SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.)
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Filed by a Party other than the Registrant [ ]
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by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Farmers National Banc Corp.
(Name of Registrant of Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
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the offsetting fee was paid previously. Identify the previous
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(Amended by Sec. Act Rel No. 7331; Exch. Act Rel. No. 37692, eff 10/7/96)
FARMERS NATIONAL BANC CORP.
20 SOUTH BROAD STREET
CANFIELD, OHIO 44406
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, MARCH 25, 1999
TO THE HOLDERS OF SHARES OF COMMON STOCK:
NOTICE IS HEREBY GIVEN that pursuant to call of its Directors,
the Annual Meeting of the Shareholders of FARMERS NATIONAL BANC
CORP., Canfield, Ohio will be held at Colonial Catering located
at 429 Lisbon Street, Canfield, Ohio 44406 on Thursday, March
25, 1999 at three-thirty o'clock (3:30) P.M., Eastern Standard
Time, for the purpose of considering and voting upon the
following matters:
1. ELECTION OF DIRECTORS. The election of the eight (8) persons
listed in the accompanying Proxy Statement.
2. AMENDMENT TO ARTICLE IV. To approve the proposal to amend
Article IV of the Corporation's Articles of Incorporation to
increase the authorized number of shares of common stock, no par
value, of the Corporation from 5,000,000 to 12,500,000.
3. APPROVAL OF THE 1999 STOCK OPTION PLAN AND RELEASE OF PREEMPTIVE
RIGHTS AS TO THE SHARES ISSUED UNDER THE PLAN. To approve the
adoption of the Farmers National Banc Corp. 1999 Stock Option
Plan and release of preemptive rights as to shares issued under
the Plan. A copy of the Stock Option Plan is included as
Exhibit 'A' to the Proxy Statement accompanying this Notice.
4. TO TRANSACT SUCH OTHER BUSINESS as may properly come before the
Meeting or any adjournment thereof.
Shareholders of record at the close of business on February 5,
1999 are the only shareholders entitled to notice of and to vote
at the Annual Shareholders Meeting.
By Order of the Board of Directors
/s/Frank L. Paden, President & Secretary
Canfield, Ohio
March 4, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL
MEETING, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE.
FARMERS NATIONAL BANC CORP.
CANFIELD, OHIO 44406
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 25, 1999
Farmers National Banc Corp., herein referred to as "Farmers" or
the "Corporation" is furnishing this Proxy Statement to its
shareholders in connection with the solicitation, by order of
the Board of Directors of Farmers, of proxies to be used at the
Annual Meeting of Shareholders to be held on Thursday, March 25,
1999 at 3:30 P.M., Eastern Standard Time, at Colonial Catering,
429 Lisbon Street, Canfield, Ohio 44406, and at any adjournments
thereof. The Corporation is a one-bank holding company of which
The Farmers National Bank of Canfield is the wholly owned
subsidiary.
The cost for solicitation of proxies will be borne by Farmers.
Brokerage firms and other custodians, nominees and fiduciaries
may be requested to forward soliciting material to their
principals and to obtain authorization for the execution of
proxies. Farmers will, upon request, reimburse brokerage firms,
and other custodians, nominees and fiduciaries for the execution
of proxies and for their expenses in forwarding proxy material
to their principals.
The proxy statement and the form of proxy are being mailed on
March 4, 1999 or as soon thereafter as practicable to all
shareholders entitled to vote at the meeting. In addition to
use of mails, proxies may be solicited by officers, directors,
and employees of Farmers by personal interview, telephone and
telegraph.
The 1998 Annual Report, including the required audited
financial statements of the Corporation and related financial
information, is enclosed with this proxy soliciting material.
VOTING RIGHTS
Only shareholders of record at the close of business on
February 5, 1999 will be entitled to vote at the meeting. As of
February 5, 1999, Farmers had issued and outstanding 3,657,289
shares of common stock with no par value held by approximately
2,586 holders of record eligible to vote. Each outstanding
share entitles the recordholder to one vote. The number of
shares present at the meeting in person or by proxy will
constitute a quorum for the transaction of business.
It is important that your stock be represented at the meeting,
regardless of the number of shares you may own. We would
appreciate your signing and returning the enclosed proxy. The
shares represented by each proxy, which is properly executed and
returned to Farmers, will be voted in accordance with the
instructions indicated in such proxy. If no instructions are
indicated, shares represented by proxy will be voted "FOR" the
election of each of the Directors as described herein under
Proposal 1, "FOR" approval of the amendment to Article IV of the
Corporation's Articles of Incorporation as described herein
under Proposal 2, and "FOR" approval of the 1999 Stock Option
Plan and release of preemptive rights as to shares issued under
the plan as described herein under Proposal 3. The proxy may be
revoked at any time prior to its exercise, by delivering notice
of revocation or a duly executed proxy bearing a later date to
the Treasurer of the Corporation at any time before the proxy is
voted. Shareholders who attend the meeting in person may vote
their stock even though they may have sent in a proxy. No
officer or employee of Farmers may be named as a proxy. If you
received two or more proxy forms because of difference in
addresses or registration of shareholdings, each should be
executed and returned in order to assure a complete tabulation
of shares.
The corporation will appoint two officers to act as inspectors
for the purpose of tabulating the votes cast by proxy. Broker
non-votes and abstentions are not treated as votes cast for
purposes of any of the matters to be voted on at the meeting.
The Board of Directors knows of no other business that will be
presented for consideration at the 1998 Annual Meeting other
than the matters described in this Proxy Statement. If any
other matters should come before the meeting, the proxy holders
will vote upon them in accordance with their best judgment.
PROPOSAL 1:
ELECTION OF DIRECTORS
Pursuant to the Code of Regulations, the authorized number of
Directors of Farmers has been set at eight (8). The Board of
Directors has nominated the eight (8) persons named below to
serve as Directors until the next Annual Meeting or until their
earlier death, resignation or removal from office. With the
exception of Mr. Joseph D. Lane, each of the nominees currently
serves as a Director of Farmers. Election of Directors by
shareholders shall be determined by a plurality of the votes
cast by the shareholders who are entitled to vote at the
meeting, present in person or by proxy. If any of the nominees
should be unavailable to serve for any reason (which is not
anticipated), the Board of Directors may designate a substitute
nominee or nominees (in which case the persons named on the
enclosed proxy card will vote all valid proxy cards for the
election of such substitute nominee or nominees), allow the
vacancy or vacancies to remain open until a suitable candidate
or candidates are located, or by resolution provide for a lesser
number of Directors. It is presently anticipated that each
person elected as a Director of the Corporation at the Annual
Meeting will be elected by the Corporation as a Director of the
Corporation's wholly-owned subsidiary, Farmers National Bank of
Canfield.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
ELECTION OF THE EIGHT NOMINEES LISTED BELOW:
INFORMATION WITH RESPECT TO NOMINEES
Certain information in the following tabulation has been
furnished to Farmers by the respective nominees for Director.
Principal Occupation and Director
Name Five Year Business Experience Age Since (A)
Benjamin R. Brown President and Owner of Castruction 53 1991
Company, Incorporated in 1965. The
Company designs and manufactures
pre-cast shapes and associated
products for the steel industry.
Richard L. Calvin Vice Chairman since 1996, formerly, 72 1975
Executive Vice President/Cashier of
Farmers National Bank since 1972
and Executive Vice President/
Treasurer of Farmers National Banc
Corp. since 1983.
Joseph D. Lane Attorney and Principal of Lane & 46 N/A
Rusu Co. L.P.A. since 1995. Vice
President of Lane Funeral Homes,
Inc. since 1975 and Vice President
of Lane Life Paramedics Ambulance
Services since 1985.
David C. Myers President and Owner of Myers 70 1988
Equipment Corp. since 1955. The
Company sells truck equipment and
school buses. Mr. Myers has
operated a 2,000 - acre farm since
1946.
Edward A. Ort President of Ort Furniture Mfg. Co. 69 1993
since 1973. The Company
manufactures upholstered furniture
which is shipped to retail furniture
stores in northeastern United States
since 1957.
Frank L. Paden President & CEO of Farmers National 47 1992
Bank since 1996 and EVP/Sr. Loan
Officer since 1991. President &
Secretary of Farmers National Banc
Corp. since 1996.
William D. Stewart Chairman since 1996, formerly, 69 1972
President of Farmers National Bank
since 1972 and President &
Secretary of Farmers National Banc
Corp. since 1983.
Ronald V. Wertz C.P.C.U., C.I.C., Vice President 52 1989
with Acordia Insurance since 1998.
Previously was President and Owner
of Boyer Insurance, Inc. since 1981.
(A) Includes the period served as a Director of The Farmers
National Bank of Canfield prior to its reorganization into a
wholly owned subsidiary of this Corporation in 1983.
PROPOSAL 2:
PROPOSAL TO AMEND ARTICLES OF INCORPORATION TO INCREASE
AUTHORIZED NUMBER OF COMMON SHARES.
The Articles of Incorporation of the Corporation presently
authorize 5,000,000 shares, no par value. The Corporation's
Board of Directors unanimously adopted a resolution proposing
and declaring it advisable that Article IV of the Corporation's
Articles of Incorporation (the "Articles") be amended in order
to increase the authorized number of shares of the Corporation
to 12,500,000 shares, no par value ("Common Shares"), and
recommending to the shareholders of the Corporation the approval
of the proposed amendment. Of the Corporation's presently
authorized 5,000,000 Common Shares, as of December 31, 1998,
3,657,289 shares were outstanding.
The Board of Directors believes that it is desirable and in the
best interests of the Corporation and its shareholders to
increase the number of Common Shares that the Corporation is
authorized to issue. This will ensure that the Corporation will
have a sufficient number of authorized Common Shares available
in the future to provide it with the desired flexibility
necessary to meet its business needs. If this proposal is
approved by the shareholders, the additional Common Shares will
be available for a variety of corporate purposes, including for
example, the declaration and payment of share dividends to the
Corporation's shareholders; issuance of shares under the
Dividend Reinvestment Plan; share splits; use in the financing
of expansion or future acquisitions; issuance pursuant to the
terms of employee benefit plans; and use in other possible
further transactions of a currently undetermined nature.
If the proposed amendment is adopted, the Corporation would be
permitted to issue the additional authorized Common Shares
without further shareholder approval, except to the extent
otherwise required by the Articles, by law or by any securities
exchange on which the Common Shares may be listed at the time.
The authorization of additional Common Shares will enable the
Corporation, as the need may arise, to take timely advantage of
market conditions and the availability of favorable
opportunities without the delay and expense associated with the
holding of a special meeting of its shareholders. It is the
belief of the Board of Directors that the delay necessary for
shareholder approval of a specific issuance could be detrimental
to the Corporation and its shareholders. The Board of Directors
does not intend to issue any Common Shares except on terms which
the Board deems to be in the best interests of the Corporation
and its shareholders. Shareholders of the Corporation may have
preemptive rights to purchase Common Shares issued in the
future, unless such rights are specifically limited by the
Articles. Depending on the terms thereof, the issuance of the
Common Shares may or may not have a dilutive effect on the
Corporation's then-existing shareholders. Other than the Common
Shares which may be acquired pursuant to the Corporation's
existing Dividend Reinvestment Plan and Stock Option Plan (see
Proposal No. 3), the Corporation presently has no plans,
agreements or understandings to issue any of the newly
authorized Common Shares.
If the amendment is approved, it will become effective upon the
filing of a Certificate of Amendment to the Corporation's
Articles with the Ohio Secretary of State, which is expected to
be accomplished as promptly as practicable after such approval
is obtained.
ADOPTION OF THE PROPOSED AMENDMENT REQUIRES THE AFFIRMATIVE VOTE
OF THE HOLDERS OF TWO THIRDS (2/3) OF THE COMMON SHARES. THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT.
PROPOSAL 3:
APPROVAL OF THE ADOPTION OF THE FARMERS NATIONAL BANC CORP. 1999
STOCK OPTION PLAN AND RELEASE OF PREEMPTIVE RIGHTS AS TO SHARES
ISSUED UNDER THE PLAN.
The following is a summary of the material provisions of the
Farmers National Banc Corp. 1999 Stock Option Plan (the "Plan")
which is attached as Exhibit `A' to this Proxy Statement and is
incorporated by reference into this summary description. This
summary is qualified entirely by reference to the Plan. Any
capitalized terms which are used in this summary description but
not defined have the meanings assigned to them in the Plan.
Introduction. On December 15, 1998, the Board of Directors
adopted the Plan. The Board of Directors urges stockholders to
read the Plan in its entirety. The Plan provides stock-based
compensation to eligible employees, including incentive and
nonqualified stock options and stock appreciation rights.
Stock-based compensation will typically be issued in
consideration for the performance of services to the Corporation.
The Board of Directors believes that the Plan will optimize the
profitability and growth of the Corporation through incentives
that link the interests of the Plan participants with those of
the Corporation's stockholders. The Board further believes that
the Plan will enable the Corporation to attract, retain and
motivate employees capable of making significant contributions
to the Corporation's success and to allow employees to share in
the success of the Corporation.
The Board of Directors expects the Plan to link the interests
of participants with those of the Corporation's stockholders by
giving participants an incentive to perform at a superior level
consistent with the Corporation's goals. The Board of Directors
believes that approval of the Plan is, therefore, in the
stockholders best interests.
Release of Preemptive Rights. Holders of Common Shares are
generally entitled to preemptive rights, subject to certain
exceptions described in Article XIII of the Corporation's
Articles of Incorporation. Consistent with the General
Corporation Law of Ohio, Article XIII allows for the release of
preemptive rights on shares issued under a stock option plan if
the release is approved by the affirmative vote of the holders
of a majority of the shares entitled to such preemptive rights.
If the holders of a majority of the common shares of the
Corporation vote "FOR" this proposal, shareholders will not have
preemptive rights on shares issued under the Plan. While the
release of preemptive rights may have a dilutive effect on the
holders of Common Shares, the Board of Directors feels that it
would not be practicable to implement a Stock Option Plan with
such shares subject to preemptive rights.
Administration. The Plan shall be administered by the
Compensation Committee of the Board or, alternatively at the
discretion of the Board, the Board may appoint a Stock Option
Plan Committee consisting of not less than two nor more than
five members to administer the Plan (collectively referred to as
the "Committee"). All Committee members shall be disinterested
directors qualified to serve pursuant to Rule 16b-3 under
Section 16 of the Securities Exchange Act of 1934, as amended
and in effect from time to time. Subject to the express
provisions of the Plan, the Committee shall have sole discretion
and authority to determine from time to time the individuals to
whom Options may be granted, the terms of the Stock Option
Agreement with the Optionee, including but not limited to, the
number of shares of Stock to be subject to each Option, the
period during which such Option may be exercised and the price
at which such Option may be exercised.
Eligibility. Directors and Officers of the Corporation and its
subsidiaries and such other employees, consultants or other
individuals the Board of Directors may from time to time
designate, shall be eligible to participate in the Plan.
Options. The Committee has discretion to award incentive stock
options ("ISOs"), which are intended to comply with Section 422
of the Internal Revenue Code, or nonqualified stock options
("NQSOs"), which are not intended to comply with Section 422 of
the Internal Revenue Code. Each option issued under the Plan
must be exercised within a period of ten years from the date of
grant, and the exercise price of an option may not be less than
the fair market value of the underlying shares of the
Corporation's Common Stock on the date of grant. At the time of
exercise, the full exercise price for a stock option must be
paid in cash or, if the Committee so provides, in shares of the
Corporation's Common Stock. Subject to the specific terms of
the Plan, the Committee has discretion to set such additional
limitations on option grants (including expiration or
termination provisions) as it deems appropriate. Options become
exercisable according to the following vesting schedule:
20% after one year from the date of grant
40% after two years from the date of grant
60% after three years from the date of grant
80% after four years from the date of grant
100% after five years from the date of grant
Stock Appreciation Rights. The Committee may grant Stock
Appreciation Rights (SAR) to participants under the Plan. A SAR
may be granted simultaneously with or subsequent to the option
to which the right is related, but each SAR must relate to a
particular option. In exchange for the surrender in whole or in
part of the related option to purchase shares of Common Stock,
the exercise of a SAR shall entitle a Participant to an amount
equal to the appreciation in value of the shares to which the
related option is being surrendered pursuant to such exercise.
Such appreciation in value shall be equal to the excess of the
Fair Market Value of such shares.
Option Grant. Options granted under the Plan will be evidenced
by written Stock Option Agreements specifying the number of
shares covered thereby and the option price, the exercise period
and all other terms, restrictions and conditions of the option.
The exercise price of all stock options granted under the Plan
must be at least equal to the Fair Market Value of such shares
on the date of grant. With respect to any Optionee who owns
stock possessing more than 10% of the voting rights of the
Corporation's outstanding Common Stock, the exercise price of
any stock option must be not less than 110% of the Fair Market
Value on the date of grant for ISO's.
Number of Available Shares. Up to 375,000 shares of the
Corporation's Common Stock are authorized for issuance through
the Plan. The Plan provides for appropriate adjustments in the
number of shares of the Corporation's Common Stock subject to
awards and available for future awards in the event of changes
in outstanding Common Stock by reason of a merger, stock split
or certain other events.
Amendment and Termination. The Board of Directors may modify,
amend or terminate the Plan at any time. However, no such
action may materially increase either the benefits to
Participants under the Plan or the number of shares that may be
issued under the Plan, materially modify the eligibility
requirements, reduce the Option Price or impair any outstanding
option or SAR. The Board of Directors will seek stockholder
approval of an amendment if necessary under Internal Revenue
Service Regulations or any applicable law. Subject to the right
of the Board of Directors to modify, amend or terminate the
Plan, the Plan will remain in effect until all options and
rights granted thereunder have been exercised or expired in
accordance with the terms of the Plan. However, in no event
will the Board of Directors grant awards under the Plan on or
after December 15, 2008.
Federal Income Tax Consequences. The following description of
Federal Income Tax Consequences is based upon existing statutes,
regulations and interpretations as of the date of this Proxy
Statement. Because the currently applicable rules are complex
and the tax laws may change and because income tax consequences
may vary depending upon the particular circumstances of each
participant, each participant should consult his or her own tax
advisor concerning Federal (and any state and local) Income Tax
Consequences. The following discussion does not purport to
describe state or local income tax consequences.
Options so designated under the Option Plan are intended to
qualify as Incentive Stock Options ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986 (the
"Code"). All Options that are not designated as ISOs are
intended to be Non-Qualified Stock Options ("NQSO").
Incentive Stock Options. The Optionee will recognize no income
upon the grant of an ISO and incur no tax on its exercise
(unless the Optionee is subject to the alternative minimum tax).
If the Optionee holds the stock acquired upon exercise of an
ISO (the "ISO Shares") for more than one year after the date the
option was exercised and for more than two years after the date
the option was granted, the Optionee generally will realize
long-term capital gain or loss (rather than ordinary income or
loss) upon disposition of the ISO Shares. This gain or loss
will be equal to the difference between the amount realized upon
such disposition and the amount paid for the shares.
If the Optionee disposes of ISO Shares prior to the expiration
of either holding period (a "disqualifying disposition"), then
gain realized upon such disposition, up to the difference
between the Fair Market Value of the shares on the date of
exercise (or, if less, the amount realized on a sale of such
shares) and the option exercise price, will be treated as
ordinary income. Any additional gain will be long-term or
short-term capital gain, depending upon the amount of time the
ISO Shares were held by the Optionee.
Non-Qualified Stock Options. An Optionee will not recognize
any taxable income at the time a NQSO is granted. However, upon
exercise of a NQSO, the Optionee will include in income as
compensation an amount equal to the difference between the Fair
Market Value of the shares on the date of exercise (or, in the
case of exercise for stock subject to a substantial risk of
forfeiture, at the time such forfeiture restriction lapses) and
the amount paid for that stock upon exercise of the NQSO. In
the case of stock subject to a substantial risk of forfeiture,
if the Optionee makes an 83(b) election, the included amount
will be based on the difference between the Fair Market Value on
the date of exercise and the Option exercise price. The
included amount will be treated as ordinary income by the
Optionee and will be subject to income tax withholding by the
Corporation (either by payment in cash by the Optionee or
withholding out of the Optionee's salary). Upon sale of the
shares by the Optionee, any appreciation or depreciation in the
value of the shares will be treated as capital gain or loss
(either long- or short-term, depending upon the time the
Optionee holds the shares after exercising the NQSO).
Tax Treatment of the Corporation. The Corporation will be
entitled to a deduction in connection with the exercise of a
NQSO by a domestic employee or Director to the extent that the
Optionee recognizes ordinary income and the Corporation
withholds tax. The Corporation will be entitled to a deduction
in connection with the disposition of ISO Shares only to the
extent that the Optionee recognizes ordinary income on a
disqualifying disposition of the ISO Shares.
ADOPTION AND APPROVAL OF THE FARMERS NATIONAL BANC CORP. 1999
STOCK OPTION PLAN REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS
OF A MAJORITY OF THE COMMON SHARES. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding beneficial
ownership as of December 31, 1998, of the Corporation's common
shares of each Director and all Executive Officers as a group.
Aggregate Number of Percent of
Shares Beneficially Outstanding
Name Owned (A) Shares
Benjamin R. Brown 28,543 .78%
Richard L. Calvin 33,652 .92%
Joseph O. Lane 83,378 2.28%
David C. Myers 22,982 .63%
Edward A. Ort 6,562 .18%
Frank L. Paden 8,861 .24%
William D. Stewart 29,001 .79%
Ronald V. Wertz 27,536 .75%
Executive Officers as a Group 12,027 (B) .33%
All Directors and
Executive Officers as a Group 243,681 6.66%
(A) Information relating to beneficial ownership is based upon
information available to Farmers and uses "Beneficial Ownership"
concepts set forth in the rules of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as
amended. Under such rules, Beneficial Ownership includes those
shares over which an individual has sole or shared voting,
and/or investment powers such as beneficial interest of a
spouse, minor children, or other relatives living in the home of
the named individual, trusts, estates and certain affiliated
companies.
(B) Includes 8,861 shares held by Frank L. Paden, President and
CEO of Farmers National Bank of Canfield and President and
Secretary of the Corporation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Corporation's Directors and executive officers, and persons
who own more than 10% of a registered class of the Corporation's
equity securities, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports
of changes in ownership of Common Stock and other equity
securities of the Corporation. Officers, Directors and greater
than 10% stockholders are required by SEC regulation to furnish
the Corporation with copies of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely on a review of the
copies of such reports furnished to the Corporation and written
representations that no other reports were required, during
1998, all Section 16(a) filing requirements applicable to its
officers, Directors and greater than 10% beneficial owners were
complied with.
COMMITTEES OF THE BOARD OF DIRECTORS
At the Directors' organizational meeting, held immediately
following the last Annual Shareholders Meeting of The Farmers
National Banc Corp. held on March 26, 1998, the following
committees were appointed by the Chairman:
EXECUTIVE COMPENSATION AND EMPLOYEES SALARY COMMITTEE: Joseph
O. Lane, Chairman; Benjamin R. Brown, Richard L. Calvin, David
C. Myers, Edward A. Ort, William D. Stewart and Ronald V. Wertz.
The Executive Compensation and Employees Salary Committee
reviews the compensation of the official staff and makes
recommendations regarding all employee benefits to the Board of
Directors. This committee met one time in 1998.
AUDIT & EXAMINING COMMITTEE: David C. Myers, Chairman;
Benjamin R. Brown, Edward A. Ort, and Ronald V. Wertz.
The Audit and Examining Committee directs the activities of the
internal audit staff, reviews the internal auditor's reports,
reviews all examinations of the Comptroller of the Currency and
makes recommendations to the Board regarding the engagement of
an external auditing firm to perform the annual audit and
prepare income tax returns. This committee met four times in
1998.
DISCOUNT LOAN COMMITTEE: Frank L. Paden, Chairman; Benjamin
R. Brown, Richard L. Calvin, Joseph O. Lane, David C. Myers,
Edward A. Ort, William D. Stewart, and Ronald V. Wertz.
The Discount Loan Committee meets weekly to review all loans
made during the previous week and to approve all loan
commitments which are either above the assigned lending limits
of the loan officers or are not in keeping with existing bank
policy.
BUILDING COMMITTEE: Richard L. Calvin, Chairman; Ad Hoc.
The Building Committee oversees site selection, office
additions and modifications. This committee met one time in 1998.
LONG RANGE AND STRATEGIC PLANNING COMMITTEE: Frank L. Paden,
Chairman; Benjamin R. Brown, Richard L. Calvin, Joseph O. Lane,
David C. Myers, Edward A. Ort, William D. Stewart, and Ronald V.
Wertz.
The Long Range and Strategic Planning Committee is responsible
for formulation and implementation of the Strategic Plan for the
operation of the Corporation. This committee met once in 1998.
NOMINATING COMMITTEE: Frank L. Paden, Chairman; Benjamin R.
Brown, Richard L. Calvin, Joseph O. Lane, David C. Myers, Edward
A. Ort, William D. Stewart, and Ronald V. Wertz.
The Nominating Committee makes decisions with respect to: (a)
nominees for election as Director at the Annual Meeting of
shareholders; (b) nominees to fill Board vacancies between
Annual Meetings; and (c) the composition of membership of the
various other standing committees. This committee met once in
1998.
RISK MANAGEMENT AND INSURANCE COMMITTEE: Ronald V. Wertz,
Chairman; Benjamin R. Brown, Richard L. Calvin, and Carl D.
Culp, EVP/Cashier/CFO.
The Risk Management and Insurance Committee is responsible for
reviewing coverage and protection levels of insurance maintained
by the Bank. The committee met once in 1998.
During 1998, each Director standing for re-election, was
present for more that 75% of the combined number of meetings of
the Board of Directors and of each committee of the Board on
which such director served. There were twelve regular and six
special meetings of the Board of Directors in 1998.
Members of the Board of Directors receive $500.00 for each
board meeting they attend, and $300.00 for each committee
meeting they attend with the exception of inside Directors who
receive no compensation for committee meetings.
NOTE: THE ABOVE COMMITTEES ARE COMMITTEES OF THE FARMERS
NATIONAL BANK OF CANFIELD (THE BANK), A WHOLLY OWNED SUBSIDIARY
OF FARMERS NATIONAL BANC CORP. CURRENTLY, THE MEMBERS OF
FARMERS' BOARD OF DIRECTORS ALSO SERVE AS THE DIRECTORS OF THE
BANK, AND ATTEND BOARD MEETINGS FOR BOTH FARMERS AND THE BANK.
ALTHOUGH THESE MEETINGS ARE CONDUCTED SEPARATELY ON THE SAME
DAY, A MEMBER RECEIVES COMPENSATION (WHICH IS PAID BY FARMERS)
FOR ONLY ONE MEETING, CONSEQUENTLY, MEMBERS ATTENDING A MEETING
OF THE BOARDS OF BOTH FARMERS AND THE BANK ON A SINGLE DAY ARE
CREDITED WITH ONE BOARD MEETING FOR ATTENDANCE AND COMPENSATION
PURPOSES.
SUMMARY COMPENSATION TABLE
Name and Principal Position Year Annual Salary Bonus 401(k) All Other
and Director Corporation Compensation
Fees (a) Contribution (c)
(b)
Frank L. Paden, President & CEO 1998 118,917 0 7,975 383
1997 103,665 0 7,486 1,098
1996 86,318 0 4,749 1,038
<FN>
(a) The amount of Director Fees included in this annual amount
is as follows: Paden ($9,300, $7,900 and $6,250).
(b) In May, 1996, the Corporation adopted a 401(k) Profit
Sharing Retirement Savings Plan. All employees of Farmers
National Bank who have completed at least one year of service
and meet certain other eligibility requirements are eligible to
participate in the Plan. Under the terms of the Plan, employees
may voluntarily defer a portion of their annual compensation,
not to exceed 15%, pursuant to Section 401(k) of the Internal
Revenue Code. The Corporation matches a percentage of the
participants' voluntary contributions up to 6% of gross wages.
In addition, at the discretion of the Board of Directors, the
Corporation may make an additional profit sharing contribution
to the Plan. The Corporation's contributions are subject to a
vesting schedule and the Plan meets the requirements of Section
401(a) of the Internal Revenue Code and Department of Labor
Regulations under ERISA.
(c) Amounts represent cost of group term life insurance and
other benefits.
Listed is the total compensation paid by the Corporation's
subsidiary, The Farmers National Bank of Canfield during the
latest fiscal year to the named person(s) for services in all
capacities, specifically setting forth the direct compensation
to the President & CEO. No other executive officer of Farmers
receives the total annual salary and bonus in excess of $100,000.
In 1991, as a result of certain changes in the Internal Revenue
Code, the Bank's pension plan was amended to reduce
significantly the benefits of several key employees, including
those of Mr. Paden. As a result, the Bank has entered into
Deferred Compensation Agreements with certain of its executive
officers, including Mr. Paden. Under the terms of the Deferred
Compensation Agreement, he will receive monthly payments of
$930.00 for a period of two hundred and four (204) months,
commencing with retirement age of 65. This agreement also
provides that these executive officers will be available to
perform consulting services for the Bank during the period he is
receiving these payments, and prohibits him from entering into
competition with the Corporation during that same period. In
the event that any payments should still remain due and payable
to the executive officer under the Agreement at the time of his
death, those payments would be made to his surviving spouse. In
the event that any payment should still remain due and payable
to either the executive officer or his spouse under the
Agreement at the death of the survivor of them, those payments
would be reduced to their then present value at a predetermined
rate of interest and paid to the estate of the survivor in a
lump sum. Payments will be prorated in the event the employee
retires before the age of 65, and will be increased
proportionately if he retires after the age of 65. The
Agreement is funded by a life insurance policy owned by the
bank, on which the Bank is the beneficiary and the premiums of
which are paid by the Bank.
NOTE: Tables containing disclosures of Stock Appreciation
Rights and Plans and Long Term Incentive Plans have been omitted
because no such programs exists for The Farmers National Bank of
Canfield and although the Farmers National Banc Corp. 1999 Stock
Option Plan has been approved by the Board of Directors on
December 15, 1998, no Options or Stock Appreciation rights have
been granted in 1998.
No Employment Contracts or Golden Parachute Agreements exist
between any executive officer and either Farmers National Banc
Corp. or The Farmers National Bank of Canfield.
INDEBTEDNESS OF MANAGEMENT
Farmers has had, and expects to have in the future, banking
transactions in the ordinary course of business with Directors,
executive officers and their associates on the same terms,
including interest rates and collateral on loans, as those
prevailing at the same time for comparable transactions with
others. Since the beginning of 1998, the largest aggregate
extensions of credit to executive officers, Directors and their
associates during the year ended December 31, 1998 was
$1,514,016 or 3.20% of Equity Capital Accounts. In the opinion
of the management of Farmers, these transactions do not involve
more than a normal risk of collectability or present other
unfavorable features.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is made up
of all of the outside Directors of Farmers. No officers of the
corporation sit on this committee. This committee reports back
to the full board but its decisions are not subject to full
board approval. The committee has the purpose and
responsibility of providing the Bank, its staff and the
communities it serves with consistent long-term leadership of
the highest quality possible while protecting the interests of
the shareholders.
The committee sets the limits for increases in the aggregate
for all staff, reviews performance of executive officers and
sets their salaries for the coming year. In addition, any
incentive/bonus program is set by the board based on the
recommendation of the compensation committee.
The committee takes a straightforward approach to the review of
executives and bases its consideration of salaries on specific
job performance, contribution to target levels of growth,
profitability, stability, capital and return on equity (ROE) and
return on assets (ROA). Also considered is the executive's
contribution to the general success of the Bank and its business
plan and community standing, which cannot necessarily be
quantified in an appropriated manner but is weighted heavily in
a community bank, which is located exclusively in small
communities. Successful bank operations are contingent upon
accomplishment in all areas and integration with the business
community's direction and success in our market areas.
Executive performance must therefore be evaluated by using these
factors as well. Specific results of each executive's area of
responsibility are evaluated and considered, but would not be
appropriately discussed here as a matter of confidentiality.
The committee evaluates the President on the same basis as
other executive offices with weight being given to the
achievement of target levels of growth, capital and return on
equity and, in addition, specific target goals of the overall
strategic plan of the Bank. The accomplishment of meeting the
goals and targets are reflected in the Summary Compensation
Table.
The members of the Compensation Committee are Joseph O. Lane,
Chairman; Benjamin R. Brown, Richard L. Calvin, David C. Myers,
Edward A. Ort, William D. Stewart and Ronald V. Wertz. None has
registered a disagreement with the above report.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is currently or was at
any time during 1998, an officer or an employee of, or had an
employment agreement with the Corporation or the Bank. No
corporate or committee interlocks exist which require disclosure
under SEC regulations.
PERFORMANCE GRAPH
The Securities and Exchange Commission requires a line graph
presentation comparing cumulative, five-year shareholder returns
on an indexed basis with a broad equity market index and either
a nationally recognized industry standard or an index of peer
companies selected by the Corporation. The Corporation has
selected the NASDAQ Stock Market US Index and the NASDAQ Banks
Index for purposes of this performance comparison which appears
below. The Performance Graph presents a comparison which
assumes $100 invested on December 31, 1993, in the Corporation's
common stock, The NASDAQ Stock Market US Index and the NASDAQ
Banks Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
AMONG FARMERS NATIONAL BANC CORP., THE NASDAQ STOCK MARKET - US
INDEX AND THE NASDAQ BANKS INDEX
[PERFORMANCE GRAPH PAPER COPY MAILED TO SEC]
TOTAL RETURN GRAPH DATA
12/93 12/94 12/95 12/96 12/97 12/98
Farmers National Banc Corp. 100 131 192 251 350 499
NASDAQ Stock Mkt-US 100 98 138 170 209 293
NASDAQ Bank 100 100 148 196 328 325
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has elected Hill, Barth and King to
serve as the Corporation's independent public accountant for the
fiscal year ending December 31, 1999. Hill, Barth and King also
served as the Corporation's independent public accountant for
the fiscal year ended December 31, 1998. Hill, Barth and King
is expected to have a representative present at the Annual
Meeting and will be available to respond to shareholders'
questions and if they desire, will have an opportunity to make
any statement they consider appropriate.
SHAREHOLDER PROPOSALS
Any Shareholder proposal intended to be placed in the Proxy
Statement for the 1999 Annual Meeting to be held in March 2000
must be received by the Corporation no later than December 1,
1999. Written proposals should be sent to Carl D. Culp,
Executive Vice President and Treasurer, Farmers National Banc
Corp., 20 South Broad Street, P.O. Box 555, Canfield, Ohio
44406. Each proposal submitted should be accompanied by the
name and address of the shareholder submitting the proposal and
the number of shares owned. If the proponent is not a
shareholder of record, proof of beneficial ownership should also
be submitted. All proposals must be a proper subject for action
and comply with the proxy rules of the Securities and Exchange
Commission. Reference is made to Rule 14a-8 under the
Securities Exchange Act of 1934, as amended, for information
concerning the content and form of such proposal and the manner
in which such proposal must be made.
ANNUAL REPORT ON FORM 10-K
A copy of the Corporation's 1998 report filed with the
Securities and Exchange Commission, on Form 10-K, will be
available without charge to shareholders upon written request to
Carl D. Culp, Executive Vice President and Treasurer, Farmers
National Banc Corp., 20 South Broad Street, P.O. Box 555,
Canfield, Ohio 44406.
BY ORDER OF THE BOARD OF DIRECTORS
FRANK L. PADEN, PRESIDENT & SECRETARY
FARMERS NATIONAL BANC CORP.
20 South Broad St., P.O. Box 555, Canfield, Ohio 44406
PROXY FOR ANNUAL MEETING
SOLICITED BY THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENT, that I, the Undersigned
Shareholder of Farmers National Banc Corp. of Canfield, Ohio, do
hereby nominate and appoint William D. Calhoun, Ronald V. Wertz
and David W. Yeany (no officer or employee of the Corporation
may be named as proxy) or any one of them (with full power to
act alone), my true and lawful attorney(s) with full power of
substitution, for me and in my name, place and stead to vote all
the Common Stock of said Corporation standing in my name on its
books on February 5, 1999, at the Annual Meeting of its
Shareholders to be held at Colonial Catering, 429 Lisbon Street,
Canfield, Ohio 44406, on Thursday, March 25, 1999, at 3:30 P.M.,
Eastern Standard Time, or any adjournment thereof with all the
powers the undersigned would possess if personally present as
follows:
1. ELECTION OF DIRECTORS: The election of the eight (8) persons
listed in the Proxy Statement dated March 4, 1999 accompanying
the notice of said meeting.
FOR (all nominees except as indicated below) ______
WITHHOLD AUTHORITY (as to all nominees)______ To withhold your
vote from certain nominees, strike a line through their name.
Benjamin R. Brown, Richard L. Calvin, Joseph D. Lane,
David C. Myers, Edward A. Ort, Frank L. Paden,
William D. Stewart, Ronald V. Wertz
2. AMENDMENT TO ARTICLE IV: To approve the proposal to amend
Article IV of the Corporation's Articles of Incorporation to
increase the authorized number of common shares, no par value,
of the Corporation from 5,000,000 to 12,500,000.
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. APPROVAL OF THE 1999 STOCK OPTION PLAN AND RELEASE OF PREEMPTIVE
RIGHTS AS TO THE SHARES ISSUED UNDER THE PLAN. To approve the
adoption of the Farmers National Banc Corp. 1999 Stock Option Plan
and release of preemptive rights as to shares issued under the Plan.
( ) FOR ( ) AGAINST ( ) ABSTAIN
4. SUCH OTHER BUSINESS as may properly come before the meeting or
any adjournment thereof.
IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THIS PROXY
CONFERS AUTHORITY TO VOTE AND WILL BE VOTED "FOR" EACH
PROPOSITION LISTED. If any other business is presented at said
meeting, this Proxy shall be voted in accordance with the
recommendations of The Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED PROPOSITIONS. This proxy is solicited on behalf of The
Board of Directors and may be revoked prior to its exercise.
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY
AS POSSIBLE (whether or not you plan to attend the meeting in
person).
IF YOU DO ATTEND THE MEETING, YOU MAY THEN WITHDRAW YOUR PROXY.
THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE.
DATED ________________________________________
________________________________________
________________________________________
Signature of Shareholder(s) *
*When signing as attorney, executor, administrator, trustee or
guardian, please give full title. If more than one trustee, all
should sign. All joint others must sign.
The following exhibits are filed or incorporated by reference as part
of this report:
1. Farmers National Banc Corp. 1999 Stock Option Plan (filed herewith).