<PAGE>
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, 1996
-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. $14,074,345
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). $19,313,280 as of February 3, 1997.
(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: 306,316 shares as
of February 3, 1997.
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, 1996, Parts I, II, and III.
(filed by mail on February 14, 1997)
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 - 17
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 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 - 21
Item 10. Executive Compensation 21 - 23
Item 11. Security Ownership of Certain Beneficial Owners
and Management 23 - 24
Item 12. Certain Relationships and Related Transactions 24
Item 13. Exhibits, Lists and Reports on Form 8-K 24 - 30
Independent Auditor's Report for 1994 31
Signatures 32 - 33
<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 ATMs worldwide. The Bank
has ATMs at each of its banking locations, and one at a local
supermarket.
There is one other commercial bank 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 73 full-time equivalent employees throughout the
organization as of December 31, 1996.
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>
1996 1995
------ ------
ASSETS
Cash and due from banks $4,582 $4,746
Interest-bearing deposits in other banks 42 52
Federal funds sold 3,352 2,426
Investment securities:
Held to maturity
Taxable investment securities 12,796 14,112
Nontaxable investment securities 21,248 19,553
Available for sale
Taxable investment securities 43,172 42,032
Nontaxable investment securities 1,026 127
------ ------
Total investment securities 78,242 75,824
Loans, net 88,630 88,233
Other assets 4,377 5,029
------- -------
TOTAL ASSETS $179,225 $176,310
======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand $13,295 $12,956
Interest-bearing demand 35,099 30,223
Savings 20,174 20,279
Time 89,168 88,424
------- -------
Total deposits 157,736 151,882
Short-term borrowings 126 529
Securities sold under agreements to repurchase 227 227
Advances from FHLB 3,885 7,232
Other liabilities 1,766 1,771
------- -------
Total liabilities 163,740 161,641
STOCKHOLDERS' EQUITY
Common stock 1,875 1,875
Additional paid-in capital 1,635 1,635
Retained earnings 15,804 14,215
Unrealized holding losses on securities available
for sale, net (46) (384)
Less: Treasury stock, at cost 3,783 2,672
------- -------
Total stockholders' equity 15,485 14,669
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $179,225 $176,310
======= =======
<PAGE>
</TABLE>
<TABLE>
I. B. ANALYSIS OF NET INTEREST EARNINGS
<CAPTION>
(Amounts in Thousands)
1996
----------------------------
Interest Ave.
Average Income/ Yield
Amount Expense (in%)
------- ------- -----
<S> <C> <C> <C>
INTEREST EARNING ASSETS
Interest-bearing deposits in other banks $42 $2 4.76%
Federal funds sold 3,352 179 5.34%
Taxable investment securities 55,968 3,627 6.48%
Nontaxable investment securities (2) 22,274 1,292 5.80%
Loans, net (3) 88,630 7,954 8.97%
------- ------- -------
Totals $170,266 $13,054 7.67%
======= ======= =====
INTEREST BEARING LIABILITIES
Interest-bearing demand deposits $35,099 $1,045 2.98%
Savings deposits 20,174 591 2.93%
Time deposits 89,168 4,947 5.55%
Short-term borrowings 126 4 3.17%
Securities sold under repurchase agreements 227 10 4.41%
Advances from FHLB 3,885 249 6.41%
------- ------- -------
Totals $148,679 $6,846 4.60%
======= ======= =====
Net Interest Margin $6,208 3.65%
======= =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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%
======= =====
(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)
1996
----------------------------
Components
Increase of Change (1)
from ---------------
Prior Year Rate Volume
------- ------ ------
<S> <C> <C> <C>
INTEREST EARNING ASSETS
Interest-bearing deposits in other banks $0 $0 0
Federal funds sold 35 (16) 51
Taxable investment securities (103) (91) (12)
Nontaxable investment securities (2) 129 (22) 151
Loans, net (3) (65) (100) 35
------- ------ ------
Totals ($4) ($229) $225
======= ====== ======
INTEREST BEARING LIABILITIES
Interest-bearing demand deposits $234 $96 138
Savings deposits (43) (40) (3)
Time deposits (12) (54) 42
Short-term borrowings (36) (16) (20)
Securities sold under repurchase agreements (1) (1) 0
Advances from FHLB (198) 16 (214)
------- ------ ------
Totals ($56) $1 ($57)
======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
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
======= ====== ======
<PAGE>
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
======= ====== ======
(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 4 to the
consolidated financial statements contained in the 1996 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, 1996, 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% $6,011 5.60%
After 1 but within 5 years 0 0.00% 6,281 6.37%
After 5 but within 10 years 0 0.00% 2,004 6.27%
------ ------ ------ ------
Total 0 0.00% $14,296 6.03%
====== ====== ====== ======
<PAGE>
Obligations of State and Political
Subdivisions (1):
Within 1 year $2,879 7.01% $0 0.00%
After 1 but within 5 years 8,590 6.14% 0 0.00%
After 5 but within 10 years 8,709 5.52% 0 0.00%
After 10 years 1,058 5.15% 1032 5.09%
------ ------ ------ ------
Total $21,236 5.95% $1,032 5.09%
====== ====== ====== ======
Corporate notes:
After 1 but within 5 years $500 8.55% $0 0.00%
After 5 but within 10 years 0 0.00% 545 6.77%
------ ------ ------ ------
Total $500 8.55% $545 6.77%
====== ====== ====== ======
Mortgage-backed securities (2):
Within 1 year $1,390 6.43% $2,305 6.04%
After 1 but within 5 years 9,446 6.57% 4,332 7.28%
After 5 but within 10 years 0 0.00% 7,986 6.45%
After 10 years 0 0.00% 13,437 6.88%
------ ------ ------ ------
Total $10,836 6.55% $28,060 6.75%
====== ====== ====== ======
Other (3) 782 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 derivatives to manage interest rate risk.
</TABLE>
<PAGE>
II. C. INVESTMENT CONCENTRATIONS:
As of December 31, 1996, 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 5 to the consolidated
financial statements contained in the 1996 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, 1996
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 $5,852 $4,590 $3,612 $7,652 $550
Agricultural 16,516 7,459 9,223 15,382 1,300
Real Est., Mortgage 2,879 7,542 24,517 5,139 26,920
Consumer, net 4,250 6,164 322 6,486 0
------ ------ ------ ------ ------
Totals $29,497 $25,755 $37,674 $34,659 $28,770
====== ====== ====== ====== ======
Included in Real Estate loans are $741,204 of Real Estate Construction
loans, all due within one year.
Fixed rate lease financing receivables of $58,916 and $125,917 are
included in Commercial and Agricultural loans, respectively, and are all
due after one year, but within five years.
<PAGE>
III. C. RISK ELEMENTS
</TABLE>
<TABLE>
1. Nonaccrual, Past Due and Renegotiated Loans
<CAPTION>
(Amounts in Thousands)
December 31,
---------------
1996 1995
------ ------
<S> <C> <C>
Commercial and agricultural
Nonaccrual loans $0 $0
Loans over 90 days past due 0 0
Renegotiated loans 0 0
Real Estate - mortgage:
Nonaccrual loans 17 17
Loans over 90 days past due (1) 0 0
Renegotiated loans 0 0
Consumer:
Nonaccrual loans 7 6
Loans over 90 days past due 1 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, 1996, and a discussion of impaired
loans is disclosed in Footnote 5 to the consolidated financial statements,
contained in the 1996 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 5 to the Consolidated
Financial Statements, contained in the 1996 Annual Report to
Stockholders, which is incorporated herein by reference.
III. D. OTHER INTEREST EARNING ASSETS
A municipal security with a par value of $126,783 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, 1996.
<TABLE>
<CAPTION>
(Amounts in Thousands)
1996 1995
------ ------
<S> <C> <C>
Average amount of loans outstanding, Net of
unearned interest, before allowance for loan losses. $90,957 $90,531
====== ======
Allowance for loan losses:
Balance, beginning of year 2,304 2,288
Loans charged off:
Commercial and agricultural 0 0
Real estate mortgage 0 0
Consumer (8) (5)
Loan recoveries:
Commercial and agricultural 45 16
Real estate mortgage 0 0
Consumer 4 5
------ ------
Net loan (recoveries) (41) (16)
------ ------
Provision charged to expense 0 0
------ ------
Balance, end of year $2,345 $2,304
====== ======
Ratio of net (recoveries) to
average loans outstanding -0.05% -0.02%
====== ======
</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) 1996 1995
-------------- --------------
% Loans % Loans
to Total to Total
Amt. Loans Amt. Loans
------ ------ ------ ------
<S> <C> <C> <C> <C>
Commercial and agricultural $111 50% $16 51%
Real estate mortgage 0 38% 0 38%
Consumer loans 13 12% 6 11%
Unallocated 2,221 N/A 2,282 N/A
------ ------ ------ ------
Total $2,345 100% $2,304 100%
====== ====== ====== ======
</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 1996 Annual Report to
Stockholders, which is incorporated herein by reference.
V. DEPOSITS
The breakdown of average deposits of the Company for the years 1996 and
1995 can be found on page 7 of this report.
Total time deposits at December 31, 1996 by maturity are disclosed in
Footnote 7 to the consolidated financial statements contained in the 1996
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, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
(Amounts in Thousands Except
Per Share Data and Percents)
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Average total assets $179,225 $176,310 $170,022
Average equity $15,485 $14,669 $14,941
Net income $2,434 $2,273 $2,329
Net income per share $7.93 $7.00 $6.50
Dividends declared per share $2.30 $1.96 $1.83
Return on average assets 1.36% 1.29% 1.37%
Return on average equity 15.72% 15.50% 15.59%
Dividend payout ratio 29.00% 28.00% 28.15%
Average equity to assets ratio 8.64% 8.32% 8.79%
</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 1996 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, 1996 and 1995.
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 which 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 6 of the 1996
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>
1996 1995
--------------- ---------------
High Low High Low
------ ------ ------ ------
<S> <C> <C> <C> <C>
First Quarter $62.00 $62.00 $48.00 $45.00
Second Quarter $62.50 $62.50 $63.00 $55.00
Third Quarter * * $56.50 $55.00
Fourth Quarter $65.00 $65.00 $62.50 $55.50
* There were no known sales of stock during these periods.
</TABLE>
For the three months ended February 15, 1997 the last known sales price
was $90 per share.
<PAGE>
b. Holders
According to the Secretary of the Company, as of February 1, 1997, there
were approximately 687 stockholders of the Company.
c. Dividends
During the fiscal years 1996, 1995, and 1994 the Company declared
dividends in the amount of $2.30, $1.96, and $1.83 per share,
respectively. Please refer to Footnote 12 to the consolidated financial
statements contained in the 1996 Annual Report to Stockholders
incorporated by reference herein for further discussion of dividends and
restrictions on dividends.
Item 6. Management's Discussion and Analysis
Reference is made to pages 3 - 7 of the 1996 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 1996 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
The principal occupation of each director, his/her age, the year in which
he or she first became a director, the number of shares of common stock of
the Company that such person beneficially owned as of February 1, 1997,
and the percentage of the total number of outstanding shares of Common
Stock represented by such shares are listed below. There are no
arrangements or understandings between any director or any other person
pursuant to which such director was selected to serve in such capacity.
<PAGE>
<TABLE>
Information Regarding Directors and Director and Officer Stock Ownership
<CAPTION>
Shares of
Common Percent
Name and Year Stock Ben- of Out-
Principal Occupation Became Term ficially Standing
During last 5 years Age Director Expires Owned (1) Stock
------------------ --- ---- ---- ---------- --------
<S> <C> <C> <C> <C> <C>
Robert C. Anderson 70 1989 1998 600 0.20%
President - Atkinson
Grain & Fertilizer,
Inc., a grain
elevator company
Glenn DeSmith 69 1987 1997 2,431 0.79%
Farmer
Howard M. Feldman 75 1975 1998 26,000 (2) 8.49%
Retired Vice-Pres.,
Taylor Freezer Co.,
a manufacturer of
commercial refriger-
ation products
Richard D. Ford 59 1978 1997 6,541 (3) 2.14%
President, C.D. Ford
& Sons, Inc.,
a distributor of
agricultural and
gardening products
Emil Klingler, Jr. 68 1965 1998 9,890 (4) 3.23%
Owner, Klingler Co.,
an owner of car-
wash and rental
properties
Dr. Barbara S. Kuhns 52 1990 1999 1,600 0.52%
Veterinarian
Gaylon E. Martin 50 1986 1999 6,847 2.24%
President of the
Company and
the Bank
H. Willard Nelson 72 1966 1998 8,315 (5) 2.71%
Farmer
C. Everett Swanson 65 1985 1999 4,250 (6) 1.39%
Farmer
All other officers (2 in number) 9,605 (7) 3.14%
-------
Total 76,079 24.84%
</TABLE>
(1) Except as otherwise indicated in the notes to this table, each
director has sole voting and investment power over the number of
shares of Common Stock listed opposite his or her name.
(2) Includes 10,700 shares held in trust by Mr. Feldman, 300 shares owned
by Rockford Metal Polishing, Inc., of which Mr. Feldman is President,
and 15,000 shares held in trust by Mr. Feldman's wife, all of which
Mr. Feldman may be deemed to share voting and investment power.
(3) Includes 3,250 shares held in the name of Mr. Ford's wife, as to which
Mr. Ford may be deemed to share voting and investment power.
(4) Includes 8,640 shares held jointly by Mr. Klingler and his wife, as to
which Mr. Klingler shares voting and investment power, and 350 shares
held jointly by Mr. Klingler's wife and daughter, as to which Mr.
Klingler may be deemed to share voting and investment power.
(5) Includes 6,400 shares held jointly by Mr. Nelson and his wife and
children, as to which Mr. Nelson shares voting and investment power,
and 450 shares held in an Individual Retirement Account in the name of
Mr. Nelson's wife, as to which Mr. Nelson may be deemed to share
voting and investment power.
(6) Includes 3,750 shares held jointly by Mr. Swanson and his wife, as to
which Mr. Swanson shares voting and investment power.
(7) Includes 4,000 shares as to which the beneficial owner may be deemed
to share voting and investment power.
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.
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 - 46
present
<PAGE>
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
<TABLE>
The aggregate amount of remuneration for 1996, 1995, and 1994 paid by the
Bank to each executive officer whose total remuneration exceeded $100,000,
is as follows:
<CAPTION>
Long-term
Compensation
Stock
Annual Compensation Options
------------------------- Awards & All
Name and Other Rights Other
Principal Annual LTIP Pay- Compen-
Position Year Salary(1) Bonus Comp. outs (2) sation(3)
---------------- --- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Gaylon E. Martin
President
& Director 1996 $150,477 $17,337 $0 None $7,224
1995 $142,471 $15,000 $0 None $6,802
1994 $140,261 $13,500 $0 None $6,666
Wayne A. Hulting
Senior Vice
President
and Controller,
Secretary/
Treasurer
1996 $80,000 $24,000 $0 None $4,003
1995 $75,240 $15,150 $0 None $3,769
1994 $75,374 $11,002 $0 None $3,624
Paul F. Lindsey
Senior Vice
President
Senior
Trust Officer
1996 $80,000 $24,000 $0 None $4,003
1995 $75,240 $15,150 $0 None $3,769
1994 $75,374 $11,002 $0 None $3,624
</TABLE>
(1) Includes director fees of $6,000, $5,800, and $6,200 in 1996, 1995, and
1994, respectively, paid to Mr. Martin.
(2) Neither the Company or the Bank offers stock options, awards or
appreciation rights, nor does it offers a long-term incentive plan
(LTIP) to its employees.
(3) Employer contributions to the Bank's 401-K Plan.
Employer Agreements, Including Change of Control Provisions
The Bank has entered into a three-year employment agreement with Gaylon E.
Martin. The agreement extends automatically for an additional year on
December 31 of each year so that the remaining term shall be three
years, unless notice of intent not to renew is given to either party by
the other prior to the renewal date. Under the terms of the agreement,
Mr. Martin receives a base salary equal to 90% of the national average
salary for bankers with comparable duties and responsibilities.
Also, under the terms of the agreement, Mr. Martin is entitled to 2.99
years additional compensation based upon 100% of the Sheshunoff average
referred to above if he is terminated other than for "cause" or if a
"change of control" of either the Bank or the Company occurs. A change of
control is defined as a transfer of ownership in excess of 25% of the
outstanding stock. Mr. Martin may terminate the contract with no
additional compensation, provided that he does not became employed in
another financial institution within 40 miles of the Bank for a period of
two years after termination.
On November 22, 1996, Norwest Corporation, the Company and the Bank
entered into an employment agreement with Mr. Martin, which agreement will
not be effective until the day after the merger is consummated. The
agreement, which has a term of one year, provides that Mr. Martin will be
employed by the Bank at an agreed upon salary and benefits. The agreement
provides that in consideration of the termination of the existing
employment agreement, Mr. Martin will be paid, subject to certain excess
payment limits in the Code, an amount equal to 2.99 times his then current
base salary. It also provides that on the last day of the twelfth month
following the consummation of the merger, Mr. Martin will be paid $120,000
in consideration of agreeing not to engage in the business of banking in
the counties of Rock Island, Mercer, Knox, Whiteside, Bureau and Henry,
Illinois, for a period of eighteen months thereafter. In addition, the
agreement provides that Mr. Martin, subject to Norwest approval, will be
granted options to purchase 2,000 shares of Norwest Common Stock, subject
to certain conditions.
<PAGE>
The Bank has also entered into employment agreements with Mr. Hulting and
Mr. Lindsey, which each expire in 1998. Under the terms of the
agreements, each officer receives a base salary equal to the national
average salary for bankers with comparable duties and responsibilities. At
the end of each year, Mr. Hulting and Mr. Lindsey receive incentive
compensation based upon a calculated formula only if the Bank has met
specific income performance goals. The incentive compensation received by
each of these officers pursuant to these agreements is listed above. Also,
under the terms of the agreements, Mr. Hulting and Mr. Lindsey are each
entitled to two years additional compensation, if the officer is
terminated other than for "cause". The officer may terminate the contract
with no additional compensation, provided that the officer does not became
employed in another financial institution within 40 miles of the Bank for
a period of two years after termination.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
<TABLE>
The following persons are known to the Company to have owned in excess of
5% of the outstanding shares of the Common Stock as of February 1, 1997:
<CAPTION>
Percent of
Name and address Shares of Common Stock Outstanding
of beneficial owner Beneficially Owned (1) Stock
--------------------- ------------------------ --------
<S> <C> <C>
Howard and Josephine 26,000 (2) 8.49%
Feldman
Rockford, IL
George and Linda Kutsunis 15,645 (3) 5.11%
Geneseo, IL
</TABLE>
(1) The information included in this table is based on information taken
from the stock records of the Company or provided to the Company by
the beneficial owners.
(2) Includes 10,700 shares held in trust where Mr. Feldman is trustee,
300 shares owned by Rockford Metal Polishing, Inc., of which Mr.
Feldman is President, and 15,000 shares held in trust where Mrs.
Feldman is trustee, all of which Mr. and Mrs. Feldman may be deemed to
share voting and investment power.
(3) Includes 11,720 shares held in trust where Mr. Kutsunis is trustee,
3,650 shares held in trust where Mrs. Kutsunis is trustee, and 275
shares held in trust where Mr. and Mrs. Kutsunis are trustees, all of
which Mr. and Mrs. Kutsunis may be deemed to share voting and
investment power.
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 5 to the
consolidated financial statements contained in the 1996 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 LLC, are filed
as a part of this report by incorporation by reference to the Annual
Report to Stockholders for fiscal years ended December 31, 1996 and 1995.
An index is found on the following page. Reference is hereby made to said
index.
On November 27, 1996 the Company filed a Form 8-K with the Commission.
This form disclosed that the Registrant signed a Definitive Agreement and
Plan of Reorganization that provides for the acquisition of the Registrant
and its wholly-owned subsidiary, The Farmers National Bank of Geneseo, by
Norwest Corporation.
<PAGE>
FARMERS NATIONAL BANCORP, INC.
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
AS OF DECEMBER 31, 1996 AND 1995 AND
THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
FARMERS NATIONAL BANCORP, INC. and Subsidiary:
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 1996
Annual Report to Stockholders, and are incorporated herein by reference.
The Independent Auditor's Report for the year 1994 is found on page 32.
(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 existing 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 new contract entered into on November 22, 1996 is
attached as an exhibit, and is found on pages 28 - 31. The management
contracts for Mr. Hulting and Mr. Lindsey were previously 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>
Employment Agreement
====================
This Employment Agreement is entered into as of
November 22, 1996, between Gaylon E. Martin ("Employee"),
Farmers National Bancorp, Inc. ("Bancorp"), the Farmers National
Bank of Geneseo ("Farmers") and Norwest Corporation ("Norwest).
WHEREAS, Employee is currently employed as President and CEO
of Farmers which is a subsidiary of Bancorp; and
WHEREAS, Bancorp and Norwest are contemporaneously entering
into an Agreement and Plan of Reorganization, dated as of
November 22, 1996 (the "Merger Agreement") pursuant to which a
wholly owned subsidiary of Norwest will be merged with and into
Bancorp (the "Acquisition"); and
WHEREAS, the parties desire to enter into an Employment
Agreement with respect to Employee's obligations and compensation
following the Acquisition; and
WHEREAS, the Farmers and Employee entered into an Employment
Agreement dated May 11, 1992.
NOW THEREFORE, the parties agree as follows:
1. Effective Date and Term. The Effective Date of this Agreement
shall be the date immediately following the Acquisition. The Term
of this Agreement shall be the period from the Effective Date
through the first anniversary of the Effective Date.
2. Employee's Services. Commencing upon the Effective Date of
this Agreement and continuing through the Term, Employee shall be a
regular, full-time employee of Farmers and shall perform all of the
transition duties as assigned by Norwest.
3. Base Compensation. Employee shall be paid base compensation
at the rate of at least One Hundred Fifteen Thousand Dollars
($115,000) per annum during the term of this Employment Agreement.
4. Benefits and Perquisites. Upon the Effective Date of this
Agreement, Employee shall be eligible to participate in the
Farmers's employee benefit plans available to regular full-time
employees of Farmers and in accordance with all of the terms of
said benefit plans. In addition, upon the Effective Date, the
Employee shall also be eligible to receive the perquisites
including, without limitation, an assigned vehicle and club
membership in accordance with existing Norwest policy and four (4)
weeks of vacation annually and participate in any bonus or
incentive compensation programs available to other executives at
his level within Norwest and its affiliates, with a 1997 bonus
guarantee of 20% if this Agreement is still in effect at the time
of the Norwest annual bonus payments.
<PAGE>
5. Additional Compensation. Upon the Effective Date, Employee
shall receive additional compensation in the amount of 2.99 times
his current base salary with Bancorp/Farmers. Payment shall be
made to Employee by Norwest within thirty (30) days of the
Effective Date and is in exchange for the termination of the prior
Agreement between Farmers and Employee dated May 11, 1992.
Notwithstanding any provision of this Agreement to the contrary,
Norwest shall not pay any benefit under this Agreement to the
extent the benefit would be an excess parachute payment to Employee
under Section 280G of the Internal Revenue Code.
6. Extinguishing Prior Agreement. Employee and Farmers hereby
agree that the prior Employment Agreement between Farmers and
Employee dated May 11, 1992 shall terminate upon receipt of the
payment set forth in paragraph 5, and that upon termination no
party thereto shall have any further obligation or claims
thereunder.
7. Stock Options. Management will request that the Human
Resources Committee of the Board of Directors of Norwest
Corporation, at that Committee's first meeting after the Effective
Date, grant stock options to Employee for 2,000 shares of Norwest
stock, at an exercise price equal to the fair market value as of
the date of the grant, all of which will vest and become first
exercisable on the first anniversary of the date of the grant,
provided that the Employee is still employed by Norwest on the
vesting date.
8. Non-Compete. In consideration for a payment in the gross
amount of One Hundred Twenty Thousand Dollars ($120,000) (less
taxes) to be paid to Employee on the last day of the twelfth month
following the closing of the Acquisition, Employee agrees that for
a period of eighteen (18) months following the Term he will not, by
himself or through associates, agents, employees, or others,
directly or indirectly, in the counties of Rock Island, Mercer,
Knox, Whiteside, Bureau and Henry, Illinois, engage in the
business of banking, including, but not limited to, the following:
i. serve as an employee, officer, director, or
principal shareholder of any bank, savings and loan association or
savings bank;
ii. directly or indirectly solicit the banking business of
any current or prospective customers of Bancorp or Norwest;
iii. directly or indirectly recruit or hire any person who is
an employee, director or officer of Bancorp or Norwest; and;
iv. in any manner become interested in, directly or indirectly, as
employee, owner, partner, shareholder, director, officer or
otherwise, in a commercial banking or thrift business. Provided,
however, that for purposes of this paragraph, the terms
"shareholder" shall not include any investment in a public
corporation where Employee owns less than five percent (5%) of the
stock issued and outstanding.
9. Termination. This Employment Agreement shall terminate on the
earlier of:
(a) The first anniversary of the Effective Date.
(b) Prior to the end of the Term set forth above, upon:
i. the Employee's death; or
ii. receipt of notice of termination by Employee from
Farmers, Bancorp or Norwest arising from the commission of a
fraudulent or dishonest act by Employee or upon the Employee's
violation of a written Farmers, Bancorp or Norwest policy; or
iii. receipt of notice of resignation by Farmers, Bancorp
or Norwest from Employee.
10. Death or Termination of Employee. In the event of the death
or termination of the Employee, all amounts earned by Employee
prior to his death or termination shall be payable to the Employee
or his estate as circumstances dictate and this Agreement shall
then terminate.
11. Confidentiality. The parties hereto agree to keep the terms
of this Agreement confidential. Norwest and Farmers shall disclose
the terms herein only as necessary to perform their duties
hereunder or as required by law. Employee shall not disclose any
terms herein except as required by law. In addition, Employee
agrees that all information he receives or has access to in his
position as President and CEO of Farmers shall forever be treated
by him as confidential and as proprietary property of Farmers and
its successors, including Norwest. Employee agrees that at no time
during or following the Term of this Agreement, will he disclose
any such information outside of Farmers or Norwest, except in the
performance of his assigned duties on behalf of the Farmers and
Norwest.
12. Indemnification. As an officer of Farmers, if in the course
of performing his assigned job duties Employee is named as an
individual defendant in any litigation, he shall be entitled to
indemnification by Farmers as set forth in its Articles of
Association or Bylaws.
13. Waiver. No waiver of any term, condition or provision shall
be effective for any purpose whatsoever unless such waiver is in
writing and signed by the appropriate party.
14. Governing Law and Enforceability. This agreement shall be
governed by and construed in accordance with the laws of the State
of Illinois. In the event that a court of competent jurisdiction
shall determine that any provision set forth herein is void,
invalid, or unenforceable, such void, invalid, or unenforceable
provision shall be deemed to be severable from and shall be severed
from this Agreement, and this Agreement shall be construed and
enforced as if such severed provision had never been a part hereof.
15. Amendment and Assignment. The parties may not modify or amend
this Employment Agreement unless said amendment is in writing and
is signed by all parties. This Agreement is personal in nature as
to the Employee and may not be assigned by him. The terms of this
Agreement shall inure to the benefit of the Farmers and Norwest and
their successors and assigns.
16. Merger. This Agreement includes the entire agreement between
the Employee, Farmers and Norwest regarding the subject matter
hereof and supersedes any and all verbal or written agreements
between Employee and Farmers or Employee and Norwest.
IN WITNESS WHEREOF, the undersigned have set their hands as of
the date first written above.
Farmers National Bancorp, Inc.
By: H. Willard Nelson
Its Chairman
Farmers National Bank of Geneseo
By: H. Willard Nelson
Its Chairman
Norwest Corporation
By: David R. Dahlke
Its: Director - Corporate Development
Employee Gaylon E. Martin
<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 sheet of Farmers
National Bancorp, Inc. and subsidiary as of December 31, 1994, and the
related consolidated statements of income, stockholders' equity and cash
flows for the year 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 audit.
We conducted our audit 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 audit
provides 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 the results of their operations and cash flows for the year 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) February 10, 1997
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) February 10, 1997
(Signature & Title) H. Willard Nelson, Director
-----------------------------
(Name & Title) H. Willard Nelson, Director
(Date) February 10, 1997
(Signature & Title) Robert C. Anderson, Director
-----------------------------
(Name & Title) Robert C. Anderson, Director
(Date) February 10, 1997
(Signature & Title) Glenn DeSmith, Director
-----------------------------
(Name & Title) Glenn DeSmith, Director
(Date) February 10, 1997
<PAGE>
(Signature & Title) Howard M. Feldman, Director
-----------------------------
(Name & Title) Howard M. Feldman, Director
(Date) February 10, 1997
(Signature & Title) Richard Ford, Director
-----------------------------
(Name & Title) Richard Ford, Director
(Date) February 10, 1997
(Signature & Title) Emil Klingler, Jr., Director
-----------------------------
(Name & Title) Emil Klingler, Jr., Director
(Date) February 10, 1997
(Signature & Title) Dr. Barbara S. Kuhns, Director
-----------------------------
(Name & Title) Dr. Barbara S. Kuhns, Director
(Date) February 10, 1997
(Signature & Title) C. Everett Swanson, Director
-----------------------------
(Name & Title) C. Everett Swanson, Director
(Date) February 10, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 8,423
<INT-BEARING-DEPOSITS> 23
<FED-FUNDS-SOLD> 6,978
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 43,932
<INVESTMENTS-CARRYING> 33,354
<INVESTMENTS-MARKET> 34,045
<LOANS> 92,848
<ALLOWANCE> 2,345
<TOTAL-ASSETS> 187,408
<DEPOSITS> 165,386
<SHORT-TERM> 316
<LIABILITIES-OTHER> 2,106
<LONG-TERM> 3,500
<COMMON> 1,875
0
0
<OTHER-SE> 18,166
<TOTAL-LIABILITIES-AND-EQUITY> 187,408
<INTEREST-LOAN> 7,954
<INTEREST-INVEST> 4,921
<INTEREST-OTHER> 179
<INTEREST-TOTAL> 13,054
<INTEREST-DEPOSIT> 6,582
<INTEREST-EXPENSE> 6,846
<INTEREST-INCOME-NET> 6,208
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (17)
<EXPENSE-OTHER> 4,012
<INCOME-PRETAX> 3,216
<INCOME-PRE-EXTRAORDINARY> 3,216
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,434
<EPS-PRIMARY> 7.93
<EPS-DILUTED> 7.93
<YIELD-ACTUAL> 3.50
<LOANS-NON> 24
<LOANS-PAST> 1,141
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,304
<CHARGE-OFFS> 8
<RECOVERIES> 49
<ALLOWANCE-CLOSE> 2,345
<ALLOWANCE-DOMESTIC> 124
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,221
</TABLE>
