Farmers National Banc Corp. · NASDAQ:FMNB
Farmers National Banc — Investor Presentation (May 2016)
33 slides from Farmers National Banc's investor presentation, May 10, 2016
Slide 1: Investor Presentation March 31, 2016
Investor Presentation March 31, 2016
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about the financial condition, results of operations, asset quality trends and profitability of Farmers National Banc Corp
Slide 3: Company overview
• Operating in eight counties in Ohio – Founded over 128 years ago • Entered the Pennsylvania market in Beaver County with the closing of the Tri-State acquisition on October 1, 2015 • Sound franchise with commitment to independence and positioned for growth • Credit quality remains strong • Diversi
Slide 4: Financial Highlights
Financial Highlights at March 31, 2016 • Banking Locations: 38 • Assets: $1.9 billion • Loans: $1.3 billion • Deposits: $1.4 billion • Loan/Deposit Ratio: 91.0% • Tangible Common Equity: 8.9% • Market Capitalization: $226 million1 Mergers/Acquisitions • National Bancshares: Closed June 19, 2015 • Tr
Slide 5: Market regions and economic rankings
• Eastern Region • Touted in four top-ten rankings: Export Growth Leaders, Export Recovery Leaders, Lowest Cost of Living, National Manufacturing Innovation Leader (Business Facilities, 2014) • Lowest Housing Costs in the nation (National Association of Realtors, 2014) • 5th Best Metro in U.S. to ra
Slide 6: Financial Overview
Financial Overview Stock Data – NASDAQ: FMNB As of 3/31/16 Operating Results for 3 Months Ended 3/31/16 • Stock Price: $8.39 • Dividend (yield): $0.04 (1.80%) • Cash Dividends: $1.1 million • Tangible Book Value: $5.99 • Revenue: $22.7 million • Net Income: $4.8 million • Net Income-Diluted Share: $
Slide 7: Market Capitalization Growth
Market Capitalization Growth • Market Capitalization Growth: 85% since March 31, 2012 • Russell 2000 Index reconstitutes in June, 2016 Market Capitalization ($000)
Slide 8: Increasing Shareholder Value
Increasing Shareholder Value Stable Dividend Policy • Consistently paid a quarterly cash dividend • Current yield 1.80% • Dividend payout range policy of 25% - 35% • 2015 dividend payout: 25.48% of net income *As of March 31, 2016
Slide 9: Commitment to Stakeholders
Commitment to Stakeholders • Four Pillars – Shareholders o 2015 Strategic Initiative o Increased Communication Plan – Customers o Small Business Support o 45% of small business lending comes from community banks* – Associates o 423 associates o Top 100 employer in the region – Community o Community
Slide 10: Growth Initiatives
Growth Initiatives • Loan Growth/Asset Quality • Non Interest Income • Deposits and Payments • Institutionalizing Cross Sales • Digital/Mobile • Talent Acquisition and Retention • Capital Management
Slide 11: Loan Growth
Loan Growth Total Loans ($000) YOY Growth: 95.24% Organic Growth: 21.63% Growth from Acquisition: 73.61%
Slide 12: Overview of Loan Portfolio
Overview of Loan Portfolio Loan Portfolio Mix – March 31, 2016 • Diverse loan mix • No national lending • No sub-prime lending • Farmers’ practice is to lend primarily within its market area • Less than 2% of loan portfolio is participations purchased • Less than 4% of loan portfolio is construction
Slide 13: Excellent Asset Quality
Excellent Asset Quality [Graphic Appears Here] 3/31/2016 Nonaccrual loans $8.3 Accruing loans past due 90 days or more 1.4 OREO 0.6 Total nonperforming assets (NPAs) $10.3 Troubled Debt Restructuring (TDR) $8.8 Loans 30-89 days delinquent 10.1 Gross portfolio loans 1,315.5 Loans held for sale (HFS)
Slide 14: Noninterest Income: Wealth Management
Noninterest Income • Wealth Management Creates Fee-based Income • Fee Income 2009: 14.5% of total gross income o Noninterest income excluding security gains • Fee Income 2016*: 22% of total gross income o Noninterest income excluding security gains • Wealth Management Build-out Timeline – 2000 Farme
Slide 15: Noninterest Income
Noninterest Income • Continued Focus on Growing Noninterest Income • Noninterest Revenue: 22% of Total Revenue Total Revenue 2016*: $22.7 million Total Interest Income Other Noninterest Income Trust Income Insurance & Investment Income Retirement Planning Income Mortgage Banking Income *For the thre
Slide 16: Deposits & Payments
Deposits & Payments • EMV • Credit Card • Instant Issue • Apple Pay
Slide 17: Institutionalizing Cross-sales
Institutionalizing Cross-sales • Enterprise-wide focus on cross-sales Digital Wealth Treasury Management Deposit Commercial Products Consumer Mortgage
Slide 18: Virtual Bank
Virtual Bank FARMERS “FARMERS rineerenacs Locations Customer Support Rates Calculators Order Checks Consumer EXPLORESTHESREATURES | ON pacy a security jill Mortgage Farmers Rewards More +) (*) MOBILE Access, \ AN ACCOUNT CUSTOMER) SUPPORT
Slide 19: Mobile Banking Analytics
Mobile Banking Analytics Mobile Banking Users Mobile Transactions 9500 17,620 8,515 18000 8500 YOY Growth: 149% 16000 7500 14000 6500 12000 YOY Growth: 151% 5500 10000 7,084 4500 8000 3,389 3500 6000 2500 4000 1500 2000 500 0 - 15 15 - 15 - - 15 15 - - 15 - 15 - 15 - 15 15 - - 16 - 16 - 16 Mar Apr M
Slide 20: Online Banking Analytics
Online Banking Analytics Online Banking Transactions Online Banking Users 26000 30000 24,380 27,128 YOY Growth: 60% 24000 25000 22000 YOY Growth: 43% 20000 20000 16,978 18000 17,039 15000 16000 10000 14000 12000 5000 10000 0 2015 2016 Transactions - Fiserv • Bill Pay • PopMoney • Account to Account
Slide 21: Talent Acquisition and Retention
Talent Acquisition and Retention • Established and experienced management team with over 305 years of combined experience, 138 of which have been with Farmers. Years of Experience FMNB Industry President & Chief Executive Officer Kevin J. Helmick (44) 22+ 22+ Senior EVP, Chief Banking Officer Mark W
Slide 22: Capital Management
Capital Management • Cash Dividend Payout Policy – Maintain 25% - 35% range • Share Repurchase Plan – Continue to look for repurchase opportunities • Organic Growth – Continued organic growth in current markets – Growth opportunities in new markets with Private Banking, Trust and Investments • Acqui
Slide 23: Capital Management: Steady Tier Leverage Ratio
Capital Management Steady Tier 1 Leverage Ratio 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 9.73% 10.44% 9.34% 3/31/14 3/31/15 3/31/16 Well Capitalized Excess
Slide 24: Continued Strong Results – Overview of 1Q 2016
Continued Strong Results – Overview of 1Q 2016 • 22% organic annual loan growth since March 31, 2015 • 133 consecutive quarters of profitability • Net income for quarter ended March 31, 2016 was $4.8 million compared to $3.2 million for the linked quarter • Annualized return on assets was 1.03% for
Slide 25: Net Interest Income and Margin
Net Interest Income and Margin Dollars in thousands $18,000 4.25% $16,458 $16,747 4.20% $16,000 4.15% $14,538 4.10% $ 14,000 4.05% 4.07% $12,000 4.00% 3.95% $9,749 3.98% $10,000 $8,992 3.90% 3.85% $8,000 3.84% 3.80% $6,000 3.75% 3.70% $4,000 3.65% 3.64% 3.66% 3.60% $2,000 3.55% $0 3.50% 1Q 2015 2Q 2
Slide 26: Interest Rate Risk Management
Interest Rate Risk Management Estimated Net Interest Income (NII) Sensitivity Profile at March 31, 2016 Percent Change in NII (FTE) ALCO Policy Limits 13 to 24 13 to 24 12 Months 12 Months Change in Interest Rates Months Months +200 bps 0.20% 4.10% 10% - +100 bps 0.10% 2.20% 5% - Estimated Economic
Slide 27: Supplemental Information
FARMERS Supplemental Information
Slide 28: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Reconciliation of Common Stockholders’ Equity to Tangible Common Equity March 31, Dec. 31, Sept. 30, June 30, March 31, 2016 2015 2015 2015 2015 Stockholders’ Equity $203,982 $198,047 $186,151 $182,575 $126,771 Less Goodwill and other intangibles 42,604 42,661 39,265
Slide 29: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Reconciliation of Income Before Taxes to Pre-Tax, Pre-Provision Income For the Three Months Ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2016 2015 2015 2015 2015 Income before income taxes $6,469 $4,023 $2,482 $1,221 $2,828 Provision for loan losses 780 990 1
Slide 30: Consolidated Statements of Income
Consolidated Statements of Income Consolidated Statements of Income For the Three Months Ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2016 2015 2015 2015 2015 Total interest income $17,747 $17,481 $15,594 $10,753 $9,999 Total interest expense 1,000 1,023 1,056 1,004 1,007 Net interest incom
Slide 31: Consolidated Statements of Financial Condition
Consolidated Statements of Financial Condition Consolidated Statements of Financial Condition March 31, Dec. 31, Sept. 30, June 30, March 31, 2016 2015 2015 2015 2015 Assets Cash and cash equivalents $34,619 $56,014 $34,344 $37,028 $26,929 Securities available for sale 387,093 394,312 379,138 386,31
Slide 32: Deposit Market Share by County
Deposit Market Share by County • Opportunity for growth with approximately 12% deposit market share in the Mahoning Valley – Large regional competitors lack focus – Community competitors inwardly focused Mahoning Top 10 2015 Market Rank Company Branches Dep. ($000) Share 1 Huntington National Bank 1
Slide 33: Deposit Market Share by County
Deposit Market Share by County Wayne Top 10 2015 Dep. Market Rank Company Branches ($000) Share 1 PNC Bank NA 11 524,901 27.94 2 FirstMerit Bank NA 5 336,446 17.91 3 Farmers National Bank of Canfield 9 327,742 17.44 4 Wayne Savings Community Bank 7 240,116 12.78 5 JPMorgan Chase Bank NA 2 118,169 6.
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