Farmers National Banc (FMNB), National Bancshares Enter Merger Agreement

Farmers National Banc Corp. (Nasdaq: FMNB) and National Bancshares Corporation (OTCBB: NBOH), the holding company for First National Bank of Orrville, announced they have entered into an agreement and plan of merger (the “Agreement”).

Kevin J. Helmick, President and CEO of Farmers, stated, “We are very pleased to announce this transformational merger. National Bancshares has a strong reputation in its core markets and provides an attractive mix of additional loans and deposits to our franchise. This transaction helps Farmers achieve additional operating scale and drive earnings per share growth as our management team continues to focus on achieving above-average returns for our shareholders. In addition to the financial benefits, the merger is a significant step in our strategy to expand our footprint. The combined company will create a top-performing Midwest community bank that has the scale, product depth and efficiency to compete effectively and deliver best-in-class service to our customers, while providing employees with a compelling corporate culture and enhanced advancement potential.”

“The transaction creates value for our shareholders, customers and employees by uniting two strong community banks with a long history of delivering top customer service,” said Mark R. Witmer, President and CEO of National Bancshares. “We are excited about the additional products and services that Farmers will bring to our customer base and the long-term value this transaction creates for our shareholders.”

Pursuant to the Agreement, each shareholder of National Bancshares will be entitled to elect to receive either $32.15 per share in cash or 4.034 shares of Farmers’ common stock, subject to an overall limitation of 80% of the shares being exchanged for stock and 20% for cash. Based on Farmers’ volume weighted average stock price over the last 20 trading days of $7.97, as of January 26, 2015, the transaction is valued at approximately $74.0 million. The merger is expected to qualify as a tax-free reorganization for those shareholders electing to receive Farmers’ stock. The transaction is subject to receipt of National Bancshares’ shareholder approval, Farmers’ shareholder approval and customary regulatory approvals. The Company expects the transaction to close in the first half of 2015.

At closing, two current members of the National Bancshares Board of Directors, James R. Smail and Howard J. Wenger, will be added to the Board of Directors of Farmers. Mark R. Witmer will also continue with Farmers as Senior Executive Vice President, Chief Community Banking Officer.

John W. Kropf, National Bancshares’ Chairman, commented, “We are very pleased to announce the combination of these two great community banks and look forward to continuity in leadership with Jim, Howard and Mark’s roles in the combined company.”

James R. Smail added, “The combined company will create a top-performing Northeast Ohio franchise with complementary business lines and branch locations. The increased operating scale, product depth and efficiency will help drive strong returns to shareholders.”

Lance Ciroli, Chairman of Farmers Board of Directors, stated, “I look forward to working with Jim and Howard and the National Bancshares organization. Jim's and Howard’s experience will help provide continuity and guidance as Farmers enters into these new markets.”

Upon consummation of the transaction, First National Bank of Orrville will be merged with and into The Farmers National Bank of Canfield. At that time, First National Bank of Orrville branches will become branches of The Farmers National Bank of Canfield. Farmers estimates that, following the closing, it will have approximately $1.7 billion in assets and 33 banking locations throughout Ohio. Farmers expects the transaction to be accretive to earnings per share for the first full year of operations, excluding one-time merger costs, by over 20% and expects any tangible book value dilution created in the transaction to be earned back in approximately 4 years. Following consummation of the transaction it is expected that The Farmers National Bank of Canfield will exceed “well-capitalized” thresholds under all regulatory definitions.

As of December 31, 2014, National Bancshares had total assets of $529.6 million, which included net loans of $398.6 million and deposits of $418.3 million. Agricultural and small business loans were the fastest growing part of National Bancshares’ loan portfolio. For the year ended December 31, 2014, National Bancshares' return on average assets and return on average equity were 1.16% and 11.92%, respectively.

Farmers intends to release its 2014 fourth-quarter and full-year financial results after the market closes January 28, 2015.

Sterne, Agee & Leach, Inc. is serving as financial advisor to Farmers and Vorys, Sater, Seymour and Pease LLP is serving as legal counsel to Farmers on the transaction. Boenning & Scattergood, Inc. is serving as financial advisor to National Bancshares and Calfee, Halter & Griswold LLP is serving as legal counsel to National Bancshares on the transaction.

You May Also Be Interested In

• Barrick Mining said to delay IPO of American gold business to 2027
• Snowflake soars 20% on earnings beat and raised guidance
• NetApp (NTAP) Tops Q1 EPS by 47c, Beats on Revenue