Preliminary Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
þ |
|
Preliminary Proxy Statement |
o |
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
o |
|
Definitive Proxy Statement |
o |
|
Definitive Additional Materials |
o |
|
Soliciting Material Pursuant to §240.14a-12 |
Farmers National Banc Corp.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ |
|
No fee required. |
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
|
(1) |
|
Title of each class of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
|
|
|
|
|
|
(5) |
|
Total fee paid: |
|
|
|
|
|
|
|
|
|
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing. |
|
(1) |
|
Amount Previously Paid: |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Filing Party: |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Date Filed: |
|
|
|
|
|
|
|
|
|
To Our Shareholders:
You are cordially invited to attend a Special Meeting of Shareholders (the Special Meeting)
of Farmers National Banc Corp. (Farmers or the Corporation) to be held on [ ], August
[ ], 2010 at 3:30 P.M., local time, at the St. Michael Family Life Center, 340 North Broad Street,
Canfield, Ohio 44406.
The attached Notice of Special Meeting of Shareholders and Proxy Statement describe the formal
business to be transacted at the Special Meeting. We are asking you to consider two critically
important proposals which, if adopted, will allow us to proceed with our proposed public offering
of our common shares, which is needed to allow us to
continue pursuing our profitable growth.
Our directors unanimously support these actions.
Specifically, we are asking our shareholders to approve: (i) a proposal to amend Article XIII
of our Articles of Incorporation, as amended, to eliminate pre-emptive rights as
described in the accompanying Proxy Statement; and (ii) a proposal to amend Article II, Section 6
of our Amended Code of Regulations to provide that a quorum for purposes of shareholder meetings consist of not less than
one-third of the common shares entitled to vote at the meeting.
We
have experienced considerable growth in the last two years, achieving
a 26% increase in net
interest income and 74% growth in our non-interest income excluding security gains and impairments in
2009 compared to 2008. This has been an
exceptional improvement in income at a time when many institutions were recording losses. Although
we reduced our dividend to preserve capital due to the challenges of the recent economic crisis,
and made significant contributions to our loan loss reserves, we were able to continue to grow
during the economic crisis without seeking assistance from the federal government.
With regard to our first proposal, we believe that eliminating pre-emptive rights is critical
to Farmers ability to efficiently obtain new
capital on a timely basis. Farmers continues to
experience significant growth and capital is required to fund that
growth. We believe that continued growth and
our continued focus on asset quality will allow us to add income
producing assets that will provide increased returns to all shareholders. In a volatile market, we must be able to move
quickly to raise capital when opportunities present themselves, and the need to comply with
shareholder pre-emptive rights impairs our ability to do that effectively. In that regard, we have
recently announced the filing of a registration statement on Form S-1 with the Securities and
Exchange Commission for a proposed public offering of our common shares. If our shareholders do
not approve the proposal to eliminate pre-emptive rights, we will not be able to proceed with that
offering.
With regard to our second proposal, our Board of Directors (the Board) has determined that
it is in the best interest of our shareholders to list our common shares on the Nasdaq
Capital Market (the Nasdaq) instead of remaining on the Over-The-Counter Bulletin Board, and the
proposal to change our quorum requirements is necessary for us to meet Nasdaqs listing
requirements. Our Board believes that listing on Nasdaq will provide our shareholders with greater
value by creating opportunities for increased analyst coverage and institutional interest in our
common shares. By capitalizing on these opportunities, we also
anticipate that the Nasdaq listing will
contribute to improved trading activity for our common shares and increased liquidity for our
shareholders.
We believe that we are well positioned to continue our profitable expansion in our market
area. In the current financial and regulatory environment, many of the larger financial
institutions operating in our market area have shifted their focus away from business development
and have focused on internal operational, capital and regulatory issues. At the same time, we
believe that many community banks operating in our market area have been more adversely
affected by the recession than we have. We believe that our performance based culture developed by
our management team, our focus on customer service and our ability to provide local credit
decisions, provide us with a significant opportunity to attract new customers.
We apologize for any confusion that was caused by the circulation of proxy materials for the
shareholder meeting that was previously scheduled on June 17, 2010. We understand that the
sheer number of proposals created some uncertainty amongst our shareholders. Consequently, we have
limited the items we are presenting to our shareholders at the
Special Meeting to those we believe are critically important to our long-term success. Your vote on these matters is important, regardless
of the number of shares you own, and all shareholders are invited to attend the Special Meeting in
person. However, whether or not you plan to attend the Special Meeting, it is important that your
shares be represented, so we urge you to execute
and return the enclosed proxy, or that you submit your proxy by telephone or Internet as soon as
possible.
Sincerely,
|
|
|
[SIGNATURE]
|
|
[SIGNATURE] |
Frank L. Paden
|
|
John S. Gulas |
President
and Secretary
|
|
Chief Operating Officer and Executive Vice President |
20 SOUTH BROAD STREET
CANFIELD, OHIO 44406
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held [ ], August [ ], 2010
TO THE HOLDERS OF COMMON SHARES:
NOTICE IS HEREBY GIVEN that pursuant to a call of its Board of Directors, a Special Meeting of
the Shareholders (the Special Meeting) of Farmers National Banc Corp. (Farmers or the
Corporation) will be held at the St. Michael Family Life Center, 340 North Broad Street,
Canfield, Ohio 44406, on August [ ], 2010 at 3:30 P.M., local time, for the purpose of
considering and voting upon the following matters:
|
1. |
|
To amend Article XIII of the Articles of Incorporation, as amended, to eliminate
pre-emptive rights as described in the accompanying Proxy Statement; |
|
2. |
|
To amend Article II, Section 6 of the Amended Code of Regulations, to provide that a
quorum for purposes of a shareholder meeting consists of not less than one-third of the
common shares entitled to vote at a meeting as described in the accompanying Proxy
Statement; and |
|
3. |
|
To transact such other business as may properly come before the Special Meeting or any
adjournment thereof. |
Shareholders of record at the close of business on [ ], 2010 are the only shareholders
entitled to notice of and to vote at the Special Meeting. Your Board of Directors recommends that
you vote FOR each of proposals being presented at the Special Meeting.
By Order of the Board of Directors,
[SIGNATURE]
Frank L. Paden
President & Secretary
Canfield, Ohio
[ ], 2010
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE SPECIAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE.
20 SOUTH BROAD STREET
CANFIELD, OHIO 44406
PROXY STATEMENT
[ ], 2010
GENERAL INFORMATION
Time and Place of the Special Meeting
Farmers National Banc Corp. (Farmers or the Corporation) is furnishing this Proxy
Statement to you in connection with the solicitation by the Board of Directors (the Board) of
proxies to be used at a Special Meeting of Shareholders (the Special Meeting) to be held on
August [ ], 2010 at 3:30 P.M., local time, at the St. Michael Family Life Center, 340 North
Broad Street, Canfield, Ohio 44406, and at any adjournments thereof. This
Proxy Statement and the accompanying Notice of Special Meeting are being mailed to shareholders on
or about [ ], 2010.
Purpose of the Special Meeting
Farmers is calling this Special Meeting to approve the proposed amendment to the Corporations
Articles of Incorporation, as amended (the Articles), and to the Corporations Amended Code of
Regulations (the Code of Regulations), which, if adopted, will allow us to proceed with a
proposed public offering of Farmers common shares.
What matters will be voted upon at the Special Meeting?
Shareholders will be voting on the following matters:
|
1. |
|
To amend Article XIII of the Articles to eliminate pre-emptive rights of shareholders
upon the offering by Farmers of unissued common shares (Proposal 1). |
|
2. |
|
To amend Article II, Section 6 of the Code of Regulations to provide that a quorum for
purposes of a shareholder meeting consists of not less than one-third of the shares
entitled to vote at the meeting (Proposal 2). |
Why does Farmers need to amend its Articles to eliminate pre-emptive rights?
Due to the continuing growth of the Farmers National Bank of Canfield (Farmers Bank), Farmers
primary subsidiary, and the increase in Farmers Banks allowance for loan losses associated with
current economic conditions, senior management of Farmers Bank and the Board have determined
that higher levels of capital are appropriate. Farmers Banks primary regulator, the Office of the
Comptroller of the Currency (the OCC), concurred with the Boards view that additional capital
would be beneficial in support of Farmers Banks continued growth and operations. As a result,
effective February 2, 2010, the OCC proposed and Farmers Bank
accepted the following individualized
minimum capital requirements for Farmers Bank: (i) Tier I Capital to Adjusted Total Assets of
7.20%; and (ii) Total Capital to Risk-Weighted Assets of 11.00%. In order to meet, maintain and
exceed these individualized minimum capital requirements and provide additional capital necessary to
support the continued growth, Farmers has filed a registration statement with the Securities and
Exchange Commission (the Commission) in connection with a proposed public offering of its common
shares. At present, Farmers intends to use the net proceeds of such offering for general corporate
purposes, including a capital contribution to Farmers Bank, which will use such amount for its
general corporate purposes, including, but not limited to, improving its regulatory capital
position, funding organic loan growth and pursuing long-term strategic opportunities.
However, the current Articles require that Farmers satisfy various pre-emptive rights in
connection with its offering of common shares. Pre-emptive rights under Article XIII provide
shareholders the right to subscribe for additional common shares if additional common shares are to
be sold by Farmers for cash, under limited circumstances. The Board believes that the current
pre-emptive rights provisions serve as a significant impediment to any sale of equity or
convertible securities to investors, as the satisfaction of pre-emptive rights adds delay, cost and
potential uncertainty to Farmers ability to raise capital. In addition, it is the opinion of the
Board that the need to accommodate pre-emptive rights in a future equity offering makes such
offering more costly and difficult, and places Farmers at a disadvantage in attracting potential
investors.
In order to obtain capital on the most advantageous terms, it is imperative for Farmers to
have available a wide variety of financing alternatives. By eliminating the pre-emptive rights
provisions from the Articles, the Board believes that Farmers will be strengthened by an enhanced
ability to negotiate favorable financing terms at potentially critical times in light of the then
prevailing circumstances and market conditions. Consequently, the Board has determined
that it would be in the best interests of Farmers and its shareholders to eliminate these
pre-emptive rights, and the Board has adopted, subject to shareholders approval, an amendment to the
Articles as set forth under Proposal 1 to amend Article XIII to eliminate pre-emptive rights.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT PRESENTED IN
PROPOSAL 1.
What will happen if the proposed amendment to the Articles to eliminate pre-emptive rights is not
adopted?
Failure by the shareholders to approve the proposed amendment set forth in Proposal 1 will
prevent Farmers from accessing a potential source of capital under its proposed public offering and
will diminish Farmers ability to timely and efficiently respond to current economic and financial
conditions. In addition, if Farmers is unable to raise capital in a timely manner, it may be
required to take actions to curtail growth in its business in order to comply with the OCCs
individualized minimum capital requirements for Farmers Bank.
Why does Farmers need to amend the Code of Regulations to modify
the Corporations quorum
requirements?
Currently, the Code of Regulations provides that the shareholders present in person or by
proxy at any meeting for the determination of the number of directors or the election of directors,
or for the consideration or action upon reports required to be laid before such meeting,
constitutes a quorum. At any meeting called for any other purpose, however, the holders of common shares
entitling them to exercise a majority of the voting power of the Corporation, present in person or
represented by proxy, shall constitute a quorum.
Farmers common shares are currently quoted on the Over the Counter Bulletin Board (OTCBB)
under the symbol FMNB.OB. Due to the continued growth of Farmers Bank, it is the opinion of the
Board that the best interests of its shareholders will be served by seeking the listing of Farmers
common shares on the Nasdaq Capital Market (Nasdaq). A listing on the Nasdaq will provide the
opportunity for increased trading volume in Farmers common shares and increased institutional and
market analyst coverage. On May 25, 2010, the Board authorized Farmers to file an application to
list the Corporations shares on the Nasdaq.
In order to be eligible for listing on the Nasdaq, Nasdaq listing requirements provide that each
company have a shareholder meeting quorum requirement that is not less than one-third of the
outstanding shares of the companys common voting shares. At present, Farmers Code of Regulations
provides for a shareholder meeting quorum requirement, under certain circumstances, that is less
than the minimum standard required by the Nasdaq. Consequently, on
June 10, 2010, the Board adopted, subject to shareholders approval, an amendment to Article II, Section 6
of the Code of Regulations to provide that a quorum for purposes of shareholder meetings shall
consist of not less than one-third of the common shares entitled to vote at the meeting. THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT PRESENTED IN PROPOSAL 2.
What will happen if the proposed amendment to the Code of Regulations is not adopted?
Failure by the shareholders to approve the proposed amendment set forth in the Proposal 2 will
impede Farmers from seeking the listing of the Corporations common shares on the Nasdaq.
What are the voting requirements to approve the proposals discussed in this proxy statement?
The vote required to approve each of the proposals to be presented at the Special Meeting is
as follows:
|
|
|
|
|
|
|
|
|
Proposal |
|
|
|
Vote Required |
|
|
PROPOSAL 1 APPROVAL
OF AMENDMENT TO ARTICLE XIII
OF THE ARTICLES OF
INCORPORATION
|
|
|
|
|
|
Proposal 1 to amend the
Articles to eliminate pre-emptive
rights requires the affirmative vote
of the holders of common shares
entitled to exercise at least
two-thirds of the voting power of
Farmers. Shareholders may vote
FOR, AGAINST, or ABSTAIN from
voting on Proposal 1. Abstentions
and broker non-votes will have the
same effect as votes against
Proposal 1. |
|
|
|
|
|
|
|
|
|
|
|
PROPOSAL 2 APPROVAL
OF AMENDMENT TO ARTICLE II,
SECTION 6 OF THE CODE OF
REGULATIONS
|
|
|
|
|
|
Proposal 2 to amend the Code
of Regulations to amend the
definition of a shareholder quorum
requires the affirmative vote of the
holders of common shares entitled to
exercise at least two-thirds of the
voting power of Farmers.
Shareholders may vote FOR,
AGAINST, or ABSTAIN from voting
on Proposal 2. Abstentions and
broker non-votes will have the same
effect as votes against Proposal 2. |
What constitutes a quorum for the Special Meeting?
Under the Code of Regulations, the holders of common shares entitling them to exercise a majority of the
voting power of Farmers, present in person or represented by proxy,
constitute a quorum. Based upon the number of common shares
outstanding as of [ ] 2010, at least [
] common shares must be represented at
the Special Meeting in person or by proxy in order to constitute a
quorum for the transaction of business.
Abstentions and broker non-votes are counted as being present for purposes of determining the
presence of a quorum.
Can the proxy materials be accessed electronically?
Compliant with rules adopted by the Commission, Farmers has elected to mail its shareholders a hard
copy of all of its proxy materials as it has previously provided in the past. Shareholders may
also obtain a copy of this proxy statement, as well as any amendments or supplements to this proxy
statement for free over the Internet at Farmers website www.farmersbankgroup.com, along
with directions to the Special Meeting or by calling the Corporation toll free at 1-888-988-3276.
In addition, copies of the proxy materials may be requested by contacting Farmers proxy solicitor,
Morrow & Co., LLC, toll free at 1-800-607-0888.
Voting Procedure
The Board has set [ ], 2010, as the record date for the Special Meeting. This means
that only shareholders of record at the close of business on that date are entitled to notice of,
and to vote at, the Special Meeting or any adjournment(s) or postponement(s) thereof. At the close
of business on [ ], 2010, there were [ ] common shares outstanding. Each common
share entitles the holder to one vote on each proposal to be voted upon at the Special Meeting.
If your shares are registered directly in your name, you are considered the shareholder of
record of those shares. Farmers has sent these proxy materials directly to all shareholders of
record. Alternatively, if your shares are held in an account at a brokerage firm, bank,
broker-dealer or other similar organization, which is sometimes called street name, then you are
the beneficial owner of those shares, and these proxy materials were forwarded to you by that
organization. The organization holding your shares is the shareholder of record for purposes of
voting the shares at the Special Meeting. As the beneficial owner, you have the right to direct
that organization how to vote the common shares held in your account by following the voting
instructions the organization provides to you.
Shareholders of record may vote on matters that are properly presented at the Special Meeting
in four ways:
|
|
|
By completing the accompanying proxy and returning it in the envelope provided; |
|
|
|
By submitting your vote telephonically; |
|
|
|
By submitting your vote electronically via the Internet; or |
|
|
|
By attending the Special Meeting and casting your vote in person. |
For the Special Meeting, Farmers is offering shareholders of record the opportunity to vote
their shares electronically through the Internet or by telephone. Instead of submitting the
enclosed proxy by mail, shareholders of record may vote by telephone or via the Internet by
following the procedures described on the enclosed proxy. In order to vote via telephone or the
Internet, please have the enclosed proxy in hand, and call the number or go to the website listed
on the proxy and follow the instructions. The telephone and Internet voting procedures are
designed to authenticate shareholders identities, to allow shareholders to give their voting
instructions, and to confirm that shareholders instructions have been recorded properly.
Shareholders voting through the Internet should understand that they may bear certain costs
associated with Internet access, such as usage charges from their Internet service providers. The
deadline for voting through the Internet or by telephone is 11:59
P.M., Eastern Time, on [ ], 2010.
If you hold your shares in street name, you should follow the voting instructions provided to
you by the organization that holds your shares. If you plan to attend the Special Meeting and vote
in person, ballots will be available. If your shares are held in the name of your broker, bank or
other shareholder of record, you must bring a legal proxy from the shareholder of record indicating
that you were the beneficial owner of the shares on [ ], 2010 in order to vote in person.
The common shares represented by each proxy that are 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 each of Proposals 1 and 2.
Proxies may be revoked at any time before a vote is taken or the authority granted is
otherwise exercised. Revocation may be accomplished by:
|
|
|
the execution of a later dated proxy with respect to the same common shares; |
|
|
|
the execution of a later casted Internet or telephone vote with respect to the same
common shares; |
|
|
|
giving notice in writing to the Treasurer at Farmers National Banc Corp., 20 South Broad
Street,
Canfield, Ohio 44406; or |
|
|
|
notifying the Treasurer in person at the Special Meeting. |
If your shares are held in street name and you wish to revoke your proxy, you should follow
the instructions provided to you by the record holder of your shares. If you wish to revoke your
proxy in person at the Special Meeting, you must bring a legal proxy from the shareholder of record
indicating that you were the beneficial owner of the shares on [ ], 2010. Attending
the Special Meeting will not, by itself, revoke your proxy.
No officer or employee of Farmers may be named as a proxy. If you received two or more proxy forms
because of a difference in addresses or registration of shareholdings, each should be executed and
returned in order to assure a complete tabulation of shares. Farmers will appoint two employees 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
Special Meeting. The Board knows of no other business that will be presented for consideration at the
Special Meeting other than the matters described in this Proxy Statement. If any other matters
should come before the Special Meeting, the proxy holders will vote upon them in accordance with their best
judgment.
Who is paying for the cost of this proxy solicitation?
Farmers will bear the cost for solicitation of proxies for the Special Meeting. 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.
In addition to use of mails, proxies may be solicited by officers, directors, and employees of
Farmers by personal interview, telephone or other forms of direct communication. Morrow & Co., LLC
has been engaged to solicit proxies on behalf of Farmers for a fee, excluding expenses, of
approximately $[ ].
Who could help answer my questions about these proxy materials, the Special Meeting or the
procedures for voting my shares?
Shareholders who have questions about proxy materials or need additional copies or require
assistance with the procedures for voting shares should contact Farmers proxy solicitor as
follows:
Morrow & Co., LLC
407 West Avenue
Stamford, CT 06902
1-800-607-0088 (toll free)
or the Corporation as follows:
Investor Relations
Farmers National Bank
20 South Broad Street
PO Box 555
Canfield, Ohio 44406
1-888-988-3276 (toll free).
PROPOSAL NO. 1 APPROVAL OF AMENDMENT TO ARTICLE XIII OF THE ARTICLES OF INCORPORATION
General
Under Proposal 1, Farmers is asking shareholders to consider and approve an amendment to the
Articles to eliminate pre-emptive rights under Article XIII. Currently, upon the offering or sale
by Farmers of common shares, the Corporation must provide shareholders with
limited pre-emptive rights. Pre-emptive rights do not exist with respect to common shares that are
offered or sold that are (i) treasury shares, (ii) issued as a share dividend, (iii) for
consideration other than money, (iv) issued by the Board, (v) issued upon the conversion of
convertible shares; (vi) issued as satisfaction of pre-emptive rights, or (vii) released from
pre-emptive rights. In addition, no pre-emptive rights are provided if shares are issued in
exchange for the outstanding securities of another corporation or if securities are issued pursuant
to the terms of a dividend reinvestment plan.
Due to the continuing growth of Farmers Bank, Farmers primary subsidiary, and the increase in
Farmers Banks allowance for loan losses associated with current economic conditions, senior
management of Farmers Bank and the Board have determined that higher levels of capital are appropriate. Farmers
Banks primary regulator, the OCC concurred with the Boards view that additional capital would be
beneficial in support of Farmers Banks continued growth and operations. As a result, effective
February 2, 2010, the OCC proposed and Farmers Bank accepted the
following individualized minimum
capital requirements for Farmers Bank: (i) Tier I Capital to Adjusted Total Assets of 7.20%; and
(ii) Total Capital to Risk-Weighted Assets of 11.00%. In order to raise the capital to meet,
maintain and exceed these individual minimum capital requirements and provide additional capital
necessary to support continued growth, Farmers has filed a registration statement with the
Commission in connection with a proposed public offering of its common shares. At present, Farmers
intends to use the net proceeds of such offering for general corporate purposes, including a
capital contribution to Farmers Bank, which will use such amount for its general corporate
purposes, including, but not limited to, improving its regulatory capital position, funding organic
loan growth and pursuing long-term strategic opportunities.
However, the current Articles require that Farmers satisfy various pre-emptive rights in
connection with its offering of common shares. Pre-emptive rights under Article XIII provide
shareholders the right to subscribe for additional common shares if additional common shares are to
be sold by Farmers for cash, under limited circumstances. The Board believes that the current
pre-emptive rights provisions serve as a significant impediment to any sale of equity or
convertible securities to investors, as the exercise of pre-emptive rights adds delay, cost and
potential uncertainty to Farmers ability to raise capital. In addition, it is the opinion of the
Board that the need to accommodate pre-emptive rights in a future equity offering makes such
offering more costly and difficult, and places Farmers at a disadvantage in attracting potential
investors.
In order to obtain capital on the most advantageous terms, it is imperative for Farmers to
have available a wide variety of financing alternatives. By eliminating the pre-emptive rights
provisions from the Articles, the Board believes that Farmers will be strengthened by an enhanced
ability to negotiate favorable financing terms at potentially critical times in light of the then
prevailing circumstances and market conditions. Consequently, the Board has determined
that it would be in the best interests of Farmers and its shareholders to eliminate these
pre-emptive rights, and the Board adopted, subject to shareholders approval, an amendment to the
Articles as set forth under Proposal 1 to amend Article XIII to eliminate pre-emptive rights.
Failure by the shareholders to approve the proposed amendment will prevent Farmers from
accessing a potential source of capital under its proposed public offering and will diminish
Farmers ability to timely and efficiently respond to current economic and financial conditions.
In addition, if Farmers is unable to raise capital in a timely manner, it may be required to take
actions to curtail growth in its business in order to comply with the OCCs individual minimum
capital requirement for Farmers Bank.
Proposal
It is proposed that Article XIII of the Articles be amended to eliminate pre-emptive rights.
If the proposal is approved by shareholders, new Article XIII of the Articles would read in its
entirety as follows:
ARTICLE XIII:
Except as may be specifically designated by the Board of Directors pursuant to
Article IV, no holder of shares of the corporation of any class, as such, shall have
the pre-emptive right to subscribe for or to purchase any shares of any class of the
corporation or any other securities of the corporation, including any warrant, right
or option to any share or other security, whether such share or security of such class
are now or hereafter authorized
Vote Required
The proposal to amend the Articles to eliminate pre-emptive rights requires the affirmative
vote of the holders of common shares entitled to exercise at least two-thirds of the voting power
of Farmers. Shareholders may vote FOR, AGAINST, or ABSTAIN from voting on Proposal 1.
Abstentions and broker non-votes will have the same effect as votes against Proposal 1.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL 1.
PROPOSAL NO. 2 APPROVAL OF AMENDMENT TO ARTICLE II, SECTION 6 OF THE CODE OF REGULATIONS
General
The Board recommends that Article II, Section 6 of the Code of Regulations be amended to meet
the minimum standard for compliance with the Nasdaq listing requirements.
Currently, the Code of Regulations provides that the shareholders present in person or by
proxy at any meeting for the determination of the number of directors or the election of directors,
or for the consideration or action upon reports required to be laid before such meeting,
constitutes a quorum. At any meeting called for any other purpose, however, the holders of shares
entitling them to exercise a majority of the voting power of the Corporation, present in person or
represented by proxy, shall constitute a quorum.
Farmers common shares are currently quoted on the OTCBB under the symbol FMNB.OB. Due to
the continued growth of Farmers Bank, it is the opinion of the Board that the best interests of its
shareholders will be served by seeking the listing of Farmers common shares on the Nasdaq. A
listing on the Nasdaq will provide the opportunity for increased trading volume in Farmers common
shares and increased institutional and market analyst coverage. On May 25, 2010, the Board
authorized Farmers to file an application to list the Corporations shares on the Nasdaq.
In order to be eligible for listing on the Nasdaq, Nasdaq listing requirements provide that each
company have a shareholder meeting quorum requirement that allows a quorum to be less than one
third of the outstanding shares of the companys common voting shares. At present, Farmers Code
of Regulations provides for a shareholder meeting quorum requirement, under certain circumstances,
that is less than the minimum standard required by the Nasdaq. Consequently, on
June 10, 2010, the Board adopted, subject to shareholders approval, an amendment to
Article II, Section 6 of the Code of Regulations to provide that a quorum for purposes of
shareholder meetings shall consist of not less than one-third of the common shares entitled to vote
at the meeting.
Failure by the shareholders to approve the proposed amendment set forth in the Proposal 2 will
impede Farmers from seeking the listing of the Corporations common shares on the Nasdaq.
Proposal
It is proposed that that Article II, Section 6 of the Code of Regulations be amended to
provide that a quorum for purposes of shareholder meetings shall consist of not less than one-third
of the common shares entitled to vote at the meeting. If the proposal is approved by shareholders,
new Article II, Section 6 of the Code of Regulations would read in its entirety as follows:
Section 6. QUORUM.
The shareholders present in person, by proxy, or by the use of communications
equipment representing not less than one third of the outstanding voting stock shall
constitute a quorum for such meeting, except when a greater proportion is required by
law or the Articles of Incorporation.
At any meeting at which a quorum is present, all questions and business which shall
come before the meeting shall be determined by the vote of the holders of a majority
of such voting shares as are represented in person or by proxy, except when a greater
proportion is required by law or the Articles of Incorporation.
The holders of a majority of the voting shares represented at any meeting, whether or
not a quorum is present, may adjourn such meeting from time to time and from place to
place without notice other than by announcement at the meeting, except when a greater
proportion is required by law or the Articles of Incorporation.
Vote Required
The proposal to amend Article II, Section 6 of the Code of Regulations to provide that a
quorum for purposes of shareholder meetings shall consist of not less than one-third of the common
shares entitled to vote at the meeting requires the affirmative vote of the holders of common
shares entitled to exercise at least two-thirds of the voting power of Farmers. Shareholders may
vote FOR, AGAINST, or ABSTAIN from voting on Proposal 2. Abstentions and broker non-votes
will have the same effect as votes against Proposal 2.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL 2.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership as of March 31, 2010
of the common shares by: (i) each person Farmers believes beneficially holds more than 5% of the
outstanding common shares (none); (ii) each director; (iii) each named executive officer; and (iv)
all executive officers and all directors as a group. In addition, unless otherwise indicated, all
persons named below can be reached at Farmers National Banc Corp., 20 South Broad Street, Canfield,
Ohio 44406.
|
|
|
|
|
|
|
|
|
|
|
Aggregate Number of |
|
|
Percent of |
|
Name |
|
Shares Beneficially Owned (A) |
|
|
Outstanding Shares |
|
Benjamin R. Brown |
|
|
65,289 |
|
|
|
* |
|
Joseph D. Lane |
|
|
267,228 |
|
|
|
1.97 |
% |
Ralph D. Macali |
|
|
102,292 |
|
|
|
* |
|
James R. Fisher |
|
|
10,795 |
|
|
|
* |
|
Frank L. Paden, President and CEO |
|
|
48,968 |
|
|
|
* |
|
Earl R. Scott |
|
|
10,726 |
|
|
|
* |
|
Anne Frederick Crawford |
|
|
47,019 |
|
|
|
* |
|
Ronald V. Wertz |
|
|
106,960 |
|
|
|
* |
|
Carl D. Culp, EVP & CFO |
|
|
3,164 |
|
|
|
* |
|
John S. Gulas, COO |
|
|
5,000 |
(B) |
|
|
* |
|
Mark L. Graham, Senior VP |
|
|
6,072 |
|
|
|
* |
|
Kevin J. Helmick, Senior VP |
|
|
2,329 |
|
|
|
* |
|
All Directors and Executive Officers as a Group |
|
|
675,842 |
(C) |
|
|
4.99 |
% |
|
|
|
(*) |
|
Represents less than 1% of Farmers issued and outstanding common shares as of March 31, 2010. |
|
(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 (the
Commission) under the Securities Exchange Act of 1934, as amended (the Exchange Act). 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 2,000 shares subject to options exercisable within 60 days of the record date for the Special Meeting. |
|
(C) |
|
Includes 48,968 shares held by Frank L. Paden; 3,164 shares held by Carl D. Culp; 5,000 shares held by John S.
Gulas; 6,072 shares held by Mark L. Graham and 2,329 shares held by Kevin J. Helmick. |
AVAILABLE INFORMATION
Farmers is subject to the informational requirements of the Exchange Act and in accordance
therewith files reports, proxy statements and other information with the Commission. Such reports,
proxy statements and other information filed by Farmers can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commissions regional offices at 175 W. Jackson Blvd., Suite 900, Chicago, Illinois
60604. Copies of such material may be obtained by mail from the Public Reference Section of the
Commission, 100 F. Street, N.E., Washington, D.C. 20549 at prescribed rates. The Commission
maintains a Web site that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address of such site is
http://www.sec.gov.
INCORPORATION OF CERTAIN FINANCIAL INFORMATION BY REFERENCE
The following documents and information filed by Farmers are hereby incorporated by reference
herein:
|
|
|
Farmers Annual Report on Form 10-K for the year ended
December 31, 2009, as filed with the Commission on March 16, 2010; |
|
|
|
Farmers Quarterly Report on Form 10-Q for the quarter
ended March 31, 2010, as filed with the Commission on May 10, 2010; |
|
|
|
Farmers definitive proxy statement for the Annual Meeting of
Shareholders held on April 13, 2010, as filed with the Commission on
March 17, 2010; and |
all documents subsequently filed by Farmers pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this proxy statement and prior to the Special Meeting shall be
deemed to be incorporated by reference herein and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of this proxy statement
to the extent that a statement contained herein, or in any subsequently filed document which also
is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this proxy statement.
Farmers will provide upon oral or written request and without charge to each person to whom
this proxy statement is delivered, including any beneficial owner, a copy of any or all of the
foregoing documents incorporated herein by reference (other than exhibits to such documents). The
public may read and copy any materials so filed with the Commission at the Public Reference Room at
100 F. Street, N.E., Washington, D.C. 20549 and/or obtain information on the operation of the
public Reference Room by calling the Commission at 1-800-SEC-0330. Additionally, the Commission
maintains an Internet site that contains reports and other information regarding registrants that
file electronically with the Commission, which can be obtained at http://www.sec.gov. Written
requests for documents should be directed to Farmers at:
Farmers National Bank of Canfield
20 South Broad Street
P. O. Box 555
Canfield, Ohio 44406
Attn: Carl D. Culp
(330) 533-3341
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Crowe Horwath LLP has served as Farmers independent public accountant for the fiscal year
ending December 31, 2009 and have served in such capacity since 2003. Crowe Horwath LLP is expected
to have a representative present at the Special Meeting, will be available to respond to
appropriate shareholder questions, and will have an opportunity to make a statement if they desire
to do so.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be placed in the proxy statement for the 2011 Annual
Meeting to be held in April 2011 must be received by Farmers no later than November 19, 2010.
Written proposals should be sent to Carl D. Culp, Executive Vice President and Treasurer, Farmers
National Banc Corp., 20 South Broad Street, PO 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 Commission. Reference is made to Rule 14a-8 under the
Exchange Act for information concerning the content and form of such proposal and the manner in
which such proposal must be made.
SHAREHOLDERS SHARING AN ADDRESS
Farmers has adopted a procedure called householding which is approved by the Commission. Under
this procedure, Farmers is delivering one copy of this proxy statement to multiple shareholders who
share the same mailing address unless the Corporation has received contrary instructions from an
affected shareholder. By adopting this procedure, Farmers will reduce its printing costs, mailing
costs and fees. Shareholders will continue to receive separate proxy cards.
Farmers will promptly deliver without charge a separate copy of the proxy statement to any
shareholder at a shared address to which a single copy of the proxy statement was delivered upon
receipt of an oral or written request. To receive a separate copy of the proxy statement, a
shareholder may write or call the Corporation at:
Investor Relations
Farmers National Bank
20 South Broad Street
PO Box 555
Canfield, Ohio 44406
1-888-988-3276
OTHER BUSINESS
The Board does not know of any other business to be presented at the Special Meeting and does
not intend to bring other matters before the Special Meeting. However, if any other matters
properly come before the Special Meeting, it is intended that the persons named in the proxy will
vote thereon according to their best judgment and interest of Farmers.
BY ORDER OF THE BOARD OF DIRECTORS,
[SIGNATURE]
Frank L. Paden
President & Secretary
[ ], 2010
FARMERS NATIONAL BANC CORP.
ATTN: SUSAN E. BETTER
20
SOUTH BROAD STREET
P.O. BOX 555
CANFIELD, OH 44406
VOTE BY INTERNET
- www.proxyvote.com
Use the Internet to transmit your voting
instructions and for electronic delivery of information up until 11:59 p.m.
Eastern Time the day before the cut-off date or meeting date. Have your proxy
card in hand when you access the web site and follow the instructions to obtain
your records and to create an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs
incurred by our company in mailing proxy materials, you can consent to receiving
all future proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 p.m. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you call and then follow
the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Vote Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK
BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
|
|
|
|
|
M24728-Z52890 |
|
KEEP THIS PORTION FOR YOUR RECORDS |
|
|
|
|
|
|
|
THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED. |
|
DETACH AND RETURN THIS PORTION
ONLY
|
|
|
|
|
|
|
|
|
|
FARMERS NATIONAL BANC CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors recommends you
vote FOR the following proposals: |
|
For |
|
Against |
|
Abstain |
|
|
1. To approve an amendment to Article XIII of the Articles of Incorporation to eliminate
pre-emptive rights. Please give your instructions by marking the box of your choosing. |
|
|
o |
|
o |
|
o |
|
|
|
2. To approve an amendment to Article II, Section 6 of the Code of Regulations to provide that
a quorum for purposes of a shareholder meeting consists of not less than one-third of the shares entitled to vote at a meeting. Please give your instructions
by marking the box of your choosing. |
|
|
o |
|
o |
|
o |
|
|
|
3. To transact such other business as may properly come before the meeting or any adjournment
thereof. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint
owners must each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership
name, by authorized officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN
BOX] |
Date |
|
|
|
|
|
Signature (Joint Owners) |
Date |
|
|
Important Notice
Regarding the Availability of Proxy Materials for the Special
Meeting:
The Notice and Proxy Statement is available at
www.proxyvote.com.
M24729-Z52890
FARMERS NATIONAL
BANC CORP.
Special Meeting of Shareholders
[ ], 2010 3:30 PM
This proxy is solicited by the Board of Directors
The undersigned shareholder hereby appoints Barbara C. Fisher, Edward A. Ort and Robert N. Rusu,
Jr.
or any one of them (each with full power to act alone), my true and lawful attorney(s) with full
power of substitution, to vote as designated on the reverse side of this ballot, all of the common
shares of Farmers National Banc Corp. standing in my name on its books on [ ], 2010 that the
shareholder is entitled to vote at the Special Meeting of its Shareholders to be held at the St. Michael Family Life Center, 340 North Broad Street,
Canfield, Ohio 44406 on [ ], 2010 at
three-thirty oclock (3:30) P.M., local time, and any
adjournment or postponement thereof with all the powers the undersigned would possess if personally
present.
In the absence of instructions to the contrary, this proxy confers
authority to the vote and will be voted For each proposal 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.
If you do attend the Special Meeting, you may then withdraw your
proxy. The proxy may be revoked at any time prior to its exercise.
Continued and to
be signed on reverse side