Helmick Tells Shareholders Farmers’ Future Is Bright

CANFIELD, Ohio – The president and CEO of Farmers National Banc Corp. calls 2015 a “transformative year” for the company, noting it successfully closed two acquisitions and is prepared for more opportunities in 2016.

“It helped us grow our assets from $1.1 billion to $1.9 billion,” Kevin J. Helmick said following the company’s annual meeting Thursday afternoon. “We now have 38 banking locations, so we increased by 17 banking locations in northeast Ohio, and now have one [branch] in western Pennsylvania.”

Helmick presented shareholders a picture of a company exhibiting strength across the board: community banking, wealth management and trust services.

Last June, Farmers completed its acquisition of First National Bank of Orrville, and in October acquired 1st National Community Bank of East Liverpool.

The CEO noted that Farmers’ capital management structure over the last year demonstrates its ability to quickly act when other opportunities for growth appear.

“We have the capability, the management team, the board of directors, the systems and processes to be strategically opportunistic about looking at acquisitions in the bank business, or the nonbank business, like our wealth management lines,” Helmick said. “Farmers is very proud of the culture that we’ve built over the last many years.”

Another initiative Helmick touched upon is the company’s upgrades to its online banking platform and its mobile banking applications.

“Our investment in mobile has really resonated with our customer base,” he said. Year-over-year, mobile banking users are up 150%, as are mobile transactions. Online banking users have increased 43%, number of transactions 60%.

Additional security measures were also implemented last year to ensure safe online and mobile transactions, Helmick said.

Another important target this year is increasing deposits, the CEO told shareholders. “Our focus will be, corporatewide, growing deposits this year,” he said.

More than 81% of the 26.9 million shares – or 21.8 million shares – were voted during the meeting. Shareholders approved the re-election of three directors, cast advisory votes in support of executive compensation, and approved Crowe Horwath LLC to serve as outside auditors.

Directors reelected to three-year terms are Gregg Strollo, Ralph D. Macali and Earl R. Scott.

Farmers’ financial strength and profitability have improved since the last annual meeting, its lines of business turned in solid performances, added Carl D. Culp, executive vice president and chief financial officer, who reviewed the financial highlights.

“A lot of exciting things have happened in the last year,” Culp said, “and these events have helped improve our profitability and financial strength.”

The acquisition helped Farmers end 2015 with nearly $1.9 billion in assets versus $1.136 billion in 2014, Culp said. Its loan portfolio doubled from $656.2 million in 2014 to $1.28 billion, and $500 million was added in deposits.

While 75% of loan growth resulted from the acquisitions, Culp said, its existing loan base grew 20%. “We grew in each of our loan categories in 2015,” he said, and the company maintains a diverse loan portfolio.

Net income for the year was $8.055 million, or 36 cents per share. In 2014, the company posted net income of $8.9 million, or 48 cents per share.

However, Culp pointed out, that 2015 numbers included $6.4 million in merger expense, which affected the bottom line. Absent the acquisition charges, Farmers would have posted earnings of 57 cents per share, an 18.75% improvement compared to 2014.

Noninterest income rose 19.6%. Noninterest expenses were up 41.4%.

Nonperforming assets dropped to 0.61% from 0.76% the previous year, Culp said. “It’s a result of two main things: the high credit quality of our existing loan portfolio and the high credit quality of our two loan portfolios we acquired with the two mergers this year.”

Mortgage banking income took off last year, Culp noted. “Our mortgage banking income increased $740,000, or almost 200% over 2014. We have invested in human capital and new technology to increase our mortgage production going forward.”

On Wednesday, Farmers reported net income for the quarter ended March 31, 2016, of $4.798 million, or 18 cents a share. This compares to fourth-quarter net income of $3.175 million, or 12 cents per share, and year-ago first quarter earnings of $2.211 million, or 12 cents a share.

“That organic loan growth continues to improve,” Culp said. “It continues to grow in a nice, diverse fashion.”

Meantime, Farmers is working to introduce new financial products to markets resulting from the acquisitions.

“First National Bank of Orrville did not have wealth management, so we’ve been able to roll out of all of our product set to those new markets, and we’ve seen really strong growth,” Helmick related. “In southern Columbiana County, the same was true there.”

Helmick said his company is excited about the opportunities in these markets for growth through future strategic acquisitions in the region.

“We look into the bank business as well as the nonbank business and wealth management, whether it be additional investment companies or insurance agencies, Helmick said. “The pipeline is good for those types of things and we’ll continue to use our capital wisely and strategically into 2016. We’re excited about the organic growth opportunities.”

“Three Minutes With” Kevin Helmick, president/CEO, Farmers National Banc Corp.

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