Wednesday, January 28, 2015CANFIELD, Ohio – Farmers National Banc Corp. has agreed to pay $74 million in stock and cash for National Bancshares Corp., holding company for First National Bank of Orrville, Farmers and National Bancshares announced Tuesday afternoon.
Farmers, which had $1.14 billion in assets at Sept. 30, is the parent of Farmers National Bank and Farmers Trust Co. National Bancshares had assets of $529.6 million at Dec. 31. Pro forma, the combined entity would increase the assets of Farmers roughly 46% to $1.67 billion and a retail banking network of 33 offices.
Under the agreement, shareholders of National Bancshares could choose to receive $32.15 per share or exchange each of their shares for 4.034 shares of Farmers common stock, subject to an overall limitation of 80% of the shares exchange for Farmers stock and 20% cash.
Farmers said it “expects the transaction to be accretive to earnings per share 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 four years.”
The National Bancshares shareholders who choose to exchange their stock for shares of Farmers should see it qualify as a tax-free reorganization, Farmers says.
The agreement must be approved by the shareholders of both companies and is subject to regulatory approval. Both parties say they expect the transaction is expected to close before June 30.
Based on Farmers’ volume of the weighted average stock over the last 20 trading days of $7.97, Farmers says, as of Monday, the purchase price is approximately $74.0 million.
Farmers has 18.41 million shares outstanding, 33% institutionally owned. Its market capitalization is $139.16 million.
National Bancshares, which began trading on the OTC markets in November, has 2.22 million shares outstanding, all owned by small investors. Its market cap is $53.17 million.
Farmers, traded on Nasdaq, made the announcement after markets closed Tuesday. Its shares closed at $7.62, up 12 cents on a volume of 2,000 shares. Average daily volume is 17,389.
National Bancshares closed at $23.95, up 95 cents on a volume of 500 shares. Average daily volume is 261 shares.
There is little overlap in the markets of Farmers Bank and First National Bank, which will be merged into Farmers Bank and its 14 branches become branches of Farmers Bank. Farmers has 19 retail banking offices in Mahoning, Trumbull, Columbiana Stark and Cuyahoga counties. First National Bank has 14 offices in north central Ohio including its newest full-service office in Salem.
In prepared statements, the presidents and CEOs of Farmers and National Bancshares, Kevin J. Helmick and Mark R. Witmer, cited the advantages of the agreement and expressed admiration for the performance of the other.
Helmick will remain president and CEO of the enlarged Farmers while Witmer will assume the new post of senior executive vice president and chief community banking officer. Two on the board of National Bancshares, James R. Smail and Howard J. Wenger, will join the board of Farmers National Banc Corp.
Said Helmick: “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 additional to the financial benefits, the merger is a significant step in our strategy to expand out 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.”
Said Witmer: “This transaction creates value for our shareholders, customers and employees by uniting two strong community banks with a long history of delivering top customer service.”
Copyright 2015 The Business Journal, Youngstown, Ohio.
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