FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 - FEE REQUIRED
For the fiscal year ended December 31, 1995
-OR-
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 - NO FEE REQUIRED
For the transition period from to
Commission file number 0-10782
FARMERS NATIONAL BANCORP, INC.
-----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3156490
------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
121 West First Street, Geneseo, Illinois 61254
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (309) 944-5361
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
None None
Securities registered pursuant to section 12(g) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Common Stock - Par value $5 None
<PAGE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. (X) - Yes
( ) - No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of the Form
10-KSB or any amendment to this Form 10-KSB. X
State issuer's revenues for the most recent fiscal year. $14,016,029
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a
specified date within the past 60 days. (see definition of affiliate in
Rule 405, 17 CFR 230.405). $13,322,870 as of March 1, 1996.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 308,034 shares as
of March 1, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly
describe them and identify the Part of the Form 10-KSB (e.g., Part I,
Part II, etc.) into which the document is incorporated: (1) Any annual
report to security holders; (2) Any proxy or information statement ;
and (3) Any prospectus filed pursuant to Rule 424 (b) or (c) under the
Securities Act of 1933. The listed documents should be clearly described
for identification purposes.
Annual report to stockholders for fiscal year
ended December 31, 1995, Parts I, II, and III.
(filed by mail on February 20, 1996)
Proxy statement to stockholders dated
February 15, 1996, Part III.
(filed electronically on February 20, 1996)
Transitional Small Business Disclosure format ( ) - Yes (X) - No
<PAGE>
FARMERS NATIONAL BANCORP, INC.
TABLE OF CONTENTS
Part I
Item 1. Description of Business 4 - 16
Item 2. Description of Property 16
Item 3. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security
Holders 17
Part II
Item 5. Market for Common Equity and Related
Stockholder Matters 17 - 18
Item 6. Management's Discussion and Analysis or
Plan of Operation 18
Item 7. Financial Statements 18
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 18
Part III
Item 9. Directors, Executive Officers, Promoters and
Control Persons; compliance with Section 16(a)
of the Exchange Act 18 - 19
Item 10. Executive Compensation 19
Item 11. Security Ownership of Certain Beneficial Owners
and Management 19
Item 12. Certain Relationships and Related Transactions 19
Item 13. Exhibits, Lists and Reports on Form 8-K 19 - 21
Independent Auditor's Report for 1994 and 1993 22
Signatures 23 - 24
<PAGE>
PART I.
Item 1. Description of Business
Farmers National Bancorp, Inc. ("The Company") is a One-Bank Holding
Company organized as such in October, 1981 to acquire and manage
financial subsidiaries as permitted by law. In 1982 The Company acquired
all of the common stock of The Farmers National Bank of Geneseo (the
Bank). The bank's main office is located in Geneseo, Illinois, where
approximately 80% of the Bank's deposits and loans are generated. The
Bank's full-service brokerage department, trust department, and computer
operations are all headquartered in the main Bank. The Bank also
maintains full service branches in Atkinson, Woodhull, and Silvis
Illinois. Atkinson is approximately 8 miles from Geneseo and Woodhull is
approximately 26 miles from Geneseo. Both of these branches were
formerly independent banks in those communities which now operate in the
former bank buildings, providing very similar if not expanded banking
services to those communities. The full-service branch in the Hy-Vee
Food Store in Silvis, Illinois, opened in January, 1992. The Silvis
branch is approximately 20 miles from Geneseo. All facilities are located
in Henry County, Illinois except for the Silvis facility, which is
located in Rock Island County, Illinois. The Company has no other
subsidiaries or operations other than the Bank.
The Bank is the largest bank in Henry County as measured by total assets
or deposits. The Bank offers a complete banking and trust service to the
retail, commercial, and agricultural area which it serves. Departments
include demand and time deposits, installment, mortgage and commercial
loans, investment, brokerage, and trust services. The Bank also is a
member of the Cirrus/Shazam Automated teller machine (ATM) network which
enables customers access to their accounts at ATM's worldwide. The Bank
has ATM's at each of its banking locations, and one at a local
supermarket.
There are two other commercial banks and a savings & loan branch in
Geneseo, a branch of a commercial bank in Woodhull, and a commercial bank
and several bank, savings & loan and credit union branches in Silvis, all
of which compete directly with the bank. There are no other commercial
banks or bank facilities located in Atkinson. There are, however, at
least 50 main offices or branches of banks, savings & loans, and credit
unions located within a 10 mile radius of the bank and its branches,
which includes the Quad-Cities (Moline and Rock Island, Illinois;
Davenport and Bettendorf, Iowa), with a population in excess of 400,000,
that provide intense direct competition with the Bank. There is also
significant competition for financial services in the area from other
financial services providers, including numerous brokerage firms and
insurance companies.
<PAGE>
The Company had 76 full-time equivalent employees throughout the
organization as of December 31, 1995.
The Annual Report to Stockholders, which is incorporated herein by
reference, reflects the changes in total interest and other operating
income, net income, total assets and long-term obligations during the
past five years.
The following schedules show comparative information for the Company as
indicated in the captions. All average amounts in these tables were
determined by using monthly data, which we believe provides a fair
representation of the daily operations of the Company.
<PAGE>
<TABLE>
I. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY
A. CONSOLIDATED AVERAGE BALANCE SHEETS
<CAPTION>
(Amounts in Thousands)
<S> <C> <C>
1995 1994
------ ------
ASSETS
Cash and due from banks $4,746 $5,278
Interest-bearing deposits in other banks 52 41
Federal funds sold 2,426 3,831
Investment securities:
Held to maturity
Taxable investment securities 14,112 8,140
Nontaxable investment securities 19,553 15,680
Available for sale
Taxable investment securities 42,032 48,573
Nontaxable investment securities 127 0
------ ------
Total investment securities 75,824 72,393
Loans, net 88,233 83,422
Other assets 5,029 5,057
------- -------
TOTAL ASSETS $176,310 $170,022
======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand $12,956 $12,458
Interest-bearing demand 30,223 30,919
Savings 20,279 21,648
Time 88,424 81,623
------- -------
Total deposits 151,882 146,648
Short-term borrowings 529 58
Securities sold under agreements to repurchase 227 272
Advances from FHLB 7,232 6,500
Other liabilities 1,771 1,603
------- -------
Total liabilities 161,641 155,081
STOCKHOLDERS' EQUITY
Common stock 1,875 1,875
Additional paid-in capital 1,635 1,635
Retained earnings 14,215 12,514
Unrealized holding losses on securities available
for sale, net (384) (473)
Less: Treasury stock, at cost 2,672 610
------- -------
Total stockholders' equity 14,669 14,941
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $176,310 $170,022
======= =======
<PAGE>
</TABLE>
<TABLE>
I. B. ANALYSIS OF NET INTEREST EARNINGS
<CAPTION>
(Amounts in Thousands)
1995
----------------------------
Interest Ave.
Average Income/ Yield
Amount Expense (in%)
------- ------- -----
<S> <C> <C> <C>
INTEREST EARNING ASSETS
Interest-bearing deposits in other banks $52 $2 3.85%
Federal funds sold (1) 2,426 144 5.94%
Taxable investment securities (1) 56,144 3,730 6.64%
Nontaxable investment securities (2) 19,680 1,163 5.91%
Loans, net (3) 88,233 8,019 9.09%
------- ------- -------
Totals $166,535 $13,058 7.84%
======= ======= =====
INTEREST BEARING LIABILITIES
Interest-bearing demand deposits $30,223 $811 2.68%
Savings deposits 20,279 634 3.13%
Time deposits 88,424 4,959 5.61%
Short-term borrowings 529 40 7.56%
Securities sold under repurchase agreements 227 11 4.85%
Advances from FHLB 7,232 447 6.18%
------- ------- -------
Totals $146,914 $6,902 4.70%
======= ======= =====
Net Interest Margin $6,156 3.70%
</TABLE> ======= =====
<PAGE>
<TABLE>
<CAPTION>
1994
----------------------------
Interest Ave.
Average Income/ Yield
Amount Expense (in%)
------- ------- -----
<S> <C> <C> <C>
INTEREST EARNING ASSETS
Interest-bearing deposits in other banks $41 $1 5.71%
Federal funds sold 3,831 182 4.75%
Taxable investment securities 56,713 3,365 5.93%
Nontaxable investment securities (2) 15,680 950 6.06%
Loans, net (3) 83,422 7,096 8.51%
------- ------- -------
Totals $159,687 $11,594 7.26%
======= ======= =====
INTEREST BEARING LIABILITIES
Interest-bearing demand deposits $30,919 $778 2.52%
Savings deposits 21,648 582 2.69%
Time deposits 81,623 3,777 4.63%
Short-term borrowings 58 1 1.72%
Securities sold under repurchase agreements 272 8 2.94%
Advances from FHLB 6,500 333 5.12%
------- ------- -------
Totals $141,020 $5,479 3.89%
======= ======= =====
Net Interest Margin $6,115 3.83%
======= =====
(1) Subsequent to the issuance of the 1995 Annual Report to Stockholders,
reclassifications were made to these accounts which are not considered
material.
(2) Interest earned and yields on nontaxable investment securities are
stated at face rate.
(3) Nonaccruing loans are included within the average loans. Loan fees
are not material and are included in loan income in a manner
consistent with SFAS 91.
</TABLE>
<PAGE>
<TABLE>
I. C. ANALYSIS OF CHANGES OF INTEREST INCOME/EXPENSE ITEMS
<CAPTION>
(Amounts in thousands)
1995
----------------------------
Components
Increase of Change (1)
from ---------------
Prior Year Rate Volume
------- ------ ------
<S> <C> <C> <C>
INTEREST EARNING ASSETS
Interest-bearing deposits in other banks $1 $1 0
Federal funds sold (38) 39 (77)
Taxable investment securities 365 399 (34)
Nontaxable investment securities (2) 213 (24) 237
Loans, net (3) 923 501 422
------- ------ ------
Totals $1,464 $916 $548
======= ====== ======
INTEREST BEARING LIABILITIES
Interest-bearing demand deposits $33 $51 (18)
Savings deposits 52 90 (38)
Time deposits 1,182 848 334
Short-term borrowings 39 11 28
Securities sold under repurchase agreements 3 4 (1)
Advances from FHLB 114 74 40
------- ------ ------
Totals $1,423 $1,078 $345
======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
1994
----------------------------
Components
Increase of Change (1)
from ---------------
Prior Year Rate Volume
------- ------ ------
<S> <C> <C> <C>
INTEREST EARNING ASSETS
Interest-bearing deposits in other banks ($1) ($1) $0
Federal funds sold 134 24 110
Taxable investment securities (221) (51) (170)
Nontaxable investment securities (2) 113 (31) 144
Loans, net (3) 216 (280) 496
------- ------ ------
Totals $241 ($339) $580
======= ====== ======
<PAGE>
INTEREST BEARING LIABILITIES
Interest-bearing demand deposits ($53) ($56) $3
Savings deposits (89) (67) (22)
Time deposits 75 (168) 243
Short-term borrowings (14) 0 (14)
Securities sold under repurchase agreements (11) 6 (17)
Advances from FHLB 121 (27) 148
------- ------ ------
Totals $29 ($312) $341
======= ====== ======
(1) Changes due to rate and volume were calculated as follows:
(A) The change in rate times the prior period volume.
(B) The change in volume times the prior period rate.
(C) The remaining variance is due to a combination of rate/volume
changes. This amount was allocated proportionately to the
volume and rate changes obtained in A and B.
(2) Interest earned and yields on nontaxable investment securities are
stated at face rate.
(3) Interest on non-accrual loans is credited to income when received.
Loan fees are not material and are included in loan income in a
manner consistent with SFAS 91.
</TABLE>
II. A. INVESTMENT SECURITIES:
Total investments, by category, are disclosed in Footnote 3 to the
consolidated financial statements contained in the 1995 Annual Report to
Stockholders, which is incorporated herein by reference.
II. B. INVESTMENT SECURITIES MATURITIES AND YIELDS:
The following table presents the maturity of securities held on December
31, 1995, and the weighted average rates by range of maturity.
<TABLE>
<CAPTION>
(Amounts in thousands)
Held to Maturity Available for sale
--------------- ---------------
Average Average
Amounts Yield Amounts Yield
------ ------ ------ ------
<S> <C> <C> <C> <C>
U.S.Treasury and Government agencies:
Within 1 year 0 0.00% $5,981 4.53%
After 1 but within 5 years 0 0.00% 6,367 6.61%
------ ------ ------ ------
Total 0 0.00% $12,348 5.60%
====== ====== ====== ======
<PAGE>
Obligations of State and Political
Subdivisions (1):
Within 1 year $2,137 5.75% $0 0.00%
After 1 but within 5 years 9,304 6.52% 0 0.00%
After 5 but within 10 years 8,810 5.68% 1,039 5.11%
After 10 years 131 6.53% 0 0.00%
------ ------ ------ ------
Total $20,382 6.08% $1,039 5.11%
====== ====== ====== ======
Corporate notes:
After 1 but within 5 years $497 8.53% $0 0.00%
After 5 but within 10 years 0 0.00% 530 7.16%
------ ------ ------ ------
Total $497 8.53% $530 7.16%
====== ====== ====== ======
Mortgage-backed securities:
Within 1 year $1,001 7.42% $514 7.80%
After 1 but within 5 years 10,714 6.53% 10,027 6.90%
After 5 but within 10 years 923 7.46% 7,728 6.73%
After 10 years 0 0.00% 10,166 6.67%
------ ------ ------ ------
Total $12,638 6.67% $28,435 6.79%
====== ====== ====== ======
Other (3) 1,129 0.00%
====== ======
(1) Interest earned and yields on non-taxable investment securities are
stated at face rate.
(2) Expected maturities may differ from contractual maturities because
the mortgages underlying the mortgage-backed securities may be called
or prepaid without any penalties. Therefore, these securities are
included in the maturity summary using the estimated average life of
each security as the maturity.
(3) Other investments consist entirely of Federal Reserve Bank Stock,
Federal Home Loan Bank Stock and Federal Agriculture Mortgage
Corporate Stock, which have no maturity or stated face rate.
The Bank does not utilize any financial instruments referred
to as derivitives to manage interest rate risk.
</TABLE>
<PAGE>
II. C. INVESTMENT CONCENTRATIONS:
As of December 31, 1995, there existed no security in the investment
portfolios above (other than U.S. Government and U.S. Government agencies
and corporations) that exceeded 10% of stockholders' equity at that
date.
III. A. TYPES OF LOANS
Total loans, by category, are disclosed in Footnote 4 to the consolidated
financial statements contained in the 1995 Annual Report to Stockholders,
which is incorporated herein by reference.
III. B. LOAN MATURITIES:
The following table presents consolidated loan maturities by yearly
ranges. Also included for loans after one year are the amounts which have
predetermined interest rates and floating or adjustable rates.
<TABLE>
<CAPTION>
(Amounts in Thousands)
As of December 31, 1995
Maturities
After One Year
--------------
Due After One After Fixed Adjust.
Within But within Five Interest Interest
one year Five Years Years Rates Rates
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Commercial $7,249 $4,760 $4,408 $8,168 $1,000
Agricultural 15,123 7,470 8,070 13,561 1,979
Real Est., Mortgage 2,801 7,408 24,564 5,912 26,060
Consumer, net 4,638 5,071 176 5,247 0
------ ------ ------ ------ ------
Totals $29,811 $24,709 $37,218 $32,888 $29,039
====== ====== ====== ====== ======
Included in Real Estate loans are $1,333,000 of Real Estate Construction
loans, all due within one year.
</TABLE>
<PAGE>
III. C. RISK ELEMENTS
<TABLE>
1. Nonaccrual, Past Due and Renegotiated Loans
<CAPTION>
(Amounts in Thousands)
December 31,
---------------
1995 1994
------ ------
<S> <C> <C>
Commercial and agricultural
Nonaccrual loans $0 $210
Loans over 90 days past due 0 0
Renegotiated loans 0 0
Real Estate - mortgage:
Nonaccrual loans 17 27
Loans over 90 days past due (1) 0 6
Renegotiated loans 0 0
Consumer:
Nonaccrual loans 6 14
Loans over 90 days past due 0 0
Renegotiated loans 0 0
(1) Does not include loans mentioned in nonaccrual loans category.
</TABLE>
The policy of the Company is to place loans on nonaccrual status if: (a)
they are maintained on a cash basis because of deterioration in the
financial position of the borrower, (b) payment in full of interest or
principal is not expected, or (c) principal or interest has been in
default for a period of 90 days or more unless the obligation is both well
secured and in the process of collection.
A debt is "well secured" if it is secured (1) by collateral in the form of
liens on or pledges of real or personal property, including securities,
that have a realizable value sufficient to discharge the debt (including
accrued interest) in full, or (2) by the guaranty of a financially
responsible party. A debt is "in the process of collection" if collection
of the debt is proceeding in due course either through legal action,
including judgment enforcement procedures, or, in appropriate
circumstances, through collection efforts not involving legal action which
are reasonably expected to result in repayment of the debt or in its
restoration to a current status.
The effect of nonaccrual loans as listed above, on gross interest income
for the period ending December 31, 1995, and a discussion of impaired
loans is disclosed in Footnote 4 to the consolidated financial statements,
contained in the 1995 Annual Report to Stockholders, which is incorporated
herein by reference.
<PAGE>
2. Potential Problem Loans. To management's best knowledge and belief,
there are no such significant loans that have not been fully disclosed
under item III.C.1.
3. Foreign Outstandings. None.
4. Loan Concentrations. There are no such concentrations other than
those previously disclosed in Footnotes 1 and 4 to the Consolidated
Financial Statements, contained in the 1995 Annual Report to
Stockholders, which is incorporated herein by reference.
III. D. OTHER INTEREST EARNING ASSETS
A municipal security with a par value of $115,000 is on nonaccrual
status due to a default on a scheduled interest payment.
IV. SUMMARY OF LOAN LOSS EXPERIENCE:
The following table summarizes activity in the allowance for loan losses
of the Company for the two years ended December 31, 1995.
<TABLE>
<CAPTION>
(Amounts in Thousands)
1995 1994
------ ------
<S> <C> <C>
Average amount of loans outstanding, Net of
unearned interest, before allowance for loan losses. $90,531 $85,689
====== ======
Allowance for loan losses:
Balance, beginning of year 2,288 2,217
Loans charged off:
Commercial and agricultural 0 0
Real estate mortgage 0 0
Consumer (5) (13)
Loan recoveries:
Commercial and agricultural 16 77
Real estate mortgage 0 1
Consumer 5 6
------ ------
Net loan (recoveries) (16) (71)
------ ------
Provision charged to expense 0 0
------ ------
Balance, end of year $2,304 $2,288
====== ======
Ratio of net (recoveries) to
average loans outstanding -0.02% -0.08%
</TABLE> ====== ======
<PAGE>
<TABLE>
The following table presents the loan loss allowance by loan category and
the percentage of loans in each category to total loans.
<CAPTION>
(Amounts in Thousands) 1995 1994
-------------- --------------
% Loans % Loans
to Total to Total
Amt. Loans Amt. Loans
------ ------ ------ ------
<S> <C> <C> <C> <C>
Commercial and agricultural $16 51% $76 54%
Real estate mortgage 0 38% 3 35%
Consumer loans 6 11% 1 11%
Unallocated 2,282 N/A 2,208 N/A
------ ------ ------ ------
Total $2,304 100% $2,288 100%
====== ====== ====== ======
</TABLE>
Provision for Loan Loss. The loan loss provision charged to operations is
based on certain factors which, in management's judgment, deserve current
recognition in estimating possible loan losses. Some of these factors are
the amount of the reserve in relation to the total dollar value of loans
outstanding, the relation to any loans known to be doubtful as to
collection, the ratio of average net charge-offs to average loans
outstanding for the most recent years, and the loan loss experience of
comparable banks in the surrounding geographical area. The unallocated
portion of the allowance is general in nature and does not specifically
relate to any loan or category of loans. Please refer to Note 1 of the
consolidated financial statements contained in the 1995 Annual Report to
Stockholders, which is incorporated herein by reference.
V. DEPOSITS
The breakdown of average deposits of the Company for the years 1995 and
1994 can be found on page 6 of this report.
Total time deposits in amounts greater than $100,000 at December 31, 1995
by maturity are disclosed in Footnote 6 to the consolidated financial
statements contained in the 1995 Annual Report to Stockholders, which is
incorporated herein by reference.
<PAGE>
VI. RETURN ON EQUITY AND ASSETS
The following table presents the return on assets and equity, the dividend
payout ratio and the equity to assets ratio of the Company for the years
ended December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
(Amounts in Thousands Except
Per Share Data and Percents)
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Average total assets $176,310 $170,022 $162,481
Average equity $14,669 $14,941 $14,002
Net income $2,273 $2,329 $2,305
Net income per share $7.00 $6.50 $6.33
Dividends declared per share $1.96 $1.83 $1.70
Return on average assets 1.29% 1.37% 1.42%
Return on average equity 15.50% 15.59% 16.46%
Dividend payout ratio 28.00% 28.15% 26.86%
Average equity to assets ratio 8.32% 8.79% 8.62%
</TABLE>
The reader should also review Management's Discussion and Analysis of
Operations for other key ratios and performance review. This discussion is
included in the 1995 Annual Report to Stockholders, which is incorporated
herein by reference.
VII. SHORT TERM BORROWINGS
No disclosure is required as the average balance of short-term borrowings
during the period was less that 30% of stockholders' equity at December
31, 1995 and 1994.
Item 2. Description of Property
The Company and the Bank operate from a two-story banking facility located
at 121 West First Street, Geneseo, Illinois. This facility is owned by The
Farmers National Bank of Geneseo. The Bank also owns two parking lots and
an undeveloped lot, all of which are adjacent to the Geneseo facility.
<PAGE>
The Atkinson branch operates from a facility located at 401 N. State
St., Atkinson, Illinois. The Woodhull Branch operates from the former
Woodhull State Bank facility with is located at 174 N. Division, Woodhull,
Il. The Bank has one year remaining on its lease with Hy-Vee Food Stores
for its Silvis Branch.
All of the properties owned by the Company and its subsidiaries are free of
any encumbrance.
A discussion of environmental matters is found on page 9 of the 1995
Annual Report to Stockholders, which is incorporated herein by reference.
Item 3. Legal Proceedings
The Bank is involved in routine litigation incidental to the business of
the Bank, none of which, individually or in the aggregate, involves as
much as 10% of the assets of the Bank, and none of which is expected to
have a material adverse effect upon the Company. The Company is not
involved in any litigation.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Part II.
Item 5. Market for the Common Equity and Related Stockholders Matters
a. Market information
A market for the securities of the Company is made by The Chicago
Corporation and Howe Barnes Investments, Inc., both of Chicago, Illinois.
According to the Secretary of the Company, the known range of prices per
share for sales of the stock are as follows:
<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
High Low High Low
------ ------ ------ ------
<S> <C> <C> <C> <C>
First Quarter $48.00 $45.00 $45.00 $44.00
Second Quarter $63.00 $55.00 $47.00 $44.00
Third Quarter $55.00 $56.50 $64.00 $47.00
Fourth Quarter $55.50 $62.50 $63.00 $45.00
</TABLE>
For the three months ended March 1, 1996 the known price was $62.00 per
share.
<PAGE>
b. Holders
According to the Secretary of the Company, as of March 1, 1996, there were
approximately 687 stockholders of the Company.
c. Dividends
During the fiscal years 1995, 1994, and 1993 the Company declared
dividends in the amount of $1.96, $1.83, and $1.70 per share,
respectively. Please refer to Footnote 11 to the consolidated financial
statements contained in the 1995 Annual Report to Stockholders
incorporated by reference herein for further discussion of dividends and
restrictions on dividends.
Item 6. Management's Discussion and Analysis or Plan of Operation
Reference is made to pages 7 - 10 of the 1995 Annual Report to
Stockholders which is incorporated by reference herein for further
discussion regarding liquidity and capital resources, results of
operations, income taxes, effects of inflation and accounting and
regulatory capital requirements.
Item 7. Financial Statements
Reference is made to the 1995 Annual Report to Stockholders which is
incorporated herein by reference.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
On July 17, 1995, the accounting firm of McGladrey & Pullen was dismissed
as the company's principal accountants. During the past two years, there
have been no disagreements with McGladrey & Pullen on any matter of
accounting principles or practices, financial statements disclosure, or
auditing scope or procedure or any reportable events. Also, during the
past two years, McGladrey & Pullen's report on the financial statements
contained no adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting
principles. This change was reported on July 17, 1995 on Form 8-K.
Part III.
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Information on the Company's directors is found on page 3 and 4 of the
Proxy Statement, dated February 15, 1996, which is incorporated herein by
reference.
There are no arrangements or understandings between any officers and any
other person pursuant to which he was or is to be selected as an officer.
<PAGE>
All executive officers who have not already been identified as directors
are listed below:
Position held during
Name last five years Age
---------------- ---------------- -----
Wayne A. Hulting Controller 1985 - 45
present
Section 16(a) of the Exchange Act (the "Act") requires the Company's
directors and executive officers and persons who own more than ten percent
of the Company's Common Stock to file initial reports of ownership and
reports of changes in that ownership with the Securities and Exchange
Commission (the "SEC"). Specific due dates for those reports have been
established, and the Company is required to disclose any failure to file
by these dates. Based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports
were required the Company believes that all filing requirements applicable
to its executive officers and directors were satisfied.
Item 10. Executive Compensation
Information on management remuneration is found on page 5 of the Proxy
Statement, dated February 15, 1996, which is incorporated herein by
reference.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Refer to page 6 of the Proxy Statement incorporated herein by reference
for an analysis of security ownership of certain beneficial owners and
management. There have been no arrangements made with any person in the
latest fiscal year which would result in a change of control of the
registrant.
Item 12. Certain Relationships and Related Transactions
Please see the Annual Report to Stockholders, Footnote 4 to the
consolidated financial statements contained in the 1995 Annual Report to
Stockholders for further information regarding related party loans. There
were no other transactions in excess of $60,000 with any related party.
Item 13. Exhibits, List and Reports on Form 8-K
The consolidated financial statements of Farmers National Bancorp, Inc.
and subsidiaries and report thereon of Clifton, Gunderson & Co. Certified
Public Accountants & Consultants, are filed as a part of this report by
incorporation by reference to the Annual Report to Stockholders for fiscal
year ended December 31, 1995. An index is found on the following page.
Reference is hereby made to said index. There were no filings made on Form
8-K during the quarter ended December 31, 1995.
<PAGE>
FARMERS NATIONAL BANCORP, INC.
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
AS OF DECEMBER 31, 1995 AND 1994 AND
THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
FARMERS NATIONAL BANCORP, INC. and Subsidiaries:
Consolidated Statements: (A)
Balance Sheets (A)
Statements of Income (A)
Statements of Stockholders' Equity (A)
Statements of Cash Flows (A)
Notes to Consolidated Financial Statements (A)
Independent Auditor's Report (A)
Additional Information Furnished Pursuant to Requirements
of Form 10-KSB and Regulations S-B:
Page
I.A. Consolidated Average Balance Sheets 6
I.B. Analysis of Net Interest Earnings 7
I.C. Analysis of Changes of Interest
Income/Expense Items 9
II.A. Investment Securities 10
II.B. Investment Securities Maturities and Yields 10
II.C. Investment Concentrations 12
III.A. Types of Loans 12
III.B. Loan Maturities 12
III.C. Risk Elements 13
III.D. Other Interest Earning Assets 14
IV. Summary of Loan Loss Experience 14
V. Deposits 15
VI. Return on Equity and Assets 16
VII. Short-Term Borrowings 16
Subsidiaries of the Company (A)
Articles of incorporation (B)
By-Laws (B)
Management contracts between the bank and
Gaylon E. Martin, Wayne A. Hulting, and Paul F. Lindsey (C)
All other schedules are omitted because they are not applicable or because
the required information is shown elsewhere herein.
<PAGE>
(A) The Independent Auditor's Report, Consolidated Financial Statements,
and a list of the subsidiaries of the Company are contained in the 1995
Annual Report to Stockholders, and are incorporated herein by reference.
The Independent Auditor's Report for the years 1994 and 1993 is found on
page 22.
(B) Articles of Incorporation were previously filed with the Commission
on Form 10-KSB, dated December 31, 1992, and are incorporated herein by
reference. The Bylaws of the Company previously were filed with Commission
on December 9, 1991 under Form 8K and are incorporated herein by
reference. Neither the Articles of Incorporation or other Bylaws have
been amended since those dates.
(C) The management contract for Mr. Martin was previously filed with the
Commission on Form 10-KSB, dated December 31, 1992, is incorporated
herein by reference, and has not been amended since that date. The
management contracts for Mr. Hulting and Mr. Lindsey were previous filed
with the commission on Form 10-KSB, dated December 31, 1993, are
incorporated herein by reference, and have not been amended since that
date.
<PAGE>
McGladrey & Pullen, L.L.P.
Certified Public Accountants and Consultants
To the Board of Directors
Farmers National Bancorp, Inc.
Geneseo, Illinois
We have audited the accompanying consolidated balance sheets of Farmers
National Bancorp, Inc. and subsidiary as of December 31, 1994 and 1993,
and the related consolidated statements of income, stockholders' equity
and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Farmers National Bancorp, Inc. and subsidiary as of December 31, 1994 and
1993 and the results of their operations and cash flows for the years then
ended in conformity with generally accepted accounting principles.
As described in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for investment securities in 1994.
McGladrey & Pullen L.L.P.
Moline, Illinois
January 13, 1995
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FARMERS NATIONAL BANCORP, INC.
(Signature & Title) Wayne A. Hulting, Controller
-----------------------------
(Name & Title) Wayne A. Hulting, Controller
(Date) March 11, 1996
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.
(Signature & Title) Gaylon E. Martin, President
-----------------------------
(Name & Title) Gaylon E. Martin, President
(Date) March 11, 1996
(Signature & Title) H. Willard Nelson, Director
-----------------------------
(Name & Title) H. Willard Nelson, Director
(Date) March 11, 1996
(Signature & Title) Robert C. Anderson, Director
-----------------------------
(Name & Title) Robert C. Anderson, Director
(Date) March 11, 1996
(Signature & Title) Glenn DeSmith, Director
-----------------------------
(Name & Title) Glenn DeSmith, Director
(Date) March 11, 1996
<PAGE>
(Signature & Title) Howard M. Feldman, Director
-----------------------------
(Name & Title) Howard M. Feldman, Director
(Date) March 11, 1996
(Signature & Title) Richard Ford, Director
-----------------------------
(Name & Title) Richard Ford, Director
(Date) March 11, 1996
(Signature & Title) Emil Klingler, Jr., Director
-----------------------------
(Name & Title) Emil Klingler, Jr., Director
(Date) March 11, 1996
(Signature & Title) Dr. Barbara S. Kuhns, Director
-----------------------------
(Name & Title) Dr. Barbara S. Kuhns, Director
(Date) March 11, 1996
(Signature & Title) Ronald Reiling, Director
-----------------------------
(Name & Title) Ronald Reiling, Director
(Date) March 11, 1996
(Signature & Title) C. Everett Swanson, Director
-----------------------------
(Name & Title) C. Everett Swanson, Director
(Date) March 11, 1996
<TABLE> <S> <C>
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