SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X] Annual Report Pursurant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1994, Commission file number 0-12055
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
Farmers National Banc Corp.
(Exact name of registrant as specified in its charter)
Ohio 34-1371693
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
20 South Broad Street
Canfield, Ohio 44406 44406
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: 216-533-3341
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $2.50 per share
(Title of Class)
Indicate by checkmark 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. Yes X No
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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 this Form 10-K or any amendment to
this Form 10-K. [ ]
The registrant estimates that as of February 6, 1995, the aggrgate market
value of the voting stock held by non-affiliates of the registrant (including
171,855 shares held by officers and directors of the registrant) was
approximately $46,709,760.
As of February 6, 1995, the registrant had outstanding 1,556,992 shares of
common stock having a par value of $2.50 per share.
<PAGE>
Supervision and Regulation
The Corporation is a one bank holding company and is regulated by the
Federal Reserve Bank (the "FRB"). The bank is a national bank and is
regulated by the Office of the Comptroller of the Currency (the "OCC"), as
well as the Federal Deposit Insurance Corporation (the "FDIC"). Changes have
developed over the past several years regarding minimum capital requirements
for financial institutions. A listing of the minimum requirements for capital
and the Corporation's capital position as of December 31, 1994 and 1993 are
presented on page 16 of the annual report to shareholders for the year ended
December 31, 1994 and is hereby incorporated by reference.
The Corporation is subject to regulation under the Bank Holding Company
Act of 1956, as amended. This Act restricts the geographic and product range
of bank holding companies by defining the types and locations of institutions
the holding companies can own or acquire. This act also regulates
transactions between the Corporation and the bank and generally prohibits tie-
ins between credit and other products and services.
The bank is subject to regulation under the National Banking Act and is
periodically examined by the OCC and is subject to the rules and regulations
of the FRB. As an insured institution and member of the Bank Insurance Fund
("BIF"), the bank is also subject to regulation by the FDIC. Establishment
of branches is subject to approval of the OCC and geographic limits
established by state law. Ohio branch banking law permits a bank having its
principal place of business in the State of Ohio to establish branch offices
in any county in Ohio without geographic restrictions.
FDICIA
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA")revised the bank regulatory and funding provisions of the Federal
Deposit Insurance Act and several other federal banking statutes. Among other
things, FDICIA requires federal banking agencies to broaden the scope of
corrective action taken with respect to banks that do not meet minimum capital
requirements and to take such actions promptly in order to minimize losses to
the FDIC.
I-3
FDICIA established five capital tiers: "well capitalized"; "adequately
capitalized"; "undercapitalized"; "significantly undercapitalized"; and
"critically undercapitalized" and imposes significant restrictions on the
operations of a depository institution that is not in either of the first two
of such categories. A depository institution's capital tier will depend upon
the relationship of its capital to various capital measures. A depository
institution will be deemed to be "well capitalized" if it is significantly
exceeds the minimum level required by regulation for each relevant capital
measure, "adequately capitalized" if it meets each such measure,
"undercapitalized" if it significantly below any such measure and "critically
undercapitalized" if it fails to meet any critical capital level set forth in
regulations. An institution may be deemed to be in a capitalization category
that is lower than is indicated by its actual capital position if it receives
an unsatisfactory examination rating or is deemed to be in an unsafe or
unsound condition or to be engaging in unsafe or unsound practices.
Under regulations adopted under these provisions, for an institution to
be well capitalized it must have a total risk-based capital ratio of at least
10%, a Tier I risk-based capital ratio of at least 6% and a Tier I leverage
ratio of at least 5% and not be subject to any specific capital order or
directive. For an institution to be adequately capitalized, it must have a
total risk-based capital ratio of at least 8%, a Tier I risk-based capital
ratio of at least 4% and a Tier I leverage ratio of at least 4% (or in some
cases 3%). Under the regulations, an institution will be deemed to be
undercapitalized if the bank has a total risk-based capital ratio that is less
than 8%, a Tier I risk-based capital ratio that is less than 4% or a Tier I
leverage ratio of less than 4% (or in some cases 3%). An institution will be
deemed to be significantly undercapitalized if the bank has a total risk-based
capital ratio that is less than 6%, a Tier I risk-based capital ratio that is
less than 3%, or a leverage ratio that is less than 3% and will be deemed to
be critically undercapitalized if it has a ratio of tangible equity to total
assets that is equal to or less than 2%.
I-3.1
FDICIA generally prohibits a depository institution from making a
capital distribution (including payment of dividends) or paying management
fees to any entity that controls the institution if it thereafter would be
undercapitalized.
If an institution becomes undercapitalized, it will be generally restricted
from borrowing from the Federal Reserve, increasing its average total assets,
making any acquisitions, establishing any branches or engaging in any new line
of business. An undercapitalized institution must submit an acceptable
capital restoration plan to the appropriate federal banking agency, which plan
must, in the opinion of such agency, be based on realistic assumptions and be
"likely to succeed" in restoring the institution's capital. In connection
with the approval of such a plan, the holding company of the institution must
guarantee that the institution will comply with the plan, subject to a
limitation of liability equal to a portion of the institution's assets. If
an undercapitalized institution fails to submit an acceptable plan or fails
to implement such a plan, it will be treated as if it is significantly
undercapitalized.
Under FDICIA, bank regulators are directed to require "significantly
undercapitzlized" institutions, among other things, to restrict business
activities, raise capital through a sale of stock, merge with another
institution and/or take any other action which the agency determines would
better carry out the purposes of FDICIA.
Within 90 days after an institution is determined to be "critically
undercapitalized", the appropriate federal banking agency must, in most cases,
appoint a receiver or conservator for the institution or take such other
action as the agency determines would better achieve the purposes of FDICIA.
In general, "critically undercapitalized" institutions will be prohibited from
paying principal or interest on their subordinated debt and will be subject
to other substantial restrictions.
Under FDICIA, an institution that is not well capitalized is generally
prohibited from accepting brokered deposits. Undercapitalized institutions
are prohibited from offering interest rates on deposits significantly higher
than prevailing rates.
I-3.2
The provisions of FDICIA governing capital regulations became effective
on December 19, 1992.
FDICIA also directs that each federal banking agency prescribe standards for
depository institutions and depository institution holding companies relating
to internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth, a
maximum ratio of classified assets to capital, a minimum ratio of market value
to book value for publicly traded shares (if feasible) and such other
standards as the agency deems appropriate.
FDICIA also contains a variety of other provisions that could affect the
operations of the Corporation, including new reporting requirements,
regulatory standards for real estate lending, "truth in savings" provisions,
the requirement that a depository institution give 90 days' prior notice to
customers and regulatory authorities before closing any branch, limitations
on credit exposure between banks, restrictions on loans to a bank's insiders
and guidelines governing regulatory examinations.
Pursuant to FDICIA, the FDIC has developed a transitional risk- based
assessment system, under which, beginning on January 1, 1993, the assessment
rate for an insured depository institution varied according to its level of
risk.
An institution's risk category will depend upon whether the institution is
well capitalized, adequately capitalized or less than adequately capitalized
and whether it is assigned to Subgroup A, B or C. Subgroup A institutions are
financially sound institutions with few minor weaknesses; Subgroup B
institutions are institutions that demonstrate weaknesses which, if not
corrected, could result in significant deterioration; and Subgroup C
institutions are institutions for which there is a substantial probability
that the FDIC will suffer a loss in connection with the institution unless
effective action is taken to correct the area of weakness. Based on its
capital and supervisory subgroups, each BIF member institution will be
assigned an annual FDIC assessment rate per $100 of insured deposits.
I-3.3
INTERSTATE BANKING AND BRANCHING LEGISLATION
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "IBBEA") authorizes interstate acquisitions of banks and bank holding
companies without geographic constraint beginning September 29, 1995.
Beginning June 1, 1997, the IBBEA also authorizes banks to merge with banks
located in another state provided that neither state has "opted out" of
interstate branching between September 29, 1994 and May 31, 1997. States also
may enact legislation permitting interstate merger transactions prior to June
1, 1997. After acquiring interstate branches through a merger, a bank may
establish additional branches in that state at the same locations as any bank
involved in the merger could have established branches under state and federal
law. In addition, a bank may establish a de novo branch in another state that
expressly permits the establishment of such branches. A bank that establishes
a de novo interstate branch may thereafter establish additional branches on
the same basis as a bank that has established interstate branches through a
merger transaction.
If a state "opts out" of interstate branching, no bank from another
state may establish a branch in that state, whether through a merger or de
novo establishment. Several states are considering legislation to opt out of
the interstate branching provisions of the IBBEA or, alternatively, to permit
interstate branching prior to the June 1, 1997 statutory effective date. It
is not possible to predict the full impact of these actions on the Bank or the
Corporation until May 31, 1997, the date by which all such statutes must be
adopted.
Competition
The Bank competes with state and national banks located in Mahoning and
Columbiana counties.
The Bank also competes with a large number of other financial
institutions, such as savings and loan associations, insurance companies,
consumer finance companies, credit unions and commercial finance and leasing
companies, for deposits, loans and service business. Money market mutual
funds, brokerage houses and similar institutions provide in a relatively
unregulated environment many of the financial services offered by the Bank.
I-3.4
Many competitors have substantially greater resources than the Bank. In the
opinion of management, the principal methods of competition are the rates of
interest charged for loans, the rates of interest paid for funds, the fees
charged for services and the availability of services.
Employees
As of December 31, 1994, the Corporation and its subsidiaries had 145
employees. The registrant considers its relations with its employers to be
satisfactory.
I-3.5
SIGNATURES
Pursuant to the requirements of Section 13 or 15(D) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the under signed, thereunto duly authorized.
Farmers National Banc Corp. Farmers National Banc Corp.
by___________________________________ by__________________________________
William D. Stewart Gene A. Dean
President & Chief Executive Officer Comptroller & Chief Financial Officer
________________________ President & Director March 30, 1995
William D. Stewart
________________________ Director March 30, 1995
Benjamin R. Brown
________________________ Executive Vice President March 30, 1995
Richard L. Calvin and Director
________________________ Director March 30, 1995
James Centofanti
________________________ Director March 30, 1995
Joseph O. Lane
________________________ Director March 30, 1995
David C. Myers
________________________ Director March 30, 1995
Edward A. Ort
________________________ Senior Vice President March 30, 1995
Frank L. Paden and Director
________________________ Director March 30, 1995
Ronald V. Wertz
IV-3
