Farmers National says it earned less in 4th quarter

The president said
management will focus on improving efficiency in 2008.

CANFIELD — Farmers National Banc Corp. posted lower fourth-quarter earnings because of an investment that isn’t performing as expected.

The Canfield-based holding company for Farmers National Bank said Tuesday that it earned $1 million, or seven cents a share, in the fourth quarter, compared with $1.6 million, or 12 cents a share, in the same quarter of 2006.

Farmers said last quarter’s results included an accounting charge that reduced earnings by $576,000. The charge was related to investments the company has in Fannie Mae, which operates in the secondary mortgage market.

In November, Fannie Mae offered preferred stock that carried higher dividends than previous offerings. Farmers said this caused the value of its Fannie Mae stock to fall, so management decided to take the $576,000 charge to reflect the lower value.

For all of 2007, Farmers earned $5.9 million, or 46 cents a share, compared with earnings of $7.2 million, or 55 cents a share, in 2006.

Frank Paden, Farmers president and chief executive, said management will focus on improving efficiency, controlling expenses and increasing noninterest income in 2008.

Farmers had $2.4 million in nonperforming loans as of Dec. 31, or 0.46 percent of all loans. A year earlier, it had $1.7 million in nonperforming loans, or 0.34 percent of all loans. Nonperforming loans are those that are at least 90 days delinquent.

Farmers charged off $705,000 in loans last year, compared with $466,000 in 2006. Charge-offs occur when banks no longer expect to receive payment on a loan.

Farmers said about 60 percent of the charge-offs last year were related to one commercial borrower.