans which are included in the loan balances above are summarized in the following tables:

	2015
Commercial real estate
Owner occupied	$	986
Non-owner occupied		501
Commercial		1,576
Total outstanding balance	$	3,063
Carrying amount, net of allowance of $31	$	2,215

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Accretable yield, or income expected to be collected, is shown in the table below:

	2015
Beginning balance	$	0
New loans purchased		361
Accretion of income		(38	)
Ending balance	$	323

Contractually required payments receivable on loans purchased credit impaired acquired during the year:

	2015
Commercial real estate
Owner occupied	$	1,063
Non-owner occupied		586
Commercial		1,476
Total	$	3,125
Cash flows expected to be collected at acquisition	$	2,764
Fair value of acquired loans at acquisition	$	2,538

The key assumptions considered in evaluating expected cash flows include probability of default and the amount of actual prepayments after the acquisition date. Prepayments affect the estimated life of the loans and could change the amount of interest income and principal expected to be collected. In reforecasting future estimated cash flows, credit loss expectations are adjusted as necessary.  There were no adjustments to forecasted cash flows that impacted the allowance for loan losses for the year ended December 31, 2015.

The following tables present the activity in the allowance for loan losses by portfolio segment for years ended December 31, 2015, 2014 and 2013:

December 31, 2015	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	2,676		$	1,420		$	1,689		$	1,663		$	184	$	7,632
Provision for loan losses		857			234			354			1,776			289		3,510
Loans charged off		(536	)		(290	)		(320	)		(2,058	)		0		(3,204	)
Recoveries		130			9			122			779			0		1,040
Total ending allowance balance	$	3,127		$	1,373		$	1,845		$	2,160		$	473	$	8,978

December 31, 2014	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	2,752		$	1,219		$	1,964		$	1,419		$	214		$	7,568
Provision for loan losses		(50	)		357			233			1,370			(30	)		1,880
Loans charged off		(151	)		(185	)		(585	)		(2,213	)		0			(3,134	)
Recoveries		125			29			77			1,087			0			1,318
Total ending allowance balance	$	2,676		$	1,420		$	1,689		$	1,663		$	184		$	7,632

62

December 31, 2013	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	3,392		$	1,453		$	1,569		$	951		$	264		$	7,629
Provision for loan losses		(306	)		(397	)		674			1,369			(50	)		1,290
Loans charged off		(505	)		(99	)		(326	)		(1,723	)		0			(2,653	)
Recoveries		171			262			47			822			0			1,302
Total ending allowance balance	$	2,752		$	1,219		$	1,964		$	1,419		$	214		$	7,568

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 December 31, 2015 and 2014.  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.

December 31, 2015	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	429	$	5	$	63	$	0	$	0	$	497
Collectively evaluated for impairment		2,698		1,337		1,782		2,160		473		8,450
Acquired loans		0		0		0		0		0		0
Acquired with deteriorated credit quality		0		31		0		0		0		31
Total ending allowance balance	$	3,127	$	1,373	$	1,845	$	2,160	$	473	$	8,978
Loans:
Loans individually evaluated for impairment	$	5,853	$	712	$	3,414	$	103	$	0	$	10,082
Loans collectively evaluated for impairment		296,866		156,415		217,023		153,305		0		823,609
Acquired loans		181,987		72,673		174,630		31,669		0		460,959
Acquired with deteriorated credit quality		1,267		948		0		0		0		2,215
Total ending loans balance	$	485,973	$	230,748	$	395,067	$	185,077	$	0	$	1,296,865

December 31, 2014	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	514	$	272	$	88	$	0	$	0	$	874
Collectively evaluated for impairment		2,162		1,148		1,601		1,663		184		6,758
Total ending allowance balance	$	2,676	$	1,420	$	1,689	$	1,663	$	184	$	7,632
Loans:
Loans individually evaluated for impairment	$	7,139	$	1,940	$	3,425	$	93	$	0	$	12,597
Loans collectively evaluated for impairment		215,434		118,210		180,428		137,183		0		651,255
Total ending loans balance	$	222,573	$	120,150	$	183,853	$	137,276	$	0	$	663,852

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The following tables present information related to impaired loans by class of loans as of and for year ended December 31, 2015, 2014 and 2013. The recorded investment in loans excludes accrued interest receivable due to immateriality.

December 31, 2015	UnpaidPrincipal Balance		Recorded Investment		Allowancefor LoanLosses Allocated		AverageRecorded Investment		InterestIncome Recognized
With no related allowance recorded:
Commercial real estate
Owner occupied	$	2,956	$	2,436	$	0	$	2,080	$	106
Non-owner occupied		343		342		0		372		30
Commercial		834		631		0		433		23
Residential real estate
1-4 family residential		2,575		2,310		0		2,174		147
Home equity lines of credit		283		268		0		260		15
Consumer		214		103		0		81		14
Subtotal		7,205		6,090		0		5,400		335
With an allowance recorded:
Commercial real estate
Owner occupied		1,597		1,595		379		2,008		70
Non-owner occupied		1,480		1,480		50		1,511		79
Commercial		81		81		5		540		4
Residential real estate
1-4 family residential		769		749		61		919		39
Home equity lines of credit		87		87		2		96		4
Consumer		0		0		0		0		0
Subtotal		4,014		3,992		497		5,074		196
Total	$	11,219	$	10,082	$	497	$	10,474	$	531

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December 31, 2014	UnpaidPrincipal Balance		Recorded Investment		Allowancefor LoanLosses Allocated		AverageRecorded Investment		InterestIncome Recognized
With no related allowance recorded:
Commercial real estate
Owner occupied	$	2,448	$	2,318	$	0	$	1,860	$	46
Non-owner occupied		391		391		0		653		20
Commercial		531		511		0		1,273		22
Residential real estate
1-4 family residential		2,421		2,156		0		1,804		79
Home equity lines of credit		476		251		0		263		13
Consumer		185		93		0		166		4
Subtotal		6,452		5,720		0		6,019		184
With an allowance recorded:
Commercial real estate
Owner occupied		2,882		2,882		446		2,104		94
Non-owner occupied		1,548		1,548		68		1,570		81
Commercial		1,444		1,429		272		818		2
Residential real estate
1-4 family residential		944		928		85		1,207		41
Home equity lines of credit		90		90		3		113		5
Consumer		0		0		0		2		0
Subtotal		6,908		6,877		874		5,814		223
Total	$	13,360	$	12,597	$	874	$	11,833	$	407

December 31, 2013	UnpaidPrincipal Balance		Recorded Investment		Allowancefor LoanLosses Allocated		AverageRecorded Investment		InterestIncome Recognized
With no related allowance recorded:
Commercial real estate
Owner occupied	$	4,302	$	3,762	$	0	$	2,643	$	137
Non-owner occupied		491		389		0		438		0
Commercial		1,007		971		0		1,363		25
Residential real estate
1-4 family residential		1,026		961		0		1,462		51
Home equity lines of credit		107		99		0		194		0
Consumer		111		112		0		9		0
Subtotal		7,044		6,294		0		6,109		213
With an allowance recorded:
Commercial real estate
Owner occupied		886		884		91		2,536		39
Non-owner occupied		1,593		1,588		75		1,975		87
Commercial		1,462		1,459		110		594		5
Residential real estate
1-4 family residential		1,458		1,347		190		112		48
Home equity lines of credit		148		147		12		12		0
Consumer		247		251		82		21		0
Subtotal		5,794		5,676		560		5,250		179
Total	$	12,838	$	11,970	$	560	$	11,359	$	392

Cash basis interest income recognized and interest income recognized was materially equal for 2015, 2014 and 2013.

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Nonaccrual loans and loans past due 90 days 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 over 90 days still on accrual by class of loans as of December 31, 2015 and 2014:

	December 31, 2015				December 31, 2014
	Nonaccrual		LoansPastDue 90DaysorMore Still Accruing		Nonaccrual		LoansPastDue 90DaysorMore Still Accruing
Originated loans:
Commercial real estate
Owner occupied	$	3,313	$	0	$	3,315	$	44
Non-owner occupied		345		0		41		0
Commercial		541		73		1,645		0
Residential real estate
1-4 family residential		2,406		336		2,742		195
Home equity lines of credit		127		112		139		40
Consumer
Indirect		266		297		90		193
Direct		30		3		36		0
Other		0		24		0		1
Total originated loans	$	7,028	$	845	$	8,008	$	473
Acquired loans:
Commercial real estate
Owner occupied	$	126	$	18	$	0	$	0
Other		92		0		0		0
Commercial		1,068		0		0		0
Residential real estate
1-4 family residential		458		467		0		0
Home equity lines of credit		125		7		0		0
Consumer
Direct		161		50		0		0
Total acquired loans	$	2,030	$	542	$	0	$	0
Total loans	$	9,058	$	1,387	$	8,008	$	473

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The following tables present the aging of the recorded investment in past due loans as of December 31, 2015 and 2014 by class of loans:

December 31, 2015	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
Originated loans:
Commercial real estate
Owner occupied	$	34	$	0	$	3,313	$	3,347	$	109,532	$	112,879
Non-owner occupied		0		0		345		345		138,824		139,169
Other		112		0		0		112		50,559		50,671
Commercial		0		0		614		614		156,513		157,127
Residential real estate
1-4 family residential		1,694		402		2,742		4,838		174,376		179,214
Home equity lines of credit		62		5		239		306		40,917		41,223
Consumer
Indirect		2,059		525		563		3,147		128,280		131,427
Direct		311		5		33		349		17,124		17,473
Other		13		10		24		47		4,461		4,508
Total originated loans:	$	4,285	$	947	$	7,873	$	13,105	$	820,586	$	833,691
Acquired loans:
Commercial real estate
Owner occupied	$	669	$	0	$	144	$	813	$	130,860	$	131,673
Non-owner occupied		0		0		0		0		28,045		28,045
Other		0		0		92		92		23,444		23,536
Commercial		276		2		1,068		1,346		72,275		73,621
Residential real estate
1-4 family residential		1,994		244		925		3,163		130,538		133,701
Home equity lines of credit		78		11		132		221		40,708		40,929
Consumer
Direct		567		56		211		834		30,631		31,465
Other		0		0		0		0		204		204
Total acquired loans	$	3,584	$	313	$	2,572	$	6,469	$	456,705	$	463,174
Total loans	$	7,869	$	1,260	$	10,445	$	19,574	$	1,277,291	$	1,296,865

December 31, 2014	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
Originated loans:
Commercial real estate
Owner occupied	$	0	$	0	$	3,359	$	3,359	$	71,272	$	74,631
Non-owner occupied		0		0		41		41		121,872		121,913
Other		0		0		0		0		26,029		26,029
Commercial		0		0		1,645		1,645		118,505		120,150
Residential real estate
1-4 family residential		1,892		546		2,937		5,375		147,223		152,598
Home equity lines of credit		205		92		179		476		30,779		31,255
Consumer
Indirect		2,136		406		283		2,825		121,754		124,579
Direct		108		18		36		162		8,909		9,071
Other		17		6		1		24		3,602		3,626
Total loans	$	4,358	$	1,068	$	8,481	$	13,907	$	649,945	$	663,852

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Troubled Debt Restructurings:

Total troubled debt restructurings were $9.3 million and $8.1 million at December 31, 2015 and 2014 respectively. The Company has allocated $528 thousand and $242 thousand of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2015 and 2014. There were no commitments to lend additional amounts to borrowers with loans that were classified as troubled debt restructurings at December 31, 2015 and $25 thousand in commitments at December 31, 2014.  

During the years ending December 31, 2015, 2014 and 2013, 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; a permanent reduction of the recorded investment in the loan; a permanent increase of the recorded investment in the loan due to a protective advance to pay delinquent real estate taxes or advance new monies; a deferral of principal payments; or a legal concession.

Troubled debt restructuring modifications involved a reduction of the notes stated interest rate in the range of 0.38% to 11.51%.  There were also extensions of the maturity dates on these and other troubled debt restructurings in the range of fifteen months to 126 months.

The following tables present loans by class modified as troubled debt restructurings that occurred during the years ending December 31, 2015, 2014 and 2013:

December 31, 2015			Pre- Modification		Post- Modification
	Number of		Outstanding Recorded		Outstanding Recorded
Troubled Debt Restructurings:	Loans		Investment		Investment
Originated loans:
Commercial real estate
Owner occupied		2	$	801	$	801
Commercial		1		8		8
Residential real estate
1-4 family residential		13		760		760
Home equity lines of credit		2		60		60
Indirect		12		104		104
Consumer		1		8		8
Total originated loans		31	$	1,741	$	1,741
Acquired loans:
Commercial		2	$	957	$	957
Total loans		33	$	2,698	$	2,698

The troubled debt restructurings described above increased the allowance for loan losses by $101 thousand and resulted in charge offs of $129 thousand during the year ended December 31, 2015.

December 31, 2014			Pre- Modification		Post- Modification
	Number of		Outstanding Recorded		Outstanding Recorded
Troubled Debt Restructurings:	Loans		Investment		Investment
Commercial real estate
Owner occupied		1	$	303	$	316
Non-owner occupied		2		408		408
Residential real estate
1-4 family residential		21		1,042		1,059
Home equity lines of credit		5		128		128
Indirect		2		37		37
Consumer		1		11		11
Total loans		32	$	1,929	$	1,959

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The troubled debt restructurings described above increased the allowance for loan losses by $11 thousand and resulted in charge offs of $42 thousand during the year ended December 31, 2014.

December 31, 2013			Pre- Modification		Post- Modification
	Number of		Outstanding Recorded		Outstanding Recorded
Troubled Debt Restructurings:	Loans		Investment		Investment
Commercial real estate
Owner occupied		2	$	226	$	239
Commercial		5		649		682
Residential real estate
1-4 family residential		4		131		98
Home equity lines of credit		5		214		214
Indirect		24		188		188
Consumer		1		1		1
Total loans		41	$	1,409	$	1,422

The troubled debt restructurings described above increased the allowance for loan losses by $66 thousand and resulted in charge offs of $50 thousand during the year ended December 31, 2013.

There was one commercial real estate loan for $40 thousand, one residential real estate loan for $1 thousand and one home equity line of credit for $11 thousand modified as troubled debt restructurings for which there were payment defaults within twelve months following the modification during the year December 31, 2015.  All three loans were past due at December 31, 2015.  There was no effect on the provision for loan losses as a result of this default during 2015.

There were four residential real estate loans for which there were payment defaults within twelve months following the modification of the troubled debt restructuring during the year ending December 31, 2014.  Only one of the four loans was past due at December 31, 2014.  There was no effect on the provision for loan losses as a result of this default during 2014.

There were two commercial loans for $204 thousand, one commercial real estate loan for $205 thousand and one residential real estate loan for $35 thousand modified as troubled debt restructuring for which there were payment defaults within twelve months following the modification during the year ending December 31, 2013.  All four loans were past due at December 31, 2013.  There was one indirect loan modified as troubled debt restructuring for which there were payment defaults within twelve months following the modification during the year ending December 31, 2013.  The loan was not past due at December 31, 2013.  There was no additional provision or any impact to the allowance for losses associated with these loans.

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 $750 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. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

69

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.

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

December 31, 2015	Pass		Special Mention		Sub standard		Doubtful		Not Rated		Total
Originated loans:
Commercial real estate
Owner occupied	$	107,222	$	1,069	$	4,588	$	0	$	0	$	112,879
Non-owner occupied		135,847		461		2,861		0		0		139,169
Other		50,376		0		295		0		0		50,671
Commercial		154,215		939		1,973		0		0		157,127
Total originated loans	$	447,660	$	2,469	$	9,717	$	0	$	0	$	459,846
Acquired loans:
Commercial real estate
Owner occupied	$	130,028	$	0	$	1,645	$	0	$	0	$	131,673
Non-owner occupied		26,141		1,340		564		0		0		28,045
Other		22,843		476		217		0		0		23,536
Commercial		69,674		635		3,312		0		0		73,621
Total acquired loans	$	248,686	$	2,451	$	5,738	$	0	$	0	$	256,875
Total loans	$	696,346	$	4,920	$	15,455	$	0	$	0	$	716,721

December 31, 2014	Pass		Special Mention		Sub standard		Doubtful		Not Rated		Total
Commercial real estate
Owner occupied	$	66,036	$	2,534	$	6,061	$	0	$	0	$	74,631
Non-owner occupied		115,159		3,760		2,994		0		0		121,913
Other		25,710		0		319		0		0		26,029
Commercial		114,409		1,566		4,175		0		0		120,150
Total loans	$	321,314	$	7,860	$	13,549	$	0	$	0	$	342,723

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential, consumer and indirect 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 and indirect auto loans based on payment activity. Nonperforming loans are loans past due 90 days and still accruing interest and nonaccrual loans.

	Residential Real Estate				Consumer
December 31, 2015	1-4 Family Residential		HomeEquityLines of Credit		Indirect		Direct		Other
Originated loans:
Performing	$	176,472	$	40,984	$	130,864	$	17,440	$	4,484
Nonperforming		2,742		239		563		33		24
Total originated loans	$	179,214	$	41,223	$	131,427	$	17,473	$	4,508
Acquired loans:
Performing		132,776		40,797		0		31,254		204
Nonperforming		925		132		0		211		0
Total acquired loans	$	133,701	$	40,929	$	0	$	31,465	$	204
Total loans	$	312,915	$	82,152	$	131,427	$	48,938	$	4,712

70

	Residential Real Estate				Consumer
December 31, 2014	1-4 Family Residential		HomeEquityLines of Credit		Indirect		Direct		Other
Performing	$	149,661	$	31,076	$	124,296	$	9,035	$	3,625
Nonperforming		2,937		179		283		36		1
Total	$	152,598	$	31,255	$	124,579	$	9,071	$	3,626

NOTE 5 – LOAN SERVICING

The Company began servicing loans upon the acquisition of First National Bank’s servicing portfolio in June 2015. Mortgage loans serviced for others are not reported as assets. The principal balances of these loans at year-end are as follows:

	2015
Mortgage loan portfolio serviced for:
FHLMC	$	68,605

Custodial escrow balances maintained in connection with serviced loans were $584 thousand at December 31, 2015.

Activity for mortgage servicing rights since the acquisition date of June 18, 2015 is as follows:

	2015
Servicing rights:
Beginning balance	$	347
Additions		166
Amortization to expense		(60	)
Ending balance	$	453

There was no valuation allowance required for mortgage servicing rights at December 31, 2015.

NOTE 6 - 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.

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The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

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. 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. For the years ended December 31, 2015 and 2014 the fair value of Level 3 investment securities was immaterial.

Derivative Instruments

The fair values of derivative instruments are based on valuation models using observable market data as of the measurement date (Level 2).

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.

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

	Fair Value Measurements at December 31, 2015 Using:
	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
Investment securities available-for sale
U.S Treasury and U.S. government sponsored entities	$	11,106	$	0	$	11,106	$	0
State and political subdivisions		138,723		0		138,723		0
Corporate bonds		1,134		0		1,134		0
Mortgage-backed securities-residential		196,587		0		196,572		15
Collateralized mortgage obligations		27,165		0		27,165		0
Small Business Administration		19,299		0		19,299		0
Equity securities		298		298		0		0
Total investment securities	$	394,312	$	298	$	393,999	$	15
Loan yield maintenance provisions	$	789	$	0	$	789	$	0
Financial Liabilities
Interest rate swaps	$	789	$	0	$	789	$	0

	Fair Value Measurements at December 31, 2014 Using:
	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
Investment securities available-for sale
U.S Treasury and U.S. government sponsored entities	$	24,821	$	0	$	24,821	$	0
State and political subdivisions		91,881		0		91,881		0
Corporate bonds		931		0		931		0
Mortgage-backed securities-residential		224,362		0		224,352		10
Collateralized mortgage obligations		25,175		0		25,175		0
Small Business Administration		22,419		0		22,419		0
Equity securities		240		240		0		0
Total investment securities	$	389,829	$	240	$	389,579	$	10
Loan yield maintenance provisions	$	638	$	0	$	638	$	0
Financial Liabilities
Interest rate swaps	$	638	$	0	$	638	$	0

There were no significant transfers between Level 1 and Level 2 during 2015 or 2014.

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The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31:

	Investment Securities Available-for-sale (Level 3)
	2015			2014		2013
Beginning Balance	$	10		$	10	$	11
Total unrealized gains or losses:
Included in other comprehensive income		0			0		0
Repayments		(1	)		0		(1	)
Acquired and/or purchased		6			0		0
Ending Balance	$	15		$	10	$	10

There is no impact to earnings as a result of fair value measurements on items valued on a recurring basis, using level 3 inputs.

Assets Measured on a Non-Recurring Basis

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

	Fair Value Measurements
	at December 31, 2015 Using:
	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	$	1,448	$	0	$	0	$	1,448
Commercial		1,514		0		0		1,514
1–4 family residential		42		0		0		42
Consumer		13		0		0		13

	Fair Value Measurements
	at December 31, 2014 Using:
	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	$	807	$	0	$	0	$	807
1–4 family residential		63		0		0		63
Other real estate owned
Commercial real estate		45		0		0		45

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Impaired loans carried at fair value that are measured for impairment using the fair value of the collateral had a carrying amount of $3.4 million, with a valuation allowance of $383 thousand at December 31, 2015, resulting in an additional provision for loan losses of $270 thousand for the year ending December 31, 2015.  At December 31, 2014, impaired loans had a carrying amount of $988 thousand, with a valuation allowance of $117 thousand. Loans measured at fair value throughout the year resulted in an additional provision for loan losses of $992 thousand for the year ending December 31, 2014. Excluded from the fair value of impaired loans, at December 31, 2015 and 2014, discussed above are $2.9 million and $4.2 million of loans with specific allowance amounts allocated and classified as troubled debt restructurings and measured using the present value of discounted cash flows, 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 Company had no related write downs during the year ended December 31, 2015.  At December 31, 2014, other real estate owned measured at fair value less costs to sell, had a net carrying amount of $45 thousand. During the year ended December 31, 2014 the Company charged down one property reflecting an updated appraisal which resulted in a write-down of $5 thousand.

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 year ended 2014 and 2013:

December 31, 2015	Fair value		Valuation Technique(s)	Unobservable Input(s)	Range Weighted Average
Impaired loans
Commercial real estate	$	701	Income approach	Adjustment for differences between earning multiplier	(49.42%) - 40.89% 35.33%
		747	Quoted price for loan relationship	Offer price	1.01% 1.01%
Commercial		252	Quoted price for loan relationship	Offer price	(3.01%) (3.01%)
		1,262	Income approach	Adjustment for differences between earning multiplier	(29.77%) (29.77%)
Residential		42	Sales comparison	Adjustment for differences between comparable sales	(18.32%) - 24.16% (14.02%)
Consumer		13	Sales comparison	Adjustment for differences between comparable sales	(12.86%) - 11.97% (5.79%)

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December 31, 2014	Fair value		Valuation Technique(s)	Unobservable Input(s)	Range Weighted Average
Impaired loans
Commercial real estate	$	1,237	Sales comparison	Adjustment for differences between comparable sales	-41.59% - 77.25% (-7.82%)
		116	Income approach	Adjustment for differences in net operating income	-13.64% - 12.93% (-5.96%)
Commercial		807	Sales comparison	Adjustment for differences between comparable sales	(27.43%) - 32.86% 9.96%
Residential		63	Sales comparison	Adjustment for differences between comparable sales	(18.32%) - 24.16% (14.02%)
Other real estate owned		45	Sales comparison	Adjustment for differences between comparable sales	(12.86%) - 11.97% (5.79%)

Fair Value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments measured on a recurring basis and not previously presented, at December 31, 2015 and December 31, 2014 are as follows:

			Fair Value Measurements at December 31, 2015 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	56,014	$	22,500	$	33,514	$	0	$	56,014
Restricted stock		9,384	n/a		n/a		n/a		n/a
Loans held for sale		1,769		0		1,813		0		1,813
Loans, net		1,287,887		0		0		1,296,075		1,296,075
Mortgage servicing rights		453		0		453		0		453
Accrued interest receivable		5,158		0		2,011		3,147		5,158
Financial liabilities
Deposits		1,409,047		1,164,506		241,909		0		1,406,415
Short-term borrowings		225,832		0		225,832		0		225,832
Long-term borrowings		22,153		0		22,306		0		22,306
Accrued interest payable		445		26		419		0		445

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			Fair Value Measurements at December 31, 2014 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	27,428	$	11,410	$	16,018	$	0	$	27,428
Restricted stock		4,224	n/a		n/a		n/a		n/a
Loans held for sale		511		0		523		0		523
Loans, net		656,220		0		0		658,993		658,993
Accrued interest receivable		3,237		0		1,645		1,592		3,237
Financial liabilities
Deposits		915,703		708,752		206,708		0		915,460
Short-term borrowings		69,136		0		69,136		0		69,136
Long-term borrowings		18,381		0		18,837		0		18,837
Accrued interest payable		402		2		400		0		402

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 federal 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 the average of binding contracts and quotes from third party investors resulting in a Level 2 classification.

Loan servicing rights: Fair value is based on a valuation model that calculates the present value of estimated future net servicing income.  The valuation model utilizes interest rate, prepayment speed and default rate assumptions that market participants would use in estimating future net servicing income (Level 2).

Accrued Interest Receivable/Payable: The carrying amounts of accrued interest receivable and payable approximate fair value resulting in a Level l, 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.

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NOTE 7—PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows:

		2015			2014
Land	$	5,833		$	3,143
Buildings		24,724			20,842
Furniture, fixtures and equipment		13,485			11,651
Leasehold Improvements		450			247
		44,492			35,883
Less accumulated depreciation		(20,302	)		(18,834	)
NET BOOK VALUE	$	24,190		$	17,049

Depreciation expense was $1.5 million for year ended December 31, 2015, $1.1 million for year ended December 31, 2014 and $1.2 million for year ended December 31, 2013.

During June 2015 the Company added 14 branches, mostly in Wayne and Medina Counties, as part of the NBOH acquisition and in September 2015, 4 branches, mostly in Columbiana County, as part of the Tri-State acquisition.  All fixed assets were recorded at their fair market value.

During 2014, the Company purchased property located adjacent to its Canfield branch on South Broad Street in Canfield, for $395 thousand to house some investment, insurance and mortgage lending activities.  The building was put into service in June 2014.

The Company leases certain branch properties under operating leases. Rent expense was $332, $323, and $302 thousand for 2015, 2014 and 2013. In addition to rent expense, under the leases, common area maintenance and property taxes are paid and the amount can fluctuate according to the costs incurred. Rent commitments, before considering renewal options that generally are present, were as follows:

2016	$	307
2017		319
2018		306
2019		303
2020		267
Thereafter		1,380
TOTAL	$	2,882

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NOTE 8—GOODWILL AND INTANGIBLE ASSETS

Goodwill associated with the Company’s purchase of NBOH in June 2015, Tri-State in October 2015, NAI in July of 2013 and Trust in 2009 totaled $35.1 million at December 31, 2015 and $5.6 million at December 31, 2014. The NBOH, Tri-State and NAI acquisitions are more fully described in Note 2. Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value, which is determined through a two-step impairment test. Step 1 includes the determination of the carrying value of the reporting units, including the existing goodwill and intangible assets, and estimating the fair value of the reporting units. After our annual impairment analysis as of September 30, 2015, the Company determined the fair value of all goodwill exceeded its carrying amount. After the annual impairment testing as of September 30, 2014 the fair value of NAI was less than its carrying value. When the carrying amount of a reporting unit exceeds its fair value, a second step to the impairment test is required. The analysis indicated that the Step 2 analysis was necessary for the NAI reporting unit. Step 2 of the goodwill impairment test is performed to measure the impairment loss.  Step 2 requires that the implied fair value of the reporting unit’s goodwill be compared to the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. After performing Step 2 it was determined that the implied value of goodwill was less than the carrying costs, resulting in an impairment charge of $763 thousand for the year ended December 31, 2014.  During the initial valuation of NAI the future income projections were not fully attained.  The fair value of the reporting unit was determined based on a discounted cash flow model.  Additionally, the $763 thousand impairment was offset with an equal reduction of the future payment liability associated with the purchase.  The two adjustments offset resulting in a zero impact to the Company’s consolidated statements of income for year ended December 31, 2014.

Other Intangibles

Core deposit intangible assets associated with the Company’s purchases of NBOH and Tri-State totaled $5.6 million.

Other intangible assets were as follows at year end:

	2015					2014
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Other intangible:
Customer relationship intangibles	$	5,970	$	(3,585	)	$	5,970	$	(2,972	)
Non-compete contracts		370		(325	)		370		(295	)
Trade Name		190		(65	)		190		(41	)
Core deposit intangible		5,582		(316	)		0		0
Total	$	12,112	$	(4,291	)	$	6,530	$	(3,308	)

Aggregate amortization expense was $983 thousand, $767 thousand, and $624 thousand for 2015, 2014, and 2013.

Estimated amortization expense for each of the next five years:

2016	$	1,293
2017		1,207
2018		1,123
2019		1,048
2020	973
Thereafter		2,177
TOTAL	$	7,821

NOTE 9 - INTEREST BEARING DEPOSITS

Time deposits of $250 thousand or more were $39.6 million and $26.3 million at year-end 2015 and 2014.

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Following is a summary of scheduled maturities of certificates of deposit during the years following December 31, 2015:

2016	$	108,493
2017		39,007
2018		18,528
2019		27,827
2020		37,494
Thereafter		7,733
TOTAL	$	239,082

Following is a summary of year-end interest bearing deposits:

		2015		2014
Demand	$	327,434	$	126,456
Money Market		293,209		266,040
Savings		234,672		131,559
Certificates of Deposit		239,082		206,951
TOTAL	$	1,094,397	$	731,006

NOTE 10 - SHORT-TERM BORROWINGS

The Bank has short-term advances from the Federal Home Loan Bank that had maturity dates of less than one year at the time of the advance. All balances are due within one year and can be renewed at the time of maturity.  Federal Home Loan Bank advances are secured by pledgings described in the following Long-Term Borrowings footnote.  Balances at year end were as follows:

	2015					2014
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Repurchase advance with a rate of .39% at December 31, 2015	$	100,000		0.39	%
Cash management advance with rates from .26% to .45% at    December 31, 2015 and 2014		50,000		0.39	%	$	10,000		0.26	%
Total advances	$	150,000		0.39	%	$	10,000		0.26	%

Securities sold under repurchase agreements are secured by the Bank’s holdings of debt securities issued by U.S. government sponsored entities and agencies with a carrying amount of $79.3 million and $61.7 million at year ended 2015 and 2014.

Repurchase agreements are financing arrangements that mature within 89 days and usually overnight. Under the agreements, customers agree to maintain funds on deposit with the Bank and in return acquire an interest in a pool of securities pledged as collateral against the funds. The securities are held in segregated safekeeping accounts at the Federal Reserve Bank and Farmers Trust Company. Information concerning securities sold under agreements to repurchase is summarized as follows:

	2015			2014			2013
Average balance during the year	$	71,779		$	71,573		$	90,951
Average interest rate during the year		0.07	%		0.04	%		0.04	%
Maximum month-end balance during the year	$	89,574		$	78,972		$	100,462
Weighted average year-end interest rate		0.06	%		0.06	%		0.06	%
Balance at year-end	$	75,482		$	58,786		$	75,267

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The following table provides a disaggregation of the obligation by class of collateral pledged for short-term financing obtained through the sales of repurchase agreements:

	2015
Overnight and continuous repurchase agreements
U.S. Treasury and U.S. government sponsored entities	$	5,276
State and political subdivisions		2,640
Mortgage-backed securities - residential		60,391
Collateralized mortgage obligations		7,175
Total borrowings	$	75,482

Management believes the risks associated with the agreements are minimal and in the case of collateral decline the company has additional investment securities available to adequately pledge as guarantees for the repurchase agreements.

The Bank has access to lines of credit amounting to $25 million at two major domestic banks that are below prime rate. The lines and terms are periodically reviewed by the banks and are generally subject to withdrawal at their discretion.  There were no borrowings under these lines at December 31, 2015 and 2014.

Farmers National Banc Corp has two unsecured revolving lines of credit for $6.5 million. The lines can be renewed annually. The lines have interest rates of prime with floors of 3.5% and 4.5%. The outstanding balance on the two lines was $350 thousand at December 31, 2015 and 2014.  The interest rate on the outstanding balance at December 31, 2015 and 2014 was 4.5%.

NOTE 11 - LONG-TERM BORROWINGS

At year end, long-term advances from the Federal Home Loan Bank were as follows:

	2015					2014
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Fixed-rate constant payment advances, at rates from .61%    to 4.88% at December 31, 2015 and 2014	$	15,054		1.24	%	$	8,381		1.72	%
Convertible and putable fixed-rate advances, at rates from 2.82%    to 4.45% at December 31, 2015 and 2014		5,000		4.45	%		10,000		3.64	%
Total advances	$	20,054		2.04	%	$	18,381		2.76	%

The Bank added $8 million in long-term advances as part of the two acquisitions during the year ended December 31, 2015. The Bank also has a total of $5 million in putable FHLB fixed-rate advances.  Should the FHLB elect the put, the Bank is required to repay the advance on that date without penalty.

Short-term and long-term Federal Home Loan Bank advances are secured by a blanket pledge of residential mortgage loans totaling $237.8 million and $110.3 million at year end 2015 and 2014. Based on this collateral the Bank is eligible to borrow an additional $63.4 million at year end 2015. Each advance is subject to a prepayment penalty if paid prior to its maturity date.

Scheduled payments of long-term FHLB advances are as follows:

Maturing in:
2016	$	7,247
2017		8,089
2018		1,008
2019		931
2020		860
Thereafter		1,919
TOTAL	$	20,054

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The Company added a special purpose entity to hold $2.1 million in Trust Preferred Debenture as part of the Tri-State acquisition. The debt has a floating rate that is determined quarterly based on the three-month LIBOR.  At December 31, 2015 the interest rate was 2.2%. These securities can be redeemed at any quarter-end.  Final maturity of the Trust Preferred Debenture is December 15, 2036. The Company has the $2.1 million note payable recorded in the long-term borrowings section of the Consolidated Balance Sheets.

NOTE 12 - COMMITMENTS AND CONTINGENT LIABILITIES

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amounts of financial instruments with off-balance-sheet risk at year end were as follows:

	2015				2014
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	100	$	4,836	$	471	$	1,881
Unused lines of credit	$	64,338	$	204,889	$	108,382	$	39,205

Commitments to make loans are generally made for periods of 30 days or less. There is one fixed rate loan commitment for 2015 that has an interest rate of 3.89% and matures within fifteen years. Variable rate loan commitments have interest rates that at December 31, 2015 ranged from 4.25% to 5.00%.  The fixed rate loan commitments for 2014 have interest rates that range from 4.00% to 4.63% and mature within thirty years.  Fixed rate unused lines of credit have interest rates ranging from 0.20% to 21.90% at December 31, 2015 and 2.11% to 13.50% at December 31, 2014.

Standby letters of credit are considered financial guarantees. The standby letters of credit have a contractual value of $5.6 million at December 31, 2015 and $5.2 million at December 31, 2014. The carrying amount of these items on the balance sheet is not material.

NOTE 13 - STOCK BASED COMPENSATION

During 2012, the Company, with the approval of shareholders, created the 2012 Equity Incentive Plan (the “Plan”). The Plan permits the award of up to 500 thousand shares to the Company’s directors and employees to promote the Company’s long-term financial success by motivating performance through long-term incentive compensation and to better align the interests of its employees with those of its shareholders. There were restricted stock awards, under the Plan, totaling 279,023 shares during 2015 and 46,957 shares during 2014. The restricted stock awards were granted with a fair value price equal to the market price of the Company’s common stock at the date of grant. Expense recognized for the Plan was $486 thousand for the year ended 2015 and $116 thousand for 2014.  As of December 31, 2015, there was $1.9 million of total unrecognized compensation expense related to the nonvested shares granted under the Plan.  The remaining cost is expected to be recognized over the next 2.7 years. There were no shares awarded or expense recognized during the year ended December 31, 2013 under the Plan.

The following is the activity under the Plan during the years ended December 31, 2015 and 2014:

	2015					2014
	Units			Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Beginning balance		46,957		$	7.39		0	$	0
Granted		279,023			7.98		46,957		7.39
Vested		0			0		0		0
Forfeited		(5,000	)		7.88		0		0.00
Ending balance		320,980		$	7.90		46,957	$	7.39

82

The Company’s Stock Option Plan, which was shareholder-approved and has since expired, permitted the grant of share options to its directors, officers and employees for up to 375 thousand shares of common stock. Option awards were granted with an exercise price equal to the market price of the Company’s common stock at the date of grant; those option awards have vesting periods of 5 years and have 10-year contractual terms. During the first quarter of 2014 the last remaining 5,000 outstanding options were exercised and the Company satisfied these options with the reissuance of treasury shares.

There were no options granted under the Stock Option Plan during 2015, 2014 or 2013.

NOTE 14 - REGULATORY MATTERS

Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The new minimum capital requirements associated with the Basel Committee on capital and liquidity regulation (Basel III) are being phased in and began on January 1, 2015 and will continue through January 1, 2019. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action by regulators that, if undertaken, could have a direct material effect on the financial statements. Management believes as of December 31, 2015, the Company and Bank meet all capital adequacy requirements to which they are subject.

The FDIC and other federal banking regulators revised the risk-based capital requirements applicable to bank holding companies and insured depository institutions, including the Company and the Bank, to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision (“Basel III”).

The common equity tier 1 capital, tier 1 capital and total capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. The leverage ratio is calculated by dividing tier 1 capital by adjusted average total assets.

Basel III limits capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity tier 1 capital, tier 1 capital and total capital to risk-weighted assets in addition to the amount necessary to meet minimum risk-based capital requirements. The capital conservation buffer will be phased in beginning January 1, 2016 and increasing each year until fully implemented at 2.5% on January 1, 2019. Currently Basel III requires the Company and Bank to maintain (i) a minimum ratio of common equity tier 1 capital to risk-weighted assets of at least 4.5%, (ii) a minimum ratio of tier 1 capital to risk-weighted assets of at least 6.0%, (iii) a minimum ratio of total capital to risk-weighted assets of at least 8.0% and (iv) a minimum leverage ratio of at least 4.0%.

Prior to January 1, 2015, federal and state regulatory agencies required the Company and the Bank to maintain minimum Tier 1 and total capital to risk-weighted assets of 4.0% and 8.0%, respectively, and Tier 1 leverage ratio of at least 4.0%.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If only adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2015 and 2014, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

Dividend Restrictions: The Company’s principal source of funds for dividend payments is dividends received from the Bank, Trust and NAI. The Bank and Trust are subject to the dividend restrictions set forth by the Comptroller of the Currency and Ohio Department of Commerce – Division of Financial Institutions, respectively. The respective regulatory agency must approve declaration of any dividends in excess of the sum of profits for the current year and retained net profits for the preceding two years. During 2016, the Bank could declare dividends on any 2016 net profits retained above $3.9 million at the date of the dividend declaration. In order to practice trust powers, Trust must maintain a minimum capital of $3 million. The Trust would also be able to, without prior approval, declare dividends on any 2016 net profits retained to the date of the dividend declaration.

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Actual and required capital amounts and ratios are presented below at year-end:

	Actual					Requirement For Capital Adequacy Purposes:					To be Well Capitalized Under Prompt Corrective Action Provisions:
	Amount		Ratio			Amount		Ratio			Amount		Ratio
2015
Common equity tier 1 capital ratio
Consolidated	$	165,451		11.59	%	$	64,245		4.5	%	N/A		N/A
Bank		157,396		11.08	%		63,938		4.5	%	$	92,354		6.5	%
Total risk based capital ratio
Consolidated		176,571		12.37	%		114,214		8.0	%	N/A		N/A
Bank		166,374		11.71	%		113,667		8.0	%		142,084		10.0	%
Tier I risk based capital ratio
Consolidated		167,550		11.74	%		85,660		6.0	%	N/A		N/A
Bank		157,396		11.08	%		85,250		6.0	%		113,667		8.0	%
Tier I leverage ratio
Consolidated		167,550		9.21	%		72,803		4.0	%	N/A		N/A
Bank		157,396		8.65	%		72,770		4.0	%		90,963		5.0	%
2014
Total risk based capital ratio
Consolidated	$	121,340		16.48	%	$	58,523		8.0	%	N/A		N/A
Bank		114,321		15.56	%		58,773		8.0	%	$	73,466		10.0	%
Tier I risk based capital ratio
Consolidated		113,654		15.43	%		29,262		4.0	%	N/A		N/A
Bank		106,689		14.52	%		29,386		4.0	%		44,079		6.0	%
Tier I leverage ratio
Consolidated		113,654		10.03	%		45,313		4.0	%	N/A		N/A
Bank		106,689		9.37	%		45,565		4.0	%		56,956		5.0	%

NOTE 15 - EMPLOYEE BENEFIT PLANS

The Company has a qualified 401(k) deferred compensation Retirement Savings Plan. All employees of the Company who have completed at least 90 days of service and meet certain other eligibility requirements are eligible to participate in the Plan. Under the terms of the Plan, employees may voluntarily defer a portion of their annual compensation pursuant to section 401(k) of the Internal Revenue Code. The Company matches a percentage of the participants’ voluntary contributions up to 6% of gross wages. In addition, at the discretion of the Board of Directors, the Company may make an additional profit sharing contribution to the Plan. Total expense was $431 thousand, $336 thousand and $336 thousand for the years ended December 31, 2015, 2014 and 2013, respectively.

During 2014 the Company adopted a profit sharing plan to provide associates not participating in a current incentive plan a vehicle for sharing in the success of the Company outside of existing wages and non-monetary benefits. The board of directors approved a profit sharing amount equal to 1% of annual compensation for associates in 2015 and 2014. The expense was $82 thousand and $73 thousand for the years ended December 31, 2015 and 2014.

The Company maintains a deferred compensation plan for certain retirees. Expense under the Plan was $10 thousand for each of the three years ended December 31, 2015, 2014 and 2013.  The liability under the Plan at December 31, 2015 was $149 thousand and $156 thousand at December 31, 2014.

84

During 2015, the Company established a nonqualified deferred compensation plan for a select group of management or highly compensated eligible individuals. Under the terms of the plan, eligible individuals may elect to defer receipt of their compensation to a later taxable year. The Company has recorded both an asset and liability of equal amount that represents the amount of contributions and the payable due to the participants in the plan.  The recorded asset and liability was $67 thousand At December 31, 2015

As part of the NBOH acquisition the Company has a director retirement and death benefit Plan for the benefit of prior members of the Board of Directors of NBOH.  The plan is designed to provide an annual retirement benefit to be paid to each director upon retirement from the Board or attaining age 70.  There are no additional benefits or participants being added to the Plan and the liability recorded at December 31, 2015 was $929 thousand.  The benefit payment upon satisfying the Plan’s requirements is a benefit to the qualifying director until death or a maximum of 15 years. No expense was recognized under this Plan in 2015.  

The Company assumed as ESOP as part of the Tri-State acquisition that covered substantially all of their employees and officers.  The trustee had discretionary authority to purchase shares of common stock of Tri-State on the open market.  There were no contributions to the plan in 2015.  During acquisition the Tri-State shares were converted to the Company’s shares and the trustee held 39,690 shares at December 31, 2015.  The process to terminate this ESOP had begun at December 31, 2015.

The Company also has a postretirement health care benefit Plan covering individuals retired from the Company that have met certain service and age requirements and certain other active employees that have met similar service requirements. The postretirement health care Plan includes a limit on the Company’s share of costs for recent and future retirees. A benefit was recognized under this Plan for 2015 of $12 thousand and expense of $4 thousand in 2014 and $13 thousand in 2013. The accrued postretirement benefit liability under this Plan was $280 thousand and $314 thousand at December 31, 2014 and 2013. Due to the immateriality of the Plan, the disclosures required under U.S. generally accepted accounting principles have been omitted.

NOTE 16 - INCOME TAXES

The provision for income taxes (credit) consists of the following:

		2015			2014		2013
Current expense	$	3,046		$	2,369	$	874
Deferred expense (benefit)		(547	)		263		809
TOTALS	$	2,499		$	2,632	$	1,683

Effective tax rates differ from federal statutory rate of 35% applied to income before income taxes due to the following:

	2015			2014			2013
Statutory tax	$	3,694		$	4,059		$	3,312
Effect of nontaxable interest		(1,403	)		(1,179	)		(1,325	)
Bank owned life insurance, net		(242	)		(159	)		(123	)
Effect of nontaxable life insurance death proceeds		0			0			(115	)
Nondeductible acquisition costs		401			0			0
Other		49			(89	)		(66	)
ACTUAL TAX	$	2,499		$	2,632		$	1,683

85

Deferred tax assets (liabilities) are comprised of the following:

		2015			2014
Deferred tax assets:
Allowance for credit losses	$	2,968		$	2,671
Net unrealized loss on securities available for sale		326			0
Deferred and accrued compensation		1,562			848
Deferred loan fees and costs		605			515
Post-retirement benefits		172			110
Nonaccrual loan interest income		324			56
Other-than-temporary impairment		196			41
Other		93			117
Gross deferred tax assets	$	6,246		$	4,358
Deferred tax liabilities:
Depreciation and amortization	$	(649	)	$	(1,081	)
Net unrealized gain on securities available for sale		0			(523	)
Federal Home Loan Bank dividends		(1,093	)		(482	)
Purchase accounting adjustments		(984	)		(550	)
Mortgage servicing rights		(158	)		0
Other		(11	)		(38	)
Gross deferred tax liabilities		(2,895	)		(2,674	)
NET DEFERRED TAX ASSET	$	3,351		$	1,684

No valuation allowance for deferred tax assets was recorded at December 31, 2015 and 2014.

At December 31, 2015 and December 31, 2014, the Company had no unrecognized tax benefits recorded. The Company does not expect the amount of unrecognized tax benefits to significantly change within the next twelve months.

The Company paid no penalties for the year ended December 31, 2015 or 2014. There were no amounts accrued for penalties or interest as of December 31, 2015 or 2014.

The Company is subject to U.S. federal income tax. The Company is no longer subject to examination by the federal taxing authority for years prior to 2012. The tax years 2012—2014 remain open to examination by the U.S. taxing authority.

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NOTE 17 – OTHER COMPREHENSIVE INCOME (LOSS)

The following table represents the detail of other comprehensive income (loss) for the years ended December 31, 2015, 2014 and 2013.

	2015
	Pre-tax			Tax			After-Tax
Unrealized holding losses on available-for-sale securities during the year	$	(1,403	)	$	491		$	(912	)
Reclassification adjustment for (gains) losses included in net income (1)		(94	)		33			(61	)
Net unrealized losses on available-for-sale securities		(1,497	)		524			(973	)
Change in funded status of post-retirement health plan		20			(7	)		13
Net other comprehensive income (loss)	$	(1,477	)	$	517		$	(960	)
	2014
	Pre-tax			Tax			After-Tax
Unrealized holding gains on available-for-sale securities during the year	$	10,486		$	(3,670	)	$	6,816
Reclassification adjustment for (gains) losses included in net income (1)		(457	)		160			(297	)
Net unrealized gains on available-for-sale securities		10,029			(3,510	)		6,519
Change in funded status of post-retirement health plan		60			(21	)		39
Net other comprehensive income (loss)	$	10,089		$	(3,531	)	$	6,558
	2013
	Pre-tax			Tax			After-Tax
Unrealized holding losses on available-for-sale securities during the year	$	(19,310	)	$	6,759		$	(12,551	)
Reclassification adjustment for (gains) losses included in net income (1)		(860	)		301			(559	)
Net unrealized losses on available-for-sale securities		(20,170	)		7,060			(13,110	)
Change in funded status of post-retirement health plan		(3	)		1			(2	)
Net other comprehensive income (loss)	$	(20,173	)	$	7,061		$	(13,112	)

(1) Pre-tax reclassification adjustments relating to available-for-sale securities are reported in security gains and the tax impact is included in income tax expense on the consolidated statements of income.

NOTE 18 - RELATED PARTY TRANSACTIONS

Loans to principal officers, directors, and their affiliates during 2015 were as follows:

Beginning balance	$	760
New loans		4
Effect of changes in composition of related parties		0
Repayments		(335	)
Ending balance	$	429

Deposits from principal officers, directors, and their affiliates at year-end 2015 and 2014 were $7.9 million and $1.7 million.

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NOTE 19 – EARNINGS PER SHARE

The factors used in the earnings per share computation follow:

	2015		2014		2013
Basic EPS
Net income	$	8,055	$	8,965	$	7,780
Weighted average shares outstanding		22,678,338		18,674,526		18,773,491
Basic earnings per share	$	0.36	$	0.48	$	0.41
Diluted EPS
Net income	$	8,055	$	8,965	$	7,780
Weighted average shares out-standing for basic earnings per share		22,678,338		18,674,526		18,773,491
Restricted stock awards		5,232		890		0
Weighted average shares for diluted earnings per share		22,683,570		18,675,416		18,773,491
Diluted earnings per share	$	0.36	$	0.48	$	0.41

193,105 award shares of common stock, issued during 2015, were not considered in computing diluted earnings per share because they were anti-dilutive.  Stock options for 5,000 shares of common stock for 2013 were not considered in computing diluted earnings per share because they were antidilutive.

NOTE 20 – INTEREST RATE SWAPS

The Company uses a program that utilizes interest-rate swaps as part of its asset/liability management strategy. The interest-rate swaps are used to help manage the Company’s interest rate risk position and not as derivatives for trading purposes. The notional amount of the interest-rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest-rate swap agreements.

The objective of the interest-rate swaps is to protect the related fixed rate commercial real estate loans from changes in fair value due to changes in interest rates. The Company has a program whereby it lends to its borrowers at a fixed rate with the loan agreement containing a two-way yield maintenance provision, which will be invoked in the event of prepayment of the loan, and is expected to exactly offset the fair value of unwinding the swap. The yield maintenance provision represents an embedded derivative which is bifurcated from the host loan contract and, as such, the swaps and embedded derivatives are not designated as hedges. Accordingly, both instruments are carried at fair value and changes in fair value are reported in current period earnings.

Summary information about these interest-rate swaps as of year ended December 31, 2015, 2014 and 2013 is as follows:

	2015			2014			2013
Notional amounts	$	30,763		$	31,459		$	25,195
Weighted average pay rate on interest-rate swaps		4.25	%		4.26	%		4.28	%
Weighted average receive rate on interest-rate swaps		2.70	%		2.67	%		2.82	%
Weighted average matuirity (years)		4.1			5.9			6.3
Fair value of combined interest-rate swaps	$	789		$	638		$	275

The fair value of the yield maintenance provisions and interest-rate swaps is recorded in other assets and other liabilities, respectively, in the consolidated balance sheet. Changes in the fair value of the yield maintenance provisions and interest-rate swaps are reported in earnings, as other noninterest income in the consolidated income statements. There were no net gains or losses recognized in earnings related to yield maintenance provisions for years ended December 31, 2015, 2014 and 2013.

NOTE 21 – SEGMENT INFORMATION

The reportable segments are determined by the products and services offered, primarily distinguished between banking, trust and retirement consulting 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, trust service fees provide the revenue in trust operations and consulting fees provide the revenues in the retirement consulting operations. All operations are domestic.

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Accounting policies for segments are the same as those described in Note 1. Segment performance is evaluated using operating income. Income taxes are calculated on operating income. Transactions among segments are made at fair value.

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

December 31, 2015	Trust Segment		Bank Segment		Retirement Consulting Segment		Eliminations and Others			Consolidated Totals
Goodwill and other intangibles	$	4,967	$	35,412	$	3,178	$	(646	)	$	42,911
Total assets	$	11,078	$	1,854,306	$	4,127	$	391		$	1,869,902

December 31, 2014	Trust Segment		Bank Segment		Retirement Consulting Segment		Eliminations and Others		Consolidated Totals
Goodwill and other intangibles	$	5,285	$	0	$	3,528	$	0	$	8,813
Total assets	$	10,643	$	1,121,505	$	4,356	$	463	$	1,136,967

For year ended 2015	Trust Segment		Bank Segment		Retirement Consulting Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	65	$	49,705	$	0	$	(33	)	$	49,737
Provision for loan losses		0		3,510		0		0		$	3,510
Service fees, security gains and other    noninterest income		6,239		10,192		2,130		(255	)	$	18,306
Noninterest expense		4,719		40,753		1,487		4,562		$	51,521
Amortization and depreciation expense		339		1,759		360		0		$	2,458
Income before taxes		1,246		13,875		283		(4,850	)		10,554
Income tax		425		2,968		97		(991	)	$	2,499
Net Income	$	821	$	10,907	$	186	$	(3,859	)	$	8,055

For year ended 2014	Trust Segment		Bank Segment		Retirement Consulting Segment			Eliminations and Others			Consolidated Totals
Net interest income	$	53	$	36,297	$	0		$	(14	)	$	36,336
Provision for loan losses		0		1,880		0			0		$	1,880
Service fees, security gains and other    noninterest income		6,170		7,577		1,810			(254	)	$	15,303
Noninterest expense		4,528		29,268		2,010			474		$	36,280
Amortization and depreciation expense		378		1,081		423			0		$	1,882
Income before taxes		1,317		11,645		(623	)		(742	)	$	11,597
Income tax		451		2,645		48			(512	)	$	2,632
Net Income (Loss)	$	866	$	9,000	$	(671	)	$	(230	)	$	8,965

For year ended 2013	Trust Segment		Bank Segment		Retirement Consulting Segment			Eliminations and Others			Consolidated Totals
Net interest income	$	45	$	35,865	$	0		$	(14	)	$	35,896
Provision for loan losses		0		1,290		0			0			1,290
Service fees, security gains and other    noninterest income		5,667		7,838		627			(218	)		13,914
Noninterest expense		4,483		30,682		627			1,420			37,212
Amortization and depreciation expense		416		1,193		236			0			1,845
Income before taxes		813		10,538		(236	)		(1,652	)		9,463
Income tax		282		2,043		(80	)		(562	)		1,683
Net Income (Loss)	$	531	$	8,495	$	(156	)	$	(1,090	)	$	7,780

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Bank segment includes Farmers National Insurance and Farmers of Canfield Investment Co.

NOTE 22 - QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarter Ended 2015	March 31		June 30		September30		December 31
Total interest income	$	9,999	$	10,753	$	15,594	$	17,481
Total interest expense		1,007		1,004		1,056		1,023
Net interest income		8,992		9,749		14,538		16,458
Provision for loan losses		450		850		1,220		990
Noninterest income		4,037		4,409		4,685		5,175
Merger related costs		245		1,912		2,499		1,736
Noninterest expense		9,506		10,175		13,022		14,884
Income before income taxes		2,828		1,221		2,482		4,023
Income taxes		617		409		625		848
Net income	$	2,211	$	812	$	1,857	$	3,175
Earnings per share - basic and diluted	$	0.12	$	0.04	$	0.07	$	0.12

Quarter Ended 2014	March 31		June 30		September30		December 31
Total interest income	$	10,063	$	10,118	$	10,413	$	10,321
Total interest expense		1,207		1,166		1,128		1,078
Net interest income		8,856		8,952		9,285		9,243
Provision for loan losses		330		300		425		825
Noninterest income		3,433		3,797		3,880		4,193
Noninterest expense		9,141		9,378		9,776		9,867
Income before income taxes		2,818		3,071		2,964		2,744
Income taxes		627		720		688		597
Net income	$	2,191	$	2,351	$	2,276	$	2,147
Earnings per share - basic and diluted	$	0.12	$	0.13	$	0.12	$	0.12

The Company sold certain investment securities and recognized security gains of $372 thousand during the fourth quarter of 2014.  

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NOTE 23—PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Below is condensed financial information of Farmers National Banc Corp. (parent company only). This information should be read in conjunction with the consolidated financial statements and related notes.

December 31,	2015		2014
BALANCE SHEETS
Assets:
Cash	$	1,357	$	1,564
Investment in subsidiaries
Bank		184,253		107,704
Trust		10,188		10,115
NAI		3,391		3,604
Securities available for sale		231		172
Other		1,319		916
TOTAL ASSETS	$	200,739	$	124,075
Liabilities:
Other liabilities	$	241	$	163
Note payable		350		350
Subordinate debt		2,099		0
Other accounts payable		2		2
TOTAL LIABILITIES		2,692		515
TOTAL STOCKHOLDERS' EQUITY		198,047		123,560
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	200,739	$	124,075

STATEMENTS OF INCOME
Years ended December 31,		2015			2014			2013
Income:
Dividends from subsidiaries
Bank	$	23,744		$	4,013		$	4,333
Trust		750			2,000			980
NAI		400			0			0
Interest and dividends on securities		2			1			2
Security gains/(losses)		0			0			21
Other income		0			764			0
TOTAL INCOME		24,896			6,778			5,336
Interest on borrowings		(35	)		(15	)		(16	)
Other expenses		(4,817	)		(1,492	)		(1,659	)
Income before income tax benefit and undistributed subsidiary income		20,044			5,271			3,661
Income tax benefit		991			512			562
Equity in undistributed net income of subsidiaries (dividends in excess    of net income)
Bank		(12,837	)		4,987			4,162
Trust		71			(1,134	)		(449	)
NAI		(214	)		(671	)		(156	)
NET INCOME	$	8,055		$	8,965		$	7,780

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STATEMENTS OF CASH FLOWS
Years ended December 31,		2015			2014			2013
Cash flows from operating activities:
Net income	$	8,055		$	8,965		$	7,780
Adjustments to reconcile net income to net cash
from operating activities:
Security (gains)/losses		0			0			(24	)
Impairment of securities		0			0			3
Dividends in excess of net income (Equity in undistributed net    income of subsidiary)		12,980			(3,182	)		(3,557	)
Other		(269	)		(982	)		(270	)
NET CASH FROM OPERATING ACTIVITIES		20,766			4,801			3,932
Cash flows from investing activities:
Proceeds from maturities of available for sale securities		0			0			56
Purchase of National Associates, Inc.		0			0			(2,111	)
Net cash paid in business combinations		(18,077	)		0			0
NET CASH FROM INVESTING ACTIVITIES		(18,077	)		0			(2,055	)
Cash flows from financing activities:
Proceeds from reissuance of treasury shares		0			32			0
Purchase of treasury shares		(213	)		(2,882	)		(1,606	)
Cash dividends paid		(2,683	)		(2,236	)		(2,248	)
NET CASH FROM FINANCING ACTIVITIES		(2,896	)		(5,086	)		(3,854	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(207	)		(285	)		(1,977	)
Beginning cash and cash equivalents		1,564			1,849			3,826
Ending cash and cash equivalents	$	1,357		$	1,564		$	1,849

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

As of the end of the period covered by this Annual Report on Form 10-K, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective to ensure that the financial and nonfinancial information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, including this Annual Report on Form 10-K for the period ended December 31, 2015, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Management’s responsibilities related to establishing and maintaining effective disclosure controls and procedures include maintaining effective internal controls over financial reporting that are designed to produce reliable financial statements in accordance with GAAP. As disclosed in the Report on Management’s Assessment of Internal Control Over Financial Reporting in the Company’s 2015 Annual Report to Shareholders, management assessed the Company’s system of internal control over financial reporting as of December 31, 2015, in relation to criteria for effective internal control over financial reporting as described in the 2013 “Internal Control - Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission and found it to be effective.

Crowe Horwath LLP, the Company’s registered public accounting firm, has audited the Company’s internal control over financial reporting as of December 31, 2015. The audit report by Crowe Horwath is located in Item 8 of this report.

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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 year ended December 31, 2015, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation or material weaknesses in such internal controls requiring corrective actions.

Item 9B. Other Information.

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by Item 401 of Regulation S-K concerning the directors of the Company and the nominees for election as directors of the Company at the Annual Meeting of Shareholders to be held on April 20, 2016 (the “2016 Annual Meeting”) is incorporated herein by reference from the information to be included under the caption “Proposal 1 – Election of Directors” in Farmers’ definitive proxy statement relating to the 2016 Annual Meeting to be filed with the Commission (“2016 Proxy Statement”).

Executive Officers of the Registrant

The names, ages and positions of Farmers’ executive officers as of March 10, 2016:

Name	Age	Title
Carl D. Culp	52	Executive Vice President, Secretary and Treasurer of Farmers and Executive Vice-President and Chief Financial Officer of Farmers Bank.
Joseph Gerzina	60	Senior Vice President, Chief Lending Officer and Regional President of Farmers Bank
Mark L. Graham	61	Executive Vice President and Chief Credit Officer of Farmers Bank
Kevin J. Helmick	44	President and Chief Executive Officer of Farmers and Farmers Bank
Brian E. Jackson	46	Senior Vice President and Chief Information Officer of Farmers Bank
Mark A. Nicastro	45	Senior Vice President and Director of Human Resources of Farmers Bank
Joseph W. Sabat	55	Vice President and Controller of Farmers Bank
Timothy Shaffer	54	Senior Vice President and Regional President of Farmers Bank
Amber Wallace Soukenik	50	Senior Vice President and Chief Retail/Marketing Officer of Farmers Bank
James VanSickle	45	Senior Vice President and Chief Risk Officer of Farmers Bank
Mark R. Witmer	51	Senior Executive Vice President, Chief Banking Officer of Farmers Bank

Officers are generally elected annually by the Board of Directors. The term of office for all the above executive officers is for the period ending with the next annual meeting.

Principal Occupation and Business Experience of Executive Officers

Mr. Culp has served as Executive Vice President and Treasurer of Farmers and Executive Vice President and Chief Financial Officer of Farmers Bank since March 1996. Prior to that time, Mr. Culp was Controller of Farmers and Farmers Bank from November 1995. Mr. Culp has 30 years of experience in finance and accounting in the banking industry, and is a certified public accountant.

Mr. Gerzina currently serves as Regional President and Chief Lending Officer, and brings 33 years of experience in commercial and private banking. Prior to joining Farmers Bank, Mr. Gerzina was a Managing Partner at Weather Vane Capital, and previously held the role of Senior Vice President and Regional Commercial Manager (2002-2009) with Huntington Bank. He was appointed as an executive officer of Farmers in 2012.

Mr. Graham has over 38 years of experience with Farmers Bank. During his tenure, Mr. Graham has held a variety of positions in Farmers Bank’s commercial loan department. Mr. Graham has served as Executive Vice President and Chief Credit Officer of Farmers Bank since January 2012; for the four years prior to that appointment, Mr. Graham served as Senior Vice President and Senior Lending Officer of Farmers Bank.

Mr. Helmick is the President and Chief Executive Officer of Farmers and Farmers Bank, a position he has held since November 2013. Prior to becoming President Mr. Helmick was Secretary of Farmers and Executive Vice President – Wealth Management and Retail Services of Farmers Bank since January 2012.  Mr. Helmick has been with the Company for 21 years and has a retail and investment background, including an MBA and CFP designation.  From 1997 through 2008, Mr. Helmick served as the Vice President and Program Manager for Farmers National Investments.  In 2008 Mr. Helmick was promoted to Senior Vice President of Wealth Management and Retail Services where he was responsible for the management and oversight of Farmers National Investments, the retail investment area of Farmers Bank, Farmers Insurance, and all branch sales and operational functions.

Mr. Jackson is the Senior Vice President and Chief Information Officer of Farmers Bank, a position he has held since May 2009. Prior to coming to the Company, Mr. Jackson was Assistant Vice President and Information Technology Manager with Home Savings Bank since 1993. He has over 23 years of experience in the IT field. Mr. Jackson was appointed as an executive officer in 2012.

94

Mr. Nicastro is the Senior Vice President and Director of Human Resources of Farmers Bank, a position he has held since joining Farmers in July 2009. Prior to that appointment, Mr. Nicastro served as Staffing and Compliance Manager for Huntington National Bank (2007-2008) and Regional Human Resources Manager for Sky Bank from 2004 until 2007. Mr. Nicastro has an MBA, and has more than 18 years of experience in Human Resource Management from both large multi-national banks and regional community banks. He was appointed as an executive officer in 2012.

Mr. Sabat has served as Vice President and Controller of Farmers Bank since April 2006. Prior to coming to the Company, Mr. Sabat was with a regional public accounting firm. Mr. Sabat has 20 years of experience in the accounting, finance and auditing fields. He is a certified public accountant and was appointed as an executive officer in 2012.

Mr. Shaffer serves as Regional President and has held that title since July of 2015.  Previously, Mr. Shaffer served as the Director of Commercial Banking & Private Client Services.  In October of 2011 Mr. Shaffer joined Farmers Bank as the Commercial Lending Manager, overseeing commercial lending, small business lending and treasury management. Mr. Shaffer has over 26 years of Banking and Lending experience in the Mahoning Valley market.  Mr. Shaffer was appointed as an executive officer in 2014.

Ms. Wallace Soukenik has served as Senior Vice President and Chief Retail/Marketing Officer for Farmers Bank since November 2013.  In August 2008 Ms. Wallace Soukenik joined Farmers Bank as Senior Vice President and Director of Marketing.  She has 26 years of experience in the Marketing field. Prior to joining the Company, Ms. Wallace Soukenik served as the Assistant Vice President of Marketing and Physician Relations at Trumbull Memorial Hospital, where she managed a $14 million endowment, a $1.5 million marketing budget and all physician contracts. She was appointed as an executive officer in 2012.

Mr. VanSickle is a Senior Vice President and Chief Risk Officer of Farmers National Bank.  Mr. VanSickle joined Farmers National Bank as part of the merger with First National Bank of Orrville in June of 2015.  Prior to the merger Mr. VanSickle served as the Chief Financial Officer of First National Bank of Orrville and brings more than 20 years of experience as a financial executive.

Mr. Witmer is the Senior Executive Vice President and Chief Banking Officer of Farmers National Bank.  Mr. Witmer joined Farmers National Bank as part of the merger with First National Bank of Orrville in June of 2015.  Prior to the merger Mr. Witmer served as the Chief Executive Officer of First National Bank of Orrville.  Mr. Witmer has more than 25 years of leadership, community banking and lending experience.

Compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended.

The information required by Item 405 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2016 Proxy Statement.

Code of Business Conduct and Ethics.

The Company has adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that covers all employees, including its principal executive, financial and accounting officers, and is posted on the Company’s website www.farmersbankgroup.com. In the event of any amendment to, or waiver from, a provision of the Code of Ethics that applies to its principal executive, financial or accounting officers, the Company intends to disclose such amendment or waiver on its website.

Procedures for Recommending Directors Nominees.

Information concerning the procedures by which shareholders may recommend nominees to Farmers’ Board of Directors is incorporated herein by reference from the information to be included under the caption “Director Nominations” in 2016 Proxy Statement. These procedures have not materially changed from those described in Farmers’ definitive proxy materials for the 2015 Annual Meeting of Shareholders.

Audit Committee.

The information required by Items 407(d)(4) and (d)(5) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “Committees of the Board of Directors – Audit Committee” in the 2016 Proxy Statement.

95

Item 11. Executive Compensation.

The information required by Item 402 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the captions “Compensation Discussion and Analysis” and “Executive Compensation and Other Information” in the 2016 Proxy Statement.

The information required by Item 407(e)(4) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “Compensation Committee Interlocks and Insider Participation” in the 2016 Proxy Statement.

The information required by Item 407(e)(5) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “The Compensation Committee Report” in the 2016 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by Item 201(d) of Regulation S-K is incorporated herein by reference from the disclosure included under the caption “Equity Compensation Plan Information” in the 2016 Proxy Statement of the Company.

The information required by Item 403 of Regulation S-K is incorporated herein by reference from the disclosure included under the caption “Beneficial Ownership of Management and Certain Beneficial Owners” in the 2016 Proxy Statement of the Company.

Item 13. Certain Relationships and Related Transactions and Director Independence.

The information required by Item 404 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “Certain Relationships and Related Transactions” in the 2016 Proxy Statement.

The information required by Item 407(a) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “The Board of Directors — Independence” in the 2016 Proxy Statement.

Item 14. Principal Accountant Fees and Services.

The information required by this Item 14 is incorporated herein by reference from the disclosure to be included under the captions “Independent Registered Public Accounting Firm Fees” and “Pre-Approval of Fees” in the 2016 Proxy Statement.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)	(1) Financial Statements
		Item 8 Reference is made to the Consolidated Financial Statements included in Item 8 of Part II herein.
	(2) Financial Statement Schedules
		No financial statement schedules are presented because they are not applicable.
	(3) Exhibits
		The exhibits filed or incorporated by reference as a part of this Annual Report on Form 10-K are listed in the Exhibit Index, which follows the signature page and is incorporated herein by reference.
(b)	Exhibits
		The exhibits filed or incorporated by reference as a part of this Annual Report on Form 10-K are listed in the Exhibit Index, which follows the signature page and is incorporated herein by reference.
(c)	Financial Statement Schedules
		See subparagraph (a)(2) above.

96

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the under signed, thereunto duly authorized.

FARMERS NATIONAL BANC CORP.
By	/s/ Kevin J. Helmick
	Kevin J. Helmick, President and Chief Executive Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Kevin J. Helmick	President, Chief Executive Officer and Director	March 10, 2016
Kevin J. Helmick	(Principal Executive Officer)
/s/ Carl D. Culp	Executive Vice President, Secretary and Treasurer	March 10, 2016
Carl D. Culp	(Principal Financial Officer)
/s/ Joseph W. Sabat	Controller	March 10, 2016
Joseph W. Sabat	(Principal Accounting Officer)
/s/ Gregory C. Bestic*	Director	March 10, 2016
Gregory C. Bestic
/s/ Anne Frederick Crawford*	Director	March 10, 2016
Anne Frederick Crawford
/s/ Lance J. Ciroli*	Chairman of the Board	March 10, 2016
Lance J. Ciroli
/s/ Ralph D. Macali*	Director	March 10, 2016
Ralph D. Macali
/s/ Terry A. Moore*	Director	March 10, 2016
Terry A. Moore
/s/ David Z. Paull*	Director	March 10, 2016
David Z. Paull
/s/ Earl R. Scott*	Director	March 10, 2016
Earl R. Scott
/s/ James R. Smail*	Director	March 10, 2016
James R. Smail
/s/ Gregg Strollo*	Director	March 10, 2016
Gregg Strollo
/s/ Howard J. Wenger*	Director	March 10, 2016
Howard J. Wenger

* The above-named directors and officers of the Registrant sign this Annual Report on Form 10-K by Kevin J. Helmick and Carl D. Culp, their attorney-in-fact, pursuant to Powers of Attorney signed by the above-named directors and officers, which Powers of Attorney are filed with this Annual Report on Form 10-K as exhibits, in the capacities indicated.

97

By
	/s/ Kevin J. Helmick
	Kevin J. Helmick
	President, Chief Executive Officer and Director
	(Principal Executive Officer)
	/s/ Carl D. Culp
	Carl D. Culp
	Executive Vice President, Secretary and Treasurer
	(Principal Financial Officer)

98

INDEX TO EXHIBITS

The following exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K:

Exhibit Number	Description
3.1	Articles of Incorporation of Farmers National Banc Corp., as amended (incorporated by reference from Exhibit 4.1 to Farmers’ Registration Statement on Form S-3 filed with the Commission on October 3, 2001 (File No. 333-70806), and by reference from Exhibit 3.1 to Farmers’ Current Report on Form 8-K filed with the commission on May 1, 2013).
3.2	Amended Code of Regulations of Farmers National Banc Corp. (incorporated by reference from Exhibit 3.2 to Farmers’ Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011 filed with the Commission on August 9, 2011).
10.1	Agreement and Plan of Merger by and between National Bancshares Corporation and Farmers National Banc Corp., dated as of January 27, 2015 (incorporated by reference from Exhibit 2.1 to Farmers’ Current Report on Form 8-K filed with the Commission on January 27, 2015).
10.2	Agreement and Plan of Merger by and among Tri-State 1st Banc, Inc., Farmers National Banc Corp. and FMNB Merger Subsidiary, LLC, dated as of June 23, 2015 (incorporated by reference from Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 29, 2015).
10.3*	Farmers National Banc Corp. 2012 Equity Incentive Plan (incorporated by reference from Exhibit 10.1 to Farmers’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 filed with the Commission on August 8, 2012).
10.4*	Farmers National Banc Corp. Cash Incentive Plan (incorporated by reference from Exhibit 10.1 to Farmers’ Current Report on Form 8-K filed with the Commission on June 24, 2011).
10.5*	Farmers National Banc Corp. Long-Term Incentive Plan (incorporated by reference from Exhibit 10.1 to Farmers’ Current Report on Form 8-K filed with the Commission on June 29, 2011).
10.6*	Farmers National Banc Corp. Nonqualified Deferred Compensation Plan (incorporated by reference from Exhibit 10.1 to Farmers’ Current Report on Form 8-K filed with the Commission on February 3, 2015).
10.7*	Farmers National Banc Corp. Form of 2012 Award Agreement under Long-Term Incentive Plan (incorporated by reference from Exhibit 10.6 to Farmers’ Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Commission on March 13, 2013).
10.8*	Farmers National Banc Corp. Form of 2013 Award Agreement under Long-Term Incentive Plan (incorporated by reference from Exhibit 10.5 to Farmers’ Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Commission on March 13, 2014).
10.9*	Farmers National Banc Corp. Form of Cash Long-Term Incentive Award Agreement under Long-Term Incentive Plan (filed herewith).
10.10*	Farmers National Banc Corp. Form of Equity Long-Term Incentive Award Agreement under 2012 Equity Incentive Plan (filed herewith).
10.11*	Farmers National Banc Corp. Form of Notice of Grant and Restricted Stock Award Agreement under 2012 Equity Incentive Plan (incorporated by reference from Exhibit 10.1 to Farmers’ Quarterly Report on Form 10-Q filed with the Commission on November 9, 2015).
10.12*	Nonemployee Director Compensation (filed herewith).
10.13*	Farmers National Banc Corp. Form of Indemnification Agreement (incorporated by reference from Exhibit 10.1 to Farmers’ Current Report on Form 8-K filed with the Commission on April 29, 2011).
10.14*	Farmers National Banc Corp. Executive Separation Policy (incorporated by reference from Exhibit 10.2 to Farmers’ Quarterly Report on Form 10-Q filed with the Commission on November 9, 2015).
10.15*	Change in Control Agreement with Kevin J. Helmick (incorporated by reference from Exhibit 10.2 to Farmers’ Current Report on Form 8-K filed with the Commission on November 14, 2013).

99

Exhibit Number	Description
10.16*	Form of Change in Control Agreements for Executive Officers (incorporated by reference from Exhibit 10.3 to Farmers’ Current Report on Form 8-K filed with the Commission on November 14, 2013).
21	Subsidiaries of Farmers (filed herewith).
23	Consent of Independent Registered Public Accounting Firm (filed herewith).
24	Powers of Attorney of Directors and Executive Officers (filed herewith).
31.1	Rule 13a-14(a)/15d-14(a) Certification of Kevin J. Helmick, President and Chief Executive Officer of Farmers (principal executive officer)(filed herewith).
31.2	Rule 13a-14(a)/15d-14(a) Certification of Carl D. Culp, Executive Vice President and Treasurer of Farmers (principal financial officer) (filed herewith).
32.1	Certification pursuant to 18 U.S.C. Section 1350 of Kevin J. Helmick, President and Chief Executive Officer of Farmers (principal executive officer) (filed herewith).
32.2	Certification pursuant to 18 U.S.C. Section 1350 of Carl D. Culp, Executive Vice President and Treasurer of Farmers (principal financial officer) (filed herewith).
101.INS	XBRL Instance Document (filed herewith).
101.SCH	XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).

* Constitutes a management contract or compensatory plan or arrangement.

Copies of any exhibits will be furnished to shareholders upon written request. Request should be directed to Carl D. Culp, Executive Vice President and Treasurer, Farmers National Banc Corp., 20 S. Broad Street, Canfield, Ohio 44406.

100

EX-10.9

Exhibit 10.9

FARMERS NATIONAL BANC CORP.

CASH LONG-TERM INCENTIVE AWARD AGREEMENT

(201__)

Farmers National Banc Corp. (the “Company”) hereby grants the undersigned Participant an Award pursuant to the Farmers National Banc Corp. Long-Term Incentive Plan (the “Cash LTI Plan”), and this Award Agreement (this “Award Agreement”) is effective the day of , 201__.

1.Name of Participant:  _______________

2. Performance Period:  The three-year period beginning January 1, 201__ and ending on December 31, 201__ (the “Performance Period”).

3. Target Cash Award as Percentage of Base Compensation: [____]% x .3 (the “Target Cash Award”).

4. Earning an Award:  At the end of the Performance Period, the Participant shall be eligible to receive a payment equal to between 0% and 250% of the Target Cash Award based on the achievement of the Performance Objectives set forth below during the Performance Period. Performance between two stated levels will be interpolated when determining the percentage of the Target Cash Award earned.  Performance with respect to each Performance Objective is calculated separately.  

(a) The Target Cash Award can be earned based on the Company’s Total Shareholder Return during the Performance Period compared to the Total Shareholder Return of the Peer Group during the Performance Period (“Relative TSR”) that corresponds to the percentage below:

Relative TSR Compared to Peer Group during Performance Period	Percentage of Target Cash Award Earned
Equal to or less than Peer Group 25th percentile	0%
Equal to Peer Group 50th percentile	50%
Equal to Peer Group 59th percentile	100%
Equal to or higher than Peer Group 85th percentile	250%

For this purpose: (i) Relative TSR shall be determined by the Committee in its sole discretion; and (ii) the Committee shall select the institutions constituting, and make such periodic adjustments as it determines appropriate to, the “Peer Group” in its sole discretion.

5. Payment of Award:  With respect to the Performance Period, the Committee shall certify the level of achievement of the Performance Objectives and determine the amount payable with respect to an Award based on the level of achievement of the Performance Objectives set forth in Section 4. Payment of the Award shall be made to the Participant in cash in a single lump sum between January 1 and March 15 of the year following the end of the Performance Period.

6. Limitations on Payment of Award:  The Committee may, in its sole discretion, reduce the amount payable with respect to the Award.  

7. Forfeiture of Awards:  If the Company is required to prepare an accounting restatement due to material non-compliance of the Company, as a result of misconduct by a Participant, with any financial reporting requirement under any applicable laws, the Participant shall reimburse the Company for all amounts received under the Cash LTI Plan within 30 days after receipt of notice of the same from the Company.

8. Effect of Termination:  If the Participant’s employment terminates for any reason prior to the end of the Performance Period, the Participant shall forfeit any right to payment with respect to an Award for such Performance Period.  Notwithstanding the foregoing:

(a) Death, Disability or Retirement. If the Participant dies, becomes Disabled or Retires during the last 12 months of the Performance Period, the amount payable with respect to the Participant’s Award (if any) shall be multiplied by a fraction, the numerator of which is the number of whole months elapsed during the Performance Period prior to the Participant’s death, Disability or Retirement and the denominator of which is 36.  Payment shall be made at the same time and in the same form, and subject to the same conditions, as set forth in Section 5.

(b) Termination for Cause.  If the Participant is Terminated for Cause (regardless of whether such Termination would also constitute a Retirement) during the Performance Period, the Participant shall forfeit any right to payment with respect to the Award.

9. Effect of Change in Control:Notwithstanding the foregoing, if the Participant is Terminated by the Company, other than for “Cause” within two years following a Change in Control, the Participant shall be entitled to receive a payment equal to the amount payable with respect to the Awards as though the Performance Objectives had been satisfied at the “target” level of achievement for the Performance Period.  Payment with respect to the Award will be made in a single lump-sum cash payment within 60 days following the date of Termination.

10. Miscellaneous:  

(a) Non-Transferability.An Award may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution.  

(b) Beneficiary.Unless otherwise specifically designated by the Participant in writing, a Participant’s beneficiary under the Cash LTI Plan shall be the Participant’s spouse or, if no spouse survives the Participant, the Participant’s estate.

(c) No Right to Continued Service or to Awards.  The granting of an Award shall impose no obligation on the Company or any Affiliate to continue the employment of a Participant or interfere with or limit the right of the Company or any Affiliate to Terminate the employment of the Participant at any time, with or without Cause, which right is expressly reserved.  

(d) Tax Withholding.  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 Cash LTI Plan.

(e) Requirements of Law.  The grant of Awards 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.  

(f) Governing Law.  The Cash LTI 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.

(g) Award Subject to Cash LTI Plan. The Award is subject to the terms and conditions described in this Award Agreement and the Cash LTI Plan, which is incorporated by reference into and made a part of this Award Agreement.  In the event of a conflict between the terms of the Cash LTI Plan and the terms of this Award Agreement, the terms of the Cash LTI Plan will govern.  The Committee has the sole responsibility of interpreting the Cash LTI Plan and this Award Agreement, and its determination of the meaning of any provision in the Cash LTI Plan or this Award Agreement will be binding on the Participant. Capitalized terms that are not defined in this Award Agreement have the same meanings as in the Cash LTI Plan.

-2-

(h) Section 409A Payment Delay.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 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.

(i) Signature in Counterparts.  This Award Agreement may be signed in counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument.

[signature page attached]

PARTICIPANT
	Date:
Print Name:

FARMERS NATIONAL BANC CORP.
By:	Date:
Its:

-3-

EX-10.10

Exhibit 10.10

FARMERS NATIONAL BANC CORP.

EQUITY LONG-TERM INCENTIVE AWARD AGREEMENT

(201__)

Farmers National Banc Corp. (the “Company”) hereby grants the undersigned Participant an Award pursuant to the Farmers National Banc Corp. 2012 Equity Incentive Plan (the “Equity LTI Plan”) and this Award Agreement (this “Award Agreement”) effective the day of , 201__ (“Grant Date”).

1. Name of Participant:

2. Performance Period:  The three-year period beginning January 1, 201__ and ending on December 31, 201__ (the “Performance Period”).

3. Target Equity Award as Percentage of Base Compensation: [____]% x .7 (the “Target Equity Award”).

4. Earning an Award:  At the end of the Performance Period, the Participant shall be eligible to receive a benefit to be received in shares equal in value at the Grant Date to between 0% and 250% of the Target Equity Award based on the achievement of the Performance Objectives set forth below during the Performance Period. Performance between two stated levels will be interpolated when determining the percentage of the Target Equity Award earned.  Performance with respect to each Performance Objective is calculated separately.

(a) The Target Equity Award can be earned in shares of the Company’s common stock based on sum of the Company’s return on equity for each fiscal year during the Performance Period divided by three (“Average ROE”) compared to the Average ROE of the Peer Group during the Performance Period (the “Average ROE Award Shares”).  The total number of the Average ROE Award Shares was determined by (i) dividing the dollar amount of Participant’s Target Award by the average reported closing price of a share of Company common stock during the 30-day period ending on the day prior to the Grant Date of this Award (the “Target ROE Award Shares”), and (ii) multiplying the result by 250% (2.5), rounded to the nearest whole share, to determine the total Average ROE Award Shares eligible to be earned upon vesting.  Between 0% and 100% of the Average ROE Award Shares are subject to vesting on the Normal Vesting Date in accordance with the following schedule and percentages:

Average ROE Compared to Peer Group during Performance Period	Percentage of Average ROE Award Shares Earned
Equal to or less than Peer Group 25th percentile	0%
Equal to Peer Group 50th percentile	20%
Equal to Peer Group 59th percentile	40%
Equal to or higher than Peer Group 85th percentile	100%

For these purposes: (i) Average ROE shall be determined by the Committee in its sole discretion; and (ii) the Committee shall select the institutions constituting, and make such periodic adjustments as it determines appropriate to, the “Peer Group” in its sole discretion.

5. Payment of Award:  With respect to the Performance Period, the Committee shall certify the level of achievement of the Performance Objectives and determine the amount payable with respect to an Award based on the level of achievement of the Performance Objectives set forth in Section 4. Payment of the Award shall be made to the Participant in the form of a number of shares of Company common stock determined by multiplying the applicable performance percentage from the schedule in Section 4(a) times the Participant’s total number of Average ROE Award Shares. Any Average ROE Award Shares that do not vest as of the Normal Vesting Date will be forfeited.

6. Limitations on Payment of Award:  The Committee may, in its sole discretion, reduce the amount payable with respect to the Award.  

7. Forfeiture of Awards:  If the Company is required to prepare an accounting restatement due to material non-compliance of the Company, as a result of misconduct by a Participant, with any financial reporting requirement under any applicable laws, the Participant shall reimburse the Company for all amounts received under the Equity LTI Plan within 30 days after receipt of notice of the same from the Company. 

8. Effect of Termination:  If the Participant’s employment terminates for any reason prior to the end of the Performance Period, the Participant shall forfeit any right to payment with respect to an Award for such Performance Period.  Notwithstanding the foregoing:

(a) Death, Disability or Retirement. If the Participant dies, becomes Disabled or Retires during the last 12 months of the Performance Period, the amount payable with respect to the Participant’s Award (if any) shall be multiplied by a fraction, the numerator of which is the number of whole months elapsed during the Performance Period prior to the Participant’s death, Disability or Retirement and the denominator of which is 36.  Payment shall be made at the same time and in the same form, and subject to the same conditions, as set forth in Section 5.

(b) Termination for Cause.  If the Participant is Terminated for Cause (regardless of whether such Termination would also constitute a Retirement) during the Performance Period, the Participant shall forfeit any right to payment with respect to the Award.

9. Effect of Change in Control:Notwithstanding the foregoing, if the Participant is Terminated by the Company, other than for “Cause” within two years following a Change in Control, the Participant shall be entitled to receive an amount with respect to the Awards as though the Performance Objectives had been satisfied at the “target” level of achievement for the Performance Period, determined as follows:

(a) 40% of the Average ROE Award Shares will vest immediately and will be delivered to the Participant within 60 days following the date of Termination.

10.Miscellaneous:  

(a) Non-Transferability.An Award may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution.  

(b) Beneficiary.Unless otherwise specifically designated by the Participant in writing, a Participant’s beneficiary under the Equity LTI Plan shall be the Participant’s spouse or, if no spouse survives the Participant, the Participant’s estate.

(c) No Right to Continued Service or to Awards.  The granting of an Award shall impose no obligation on the Company or any Affiliate to continue the employment of a Participant or interfere with or limit the right of the Company or any Affiliate to Terminate the employment of the Participant at any time, with or without Cause, which right is expressly reserved.  

(d) Tax Withholding.  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 Equity LTI Plan.

(e) Requirements of Law.  The grant of Awards 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.  

(f) Governing Law.  The Equity LTI 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.

-2-

(a) Award Subject to Equity LTI Plan. The Award is subject to the terms and conditions described in this Award Agreement and the Equity LTI Plan, which is incorporated by reference into and made a part of this Award Agreement.  In the event of a conflict between the terms of the Equity LTI Plan and the terms of this Award Agreement, the terms of the Equity LTI Plan will govern.  The Committee has the sole responsibility of interpreting the Equity LTI Plan and this Award Agreement, and its determination of the meaning of any provision in the Equity LTI Plan or this Award Agreement will be binding on the Participant. Capitalized terms that are not defined in this Award Agreement have the same meanings as in the Equity LTI Plan. 

(g) Section 409A Payment Delay.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 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.

(h) Signature in Counterparts.  This Award Agreement may be signed in counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument.

[signature page attached]

PARTICIPANT
	Date:
Print Name:

FARMERS NATIONAL BANC CORP.
By:	Date:
Its:

-3-

EX-10.12

Exhibit 10.12

Director Compensation

Each director of Farmers National Banc Corp. (the “Corporation”) who is not an employee of the Corporation shall receive an annual retainer fee of $35,000. Directors with significant additional duties shall receive the following additional retainers: (i) $15,000 for the independent Chair of the Board of Directors; (ii) $10,000 for the independent Board Vice Chair; (iii) $10,000 for the Chair of the Executive Committee; and (iv) $5,000 for all other committee Chairs.

EX-21

Exhibit 21

Subsidiaries of Farmers National Banc Corp.

Farmers National Banc Corp.

- The Farmers National Bank of Canfield

- Farmers Trust Company

- National Associates, Inc.

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements on Form S-3D (No. 333-180649) and Forms S-8 (Nos. 333-188570, 333-185260 and 333-176399) of Farmers National Banc Corp. of our report dated February 27, 2015 relating to the consolidated financial statements and effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K of Farmers National Banc Corp. for the year ended December 31, 2015.

	Crowe Horwath LLP
Cleveland, Ohio
March 10, 2016

EX-24

Exhibit 24

POWER OF ATTORNEY

Each director and/or officer of Farmers National Banc Corp. (the “Corporation”) whose signature appears below hereby appoints KEVIN J. HELMICK and CARL D. CULP, and each of them, with full power of substitution and resubstitution, as attorneys or attorney to sign for the undersigned and in his or her name, place and stead, and in any and all capacities stated below, and to cause to be filed with the Securities and Exchange Commission (the “Commission”), the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and likewise to sign and file with the Commission any and all amendments (on Form 10-K/A) and exhibits thereto, and any and all applications and documents to be filed with the Commission pertaining to such Annual Report, with full power and authority to do and perform any and all acts and things whatsoever requisite, necessary or advisable to be done in the premises, as fully and for all intents and purposes as each of the undersigned could so if personally present, hereby ratifying and approving the acts of said attorneys and any of them and any such substitute.

IN WITNESS WHEREOF, we have hereunto set our hands effective as of the 23rd day of February, 2016.

/s/ Kevin J. Helmick	/s/ Carl D. Culp	/s/ Joseph W. Sabat
Kevin J. Helmick	Carl D. Culp	Joseph W. Sabat
President &CEO	Executive VP, CFO and Treasurer	Controller
(Principal Executive Officer)	(Principal Financial Officer)	(Principal Accounting Officer)
February 23, 2016	February 23, 2016	February 23, 2016
/s/ Gregory C. Bestic	Director
Gregory C. Bestic
/s/ Lance J. Ciroli	Director
Lance J. Ciroli
/s/ Anne Frederick Crawford	Director
Anne Frederick Crawford
/s/ Ralph D. Macali	Director
Ralph D. Macali
/s/ Terry A. Moore	Director
Terry A. Moore
/s/ David Z. Paull	Director
David Z. Paull
/s/ Earl R. Scott	Director
Earl R. Scott
/s/ James R. Smail	Director
James R. Smail
/s/ Gregg Strollo	Director
Gregg Strollo
/s/ Howard J. Wenger	Director
Howard J. Wenger

EX-31.1

Exhibit 31.1

CERTIFICATION

CERTIFICATION FOR ANNUAL REPORT ON FORM 10-K

I, Kevin J. Helmick, certify that:

1) I have reviewed this annual report on Form 10-K of Farmers National Banc Corp. (the “Company”);

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 controls 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.

/s/ Kevin J. Helmick

Kevin J. Helmick

President and Chief Executive Officer

(Principal Executive Officer)

March 10, 2016

EX-31.2

Exhibit 31.2

CERTIFICATION

CERTIFICATION FOR ANNUAL REPORT ON FORM 10-K

I, Carl D. Culp, certify that:

1) I have reviewed this annual report on Form 10-K of Farmers National Banc Corp. (the “Company”);

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 controls 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.

/s/ Carl D. Culp

Carl D. Culp

Executive Vice President and Treasurer

(Principal Financial Officer)

March 10, 2016

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 Annual Report of Farmers National Banc Corp. (the “Company”) on Form 10-K for the period ending December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Kevin J. Helmick, principal executive officer of the Company, 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 Company.

/s/ Kevin J. Helmick

Kevin J. Helmick

President and Chief Executive Officer

(Principal Executive Officer)

March 10, 2016

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 Annual Report of Farmers National Banc Corp. (the “Company”) on Form 10-K for the period ending December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Carl D. Culp, principal financial officer of the Company, 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 Company.

/s/ Carl D. Culp

Carl D. Culp

Executive Vice President and Treasurer

(Principal Financial Officer)

March 10, 2016

XML

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Mar. 07, 2016	Jun. 30, 2015
Document And Entity Information [Abstract]
Entity Registrant Name	FARMERS NATIONAL BANC CORP /OH/
Entity Central Index Key	0000709337
Document Type	10-K
Trading Symbol	FMNB
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 211.8
Entity Common Stock, Shares Outstanding		26,935,484

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
ASSETS
Cash and due from banks	$ 22,500	$ 11,410
Federal funds sold and other	33,514	16,018
TOTAL CASH AND CASH EQUIVALENTS	56,014	27,428
Securities available for sale	394,312	389,829
Loans held for sale	1,769	511
Loans	1,296,865	663,852
Less allowance for loan losses	8,978	7,632
NET LOANS	1,287,887	656,220
Premises and equipment, net	24,190	17,049
Goodwill	35,090	5,591
Other intangibles	7,821	3,222
Bank owned life insurance	29,234	16,367
Other assets	33,585	20,750
TOTAL ASSETS	1,869,902	1,136,967
Deposits:
Noninterest-bearing	314,650	184,697
Interest-bearing	1,094,397	731,006
TOTAL DEPOSITS	1,409,047	915,703
Short-term borrowings	225,832	69,136
Long-term borrowings	22,153	18,381
Other liabilities	14,823	10,187
TOTAL LIABILITIES	$ 1,671,855	$ 1,013,407
Commitments and contingent liabilities (Note 12)
Stockholders' equity
Common Stock - Authorized 35,000,000 shares; issued 27,590,531 in 2015 and 19,031,059 in 2014	$ 176,287	$ 106,021
Retained earnings	26,316	20,944
Accumulated other comprehensive income	133	1,093
Treasury stock, at cost; 646,247 shares in 2015 and 622,447 shares in 2014	(4,689)	(4,498)
TOTAL STOCKHOLDERS' EQUITY	198,047	123,560
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,869,902	$ 1,136,967

XML

Consolidated Balance Sheets (Parenthetical) - shares	Dec. 31, 2015	Dec. 31, 2014
Statement Of Financial Position [Abstract]
Common stock, shares authorized	35,000,000	35,000,000
Common stock, shares issued	27,590,531	19,031,059
Treasury stock, shares	646,247	622,447

XML

Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
INTEREST AND DIVIDEND INCOME
Loans, including fees	$ 44,657	$ 30,901	$ 30,717
Taxable securities	5,903	7,282	7,062
Tax exempt securities	2,951	2,523	2,949
Dividends	287	190	196
Federal funds sold and other interest income	29	19	35
TOTAL INTEREST AND DIVIDEND INCOME	53,827	40,915	40,959
INTEREST EXPENSE
Deposits	3,489	4,008	4,560
Short-term borrowings	177	46	51
Long-term borrowings	424	525	452
TOTAL INTEREST EXPENSE	4,090	4,579	5,063
NET INTEREST INCOME	49,737	36,336	35,896
Provision for loan losses	3,510	1,880	1,290
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	46,227	34,456	34,606
NONINTEREST INCOME
Service charges on deposit accounts	3,253	2,627	2,370
Bank owned life insurance income, including death benefits	702	459	696
Trust fees	6,156	6,092	5,583
Insurance agency commissions	569	354	243
Security gains	94	457	863
Impairment of equity securities	0	0	(3)
Retirement plan consulting fees	2,130	1,809	628
Investment commissions	1,172	1,026	989
Net gains on sale of loans	1,101	358	505
Other operating income	3,129	2,121	2,040
TOTAL NONINTEREST INCOME	18,306	15,303	13,914
NONINTEREST EXPENSE
Salaries and employee benefits	26,638	20,878	22,054
Occupancy and equipment	5,452	4,505	4,189
State and local taxes	1,171	878	1,313
Professional fees	3,180	2,451	2,212
Merger related costs	6,392	0	330
Advertising	1,325	1,112	911
FDIC insurance	937	733	719
Intangible amortization	983	767	624
Core processing charges	2,176	1,571	1,354
Other operating expenses	5,725	5,267	5,351
TOTAL NONINTEREST EXPENSE	53,979	38,162	39,057
INCOME BEFORE INCOME TAXES	10,554	11,597	9,463
INCOME TAXES	2,499	2,632	1,683
NET INCOME	$ 8,055	$ 8,965	$ 7,780
EARNINGS PER SHARE: Basic and Diluted	$ 0.36	$ 0.48	$ 0.41

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Statement Of Income And Comprehensive Income [Abstract]
NET INCOME		$ 8,055	$ 8,965	$ 7,780
Other comprehensive income (loss):
Net unrealized holding gains (losses) on available for sale securities		(1,403)	10,486	(19,310)
Reclassification adjustment for gains realized in income	[1]	(94)	(457)	(860)
Net unrealized holding gains (losses)		(1,497)	10,029	(20,170)
Income tax effect		524	(3,510)	7,060
Unrealized holding gains (losses), net of reclassification and tax		(973)	6,519	(13,110)
Change in funded status of post-retirement health plan		20	60	(3)
Income tax effect		(7)	(21)	1
Change in funded status of post-retirement health plan, net of tax		13	39	(2)
Other comprehensive income (loss), net of tax		(960)	6,558	(13,112)
TOTAL COMPREHENSIVE INCOME (LOSS)		$ 7,095	$ 15,523	$ (5,332)

[1] Pre-tax reclassification adjustments relating to available-for-sale securities are reported in security gains and the tax impact is included in income tax expense on the consolidated statements of income.

XML

Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands	Total	COMMON STOCK	RETAINED EARNINGS	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	TREASURY STOCK, AT COST
Balance at beginning of year at Dec. 31, 2012		$ 104,504	$ 8,683	$ 7,647	$ (42)
Issued 8,559,472 shares in 2015 and 228,777 in 2013 as part of business combinations		1,400
Stock compensation expense for 320,980 unvested shares in 2015 and 46,957 in 2014		1
Balance at end of year at Dec. 31, 2013	$ 113,007	105,905	14,215	(5,465)	(1,648)
Net income	7,780		7,780
Dividends declared: $.12 cash dividends per share in 2014 and 2013, $.18 in 2012			(2,248)
Other comprehensive income (loss)				(13,112)
Reissued 5,000 treasury shares to satisfy exercised stock options					0
Reissued 3,000 treasury shares under the Equity Incentive Plan					0
Purchased 26,800 shares in 2015, 372,368 shares in 2014 and 247,845 shares in 2013					(1,606)
Issued 8,559,472 shares in 2015 and 228,777 in 2013 as part of business combinations		0
Stock compensation expense for 320,980 unvested shares in 2015 and 46,957 in 2014		116
Balance at end of year at Dec. 31, 2014	123,560	106,021	20,944	1,093	(4,498)
Net income	8,965		8,965
Dividends declared: $.12 cash dividends per share in 2014 and 2013, $.18 in 2012			(2,236)
Other comprehensive income (loss)				6,558
Reissued 5,000 treasury shares to satisfy exercised stock options					32
Reissued 3,000 treasury shares under the Equity Incentive Plan					0
Purchased 26,800 shares in 2015, 372,368 shares in 2014 and 247,845 shares in 2013					(2,882)
Issued 8,559,472 shares in 2015 and 228,777 in 2013 as part of business combinations		69,780
Stock compensation expense for 320,980 unvested shares in 2015 and 46,957 in 2014		486
Balance at end of year at Dec. 31, 2015	198,047	$ 176,287	26,316	133	(4,689)
Net income	$ 8,055		8,055
Dividends declared: $.12 cash dividends per share in 2014 and 2013, $.18 in 2012			$ (2,683)
Other comprehensive income (loss)				$ (960)
Reissued 5,000 treasury shares to satisfy exercised stock options					0
Reissued 3,000 treasury shares under the Equity Incentive Plan					22
Purchased 26,800 shares in 2015, 372,368 shares in 2014 and 247,845 shares in 2013					$ (213)

XML

Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Common stock, shares issued	27,590,531	19,031,059
COMMON STOCK
Common stock, shares issued	8,559,472		228,777
Stock compensation expense, unvested shares	320,980	46,957
RETAINED EARNINGS
Cash dividend declared per share of common stock	$ 0.12	$ 0.12	$ 0.12
TREASURY STOCK, AT COST
Treasury stock reissued to satisfy exercised stock options, shares	5,000
Treasury stock reissued under the Equity Incentive Plan, shares	3,000
Treasury stock repurchased	26,800	372,368	247,845

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME	$ 8,055	$ 8,965	$ 7,780
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses	3,510	1,880	1,290
Depreciation and amortization	2,751	1,981	1,945
Net amortization of securities	2,275	1,472	2,646
Security gains	(94)	(457)	(863)
Stock compensation expense	486	116	0
Impairment of equity securities	0	0	3
Loss on sale of other real estate owned	286	53	75
Earnings on bank owned life insurance	(702)	(459)	(478)
Income recognized from death benefit on bank owned life insurance	0	0	(218)
Origination of loans held for sale	(46,201)	(15,911)	(25,085)
Proceeds from loans held for sale	46,455	15,916	29,056
Net gains on sale of loans	(1,101)	(358)	(505)
Net change in other assets and liabilities	(9,397)	(946)	(1,394)
NET CASH FROM OPERATING ACTIVITIES	6,323	12,252	14,252
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and repayments of securities available for sale	63,243	49,401	75,015
Proceeds from sales of securities available for sale	102,257	57,170	94,016
Purchases of securities available for sale	(72,683)	(64,400)	(149,886)
Loan originations and payments, net	(139,656)	(35,352)	(45,529)
Proceeds from sale of other real estate owned	553	337	282
Purchase of bank owned life insurance	(6,000)	0	0
Proceeds from BOLI death benefit	0	0	329
Proceeds from sale of land and building	723	0	118
Additions to premises and equipment	(1,299)	(972)	(215)
Net cash received (paid) in business combinations	29,749	0	(2,111)
NET CASH FROM INVESTING ACTIVITIES	(23,113)	6,184	(27,981)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits	(44,659)	487	(3,793)
Net change in short-term borrowings	91,159	(22,481)	1,731
Repayments of long-term borrowings	(3,228)	(1,441)	(601)
New advances for long term borrowing	5,000	10,000	10,000
Cash dividends paid	(2,683)	(2,236)	(2,248)
Proceeds from reissuance of treasury shares	0	32	0
Repurchase of common shares	(213)	(2,882)	(1,606)
NET CASH FROM FINANCING ACTIVITIES	45,376	(18,521)	3,483
NET CHANGE IN CASH AND CASH EQUIVALENTS	28,586	(85)	(10,246)
Beginning cash and cash equivalents	27,428	27,513	37,759
Ending cash and cash equivalents	56,014	27,428	27,513
Supplemental cash flow information:
Interest paid	4,047	4,623	5,095
Income taxes paid	2,620	1,925	1,130
Supplemental noncash disclosures:
Transfer of loans and property to other real estate owned	888	368	193
Issuance of stock for business combinations	69,780	0	1,400
Contingent consideration for NAI acquisition	0	0	920
Security purchases not settled	$ 1,338	$ 0	$ 0

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include the accounts of Farmers National Banc Corp. and its wholly-owned subsidiaries, The Farmers National Bank (“Bank”) of Canfield, Farmers Trust Company (“Trust”) and National Associates, Inc. (“NAI”). The Company acquired First National Bank of Orrville (“First National Bank”) a subsidiary of National Bancshares Corporation (“NBOH”) and 1^st National Community Bank (“FNCB”) a subsidiary of Tri-State 1^st Banc, Inc. (“Tri-State”) during 2015 and consolidated all activity of both acquisitions within the Bank, see Note 2.  The consolidated financial statements also include the accounts of the Farmers National Bank of Canfield’s subsidiaries; Farmers National Insurance (“Insurance”) and Farmers of Canfield Investment Co. (“Investments”).  Together the entities are referred to as “the Company.” All significant intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations: The Company provides full banking services, including wealth management services and mortgage banking activity, through the Bank. As a national bank, the Bank is subject to regulation of the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The primary area served by the Bank is the northeastern region of Ohio through thirty eight (38) locations.  With the acquisition of FNCB the Bank has added one branch location in southwestern Pennsylvania.  The Company provides trust services through its Trust subsidiary, retirement consulting services through its NAI subsidiary and insurance services through the Bank’s Insurance subsidiary.  The primary purpose of Investments, the new subsidiary of the Bank in 2014, is to invest in municipal securities. Farmers Trust Company has a state-chartered bank license to conduct trust business from the Ohio Department of Commerce – Division of Financial Institutions.

Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.

Cash Flows: Cash and cash equivalents include cash on hand, deposits with other financial institutions and federal funds sold. Generally, federal funds are purchased and sold for one-day periods. Net cash flows are reported for loan and deposit transactions, short term borrowings, and other assets and liabilities.

Securities Available for Sale: Debt securities are classified as available for sale when they might be sold before maturity. Equity securities with readily determinable fair values are classified as available for sale. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method. Purchases are recorded on the trade date.

Management evaluates securities for other-than-temporary impairment (OTTI) on at least a quarterly basis, and more frequently when economic or market conditions warrant. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. 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) other-than-temporary impairment (OTTI) related to other factors, which is recognized in other comprehensive income. 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.

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are charged to earnings.

Mortgage loans held for sale are sold with or without servicing rights released. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, and an allowance for loan losses. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate.

Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level yield method without anticipating prepayments. Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

For all classes of loans, when interest accruals are discontinued, interest accrued but not received for loans placed on non-accrual is reversed against interest income. Interest on such loans is thereafter recorded on a cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Purchased Credit Impaired Loans: The Company purchased loans that have shown evidence of credit deterioration since origination through the acquisition of First National Bank. These loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. The Company estimates the amount and timing of expected cash flows for each loan, and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan. The excess of the loan’s contractual principal and interest over expected cash flows is not recorded.

Over the life of the loan, expected cash flows continue to be estimated.  If the present value of expected cash flows is less than the carrying amount, a loss is recorded as a provision for loan losses.  If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

Derivatives: Derivative financial instruments are recognized as assets or liabilities at fair value. The Company’s derivatives are interest-rate swap agreements, which are used as part of its asset and liability management strategy to help manage its interest rate risk position. The Company does not use derivatives for trading or balance sheet hedging purposes. The derivative transactions are considered instruments with no hedging designation, otherwise known as stand-alone derivatives. Changes in the fair value of the derivatives are reported currently in earnings, as other noninterest income.

Concentration of Credit Risk: There are no significant concentrations of loans to any one industry or customer. However, most of the Company’s business activity is with customers located within Northeastern Ohio. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy of a 9 county area. Loans secured by real estate represent 68% of the total portfolio and changes related to the real estate markets are monitor by management.

Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred loan losses, increased by the provision for loan losses and decreased by charge-offs less recoveries. The allowance is based on management’s judgment taking into consideration past loss experience, reviews of individual loans, current economic conditions and other factors considered relevant by management at the financial statement date. While management uses the best information available to establish the allowance, future adjustments to the allowance may be necessary, which may be material, if economic conditions differ substantially from the assumptions used in estimating the allowance. If additions to the original estimate of the allowance for loan losses are deemed necessary, they will be reported in earnings in the period in which they become reasonably estimable and probable. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.

Acquired loans are individually evaluated and for those purchased loans without evidence of credit deterioration, management evaluates each reviewed loan using an internal grading system with a grade assigned to each loan at the date of acquisition. To the extent that any purchased loan is not specifically reviewed, such loan is assumed to have characteristics similar to the characteristics of the acquired portfolio of purchased loans. The grade for each purchased loan without evidence of credit deterioration is reviewed subsequent to the date of acquisition any time a loan is renewed or extended or at any time information becomes available to the Company that provides material insight regarding the loan’s performance, the status of the borrower or the quality or value of the underlying collateral. To the extent that current information indicates it is probable that the Company will collect all amounts according to the contractual terms thereof, such loan is not considered impaired and is not individually considered in the determination of the required allowance for loan losses. To the extent that current information indicates it is probable that the Company will not be able to collect all amounts according to the contractual terms thereof, such loan is considered impaired and is considered in the determination of the required level of allowance.

In determining the day 1 fair values of purchased loans without evidence of credit deterioration at the date of acquisition, management includes (i) no carry over of any previously recorded allowance for loan losses and (ii) an adjustment of the unpaid principal balance to reflect an appropriate market rate of interest, given the risk profile and grade assigned to each loan. This adjustment is accreted into earnings as a yield adjustment, using the effective yield method, over the remaining life of each loan.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is considered impaired when, based on the current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Loans, for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Impairment is measured on a loan by loan basis for commercial and commercial real estate loans over $750 thousand, individually or in the aggregate, by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans are collectively evaluated for impairment and accordingly, they are not separately identified for impairment disclosures. Non-real estate secured consumer loans in bankruptcy where debt has not been reaffirmed are considered troubled debt restructurings and are evaluated individually to ensure that accurate accounting treatment is in place.

The Company considers the guidance on troubled debt restructuring for individual consumer and residential loans when evaluating for impairment disclosure. Troubled debt restructurings are measured at the present value of estimated future cash flow using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced for the most recent twelve quarters. The formula for calculating the allowance for loan losses requires that the historical loss percentage be applied to homogeneous and all risk rated loans. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The following portfolio segments have been identified:

Commercial Loans. Commercial credit is extended to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or other projects. The majority of these borrowers are customers doing business within our geographic regions. These loans are generally underwritten individually and secured with the assets of the company and the personal guarantee of the business owners. Commercial loans are made based primarily on the historical and projected cash flow of the borrower and the underlying collateral provided by the borrower.

Commercial Real Estate Loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as cash flow loans and the repayment of these loans is largely dependent on the successful operation of the property. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and property type.

Consumer Loans. Consumer loans are primarily comprised of loans made directly to consumers and indirectly through automobile dealerships. These loans have a specific matrix which consists of several factors including debt to income, type of collateral and loan to collateral value, credit history and relationship with the borrower. Consumer lending uses risk-based pricing in the underwriting process.

Residential Real Estate Loans. Residential mortgage loans represent loans to consumers for the purchase or refinance of a residence. These loans are generally financed up to 15 years, and in most cases, are extended to borrowers to finance their primary residence. Real estate market values at the time of origination directly affect the amount of credit extended and, in the event of default, subsequent changes in these values may impact the severity of losses.

Servicing Rights:When mortgage loans are sold and servicing rights are retained the servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. The Company compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non‑interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.  Servicing assets are evaluated for impairment based upon the fair value of the assets compared to carrying amount. Any impairment is reported as a valuation allowance, to the extent that fair value is less than the capitalized amount for a grouping. There was no valuation allowance impairment against servicing assets as of December 31, 2015.

Servicing fee income is recorded when earned for servicing loans based on a contractual percentage of the outstanding principal or a fixed amount per loan. The amortization of mortgage servicing rights is netted against loan servicing fee income. Servicing fees, late fees and ancillary fees related to loan servicing are not considered significant for financial reporting.

Foreclosed Assets: 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. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost, less accumulated depreciation. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 5 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 10 years.

Restricted Stock: The Bank is a member of the Federal Home Loan Bank (FHLB) system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. The Bank is also a member of and owns stock in the Federal Reserve Bank. These stocks are carried at cost, classified as restricted securities included in other assets, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Bank Owned Life Insurance: The Company has purchased life insurance policies on certain key officers. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Long-term Assets: Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Goodwill and Other Intangible Assets: Goodwill resulting from a business combination is generally determined as the excess of the fair value of the consideration transferred over the fair value of the net assets acquired as of the acquisition date. Goodwill acquired in a purchase business combination and determined to have an indefinite useful life is not amortized, but tested for impairment at least annually. The Company has selected September 30 as the date to perform the annual goodwill impairment tests associated with the acquisition of the Trust, NAI, First National Bank and FNCB. Intangible assets with definite useful lives are amortized over their estimated useful lives. Goodwill is the only intangible asset with an indefinite life on the balance sheet. Core deposit intangible assets arising from bank acquisitions are amortized over their estimated useful lives of 7 to 8 years. Non-compete contracts are amortized on a straight line basis, over the term of the agreements. Customer relationship and trade name intangibles are amortized over an average of 13 years on an accelerated method.

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Stock-Based Compensation: Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. The market price of the Company’s common stock at the grant date is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Retirement Plans: Employee 401(k) and profit sharing plan expense is the amount of matching and discretionary contributions. Deferred compensation and supplemental retirement plan expense allocates the benefits over years of service.

Earnings per Common Share: Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock equity awards. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the financial statements.

Comprehensive Income (Loss): Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized gains and losses on securities available for sale and changes in the funded status of the post-retirement health plan, which are recognized as separate components of equity, net of tax effects.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the financial statements.

Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank (“FRB”) was required to meet regulatory reserve and clearing requirements. The Company had deposits with the FRB of $29.4 million at December 31, 2015 and $14.0 million at December 31, 2014.

Equity: Treasury stock is carried at cost.

Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank and Trust to the holding company or by the holding company to shareholders.

Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions as more fully disclosed in Note 6. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates.

Operating Segments: While the 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 three lines of business, the Bank, Trust and Retirement Consulting segments. The Company discloses segment information in Note 21.

Reclassification: Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or stockholders’ equity.

Adoption of New Accounting Standards:  In September 2015, the FASB amended existing guidance under Accounting Standards Update (ASU) 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The amendments require that an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. These amendments are effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2015. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-11, "Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures." The new guidance aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as repurchase financings with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The amendments in the ASU require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The amendments in the ASU also require expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The Company adopted the amendments in this ASU effective January 1, 2015. In addition, the expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings were effective for the Company’s reporting period ending June 30, 2015. All of the Company's repurchase agreements are typical in nature (i.e., not repurchase-to-maturity transactions or repurchase agreements executed as a repurchase financing) and are accounted for as secured borrowings. As such, the adoption of ASU No. 2014-11 did not have a material impact on the Company's consolidated financial statements.

Newly Issued, Not Yet Effective Accounting Standards: In January, 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, affecting public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. Requiring most equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income.  The ASU will take effect for fiscal years beginning after December 15, 2017.  The adoption of this standard is not expected to have a material effect on the Company’s consolidated financial statements.

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Business Combinations

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Business Combinations

NOTE 2 - BUSINESS COMBINATIONS

On October 1, 2015, the Company completed the acquisition of Tri-State, the parent company of FNCB. The transaction involved both cash and 1,296,517 shares of stock totaling $14.3 million. Pursuant to the terms of the merger agreement, common shareholders of Tri-State received 1.747 common shares, without par value, of the Company or $14.20 in cash, for each common share of Tri-State, subject to proration provisions specified in the merger agreement that provide for a targeted aggregate split of total consideration consisting of 75% shares of Farmers’ common stock and 25% cash. Preferred shareholders of Tri-State received $13.60 in cash for each share of Series A Preferred Stock, without par value, of Tri-State.

Goodwill of $2.8 million, which is recorded on the balance sheet, 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 $1.2 million is related to core deposits.  The following table summarizes the consideration paid for Tri-State and the amounts of the assets acquired and liabilities assumed on the closing date of the acquisition.

Consideration
Cash	$	3,607
Stock		10,733
Fair value of total consideration transferred	$	14,340
Assets acquired and liabilities assumed
Cash and due from financial institutions	$	13,553
Securities available for sale		48,300
Loans, net		66,374
Premises and equipment		1,935
Bank owned life insurance		3,274
Core deposit intangible		1,173
Other assets		1,329
Total assets		135,938
Fair value of liabilities assumed
Deposits		114,342
Long-term borrowings		2,002
Accrued interest payable and other liabilities		8,072
Total liabilities		124,416
Net assets acquired	$	11,522
Goodwill created		2,818
Total net assets acquired	$	14,340

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

On June 19, 2015, the Company completed the acquisition of all outstanding stock of NBOH, the parent company of First National Bank. The transaction involved both cash and 7,262,955 shares of stock totaling $74.8 million. First National Bank branches became branches of Farmers Bank.  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, 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.

The acquisition provides an attractive mix of additional loans and deposits and helps the Company achieve additional operating scale and drives earnings per share growth. In addition to the financial benefits, the merger is a significant step in Company’s strategy to expand its footprint.  The combined company creates a top-performing midwest community bank that has the scale, product depth and efficiency to compete effectively.

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
Loans, net		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		65,537
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

The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows.  However, the Company believes that all contractual cash flows related to these financial instruments will be collected. As such, these receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans, which have shown evidence of credit deterioration since origination. Receivables acquired that were not subject to these requirements include non-impaired loans and customer receivables with a fair value and gross contractual amounts receivable of $429.7 million on the date of acquisition.

The following table presents pro forma information as if both acquisitions that occurred in 2015 actually took place at the beginning of 2014.  The pro forma information includes adjustments for merger related costs, 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.

	2015		2014
Net interest income	$	62,524	$	58,098
Net income	$	12,750	$	15,316
Basic and diluted earnings per share	$	0.47	$	0.57

On July 1, 2013, the Company completed the acquisition of all outstanding stock of the retirement planning consultancy 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 with an initial fair value of $920 thousand. The measurement period is defined, in essence, as “the twelve month period ending on the second anniversary of the closing date.”  Based on actual EBITDA growth the Company recognized $1.3 million of expense during the year ended December 31, 2015 after writing the fair value of the contingent consideration down to $156 thousand in 2014.  The final payment of $1.5 million was made to satisfy the contingent consideration clause of the agreement during September 2015.

Goodwill of $2.6 million, which is recorded on the balance sheet, arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies.  The goodwill is not expected to be deductible for income tax purposes.  The goodwill was partially impaired as described in Note 8, by an amount equal to the reduction in the contingent consideration payable. The two adjustments offset resulting in a zero impact to the Company’s consolidated statements of income for year ended December 31, 2014.  After the impairment in 2014 the NAI goodwill was $1.9 million at year ended 2015 and 2014. The fair value of other intangible assets of $2.3 million is related to client relationships, company name and noncompetition agreements.  The intangible assets had a carrying value of $1.3 million at December 31, 2015.

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Securities Available for Sale

12 Months Ended

Dec. 31, 2015

Investments Debt And Equity Securities [Abstract]

Securities Available for Sale

NOTE 3 - SECURITIES AVAILABLE FOR SALE

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at December 31, 2015 and 2014 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized
	2015	Cost		Gains		Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities		$	11,120	$	38	$	(52	)	$	11,106
State and political subdivisions			136,781		2,354		(412	)		138,723
Corporate bonds			1,134		5		(5	)		1,134
Mortgage-backed securities - residential			197,289		1,433		(2,135	)		196,587
Collateralized mortgage obligations			28,035		0		(870	)		27,165
Small Business Administration			19,755		1		(457	)		19,299
Equity securities			203		127		(32	)		298
Totals		$	394,317	$	3,958	$	(3,963	)	$	394,312

				Gross		Gross
		Amortized		Unrealized		Unrealized
	2014	Cost		Gains		Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities		$	24,515	$	418	$	(112	)	$	24,821
State and political subdivisions			90,369		2,183		(671	)		91,881
Corporate bonds			936		3		(8	)		931
Mortgage-backed securities - residential			223,216		2,395		(1,249	)		224,362
Collateralized mortgage obligations			25,988		98		(911	)		25,175
Small Business Administration			23,193		1		(775	)		22,419
Equity securities			120		121		(1	)		240
Totals		$	388,337	$	5,219	$	(3,727	)	$	389,829

The proceeds from sales of available-for-sale securities and the associated gains and losses were as follows:

		2015			2014			2013
Proceeds	$	102,257		$	57,170		$	94,016
Gross gains		908			758			1,924
Gross losses		(814	)		(301	)		(1,061	)

The tax provision related to these net realized gains was $33 thousand, $160 thousand and $301 thousand respectively.

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. Securities not due at a single maturity date are shown separately.

Available for sale		December 31, 2015
		Amortized
Maturity		Cost		Fair Value
Within one year		$	16,564	$	16,697
One to five years			68,354		69,023
Five to ten years			51,655		52,775
Beyond ten years			12,462		12,468
Mortgage-backed securities, collateralized mortgage obligations and Small Business Administration			245,079		243,051
	Totals	$	394,114	$	394,014

Securities with a carrying amount of $219 million at December 31, 2015, $149 million at December 31, 2014 and $164 million at December 31, 2013 were pledged to secure public deposits and repurchase agreements. The Trust company had securities, with a carrying amount of $100 thousand, at year-end 2015, 2014 and 2013, pledged to qualify as a fiduciary in the State of Ohio.

In each year, there were no holdings of any other issuer that exceeded 10% of stockholders’ equity, other than the U.S. Government,  its agencies and its sponsored entities.

The following table summarizes the investment securities with unrealized losses at December 31, 2015 and 2014 aggregated by major security type and length of time in a continuous unrealized loss position.

2015
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and U.S. government
sponsored entities	$	6,044	$	(51	)	$	199	$	(1	)	$	6,243	$	(52	)
State and political subdivisions		22,016		(167	)		12,635		(245	)		34,651		(412	)
Corporate bonds		102		(1	)		478		(4	)		580		(5	)
Mortgage-backed securities - residential		79,301		(1,044	)		40,794		(1,091	)		120,095		(2,135	)
Collateralized mortgage obligations		14,342		(169	)		12,695		(701	)		27,037		(870	)
Small Business Administration		0		0			19,237		(457	)		19,237		(457	)
Equity securities		88		(32	)		0		0			88		(32	)
Total temporarily impaired	$	121,893	$	(1,464	)	$	86,038	$	(2,499	)	$	207,931	$	(3,963	)

2014
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and U.S. government
sponsored entities	$	498	$	(2	)	$	10,159	$	(110	)	$	10,657	$	(112	)
State and political subdivisions		987		(11	)		24,063		(660	)		25,050		(671	)
Corporate bonds		0		0			476		(8	)		476		(8	)
Mortgage-backed securities - residential		25,770		(202	)		55,576		(1,047	)		81,346		(1,249	)
Collateralized mortgage obligations		0		0			19,541		(911	)		19,541		(911	)
Small Business Administration		0		0			22,319		(775	)		22,319		(775	)
Equity securities		26		(1	)		0		0			26		(1	)
Total temporarily impaired	$	27,281	$	(216	)	$	132,134	$	(3,511	)	$	159,415	$	(3,727	)

The Company’s equity securities include local and regional bank holdings. During the year ended December 31, 2013 a $3 thousand pre-tax charge was recognized for the other-than-temporary decline in fair value on these equity holdings. No other-than-temporary impairments were recognized during 2015 or 2014.  If an other-than-temporary impairment were to occur, the amount of the impairment recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it would be required to sell the security before recovery of its amortized cost basis. The previous amortized cost basis less the impairment recognized in earnings becomes the new amortized cost basis of the investment.

As of December 31, 2015, the Company’s security portfolio consisted of 486 securities, 178 of which were in an unrealized loss position. The majority of unrealized losses are related to the Company’s holdings in securities issued by state and political subdivisions, mortgage-backed securities - residential, collateralized mortgage obligations and Small Business Administration, as discussed below:

Securities issued by State and Political subdivisions

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 and does not expect to be required to sell these securities before their anticipated recovery. The fair value is expected to recover as the securities approach their maturity date.

Mortgage-backed securities - residential

All of the Company’s holdings of mortgage-backed securities—residential at year end 2015 and 2014 were issued by U.S. Government sponsored enterprises. 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 other-than-temporarily impaired at December 31, 2015 and 2014.

Collateralized mortgage obligations

The Company’s portfolio includes collateralized mortgage obligations issued by U.S. Government sponsored enterprises. The decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality. The Company does not have the intent to sell these collateralized mortgage obligations and it is likely that it will not be required to sell the securities before their anticipated recovery. The Company monitors all securities to ensure adequate credit support and as of December 31, 2015 and 2014, the Company believes there is no other-than-temporary impairment.

Small Business Administration

The Company’s holdings of Small Business Administration securities are issued and backed by the full faith and credit of the U.S. Government. Unrealized losses on these Small Business Administration securities 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 securities 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 other-than-temporarily impaired at December 31, 2015 and 2014.

XML

Loans

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Loans

NOTE 4 - LOANS

Loans at year end were as follows:

	2015			2014
Originated loans:
Commercial real estate
Owner occupied	$	113,160		$	74,829
Non-owner occupied		139,502			122,228
Other		50,855			26,137
Commercial		157,447			120,493
Residential real estate
1-4 family residential		179,657			153,055
Home equity lines of credit		41,171			31,255
Consumer
Indirect		127,335			120,931
Direct		17,325			9,071
Other		4,508			3,626
Subtotal		830,960			661,625
Net deferred loan costs		2,731			2,227
Allowance for loan losses		(8,978	)		(7,632	)
Total originated loans		824,713			656,220
Acquired loans:
Commercial real estate
Owner occupied		131,673			0
Non-owner occupied		28,045			0
Other		23,536			0
Commercial		73,621			0
Residential real estate
1-4 family residential		133,701			0
Home equity lines of credit		40,929			0
Consumer
Direct		31,465			0
Other		204			0
Total acquired loans		463,174			0
Net loans	$	1,287,887		$	656,220

Purchased credit impaired loans

As part of the NBOH acquisition during 2015 the Company acquired various loans that displayed evidence of deterioration of credit quality since origination and which was probable that all contractually required payments would not be collected.  The carrying amounts and contractually required payments of these loans which are included in the loan balances above are summarized in the following tables:

	2015
Commercial real estate
Owner occupied	$	986
Non-owner occupied		501
Commercial		1,576
Total outstanding balance	$	3,063
Carrying amount, net of allowance of $31	$	2,215

Accretable yield, or income expected to be collected, is shown in the table below:

	2015
Beginning balance	$	0
New loans purchased		361
Accretion of income		(38	)
Ending balance	$	323

Contractually required payments receivable on loans purchased credit impaired acquired during the year:

	2015
Commercial real estate
Owner occupied	$	1,063
Non-owner occupied		586
Commercial		1,476
Total	$	3,125
Cash flows expected to be collected at acquisition	$	2,764
Fair value of acquired loans at acquisition	$	2,538

The key assumptions considered in evaluating expected cash flows include probability of default and the amount of actual prepayments after the acquisition date. Prepayments affect the estimated life of the loans and could change the amount of interest income and principal expected to be collected. In reforecasting future estimated cash flows, credit loss expectations are adjusted as necessary.  There were no adjustments to forecasted cash flows that impacted the allowance for loan losses for the year ended December 31, 2015.

The following tables present the activity in the allowance for loan losses by portfolio segment for years ended December 31, 2015, 2014 and 2013:

December 31, 2015	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	2,676		$	1,420		$	1,689		$	1,663		$	184	$	7,632
Provision for loan losses		857			234			354			1,776			289		3,510
Loans charged off		(536	)		(290	)		(320	)		(2,058	)		0		(3,204	)
Recoveries		130			9			122			779			0		1,040
Total ending allowance balance	$	3,127		$	1,373		$	1,845		$	2,160		$	473	$	8,978

December 31, 2014	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	2,752		$	1,219		$	1,964		$	1,419		$	214		$	7,568
Provision for loan losses		(50	)		357			233			1,370			(30	)		1,880
Loans charged off		(151	)		(185	)		(585	)		(2,213	)		0			(3,134	)
Recoveries		125			29			77			1,087			0			1,318
Total ending allowance balance	$	2,676		$	1,420		$	1,689		$	1,663		$	184		$	7,632

December 31, 2013	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	3,392		$	1,453		$	1,569		$	951		$	264		$	7,629
Provision for loan losses		(306	)		(397	)		674			1,369			(50	)		1,290
Loans charged off		(505	)		(99	)		(326	)		(1,723	)		0			(2,653	)
Recoveries		171			262			47			822			0			1,302
Total ending allowance balance	$	2,752		$	1,219		$	1,964		$	1,419		$	214		$	7,568

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 December 31, 2015 and 2014.  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.

December 31, 2015	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	429	$	5	$	63	$	0	$	0	$	497
Collectively evaluated for impairment		2,698		1,337		1,782		2,160		473		8,450
Acquired loans		0		0		0		0		0		0
Acquired with deteriorated credit quality		0		31		0		0		0		31
Total ending allowance balance	$	3,127	$	1,373	$	1,845	$	2,160	$	473	$	8,978
Loans:
Loans individually evaluated for impairment	$	5,853	$	712	$	3,414	$	103	$	0	$	10,082
Loans collectively evaluated for impairment		296,866		156,415		217,023		153,305		0		823,609
Acquired loans		181,987		72,673		174,630		31,669		0		460,959
Acquired with deteriorated credit quality		1,267		948		0		0		0		2,215
Total ending loans balance	$	485,973	$	230,748	$	395,067	$	185,077	$	0	$	1,296,865

December 31, 2014	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	514	$	272	$	88	$	0	$	0	$	874
Collectively evaluated for impairment		2,162		1,148		1,601		1,663		184		6,758
Total ending allowance balance	$	2,676	$	1,420	$	1,689	$	1,663	$	184	$	7,632
Loans:
Loans individually evaluated for impairment	$	7,139	$	1,940	$	3,425	$	93	$	0	$	12,597
Loans collectively evaluated for impairment		215,434		118,210		180,428		137,183		0		651,255
Total ending loans balance	$	222,573	$	120,150	$	183,853	$	137,276	$	0	$	663,852

The following tables present information related to impaired loans by class of loans as of and for year ended December 31, 2015, 2014 and 2013. The recorded investment in loans excludes accrued interest receivable due to immateriality.

December 31, 2015	UnpaidPrincipal Balance		Recorded Investment		Allowancefor LoanLosses Allocated		AverageRecorded Investment		InterestIncome Recognized
With no related allowance recorded:
Commercial real estate
Owner occupied	$	2,956	$	2,436	$	0	$	2,080	$	106
Non-owner occupied		343		342		0		372		30
Commercial		834		631		0		433		23
Residential real estate
1-4 family residential		2,575		2,310		0		2,174		147
Home equity lines of credit		283		268		0		260		15
Consumer		214		103		0		81		14
Subtotal		7,205		6,090		0		5,400		335
With an allowance recorded:
Commercial real estate
Owner occupied		1,597		1,595		379		2,008		70
Non-owner occupied		1,480		1,480		50		1,511		79
Commercial		81		81		5		540		4
Residential real estate
1-4 family residential		769		749		61		919		39
Home equity lines of credit		87		87		2		96		4
Consumer		0		0		0		0		0
Subtotal		4,014		3,992		497		5,074		196
Total	$	11,219	$	10,082	$	497	$	10,474	$	531

December 31, 2014	UnpaidPrincipal Balance		Recorded Investment		Allowancefor LoanLosses Allocated		AverageRecorded Investment		InterestIncome Recognized
With no related allowance recorded:
Commercial real estate
Owner occupied	$	2,448	$	2,318	$	0	$	1,860	$	46
Non-owner occupied		391		391		0		653		20
Commercial		531		511		0		1,273		22
Residential real estate
1-4 family residential		2,421		2,156		0		1,804		79
Home equity lines of credit		476		251		0		263		13
Consumer		185		93		0		166		4
Subtotal		6,452		5,720		0		6,019		184
With an allowance recorded:
Commercial real estate
Owner occupied		2,882		2,882		446		2,104		94
Non-owner occupied		1,548		1,548		68		1,570		81
Commercial		1,444		1,429		272		818		2
Residential real estate
1-4 family residential		944		928		85		1,207		41
Home equity lines of credit		90		90		3		113		5
Consumer		0		0		0		2		0
Subtotal		6,908		6,877		874		5,814		223
Total	$	13,360	$	12,597	$	874	$	11,833	$	407

December 31, 2013	UnpaidPrincipal Balance		Recorded Investment		Allowancefor LoanLosses Allocated		AverageRecorded Investment		InterestIncome Recognized
With no related allowance recorded:
Commercial real estate
Owner occupied	$	4,302	$	3,762	$	0	$	2,643	$	137
Non-owner occupied		491		389		0		438		0
Commercial		1,007		971		0		1,363		25
Residential real estate
1-4 family residential		1,026		961		0		1,462		51
Home equity lines of credit		107		99		0		194		0
Consumer		111		112		0		9		0
Subtotal		7,044		6,294		0		6,109		213
With an allowance recorded:
Commercial real estate
Owner occupied		886		884		91		2,536		39
Non-owner occupied		1,593		1,588		75		1,975		87
Commercial		1,462		1,459		110		594		5
Residential real estate
1-4 family residential		1,458		1,347		190		112		48
Home equity lines of credit		148		147		12		12		0
Consumer		247		251		82		21		0
Subtotal		5,794		5,676		560		5,250		179
Total	$	12,838	$	11,970	$	560	$	11,359	$	392

Cash basis interest income recognized and interest income recognized was materially equal for 2015, 2014 and 2013.

Nonaccrual loans and loans past due 90 days 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 over 90 days still on accrual by class of loans as of December 31, 2015 and 2014:

	December 31, 2015				December 31, 2014
	Nonaccrual		LoansPastDue 90DaysorMore Still Accruing		Nonaccrual		LoansPastDue 90DaysorMore Still Accruing
Originated loans:
Commercial real estate
Owner occupied	$	3,313	$	0	$	3,315	$	44
Non-owner occupied		345		0		41		0
Commercial		541		73		1,645		0
Residential real estate
1-4 family residential		2,406		336		2,742		195
Home equity lines of credit		127		112		139		40
Consumer
Indirect		266		297		90		193
Direct		30		3		36		0
Other		0		24		0		1
Total originated loans	$	7,028	$	845	$	8,008	$	473
Acquired loans:
Commercial real estate
Owner occupied	$	126	$	18	$	0	$	0
Other		92		0		0		0
Commercial		1,068		0		0		0
Residential real estate
1-4 family residential		458		467		0		0
Home equity lines of credit		125		7		0		0
Consumer
Direct		161		50		0		0
Total acquired loans	$	2,030	$	542	$	0	$	0
Total loans	$	9,058	$	1,387	$	8,008	$	473

The following tables present the aging of the recorded investment in past due loans as of December 31, 2015 and 2014 by class of loans:

December 31, 2015	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
Originated loans:
Commercial real estate
Owner occupied	$	34	$	0	$	3,313	$	3,347	$	109,532	$	112,879
Non-owner occupied		0		0		345		345		138,824		139,169
Other		112		0		0		112		50,559		50,671
Commercial		0		0		614		614		156,513		157,127
Residential real estate
1-4 family residential		1,694		402		2,742		4,838		174,376		179,214
Home equity lines of credit		62		5		239		306		40,917		41,223
Consumer
Indirect		2,059		525		563		3,147		128,280		131,427
Direct		311		5		33		349		17,124		17,473
Other		13		10		24		47		4,461		4,508
Total originated loans:	$	4,285	$	947	$	7,873	$	13,105	$	820,586	$	833,691
Acquired loans:
Commercial real estate
Owner occupied	$	669	$	0	$	144	$	813	$	130,860	$	131,673
Non-owner occupied		0		0		0		0		28,045		28,045
Other		0		0		92		92		23,444		23,536
Commercial		276		2		1,068		1,346		72,275		73,621
Residential real estate
1-4 family residential		1,994		244		925		3,163		130,538		133,701
Home equity lines of credit		78		11		132		221		40,708		40,929
Consumer
Direct		567		56		211		834		30,631		31,465
Other		0		0		0		0		204		204
Total acquired loans	$	3,584	$	313	$	2,572	$	6,469	$	456,705	$	463,174
Total loans	$	7,869	$	1,260	$	10,445	$	19,574	$	1,277,291	$	1,296,865

December 31, 2014	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
Originated loans:
Commercial real estate
Owner occupied	$	0	$	0	$	3,359	$	3,359	$	71,272	$	74,631
Non-owner occupied		0		0		41		41		121,872		121,913
Other		0		0		0		0		26,029		26,029
Commercial		0		0		1,645		1,645		118,505		120,150
Residential real estate
1-4 family residential		1,892		546		2,937		5,375		147,223		152,598
Home equity lines of credit		205		92		179		476		30,779		31,255
Consumer
Indirect		2,136		406		283		2,825		121,754		124,579
Direct		108		18		36		162		8,909		9,071
Other		17		6		1		24		3,602		3,626
Total loans	$	4,358	$	1,068	$	8,481	$	13,907	$	649,945	$	663,852

Troubled Debt Restructurings:

Total troubled debt restructurings were $9.3 million and $8.1 million at December 31, 2015 and 2014 respectively. The Company has allocated $528 thousand and $242 thousand of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2015 and 2014. There were no commitments to lend additional amounts to borrowers with loans that were classified as troubled debt restructurings at December 31, 2015 and $25 thousand in commitments at December 31, 2014.  

During the years ending December 31, 2015, 2014 and 2013, 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; a permanent reduction of the recorded investment in the loan; a permanent increase of the recorded investment in the loan due to a protective advance to pay delinquent real estate taxes or advance new monies; a deferral of principal payments; or a legal concession.

Troubled debt restructuring modifications involved a reduction of the notes stated interest rate in the range of 0.38% to 11.51%.  There were also extensions of the maturity dates on these and other troubled debt restructurings in the range of fifteen months to 126 months.

The following tables present loans by class modified as troubled debt restructurings that occurred during the years ending December 31, 2015, 2014 and 2013:

December 31, 2015			Pre- Modification		Post- Modification
	Number of		Outstanding Recorded		Outstanding Recorded
Troubled Debt Restructurings:	Loans		Investment		Investment
Originated loans:
Commercial real estate
Owner occupied		2	$	801	$	801
Commercial		1		8		8
Residential real estate
1-4 family residential		13		760		760
Home equity lines of credit		2		60		60
Indirect		12		104		104
Consumer		1		8		8
Total originated loans		31	$	1,741	$	1,741
Acquired loans:
Commercial		2	$	957	$	957
Total loans		33	$	2,698	$	2,698

The troubled debt restructurings described above increased the allowance for loan losses by $101 thousand and resulted in charge offs of $129 thousand during the year ended December 31, 2015.

December 31, 2014			Pre- Modification		Post- Modification
	Number of		Outstanding Recorded		Outstanding Recorded
Troubled Debt Restructurings:	Loans		Investment		Investment
Commercial real estate
Owner occupied		1	$	303	$	316
Non-owner occupied		2		408		408
Residential real estate
1-4 family residential		21		1,042		1,059
Home equity lines of credit		5		128		128
Indirect		2		37		37
Consumer		1		11		11
Total loans		32	$	1,929	$	1,959

The troubled debt restructurings described above increased the allowance for loan losses by $11 thousand and resulted in charge offs of $42 thousand during the year ended December 31, 2014.

December 31, 2013			Pre- Modification		Post- Modification
	Number of		Outstanding Recorded		Outstanding Recorded
Troubled Debt Restructurings:	Loans		Investment		Investment
Commercial real estate
Owner occupied		2	$	226	$	239
Commercial		5		649		682
Residential real estate
1-4 family residential		4		131		98
Home equity lines of credit		5		214		214
Indirect		24		188		188
Consumer		1		1		1
Total loans		41	$	1,409	$	1,422

The troubled debt restructurings described above increased the allowance for loan losses by $66 thousand and resulted in charge offs of $50 thousand during the year ended December 31, 2013.

There was one commercial real estate loan for $40 thousand, one residential real estate loan for $1 thousand and one home equity line of credit for $11 thousand modified as troubled debt restructurings for which there were payment defaults within twelve months following the modification during the year December 31, 2015.  All three loans were past due at December 31, 2015.  There was no effect on the provision for loan losses as a result of this default during 2015.

There were four residential real estate loans for which there were payment defaults within twelve months following the modification of the troubled debt restructuring during the year ending December 31, 2014.  Only one of the four loans was past due at December 31, 2014.  There was no effect on the provision for loan losses as a result of this default during 2014.

There were two commercial loans for $204 thousand, one commercial real estate loan for $205 thousand and one residential real estate loan for $35 thousand modified as troubled debt restructuring for which there were payment defaults within twelve months following the modification during the year ending December 31, 2013.  All four loans were past due at December 31, 2013.  There was one indirect loan modified as troubled debt restructuring for which there were payment defaults within twelve months following the modification during the year ending December 31, 2013.  The loan was not past due at December 31, 2013.  There was no additional provision or any impact to the allowance for losses associated with these loans.

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 $750 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. They 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.

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

December 31, 2015	Pass		Special Mention		Sub standard		Doubtful		Not Rated		Total
Originated loans:
Commercial real estate
Owner occupied	$	107,222	$	1,069	$	4,588	$	0	$	0	$	112,879
Non-owner occupied		135,847		461		2,861		0		0		139,169
Other		50,376		0		295		0		0		50,671
Commercial		154,215		939		1,973		0		0		157,127
Total originated loans	$	447,660	$	2,469	$	9,717	$	0	$	0	$	459,846
Acquired loans:
Commercial real estate
Owner occupied	$	130,028	$	0	$	1,645	$	0	$	0	$	131,673
Non-owner occupied		26,141		1,340		564		0		0		28,045
Other		22,843		476		217		0		0		23,536
Commercial		69,674		635		3,312		0		0		73,621
Total acquired loans	$	248,686	$	2,451	$	5,738	$	0	$	0	$	256,875
Total loans	$	696,346	$	4,920	$	15,455	$	0	$	0	$	716,721

December 31, 2014	Pass		Special Mention		Sub standard		Doubtful		Not Rated		Total
Commercial real estate
Owner occupied	$	66,036	$	2,534	$	6,061	$	0	$	0	$	74,631
Non-owner occupied		115,159		3,760		2,994		0		0		121,913
Other		25,710		0		319		0		0		26,029
Commercial		114,409		1,566		4,175		0		0		120,150
Total loans	$	321,314	$	7,860	$	13,549	$	0	$	0	$	342,723

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential, consumer and indirect 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 and indirect auto loans based on payment activity. Nonperforming loans are loans past due 90 days and still accruing interest and nonaccrual loans.

	Residential Real Estate				Consumer
December 31, 2015	1-4 Family Residential		HomeEquityLines of Credit		Indirect		Direct		Other
Originated loans:
Performing	$	176,472	$	40,984	$	130,864	$	17,440	$	4,484
Nonperforming		2,742		239		563		33		24
Total originated loans	$	179,214	$	41,223	$	131,427	$	17,473	$	4,508
Acquired loans:
Performing		132,776		40,797		0		31,254		204
Nonperforming		925		132		0		211		0
Total acquired loans	$	133,701	$	40,929	$	0	$	31,465	$	204
Total loans	$	312,915	$	82,152	$	131,427	$	48,938	$	4,712

	Residential Real Estate				Consumer
December 31, 2014	1-4 Family Residential		HomeEquityLines of Credit		Indirect		Direct		Other
Performing	$	149,661	$	31,076	$	124,296	$	9,035	$	3,625
Nonperforming		2,937		179		283		36		1
Total	$	152,598	$	31,255	$	124,579	$	9,071	$	3,626

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Loan Servicing

12 Months Ended

Dec. 31, 2015

Transfers And Servicing [Abstract]

Loan Servicing

NOTE 5 – LOAN SERVICING

The Company began servicing loans upon the acquisition of First National Bank’s servicing portfolio in June 2015. Mortgage loans serviced for others are not reported as assets. The principal balances of these loans at year-end are as follows:

	2015
Mortgage loan portfolio serviced for:
FHLMC	$	68,605

Custodial escrow balances maintained in connection with serviced loans were $584 thousand at December 31, 2015.

Activity for mortgage servicing rights since the acquisition date of June 18, 2015 is as follows:

	2015
Servicing rights:
Beginning balance	$	347
Additions		166
Amortization to expense		(60	)
Ending balance	$	453

There was no valuation allowance required for mortgage servicing rights at December 31, 2015.

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Fair Value

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value

NOTE 6 - 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 of each type of financial instrument:

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. 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. For the years ended December 31, 2015 and 2014 the fair value of Level 3 investment securities was immaterial.

Derivative Instruments

The fair values of derivative instruments are based on valuation models using observable market data as of the measurement date (Level 2).

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 are summarized below:

	Fair Value Measurements at December 31, 2015 Using:
	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
Investment securities available-for sale
U.S Treasury and U.S. government sponsored entities	$	11,106	$	0	$	11,106	$	0
State and political subdivisions		138,723		0		138,723		0
Corporate bonds		1,134		0		1,134		0
Mortgage-backed securities-residential		196,587		0		196,572		15
Collateralized mortgage obligations		27,165		0		27,165		0
Small Business Administration		19,299		0		19,299		0
Equity securities		298		298		0		0
Total investment securities	$	394,312	$	298	$	393,999	$	15
Loan yield maintenance provisions	$	789	$	0	$	789	$	0
Financial Liabilities
Interest rate swaps	$	789	$	0	$	789	$	0

	Fair Value Measurements at December 31, 2014 Using:
	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
Investment securities available-for sale
U.S Treasury and U.S. government sponsored entities	$	24,821	$	0	$	24,821	$	0
State and political subdivisions		91,881		0		91,881		0
Corporate bonds		931		0		931		0
Mortgage-backed securities-residential		224,362		0		224,352		10
Collateralized mortgage obligations		25,175		0		25,175		0
Small Business Administration		22,419		0		22,419		0
Equity securities		240		240		0		0
Total investment securities	$	389,829	$	240	$	389,579	$	10
Loan yield maintenance provisions	$	638	$	0	$	638	$	0
Financial Liabilities
Interest rate swaps	$	638	$	0	$	638	$	0

There were no significant transfers between Level 1 and Level 2 during 2015 or 2014.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31:

	Investment Securities Available-for-sale (Level 3)
	2015			2014		2013
Beginning Balance	$	10		$	10	$	11
Total unrealized gains or losses:
Included in other comprehensive income		0			0		0
Repayments		(1	)		0		(1	)
Acquired and/or purchased		6			0		0
Ending Balance	$	15		$	10	$	10

There is no impact to earnings as a result of fair value measurements on items valued on a recurring basis, using level 3 inputs.

Assets Measured on a Non-Recurring Basis

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

	Fair Value Measurements
	at December 31, 2015 Using:
	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	$	1,448	$	0	$	0	$	1,448
Commercial		1,514		0		0		1,514
1–4 family residential		42		0		0		42
Consumer		13		0		0		13

	Fair Value Measurements
	at December 31, 2014 Using:
	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	$	807	$	0	$	0	$	807
1–4 family residential		63		0		0		63
Other real estate owned
Commercial real estate		45		0		0		45

Impaired loans carried at fair value that are measured for impairment using the fair value of the collateral had a carrying amount of $3.4 million, with a valuation allowance of $383 thousand at December 31, 2015, resulting in an additional provision for loan losses of $270 thousand for the year ending December 31, 2015.  At December 31, 2014, impaired loans had a carrying amount of $988 thousand, with a valuation allowance of $117 thousand. Loans measured at fair value throughout the year resulted in an additional provision for loan losses of $992 thousand for the year ending December 31, 2014. Excluded from the fair value of impaired loans, at December 31, 2015 and 2014, discussed above are $2.9 million and $4.2 million of loans with specific allowance amounts allocated and classified as troubled debt restructurings and measured using the present value of discounted cash flows, 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 Company had no related write downs during the year ended December 31, 2015.  At December 31, 2014, other real estate owned measured at fair value less costs to sell, had a net carrying amount of $45 thousand. During the year ended December 31, 2014 the Company charged down one property reflecting an updated appraisal which resulted in a write-down of $5 thousand.

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 year ended 2014 and 2013:

December 31, 2015	Fair value		Valuation Technique(s)	Unobservable Input(s)	Range Weighted Average
Impaired loans
Commercial real estate	$	701	Income approach	Adjustment for differences between earning multiplier	(49.42%) - 40.89% 35.33%
		747	Quoted price for loan relationship	Offer price	1.01% 1.01%
Commercial		252	Quoted price for loan relationship	Offer price	(3.01%) (3.01%)
		1,262	Income approach	Adjustment for differences between earning multiplier	(29.77%) (29.77%)
Residential		42	Sales comparison	Adjustment for differences between comparable sales	(18.32%) - 24.16% (14.02%)
Consumer		13	Sales comparison	Adjustment for differences between comparable sales	(12.86%) - 11.97% (5.79%)

December 31, 2014	Fair value		Valuation Technique(s)	Unobservable Input(s)	Range Weighted Average
Impaired loans
Commercial real estate	$	1,237	Sales comparison	Adjustment for differences between comparable sales	-41.59% - 77.25% (-7.82%)
		116	Income approach	Adjustment for differences in net operating income	-13.64% - 12.93% (-5.96%)
Commercial		807	Sales comparison	Adjustment for differences between comparable sales	(27.43%) - 32.86% 9.96%
Residential		63	Sales comparison	Adjustment for differences between comparable sales	(18.32%) - 24.16% (14.02%)
Other real estate owned		45	Sales comparison	Adjustment for differences between comparable sales	(12.86%) - 11.97% (5.79%)

Fair Value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments measured on a recurring basis and not previously presented, at December 31, 2015 and December 31, 2014 are as follows:

			Fair Value Measurements at December 31, 2015 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	56,014	$	22,500	$	33,514	$	0	$	56,014
Restricted stock		9,384	n/a		n/a		n/a		n/a
Loans held for sale		1,769		0		1,813		0		1,813
Loans, net		1,287,887		0		0		1,296,075		1,296,075
Mortgage servicing rights		453		0		453		0		453
Accrued interest receivable		5,158		0		2,011		3,147		5,158
Financial liabilities
Deposits		1,409,047		1,164,506		241,909		0		1,406,415
Short-term borrowings		225,832		0		225,832		0		225,832
Long-term borrowings		22,153		0		22,306		0		22,306
Accrued interest payable		445		26		419		0		445

			Fair Value Measurements at December 31, 2014 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	27,428	$	11,410	$	16,018	$	0	$	27,428
Restricted stock		4,224	n/a		n/a		n/a		n/a
Loans held for sale		511		0		523		0		523
Loans, net		656,220		0		0		658,993		658,993
Accrued interest receivable		3,237		0		1,645		1,592		3,237
Financial liabilities
Deposits		915,703		708,752		206,708		0		915,460
Short-term borrowings		69,136		0		69,136		0		69,136
Long-term borrowings		18,381		0		18,837		0		18,837
Accrued interest payable		402		2		400		0		402

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 federal 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 the average of binding contracts and quotes from third party investors resulting in a Level 2 classification.

Loan servicing rights: Fair value is based on a valuation model that calculates the present value of estimated future net servicing income.  The valuation model utilizes interest rate, prepayment speed and default rate assumptions that market participants would use in estimating future net servicing income (Level 2).

Accrued Interest Receivable/Payable: The carrying amounts of accrued interest receivable and payable approximate fair value resulting in a Level l, 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.

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Premises and Equipment

12 Months Ended

Dec. 31, 2015

Property Plant And Equipment [Abstract]

Premises and Equipment

NOTE 7—PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows:

		2015			2014
Land	$	5,833		$	3,143
Buildings		24,724			20,842
Furniture, fixtures and equipment		13,485			11,651
Leasehold Improvements		450			247
		44,492			35,883
Less accumulated depreciation		(20,302	)		(18,834	)
NET BOOK VALUE	$	24,190		$	17,049

Depreciation expense was $1.5 million for year ended December 31, 2015, $1.1 million for year ended December 31, 2014 and $1.2 million for year ended December 31, 2013.

During June 2015 the Company added 14 branches, mostly in Wayne and Medina Counties, as part of the NBOH acquisition and in September 2015, 4 branches, mostly in Columbiana County, as part of the Tri-State acquisition.  All fixed assets were recorded at their fair market value.

During 2014, the Company purchased property located adjacent to its Canfield branch on South Broad Street in Canfield, for $395 thousand to house some investment, insurance and mortgage lending activities.  The building was put into service in June 2014.

The Company leases certain branch properties under operating leases. Rent expense was $332, $323, and $302 thousand for 2015, 2014 and 2013. In addition to rent expense, under the leases, common area maintenance and property taxes are paid and the amount can fluctuate according to the costs incurred. Rent commitments, before considering renewal options that generally are present, were as follows:

2016	$	307
2017		319
2018		306
2019		303
2020		267
Thereafter		1,380
TOTAL	$	2,882

XML

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

NOTE 8—GOODWILL AND INTANGIBLE ASSETS

Goodwill associated with the Company’s purchase of NBOH in June 2015, Tri-State in October 2015, NAI in July of 2013 and Trust in 2009 totaled $35.1 million at December 31, 2015 and $5.6 million at December 31, 2014. The NBOH, Tri-State and NAI acquisitions are more fully described in Note 2. Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value, which is determined through a two-step impairment test. Step 1 includes the determination of the carrying value of the reporting units, including the existing goodwill and intangible assets, and estimating the fair value of the reporting units. After our annual impairment analysis as of September 30, 2015, the Company determined the fair value of all goodwill exceeded its carrying amount. After the annual impairment testing as of September 30, 2014 the fair value of NAI was less than its carrying value. When the carrying amount of a reporting unit exceeds its fair value, a second step to the impairment test is required. The analysis indicated that the Step 2 analysis was necessary for the NAI reporting unit. Step 2 of the goodwill impairment test is performed to measure the impairment loss.  Step 2 requires that the implied fair value of the reporting unit’s goodwill be compared to the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. After performing Step 2 it was determined that the implied value of goodwill was less than the carrying costs, resulting in an impairment charge of $763 thousand for the year ended December 31, 2014.  During the initial valuation of NAI the future income projections were not fully attained.  The fair value of the reporting unit was determined based on a discounted cash flow model.  Additionally, the $763 thousand impairment was offset with an equal reduction of the future payment liability associated with the purchase.  The two adjustments offset resulting in a zero impact to the Company’s consolidated statements of income for year ended December 31, 2014.

Other Intangibles

Core deposit intangible assets associated with the Company’s purchases of NBOH and Tri-State totaled $5.6 million.

Other intangible assets were as follows at year end:

	2015					2014
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Other intangible:
Customer relationship intangibles	$	5,970	$	(3,585	)	$	5,970	$	(2,972	)
Non-compete contracts		370		(325	)		370		(295	)
Trade Name		190		(65	)		190		(41	)
Core deposit intangible		5,582		(316	)		0		0
Total	$	12,112	$	(4,291	)	$	6,530	$	(3,308	)

Aggregate amortization expense was $983 thousand, $767 thousand, and $624 thousand for 2015, 2014, and 2013.

Estimated amortization expense for each of the next five years:

2016	$	1,293
2017		1,207
2018		1,123
2019		1,048
2020	973
Thereafter		2,177
TOTAL	$	7,821

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Interest Bearing Deposits

12 Months Ended

Dec. 31, 2015

Interest Bearing Deposits [Abstract]

Interest Bearing Deposits

NOTE 9 - INTEREST BEARING DEPOSITS

Time deposits of $250 thousand or more were $39.6 million and $26.3 million at year-end 2015 and 2014.

Following is a summary of scheduled maturities of certificates of deposit during the years following December 31, 2015:

2016	$	108,493
2017		39,007
2018		18,528
2019		27,827
2020		37,494
Thereafter		7,733
TOTAL	$	239,082

Following is a summary of year-end interest bearing deposits:

		2015		2014
Demand	$	327,434	$	126,456
Money Market		293,209		266,040
Savings		234,672		131,559
Certificates of Deposit		239,082		206,951
TOTAL	$	1,094,397	$	731,006

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Short-term Borrowings

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Short-term Borrowings

NOTE 10 - SHORT-TERM BORROWINGS

The Bank has short-term advances from the Federal Home Loan Bank that had maturity dates of less than one year at the time of the advance. All balances are due within one year and can be renewed at the time of maturity.  Federal Home Loan Bank advances are secured by pledgings described in the following Long-Term Borrowings footnote.  Balances at year end were as follows:

	2015					2014
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Repurchase advance with a rate of .39% at December 31, 2015	$	100,000		0.39	%
Cash management advance with rates from .26% to .45% at    December 31, 2015 and 2014		50,000		0.39	%	$	10,000		0.26	%
Total advances	$	150,000		0.39	%	$	10,000		0.26	%

Securities sold under repurchase agreements are secured by the Bank’s holdings of debt securities issued by U.S. government sponsored entities and agencies with a carrying amount of $79.3 million and $61.7 million at year ended 2015 and 2014.

Repurchase agreements are financing arrangements that mature within 89 days and usually overnight. Under the agreements, customers agree to maintain funds on deposit with the Bank and in return acquire an interest in a pool of securities pledged as collateral against the funds. The securities are held in segregated safekeeping accounts at the Federal Reserve Bank and Farmers Trust Company. Information concerning securities sold under agreements to repurchase is summarized as follows:

	2015			2014			2013
Average balance during the year	$	71,779		$	71,573		$	90,951
Average interest rate during the year		0.07	%		0.04	%		0.04	%
Maximum month-end balance during the year	$	89,574		$	78,972		$	100,462
Weighted average year-end interest rate		0.06	%		0.06	%		0.06	%
Balance at year-end	$	75,482		$	58,786		$	75,267

The following table provides a disaggregation of the obligation by class of collateral pledged for short-term financing obtained through the sales of repurchase agreements:

	2015
Overnight and continuous repurchase agreements
U.S. Treasury and U.S. government sponsored entities	$	5,276
State and political subdivisions		2,640
Mortgage-backed securities - residential		60,391
Collateralized mortgage obligations		7,175
Total borrowings	$	75,482

Management believes the risks associated with the agreements are minimal and in the case of collateral decline the company has additional investment securities available to adequately pledge as guarantees for the repurchase agreements.

The Bank has access to lines of credit amounting to $25 million at two major domestic banks that are below prime rate. The lines and terms are periodically reviewed by the banks and are generally subject to withdrawal at their discretion.  There were no borrowings under these lines at December 31, 2015 and 2014.

Farmers National Banc Corp has two unsecured revolving lines of credit for $6.5 million. The lines can be renewed annually. The lines have interest rates of prime with floors of 3.5% and 4.5%. The outstanding balance on the two lines was $350 thousand at December 31, 2015 and 2014.  The interest rate on the outstanding balance at December 31, 2015 and 2014 was 4.5%.

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Long-Term Borrowings

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Long-Term Borrowings

NOTE 11 - LONG-TERM BORROWINGS

At year end, long-term advances from the Federal Home Loan Bank were as follows:

	2015					2014
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Fixed-rate constant payment advances, at rates from .61%    to 4.88% at December 31, 2015 and 2014	$	15,054		1.24	%	$	8,381		1.72	%
Convertible and putable fixed-rate advances, at rates from 2.82%    to 4.45% at December 31, 2015 and 2014		5,000		4.45	%		10,000		3.64	%
Total advances	$	20,054		2.04	%	$	18,381		2.76	%

The Bank added $8 million in long-term advances as part of the two acquisitions during the year ended December 31, 2015. The Bank also has a total of $5 million in putable FHLB fixed-rate advances.  Should the FHLB elect the put, the Bank is required to repay the advance on that date without penalty.

Short-term and long-term Federal Home Loan Bank advances are secured by a blanket pledge of residential mortgage loans totaling $237.8 million and $110.3 million at year end 2015 and 2014. Based on this collateral the Bank is eligible to borrow an additional $63.4 million at year end 2015. Each advance is subject to a prepayment penalty if paid prior to its maturity date.

Scheduled payments of long-term FHLB advances are as follows:

Maturing in:
2016	$	7,247
2017		8,089
2018		1,008
2019		931
2020		860
Thereafter		1,919
TOTAL	$	20,054

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Commitments and Contingent Liabilities

12 Months Ended

Dec. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingent Liabilities

NOTE 12 - COMMITMENTS AND CONTINGENT LIABILITIES

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amounts of financial instruments with off-balance-sheet risk at year end were as follows:

	2015				2014
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	100	$	4,836	$	471	$	1,881
Unused lines of credit	$	64,338	$	204,889	$	108,382	$	39,205

Commitments to make loans are generally made for periods of 30 days or less. There is one fixed rate loan commitment for 2015 that has an interest rate of 3.89% and matures within fifteen years. Variable rate loan commitments have interest rates that at December 31, 2015 ranged from 4.25% to 5.00%.  The fixed rate loan commitments for 2014 have interest rates that range from 4.00% to 4.63% and mature within thirty years.  Fixed rate unused lines of credit have interest rates ranging from 0.20% to 21.90% at December 31, 2015 and 2.11% to 13.50% at December 31, 2014.

Standby letters of credit are considered financial guarantees. The standby letters of credit have a contractual value of $5.6 million at December 31, 2015 and $5.2 million at December 31, 2014. The carrying amount of these items on the balance sheet is not material.

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Stock Based Compensation

12 Months Ended

Dec. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Based Compensation

NOTE 13 - STOCK BASED COMPENSATION

During 2012, the Company, with the approval of shareholders, created the 2012 Equity Incentive Plan (the “Plan”). The Plan permits the award of up to 500 thousand shares to the Company’s directors and employees to promote the Company’s long-term financial success by motivating performance through long-term incentive compensation and to better align the interests of its employees with those of its shareholders. There were restricted stock awards, under the Plan, totaling 279,023 shares during 2015 and 46,957 shares during 2014. The restricted stock awards were granted with a fair value price equal to the market price of the Company’s common stock at the date of grant. Expense recognized for the Plan was $486 thousand for the year ended 2015 and $116 thousand for 2014.  As of December 31, 2015, there was $1.9 million of total unrecognized compensation expense related to the nonvested shares granted under the Plan.  The remaining cost is expected to be recognized over the next 2.7 years. There were no shares awarded or expense recognized during the year ended December 31, 2013 under the Plan.

The following is the activity under the Plan during the years ended December 31, 2015 and 2014:

	2015					2014
	Units			Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Beginning balance		46,957		$	7.39		0	$	0
Granted		279,023			7.98		46,957		7.39
Vested		0			0		0		0
Forfeited		(5,000	)		7.88		0		0.00
Ending balance		320,980		$	7.90		46,957	$	7.39

The Company’s Stock Option Plan, which was shareholder-approved and has since expired, permitted the grant of share options to its directors, officers and employees for up to 375 thousand shares of common stock. Option awards were granted with an exercise price equal to the market price of the Company’s common stock at the date of grant; those option awards have vesting periods of 5 years and have 10-year contractual terms. During the first quarter of 2014 the last remaining 5,000 outstanding options were exercised and the Company satisfied these options with the reissuance of treasury shares.

There were no options granted under the Stock Option Plan during 2015, 2014 or 2013.

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Regulatory Matters

12 Months Ended

Dec. 31, 2015

Regulatory Capital Requirements [Abstract]

Regulatory Matters

NOTE 14 - REGULATORY MATTERS

Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The new minimum capital requirements associated with the Basel Committee on capital and liquidity regulation (Basel III) are being phased in and began on January 1, 2015 and will continue through January 1, 2019. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action by regulators that, if undertaken, could have a direct material effect on the financial statements. Management believes as of December 31, 2015, the Company and Bank meet all capital adequacy requirements to which they are subject.

The FDIC and other federal banking regulators revised the risk-based capital requirements applicable to bank holding companies and insured depository institutions, including the Company and the Bank, to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision (“Basel III”).

The common equity tier 1 capital, tier 1 capital and total capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. The leverage ratio is calculated by dividing tier 1 capital by adjusted average total assets.

Basel III limits capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity tier 1 capital, tier 1 capital and total capital to risk-weighted assets in addition to the amount necessary to meet minimum risk-based capital requirements. The capital conservation buffer will be phased in beginning January 1, 2016 and increasing each year until fully implemented at 2.5% on January 1, 2019. Currently Basel III requires the Company and Bank to maintain (i) a minimum ratio of common equity tier 1 capital to risk-weighted assets of at least 4.5%, (ii) a minimum ratio of tier 1 capital to risk-weighted assets of at least 6.0%, (iii) a minimum ratio of total capital to risk-weighted assets of at least 8.0% and (iv) a minimum leverage ratio of at least 4.0%.

Prior to January 1, 2015, federal and state regulatory agencies required the Company and the Bank to maintain minimum Tier 1 and total capital to risk-weighted assets of 4.0% and 8.0%, respectively, and Tier 1 leverage ratio of at least 4.0%.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If only adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2015 and 2014, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

Dividend Restrictions: The Company’s principal source of funds for dividend payments is dividends received from the Bank, Trust and NAI. The Bank and Trust are subject to the dividend restrictions set forth by the Comptroller of the Currency and Ohio Department of Commerce – Division of Financial Institutions, respectively. The respective regulatory agency must approve declaration of any dividends in excess of the sum of profits for the current year and retained net profits for the preceding two years. During 2016, the Bank could declare dividends on any 2016 net profits retained above $3.9 million at the date of the dividend declaration. In order to practice trust powers, Trust must maintain a minimum capital of $3 million. The Trust would also be able to, without prior approval, declare dividends on any 2016 net profits retained to the date of the dividend declaration.

Actual and required capital amounts and ratios are presented below at year-end:

	Actual					Requirement For Capital Adequacy Purposes:					To be Well Capitalized Under Prompt Corrective Action Provisions:
	Amount		Ratio			Amount		Ratio			Amount		Ratio
2015
Common equity tier 1 capital ratio
Consolidated	$	165,451		11.59	%	$	64,245		4.5	%	N/A		N/A
Bank		157,396		11.08	%		63,938		4.5	%	$	92,354		6.5	%
Total risk based capital ratio
Consolidated		176,571		12.37	%		114,214		8.0	%	N/A		N/A
Bank		166,374		11.71	%		113,667		8.0	%		142,084		10.0	%
Tier I risk based capital ratio
Consolidated		167,550		11.74	%		85,660		6.0	%	N/A		N/A
Bank		157,396		11.08	%		85,250		6.0	%		113,667		8.0	%
Tier I leverage ratio
Consolidated		167,550		9.21	%		72,803		4.0	%	N/A		N/A
Bank		157,396		8.65	%		72,770		4.0	%		90,963		5.0	%
2014
Total risk based capital ratio
Consolidated	$	121,340		16.48	%	$	58,523		8.0	%	N/A		N/A
Bank		114,321		15.56	%		58,773		8.0	%	$	73,466		10.0	%
Tier I risk based capital ratio
Consolidated		113,654		15.43	%		29,262		4.0	%	N/A		N/A
Bank		106,689		14.52	%		29,386		4.0	%		44,079		6.0	%
Tier I leverage ratio
Consolidated		113,654		10.03	%		45,313		4.0	%	N/A		N/A
Bank		106,689		9.37	%		45,565		4.0	%		56,956		5.0	%

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2015

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plans

NOTE 15 - EMPLOYEE BENEFIT PLANS

The Company has a qualified 401(k) deferred compensation Retirement Savings Plan. All employees of the Company who have completed at least 90 days of service and meet certain other eligibility requirements are eligible to participate in the Plan. Under the terms of the Plan, employees may voluntarily defer a portion of their annual compensation pursuant to section 401(k) of the Internal Revenue Code. The Company matches a percentage of the participants’ voluntary contributions up to 6% of gross wages. In addition, at the discretion of the Board of Directors, the Company may make an additional profit sharing contribution to the Plan. Total expense was $431 thousand, $336 thousand and $336 thousand for the years ended December 31, 2015, 2014 and 2013, respectively.

During 2014 the Company adopted a profit sharing plan to provide associates not participating in a current incentive plan a vehicle for sharing in the success of the Company outside of existing wages and non-monetary benefits. The board of directors approved a profit sharing amount equal to 1% of annual compensation for associates in 2015 and 2014. The expense was $82 thousand and $73 thousand for the years ended December 31, 2015 and 2014.

The Company maintains a deferred compensation plan for certain retirees. Expense under the Plan was $10 thousand for each of the three years ended December 31, 2015, 2014 and 2013.  The liability under the Plan at December 31, 2015 was $149 thousand and $156 thousand at December 31, 2014.

During 2015, the Company established a nonqualified deferred compensation plan for a select group of management or highly compensated eligible individuals. Under the terms of the plan, eligible individuals may elect to defer receipt of their compensation to a later taxable year. The Company has recorded both an asset and liability of equal amount that represents the amount of contributions and the payable due to the participants in the plan.  The recorded asset and liability was $67 thousand At December 31, 2015

As part of the NBOH acquisition the Company has a director retirement and death benefit Plan for the benefit of prior members of the Board of Directors of NBOH.  The plan is designed to provide an annual retirement benefit to be paid to each director upon retirement from the Board or attaining age 70.  There are no additional benefits or participants being added to the Plan and the liability recorded at December 31, 2015 was $929 thousand.  The benefit payment upon satisfying the Plan’s requirements is a benefit to the qualifying director until death or a maximum of 15 years. No expense was recognized under this Plan in 2015.  

The Company assumed as ESOP as part of the Tri-State acquisition that covered substantially all of their employees and officers.  The trustee had discretionary authority to purchase shares of common stock of Tri-State on the open market.  There were no contributions to the plan in 2015.  During acquisition the Tri-State shares were converted to the Company’s shares and the trustee held 39,690 shares at December 31, 2015.  The process to terminate this ESOP had begun at December 31, 2015.

The Company also has a postretirement health care benefit Plan covering individuals retired from the Company that have met certain service and age requirements and certain other active employees that have met similar service requirements. The postretirement health care Plan includes a limit on the Company’s share of costs for recent and future retirees. A benefit was recognized under this Plan for 2015 of $12 thousand and expense of $4 thousand in 2014 and $13 thousand in 2013. The accrued postretirement benefit liability under this Plan was $280 thousand and $314 thousand at December 31, 2014 and 2013. Due to the immateriality of the Plan, the disclosures required under U.S. generally accepted accounting principles have been omitted.

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Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 16 - INCOME TAXES

The provision for income taxes (credit) consists of the following:

		2015			2014		2013
Current expense	$	3,046		$	2,369	$	874
Deferred expense (benefit)		(547	)		263		809
TOTALS	$	2,499		$	2,632	$	1,683

Effective tax rates differ from federal statutory rate of 35% applied to income before income taxes due to the following:

	2015			2014			2013
Statutory tax	$	3,694		$	4,059		$	3,312
Effect of nontaxable interest		(1,403	)		(1,179	)		(1,325	)
Bank owned life insurance, net		(242	)		(159	)		(123	)
Effect of nontaxable life insurance death proceeds		0			0			(115	)
Nondeductible acquisition costs		401			0			0
Other		49			(89	)		(66	)
ACTUAL TAX	$	2,499		$	2,632		$	1,683

Deferred tax assets (liabilities) are comprised of the following:

		2015			2014
Deferred tax assets:
Allowance for credit losses	$	2,968		$	2,671
Net unrealized loss on securities available for sale		326			0
Deferred and accrued compensation		1,562			848
Deferred loan fees and costs		605			515
Post-retirement benefits		172			110
Nonaccrual loan interest income		324			56
Other-than-temporary impairment		196			41
Other		93			117
Gross deferred tax assets	$	6,246		$	4,358
Deferred tax liabilities:
Depreciation and amortization	$	(649	)	$	(1,081	)
Net unrealized gain on securities available for sale		0			(523	)
Federal Home Loan Bank dividends		(1,093	)		(482	)
Purchase accounting adjustments		(984	)		(550	)
Mortgage servicing rights		(158	)		0
Other		(11	)		(38	)
Gross deferred tax liabilities		(2,895	)		(2,674	)
NET DEFERRED TAX ASSET	$	3,351		$	1,684

No valuation allowance for deferred tax assets was recorded at December 31, 2015 and 2014.

At December 31, 2015 and December 31, 2014, the Company had no unrecognized tax benefits recorded. The Company does not expect the amount of unrecognized tax benefits to significantly change within the next twelve months.

The Company paid no penalties for the year ended December 31, 2015 or 2014. There were no amounts accrued for penalties or interest as of December 31, 2015 or 2014.

The Company is subject to U.S. federal income tax. The Company is no longer subject to examination by the federal taxing authority for years prior to 2012. The tax years 2012—2014 remain open to examination by the U.S. taxing authority.

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Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2015

Comprehensive Income Net Of Tax [Abstract]

Other Comprehensive Income (Loss)

NOTE 17 – OTHER COMPREHENSIVE INCOME (LOSS)

The following table represents the detail of other comprehensive income (loss) for the years ended December 31, 2015, 2014 and 2013.

	2015
	Pre-tax			Tax			After-Tax
Unrealized holding losses on available-for-sale securities during the year	$	(1,403	)	$	491		$	(912	)
Reclassification adjustment for (gains) losses included in net income (1)		(94	)		33			(61	)
Net unrealized losses on available-for-sale securities		(1,497	)		524			(973	)
Change in funded status of post-retirement health plan		20			(7	)		13
Net other comprehensive income (loss)	$	(1,477	)	$	517		$	(960	)
	2014
	Pre-tax			Tax			After-Tax
Unrealized holding gains on available-for-sale securities during the year	$	10,486		$	(3,670	)	$	6,816
Reclassification adjustment for (gains) losses included in net income (1)		(457	)		160			(297	)
Net unrealized gains on available-for-sale securities		10,029			(3,510	)		6,519
Change in funded status of post-retirement health plan		60			(21	)		39
Net other comprehensive income (loss)	$	10,089		$	(3,531	)	$	6,558
	2013
	Pre-tax			Tax			After-Tax
Unrealized holding losses on available-for-sale securities during the year	$	(19,310	)	$	6,759		$	(12,551	)
Reclassification adjustment for (gains) losses included in net income (1)		(860	)		301			(559	)
Net unrealized losses on available-for-sale securities		(20,170	)		7,060			(13,110	)
Change in funded status of post-retirement health plan		(3	)		1			(2	)
Net other comprehensive income (loss)	$	(20,173	)	$	7,061		$	(13,112	)

(1) Pre-tax reclassification adjustments relating to available-for-sale securities are reported in security gains and the tax impact is included in income tax expense on the consolidated statements of income.

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Related Party Transactions

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 18 - RELATED PARTY TRANSACTIONS

Loans to principal officers, directors, and their affiliates during 2015 were as follows:

Beginning balance	$	760
New loans		4
Effect of changes in composition of related parties		0
Repayments		(335	)
Ending balance	$	429

Deposits from principal officers, directors, and their affiliates at year-end 2015 and 2014 were $7.9 million and $1.7 million.

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Earnings Per Share

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 19 – EARNINGS PER SHARE

The factors used in the earnings per share computation follow:

	2015		2014		2013
Basic EPS
Net income	$	8,055	$	8,965	$	7,780
Weighted average shares outstanding		22,678,338		18,674,526		18,773,491
Basic earnings per share	$	0.36	$	0.48	$	0.41
Diluted EPS
Net income	$	8,055	$	8,965	$	7,780
Weighted average shares out-standing for basic earnings per share		22,678,338		18,674,526		18,773,491
Restricted stock awards		5,232		890		0
Weighted average shares for diluted earnings per share		22,683,570		18,675,416		18,773,491
Diluted earnings per share	$	0.36	$	0.48	$	0.41

193,105 award shares of common stock, issued during 2015, were not considered in computing diluted earnings per share because they were anti-dilutive.  Stock options for 5,000 shares of common stock for 2013 were not considered in computing diluted earnings per share because they were antidilutive.

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Interest Rate Swaps

12 Months Ended

Dec. 31, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Interest Rate Swaps

NOTE 20 – INTEREST RATE SWAPS

The Company uses a program that utilizes interest-rate swaps as part of its asset/liability management strategy. The interest-rate swaps are used to help manage the Company’s interest rate risk position and not as derivatives for trading purposes. The notional amount of the interest-rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest-rate swap agreements.

The objective of the interest-rate swaps is to protect the related fixed rate commercial real estate loans from changes in fair value due to changes in interest rates. The Company has a program whereby it lends to its borrowers at a fixed rate with the loan agreement containing a two-way yield maintenance provision, which will be invoked in the event of prepayment of the loan, and is expected to exactly offset the fair value of unwinding the swap. The yield maintenance provision represents an embedded derivative which is bifurcated from the host loan contract and, as such, the swaps and embedded derivatives are not designated as hedges. Accordingly, both instruments are carried at fair value and changes in fair value are reported in current period earnings.

Summary information about these interest-rate swaps as of year ended December 31, 2015, 2014 and 2013 is as follows:

	2015			2014			2013
Notional amounts	$	30,763		$	31,459		$	25,195
Weighted average pay rate on interest-rate swaps		4.25	%		4.26	%		4.28	%
Weighted average receive rate on interest-rate swaps		2.70	%		2.67	%		2.82	%
Weighted average matuirity (years)		4.1			5.9			6.3
Fair value of combined interest-rate swaps	$	789		$	638		$	275

The fair value of the yield maintenance provisions and interest-rate swaps is recorded in other assets and other liabilities, respectively, in the consolidated balance sheet. Changes in the fair value of the yield maintenance provisions and interest-rate swaps are reported in earnings, as other noninterest income in the consolidated income statements. There were no net gains or losses recognized in earnings related to yield maintenance provisions for years ended December 31, 2015, 2014 and 2013.

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Segment Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

NOTE 21 – SEGMENT INFORMATION

The reportable segments are determined by the products and services offered, primarily distinguished between banking, trust and retirement consulting 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, trust service fees provide the revenue in trust operations and consulting fees provide the revenues in the retirement consulting operations. All operations are domestic.

Accounting policies for segments are the same as those described in Note 1. Segment performance is evaluated using operating income. Income taxes are calculated on operating income. Transactions among segments are made at fair value.

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

December 31, 2015	Trust Segment		Bank Segment		Retirement Consulting Segment		Eliminations and Others			Consolidated Totals
Goodwill and other intangibles	$	4,967	$	35,412	$	3,178	$	(646	)	$	42,911
Total assets	$	11,078	$	1,854,306	$	4,127	$	391		$	1,869,902

December 31, 2014	Trust Segment		Bank Segment		Retirement Consulting Segment		Eliminations and Others		Consolidated Totals
Goodwill and other intangibles	$	5,285	$	0	$	3,528	$	0	$	8,813
Total assets	$	10,643	$	1,121,505	$	4,356	$	463	$	1,136,967

For year ended 2015	Trust Segment		Bank Segment		Retirement Consulting Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	65	$	49,705	$	0	$	(33	)	$	49,737
Provision for loan losses		0		3,510		0		0		$	3,510
Service fees, security gains and other    noninterest income		6,239		10,192		2,130		(255	)	$	18,306
Noninterest expense		4,719		40,753		1,487		4,562		$	51,521
Amortization and depreciation expense		339		1,759		360		0		$	2,458
Income before taxes		1,246		13,875		283		(4,850	)		10,554
Income tax		425		2,968		97		(991	)	$	2,499
Net Income	$	821	$	10,907	$	186	$	(3,859	)	$	8,055

For year ended 2014	Trust Segment		Bank Segment		Retirement Consulting Segment			Eliminations and Others			Consolidated Totals
Net interest income	$	53	$	36,297	$	0		$	(14	)	$	36,336
Provision for loan losses		0		1,880		0			0		$	1,880
Service fees, security gains and other    noninterest income		6,170		7,577		1,810			(254	)	$	15,303
Noninterest expense		4,528		29,268		2,010			474		$	36,280
Amortization and depreciation expense		378		1,081		423			0		$	1,882
Income before taxes		1,317		11,645		(623	)		(742	)	$	11,597
Income tax		451		2,645		48			(512	)	$	2,632
Net Income (Loss)	$	866	$	9,000	$	(671	)	$	(230	)	$	8,965

For year ended 2013	Trust Segment		Bank Segment		Retirement Consulting Segment			Eliminations and Others			Consolidated Totals
Net interest income	$	45	$	35,865	$	0		$	(14	)	$	35,896
Provision for loan losses		0		1,290		0			0			1,290
Service fees, security gains and other    noninterest income		5,667		7,838		627			(218	)		13,914
Noninterest expense		4,483		30,682		627			1,420			37,212
Amortization and depreciation expense		416		1,193		236			0			1,845
Income before taxes		813		10,538		(236	)		(1,652	)		9,463
Income tax		282		2,043		(80	)		(562	)		1,683
Net Income (Loss)	$	531	$	8,495	$	(156	)	$	(1,090	)	$	7,780

Bank segment includes Farmers National Insurance and Farmers of Canfield Investment Co.

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

NOTE 22 - QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarter Ended 2015	March 31		June 30		September30		December 31
Total interest income	$	9,999	$	10,753	$	15,594	$	17,481
Total interest expense		1,007		1,004		1,056		1,023
Net interest income		8,992		9,749		14,538		16,458
Provision for loan losses		450		850		1,220		990
Noninterest income		4,037		4,409		4,685		5,175
Merger related costs		245		1,912		2,499		1,736
Noninterest expense		9,506		10,175		13,022		14,884
Income before income taxes		2,828		1,221		2,482		4,023
Income taxes		617		409		625		848
Net income	$	2,211	$	812	$	1,857	$	3,175
Earnings per share - basic and diluted	$	0.12	$	0.04	$	0.07	$	0.12

Quarter Ended 2014	March 31		June 30		September30		December 31
Total interest income	$	10,063	$	10,118	$	10,413	$	10,321
Total interest expense		1,207		1,166		1,128		1,078
Net interest income		8,856		8,952		9,285		9,243
Provision for loan losses		330		300		425		825
Noninterest income		3,433		3,797		3,880		4,193
Noninterest expense		9,141		9,378		9,776		9,867
Income before income taxes		2,818		3,071		2,964		2,744
Income taxes		627		720		688		597
Net income	$	2,191	$	2,351	$	2,276	$	2,147
Earnings per share - basic and diluted	$	0.12	$	0.13	$	0.12	$	0.12

The Company sold certain investment securities and recognized security gains of $372 thousand during the fourth quarter of 2014.  

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Parent Company Only Condensed Financial Information

12 Months Ended

Dec. 31, 2015

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Parent Company Only Condensed Financial Information

NOTE 23—PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Below is condensed financial information of Farmers National Banc Corp. (parent company only). This information should be read in conjunction with the consolidated financial statements and related notes.

December 31,	2015		2014
BALANCE SHEETS
Assets:
Cash	$	1,357	$	1,564
Investment in subsidiaries
Bank		184,253		107,704
Trust		10,188		10,115
NAI		3,391		3,604
Securities available for sale		231		172
Other		1,319		916
TOTAL ASSETS	$	200,739	$	124,075
Liabilities:
Other liabilities	$	241	$	163
Note payable		350		350
Subordinate debt		2,099		0
Other accounts payable		2		2
TOTAL LIABILITIES		2,692		515
TOTAL STOCKHOLDERS' EQUITY		198,047		123,560
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	200,739	$	124,075

STATEMENTS OF INCOME
Years ended December 31,		2015			2014			2013
Income:
Dividends from subsidiaries
Bank	$	23,744		$	4,013		$	4,333
Trust		750			2,000			980
NAI		400			0			0
Interest and dividends on securities		2			1			2
Security gains/(losses)		0			0			21
Other income		0			764			0
TOTAL INCOME		24,896			6,778			5,336
Interest on borrowings		(35	)		(15	)		(16	)
Other expenses		(4,817	)		(1,492	)		(1,659	)
Income before income tax benefit and undistributed subsidiary income		20,044			5,271			3,661
Income tax benefit		991			512			562
Equity in undistributed net income of subsidiaries (dividends in excess    of net income)
Bank		(12,837	)		4,987			4,162
Trust		71			(1,134	)		(449	)
NAI		(214	)		(671	)		(156	)
NET INCOME	$	8,055		$	8,965		$	7,780

STATEMENTS OF CASH FLOWS
Years ended December 31,		2015			2014			2013
Cash flows from operating activities:
Net income	$	8,055		$	8,965		$	7,780
Adjustments to reconcile net income to net cash
from operating activities:
Security (gains)/losses		0			0			(24	)
Impairment of securities		0			0			3
Dividends in excess of net income (Equity in undistributed net    income of subsidiary)		12,980			(3,182	)		(3,557	)
Other		(269	)		(982	)		(270	)
NET CASH FROM OPERATING ACTIVITIES		20,766			4,801			3,932
Cash flows from investing activities:
Proceeds from maturities of available for sale securities		0			0			56
Purchase of National Associates, Inc.		0			0			(2,111	)
Net cash paid in business combinations		(18,077	)		0			0
NET CASH FROM INVESTING ACTIVITIES		(18,077	)		0			(2,055	)
Cash flows from financing activities:
Proceeds from reissuance of treasury shares		0			32			0
Purchase of treasury shares		(213	)		(2,882	)		(1,606	)
Cash dividends paid		(2,683	)		(2,236	)		(2,248	)
NET CASH FROM FINANCING ACTIVITIES		(2,896	)		(5,086	)		(3,854	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(207	)		(285	)		(1,977	)
Beginning cash and cash equivalents		1,564			1,849			3,826
Ending cash and cash equivalents	$	1,357		$	1,564		$	1,849

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation: The consolidated financial statements include the accounts of Farmers National Banc Corp. and its wholly-owned subsidiaries, The Farmers National Bank (“Bank”) of Canfield, Farmers Trust Company (“Trust”) and National Associates, Inc. (“NAI”). The Company acquired First National Bank of Orrville (“First National Bank”) a subsidiary of National Bancshares Corporation (“NBOH”) and 1^st National Community Bank (“FNCB”) a subsidiary of Tri-State 1^st Banc, Inc. (“Tri-State”) during 2015 and consolidated all activity of both acquisitions within the Bank, see Note 2.  The consolidated financial statements also include the accounts of the Farmers National Bank of Canfield’s subsidiaries; Farmers National Insurance (“Insurance”) and Farmers of Canfield Investment Co. (“Investments”).  Together the entities are referred to as “the Company.” All significant intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations

Nature of Operations: The Company provides full banking services, including wealth management services and mortgage banking activity, through the Bank. As a national bank, the Bank is subject to regulation of the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The primary area served by the Bank is the northeastern region of Ohio through thirty eight (38) locations.  With the acquisition of FNCB the Bank has added one branch location in southwestern Pennsylvania.  The Company provides trust services through its Trust subsidiary, retirement consulting services through its NAI subsidiary and insurance services through the Bank’s Insurance subsidiary.  The primary purpose of Investments, the new subsidiary of the Bank in 2014, is to invest in municipal securities. Farmers Trust Company has a state-chartered bank license to conduct trust business from the Ohio Department of Commerce – Division of Financial Institutions.

Estimates

Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.

Cash Flows

Cash Flows: Cash and cash equivalents include cash on hand, deposits with other financial institutions and federal funds sold. Generally, federal funds are purchased and sold for one-day periods. Net cash flows are reported for loan and deposit transactions, short term borrowings, and other assets and liabilities.

Securities Available for Sale

Securities Available for Sale: Debt securities are classified as available for sale when they might be sold before maturity. Equity securities with readily determinable fair values are classified as available for sale. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method. Purchases are recorded on the trade date.

Management evaluates securities for other-than-temporary impairment (OTTI) on at least a quarterly basis, and more frequently when economic or market conditions warrant. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. 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) other-than-temporary impairment (OTTI) related to other factors, which is recognized in other comprehensive income. 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.

Loans Held for Sale

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are charged to earnings.

Mortgage loans held for sale are sold with or without servicing rights released. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

Loans

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, and an allowance for loan losses. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate.

Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level yield method without anticipating prepayments. Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

For all classes of loans, when interest accruals are discontinued, interest accrued but not received for loans placed on non-accrual is reversed against interest income. Interest on such loans is thereafter recorded on a cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Purchased Credit Impaired Loans

Purchased Credit Impaired Loans: The Company purchased loans that have shown evidence of credit deterioration since origination through the acquisition of First National Bank. These loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. The Company estimates the amount and timing of expected cash flows for each loan, and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan. The excess of the loan’s contractual principal and interest over expected cash flows is not recorded.

Over the life of the loan, expected cash flows continue to be estimated.  If the present value of expected cash flows is less than the carrying amount, a loss is recorded as a provision for loan losses.  If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

Derivatives

Derivatives: Derivative financial instruments are recognized as assets or liabilities at fair value. The Company’s derivatives are interest-rate swap agreements, which are used as part of its asset and liability management strategy to help manage its interest rate risk position. The Company does not use derivatives for trading or balance sheet hedging purposes. The derivative transactions are considered instruments with no hedging designation, otherwise known as stand-alone derivatives. Changes in the fair value of the derivatives are reported currently in earnings, as other noninterest income.

Concentration of Credit Risk

Concentration of Credit Risk: There are no significant concentrations of loans to any one industry or customer. However, most of the Company’s business activity is with customers located within Northeastern Ohio. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy of a 9 county area. Loans secured by real estate represent 68% of the total portfolio and changes related to the real estate markets are monitor by management.

Allowance for Loan Losses

Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred loan losses, increased by the provision for loan losses and decreased by charge-offs less recoveries. The allowance is based on management’s judgment taking into consideration past loss experience, reviews of individual loans, current economic conditions and other factors considered relevant by management at the financial statement date. While management uses the best information available to establish the allowance, future adjustments to the allowance may be necessary, which may be material, if economic conditions differ substantially from the assumptions used in estimating the allowance. If additions to the original estimate of the allowance for loan losses are deemed necessary, they will be reported in earnings in the period in which they become reasonably estimable and probable. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.

Acquired loans are individually evaluated and for those purchased loans without evidence of credit deterioration, management evaluates each reviewed loan using an internal grading system with a grade assigned to each loan at the date of acquisition. To the extent that any purchased loan is not specifically reviewed, such loan is assumed to have characteristics similar to the characteristics of the acquired portfolio of purchased loans. The grade for each purchased loan without evidence of credit deterioration is reviewed subsequent to the date of acquisition any time a loan is renewed or extended or at any time information becomes available to the Company that provides material insight regarding the loan’s performance, the status of the borrower or the quality or value of the underlying collateral. To the extent that current information indicates it is probable that the Company will collect all amounts according to the contractual terms thereof, such loan is not considered impaired and is not individually considered in the determination of the required allowance for loan losses. To the extent that current information indicates it is probable that the Company will not be able to collect all amounts according to the contractual terms thereof, such loan is considered impaired and is considered in the determination of the required level of allowance.

In determining the day 1 fair values of purchased loans without evidence of credit deterioration at the date of acquisition, management includes (i) no carry over of any previously recorded allowance for loan losses and (ii) an adjustment of the unpaid principal balance to reflect an appropriate market rate of interest, given the risk profile and grade assigned to each loan. This adjustment is accreted into earnings as a yield adjustment, using the effective yield method, over the remaining life of each loan.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is considered impaired when, based on the current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Loans, for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Impairment is measured on a loan by loan basis for commercial and commercial real estate loans over $750 thousand, individually or in the aggregate, by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans are collectively evaluated for impairment and accordingly, they are not separately identified for impairment disclosures. Non-real estate secured consumer loans in bankruptcy where debt has not been reaffirmed are considered troubled debt restructurings and are evaluated individually to ensure that accurate accounting treatment is in place.

The Company considers the guidance on troubled debt restructuring for individual consumer and residential loans when evaluating for impairment disclosure. Troubled debt restructurings are measured at the present value of estimated future cash flow using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced for the most recent twelve quarters. The formula for calculating the allowance for loan losses requires that the historical loss percentage be applied to homogeneous and all risk rated loans. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The following portfolio segments have been identified:

Commercial Loans. Commercial credit is extended to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or other projects. The majority of these borrowers are customers doing business within our geographic regions. These loans are generally underwritten individually and secured with the assets of the company and the personal guarantee of the business owners. Commercial loans are made based primarily on the historical and projected cash flow of the borrower and the underlying collateral provided by the borrower.

Commercial Real Estate Loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as cash flow loans and the repayment of these loans is largely dependent on the successful operation of the property. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and property type.

Consumer Loans. Consumer loans are primarily comprised of loans made directly to consumers and indirectly through automobile dealerships. These loans have a specific matrix which consists of several factors including debt to income, type of collateral and loan to collateral value, credit history and relationship with the borrower. Consumer lending uses risk-based pricing in the underwriting process.

Residential Real Estate Loans. Residential mortgage loans represent loans to consumers for the purchase or refinance of a residence. These loans are generally financed up to 15 years, and in most cases, are extended to borrowers to finance their primary residence. Real estate market values at the time of origination directly affect the amount of credit extended and, in the event of default, subsequent changes in these values may impact the severity of losses.

Servicing Rights

Servicing Rights:When mortgage loans are sold and servicing rights are retained the servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. The Company compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non‑interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.  Servicing assets are evaluated for impairment based upon the fair value of the assets compared to carrying amount. Any impairment is reported as a valuation allowance, to the extent that fair value is less than the capitalized amount for a grouping. There was no valuation allowance impairment against servicing assets as of December 31, 2015.

Servicing fee income is recorded when earned for servicing loans based on a contractual percentage of the outstanding principal or a fixed amount per loan. The amortization of mortgage servicing rights is netted against loan servicing fee income. Servicing fees, late fees and ancillary fees related to loan servicing are not considered significant for financial reporting.

Foreclosed Assets

Foreclosed Assets: 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. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed.

Premises and Equipment

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost, less accumulated depreciation. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 5 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 10 years.

Restricted Stock

Restricted Stock: The Bank is a member of the Federal Home Loan Bank (FHLB) system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. The Bank is also a member of and owns stock in the Federal Reserve Bank. These stocks are carried at cost, classified as restricted securities included in other assets, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Bank Owned Life Insurance

Bank Owned Life Insurance: The Company has purchased life insurance policies on certain key officers. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Long-term Assets

Long-term Assets: Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets: Goodwill resulting from a business combination is generally determined as the excess of the fair value of the consideration transferred over the fair value of the net assets acquired as of the acquisition date. Goodwill acquired in a purchase business combination and determined to have an indefinite useful life is not amortized, but tested for impairment at least annually. The Company has selected September 30 as the date to perform the annual goodwill impairment tests associated with the acquisition of the Trust, NAI, First National Bank and FNCB. Intangible assets with definite useful lives are amortized over their estimated useful lives. Goodwill is the only intangible asset with an indefinite life on the balance sheet. Core deposit intangible assets arising from bank acquisitions are amortized over their estimated useful lives of 7 to 8 years. Non-compete contracts are amortized on a straight line basis, over the term of the agreements. Customer relationship and trade name intangibles are amortized over an average of 13 years on an accelerated method.

Loan Commitments and Related Financial Instruments

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Stock-Based Compensation

Stock-Based Compensation: Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. The market price of the Company’s common stock at the grant date is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Income Taxes

Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Retirement Plans

Retirement Plans: Employee 401(k) and profit sharing plan expense is the amount of matching and discretionary contributions. Deferred compensation and supplemental retirement plan expense allocates the benefits over years of service.

Earnings Per Common Share

Earnings per Common Share: Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock equity awards. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the financial statements.

Comprehensive Income (Loss)

Comprehensive Income (Loss): Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized gains and losses on securities available for sale and changes in the funded status of the post-retirement health plan, which are recognized as separate components of equity, net of tax effects.

Loss Contingencies

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the financial statements.

Restrictions on Cash

Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank (“FRB”) was required to meet regulatory reserve and clearing requirements. The Company had deposits with the FRB of $29.4 million at December 31, 2015 and $14.0 million at December 31, 2014.

Equity

Equity: Treasury stock is carried at cost.

Dividend Restriction

Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank and Trust to the holding company or by the holding company to shareholders.

Fair Value of Financial Instruments

Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions as more fully disclosed in Note 6. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates.

Operating Segments

Operating Segments: While the 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 three lines of business, the Bank, Trust and Retirement Consulting segments. The Company discloses segment information in Note 21.

Reclassification

Reclassification: Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or stockholders’ equity.

Adoption of New Accounting Standards

Adoption of New Accounting Standards:  In September 2015, the FASB amended existing guidance under Accounting Standards Update (ASU) 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The amendments require that an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. These amendments are effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2015. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-11, "Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures." The new guidance aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as repurchase financings with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The amendments in the ASU require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The amendments in the ASU also require expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The Company adopted the amendments in this ASU effective January 1, 2015. In addition, the expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings were effective for the Company’s reporting period ending June 30, 2015. All of the Company's repurchase agreements are typical in nature (i.e., not repurchase-to-maturity transactions or repurchase agreements executed as a repurchase financing) and are accounted for as secured borrowings. As such, the adoption of ASU No. 2014-11 did not have a material impact on the Company's consolidated financial statements.

Newly Issued, Not Yet Effective Accounting Standards: In January, 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, affecting public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. Requiring most equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income.  The ASU will take effect for fiscal years beginning after December 15, 2017.  The adoption of this standard is not expected to have a material effect on the Company’s consolidated financial statements.

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Business Combinations (Tables)

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Summary of Consideration Paid and Amounts of Assets and Liabilities Assumed

The following table summarizes the consideration paid for Tri-State and the amounts of the assets acquired and liabilities assumed on the closing date of the acquisition.

Consideration
Cash	$	3,607
Stock		10,733
Fair value of total consideration transferred	$	14,340
Assets acquired and liabilities assumed
Cash and due from financial institutions	$	13,553
Securities available for sale		48,300
Loans, net		66,374
Premises and equipment		1,935
Bank owned life insurance		3,274
Core deposit intangible		1,173
Other assets		1,329
Total assets		135,938
Fair value of liabilities assumed
Deposits		114,342
Long-term borrowings		2,002
Accrued interest payable and other liabilities		8,072
Total liabilities		124,416
Net assets acquired	$	11,522
Goodwill created		2,818
Total net assets acquired	$	14,340

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.

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
Loans, net		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		65,537
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

Pro Forma Information

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.

	2015		2014
Net interest income	$	62,524	$	58,098
Net income	$	12,750	$	15,316
Basic and diluted earnings per share	$	0.47	$	0.57

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Securities Available for Sale (Tables)

12 Months Ended

Dec. 31, 2015

Investments Debt And Equity Securities [Abstract]

Summary of the Amortized Cost and Fair Value of Available-for-Sale Investment Securities Corresponding Amounts of Unrealized Gains and Losses

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at December 31, 2015 and 2014 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized
	2015	Cost		Gains		Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities		$	11,120	$	38	$	(52	)	$	11,106
State and political subdivisions			136,781		2,354		(412	)		138,723
Corporate bonds			1,134		5		(5	)		1,134
Mortgage-backed securities - residential			197,289		1,433		(2,135	)		196,587
Collateralized mortgage obligations			28,035		0		(870	)		27,165
Small Business Administration			19,755		1		(457	)		19,299
Equity securities			203		127		(32	)		298
Totals		$	394,317	$	3,958	$	(3,963	)	$	394,312

				Gross		Gross
		Amortized		Unrealized		Unrealized
	2014	Cost		Gains		Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities		$	24,515	$	418	$	(112	)	$	24,821
State and political subdivisions			90,369		2,183		(671	)		91,881
Corporate bonds			936		3		(8	)		931
Mortgage-backed securities - residential			223,216		2,395		(1,249	)		224,362
Collateralized mortgage obligations			25,988		98		(911	)		25,175
Small Business Administration			23,193		1		(775	)		22,419
Equity securities			120		121		(1	)		240
Totals		$	388,337	$	5,219	$	(3,727	)	$	389,829

Proceeds from Sales of Available-for-Sale Securities and the Associated Gains and Losses

The proceeds from sales of available-for-sale securities and the associated gains and losses were as follows:

		2015			2014			2013
Proceeds	$	102,257		$	57,170		$	94,016
Gross gains		908			758			1,924
Gross losses		(814	)		(301	)		(1,061	)

Amortized Cost and Fair Value of the Debt Securities Maturity

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. Securities not due at a single maturity date are shown separately.

Available for sale		December 31, 2015
		Amortized
Maturity		Cost		Fair Value
Within one year		$	16,564	$	16,697
One to five years			68,354		69,023
Five to ten years			51,655		52,775
Beyond ten years			12,462		12,468
Mortgage-backed securities, collateralized mortgage obligations and Small Business Administration			245,079		243,051
	Totals	$	394,114	$	394,014

Investment Securities with Unrealized Losses

The following table summarizes the investment securities with unrealized losses at December 31, 2015 and 2014 aggregated by major security type and length of time in a continuous unrealized loss position.

2015
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and U.S. government
sponsored entities	$	6,044	$	(51	)	$	199	$	(1	)	$	6,243	$	(52	)
State and political subdivisions		22,016		(167	)		12,635		(245	)		34,651		(412	)
Corporate bonds		102		(1	)		478		(4	)		580		(5	)
Mortgage-backed securities - residential		79,301		(1,044	)		40,794		(1,091	)		120,095		(2,135	)
Collateralized mortgage obligations		14,342		(169	)		12,695		(701	)		27,037		(870	)
Small Business Administration		0		0			19,237		(457	)		19,237		(457	)
Equity securities		88		(32	)		0		0			88		(32	)
Total temporarily impaired	$	121,893	$	(1,464	)	$	86,038	$	(2,499	)	$	207,931	$	(3,963	)

2014
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and U.S. government
sponsored entities	$	498	$	(2	)	$	10,159	$	(110	)	$	10,657	$	(112	)
State and political subdivisions		987		(11	)		24,063		(660	)		25,050		(671	)
Corporate bonds		0		0			476		(8	)		476		(8	)
Mortgage-backed securities - residential		25,770		(202	)		55,576		(1,047	)		81,346		(1,249	)
Collateralized mortgage obligations		0		0			19,541		(911	)		19,541		(911	)
Small Business Administration		0		0			22,319		(775	)		22,319		(775	)
Equity securities		26		(1	)		0		0			26		(1	)
Total temporarily impaired	$	27,281	$	(216	)	$	132,134	$	(3,511	)	$	159,415	$	(3,727	)

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Loans (Tables)

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Schedule of Loan Balances

Loans at year end were as follows:

	2015			2014
Originated loans:
Commercial real estate
Owner occupied	$	113,160		$	74,829
Non-owner occupied		139,502			122,228
Other		50,855			26,137
Commercial		157,447			120,493
Residential real estate
1-4 family residential		179,657			153,055
Home equity lines of credit		41,171			31,255
Consumer
Indirect		127,335			120,931
Direct		17,325			9,071
Other		4,508			3,626
Subtotal		830,960			661,625
Net deferred loan costs		2,731			2,227
Allowance for loan losses		(8,978	)		(7,632	)
Total originated loans		824,713			656,220
Acquired loans:
Commercial real estate
Owner occupied		131,673			0
Non-owner occupied		28,045			0
Other		23,536			0
Commercial		73,621			0
Residential real estate
1-4 family residential		133,701			0
Home equity lines of credit		40,929			0
Consumer
Direct		31,465			0
Other		204			0
Total acquired loans		463,174			0
Net loans	$	1,287,887		$	656,220

Purchased Credit Impaired Loans

As part of the NBOH acquisition during 2015 the Company acquired various loans that displayed evidence of deterioration of credit quality since origination and which was probable that all contractually required payments would not be collected.  The carrying amounts and contractually required payments of these loans which are included in the loan balances above are summarized in the following tables:

	2015
Commercial real estate
Owner occupied	$	986
Non-owner occupied		501
Commercial		1,576
Total outstanding balance	$	3,063
Carrying amount, net of allowance of $31	$	2,215

Schedule of Accretable Yield or Income Expected to be Collected

Accretable yield, or income expected to be collected, is shown in the table below:

	2015
Beginning balance	$	0
New loans purchased		361
Accretion of income		(38	)
Ending balance	$	323

Schedule of Receivables for which Contractually Required Payments would not be Collected

Contractually required payments receivable on loans purchased credit impaired acquired during the year:

	2015
Commercial real estate
Owner occupied	$	1,063
Non-owner occupied		586
Commercial		1,476
Total	$	3,125
Cash flows expected to be collected at acquisition	$	2,764
Fair value of acquired loans at acquisition	$	2,538

Activity in the Allowance for Loan Losses by Portfolio Segment

The following tables present the activity in the allowance for loan losses by portfolio segment for years ended December 31, 2015, 2014 and 2013:

December 31, 2015	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	2,676		$	1,420		$	1,689		$	1,663		$	184	$	7,632
Provision for loan losses		857			234			354			1,776			289		3,510
Loans charged off		(536	)		(290	)		(320	)		(2,058	)		0		(3,204	)
Recoveries		130			9			122			779			0		1,040
Total ending allowance balance	$	3,127		$	1,373		$	1,845		$	2,160		$	473	$	8,978

December 31, 2014	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	2,752		$	1,219		$	1,964		$	1,419		$	214		$	7,568
Provision for loan losses		(50	)		357			233			1,370			(30	)		1,880
Loans charged off		(151	)		(185	)		(585	)		(2,213	)		0			(3,134	)
Recoveries		125			29			77			1,087			0			1,318
Total ending allowance balance	$	2,676		$	1,420		$	1,689		$	1,663		$	184		$	7,632

December 31, 2013	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	3,392		$	1,453		$	1,569		$	951		$	264		$	7,629
Provision for loan losses		(306	)		(397	)		674			1,369			(50	)		1,290
Loans charged off		(505	)		(99	)		(326	)		(1,723	)		0			(2,653	)
Recoveries		171			262			47			822			0			1,302
Total ending allowance balance	$	2,752		$	1,219		$	1,964		$	1,419		$	214		$	7,568

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Based

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 December 31, 2015 and 2014.  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.

December 31, 2015	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	429	$	5	$	63	$	0	$	0	$	497
Collectively evaluated for impairment		2,698		1,337		1,782		2,160		473		8,450
Acquired loans		0		0		0		0		0		0
Acquired with deteriorated credit quality		0		31		0		0		0		31
Total ending allowance balance	$	3,127	$	1,373	$	1,845	$	2,160	$	473	$	8,978
Loans:
Loans individually evaluated for impairment	$	5,853	$	712	$	3,414	$	103	$	0	$	10,082
Loans collectively evaluated for impairment		296,866		156,415		217,023		153,305		0		823,609
Acquired loans		181,987		72,673		174,630		31,669		0		460,959
Acquired with deteriorated credit quality		1,267		948		0		0		0		2,215
Total ending loans balance	$	485,973	$	230,748	$	395,067	$	185,077	$	0	$	1,296,865

December 31, 2014	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	514	$	272	$	88	$	0	$	0	$	874
Collectively evaluated for impairment		2,162		1,148		1,601		1,663		184		6,758
Total ending allowance balance	$	2,676	$	1,420	$	1,689	$	1,663	$	184	$	7,632
Loans:
Loans individually evaluated for impairment	$	7,139	$	1,940	$	3,425	$	93	$	0	$	12,597
Loans collectively evaluated for impairment		215,434		118,210		180,428		137,183		0		651,255
Total ending loans balance	$	222,573	$	120,150	$	183,853	$	137,276	$	0	$	663,852

Loans Individually Evaluated for Impairment by Class of Loans

The following tables present information related to impaired loans by class of loans as of and for year ended December 31, 2015, 2014 and 2013. The recorded investment in loans excludes accrued interest receivable due to immateriality.

December 31, 2015	UnpaidPrincipal Balance		Recorded Investment		Allowancefor LoanLosses Allocated		AverageRecorded Investment		InterestIncome Recognized
With no related allowance recorded:
Commercial real estate
Owner occupied	$	2,956	$	2,436	$	0	$	2,080	$	106
Non-owner occupied		343		342		0		372		30
Commercial		834		631		0		433		23
Residential real estate
1-4 family residential		2,575		2,310		0		2,174		147
Home equity lines of credit		283		268		0		260		15
Consumer		214		103		0		81		14
Subtotal		7,205		6,090		0		5,400		335
With an allowance recorded:
Commercial real estate
Owner occupied		1,597		1,595		379		2,008		70
Non-owner occupied		1,480		1,480		50		1,511		79
Commercial		81		81		5		540		4
Residential real estate
1-4 family residential		769		749		61		919		39
Home equity lines of credit		87		87		2		96		4
Consumer		0		0		0		0		0
Subtotal		4,014		3,992		497		5,074		196
Total	$	11,219	$	10,082	$	497	$	10,474	$	531

December 31, 2014	UnpaidPrincipal Balance		Recorded Investment		Allowancefor LoanLosses Allocated		AverageRecorded Investment		InterestIncome Recognized
With no related allowance recorded:
Commercial real estate
Owner occupied	$	2,448	$	2,318	$	0	$	1,860	$	46
Non-owner occupied		391		391		0		653		20
Commercial		531		511		0		1,273		22
Residential real estate
1-4 family residential		2,421		2,156		0		1,804		79
Home equity lines of credit		476		251		0		263		13
Consumer		185		93		0		166		4
Subtotal		6,452		5,720		0		6,019		184
With an allowance recorded:
Commercial real estate
Owner occupied		2,882		2,882		446		2,104		94
Non-owner occupied		1,548		1,548		68		1,570		81
Commercial		1,444		1,429		272		818		2
Residential real estate
1-4 family residential		944		928		85		1,207		41
Home equity lines of credit		90		90		3		113		5
Consumer		0		0		0		2		0
Subtotal		6,908		6,877		874		5,814		223
Total	$	13,360	$	12,597	$	874	$	11,833	$	407

December 31, 2013	UnpaidPrincipal Balance		Recorded Investment		Allowancefor LoanLosses Allocated		AverageRecorded Investment		InterestIncome Recognized
With no related allowance recorded:
Commercial real estate
Owner occupied	$	4,302	$	3,762	$	0	$	2,643	$	137
Non-owner occupied		491		389		0		438		0
Commercial		1,007		971		0		1,363		25
Residential real estate
1-4 family residential		1,026		961		0		1,462		51
Home equity lines of credit		107		99		0		194		0
Consumer		111		112		0		9		0
Subtotal		7,044		6,294		0		6,109		213
With an allowance recorded:
Commercial real estate
Owner occupied		886		884		91		2,536		39
Non-owner occupied		1,593		1,588		75		1,975		87
Commercial		1,462		1,459		110		594		5
Residential real estate
1-4 family residential		1,458		1,347		190		112		48
Home equity lines of credit		148		147		12		12		0
Consumer		247		251		82		21		0
Subtotal		5,794		5,676		560		5,250		179
Total	$	12,838	$	11,970	$	560	$	11,359	$	392

Cash basis interest income recognized and interest income recognized was materially equal for 2015, 2014 and 2013.

Schedule of Investment in Nonaccrual and Loans Past Due 90 Days or More Still on Accrual by Class of Loans

Nonaccrual loans and loans past due 90 days 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 over 90 days still on accrual by class of loans as of December 31, 2015 and 2014:

	December 31, 2015				December 31, 2014
	Nonaccrual		LoansPastDue 90DaysorMore Still Accruing		Nonaccrual		LoansPastDue 90DaysorMore Still Accruing
Originated loans:
Commercial real estate
Owner occupied	$	3,313	$	0	$	3,315	$	44
Non-owner occupied		345		0		41		0
Commercial		541		73		1,645		0
Residential real estate
1-4 family residential		2,406		336		2,742		195
Home equity lines of credit		127		112		139		40
Consumer
Indirect		266		297		90		193
Direct		30		3		36		0
Other		0		24		0		1
Total originated loans	$	7,028	$	845	$	8,008	$	473
Acquired loans:
Commercial real estate
Owner occupied	$	126	$	18	$	0	$	0
Other		92		0		0		0
Commercial		1,068		0		0		0
Residential real estate
1-4 family residential		458		467		0		0
Home equity lines of credit		125		7		0		0
Consumer
Direct		161		50		0		0
Total acquired loans	$	2,030	$	542	$	0	$	0
Total loans	$	9,058	$	1,387	$	8,008	$	473

Schedule of Investment in Past Due Loans

The following tables present the aging of the recorded investment in past due loans as of December 31, 2015 and 2014 by class of loans:

December 31, 2015	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
Originated loans:
Commercial real estate
Owner occupied	$	34	$	0	$	3,313	$	3,347	$	109,532	$	112,879
Non-owner occupied		0		0		345		345		138,824		139,169
Other		112		0		0		112		50,559		50,671
Commercial		0		0		614		614		156,513		157,127
Residential real estate
1-4 family residential		1,694		402		2,742		4,838		174,376		179,214
Home equity lines of credit		62		5		239		306		40,917		41,223
Consumer
Indirect		2,059		525		563		3,147		128,280		131,427
Direct		311		5		33		349		17,124		17,473
Other		13		10		24		47		4,461		4,508
Total originated loans:	$	4,285	$	947	$	7,873	$	13,105	$	820,586	$	833,691
Acquired loans:
Commercial real estate
Owner occupied	$	669	$	0	$	144	$	813	$	130,860	$	131,673
Non-owner occupied		0		0		0		0		28,045		28,045
Other		0		0		92		92		23,444		23,536
Commercial		276		2		1,068		1,346		72,275		73,621
Residential real estate
1-4 family residential		1,994		244		925		3,163		130,538		133,701
Home equity lines of credit		78		11		132		221		40,708		40,929
Consumer
Direct		567		56		211		834		30,631		31,465
Other		0		0		0		0		204		204
Total acquired loans	$	3,584	$	313	$	2,572	$	6,469	$	456,705	$	463,174
Total loans	$	7,869	$	1,260	$	10,445	$	19,574	$	1,277,291	$	1,296,865

December 31, 2014	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
Originated loans:
Commercial real estate
Owner occupied	$	0	$	0	$	3,359	$	3,359	$	71,272	$	74,631
Non-owner occupied		0		0		41		41		121,872		121,913
Other		0		0		0		0		26,029		26,029
Commercial		0		0		1,645		1,645		118,505		120,150
Residential real estate
1-4 family residential		1,892		546		2,937		5,375		147,223		152,598
Home equity lines of credit		205		92		179		476		30,779		31,255
Consumer
Indirect		2,136		406		283		2,825		121,754		124,579
Direct		108		18		36		162		8,909		9,071
Other		17		6		1		24		3,602		3,626
Total loans	$	4,358	$	1,068	$	8,481	$	13,907	$	649,945	$	663,852

Schedule of Loans by Class Modified as Troubled Debt Restructurings

The following tables present loans by class modified as troubled debt restructurings that occurred during the years ending December 31, 2015, 2014 and 2013:

December 31, 2015			Pre- Modification		Post- Modification
	Number of		Outstanding Recorded		Outstanding Recorded
Troubled Debt Restructurings:	Loans		Investment		Investment
Originated loans:
Commercial real estate
Owner occupied		2	$	801	$	801
Commercial		1		8		8
Residential real estate
1-4 family residential		13		760		760
Home equity lines of credit		2		60		60
Indirect		12		104		104
Consumer		1		8		8
Total originated loans		31	$	1,741	$	1,741
Acquired loans:
Commercial		2	$	957	$	957
Total loans		33	$	2,698	$	2,698

Risk Category of Loans by Class of Loans

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

December 31, 2015	Pass		Special Mention		Sub standard		Doubtful		Not Rated		Total
Originated loans:
Commercial real estate
Owner occupied	$	107,222	$	1,069	$	4,588	$	0	$	0	$	112,879
Non-owner occupied		135,847		461		2,861		0		0		139,169
Other		50,376		0		295		0		0		50,671
Commercial		154,215		939		1,973		0		0		157,127
Total originated loans	$	447,660	$	2,469	$	9,717	$	0	$	0	$	459,846
Acquired loans:
Commercial real estate
Owner occupied	$	130,028	$	0	$	1,645	$	0	$	0	$	131,673
Non-owner occupied		26,141		1,340		564		0		0		28,045
Other		22,843		476		217		0		0		23,536
Commercial		69,674		635		3,312		0		0		73,621
Total acquired loans	$	248,686	$	2,451	$	5,738	$	0	$	0	$	256,875
Total loans	$	696,346	$	4,920	$	15,455	$	0	$	0	$	716,721

December 31, 2014	Pass		Special Mention		Sub standard		Doubtful		Not Rated		Total
Commercial real estate
Owner occupied	$	66,036	$	2,534	$	6,061	$	0	$	0	$	74,631
Non-owner occupied		115,159		3,760		2,994		0		0		121,913
Other		25,710		0		319		0		0		26,029
Commercial		114,409		1,566		4,175		0		0		120,150
Total loans	$	321,314	$	7,860	$	13,549	$	0	$	0	$	342,723

Investment in Residential, Consumer and Indirect Auto Loans Based on Payment Activity

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential, consumer and indirect 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 and indirect auto loans based on payment activity. Nonperforming loans are loans past due 90 days and still accruing interest and nonaccrual loans.

	Residential Real Estate				Consumer
December 31, 2015	1-4 Family Residential		HomeEquityLines of Credit		Indirect		Direct		Other
Originated loans:
Performing	$	176,472	$	40,984	$	130,864	$	17,440	$	4,484
Nonperforming		2,742		239		563		33		24
Total originated loans	$	179,214	$	41,223	$	131,427	$	17,473	$	4,508
Acquired loans:
Performing		132,776		40,797		0		31,254		204
Nonperforming		925		132		0		211		0
Total acquired loans	$	133,701	$	40,929	$	0	$	31,465	$	204
Total loans	$	312,915	$	82,152	$	131,427	$	48,938	$	4,712

	Residential Real Estate				Consumer
December 31, 2014	1-4 Family Residential		HomeEquityLines of Credit		Indirect		Direct		Other
Performing	$	149,661	$	31,076	$	124,296	$	9,035	$	3,625
Nonperforming		2,937		179		283		36		1
Total	$	152,598	$	31,255	$	124,579	$	9,071	$	3,626

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Loan Servicing (Tables)

12 Months Ended

Dec. 31, 2015

Transfers And Servicing [Abstract]

Summary of Principal Balance for Mortgage Loans

The principal balances of these loans at year-end are as follows:

	2015
Mortgage loan portfolio serviced for:
FHLMC	$	68,605

Summary of Activity for Mortgage Servicing Rights

Activity for mortgage servicing rights since the acquisition date of June 18, 2015 is as follows:

	2015
Servicing rights:
Beginning balance	$	347
Additions		166
Amortization to expense		(60	)
Ending balance	$	453

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Fair Value (Tables)

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Assets Measured at Fair Value on Recurring Basis

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

	Fair Value Measurements at December 31, 2015 Using:
	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
Investment securities available-for sale
U.S Treasury and U.S. government sponsored entities	$	11,106	$	0	$	11,106	$	0
State and political subdivisions		138,723		0		138,723		0
Corporate bonds		1,134		0		1,134		0
Mortgage-backed securities-residential		196,587		0		196,572		15
Collateralized mortgage obligations		27,165		0		27,165		0
Small Business Administration		19,299		0		19,299		0
Equity securities		298		298		0		0
Total investment securities	$	394,312	$	298	$	393,999	$	15
Loan yield maintenance provisions	$	789	$	0	$	789	$	0
Financial Liabilities
Interest rate swaps	$	789	$	0	$	789	$	0

	Fair Value Measurements at December 31, 2014 Using:
	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
Investment securities available-for sale
U.S Treasury and U.S. government sponsored entities	$	24,821	$	0	$	24,821	$	0
State and political subdivisions		91,881		0		91,881		0
Corporate bonds		931		0		931		0
Mortgage-backed securities-residential		224,362		0		224,352		10
Collateralized mortgage obligations		25,175		0		25,175		0
Small Business Administration		22,419		0		22,419		0
Equity securities		240		240		0		0
Total investment securities	$	389,829	$	240	$	389,579	$	10
Loan yield maintenance provisions	$	638	$	0	$	638	$	0
Financial Liabilities
Interest rate swaps	$	638	$	0	$	638	$	0

Reconciliation for All Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31:

	Investment Securities Available-for-sale (Level 3)
	2015			2014		2013
Beginning Balance	$	10		$	10	$	11
Total unrealized gains or losses:
Included in other comprehensive income		0			0		0
Repayments		(1	)		0		(1	)
Acquired and/or purchased		6			0		0
Ending Balance	$	15		$	10	$	10

Assets Measured at Fair Value on Non-Recurring Basis

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

	Fair Value Measurements
	at December 31, 2015 Using:
	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	$	1,448	$	0	$	0	$	1,448
Commercial		1,514		0		0		1,514
1–4 family residential		42		0		0		42
Consumer		13		0		0		13

	Fair Value Measurements
	at December 31, 2014 Using:
	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	$	807	$	0	$	0	$	807
1–4 family residential		63		0		0		63
Other real estate owned
Commercial real estate		45		0		0		45

Fair Value Measurements for Financial Instruments

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 year ended 2014 and 2013:

December 31, 2015	Fair value		Valuation Technique(s)	Unobservable Input(s)	Range Weighted Average
Impaired loans
Commercial real estate	$	701	Income approach	Adjustment for differences between earning multiplier	(49.42%) - 40.89% 35.33%
		747	Quoted price for loan relationship	Offer price	1.01% 1.01%
Commercial		252	Quoted price for loan relationship	Offer price	(3.01%) (3.01%)
		1,262	Income approach	Adjustment for differences between earning multiplier	(29.77%) (29.77%)
Residential		42	Sales comparison	Adjustment for differences between comparable sales	(18.32%) - 24.16% (14.02%)
Consumer		13	Sales comparison	Adjustment for differences between comparable sales	(12.86%) - 11.97% (5.79%)

December 31, 2014	Fair value		Valuation Technique(s)	Unobservable Input(s)	Range Weighted Average
Impaired loans
Commercial real estate	$	1,237	Sales comparison	Adjustment for differences between comparable sales	-41.59% - 77.25% (-7.82%)
		116	Income approach	Adjustment for differences in net operating income	-13.64% - 12.93% (-5.96%)
Commercial		807	Sales comparison	Adjustment for differences between comparable sales	(27.43%) - 32.86% 9.96%
Residential		63	Sales comparison	Adjustment for differences between comparable sales	(18.32%) - 24.16% (14.02%)
Other real estate owned		45	Sales comparison	Adjustment for differences between comparable sales	(12.86%) - 11.97% (5.79%)

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments measured on a recurring basis and not previously presented, at December 31, 2015 and December 31, 2014 are as follows:

			Fair Value Measurements at December 31, 2015 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	56,014	$	22,500	$	33,514	$	0	$	56,014
Restricted stock		9,384	n/a		n/a		n/a		n/a
Loans held for sale		1,769		0		1,813		0		1,813
Loans, net		1,287,887		0		0		1,296,075		1,296,075
Mortgage servicing rights		453		0		453		0		453
Accrued interest receivable		5,158		0		2,011		3,147		5,158
Financial liabilities
Deposits		1,409,047		1,164,506		241,909		0		1,406,415
Short-term borrowings		225,832		0		225,832		0		225,832
Long-term borrowings		22,153		0		22,306		0		22,306
Accrued interest payable		445		26		419		0		445

			Fair Value Measurements at December 31, 2014 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	27,428	$	11,410	$	16,018	$	0	$	27,428
Restricted stock		4,224	n/a		n/a		n/a		n/a
Loans held for sale		511		0		523		0		523
Loans, net		656,220		0		0		658,993		658,993
Accrued interest receivable		3,237		0		1,645		1,592		3,237
Financial liabilities
Deposits		915,703		708,752		206,708		0		915,460
Short-term borrowings		69,136		0		69,136		0		69,136
Long-term borrowings		18,381		0		18,837		0		18,837
Accrued interest payable		402		2		400		0		402

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Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2015

Property Plant And Equipment [Abstract]

Premises and Equipment

Year-end premises and equipment were as follows:

		2015			2014
Land	$	5,833		$	3,143
Buildings		24,724			20,842
Furniture, fixtures and equipment		13,485			11,651
Leasehold Improvements		450			247
		44,492			35,883
Less accumulated depreciation		(20,302	)		(18,834	)
NET BOOK VALUE	$	24,190		$	17,049

Rent Commitments

The Company leases certain branch properties under operating leases. Rent expense was $332, $323, and $302 thousand for 2015, 2014 and 2013. In addition to rent expense, under the leases, common area maintenance and property taxes are paid and the amount can fluctuate according to the costs incurred. Rent commitments, before considering renewal options that generally are present, were as follows:

2016	$	307
2017		319
2018		306
2019		303
2020		267
Thereafter		1,380
TOTAL	$	2,882

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2015

Goodwill And Intangible Assets Disclosure [Abstract]

Other Intangible Assets

Other intangible assets were as follows at year end:

	2015					2014
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Other intangible:
Customer relationship intangibles	$	5,970	$	(3,585	)	$	5,970	$	(2,972	)
Non-compete contracts		370		(325	)		370		(295	)
Trade Name		190		(65	)		190		(41	)
Core deposit intangible		5,582		(316	)		0		0
Total	$	12,112	$	(4,291	)	$	6,530	$	(3,308	)

Estimated Amortization Expense

Estimated amortization expense for each of the next five years:

2016	$	1,293
2017		1,207
2018		1,123
2019		1,048
2020	973
Thereafter		2,177
TOTAL	$	7,821

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Interest Bearing Deposits (Tables)

12 Months Ended

Dec. 31, 2015

Interest Bearing Deposits [Abstract]

Summary of Scheduled Maturities of Certificates of Deposit

Following is a summary of scheduled maturities of certificates of deposit during the years following December 31, 2015:

2016	$	108,493
2017		39,007
2018		18,528
2019		27,827
2020		37,494
Thereafter		7,733
TOTAL	$	239,082

Summary of Year-end Interest Bearing Deposits

Following is a summary of year-end interest bearing deposits:

		2015		2014
Demand	$	327,434	$	126,456
Money Market		293,209		266,040
Savings		234,672		131,559
Certificates of Deposit		239,082		206,951
TOTAL	$	1,094,397	$	731,006

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Short-term Borrowings (Tables)

12 Months Ended

Dec. 31, 2015

Summary of Long-term Advances from the Federal Home Loan Bank

At year end, long-term advances from the Federal Home Loan Bank were as follows:

	2015					2014
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Fixed-rate constant payment advances, at rates from .61%    to 4.88% at December 31, 2015 and 2014	$	15,054		1.24	%	$	8,381		1.72	%
Convertible and putable fixed-rate advances, at rates from 2.82%    to 4.45% at December 31, 2015 and 2014		5,000		4.45	%		10,000		3.64	%
Total advances	$	20,054		2.04	%	$	18,381		2.76	%

Summary of Securities Sold under Agreements to Repurchase

The securities are held in segregated safekeeping accounts at the Federal Reserve Bank and Farmers Trust Company. Information concerning securities sold under agreements to repurchase is summarized as follows

	2015			2014			2013
Average balance during the year	$	71,779		$	71,573		$	90,951
Average interest rate during the year		0.07	%		0.04	%		0.04	%
Maximum month-end balance during the year	$	89,574		$	78,972		$	100,462
Weighted average year-end interest rate		0.06	%		0.06	%		0.06	%
Balance at year-end	$	75,482		$	58,786		$	75,267

Schedule Disaggregation of the Obligation by the Class of Collateral Pledged for Short-Term Financing Obtained Through the Sales of Repurchase Agreements

The following table provides a disaggregation of the obligation by class of collateral pledged for short-term financing obtained through the sales of repurchase agreements:

	2015
Overnight and continuous repurchase agreements
U.S. Treasury and U.S. government sponsored entities	$	5,276
State and political subdivisions		2,640
Mortgage-backed securities - residential		60,391
Collateralized mortgage obligations		7,175
Total borrowings	$	75,482

Pledged

Summary of Long-term Advances from the Federal Home Loan Bank

Federal Home Loan Bank advances are secured by pledgings described in the following Long-Term Borrowings footnote.  Balances at year end were as follows:

	2015					2014
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Repurchase advance with a rate of .39% at December 31, 2015	$	100,000		0.39	%
Cash management advance with rates from .26% to .45% at    December 31, 2015 and 2014		50,000		0.39	%	$	10,000		0.26	%
Total advances	$	150,000		0.39	%	$	10,000		0.26	%

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Long-Term Borrowings (Tables)

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Summary of Long-term Advances from the Federal Home Loan Bank

At year end, long-term advances from the Federal Home Loan Bank were as follows:

	2015					2014
			Weighted					Weighted
			Average					Average
	Amount		Rate			Amount		Rate
Fixed-rate constant payment advances, at rates from .61%    to 4.88% at December 31, 2015 and 2014	$	15,054		1.24	%	$	8,381		1.72	%
Convertible and putable fixed-rate advances, at rates from 2.82%    to 4.45% at December 31, 2015 and 2014		5,000		4.45	%		10,000		3.64	%
Total advances	$	20,054		2.04	%	$	18,381		2.76	%

Schedule of Payments of Long-term FHLB Advances

Scheduled payments of long-term FHLB advances are as follows:

Maturing in:
2016	$	7,247
2017		8,089
2018		1,008
2019		931
2020		860
Thereafter		1,919
TOTAL	$	20,054

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Commitments and Contingent Liabilities (Tables)

12 Months Ended

Dec. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

The Contractual Amounts of Financial Instruments with Off-Balance-Sheet Risk at Year End

The contractual amounts of financial instruments with off-balance-sheet risk at year end were as follows:

	2015				2014
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	100	$	4,836	$	471	$	1,881
Unused lines of credit	$	64,338	$	204,889	$	108,382	$	39,205

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Stock Based Compensation (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Plan

The following is the activity under the Plan during the years ended December 31, 2015 and 2014:

	2015					2014
	Units			Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Beginning balance		46,957		$	7.39		0	$	0
Granted		279,023			7.98		46,957		7.39
Vested		0			0		0		0
Forfeited		(5,000	)		7.88		0		0.00
Ending balance		320,980		$	7.90		46,957	$	7.39

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Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2015

Regulatory Capital Requirements [Abstract]

Schedule of Actual and Required Capital Amounts and Ratios

Actual and required capital amounts and ratios are presented below at year-end:

	Actual					Requirement For Capital Adequacy Purposes:					To be Well Capitalized Under Prompt Corrective Action Provisions:
	Amount		Ratio			Amount		Ratio			Amount		Ratio
2015
Common equity tier 1 capital ratio
Consolidated	$	165,451		11.59	%	$	64,245		4.5	%	N/A		N/A
Bank		157,396		11.08	%		63,938		4.5	%	$	92,354		6.5	%
Total risk based capital ratio
Consolidated		176,571		12.37	%		114,214		8.0	%	N/A		N/A
Bank		166,374		11.71	%		113,667		8.0	%		142,084		10.0	%
Tier I risk based capital ratio
Consolidated		167,550		11.74	%		85,660		6.0	%	N/A		N/A
Bank		157,396		11.08	%		85,250		6.0	%		113,667		8.0	%
Tier I leverage ratio
Consolidated		167,550		9.21	%		72,803		4.0	%	N/A		N/A
Bank		157,396		8.65	%		72,770		4.0	%		90,963		5.0	%
2014
Total risk based capital ratio
Consolidated	$	121,340		16.48	%	$	58,523		8.0	%	N/A		N/A
Bank		114,321		15.56	%		58,773		8.0	%	$	73,466		10.0	%
Tier I risk based capital ratio
Consolidated		113,654		15.43	%		29,262		4.0	%	N/A		N/A
Bank		106,689		14.52	%		29,386		4.0	%		44,079		6.0	%
Tier I leverage ratio
Consolidated		113,654		10.03	%		45,313		4.0	%	N/A		N/A
Bank		106,689		9.37	%		45,565		4.0	%		56,956		5.0	%

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Provision for Income Taxes (Credit)

The provision for income taxes (credit) consists of the following:

		2015			2014		2013
Current expense	$	3,046		$	2,369	$	874
Deferred expense (benefit)		(547	)		263		809
TOTALS	$	2,499		$	2,632	$	1,683

Effective Tax Rates Differ from Federal Statutory Rate

Effective tax rates differ from federal statutory rate of 35% applied to income before income taxes due to the following:

	2015			2014			2013
Statutory tax	$	3,694		$	4,059		$	3,312
Effect of nontaxable interest		(1,403	)		(1,179	)		(1,325	)
Bank owned life insurance, net		(242	)		(159	)		(123	)
Effect of nontaxable life insurance death proceeds		0			0			(115	)
Nondeductible acquisition costs		401			0			0
Other		49			(89	)		(66	)
ACTUAL TAX	$	2,499		$	2,632		$	1,683

Deferred Tax Assets (Liabilities)

Deferred tax assets (liabilities) are comprised of the following:

		2015			2014
Deferred tax assets:
Allowance for credit losses	$	2,968		$	2,671
Net unrealized loss on securities available for sale		326			0
Deferred and accrued compensation		1,562			848
Deferred loan fees and costs		605			515
Post-retirement benefits		172			110
Nonaccrual loan interest income		324			56
Other-than-temporary impairment		196			41
Other		93			117
Gross deferred tax assets	$	6,246		$	4,358
Deferred tax liabilities:
Depreciation and amortization	$	(649	)	$	(1,081	)
Net unrealized gain on securities available for sale		0			(523	)
Federal Home Loan Bank dividends		(1,093	)		(482	)
Purchase accounting adjustments		(984	)		(550	)
Mortgage servicing rights		(158	)		0
Other		(11	)		(38	)
Gross deferred tax liabilities		(2,895	)		(2,674	)
NET DEFERRED TAX ASSET	$	3,351		$	1,684

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Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2015

Comprehensive Income Net Of Tax [Abstract]

Schedule of Other Comprehensive Income (Loss)

The following table represents the detail of other comprehensive income (loss) for the years ended December 31, 2015, 2014 and 2013.

	2015
	Pre-tax			Tax			After-Tax
Unrealized holding losses on available-for-sale securities during the year	$	(1,403	)	$	491		$	(912	)
Reclassification adjustment for (gains) losses included in net income (1)		(94	)		33			(61	)
Net unrealized losses on available-for-sale securities		(1,497	)		524			(973	)
Change in funded status of post-retirement health plan		20			(7	)		13
Net other comprehensive income (loss)	$	(1,477	)	$	517		$	(960	)
	2014
	Pre-tax			Tax			After-Tax
Unrealized holding gains on available-for-sale securities during the year	$	10,486		$	(3,670	)	$	6,816
Reclassification adjustment for (gains) losses included in net income (1)		(457	)		160			(297	)
Net unrealized gains on available-for-sale securities		10,029			(3,510	)		6,519
Change in funded status of post-retirement health plan		60			(21	)		39
Net other comprehensive income (loss)	$	10,089		$	(3,531	)	$	6,558
	2013
	Pre-tax			Tax			After-Tax
Unrealized holding losses on available-for-sale securities during the year	$	(19,310	)	$	6,759		$	(12,551	)
Reclassification adjustment for (gains) losses included in net income (1)		(860	)		301			(559	)
Net unrealized losses on available-for-sale securities		(20,170	)		7,060			(13,110	)
Change in funded status of post-retirement health plan		(3	)		1			(2	)
Net other comprehensive income (loss)	$	(20,173	)	$	7,061		$	(13,112	)

(1) Pre-tax reclassification adjustments relating to available-for-sale securities are reported in security gains and the tax impact is included in income tax expense on the consolidated statements of income.

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Loans to Principal Officers, Directors, and Their Affiliates

Loans to principal officers, directors, and their affiliates during 2015 were as follows:

Beginning balance	$	760
New loans		4
Effect of changes in composition of related parties		0
Repayments		(335	)
Ending balance	$	429

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The factors used in the earnings per share computation follow:

	2015		2014		2013
Basic EPS
Net income	$	8,055	$	8,965	$	7,780
Weighted average shares outstanding		22,678,338		18,674,526		18,773,491
Basic earnings per share	$	0.36	$	0.48	$	0.41
Diluted EPS
Net income	$	8,055	$	8,965	$	7,780
Weighted average shares out-standing for basic earnings per share		22,678,338		18,674,526		18,773,491
Restricted stock awards		5,232		890		0
Weighted average shares for diluted earnings per share		22,683,570		18,675,416		18,773,491
Diluted earnings per share	$	0.36	$	0.48	$	0.41

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Interest-Rate Swaps (Tables)

12 Months Ended

Dec. 31, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Summary Information about Interest-Rate Swaps

Summary information about these interest-rate swaps as of year ended December 31, 2015, 2014 and 2013 is as follows:

	2015			2014			2013
Notional amounts	$	30,763		$	31,459		$	25,195
Weighted average pay rate on interest-rate swaps		4.25	%		4.26	%		4.28	%
Weighted average receive rate on interest-rate swaps		2.70	%		2.67	%		2.82	%
Weighted average matuirity (years)		4.1			5.9			6.3
Fair value of combined interest-rate swaps	$	789		$	638		$	275

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

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

December 31, 2015	Trust Segment		Bank Segment		Retirement Consulting Segment		Eliminations and Others			Consolidated Totals
Goodwill and other intangibles	$	4,967	$	35,412	$	3,178	$	(646	)	$	42,911
Total assets	$	11,078	$	1,854,306	$	4,127	$	391		$	1,869,902

December 31, 2014	Trust Segment		Bank Segment		Retirement Consulting Segment		Eliminations and Others		Consolidated Totals
Goodwill and other intangibles	$	5,285	$	0	$	3,528	$	0	$	8,813
Total assets	$	10,643	$	1,121,505	$	4,356	$	463	$	1,136,967

For year ended 2015	Trust Segment		Bank Segment		Retirement Consulting Segment		Eliminations and Others			Consolidated Totals
Net interest income	$	65	$	49,705	$	0	$	(33	)	$	49,737
Provision for loan losses		0		3,510		0		0		$	3,510
Service fees, security gains and other    noninterest income		6,239		10,192		2,130		(255	)	$	18,306
Noninterest expense		4,719		40,753		1,487		4,562		$	51,521
Amortization and depreciation expense		339		1,759		360		0		$	2,458
Income before taxes		1,246		13,875		283		(4,850	)		10,554
Income tax		425		2,968		97		(991	)	$	2,499
Net Income	$	821	$	10,907	$	186	$	(3,859	)	$	8,055

For year ended 2014	Trust Segment		Bank Segment		Retirement Consulting Segment			Eliminations and Others			Consolidated Totals
Net interest income	$	53	$	36,297	$	0		$	(14	)	$	36,336
Provision for loan losses		0		1,880		0			0		$	1,880
Service fees, security gains and other    noninterest income		6,170		7,577		1,810			(254	)	$	15,303
Noninterest expense		4,528		29,268		2,010			474		$	36,280
Amortization and depreciation expense		378		1,081		423			0		$	1,882
Income before taxes		1,317		11,645		(623	)		(742	)	$	11,597
Income tax		451		2,645		48			(512	)	$	2,632
Net Income (Loss)	$	866	$	9,000	$	(671	)	$	(230	)	$	8,965

For year ended 2013	Trust Segment		Bank Segment		Retirement Consulting Segment			Eliminations and Others			Consolidated Totals
Net interest income	$	45	$	35,865	$	0		$	(14	)	$	35,896
Provision for loan losses		0		1,290		0			0			1,290
Service fees, security gains and other    noninterest income		5,667		7,838		627			(218	)		13,914
Noninterest expense		4,483		30,682		627			1,420			37,212
Amortization and depreciation expense		416		1,193		236			0			1,845
Income before taxes		813		10,538		(236	)		(1,652	)		9,463
Income tax		282		2,043		(80	)		(562	)		1,683
Net Income (Loss)	$	531	$	8,495	$	(156	)	$	(1,090	)	$	7,780

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

Quarter Ended 2015	March 31		June 30		September30		December 31
Total interest income	$	9,999	$	10,753	$	15,594	$	17,481
Total interest expense		1,007		1,004		1,056		1,023
Net interest income		8,992		9,749		14,538		16,458
Provision for loan losses		450		850		1,220		990
Noninterest income		4,037		4,409		4,685		5,175
Merger related costs		245		1,912		2,499		1,736
Noninterest expense		9,506		10,175		13,022		14,884
Income before income taxes		2,828		1,221		2,482		4,023
Income taxes		617		409		625		848
Net income	$	2,211	$	812	$	1,857	$	3,175
Earnings per share - basic and diluted	$	0.12	$	0.04	$	0.07	$	0.12

Quarter Ended 2014	March 31		June 30		September30		December 31
Total interest income	$	10,063	$	10,118	$	10,413	$	10,321
Total interest expense		1,207		1,166		1,128		1,078
Net interest income		8,856		8,952		9,285		9,243
Provision for loan losses		330		300		425		825
Noninterest income		3,433		3,797		3,880		4,193
Noninterest expense		9,141		9,378		9,776		9,867
Income before income taxes		2,818		3,071		2,964		2,744
Income taxes		627		720		688		597
Net income	$	2,191	$	2,351	$	2,276	$	2,147
Earnings per share - basic and diluted	$	0.12	$	0.13	$	0.12	$	0.12

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Parent Company Only Condensed Financial Information (Tables)

12 Months Ended

Dec. 31, 2015

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Financial Information

NOTE 23—PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Below is condensed financial information of Farmers National Banc Corp. (parent company only). This information should be read in conjunction with the consolidated financial statements and related notes.

December 31,	2015		2014
BALANCE SHEETS
Assets:
Cash	$	1,357	$	1,564
Investment in subsidiaries
Bank		184,253		107,704
Trust		10,188		10,115
NAI		3,391		3,604
Securities available for sale		231		172
Other		1,319		916
TOTAL ASSETS	$	200,739	$	124,075
Liabilities:
Other liabilities	$	241	$	163
Note payable		350		350
Subordinate debt		2,099		0
Other accounts payable		2		2
TOTAL LIABILITIES		2,692		515
TOTAL STOCKHOLDERS' EQUITY		198,047		123,560
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	200,739	$	124,075

STATEMENTS OF INCOME
Years ended December 31,		2015			2014			2013
Income:
Dividends from subsidiaries
Bank	$	23,744		$	4,013		$	4,333
Trust		750			2,000			980
NAI		400			0			0
Interest and dividends on securities		2			1			2
Security gains/(losses)		0			0			21
Other income		0			764			0
TOTAL INCOME		24,896			6,778			5,336
Interest on borrowings		(35	)		(15	)		(16	)
Other expenses		(4,817	)		(1,492	)		(1,659	)
Income before income tax benefit and undistributed subsidiary income		20,044			5,271			3,661
Income tax benefit		991			512			562
Equity in undistributed net income of subsidiaries (dividends in excess    of net income)
Bank		(12,837	)		4,987			4,162
Trust		71			(1,134	)		(449	)
NAI		(214	)		(671	)		(156	)
NET INCOME	$	8,055		$	8,965		$	7,780

STATEMENTS OF CASH FLOWS
Years ended December 31,		2015			2014			2013
Cash flows from operating activities:
Net income	$	8,055		$	8,965		$	7,780
Adjustments to reconcile net income to net cash
from operating activities:
Security (gains)/losses		0			0			(24	)
Impairment of securities		0			0			3
Dividends in excess of net income (Equity in undistributed net    income of subsidiary)		12,980			(3,182	)		(3,557	)
Other		(269	)		(982	)		(270	)
NET CASH FROM OPERATING ACTIVITIES		20,766			4,801			3,932
Cash flows from investing activities:
Proceeds from maturities of available for sale securities		0			0			56
Purchase of National Associates, Inc.		0			0			(2,111	)
Net cash paid in business combinations		(18,077	)		0			0
NET CASH FROM INVESTING ACTIVITIES		(18,077	)		0			(2,055	)
Cash flows from financing activities:
Proceeds from reissuance of treasury shares		0			32			0
Purchase of treasury shares		(213	)		(2,882	)		(1,606	)
Cash dividends paid		(2,683	)		(2,236	)		(2,248	)
NET CASH FROM FINANCING ACTIVITIES		(2,896	)		(5,086	)		(3,854	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(207	)		(285	)		(1,977	)
Beginning cash and cash equivalents		1,564			1,849			3,826
Ending cash and cash equivalents	$	1,357		$	1,564		$	1,849

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Summary of Significant Accounting Policies (Details Textual)	12 Months Ended
	Dec. 31, 2015 USD ($) Location County_Economy Segment	Dec. 31, 2014 USD ($)
Summary of Significant Accounting Policies (Additional Textual) [Abstract]
Number of locations served by bank | Location	38
Purchased and sold period of federal fund	1 day
Delinquent period of loans after which interest income is discontinued	90 days
Number of county economy from which credit risk exposure effected | County_Economy	9
Percentage of portfolio loans secured by real estate	68.00%
Impairment on loan	$ 750,000
Valuation allowance impairment against servicing assets	$ 0
Recognized tax amount	50.00%
Deposits with Federal Reserve Bank	$ 29,400,000	$ 14,000,000
Operating segments of business | Segment	3
Customer Relationships
Summary of Significant Accounting Policies (Textual) [Abstract]
Intangible assets amortized period	13 years
Minimum | Core Deposits
Summary of Significant Accounting Policies (Textual) [Abstract]
Intangible assets amortized period	7 years
Maximum | Core Deposits
Summary of Significant Accounting Policies (Textual) [Abstract]
Intangible assets amortized period	8 years
Buildings | Minimum
Summary of Significant Accounting Policies (Textual) [Abstract]
Range of buildings and furniture depreciated	5 years
Buildings | Maximum
Summary of Significant Accounting Policies (Textual) [Abstract]
Range of buildings and furniture depreciated	40 years
Furniture Fixtures and Equipment | Minimum
Summary of Significant Accounting Policies (Textual) [Abstract]
Range of buildings and furniture depreciated	3 years
Furniture Fixtures and Equipment | Maximum
Summary of Significant Accounting Policies (Textual) [Abstract]
Range of buildings and furniture depreciated	10 years
Mortgage Servicing Rights
Summary of Significant Accounting Policies (Additional Textual) [Abstract]
Valuation allowance impairment against servicing assets	$ 0
Residential Real Estate
Summary of Significant Accounting Policies (Textual) [Abstract]
Loan financing period	15 years
1st National Community Bank | Southwestern Pennsylvania
Summary of Significant Accounting Policies (Additional Textual) [Abstract]
Number of new locations added by bank | Location	1

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Business Combinations (Details Textual) - USD ($)				3 Months Ended				12 Months Ended
	Sep. 30, 2015	Jun. 19, 2015	Jul. 01, 2013	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Goodwill				$ 35,090,000				$ 35,090,000	$ 5,591,000
Gross contractual amount receivable				429,700,000				429,700,000
Business acquisition transaction expenses				1,736,000	$ 2,499,000	$ 1,912,000	$ 245,000	6,392,000	0	$ 330,000
Intangible assets at carrying value				7,821,000				7,821,000	3,222,000
Core Deposits
Business Acquisition [Line Items]
Intangible assets at carrying value				5,600,000				$ 5,600,000
Tri-State 1st Banc Incorporation
Business Acquisition [Line Items]
Shares of stock issued for acquisition	1,296,517
Fair value of total consideration transferred	$ 14,340,000
Shares shareholders are entitled to elect to receive per shares	174.70%
Cash shareholders are entitled to elect to receive per share	$ 14.20				$ 14.20
Business Acquisition Shares Being Exchanged for Stock	75.00%
Business Acquisition Shares Being Exchanged for Cash	25.00%
Business Acquisition, Effective Date of Acquisition								Oct. 01, 2015
Goodwill	$ 2,818,000				$ 2,818,000
Fair value of other intangible assets	1,173,000				1,173,000
Tri-State 1st Banc Incorporation | Core Deposits
Business Acquisition [Line Items]
Fair value of other intangible assets	$ 1,200,000				$ 1,200,000
Tri-State 1st Banc Incorporation | Series A Preferred Stock
Business Acquisition [Line Items]
Cash shareholders are entitled to elect to receive per share	$ 13.60				$ 13.60
National Bancshares Corporation
Business Acquisition [Line Items]
Shares of stock issued for acquisition		7,262,955
Fair value of total consideration transferred		$ 74,780,000
Shares shareholders are entitled to elect to receive per shares		403.40%
Cash shareholders are entitled to elect to receive per share		$ 32.15
Business Acquisition, Effective Date of Acquisition								Jun. 19, 2015
Goodwill		$ 26,681,000
Fair value of other intangible assets		$ 4,409,000
Maximum shares exchanged for stock		80.00%
Maximum shares exchanged for cash		20.00%
National Bancshares Corporation | Core Deposits
Business Acquisition [Line Items]
Fair value of other intangible assets		$ 4,400,000
National Associates Incorporated
Business Acquisition [Line Items]
Fair value of total consideration transferred			$ 4,400,000
Business Acquisition, Effective Date of Acquisition								Jul. 01, 2013
Goodwill			2,600,000
Fair value of other intangible assets				2,300,000				$ 2,300,000
Contingent future payments				1,500,000				1,500,000
Contingent consideration initial fair value			$ 920,000						156,000
Business acquisition transaction expenses								1,300,000
Business acquisition final payment								1,500,000
After impairment of goodwill								1,900,000	$ 1,900,000
Intangible assets at carrying value				$ 1,300,000				$ 1,300,000

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Business Combinations (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 19, 2015	Dec. 31, 2015	Dec. 31, 2014
Assets acquired and liabilities assumed
Bank owned life insurance			$ 29,234	$ 16,367
Fair value of liabilities assumed
Goodwill created			$ 35,090	$ 5,591
Tri-State 1st Banc Incorporation
Consideration
Cash	$ 3,607
Stock	10,733
Fair value of total consideration transferred	14,340
Assets acquired and liabilities assumed
Cash and due from financial institutions	13,553
Securities available for sale	48,300
Loans, net	66,374
Premises and equipment	1,935
Bank owned life insurance	3,274
Core deposit intangible	1,173
Other assets	1,329
Total assets	135,938
Fair value of liabilities assumed
Deposits	114,342
Long-term borrowings	2,002
Accrued interest payable and other liabilities	8,072
Total liabilities	124,416
Net assets acquired	11,522
Goodwill created	2,818
Total net assets acquired	$ 14,340
National Bancshares Corporation
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
Loans, net		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		65,537
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

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Business Combinations (Details 1) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Business Combinations [Abstract]
Net interest income	$ 62,524	$ 58,098
Net income	$ 12,750	$ 15,316
Basic and diluted earnings per share	$ 0.47	$ 0.57

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Securities Available for Sale (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	$ 394,317	$ 388,337
Gross Unrealized Gains	3,958	5,219
Gross Unrealized Losses	(3,963)	(3,727)
Fair Value	394,312	389,829
Corporate bonds
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	1,134	936
Gross Unrealized Gains	5	3
Gross Unrealized Losses	(5)	(8)
Fair Value	1,134	931
Collateralized Mortgage Obligations
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	28,035	25,988
Gross Unrealized Gains	0	98
Gross Unrealized Losses	(870)	(911)
Fair Value	27,165	25,175
Small Business Administration
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	19,755	23,193
Gross Unrealized Gains	1	1
Gross Unrealized Losses	(457)	(775)
Fair Value	19,299	22,419
U.S. Treasury and U.S. government sponsored entities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	11,120	24,515
Gross Unrealized Gains	38	418
Gross Unrealized Losses	(52)	(112)
Fair Value	11,106	24,821
State and political subdivisions
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	136,781	90,369
Gross Unrealized Gains	2,354	2,183
Gross Unrealized Losses	(412)	(671)
Fair Value	138,723	91,881
Mortgage-backed securities - residential
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	197,289	223,216
Gross Unrealized Gains	1,433	2,395
Gross Unrealized Losses	(2,135)	(1,249)
Fair Value	196,587	224,362
Equity securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	203	120
Gross Unrealized Gains	127	121
Gross Unrealized Losses	(32)	(1)
Fair Value	$ 298	$ 240

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Securities Available for Sale (Details 1) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Proceeds from sales of available-for-sale securities and the associated gains and losses
Proceeds	$ 102,257	$ 57,170	$ 94,016
Gross gains	908	758	1,924
Gross losses	$ (814)	$ (301)	$ (1,061)

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Securities Available for Sale (Details Textual) $ in Thousands		12 Months Ended
		Dec. 31, 2015 USD ($) Securities	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Securities Available for Sale (Additional Textual) [Abstract]
Tax provision related to net realized gain	[1]	$ 33	$ 160	$ 301
Number of securities not more than 10% of stockholder equities | Securities		0
Number of securities | Securities		486
Number of securities on unrealized loss position | Securities		178
Securities Available for Sale (Textual) [Abstract]
Pledged to secure public deposits and repurchase agreements and Pledge to qualify carrying amount of securities		$ 219,000	149,000	164,000
Other than temporary impairment charges recognized		0	0	3
Farmers Trust Company
Securities Available for Sale (Textual) [Abstract]
Pledged to secure public deposits and repurchase agreements and Pledge to qualify carrying amount of securities		$ 100	$ 100	$ 100

[1] Pre-tax reclassification adjustments relating to available-for-sale securities are reported in security gains and the tax impact is included in income tax expense on the consolidated statements of income.

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Securities Available for Sale (Details 2) $ in Thousands	Dec. 31, 2015 USD ($)
Amortized cost and fair value of the debt securities maturity
Amortized Cost, Within one year	$ 16,564
Amortized Cost, One to five years	68,354
Amortized Cost, Five to ten years	51,655
Amortized Cost, Beyond ten years	12,462
Amortized Cost, Mortgage-backed securities, collateralized mortgage obligations and Small Business Administration	245,079
Amortized Cost, Totals	394,114
Fair Value, Within one year	16,697
Fair Value, One to five years	69,023
Fair Value, Five to ten years	52,775
Fair Value, Beyond ten years	12,468
Fair Value, Mortgage-backed securities, collateralized mortgage obligations and Small Business Administration	243,051
Fair Value, Totals	$ 394,014

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Securities Available for Sale (Details 3) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	$ 121,893	$ 27,281
Unrealized Losses, Less Than 12 Months	(1,464)	(216)
Fair Value, 12 Months or Longer	86,038	132,134
Unrealized Losses, 12 Months or Longer	(2,499)	(3,511)
Fair Value, Total	207,931	159,415
Unrealized Losses, Total	(3,963)	(3,727)
Corporate bonds
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	102	0
Unrealized Losses, Less Than 12 Months	(1)	0
Fair Value, 12 Months or Longer	478	476
Unrealized Losses, 12 Months or Longer	(4)	(8)
Fair Value, Total	580	476
Unrealized Losses, Total	(5)	(8)
Collateralized Mortgage Obligations
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	14,342	0
Unrealized Losses, Less Than 12 Months	(169)	0
Fair Value, 12 Months or Longer	12,695	19,541
Unrealized Losses, 12 Months or Longer	(701)	(911)
Fair Value, Total	27,037	19,541
Unrealized Losses, Total	(870)	(911)
Small Business Administration
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	19,237	22,319
Unrealized Losses, 12 Months or Longer	(457)	(775)
Fair Value, Total	19,237	22,319
Unrealized Losses, Total	(457)	(775)
U.S. Treasury and U.S. government sponsored entities
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	6,044	498
Unrealized Losses, Less Than 12 Months	(51)	(2)
Fair Value, 12 Months or Longer	199	10,159
Unrealized Losses, 12 Months or Longer	(1)	(110)
Fair Value, Total	6,243	10,657
Unrealized Losses, Total	(52)	(112)
State and political subdivisions
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	22,016	987
Unrealized Losses, Less Than 12 Months	(167)	(11)
Fair Value, 12 Months or Longer	12,635	24,063
Unrealized Losses, 12 Months or Longer	(245)	(660)
Fair Value, Total	34,651	25,050
Unrealized Losses, Total	(412)	(671)
Mortgage-backed securities - residential
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	79,301	25,770
Unrealized Losses, Less Than 12 Months	(1,044)	(202)
Fair Value, 12 Months or Longer	40,794	55,576
Unrealized Losses, 12 Months or Longer	(1,091)	(1,047)
Fair Value, Total	120,095	81,346
Unrealized Losses, Total	(2,135)	(1,249)
Equity securities
Investment securities with unrealized losses
Fair Value, Less Than 12 Months	88	26
Unrealized Losses, Less Than 12 Months	(32)	(1)
Fair Value, 12 Months or Longer	0	0
Unrealized Losses, 12 Months or Longer	0	0
Fair Value, Total	88	26
Unrealized Losses, Total	$ (32)	$ (1)

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Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule of loan balances
Allowance for loan losses	$ (8,978)	$ (7,632)	$ (7,568)	$ (7,629)
Total loans	1,287,887	656,220
Commercial real estate
Schedule of loan balances
Allowance for loan losses	(3,127)	(2,676)	(2,752)	(3,392)
Commercial
Schedule of loan balances
Allowance for loan losses	(1,373)	(1,420)	(1,219)	(1,453)
Residential real estate
Schedule of loan balances
Allowance for loan losses	(1,845)	(1,689)	(1,964)	(1,569)
Consumer
Schedule of loan balances
Allowance for loan losses	(2,160)	(1,663)	$ (1,419)	$ (951)
Originated Loans
Schedule of loan balances
Subtotal	830,960	661,625
Net deferred loan costs	2,731	2,227
Allowance for loan losses	(8,978)	(7,632)
Total loans	824,713	656,220
Originated Loans | Commercial
Schedule of loan balances
Commercial	157,447	120,493
Originated Loans | Commercial real estate, Owner occupied | Commercial real estate
Schedule of loan balances
Commercial real estate	113,160	74,829
Originated Loans | Commercial real estate, Non-owner occupied | Commercial real estate
Schedule of loan balances
Commercial real estate	139,502	122,228
Originated Loans | Commercial real estate, Other | Commercial real estate
Schedule of loan balances
Commercial real estate	50,855	26,137
Originated Loans | Residential real estate, 1-4 family residential | Residential real estate
Schedule of loan balances
Residential real estate	179,657	153,055
Originated Loans | Residential real estate, Home equity lines of credit | Residential real estate
Schedule of loan balances
Residential real estate	41,171	31,255
Originated Loans | Consumer, Indirect | Consumer
Schedule of loan balances
Consumer	127,335	120,931
Originated Loans | Consumer, Direct | Consumer
Schedule of loan balances
Consumer	17,325	9,071
Originated Loans | Consumer, Other | Consumer
Schedule of loan balances
Consumer	4,508	3,626
Acquired Loans
Schedule of loan balances
Total loans	463,174	0
Acquired Loans | Commercial
Schedule of loan balances
Commercial	73,621	0
Acquired Loans | Commercial real estate, Owner occupied | Commercial real estate
Schedule of loan balances
Commercial real estate	131,673	0
Acquired Loans | Commercial real estate, Non-owner occupied | Commercial real estate
Schedule of loan balances
Commercial real estate	28,045	0
Acquired Loans | Commercial real estate, Other | Commercial real estate
Schedule of loan balances
Commercial real estate	23,536	0
Acquired Loans | Residential real estate, 1-4 family residential | Residential real estate
Schedule of loan balances
Residential real estate	133,701	0
Acquired Loans | Residential real estate, Home equity lines of credit | Residential real estate
Schedule of loan balances
Residential real estate	40,929	0
Acquired Loans | Consumer, Direct | Consumer
Schedule of loan balances
Consumer	31,465	0
Acquired Loans | Consumer, Other | Consumer
Schedule of loan balances
Consumer	$ 204	$ 0

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Loans (Details 1) $ in Thousands	Dec. 31, 2015 USD ($)
Financing Receivable Impaired [Line Items]
Loans acquired with deteriorated credit quality	$ 3,125
Commercial
Financing Receivable Impaired [Line Items]
Loans acquired with deteriorated credit quality	1,476
National Bancshares Corporation
Financing Receivable Impaired [Line Items]
Total outstanding balance	3,063
Carrying amount, net of allowance	2,215
National Bancshares Corporation | Commercial
Financing Receivable Impaired [Line Items]
Loans acquired with deteriorated credit quality	1,576
Commercial real estate, Owner occupied | Commercial real estate
Financing Receivable Impaired [Line Items]
Loans acquired with deteriorated credit quality	1,063
Commercial real estate, Owner occupied | National Bancshares Corporation | Commercial real estate
Financing Receivable Impaired [Line Items]
Loans acquired with deteriorated credit quality	986
Commercial real estate, Non-owner occupied | Commercial real estate
Financing Receivable Impaired [Line Items]
Loans acquired with deteriorated credit quality	586
Commercial real estate, Non-owner occupied | National Bancshares Corporation | Commercial real estate
Financing Receivable Impaired [Line Items]
Loans acquired with deteriorated credit quality	$ 501

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Loans (Details 1) (Parenthetical) - Receivables Acquired with Deteriorated Credit Quality $ in Thousands	Dec. 31, 2015 USD ($)
Financing Receivable Impaired [Line Items]
Acquired with deteriorated credit quality, allowances	$ 0
National Bancshares Corporation
Financing Receivable Impaired [Line Items]
Acquired with deteriorated credit quality, allowances	$ 31

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Loans (Details 2) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)
Receivables [Abstract]
Beginning balance	$ 0
New loans purchased	361
Accretion of income	(38)
Ending balance	$ 323

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Loans (Details 3) $ in Thousands	Dec. 31, 2015 USD ($)
Financing Receivable Impaired [Line Items]
Contractually required payments	$ 3,125
Cash flows expected to be collected at acquisition	2,764
Fair value of acquired loans at acquisition	2,538
Commercial
Financing Receivable Impaired [Line Items]
Contractually required payments	1,476
Commercial real estate, Owner occupied | Commercial real estate
Financing Receivable Impaired [Line Items]
Contractually required payments	1,063
Commercial real estate, Non-owner occupied | Commercial real estate
Financing Receivable Impaired [Line Items]
Contractually required payments	$ 586

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Loans (Details 4) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Allowance for loan losses
Beginning balance	$ 7,632	$ 7,568	$ 7,629
Provision for loan losses	3,510	1,880	1,290
Loans charged off	(3,204)	(3,134)	(2,653)
Recoveries	1,040	1,318	1,302
Ending balance	8,978	7,632	7,568
Commercial real estate
Allowance for loan losses
Beginning balance	2,676	2,752	3,392
Provision for loan losses	857	(50)	(306)
Loans charged off	(536)	(151)	(505)
Recoveries	130	125	171
Ending balance	3,127	2,676	2,752
Commercial
Allowance for loan losses
Beginning balance	1,420	1,219	1,453
Provision for loan losses	234	357	(397)
Loans charged off	(290)	(185)	(99)
Recoveries	9	29	262
Ending balance	1,373	1,420	1,219
Residential real estate
Allowance for loan losses
Beginning balance	1,689	1,964	1,569
Provision for loan losses	354	233	674
Loans charged off	(320)	(585)	(326)
Recoveries	122	77	47
Ending balance	1,845	1,689	1,964
Consumer
Allowance for loan losses
Beginning balance	1,663	1,419	951
Provision for loan losses	1,776	1,370	1,369
Loans charged off	(2,058)	(2,213)	(1,723)
Recoveries	779	1,087	822
Ending balance	2,160	1,663	1,419
Unallocated
Allowance for loan losses
Beginning balance	184	214	264
Provision for loan losses	289	(30)	(50)
Loans charged off	0	0	0
Recoveries	0	0	0
Ending balance	$ 473	$ 184	$ 214

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Loans (Details 5) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$ 497	$ 874
Collectively evaluated for impairment	8,450	6,758
Acquired with deteriorated credit quality	31
Total ending allowance balance	8,978	7,632	$ 7,568	$ 7,629
Loans:
Loans individually evaluated for impairment	10,082	12,597
Loans collectively evaluated for impairment	823,609	651,255
Acquired loans	460,959
Acquired with deteriorated credit quality	716,721	342,723
Loans	1,296,865	663,852
Receivables Acquired with Deteriorated Credit Quality
Ending allowance balance attributable to loans:
Acquired loans	0
Loans:
Acquired with deteriorated credit quality	2,215
Commercial real estate
Ending allowance balance attributable to loans:
Individually evaluated for impairment	429	514
Collectively evaluated for impairment	2,698	2,162
Acquired with deteriorated credit quality	0
Total ending allowance balance	3,127	2,676	2,752	3,392
Loans:
Loans individually evaluated for impairment	5,853	7,139
Loans collectively evaluated for impairment	296,866	215,434
Acquired loans	181,987
Loans	485,973	222,573
Commercial real estate | Receivables Acquired with Deteriorated Credit Quality
Ending allowance balance attributable to loans:
Acquired loans	0
Loans:
Acquired with deteriorated credit quality	1,267
Commercial
Ending allowance balance attributable to loans:
Individually evaluated for impairment	5	272
Collectively evaluated for impairment	1,337	1,148
Acquired with deteriorated credit quality	31
Total ending allowance balance	1,373	1,420	1,219	1,453
Loans:
Loans individually evaluated for impairment	712	1,940
Loans collectively evaluated for impairment	156,415	118,210
Acquired loans	72,673
Acquired with deteriorated credit quality		120,150
Loans	230,748	120,150
Commercial | Receivables Acquired with Deteriorated Credit Quality
Ending allowance balance attributable to loans:
Acquired loans	0
Loans:
Acquired with deteriorated credit quality	948
Residential real estate
Ending allowance balance attributable to loans:
Individually evaluated for impairment	63	88
Collectively evaluated for impairment	1,782	1,601
Acquired with deteriorated credit quality	0
Total ending allowance balance	1,845	1,689	1,964	1,569
Loans:
Loans individually evaluated for impairment	3,414	3,425
Loans collectively evaluated for impairment	217,023	180,428
Acquired loans	174,630
Loans	395,067	183,853
Residential real estate | Receivables Acquired with Deteriorated Credit Quality
Ending allowance balance attributable to loans:
Acquired loans	0
Loans:
Acquired with deteriorated credit quality	0
Consumer
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	2,160	1,663
Acquired with deteriorated credit quality	0
Total ending allowance balance	2,160	1,663	1,419	951
Loans:
Loans individually evaluated for impairment	103	93
Loans collectively evaluated for impairment	153,305	137,183
Acquired loans	31,669
Loans	185,077	137,276
Consumer | Receivables Acquired with Deteriorated Credit Quality
Ending allowance balance attributable to loans:
Acquired loans	0
Loans:
Acquired with deteriorated credit quality	0
Unallocated
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	473	184
Acquired with deteriorated credit quality	0
Total ending allowance balance	473	184	$ 214	$ 264
Loans:
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	0	0
Acquired loans	0
Loans	0	$ 0
Unallocated | Receivables Acquired with Deteriorated Credit Quality
Ending allowance balance attributable to loans:
Acquired loans	0
Loans:
Acquired with deteriorated credit quality	$ 0

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Loans (Details 6) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	$ 7,205	$ 6,452	$ 7,044
Unpaid Principal Balance, With an allowance recorded	4,014	6,908	5,794
Unpaid Principal Balance	11,219	13,360	12,838
Recorded Investment, With no related allowance recorded	6,090	5,720	6,294
Recorded Investment, With an allowance recorded	3,992	6,877	5,676
Recorded Investment	10,082	12,597	11,970
Allowance for Loan Losses Allocated	497	874	560
Average Recorded Investment, With no related allowance recorded	5,400	6,019	6,109
Average Recorded Investment, With an allowance recorded	5,074	5,814	5,250
Average Recorded Investment	10,474	11,833	11,359
Interest Income Recognized, With no related allowance recorded	335	184	213
Interest Income Recognized, With related allowance recorded	196	223	179
Interest Income Recognized	531	407	392
Commercial
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	834	531	1,007
Unpaid Principal Balance, With an allowance recorded	81	1,444	1,462
Recorded Investment, With no related allowance recorded	631	511	971
Recorded Investment, With an allowance recorded	81	1,429	1,459
Allowance for Loan Losses Allocated	5	272	110
Average Recorded Investment, With no related allowance recorded	433	1,273	1,363
Average Recorded Investment, With an allowance recorded	540	818	594
Interest Income Recognized, With no related allowance recorded	23	22	25
Interest Income Recognized, With related allowance recorded	4	2	5
Consumer
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	214	185	111
Unpaid Principal Balance, With an allowance recorded	0	0	247
Recorded Investment, With no related allowance recorded	103	93	112
Recorded Investment, With an allowance recorded	0	0	251
Allowance for Loan Losses Allocated	0	0	82
Average Recorded Investment, With no related allowance recorded	81	166	9
Average Recorded Investment, With an allowance recorded	0	2	21
Interest Income Recognized, With no related allowance recorded	14	4	0
Interest Income Recognized, With related allowance recorded	0	0	0
Commercial real estate, Owner occupied | Commercial real estate
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	2,956	2,448	4,302
Unpaid Principal Balance, With an allowance recorded	1,597	2,882	886
Recorded Investment, With no related allowance recorded	2,436	2,318	3,762
Recorded Investment, With an allowance recorded	1,595	2,882	884
Allowance for Loan Losses Allocated	379	446	91
Average Recorded Investment, With no related allowance recorded	2,080	1,860	2,643
Average Recorded Investment, With an allowance recorded	2,008	2,104	2,536
Interest Income Recognized, With no related allowance recorded	106	46	137
Interest Income Recognized, With related allowance recorded	70	94	39
Commercial real estate, Non-owner occupied | Commercial real estate
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	343	391	491
Unpaid Principal Balance, With an allowance recorded	1,480	1,548	1,593
Recorded Investment, With no related allowance recorded	342	391	389
Recorded Investment, With an allowance recorded	1,480	1,548	1,588
Allowance for Loan Losses Allocated	50	68	75
Average Recorded Investment, With no related allowance recorded	372	653	438
Average Recorded Investment, With an allowance recorded	1,511	1,570	1,975
Interest Income Recognized, With no related allowance recorded	30	20	0
Interest Income Recognized, With related allowance recorded	79	81	87
Residential real estate, 1-4 family residential | Residential real estate
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	2,575	2,421	1,026
Unpaid Principal Balance, With an allowance recorded	769	944	1,458
Recorded Investment, With no related allowance recorded	2,310	2,156	961
Recorded Investment, With an allowance recorded	749	928	1,347
Allowance for Loan Losses Allocated	61	85	190
Average Recorded Investment, With no related allowance recorded	2,174	1,804	1,462
Average Recorded Investment, With an allowance recorded	919	1,207	112
Interest Income Recognized, With no related allowance recorded	147	79	51
Interest Income Recognized, With related allowance recorded	39	41	48
Residential real estate, Home equity lines of credit | Residential real estate
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	283	476	107
Unpaid Principal Balance, With an allowance recorded	87	90	148
Recorded Investment, With no related allowance recorded	268	251	99
Recorded Investment, With an allowance recorded	87	90	147
Allowance for Loan Losses Allocated	2	3	12
Average Recorded Investment, With no related allowance recorded	260	263	194
Average Recorded Investment, With an allowance recorded	96	113	12
Interest Income Recognized, With no related allowance recorded	15	13	0
Interest Income Recognized, With related allowance recorded	$ 4	$ 5	$ 0

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Loans (Details 7) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	$ 9,058	$ 8,008
Loans Past Due 90 Days or More Still Accruing	1,387	473
Originated Loans
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	7,028	8,008
Loans Past Due 90 Days or More Still Accruing	845	473
Originated Loans | Commercial
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	541	1,645
Loans Past Due 90 Days or More Still Accruing	73	0
Originated Loans | Commercial real estate, Owner occupied | Commercial real estate
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	3,313	3,315
Loans Past Due 90 Days or More Still Accruing	0	44
Originated Loans | Commercial real estate, Non-owner occupied | Commercial real estate
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	345	41
Loans Past Due 90 Days or More Still Accruing	0	0
Originated Loans | Residential real estate, 1-4 family residential | Residential real estate
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	2,406	2,742
Loans Past Due 90 Days or More Still Accruing	336	195
Originated Loans | Residential real estate, Home equity lines of credit | Residential real estate
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	127	139
Loans Past Due 90 Days or More Still Accruing	112	40
Originated Loans | Consumer, Indirect | Consumer
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	266	90
Loans Past Due 90 Days or More Still Accruing	297	193
Originated Loans | Consumer, Direct | Consumer
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	30	36
Loans Past Due 90 Days or More Still Accruing	3	0
Originated Loans | Consumer, Other | Consumer
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	0	0
Loans Past Due 90 Days or More Still Accruing	24	1
Acquired Loans
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	2,030	0
Loans Past Due 90 Days or More Still Accruing	542	0
Acquired Loans | Commercial
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	1,068	0
Loans Past Due 90 Days or More Still Accruing	0	0
Acquired Loans | Commercial real estate, Owner occupied | Commercial real estate
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	126	0
Loans Past Due 90 Days or More Still Accruing	18	0
Acquired Loans | Residential real estate, 1-4 family residential | Residential real estate
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	458	0
Loans Past Due 90 Days or More Still Accruing	467	0
Acquired Loans | Residential real estate, Home equity lines of credit | Residential real estate
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	125	0
Loans Past Due 90 Days or More Still Accruing	7	0
Acquired Loans | Consumer, Direct | Consumer
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	161	0
Loans Past Due 90 Days or More Still Accruing	50	0
Acquired Loans | Commercial real estate, Other | Commercial real estate
Schedule of investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
Nonaccrual	92	0
Loans Past Due 90 Days or More Still Accruing	$ 0	$ 0

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Loans (Details 8) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Schedule of investment in past due loans
Total Past Due	$ 19,574	$ 13,907
Loans Not Past Due	1,277,291	649,945
Loans	1,296,865	663,852
Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	7,869	4,358
Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	1,260	1,068
Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	10,445	8,481
Commercial real estate
Schedule of investment in past due loans
Loans	485,973	222,573
Commercial
Schedule of investment in past due loans
Loans	230,748	120,150
Residential real estate
Schedule of investment in past due loans
Loans	395,067	183,853
Consumer
Schedule of investment in past due loans
Loans	185,077	137,276
Residential real estate, 1-4 family residential | Residential real estate
Schedule of investment in past due loans
Loans	312,915	152,598
Residential real estate, Home equity lines of credit | Residential real estate
Schedule of investment in past due loans
Loans	82,152	31,255
Consumer, Indirect | Consumer
Schedule of investment in past due loans
Loans	131,427	124,579
Consumer, Direct | Consumer
Schedule of investment in past due loans
Loans	48,938	9,071
Consumer, Other | Consumer
Schedule of investment in past due loans
Loans	4,712	3,626
Originated Loans
Schedule of investment in past due loans
Total Past Due	13,105
Loans Not Past Due	820,586
Loans	833,691
Originated Loans | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	4,285
Originated Loans | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	947
Originated Loans | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	7,873
Originated Loans | Commercial
Schedule of investment in past due loans
Total Past Due	614	1,645
Loans Not Past Due	156,513	118,505
Loans	157,127	120,150
Originated Loans | Commercial | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	0	0
Originated Loans | Commercial | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	0	0
Originated Loans | Commercial | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	614	1,645
Originated Loans | Commercial real estate, Owner occupied | Commercial real estate
Schedule of investment in past due loans
Total Past Due	3,347	3,359
Loans Not Past Due	109,532	71,272
Loans	112,879	74,631
Originated Loans | Commercial real estate, Owner occupied | Commercial real estate | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	34	0
Originated Loans | Commercial real estate, Owner occupied | Commercial real estate | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	0	0
Originated Loans | Commercial real estate, Owner occupied | Commercial real estate | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	3,313	3,359
Originated Loans | Commercial real estate, Non-owner occupied | Commercial real estate
Schedule of investment in past due loans
Total Past Due	345	41
Loans Not Past Due	138,824	121,872
Loans	139,169	121,913
Originated Loans | Commercial real estate, Non-owner occupied | Commercial real estate | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	0	0
Originated Loans | Commercial real estate, Non-owner occupied | Commercial real estate | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	0	0
Originated Loans | Commercial real estate, Non-owner occupied | Commercial real estate | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	345	41
Originated Loans | Commercial real estate, Other | Commercial real estate
Schedule of investment in past due loans
Total Past Due	112	0
Loans Not Past Due	50,559	26,029
Loans	50,671	26,029
Originated Loans | Commercial real estate, Other | Commercial real estate | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	112	0
Originated Loans | Commercial real estate, Other | Commercial real estate | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	0	0
Originated Loans | Commercial real estate, Other | Commercial real estate | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	0	0
Originated Loans | Residential real estate, 1-4 family residential | Residential real estate
Schedule of investment in past due loans
Total Past Due	4,838	5,375
Loans Not Past Due	174,376	147,223
Loans	179,214	152,598
Originated Loans | Residential real estate, 1-4 family residential | Residential real estate | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	1,694	1,892
Originated Loans | Residential real estate, 1-4 family residential | Residential real estate | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	402	546
Originated Loans | Residential real estate, 1-4 family residential | Residential real estate | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	2,742	2,937
Originated Loans | Residential real estate, Home equity lines of credit | Residential real estate
Schedule of investment in past due loans
Total Past Due	306	476
Loans Not Past Due	40,917	30,779
Loans	41,223	31,255
Originated Loans | Residential real estate, Home equity lines of credit | Residential real estate | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	62	205
Originated Loans | Residential real estate, Home equity lines of credit | Residential real estate | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	5	92
Originated Loans | Residential real estate, Home equity lines of credit | Residential real estate | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	239	179
Originated Loans | Consumer, Indirect | Consumer
Schedule of investment in past due loans
Total Past Due	3,147	2,825
Loans Not Past Due	128,280	121,754
Loans	131,427	124,579
Originated Loans | Consumer, Indirect | Consumer | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	2,059	2,136
Originated Loans | Consumer, Indirect | Consumer | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	525	406
Originated Loans | Consumer, Indirect | Consumer | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	563	283
Originated Loans | Consumer, Direct | Consumer
Schedule of investment in past due loans
Total Past Due	349	162
Loans Not Past Due	17,124	8,909
Loans	17,473	9,071
Originated Loans | Consumer, Direct | Consumer | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	311	108
Originated Loans | Consumer, Direct | Consumer | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	5	18
Originated Loans | Consumer, Direct | Consumer | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	33	36
Originated Loans | Consumer, Other | Consumer
Schedule of investment in past due loans
Total Past Due	47	24
Loans Not Past Due	4,461	3,602
Loans	4,508	3,626
Originated Loans | Consumer, Other | Consumer | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	13	17
Originated Loans | Consumer, Other | Consumer | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	10	6
Originated Loans | Consumer, Other | Consumer | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	24	$ 1
Acquired Loans
Schedule of investment in past due loans
Total Past Due	6,469
Loans Not Past Due	456,705
Loans	463,174
Acquired Loans | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	3,584
Acquired Loans | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	313
Acquired Loans | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	2,572
Acquired Loans | Commercial
Schedule of investment in past due loans
Total Past Due	1,346
Loans Not Past Due	72,275
Loans	73,621
Acquired Loans | Commercial | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	276
Acquired Loans | Commercial | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	2
Acquired Loans | Commercial | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	1,068
Acquired Loans | Commercial real estate, Owner occupied | Commercial real estate
Schedule of investment in past due loans
Total Past Due	813
Loans Not Past Due	130,860
Loans	131,673
Acquired Loans | Commercial real estate, Owner occupied | Commercial real estate | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	669
Acquired Loans | Commercial real estate, Owner occupied | Commercial real estate | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	0
Acquired Loans | Commercial real estate, Owner occupied | Commercial real estate | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	144
Acquired Loans | Commercial real estate, Non-owner occupied | Commercial real estate
Schedule of investment in past due loans
Total Past Due	0
Loans Not Past Due	28,045
Loans	28,045
Acquired Loans | Commercial real estate, Non-owner occupied | Commercial real estate | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	0
Acquired Loans | Commercial real estate, Non-owner occupied | Commercial real estate | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	0
Acquired Loans | Commercial real estate, Non-owner occupied | Commercial real estate | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	0
Acquired Loans | Commercial real estate, Other | Commercial real estate
Schedule of investment in past due loans
Total Past Due	92
Loans Not Past Due	23,444
Loans	23,536
Acquired Loans | Commercial real estate, Other | Commercial real estate | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	0
Acquired Loans | Commercial real estate, Other | Commercial real estate | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	0
Acquired Loans | Commercial real estate, Other | Commercial real estate | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	92
Acquired Loans | Commercial real estate, Other | Consumer
Schedule of investment in past due loans
Total Past Due	0
Loans Not Past Due	204
Loans	204
Acquired Loans | Commercial real estate, Other | Consumer | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	0
Acquired Loans | Commercial real estate, Other | Consumer | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	0
Acquired Loans | Commercial real estate, Other | Consumer | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	0
Acquired Loans | Residential real estate, 1-4 family residential | Residential real estate
Schedule of investment in past due loans
Total Past Due	3,163
Loans Not Past Due	130,538
Loans	133,701
Acquired Loans | Residential real estate, 1-4 family residential | Residential real estate | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	1,994
Acquired Loans | Residential real estate, 1-4 family residential | Residential real estate | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	244
Acquired Loans | Residential real estate, 1-4 family residential | Residential real estate | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	925
Acquired Loans | Residential real estate, Home equity lines of credit | Residential real estate
Schedule of investment in past due loans
Total Past Due	221
Loans Not Past Due	40,708
Loans	40,929
Acquired Loans | Residential real estate, Home equity lines of credit | Residential real estate | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	78
Acquired Loans | Residential real estate, Home equity lines of credit | Residential real estate | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	11
Acquired Loans | Residential real estate, Home equity lines of credit | Residential real estate | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	132
Acquired Loans | Consumer, Indirect | Consumer
Schedule of investment in past due loans
Loans	0
Acquired Loans | Consumer, Direct | Consumer
Schedule of investment in past due loans
Total Past Due	834
Loans Not Past Due	30,631
Loans	31,465
Acquired Loans | Consumer, Direct | Consumer | Financing Receivables, 30 to 59 Days Past Due
Schedule of investment in past due loans
Total Past Due	567
Acquired Loans | Consumer, Direct | Consumer | Financing Receivables, 60 to 89 Days Past Due
Schedule of investment in past due loans
Total Past Due	56
Acquired Loans | Consumer, Direct | Consumer | Financing Receivables, Equal to Greater than 90 Days Past Due
Schedule of investment in past due loans
Total Past Due	211
Acquired Loans | Consumer, Other | Consumer
Schedule of investment in past due loans
Loans	$ 204

XML

Loans (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Financing Receivable Recorded Investment Past Due [Line Items]
Total troubled debt restructurings	$ 9,300,000	$ 8,100,000
Specific reserves to customers	497,000	874,000
Commitments to lend additional amounts to borrowers classified as troubled debt restructurings	0	25,000
Allowance adjustment charge offs	129,000	42,000	$ 50,000
Increase in the allowance for loan losses as a result of the allowance	101,000	$ 11,000	66,000
Payment default loan period		12 months
Maximum commercial loan and commercial real estate relationships	750,000
Commercial real estate loan
Financing Receivable Recorded Investment Past Due [Line Items]
Modified troubled debt restructuring	40,000		205,000
Residential real estate loan
Financing Receivable Recorded Investment Past Due [Line Items]
Modified troubled debt restructuring	1,000		35,000
Home equity line of credit
Financing Receivable Recorded Investment Past Due [Line Items]
Modified troubled debt restructuring	11,000
Commercial Loan
Financing Receivable Recorded Investment Past Due [Line Items]
Modified troubled debt restructuring			$ 204,000
Troubled debt restructurings
Financing Receivable Recorded Investment Past Due [Line Items]
Specific reserves to customers	$ 528,000	$ 242,000
Contractual Interest Rate Reduction | Minimum
Financing Receivable Recorded Investment Past Due [Line Items]
Reduction of the notes stated interest rate			0.38%
Contractual Interest Rate Reduction | Maximum
Financing Receivable Recorded Investment Past Due [Line Items]
Reduction of the notes stated interest rate			11.51%
Extended Maturity | Minimum
Financing Receivable Recorded Investment Past Due [Line Items]
Maturity period loans	15 months
Extended Maturity | Maximum
Financing Receivable Recorded Investment Past Due [Line Items]
Maturity period loans	126 months

XML

Loans (Details 9) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) Loan	Dec. 31, 2014 USD ($) Loan	Dec. 31, 2013 USD ($) Loans
Financing Receivable Modifications [Line Items]
Number of Loans	33	32	41
Pre-Modification Outstanding Recorded Investment	$ 2,698	$ 1,929	$ 1,409
Post-Modification Outstanding Recorded Investment	$ 2,698	$ 1,959	$ 1,422
Commercial real estate, Owner occupied
Financing Receivable Modifications [Line Items]
Number of Loans		1	2
Pre-Modification Outstanding Recorded Investment		$ 303	$ 226
Post-Modification Outstanding Recorded Investment		$ 316	$ 239
Residential real estate, 1-4 family residential
Financing Receivable Modifications [Line Items]
Number of Loans		21	4
Pre-Modification Outstanding Recorded Investment		$ 1,042	$ 131
Post-Modification Outstanding Recorded Investment		$ 1,059	$ 98
Residential real estate, Home equity lines of credit
Financing Receivable Modifications [Line Items]
Number of Loans		5	5
Pre-Modification Outstanding Recorded Investment		$ 128	$ 214
Post-Modification Outstanding Recorded Investment		$ 128	$ 214
Consumer, Indirect
Financing Receivable Modifications [Line Items]
Number of Loans		2	24
Pre-Modification Outstanding Recorded Investment		$ 37	$ 188
Post-Modification Outstanding Recorded Investment		$ 37	$ 188
Commercial real estate, Non-owner occupied
Financing Receivable Modifications [Line Items]
Number of Loans | Loan		2
Pre-Modification Outstanding Recorded Investment		$ 408
Post-Modification Outstanding Recorded Investment		$ 408
Commercial
Financing Receivable Modifications [Line Items]
Number of Loans | Loans			5
Pre-Modification Outstanding Recorded Investment			$ 649
Post-Modification Outstanding Recorded Investment			$ 682
Consumer
Financing Receivable Modifications [Line Items]
Number of Loans		1	1
Pre-Modification Outstanding Recorded Investment		$ 11	$ 1
Post-Modification Outstanding Recorded Investment		$ 11	$ 1
Originated Loans
Financing Receivable Modifications [Line Items]
Number of Loans | Loan	31
Pre-Modification Outstanding Recorded Investment	$ 1,741
Post-Modification Outstanding Recorded Investment	$ 1,741
Originated Loans | Commercial real estate, Owner occupied
Financing Receivable Modifications [Line Items]
Number of Loans | Loan	2
Pre-Modification Outstanding Recorded Investment	$ 801
Post-Modification Outstanding Recorded Investment	$ 801
Originated Loans | Residential real estate, 1-4 family residential
Financing Receivable Modifications [Line Items]
Number of Loans | Loan	13
Pre-Modification Outstanding Recorded Investment	$ 760
Post-Modification Outstanding Recorded Investment	$ 760
Originated Loans | Residential real estate, Home equity lines of credit
Financing Receivable Modifications [Line Items]
Number of Loans | Loan	2
Pre-Modification Outstanding Recorded Investment	$ 60
Post-Modification Outstanding Recorded Investment	$ 60
Originated Loans | Consumer, Indirect
Financing Receivable Modifications [Line Items]
Number of Loans | Loan	12
Pre-Modification Outstanding Recorded Investment	$ 104
Post-Modification Outstanding Recorded Investment	$ 104
Originated Loans | Commercial
Financing Receivable Modifications [Line Items]
Number of Loans | Loan	1
Pre-Modification Outstanding Recorded Investment	$ 8
Post-Modification Outstanding Recorded Investment	$ 8
Originated Loans | Consumer
Financing Receivable Modifications [Line Items]
Number of Loans | Loan	1
Pre-Modification Outstanding Recorded Investment	$ 8
Post-Modification Outstanding Recorded Investment	$ 8
Acquired Loans | Commercial
Financing Receivable Modifications [Line Items]
Number of Loans | Loan	2
Pre-Modification Outstanding Recorded Investment	$ 957
Post-Modification Outstanding Recorded Investment	$ 957

XML

Loans (Details 10) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	$ 716,721	$ 342,723
Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		74,631
Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		121,913
Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		26,029
Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		120,150
Originated Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	459,846
Originated Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	112,879
Originated Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	139,169
Originated Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	50,671
Originated Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	157,127
Acquired Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	256,875
Acquired Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	131,673
Acquired Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	28,045
Acquired Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	23,536
Acquired Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	73,621
Pass
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	696,346	321,314
Pass | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		66,036
Pass | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		115,159
Pass | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		25,710
Pass | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		114,409
Pass | Originated Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	447,660
Pass | Originated Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	107,222
Pass | Originated Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	135,847
Pass | Originated Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	50,376
Pass | Originated Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	154,215
Pass | Acquired Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	248,686
Pass | Acquired Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	130,028
Pass | Acquired Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	26,141
Pass | Acquired Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	22,843
Pass | Acquired Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	69,674
Special Mention
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	4,920	7,860
Special Mention | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		2,534
Special Mention | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		3,760
Special Mention | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		0
Special Mention | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		1,566
Special Mention | Originated Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	2,469
Special Mention | Originated Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	1,069
Special Mention | Originated Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	461
Special Mention | Originated Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Special Mention | Originated Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	939
Special Mention | Acquired Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	2,451
Special Mention | Acquired Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Special Mention | Acquired Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	1,340
Special Mention | Acquired Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	476
Special Mention | Acquired Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	635
Substandard
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	15,455	13,549
Substandard | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		6,061
Substandard | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		2,994
Substandard | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		319
Substandard | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		4,175
Substandard | Originated Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	9,717
Substandard | Originated Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	4,588
Substandard | Originated Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	2,861
Substandard | Originated Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	295
Substandard | Originated Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	1,973
Substandard | Acquired Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	5,738
Substandard | Acquired Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	1,645
Substandard | Acquired Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	564
Substandard | Acquired Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	217
Substandard | Acquired Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	3,312
Doubtful
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0	0
Doubtful | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		0
Doubtful | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		0
Doubtful | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		0
Doubtful | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		0
Doubtful | Originated Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Doubtful | Originated Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Doubtful | Originated Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Doubtful | Originated Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Doubtful | Originated Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Doubtful | Acquired Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Doubtful | Acquired Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Doubtful | Acquired Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Doubtful | Acquired Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Doubtful | Acquired Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Not Rated
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0	0
Not Rated | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		0
Not Rated | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		0
Not Rated | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		0
Not Rated | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans		$ 0
Not Rated | Originated Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Not Rated | Originated Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Not Rated | Originated Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Not Rated | Originated Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Not Rated | Originated Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Not Rated | Acquired Loans
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Not Rated | Acquired Loans | Commercial real estate | Commercial real estate, Owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Not Rated | Acquired Loans | Commercial real estate | Commercial real estate, Non-owner occupied
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Not Rated | Acquired Loans | Commercial real estate | Commercial real estate, Other
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	0
Not Rated | Acquired Loans | Commercial
Financing Receivable Recorded Investment [Line Items]
Total risk category of loans by class of loans	$ 0

XML

Loans (Details 11) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable Recorded Investment [Line Items]
Loans	$ 1,296,865	$ 663,852
Residential real estate
Financing Receivable Recorded Investment [Line Items]
Loans	395,067	183,853
Residential real estate | Residential real estate, 1-4 family residential
Financing Receivable Recorded Investment [Line Items]
Loans	312,915	152,598
Residential real estate | Residential real estate, 1-4 family residential | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans		149,661
Residential real estate | Residential real estate, 1-4 family residential | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans		2,937
Residential real estate | Residential real estate, Home equity lines of credit
Financing Receivable Recorded Investment [Line Items]
Loans	82,152	31,255
Residential real estate | Residential real estate, Home equity lines of credit | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans		31,076
Residential real estate | Residential real estate, Home equity lines of credit | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans		179
Consumer
Financing Receivable Recorded Investment [Line Items]
Loans	185,077	137,276
Consumer | Consumer, Indirect
Financing Receivable Recorded Investment [Line Items]
Loans	131,427	124,579
Consumer | Consumer, Indirect | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans		124,296
Consumer | Consumer, Indirect | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans		283
Consumer | Consumer, Direct
Financing Receivable Recorded Investment [Line Items]
Loans	48,938	9,071
Consumer | Consumer, Direct | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans		9,035
Consumer | Consumer, Direct | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans		36
Consumer | Consumer, Other
Financing Receivable Recorded Investment [Line Items]
Loans	4,712	3,626
Consumer | Consumer, Other | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans		3,625
Consumer | Consumer, Other | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans		1
Originated Loans
Financing Receivable Recorded Investment [Line Items]
Loans	833,691
Originated Loans | Residential real estate | Residential real estate, 1-4 family residential
Financing Receivable Recorded Investment [Line Items]
Loans	179,214	152,598
Originated Loans | Residential real estate | Residential real estate, 1-4 family residential | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	176,472
Originated Loans | Residential real estate | Residential real estate, 1-4 family residential | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	2,742
Originated Loans | Residential real estate | Residential real estate, Home equity lines of credit
Financing Receivable Recorded Investment [Line Items]
Loans	41,223	31,255
Originated Loans | Residential real estate | Residential real estate, Home equity lines of credit | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	40,984
Originated Loans | Residential real estate | Residential real estate, Home equity lines of credit | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	239
Originated Loans | Consumer | Consumer, Indirect
Financing Receivable Recorded Investment [Line Items]
Loans	131,427	124,579
Originated Loans | Consumer | Consumer, Indirect | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	130,864
Originated Loans | Consumer | Consumer, Indirect | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	563
Originated Loans | Consumer | Consumer, Direct
Financing Receivable Recorded Investment [Line Items]
Loans	17,473	9,071
Originated Loans | Consumer | Consumer, Direct | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	17,440
Originated Loans | Consumer | Consumer, Direct | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	33
Originated Loans | Consumer | Consumer, Other
Financing Receivable Recorded Investment [Line Items]
Loans	4,508	$ 3,626
Originated Loans | Consumer | Consumer, Other | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	4,484
Originated Loans | Consumer | Consumer, Other | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	24
Acquired Loans
Financing Receivable Recorded Investment [Line Items]
Loans	463,174
Acquired Loans | Residential real estate | Residential real estate, 1-4 family residential
Financing Receivable Recorded Investment [Line Items]
Loans	133,701
Acquired Loans | Residential real estate | Residential real estate, 1-4 family residential | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	132,776
Acquired Loans | Residential real estate | Residential real estate, 1-4 family residential | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	925
Acquired Loans | Residential real estate | Residential real estate, Home equity lines of credit
Financing Receivable Recorded Investment [Line Items]
Loans	40,929
Acquired Loans | Residential real estate | Residential real estate, Home equity lines of credit | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	40,797
Acquired Loans | Residential real estate | Residential real estate, Home equity lines of credit | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	132
Acquired Loans | Consumer | Consumer, Indirect
Financing Receivable Recorded Investment [Line Items]
Loans	0
Acquired Loans | Consumer | Consumer, Indirect | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	0
Acquired Loans | Consumer | Consumer, Indirect | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	0
Acquired Loans | Consumer | Consumer, Direct
Financing Receivable Recorded Investment [Line Items]
Loans	31,465
Acquired Loans | Consumer | Consumer, Direct | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	31,254
Acquired Loans | Consumer | Consumer, Direct | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	211
Acquired Loans | Consumer | Consumer, Other
Financing Receivable Recorded Investment [Line Items]
Loans	204
Acquired Loans | Consumer | Consumer, Other | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	204
Acquired Loans | Consumer | Consumer, Other | Nonperforming Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Loans	$ 0

XML

Loan Servicing - Summary of Principal Balance for Mortgage Loans (Details) $ in Thousands	Dec. 31, 2015 USD ($)
FHLMC
Mortgage loan portfolio serviced for:
Loan Portfolio Expense	$ 68,605

XML

Loan Servicing - Additional Information (Details)	Dec. 31, 2015 USD ($)
Transfers And Servicing [Abstract]
Escrow balances maintained in connection with serviced loans	$ 584,000
Mortgage servicing rights, valuation allowance	$ 0

XML

Loan Servicing - Summary of Activity for Mortgage Servicing Rights of Acquisition (Details ) $ in Thousands	6 Months Ended
	Dec. 31, 2015 USD ($)
Servicing rights:
Beginning balance	$ 347
Additions	166
Amortization to expense	(60)
Ending balance	$ 453

XML

Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Financial Assets
Securities available for sale	$ 394,312	$ 389,829
Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	394,312	389,829
Loan yield maintenance provisions	789	638
Corporate bonds
Financial Assets
Securities available for sale	1,134	931
Corporate bonds | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	1,134	931
Collateralized mortgage obligations
Financial Assets
Securities available for sale	27,165	25,175
Collateralized mortgage obligations | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	27,165	25,175
Small Business Administration
Financial Assets
Securities available for sale	19,299	22,419
Small Business Administration | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	19,299	22,419
U.S. Treasury and U.S. government sponsored entities
Financial Assets
Securities available for sale	11,106	24,821
U.S. Treasury and U.S. government sponsored entities | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	11,106	24,821
State and political subdivisions
Financial Assets
Securities available for sale	138,723	91,881
State and political subdivisions | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	138,723	91,881
Mortgage-backed securities - residential
Financial Assets
Securities available for sale	196,587	224,362
Mortgage-backed securities - residential | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	196,587	224,362
Equity securities
Financial Assets
Securities available for sale	298	240
Equity securities | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	298	240
Interest rate swaps | Fair Value, Measurements, Recurring
Financial Liabilities
Derivative liabilities	789	638
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	298	240
Loan yield maintenance provisions	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate bonds | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Collateralized mortgage obligations | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Small Business Administration | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury and U.S. government sponsored entities | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | State and political subdivisions | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mortgage-backed securities - residential | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	298	240
Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate swaps | Fair Value, Measurements, Recurring
Financial Liabilities
Derivative liabilities	0	0
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	393,999	389,579
Loan yield maintenance provisions	789	638
Significant Other Observable Inputs (Level 2) | Corporate bonds | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	1,134	931
Significant Other Observable Inputs (Level 2) | Collateralized mortgage obligations | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	27,165	25,175
Significant Other Observable Inputs (Level 2) | Small Business Administration | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	19,299	22,419
Significant Other Observable Inputs (Level 2) | U.S. Treasury and U.S. government sponsored entities | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	11,106	24,821
Significant Other Observable Inputs (Level 2) | State and political subdivisions | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	138,723	91,881
Significant Other Observable Inputs (Level 2) | Mortgage-backed securities - residential | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	196,572	224,352
Significant Other Observable Inputs (Level 2) | Equity securities | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Significant Other Observable Inputs (Level 2) | Interest rate swaps | Fair Value, Measurements, Recurring
Financial Liabilities
Derivative liabilities	789	638
Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	15	10
Loan yield maintenance provisions	0	0
Significant Unobservable Inputs (Level 3) | Corporate bonds | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Significant Unobservable Inputs (Level 3) | Collateralized mortgage obligations | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Significant Unobservable Inputs (Level 3) | Small Business Administration | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Significant Unobservable Inputs (Level 3) | U.S. Treasury and U.S. government sponsored entities | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Significant Unobservable Inputs (Level 3) | State and political subdivisions | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Significant Unobservable Inputs (Level 3) | Mortgage-backed securities - residential | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	15	10
Significant Unobservable Inputs (Level 3) | Equity securities | Fair Value, Measurements, Recurring
Financial Assets
Securities available for sale	0	0
Significant Unobservable Inputs (Level 3) | Interest rate swaps | Fair Value, Measurements, Recurring
Financial Liabilities
Derivative liabilities	$ 0	$ 0

XML

Fair Value (Details Textual) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($) Property	Dec. 31, 2013 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value assets liabilities transfers amount between level 1 and level 2	$ 0	$ 0
Impaired loans, unpaid carrying amount with allowance recorded	4,014	6,908	$ 5,794
Impaired loans, allowance	497	874	560
Provision for loan losses	3,510	$ 1,880	$ 1,290
Number of properties charged down reflecting updated appraisals | Property		1
Other real estate owned measured at fair value less costs to sell		$ 45
Write down of other real estate owned	$ 0	5
Maximum maturity period of short term borrowings	90 days
Measured Using Present Value of Cash Flows
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Troubled debt restructurings	$ 2,900	4,200
Collateral Dependent Impaired Loans
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans, unpaid carrying amount with allowance recorded	3,400	988
Impaired loans, allowance	383	117
Provision for loan losses	$ 270	$ 992

XML

Fair Value (Details 1) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs
Beginning Balance	$ 10	$ 10	$ 11
Total unrealized gains or losses:
Included in other comprehensive income	0	0	0
Repayments	(1)	0	(1)
Acquired and/or purchased	6	0	0
Ending Balance	$ 15	$ 10	$ 10

XML

Fair Value (Details 2) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	$ 10,082	$ 12,597	$ 11,970
Fair Value, Measurements, Nonrecurring | Other real estate owned, Commercial real estate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment		45
Commercial real estate, Owner occupied | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	1,448
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Nonrecurring | Other real estate owned, Commercial real estate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment		0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial real estate, Owner occupied | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	0
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Nonrecurring | Other real estate owned, Commercial real estate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment		0
Significant Other Observable Inputs (Level 2) | Commercial real estate, Owner occupied | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	0
Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Nonrecurring | Other real estate owned, Commercial real estate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment		45
Significant Unobservable Inputs (Level 3) | Commercial real estate, Owner occupied | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	1,448
Commercial | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	1,514	807
Commercial | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	0	0
Commercial | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	0	0
Commercial | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	1,514	807
Residential Real Estate | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	42	63
Residential Real Estate | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	0	0
Residential Real Estate | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	0	0
Residential Real Estate | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	42	$ 63
Consumer | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	13
Consumer | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	0
Consumer | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	0
Consumer | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Recorded Investment	$ 13

XML

Fair Value (Details 3) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Fair value measurements for financial instruments
Recorded Investment	$ 10,082	$ 12,597	$ 11,970
Fair Value, Measurements, Nonrecurring | Commercial
Fair value measurements for financial instruments
Recorded Investment	1,514	807
Fair Value, Measurements, Nonrecurring | Residential Real Estate
Fair value measurements for financial instruments
Recorded Investment	42	63
Fair Value, Measurements, Nonrecurring | Consumer
Fair value measurements for financial instruments
Recorded Investment	13
Fair Value, Measurements, Nonrecurring | Income Approach Valuation | Commercial
Fair value measurements for financial instruments
Recorded Investment	$ 1,262
Fair Value Measurements Valuation Technique(s) Description	Income approach
Fair Value, Measurements, Nonrecurring | Income Approach Valuation | Commercial | Weighted Average
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	(29.77%)
Fair Value, Measurements, Nonrecurring | Income Approach Valuation | Commercial real estate
Fair value measurements for financial instruments
Recorded Investment	$ 701	$ 116
Fair Value Measurements Valuation Technique(s) Description	Income approach
Fair Value, Measurements, Nonrecurring | Income Approach Valuation | Commercial real estate | Minimum
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		(13.64%)
Fair Value, Measurements, Nonrecurring | Income Approach Valuation | Commercial real estate | Minimum | Commercial real estate loan
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	(49.42%)
Fair Value, Measurements, Nonrecurring | Income Approach Valuation | Commercial real estate | Maximum
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		12.93%
Fair Value, Measurements, Nonrecurring | Income Approach Valuation | Commercial real estate | Maximum | Commercial real estate loan
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	40.89%
Fair Value, Measurements, Nonrecurring | Income Approach Valuation | Commercial real estate | Weighted Average
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		(5.96%)
Fair Value, Measurements, Nonrecurring | Income Approach Valuation | Commercial real estate | Weighted Average | Commercial real estate loan
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	35.33%
Fair Value, Measurements, Nonrecurring | Quoted price for loan relationship | Commercial
Fair value measurements for financial instruments
Recorded Investment	$ 252
Fair Value Measurements Valuation Technique(s) Description	Quoted price for loan relationship
Fair Value, Measurements, Nonrecurring | Quoted price for loan relationship | Commercial | Weighted Average
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	(3.01%)
Fair Value, Measurements, Nonrecurring | Quoted price for loan relationship | Commercial real estate
Fair value measurements for financial instruments
Recorded Investment	$ 747
Fair Value Measurements Valuation Technique(s) Description	Quoted price for loan relationship
Fair Value, Measurements, Nonrecurring | Quoted price for loan relationship | Commercial real estate | Weighted Average
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	1.01%
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Other real estate owned
Fair value measurements for financial instruments
Recorded Investment		$ 45
Fair Value Measurements Valuation Technique(s) Description	Sales comparison
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Minimum | Other real estate owned
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		(12.86%)
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Maximum | Other real estate owned
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		11.97%
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Weighted Average | Other real estate owned
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		(5.79%)
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Commercial
Fair value measurements for financial instruments
Recorded Investment		$ 807
Fair Value Measurements Valuation Technique(s) Description	Sales comparison
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Commercial | Minimum
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		(27.43%)
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Commercial | Maximum
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		32.86%
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Commercial | Weighted Average
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		(9.96%)
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Residential Real Estate
Fair value measurements for financial instruments
Recorded Investment	$ 42	$ 63
Fair Value Measurements Valuation Technique(s) Description	Sales comparison
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Residential Real Estate | Minimum
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	(18.32%)	(18.32%)
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Residential Real Estate | Maximum
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	24.16%	24.16%
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Residential Real Estate | Weighted Average
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	(14.02%)	(14.02%)
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Consumer
Fair value measurements for financial instruments
Recorded Investment	$ 13
Fair Value Measurements Valuation Technique(s) Description	Sales comparison
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Consumer | Minimum
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	(12.86%)
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Consumer | Maximum
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	11.97%
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Consumer | Weighted Average
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent	(5.79%)
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Commercial real estate
Fair value measurements for financial instruments
Recorded Investment		$ 1,237
Fair Value Measurements Valuation Technique(s) Description	Sales comparison
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Commercial real estate | Minimum | Commercial real estate loan
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		(41.59%)
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Commercial real estate | Maximum | Commercial real estate loan
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		77.25%
Fair Value, Measurements, Nonrecurring | Sales Comparison Valuation | Commercial real estate | Weighted Average | Commercial real estate loan
Fair value measurements for financial instruments
Adjustment for differences between earning multiplier and comparable sales, Percent		(7.82%)

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Fair Value (Details 4) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Financial assets
Cash and cash equivalents, Carrying Amount	$ 56,014	$ 27,428	$ 27,513	$ 37,759
Restricted stock, Carrying Amount	9,384	4,224
Loans held for sale, Carrying Amount	1,769	511
Loans, net, Carrying Amount	1,287,887	656,220
Mortgage servicing rights, Carrying Amount	453
Accrued interest receivable, Carrying Amount	5,158	3,237
Financial liabilities
Deposits, Carrying Amount	1,409,047	915,703
Short-term borrowings, Carrying Amount	225,832	69,136
Long-term borrowings	22,153	18,381
Accrued interest payable, Carrying Amount	445	402
Fair Value, Measurements, Recurring
Financial assets
Cash and cash equivalents, Fair Value	56,014	27,428
Loans held for sale, Fair Value	1,813	523
Loans, net, Fair Value	1,296,075	658,993
Mortgage servicing rights, Fair Value	453
Accrued interest receivable, Fair Value	5,158	3,237
Financial liabilities
Deposits, Fair Value	1,406,415	915,460
Short-term borrowings, Fair Value	225,832	69,136
Long-term borrowings, Fair Value	22,306	18,837
Accrued interest payable, Fair value	445	402
Fair Value, Measurements, Recurring | Level 1
Financial assets
Cash and cash equivalents, Fair Value	22,500	11,410
Loans held for sale, Fair Value	0	0
Loans, net, Fair Value	0	0
Mortgage servicing rights, Fair Value	0
Accrued interest receivable, Fair Value	0	0
Financial liabilities
Deposits, Fair Value	1,164,506	708,752
Short-term borrowings, Fair Value	0	0
Long-term borrowings, Fair Value	0	0
Accrued interest payable, Fair value	26	2
Fair Value, Measurements, Recurring | Level 2
Financial assets
Cash and cash equivalents, Fair Value	33,514	16,018
Loans held for sale, Fair Value	1,813	523
Loans, net, Fair Value	0	0
Mortgage servicing rights, Fair Value	453
Accrued interest receivable, Fair Value	2,011	1,645
Financial liabilities
Deposits, Fair Value	241,909	206,708
Short-term borrowings, Fair Value	225,832	69,136
Long-term borrowings, Fair Value	22,306	18,837
Accrued interest payable, Fair value	419	400
Fair Value, Measurements, Recurring | Level 3
Financial assets
Cash and cash equivalents, Fair Value	0	0
Loans held for sale, Fair Value	0	0
Loans, net, Fair Value	1,296,075	658,993
Mortgage servicing rights, Fair Value	0
Accrued interest receivable, Fair Value	3,147	1,592
Financial liabilities
Deposits, Fair Value	0	0
Short-term borrowings, Fair Value	0	0
Long-term borrowings, Fair Value	0	0
Accrued interest payable, Fair value	$ 0	$ 0

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Premises and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Premises and equipment
Premises and equipment, gross	$ 44,492	$ 35,883
Less accumulated depreciation	(20,302)	(18,834)
NET BOOK VALUE	24,190	17,049
Land
Premises and equipment
Premises and equipment, gross	5,833	3,143
Buildings
Premises and equipment
Premises and equipment, gross	24,724	20,842
Furniture Fixtures and Equipment
Premises and equipment
Premises and equipment, gross	13,485	11,651
Leasehold Improvements
Premises and equipment
Premises and equipment, gross	$ 450	$ 247

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Premises and Equipment (Details Textual) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Sep. 30, 2015 Location	Jun. 30, 2015 Location
Premises and Equipment (Textual) [Abstract]
Depreciation expense	$ 1,500	$ 1,100	$ 1,200
Purchase of property		$ 395
Possession of property		2014-06
Rent expense	$ 332	$ 323	$ 302
NBOH acquisition
Premises and Equipment (Textual) [Abstract]
Number of retail branch | Location					14
Tri-State acquisition
Premises and Equipment (Textual) [Abstract]
Number of retail branch | Location				4

XML

Premises and Equipment (Details 1) $ in Thousands	Dec. 31, 2015 USD ($)
Rent commitments
2016	$ 307
2017	319
2018	306
2019	303
2020	267
Thereafter	1,380
TOTAL	$ 2,882

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Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Goodwill And Intangible Assets [Line Items]
Goodwill associated with the Company's purchase of National Associates, Inc. and Farmers Trust Company	$ 35,090	$ 5,591
Impairment Charges		763
Other intangibles	7,821	3,222
Aggregate amortization expense	983	$ 767	$ 624
Core Deposits
Goodwill And Intangible Assets [Line Items]
Other intangibles	$ 5,600

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Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Other intangible assets
Gross Carrying Amount	$ 12,112	$ 6,530
Accumulated Amortization	(4,291)	(3,308)
Customer Relationships
Other intangible assets
Gross Carrying Amount	5,970	5,970
Accumulated Amortization	(3,585)	(2,972)
Non-compete contracts
Other intangible assets
Gross Carrying Amount	370	370
Accumulated Amortization	(325)	(295)
Trade name
Other intangible assets
Gross Carrying Amount	190	190
Accumulated Amortization	(65)	(41)
Core Deposits
Other intangible assets
Gross Carrying Amount	5,582	0
Accumulated Amortization	$ (316)	$ 0

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Goodwill and Intangible Assets (Details 1) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
2016	$ 1,293
2017	1,207
2018	1,123
2019	1,048
2020	973
Thereafter	2,177
TOTAL	$ 7,821	$ 3,222

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Interest Bearing Deposits (Details Textual) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Interest Bearing Deposits (Textual) [Abstract]
Minimum time deposits amount	$ 250
Time deposits of $100 thousand or more	$ 39,600	$ 26,300

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Interest Bearing Deposits (Details) - Certificates of Deposit $ in Thousands	Dec. 31, 2015 USD ($)
Summary of scheduled maturities of certificates of deposit
2016	$ 108,493
2017	39,007
2018	18,528
2019	27,827
2020	37,494
Thereafter	7,733
TOTAL	$ 239,082

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Interest Bearing Deposits (Details 1) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Summary of year-end interest bearing deposits
Demand	$ 327,434	$ 126,456
Money Market	293,209	266,040
Savings	234,672	131,559
Certificates of Deposit	239,082	206,951
TOTAL	$ 1,094,397	$ 731,006

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Short-term borrowings (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Assets Sold Under Agreements To Repurchase [Line Items]
Amount of Advances	$ 20,054	$ 18,381
Weighted Average Interest Rate	2.04%	2.76%
Pledged
Assets Sold Under Agreements To Repurchase [Line Items]
Amount of Advances	$ 150,000	$ 10,000
Weighted Average Interest Rate	0.39%	0.26%
Pledged | Repurchase advance
Assets Sold Under Agreements To Repurchase [Line Items]
Amount of Advances	$ 100,000
Weighted Average Interest Rate	0.39%
Pledged | Cash management advance
Assets Sold Under Agreements To Repurchase [Line Items]
Amount of Advances	$ 50,000	$ 10,000
Weighted Average Interest Rate	0.39%	0.26%

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Short-term borrowings (Parenthetical) (Details) - Pledged	Dec. 31, 2015	Dec. 31, 2014
Repurchase advance
Assets Sold Under Agreements To Repurchase [Line Items]
Federal Home Loan Bank interest rate	0.39%
Cash management advance
Assets Sold Under Agreements To Repurchase [Line Items]
Federal Home Loan Bank interest rate	0.26%	0.45%

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Short-term borrowings (Details Textual)	12 Months Ended
	Dec. 31, 2015 USD ($) Bank	Dec. 31, 2014 USD ($)
Line Of Credit Facility [Line Items]
Maturity of repurchase agreements	89 days
Securities Sold under Agreements to Repurchase and Other Short Term Borrowings (Additional Textual) [Abstract]
Interest rate, effective percentage	4.50%	4.50%
Domestic Line of Credit
Line Of Credit Facility [Line Items]
Access to lines of credit at domestic banks	$ 25,000,000
Number of domestic banks | Bank	2
Unsecured revolving line of credit, outstanding balance	$ 0	$ 0
Revolving Credit Facility
Line Of Credit Facility [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	4.50%
Revolving Credit Facility | Farmers National Banc Corp | Unsecured Debt
Line Of Credit Facility [Line Items]
Unsecured revolving line of credit, outstanding balance	$ 6,500,000
Letter of Credit
Line Of Credit Facility [Line Items]
Unsecured revolving line of credit, outstanding balance	$ 350,000	350,000
Debt Instrument, Interest Rate, Stated Percentage	3.50%
US Treasury and Government Short-term Debt Securities
Line Of Credit Facility [Line Items]
Carrying amount of securities sold under repurchase agreement	$ 79,300,000	$ 61,700,000

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Short-term borrowings (Details 1) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Summary of securities sold under agreements to repurchase
Average balance during the year	$ 71,779	$ 71,573	$ 90,951
Average interest rate during the year	0.07%	0.04%	0.04%
Maximum month-end balance during the year	$ 89,574	$ 78,972	$ 100,462
Weighted average year-end interest rate	0.06%	0.06%	0.06%
Balance at year-end	$ 75,482	$ 58,786	$ 75,267

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Short-term borrowings (Details 2) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Assets Sold Under Agreements To Repurchase [Line Items]
Total borrowings	$ 225,832	$ 69,136
Repurchase agreement
Assets Sold Under Agreements To Repurchase [Line Items]
Total borrowings	75,482
Repurchase agreement | Collateralized mortgage obligations
Assets Sold Under Agreements To Repurchase [Line Items]
Total borrowings	7,175
Repurchase agreement | U.S. Treasury and U.S. government sponsored entities
Assets Sold Under Agreements To Repurchase [Line Items]
Total borrowings	5,276
Repurchase agreement | State and political subdivisions
Assets Sold Under Agreements To Repurchase [Line Items]
Total borrowings	2,640
Repurchase agreement | Mortgage-backed securities - residential
Assets Sold Under Agreements To Repurchase [Line Items]
Total borrowings	$ 60,391

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Long-Term Borrowings (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Summary of long-term advances from the Federal Home Loan Bank
Amount of Advances	$ 20,054	$ 18,381
Weighted Average Interest Rate	2.04%	2.76%
Fixed-rate constant payment advances
Summary of long-term advances from the Federal Home Loan Bank
Amount of Advances	$ 15,054	$ 8,381
Weighted Average Interest Rate	1.24%	1.72%
Convertible and putable fixed-rate advances
Summary of long-term advances from the Federal Home Loan Bank
Amount of Advances	$ 5,000	$ 10,000
Weighted Average Interest Rate	4.45%	3.64%

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Long-Term Borrowings (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Long-term Borrowings (Additional Textual) [Abstract]
Long-term advances	$ 20,054	$ 18,381
Residential mortgage loans	237,800	$ 110,300
Additional borrowing limit	63,400
Long-term investments	$ 2,100
Interest rate	2.20%
Debt interest rate payment description	The debt has a floating rate that is determined quarterly based on the three-month LIBOR
Notes payable	$ 2,100
Debenture maturity date	Dec. 15, 2036
Farmers National Banc Corp
Long-term Borrowings (Additional Textual) [Abstract]
Long-term advances	$ 8,000
Fixed-rate constant payment advances
Long-term Borrowings (Textual) [Abstract]
Federal Home Loan Bank interest rate from	0.61%	0.61%
Federal Home Loan Bank interest rate to	4.88%	4.88%
Long-term Borrowings (Additional Textual) [Abstract]
Long-term advances	$ 15,054	$ 8,381
Convertible and putable fixed-rate advances
Long-term Borrowings (Textual) [Abstract]
Federal Home Loan Bank interest rate from	2.82%	2.82%
Federal Home Loan Bank interest rate to	4.45%	4.45%
Long-term Borrowings (Additional Textual) [Abstract]
Long-term advances	$ 5,000	$ 10,000
Fixed-rate advances
Long-term Borrowings (Additional Textual) [Abstract]
Retained amount of putable FHLB fixed-rate advances	$ 5,000

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Long-Term Borrowings (Details 1) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Maturing in:
2016	$ 7,247
2017	8,089
2018	1,008
2019	931
2020	860
Thereafter	1,919
TOTAL	$ 20,054	$ 18,381

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Commitments and Contingent Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Commitments to make loans | Fixed Rate
The contractual amounts of financial instruments with off-balance-sheet risk at year end
Total contractual amounts of financial instruments with off-balance-sheet risk	$ 100	$ 471
Commitments to make loans | Variable Rate
The contractual amounts of financial instruments with off-balance-sheet risk at year end
Total contractual amounts of financial instruments with off-balance-sheet risk	4,836	1,881
Unused lines of credit | Fixed Rate
The contractual amounts of financial instruments with off-balance-sheet risk at year end
Total contractual amounts of financial instruments with off-balance-sheet risk	64,338	108,382
Unused lines of credit | Variable Rate
The contractual amounts of financial instruments with off-balance-sheet risk at year end
Total contractual amounts of financial instruments with off-balance-sheet risk	$ 204,889	$ 39,205

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Commitments and Contingent Liabilities (Details Textual) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Commitments and Contingent Liabilities (Additional Textual) [Abstract]
Maximum commitment period to make loans	30 days
Standby letters of credit contractual value	$ 5.6	$ 5.2
Fixed Rate
Commitments and Contingent Liabilities (Textual) [Abstract]
Fixed rate loan commitments maturity range	15 years	30 years
Commitments to make loans
Commitments and Contingent Liabilities (Textual) [Abstract]
Debt Instrument, Interest Rate, Stated Percentage	3.89%
Commitments to make loans | Minimum
Commitments and Contingent Liabilities (Textual) [Abstract]
Debt Instrument, Interest Rate, Stated Percentage		4.00%
Debt Instrument, Variable Interest Rate Percentage	4.25%
Commitments to make loans | Maximum
Commitments and Contingent Liabilities (Textual) [Abstract]
Debt Instrument, Interest Rate, Stated Percentage		4.63%
Debt Instrument, Variable Interest Rate Percentage	5.00%
Unused lines of credit | Minimum
Commitments and Contingent Liabilities (Textual) [Abstract]
Debt Instrument, Interest Rate, Stated Percentage	0.20%	2.11%
Unused lines of credit | Maximum
Commitments and Contingent Liabilities (Textual) [Abstract]
Debt Instrument, Interest Rate, Stated Percentage	21.90%	13.50%

XML

Stock Based Compensation (Details Textual) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Restricted Stock Awards | 2012 Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Maximum shares available under equity incentive plan					500,000
Shares awarded under equity incentive plan		279,023	46,957	0
Stock based compensation expense		$ 486,000	$ 116,000	$ 0
Unrecognized compensation expense		$ 1,900,000
Compensation cost not yet recognized, period for recognition		2 years 8 months 12 days
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Maximum shares available under equity incentive plan		375,000
Vesting period under stock option plan		5 years
Contractual term of options granted		10 years
Options outstanding during period	5,000
Options exercise during period	5,000
Options granted during period		0	0	0

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Stock Based Compensation (Details) - Restricted Stock Awards - 2012 Incentive Plan - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning balance, Units	46,957	0
Granted, Units	279,023	46,957	0
Vested, Units	0	0
Forfeited, Units	(5,000)	0
Ending balance, Units	320,980	46,957	0
Beginning balance, Weighted Average Grant Date Fair Value	$ 7.39	$ 0
Granted, Weighted Average Grant Date Fair Value	7.98	7.39
Vested, Weighted Average Grant Date Fair Value	0	0
Forfeited, Weighted Average Grant Date Fair Value	7.88	0.00
Ending balance, Weighted Average Grant Date Fair Value	$ 7.90	$ 7.39	$ 0

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Regulatory Matters (Details Textual) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Regulatory Matters (Additional Textual) [Abstract]
Common equity tier 1 capital to risk-weighted assets, capital conservation buffer ratio	2.50%
Tier 1 capital to risk-weighted assets, capital conservation buffer ratio	2.50%
Total capital to risk-weighted assets, capital conservation buffer ratio	2.50%
Minimum ratio of common equity tier 1 capital to risk-weighted assets	4.50%
Minimum ratio of tier 1 capital to risk-weighted assets	6.00%	4.00%
Minimum ratio of total capital to risk-weighted assets	8.00%	8.00%
Minimum leverage ratio	4.00%	4.00%
Minimum capital maintained by trust	$ 3,000
Retained earnings	26,316	$ 20,944
Minimum
Regulatory Matters (Additional Textual) [Abstract]
Retained earnings	$ 3,900
Farmers National Banc Corp
Regulatory Matters (Additional Textual) [Abstract]
Minimum ratio of common equity tier 1 capital to risk-weighted assets	4.50%
Minimum ratio of tier 1 capital to risk-weighted assets	6.00%	4.00%
Minimum ratio of total capital to risk-weighted assets	8.00%	8.00%
Minimum leverage ratio	4.00%	4.00%

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Regulatory Matters (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Common equity tier 1 capital ratio
Actual, Amount	$ 165,451
Actual, Ratio	11.59%
Requirement for Capital Adequacy Purposes, Amount	$ 64,245
Requirement for Capital Adequacy Purposes, Ratio	4.50%
Total risk based capital ratio
Actual, Amount	$ 176,571	$ 121,340
Actual, Ratio	12.37%	16.48%
Requirement for Capital Adequacy Purposes, Amount	$ 114,214	$ 58,523
Requirement for Capital Adequacy Purposes, Ratio	8.00%	8.00%
Tier 1 risk based capital ratio
Actual, Amount	$ 167,550	$ 113,654
Actual, Ratio	11.74%	15.43%
Requirement for Capital Adequacy Purposes, Amount	$ 85,660	$ 29,262
Requirement for Capital Adequacy Purposes, Ratio	6.00%	4.00%
Tier 1 leverage ratio
Actual, Amount	$ 167,550	$ 113,654
Actual, Ratio	9.21%	10.03%
Requirement for Capital Adequacy Purposes, Amount	$ 72,803	$ 45,313
Requirement for Capital Adequacy Purposes, Ratio	4.00%	4.00%
Farmers National Banc Corp
Common equity tier 1 capital ratio
Actual, Amount	$ 157,396
Actual, Ratio	11.08%
Requirement for Capital Adequacy Purposes, Amount	$ 63,938
Requirement for Capital Adequacy Purposes, Ratio	4.50%
To be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 92,354
To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	6.50%
Total risk based capital ratio
Actual, Amount	$ 166,374	$ 114,321
Actual, Ratio	11.71%	15.56%
Requirement for Capital Adequacy Purposes, Amount	$ 113,667	$ 58,773
Requirement for Capital Adequacy Purposes, Ratio	8.00%	8.00%
To be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 142,084	$ 73,466
To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	10.00%	10.00%
Tier 1 risk based capital ratio
Actual, Amount	$ 157,396	$ 106,689
Actual, Ratio	11.08%	14.52%
Requirement for Capital Adequacy Purposes, Amount	$ 85,250	$ 29,386
Requirement for Capital Adequacy Purposes, Ratio	6.00%	4.00%
To be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 113,667	$ 44,079
To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	8.00%	6.00%
Tier 1 leverage ratio
Actual, Amount	$ 157,396	$ 106,689
Actual, Ratio	8.65%	9.37%
Requirement for Capital Adequacy Purposes, Amount	$ 72,770	$ 45,565
Requirement for Capital Adequacy Purposes, Ratio	4.00%	4.00%
To be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 90,963	$ 56,956
To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	5.00%	5.00%

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Employee Benefit Plans (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
The accrued postretirement benefit liability		$ 280,000	$ 314,000
Defined Benefit Postretirement Health Coverage
Defined Benefit Plan Disclosure [Line Items]
(Benefit) expense under the plan	$ (12,000)	4,000	13,000
National Bancshares Corporation
Defined Benefit Plan Disclosure [Line Items]
(Benefit) expense under the plan	0
Liability under the Plan	$ 929,000
Director age for eligibility for annual retirement benefit plan	70 years
Maximum years for benefit payment under the plan	15 years
Retirement Savings Plan
Defined Benefit Plan Disclosure [Line Items]
Employees who have completed no days of service	90 days
Percentage of the participants' voluntary contributions of gross wages	6.00%
(Benefit) expense under the plan	$ 431,000	336,000	336,000
Profit Sharing Plan
Defined Benefit Plan Disclosure [Line Items]
(Benefit) expense under the plan	$ 82,000	$ 73,000
Annual compensation for associates, Percent	1.00%	1.00%
Deferred Compensation Plan
Defined Benefit Plan Disclosure [Line Items]
(Benefit) expense under the plan	$ 10,000	$ 10,000	$ 10,000
Liability under the Plan	149,000	$ 156,000
Deferred compensation plan asset recorded	67,000
Deferred compensation plan liability recorded	67,000
ESOP | Tri-State 1st Banc Incorporation
Defined Benefit Plan Disclosure [Line Items]
Contributions to the plan	$ 0
Shares held in trust	39,690

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Provision for income taxes (credit)
Current expense									$ 3,046	$ 2,369	$ 874
Deferred expense (benefit)									(547)	263	809
TOTALS	$ 848	$ 625	$ 409	$ 617	$ 597	$ 688	$ 720	$ 627	$ 2,499	$ 2,632	$ 1,683

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Income Taxes (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Taxes (Textual) [Abstract]
Federal statutory income tax rate	35.00%
Valuation allowance for deferred tax assets	$ 0	$ 0
Unrecognized tax benefits	0	0
Penalties or interest	0	0
Amounts accrued for penalties or interest	$ 0	$ 0
Earliest Tax Year
Income Taxes (Textual) [Abstract]
Open tax year	2012
Latest Tax Year
Income Taxes (Textual) [Abstract]
Open tax year	2014

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Income Taxes (Details 1) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Effective Income Tax Rate Reconciliation, Amount [Abstract]
Statutory tax									$ 3,694	$ 4,059	$ 3,312
Effect of nontaxable interest									(1,403)	(1,179)	(1,325)
Bank owned life insurance, net									(242)	(159)	(123)
Effect of nontaxable life insurance death proceeds									0	0	(115)
Nondeductible acquisition costs									401	0	0
Other									49	(89)	(66)
TOTALS	$ 848	$ 625	$ 409	$ 617	$ 597	$ 688	$ 720	$ 627	$ 2,499	$ 2,632	$ 1,683

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Income Taxes (Details 2) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Deferred tax assets:
Allowance for credit losses	$ 2,968	$ 2,671
Net unrealized loss on securities available for sale	326	0
Deferred and accrued compensation	1,562	848
Deferred loan fees and costs	605	515
Post-retirement benefits	172	110
Nonaccrual loan interest income	324	56
Other-than-temporary impairment	196	41
Other	93	117
Gross deferred tax assets	6,246	4,358
Deferred tax liabilities:
Depreciation and amortization	(649)	(1,081)
Net unrealized gain on securities available for sale	0	(523)
Federal Home Loan Bank dividends	(1,093)	(482)
Purchase accounting adjustments	(984)	(550)
Mortgage servicing rights	(158)	0
Other	(11)	(38)
Gross deferred tax liabilities	(2,895)	(2,674)
NET DEFERRED TAX ASSET	$ 3,351	$ 1,684

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Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Comprehensive Income Net Of Tax [Abstract]
Unrealized holding (losses) gains on available-for-sale securities during the year, pre-tax		$ (1,403)	$ 10,486	$ (19,310)
Reclassification adjustment for (gains) losses included in net income, pre-tax	[1]	(94)	(457)	(860)
Net unrealized holding gains (losses)		(1,497)	10,029	(20,170)
Change in funded status of post-retirement health plan		20	60	(3)
Net other comprehensive income (loss), pre-tax		(1,477)	10,089	(20,173)
Unrealized holding (losses) gains on available-for-sale securities during the year, tax		491	(3,670)	6,759
Reclassification adjustment for (gains) losses included in net income, tax	[1]	33	160	301
Income tax effect		524	(3,510)	7,060
Income tax effect		(7)	(21)	1
Net other comprehensive income (loss), tax		517	(3,531)	7,061
Unrealized holding (losses) gains on available-for-sale securities during the year, after-tax		(912)	6,816	(12,551)
Reclassification adjustment for (gains) losses included in net income, after-tax	[1]	(61)	(297)	(559)
Unrealized holding gains (losses), net of reclassification and tax		(973)	6,519	(13,110)
Change in funded status of post-retirement health plan, net of tax		13	39	(2)
Other comprehensive income (loss), net of tax		$ (960)	$ 6,558	$ (13,112)

[1] Pre-tax reclassification adjustments relating to available-for-sale securities are reported in security gains and the tax impact is included in income tax expense on the consolidated statements of income.

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Related Party Transactions (Details) - Affiliated Entity $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)
Loans to principal officers, directors, and their affiliates
Beginning balance	$ 760
New loans	4
Effect of changes in composition of related parties	0
Repayments	(335)
Ending balance	$ 429

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Related Party Transactions (Details Textual) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Affiliated Entity
Related Party Transactions (Textual) [Abstract]
Deposits from principal officers, directors, and their affiliates	$ 7.9	$ 1.7

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Basic EPS
Net income	$ 3,175	$ 1,857	$ 812	$ 2,211	$ 2,147	$ 2,276	$ 2,351	$ 2,191	$ 8,055	$ 8,965	$ 7,780
Weighted average shares outstanding									22,678,338	18,674,526	18,773,491
Basic earnings per share									$ 0.36	$ 0.48	$ 0.41
Diluted EPS
Net income	$ 3,175	$ 1,857	$ 812	$ 2,211	$ 2,147	$ 2,276	$ 2,351	$ 2,191	$ 8,055	$ 8,965	$ 7,780
Weighted average shares outstanding									22,678,338	18,674,526	18,773,491
Restricted stock awards									5,232	890	0
Weighted average shares for diluted earnings per share									22,683,570	18,675,416	18,773,491
Diluted earnings per share									$ 0.36	$ 0.48	$ 0.41

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Earnings Per Share (Details Textual) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2013
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Shares not considered in computing of diluted earnings per share		5,000
Common stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Shares not considered in computing of diluted earnings per share	193,105

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Interest Rate Swaps (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Derivative [Line Items]
Weighted average pay rate on interest-rate swaps	4.25%	4.26%	4.28%
Weighted average receive rate on interest-rate swaps	2.70%	2.67%	2.82%
Weighted average matuirity (years)	4 years 1 month 6 days	5 years 10 months 24 days	6 years 3 months 18 days
Fair value of combined interest-rate swaps	$ 789	$ 638	$ 275
Interest rate swaps
Derivative [Line Items]
Notional amounts	$ 30,763	$ 31,459	$ 25,195

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Interest Rate Swaps (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Interest rate swaps
Derivative [Line Items]
Net Gain or Loss recognized in earnings	$ 0	$ 0	$ 0

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Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Goodwill and other intangibles	$ 42,911				$ 8,813				$ 42,911	$ 8,813
Total assets	1,869,902				1,136,967				1,869,902	1,136,967
Net interest income	16,458	$ 14,538	$ 9,749	$ 8,992	9,243	$ 9,285	$ 8,952	$ 8,856	49,737	36,336	$ 35,896
Provision for loan losses									3,510	1,880	1,290
Service fees, security gains and other noninterest income	5,175	4,685	4,409	4,037	4,193	3,880	3,797	3,433	18,306	15,303	13,914
Noninterest expense									51,521	36,280	37,212
Amortization and depreciation expense									2,458	1,882	1,845
INCOME BEFORE INCOME TAXES	4,023	2,482	1,221	2,828	2,744	2,964	3,071	2,818	10,554	11,597	9,463
Income tax	848	625	409	617	597	688	720	627	2,499	2,632	1,683
NET INCOME	3,175	$ 1,857	$ 812	$ 2,211	2,147	$ 2,276	$ 2,351	$ 2,191	8,055	8,965	7,780
Eliminations And Others
Segment Reporting Information [Line Items]
Goodwill and other intangibles	(646)				0				(646)	0
Total assets	391				463				391	463
Net interest income									(33)	(14)	(14)
Provision for loan losses									0	0	0
Service fees, security gains and other noninterest income									(255)	(254)	(218)
Noninterest expense									4,562	474	1,420
Amortization and depreciation expense									0	0	0
INCOME BEFORE INCOME TAXES									(4,850)	(742)	(1,652)
Income tax									(991)	(512)	(562)
NET INCOME									(3,859)	(230)	(1,090)
Trust Segment | Operating Segments
Segment Reporting Information [Line Items]
Goodwill and other intangibles	4,967				5,285				4,967	5,285
Total assets	11,078				10,643				11,078	10,643
Net interest income									65	53	45
Provision for loan losses									0	0	0
Service fees, security gains and other noninterest income									6,239	6,170	5,667
Noninterest expense									4,719	4,528	4,483
Amortization and depreciation expense									339	378	416
INCOME BEFORE INCOME TAXES									1,246	1,317	813
Income tax									425	451	282
NET INCOME									821	866	531
Bank Segment | Operating Segments
Segment Reporting Information [Line Items]
Goodwill and other intangibles	35,412				0				35,412	0
Total assets	1,854,306				1,121,505				1,854,306	1,121,505
Net interest income									49,705	36,297	35,865
Provision for loan losses									3,510	1,880	1,290
Service fees, security gains and other noninterest income									10,192	7,577	7,838
Noninterest expense									40,753	29,268	30,682
Amortization and depreciation expense									1,759	1,081	1,193
INCOME BEFORE INCOME TAXES									13,875	11,645	10,538
Income tax									2,968	2,645	2,043
NET INCOME									10,907	9,000	8,495
Retirement Consulting Segment | Operating Segments
Segment Reporting Information [Line Items]
Goodwill and other intangibles	3,178				3,528				3,178	3,528
Total assets	$ 4,127				$ 4,356				4,127	4,356
Net interest income									0	0	0
Provision for loan losses									0	0	0
Service fees, security gains and other noninterest income									2,130	1,810	627
Noninterest expense									1,487	2,010	627
Amortization and depreciation expense									360	423	236
INCOME BEFORE INCOME TAXES									283	(623)	(236)
Income tax									97	48	(80)
NET INCOME									$ 186	$ (671)	$ (156)

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Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Quarterly Financial Data Abstract
Total interest income	$ 17,481	$ 15,594	$ 10,753	$ 9,999	$ 10,321	$ 10,413	$ 10,118	$ 10,063	$ 53,827	$ 40,915	$ 40,959
Total interest expense	1,023	1,056	1,004	1,007	1,078	1,128	1,166	1,207	4,090	4,579	5,063
NET INTEREST INCOME	16,458	14,538	9,749	8,992	9,243	9,285	8,952	8,856	49,737	36,336	35,896
Provision for loan losses	990	1,220	850	450	825	425	300	330
Noninterest income	5,175	4,685	4,409	4,037	4,193	3,880	3,797	3,433	18,306	15,303	13,914
Merger related costs	1,736	2,499	1,912	245					6,392	0	330
Noninterest expense	14,884	13,022	10,175	9,506	9,867	9,776	9,378	9,141	53,979	38,162	39,057
INCOME BEFORE INCOME TAXES	4,023	2,482	1,221	2,828	2,744	2,964	3,071	2,818	10,554	11,597	9,463
INCOME TAXES	848	625	409	617	597	688	720	627	2,499	2,632	1,683
NET INCOME	$ 3,175	$ 1,857	$ 812	$ 2,211	$ 2,147	$ 2,276	$ 2,351	$ 2,191	$ 8,055	$ 8,965	$ 7,780
Earnings per share - basic and diluted	$ 0.12	$ 0.07	$ 0.04	$ 0.12	$ 0.12	$ 0.12	$ 0.13	$ 0.12	$ 0.36	$ 0.48	$ 0.41

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Quarterly Financial Data (Unaudited) (Details Textual) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Quarterly Financial Data Abstract
Security gains	$ 372	$ 94	$ 457	$ 863

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Parent Company Only Condensed Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Assets:
Securities available for sale	$ 394,312				$ 389,829				$ 394,312	$ 389,829
Other	33,585				20,750				33,585	20,750
TOTAL ASSETS	1,869,902				1,136,967				1,869,902	1,136,967
Liabilities:
Other liabilities	14,823				10,187				14,823	10,187
TOTAL LIABILITIES	1,671,855				1,013,407				1,671,855	1,013,407
TOTAL STOCKHOLDERS' EQUITY	198,047				123,560				198,047	123,560	$ 113,007
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	1,869,902				1,136,967				1,869,902	1,136,967
Income:
Dividends from subsidiaries									287	190	196
INCOME TAXES	848	$ 625	$ 409	$ 617	597	$ 688	$ 720	$ 627	2,499	2,632	1,683
NET INCOME	3,175	1,857	812	2,211	2,147	2,276	2,351	2,191	8,055	8,965	7,780
Cash flows from operating activities:
Net income	3,175	$ 1,857	$ 812	$ 2,211	2,147	$ 2,276	$ 2,351	$ 2,191	8,055	8,965	7,780
Security gains					(372)				(94)	(457)	(863)
Impairment of securities									0	0	3
Cash flows from investing activities:
Proceeds from maturities of available for sale securities									63,243	49,401	75,015
Net cash received (paid) in business combinations									29,749	0	(2,111)
NET CASH FROM INVESTING ACTIVITIES									(23,113)	6,184	(27,981)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from reissuance of treasury shares									0	32	0
Cash dividends paid									(2,683)	(2,236)	(2,248)
NET CHANGE IN CASH AND CASH EQUIVALENTS									28,586	(85)	(10,246)
Farmers National Banc Corp
Assets:
Cash	1,357				1,564				1,357	1,564
Securities available for sale	231				172				231	172
Other	1,319				916				1,319	916
TOTAL ASSETS	200,739				124,075				200,739	124,075
Liabilities:
Other liabilities	241				163				241	163
Note payable	350				350				350	350
Subordinate debt	2,099				0				2,099	0
Other accounts payable	2				2				2	2
TOTAL LIABILITIES	2,692				515				2,692	515
TOTAL STOCKHOLDERS' EQUITY	198,047				123,560				198,047	123,560
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	200,739				124,075				200,739	124,075
Income:
Interest and dividends on securities									2	1	2
Security gains/(losses)									0	0	21
Other income									0	764	0
TOTAL INCOME									24,896	6,778	5,336
Interest on borrowings									(35)	(15)	(16)
Other expenses									(4,817)	(1,492)	(1,659)
Income before income tax benefit and undistributed subsidiary income									20,044	5,271	3,661
INCOME TAXES									991	512	562
Equity in undistributed net income of subsidiaries (dividends in excess of net income)									(12,980)	3,182	3,557
NET INCOME									8,055	8,965	7,780
Cash flows from operating activities:
Net income									8,055	8,965	7,780
Security gains									0	0	(24)
Impairment of securities									0	0	3
Dividends in excess of net income (Equity in undistributed net income of subsidiary)									12,980	(3,182)	(3,557)
Other									(269)	(982)	(270)
NET CASH FROM OPERATING ACTIVITIES									20,766	4,801	3,932
Cash flows from investing activities:
Proceeds from maturities of available for sale securities									0	0	56
Net cash received (paid) in business combinations									0	0	(2,111)
Net cash paid in business combinations									(18,077)	0	0
NET CASH FROM INVESTING ACTIVITIES									(18,077)	0	(2,055)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from reissuance of treasury shares									0	32	0
Purchase of treasury shares									(213)	(2,882)	(1,606)
Cash dividends paid									(2,683)	(2,236)	(2,248)
NET CASH FROM FINANCING ACTIVITIES									(2,896)	(5,086)	(3,854)
NET CHANGE IN CASH AND CASH EQUIVALENTS									(207)	(285)	(1,977)
Beginning cash and cash equivalents	1,357				1,564				1,357	1,564	1,849	$ 3,826
Farmers National Banc Corp | National Associates Incorporated
Assets:
Investment in subsidiaries	3,391				3,604				3,391	3,604
Income:
Dividends from subsidiaries									400	0	0
Equity in undistributed net income of subsidiaries (dividends in excess of net income)									(214)	(671)	(156)
Cash flows from operating activities:
Dividends in excess of net income (Equity in undistributed net income of subsidiary)									214	671	156
Farmers National Banc Corp | Bank Segment
Assets:
Investment in subsidiaries	184,253				107,704				184,253	107,704
Income:
Dividends from subsidiaries									23,744	4,013	4,333
Equity in undistributed net income of subsidiaries (dividends in excess of net income)									(12,837)	4,987	4,162
Cash flows from operating activities:
Dividends in excess of net income (Equity in undistributed net income of subsidiary)									12,837	(4,987)	(4,162)
Farmers National Banc Corp | Trust Segment
Assets:
Investment in subsidiaries	$ 10,188				$ 10,115				10,188	10,115
Income:
Dividends from subsidiaries									750	2,000	980
Equity in undistributed net income of subsidiaries (dividends in excess of net income)									71	(1,134)	(449)
Cash flows from operating activities:
Dividends in excess of net income (Equity in undistributed net income of subsidiary)									$ (71)	$ 1,134	$ 449