CANFIELD, Ohio -- Farmers National Banc Corp., parent of Farmers National Bank and the Farmers Trust Co., Tuesday reported net income of $3.04 million for the quarter ended Dec. 31, or 16 cents per basic and diluted share.

For the year, Farmers reported net income of $9.22 million, or 50 cents a share.

By comparison, Farmers recorded third-quarter net income of $2.37 million, or 13 cents a share, and fourth-quarter 2010 earnings of $3.26 million, or 24 cents per share. For all of 2010, Farmers has net income of $8.99 million, or 66 cents a share.

The president and CEO, John S. Gulas, announced a special one-time additional cash dividend of three cents a share, payable Feb. 28 to shareholders of record Feb. 13. The three-cent cash dividend is a 25% premium on the 12-cent annual cash dividend, Gulas noted.

In a prepared statement, Gulas commented, “Farmers has navigated through the Great Recession with positive earnings each quarter, and we felt it appropriate to share the earnings with our shareholders through this special additional dividend.”

Credit quality improved significantly as reflected by the 54.8% decrease in the provision for loan losses from Dec. 31, 2010, to Dec. 31. The provision stood at $3.65 million at year-end compared to $8.08 million a year earlier. Farmers did not set aside any addition provision in the fourth quarter but did set aside $2.2 million the last quarter of 2010.

Net charge-offs declined by half. They stood at $3.13 million for all of 2011 and at $6.2 million at Dec. 31, 2010, Farmers said.

Delinquent loans -- those 30 to 89 days in arrears -- fell to $3.43 million at Dec. 31 from $7.92 million a year earlier.

On the other hand, nonperforming loans -- those 90 and more days in arrears -- were $10.84 million at Dec. 31 compared to $8.90 million a year earlier. And nonperforming assets were 1.08% of total assets at year-end where the ratio was 0.96% at Dec. 31, 2010. Repossessed real estate --other real estate owned -- was $$585,000 at Dec. 31 compared to $532,000 at Dec. 31, 2010.

Performance ratios for the quarters ended Dec. 31, Sept. 30 and Dec. 31, 2010:

• Net interest margin (annualized), 3.80%, 3.97%, 4.16%.

• Return on average assets (annualized), 1.13%, 0.90%, 1.26%.

• Return on average equity (annualized), 11.37%, 8.56%, 14.29%.

• Efficiency ration (tax equivalent basis), 76.90%, 64.64%, 57.34%.

• Dividends to net income, 18.49%, 23.66%, 12.53%.

Shareholders’ equity stood at $114.45 million at Dec. 31, or 10.7% of assets, an increase of $26.4 million the same date in 2010 when it was $88.05 million. Farmers attributed this in part to its successful efforts to raise capital during the first quarter, approximately $14 million coming from the issuance of new shares.

Fourth-quarter net interest income was $9.12 million compared to $9.24 the third quarter and $9.76 million the fourth quarter of 2010. For 2011 the figure was $36.6 million compared to $37.37 million for 2010, a 2.7% drop.

Fourth-quarter interest expense was $1.77 million compared to $1.98 million the preceding quarter and $2.22 the same quarter a year ago. Full-year interest expense dropped 28.7% to $7.84 million from $11 million.

Noninterest expense, which includes salaries and benefits, rents, Federal Deposit Insurance Corp. premiums and maintaining repossessed real estate, was %9.64 million in the fourth quarter compared to $8.18 million the third quarter and $7.87 million the last quarter of 2010. For the year, Farmers’ noninterest expense was $33.73 million, 8.9% above $30.96 million in 2010.

Much of the fourth-quarter increase was attributed to Farmers’ decision to early repayment of an advance from the Federal Home Loan Bank in Cincinnati. That accelerated repayment carried a penalty but decreased Farmers’ cost of funds and improved its risk-based capital ratios, Farmers explained. It also resulted in its efficiency ratio jumping to 76.9%.

Salaries and employee benefits rose $528,000 in the quarter because of the bank expanding into Stark County and adding employees, Farmers said. Farmers’ assets stood at $1.068 billion at Dec. 31, a slight decease from $1.086 billion three months earlier but well ahead of the $982.75 million at Dec. 31, 2010.

When trading ended Tuesday, shares of Farmers closed at $5.50, up 15 cents from close of trading Monday, on a volume of 4,525.

Published by The Business Journal, Youngstown, Ohio.