Farmers National Banc (FMNB) 8-K 2014’s Financial Results and the National Bancshares Merger

January 29, 2015 Conference Call Presentation to Discuss

2014’s Financial Results and the National Bancshares Merger

Exhibit 99.1

2

Disclosure Statement

Forward-Looking Statements

This investor presentation contains forward-looking statements within the meaning of the Private Securities Litigation

Reform Act of 1995. These statements are not historical facts, but rather statements based on the Company's current

expectations regarding our business strategies and their intended results and future performance. Forward-looking

statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions, as well as

any statements related to future expectations of performance or conditional verbs, such as "will," "would," "should,"

"could," or "may."

Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or

contribute to the Company's actual results, performance, and achievements to be materially different from those expressed

or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without

limitation, the Company's failure to integrate National Bancshares and First National Bank in accordance with

expectations; deviations from performance expectations related to National Bancshares and First National Bank; general

economic conditions, including changes in market interest rates and changes in monetary and fiscal policies of the federal

government; legislative and regulatory changes; competitive conditions in the banking markets served by the Company's

subsidiaries; the adequacy of the allowance for losses on loans and the level of future provisions for losses on loans; and

other factors disclosed periodically in the Company's filings with the Securities and Exchange Commission.

Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue

reliance on them, whether included in this report or made elsewhere from time to time by the Company or on the

Company's behalf. The Company assumes no obligation to update any forward-looking statements.

3

Additional Information for Stockholders

In

connection

with

the

proposed

merger,

Farmers

will

file

with

the

Securities

and

Exchange

Commission

("SEC")

a

Registration Statement on Form S-4 that will include a joint proxy statement and a Farmers prospectus, as well as other

relevant documents concerning the proposed transaction.

SHAREHOLDERS OF FARMERS AND NATIONAL BANCSHARES AND OTHER INVESTORS ARE URGED TO

CAREFULLY READ THE PROXY STATEMENT/PROSPECTUS TO BE INCLUDED IN THE REGISTRATION

STATEMENT

ON

FORM

S-4,

WHICH

FARMERS

WILL

FILE

WITH

THE

SEC

IN

CONNECTION

WITH

THE

PROPOSED MERGER, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT FARMERS,

NATIONAL BANCSHARES, THE MERGER, THE PERSONS SOLICITING PROXIES WITH RESPECT TO THE

PROPOSED MERGER AND THEIR INTERESTS IN THE PROPOSED MERGER AND RELATED MATTERS.

The

respective

directors

and

executive

officers

of

Farmers

and

National

Bancshares

and

other

persons

may

be

deemed to

be participants in the solicitation of proxies from National Bancshares and Farmers shareholders with respect to the

proposed merger. Information regarding the directors and executive officers of Farmers is available in its proxy

statement

filed

with

the

SEC

on

March

19,

2014.

Information

regarding

directors

and

executive

officers

of

National

Bancshares is available on its website at http://www.discoverfirstnational.com/. Other information regarding the

participants in the solicitation and a description of their direct and indirect interests, by security holdings or otherwise,

will

be

contained

in

the

proxy

statement/prospectus

and

other

relevant

materials

to

be

filed

with

the

SEC

when

they

become available.

Investors and security holders will be able to obtain free copies of the registration statement (when available) and other

documents

filed

with

the

SEC

by

Farmers

through

the

website

maintained

by

the

SEC

at

http://www.sec.gov.

Copies

of

the documents filed with the

SEC

by Farmers will be available free of charge on Farmers' website at

https://www.farmersbankgroup.com.

4

Introduction

$842

$970

$1,031

$1,035

$1,118

$1,142

$1,141

2008

2009

2010

2011

2012

2013

2014

Total Average Assets Up 36% Since 2008

History of Acquisition and            

Business Development

2009 Acquired the Butler Wick Trust

Company

2010 Created Farmers National Insurance

2012 Rolled Out Private Client Services

2013 Acquired National Associates

Farmers has become a leading, diversified financial institution with

a history of stable growth and profitability

•

•

•

•

5

Farmers –

2014 Business Highlights

•

Record year for Wealth Management

–

Farmers Trust Company revenues up 9%

–

Farmers National Investments commissions  increased 13%

–

Farmers National Insurance revenues up 24%

•

Online and Mobile Banking Enhancements

•

Total dividends paid during 2014

–

$2.2 million, or 25% of net income

•

Repurchased 150,868 shares  during the 2014 fourth quarter at a cost of $1.2

million, combined with third quarter odd-lot program reduced total outstanding

shares by 2%

1

January 1, 2014 to December 31, 2014 gross dealer commissions

1

6

Farmers –

2014 Financial Highlights

•

128 consecutive quarters of profitability 

•

Net income per diluted share for year ended December 31, 2014 was $0.48, a 17.1%

improvement over 2013

•

Efficiency ratio for 2014 improved to 70.24%, compared to 74.82% for 2013

•

Loans increased 5.3% since December 31, 2013

•

Nonperforming assets to total assets remain at low levels, 0.76% at December 31,

2014

•

Nonperforming assets declined to $8.6 million from $9.3 million

•

Tangible book value per share up 13.9% to $6.23 from $5.47

•

Tier 1 capital ratio to average assets of 10.02%in  2014 compared to 9.36% in 2013

7

Farmers –

2014 Financial Results

Loan Growth ($M)

Loan Quality (NPA/Total Assets)

Noninterest Income excluding Security

Gains ($M)

Noninterest Expense ($M)

Creates Prominent NE Ohio Franchise

8

(1)

Community Banks defined as those with assets less than $20.0 billion.  Northeast Ohio includes area codes 216, 330 and 440

(2)

Based on FMNB’s stock price of $7.66 on January 28, 2015.

Source: SNL Financial

FMNB Branches

NBOH Branches

Pro Forma Highlights

Branches

33

Assets

$1.7 Billion

Loans

$1.1 Billion

Deposits

$1.3 Billion

Market Cap

$196

Million

2

Creates the third largest community bank

1

by asset size headquartered in Northeastern

Ohio

Complementary business lines & compelling

cultural fit

–

Combines NBOH’s strong loan growth

with Farmers’

wealth management

resources and strong capital base

–

Highly compatible cultures with similar

strategies, customer focus and strong

service and community orientation

Enhanced board of directors and

management team bringing strengths and

best practices from both sides

Catalyst for additional growth opportunities

Strategic Rationale

•

•

•

•

Transaction Overview

9

•

Each shareholder of NBOH will elect to receive $32.15 per share

in cash or 4.034 shares of FMNB, subject to 80% of the shares

being exchanged for stock and 20% for cash

Structure/Consideration

•

$74.0 million based on FMNB’s 20-day volume weighted

average price of $7.97 as of January 26, 2015

•

Deal value/tangible book value

of

155%

1

•

Deal value/ LTM Earnings of 12.5x

1

•

Core deposit premium of 6.8%

1,2

Purchase Price

•

FMNB will add two NBOH directors to its Board of Directors:

James R. Smail

& Howard J. Wenger

•

Mark Witmer to join FMNB as Senior Executive Vice President,

Chief Community Banking Officer

Board/Management

•

Customary regulatory approvals and shareholder approvals of

both FMNB and NBOH

•

Estimated close 1

st

half of 2015

Required Approvals/

Timing

(1)

Deal pricing metrics based on aggregate $74.0 million deal value and NBOH 12/31/14 financials

(2)

Core deposit premium defined as aggregate deal value less NBOH’s tangible equity divided by NBOH’s deposits less time deposits > $100k

•

Maintains community bank in Wayne County

•

Combined Company synergies

–

Wealth Management

–

Agricultural lending

–

Mortgage lending/operations

•

Increases legal lending limit

•

Develops deeper comprehensive platform for banking

•

Maintains similar cultures

•

Creates greater liquidity for shareholders

10

Partnership –

Selecting Farmers

•

High performing Northeastern Ohio

community bank with 2014 ROAA of 1.16%

•

Compounded annualized growth rate for

gross loans of 23% since Q1 2012

•

Net income compounded annualized growth

rate of 31% from 2011FY to 2014FY

11

National Bancshares Corporation

Overview

Gross Loans ($M)

ROAA

Net Income (000’s)

Source: SNL Financial and internal management reports

12

2014 A Record Year

•

•

•

•

NBOH 2014 Financial Highlights

National Bancshares achieved record net income, return on average assets,

return on average equity, loan balances, deposit balances and efficiency ratio

in 2014

Total assets at December 31, 2014 were a record $529.6 million compared to

$476.2 million at December 31, 2013

Total loans were $402.6 million as of December 31, 2014 which represents

more than twice the amount when compared to year-end 2010

Growth was primarily due to an increase in one-to-four family residential

loans, farmland and agricultural production loans and consumer loans

•

Farmers welcomes NBOH Board members Jim Smail and Howard Wenger as new

FMNB Board Members to help provide leadership and guidance in the Wayne County

market

•

Mark Witmer, CEO of National Bancshares Corporation and First National Bank, is a

capable and respected leader and has agreed to join Farmers as Senior Executive Vice

President, Chief Community Banking Officer

•

Mark has assembled a successful and loyal management team with which Farmers is

pleased to partner

•

Since Mark joined as CEO in January 2012, NBOH has seen impressive growth:

•

We are pleased to offer continued employment to key management personnel and

virtually all of NBOH’s lenders, business development and customer-facing personnel

13

Talented Management and Staff

NBOH Historical Performance

($M)

FYE 2011

FYE 2014

CAGR

Loans

$217

$403

23%

Deposits

$341

$418

7%

ROAA

0.66%

1.16%

-

ROAE

6.39%

11.92%

-

Net Income

$2.6

$5.9

31%

14

Due Diligence Summary

•

Estimated loan mark of $4.4 million (107%

of reserves) as of 12/31/14

–

4.0x coverage of non-performing

loans as of 12/31/14

•

Write-down of OREO of $74k (10%)

•

Write-down of fixed assets of $837k

•

Write-up of loans of $913k (rate)

•

Write-up of deposits of

$576k (rate)

•

Assumes 25% cost savings, 65% in 2015

and 100% thereafter

•

After-tax, one-time merger charges are

estimated at $3.5 million

Modeling Assumptions

•

Comprehensive due diligence process

•

Two tiered credit due diligence process

completed

by

senior

management

and

3

rd

party

loan review team

•

Analyzed credit files, underwriting

methodology and policy and portfolio

management processes

•

FMNB’s credit reviews focused on the largest

relationships, adversely classified assets and

watch list loans

•

Both organizations use the same core

processing vendor and share the same outside

audit firm

•

NBOH completed comparable reverse due

diligence on FMNB

Pro Forma Loan Portfolio

15

FMNB

NBOH

Pro Forma

Source: Preliminary company reports as of 12/31/14; excludes loans held for sale.

Note: Pro forma composition excludes purchase accounting adjustments.

(1)

(2)

MRQ Yield On Loans:

4.35%

MRQ Yield On Loans:

4.90%

MRQ Yield On Loans:

4.69%

Loans ($000)

Construction & Land

$          20,217

3.0%

Residential Mortgage

147,197

22.2%

Home Equity

31,255

4.7%

Commercial Real Estate

207,756

31.3%

C & I

120,150

18.1%

Consumer & Other

137,277

20.7%

Total

$        663,852

100.0%

Loans ($000)

Construction & Land

$          47,835

4.5%

Residential Mortgage

232,078

21.8%

Home Equity

71,951

6.7%

Commercial Real Estate

348,341

32.7%

C & I

182,158

17.1%

Consumer & Other

184,134

17.3%

Total

$     1,066,497

100.0%

Loans ($000)

Construction & Land

$          27,833

6.9%

Residential Mortgage

126,830

31.5%

Home Equity

40,087

10.0%

Commercial Real Estate

114,551

28.4%

C & I

62,702

15.6%

Consumer & Other

30,642

7.6%

Total

$        402,645

100.0%

Includes loans secured by farmland.

Includes agricultural production loans.

3.0%

22.2%

4.7%

31.3%

18.1%

20.7%

Construction & Land

Residential Mortgage

Home Equity

Commercial Real Estate

C & I

Consumer & Other

4.5%

21.8%

6.7%

32.7%

17.1%

17.3%

Construction & Land

Residential Mortgage

Home Equity

Commercial Real Estate

C & I

Consumer & Other

Construction & Land

Residential Mortgage

Home Equity

Commercial Real Estate1

C & I2

Consumer & Other

6.9%

31.5%

28.4%

7.6%

15.6%

10.0%

1

2

Pro Forma Deposit Mix

16

FMNB

NBOH

Pro Forma

Source: Preliminary company reports as of 12/31/14.

Note: Pro forma composition excludes purchase accounting adjustments.

MRQ Cost Of Deposits:

0.31%

MRQ Cost Of Deposits:

0.41%

MRQ Cost Of Deposits:

0.38%

Deposits ($000)

Noninterest-bearing Deposits

$184,697

20.2%

IB Demand, Savings & MMDA

524,054

57.2%

Retail Time Deposits

125,156

13.7%

Jumbo Time Deposits

81,796

8.9%

Total

915,703

$        

100.0%

Deposits ($000)

Noninterest-bearing Deposits

218,748

$        

16.4%

IB Demand, Savings & MMDA

845,487

63.4%

Retail Time Deposits

155,649

11.7%

Jumbo Time Deposits

114,151

8.6%

Total

1,334,035

$     

100.0%

Deposits ($000)

Noninterest-bearing Deposits

$          34,051

8.1%

IB Demand, Savings & MMDA

309,578

74.0%

Retail Time Deposits

40,192

9.6%

Jumbo Time Deposits

34,511

8.2%

Total

$        418,332

100.0%

20.2%

57.2%

13.7%

8.9%

Noninterest-bearing Deposits

IB Demand, Savings & MMDA

Retail Time Deposits

Jumbo Time Deposits

16.4%

63.4%

11.7%

8.6%

Noninterest-bearing Deposits

IB Demand, Savings & MMDA

Retail Time Deposits

Jumbo Time Deposits

Noninterest-bearing Deposits

IB Demand, Savings & MMDA

Retail Time Deposits

Jumbo Time Deposits

8.1%

74.0%

9.6%

8.2%

Favorable Financial Metrics

17

(1)

Tangible book value per share earnback period defined as number of years for pro forma tangible book value per share to exceed projected standalone tangible book value per share (“crossover”)

•

Farmers expects the transaction to be accretive to

2016 earnings per share by over  20% assuming fully

phased in cost savings

•

Estimated internal rate of return  in  excess of 20%

•

Manageable level of tangible book value dilution

earned back in approximately 4 years using the

“crossover”

method of calculation

1

•

Estimated tangible common equity/tangible assets of

approximately 9% at close

•

NBOH shareholders will own approximately 28% of

the combined company enabling both sets of

shareholders to benefit from the synergies of the

merger

Summary Highlights

•

Creates a leading Northeastern Ohio community banking franchise with added

scale, enhanced profitability and growth potential

•

Strong regional presence and brand recognition with outstanding customer

service

•

Financially

compelling:

>20%

EPS

accretion

in

2016

and

>20%

IRR

with

manageable TBV earnback

•

Attractively valued pro forma company with significant upside potential

•

Strong capital base provides flexibility with respect to growth and capital

management

•

Creates

a

combined

company

which

combines

the

best

practices

and

personnel

of both institutions

18