Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly period ended March 31, 2025 Commission file number 001-35296 FARMERS NATIONAL BANC CORP. (Exact name of registrant as specified in its charter) OHIO 34-1371693 (State or other jurisdiction of incorporation or o ...

Farmers National Banc (FMNB) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #2 (Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.Since a chan ...

Core Viewpoint - Farmers National Banc (FMNB) reported a revenue increase of 11.6% year-over-year for Q1 2025, with earnings per share (EPS) exceeding expectations, indicating a positive financial performance despite a slight revenue miss against consensus estimates [1]. Financial Performance - Revenue for the quarter was $44.68 million, up from the previous year's $40.00 million [1]. - EPS was reported at $0.39, an increase from $0.34 in the same quarter last year, representing a 14.71% surprise over the consensus estimate of $0.34 [1]. - The revenue surprise was -0.39% compared to the Zacks Consensus Estimate of $44.85 million [1]. Key Metrics - Efficiency Ratio was reported at 59.6%, better than the estimated 60.3% [4]. - Net Interest Margin stood at 2.9%, exceeding the average estimate of 2.8% [4]. - Average Earning Assets were $4.89 billion, slightly above the estimated $4.88 billion [4]. - Non-Performing Loans (NCOs) to Average Loans ratio was 0%, compared to the estimated 0.2% [4]. - Total Noninterest Income was $10.48 million, below the estimated $11.38 million [4]. - Trust fees were $2.64 million, lower than the estimated $2.97 million [4]. - Retirement plan consulting fees were $0.80 million, compared to the estimated $0.99 million [4]. - Service charges on deposit accounts were $1.76 million, slightly below the estimated $1.81 million [4]. - Net Interest Income (tax-equivalent) was $34.84 million, above the estimated $33.40 million [4]. - Net Interest Income was reported at $34.20 million, exceeding the estimated $33.28 million [4]. Stock Performance - Farmers National shares have returned -7.8% over the past month, compared to the Zacks S&P 500 composite's -4.2% change [3]. - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3].

Farmers National Banc (FMNB) came out with quarterly earnings of $0.39 per share, beating the Zacks Consensus Estimate of $0.34 per share. This compares to earnings of $0.34 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 14.71%. A quarter ago, it was expected that this bank would post earnings of $0.34 per share when it actually produced earnings of $0.39, delivering a surprise of 14.71%.Over the last four quarters, the compa ...

Financial Performance - Net income for Q1 2025 was $13.6 million, or $0.36 per diluted share, up from $11.2 million, or $0.30 per diluted share in Q1 2024, representing a 21.4% increase in net income year-over-year [2]. - Net income for Q1 2025 was $13,578,000, a decrease of 5.65% compared to $14,391,000 in Q4 2024 [18]. - Adjusted net income increased to $14,634 for the three months ended March 31, 2025, compared to $14,543 in the previous quarter, showing a slight growth of 0.62% [25]. - Return on Average Assets (Annualized) was 1.06%, down from 1.12% in Q4 2024 [18]. - Return on average tangible equity (annualized) was 25.89% for the three months ended March 31, 2025, compared to 24.20% in the previous quarter, reflecting an increase of 1.69 percentage points [25]. Asset and Deposit Growth - Total assets increased by $38.1 million to $5.16 billion in Q1 2025, while total deposits rose by $214.5 million to $4.48 billion [4][6]. - Total assets increased to $5,157,040,000, up from $5,118,924,000 in Q4 2024 [18]. - Total deposits rose to $4,481,288,000, an increase of 5.02% from $4,266,779,000 in Q4 2024 [18]. - Total customer deposits rose to $4,321,323 million, up from $4,198,125 million year-over-year, reflecting a growth of 2.9% [19]. Income and Revenue Streams - Net interest income increased to $34.2 million in Q1 2025 from $31.7 million in Q1 2024, with net interest margin improving to 2.85% from 2.70% year-over-year [11]. - Noninterest income rose to $10.5 million in Q1 2025, up from $8.4 million in Q1 2024, driven by improved profitability across fee-based services [12]. - Total interest income for Q1 2025 was $57,305,000, a decrease of 1.04% from Q4 2024 [18]. - Noninterest income decreased to $10,481,000, down 8.15% from $11,413,000 in Q4 2024 [18]. - Net interest income for the quarter was $34,837 million, up from $32,341 million year-over-year, resulting in a net interest margin of 2.85% [22]. Credit Quality and Risk Management - Non-performing loans decreased to $20.7 million, or 0.64% of total loans, down from $22.8 million, or 0.70% at the end of 2024, indicating improved credit quality [8]. - The allowance for credit losses to total loans was 1.09% at March 31, 2025, slightly down from 1.10% at the end of 2024, indicating stable credit risk management [10]. - Non-performing loans decreased to $20,724 million from $22,818 million quarter-over-quarter, indicating improved asset quality [19]. - Non-performing assets to total assets ratio improved to 0.41% from 0.45% quarter-over-quarter, showing enhanced asset management [19]. Operational Efficiency - The efficiency ratio improved to 59.6% in Q1 2025 compared to the same period in 2024, reflecting better operational efficiency [9]. - The efficiency ratio excluding certain items improved to 59.57% for the three months ended March 31, 2025, down from 61.54% in the previous quarter, indicating enhanced operational efficiency [25]. Strategic Initiatives - The company opened a commercial loan production office in Columbus at the end of Q1 2025, marking a strategic expansion into a growth market [9]. - The company anticipates continued volatility in the bond market throughout 2025, impacting investment strategies [5]. - The company had access to an additional $749.3 million in FHLB borrowing capacity as of March 31, 2025, enhancing liquidity [14]. Capital Adequacy - Common Equity Tier 1 Capital Ratio increased to 11.48% from 10.88% year-over-year [19]. - The Tier 1 Leverage Ratio increased to 8.54% from 8.19% year-over-year, indicating stronger capital adequacy [19]. - Tangible common equity rose to $241,668 for the three months ended March 31, 2025, up from $217,828 in the previous quarter, representing an increase of 10.93% [24].

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Acquisitions and Business Growth - Farmers Trust acquired substantially all assets of Crest Retirement Advisors, LLC in a cash transaction during 2024[20] - Farmers Insurance acquired substantially all assets of Randy L. Jones Agency, Inc. in a cash transaction during 2022[22] - Farmers Trust offers a full complement of personal and corporate trust services, enhancing its service offerings[20] Employment and Workforce - As of December 31, 2024, Farmers and its subsidiaries had 682 full-time equivalent employees[26] - The market for top talent is highly competitive, and Farmers is committed to attracting and retaining a dedicated workforce[26] Regulatory Environment - Farmers elected to become a financial holding company in 2016, allowing it to engage in activities that are financial in nature[42] - The Company is subject to extensive regulation by federal and state regulatory agencies, which may restrict its ability to diversify and pay dividends[28] - Farmers Bank is subject to regulation and examination primarily by the Office of the Comptroller of the Currency (OCC) and secondarily by the FDIC[32] - Farmers Bank is subject to federal regulations limiting transactions with affiliates, requiring covered transactions to be secured by specified collateral and capped at 10% of capital stock for individual transactions and 20% for aggregate transactions[47] - The Economic Growth, Regulatory Relief and Consumer Protection Act eased restrictions for bank holding companies with consolidated assets of less than $100 billion, including Farmers[61] - The Volcker Rule limits trading activities of insured depository institutions, but Farmers is exempt as a community bank with total consolidated assets of $10 billion or less[64] Capital and Financial Ratios - Under Basel III, the minimum ratio of Common Equity Tier 1 (CET1) to risk-weighted assets is set at 4.5%, plus a 2.5% capital conservation buffer, resulting in an effective minimum ratio of 7.0%[56] - The minimum Tier 1 capital ratio is 6.0%, plus the capital conservation buffer, leading to an effective minimum of 8.5%[56] - The total capital ratio must be at least 8.0%, plus the capital conservation buffer, resulting in a minimum total capital ratio of 10.5%[56] Community and Compliance - Farmers received a "satisfactory" rating in its most recent Community Reinvestment Act examination, which is crucial for any new activities or acquisitions[73] - The Dodd-Frank Act mandates shareholders to have a non-binding vote on executive compensation practices, with a new clawback policy approved on September 26, 2023[80] - Farmers Bank is subject to the Sarbanes-Oxley Act, requiring the CEO and CFO to certify the accuracy of Quarterly and Annual Reports, ensuring no material misstatements[77] Cybersecurity and Risk Management - The bank has implemented multiple layers of cybersecurity controls to protect against attacks, with a focus on maintaining business continuity and rapid recovery processes[81] - Federal regulations require banking organizations to notify regulators of computer-security incidents within 36 hours, promoting early awareness of threats[82] - Farmers Bank continues to monitor state-level cybersecurity regulatory activities as they evolve[85] - The bank's incentive compensation policies are under review by the Federal Reserve to ensure they do not encourage excessive risk-taking[79] - The bank has not experienced significant data loss or financial losses from cybersecurity attacks to date, but risks remain high[86] Interest Rate Sensitivity and Financial Projections - The company anticipates a net interest income change of -9.0% for a +400 basis point increase in interest rates for 2024, compared to -6.2% for 2023[286] - A sudden and sustained 400 basis point decrease in market interest rates is projected to increase net interest income by 6.1% in 2024, up from 2.7% in 2023[286] - The net present value of equity is expected to decrease by 37.2% with a +400 basis point increase in interest rates for 2024, compared to a decrease of 36.4% for 2023[286] - The Federal Open Market Committee raised the discount rate from 0.25% to 5.50% between March 2022 and July 2023, with a forecasted cut of 100 basis points in late 2024[286] - The company is focusing on shortening the duration of its investment portfolio to mitigate the gap between book and market rates[288] - Loan growth will be broad-based across various sectors, including consumer, commercial, and real estate, to manage risk effectively[288] - Interest rate sensitivity management is crucial for protecting against net interest income volatility, with a quarterly report presented to the Board of Directors[289] - A significant portion of interest-sensitive assets and liabilities matures within twelve months, necessitating close monitoring[290] - The company has no market risk sensitive instruments held for trading purposes, indicating a conservative approach to market risk[289] - The company recognizes the inherent risks in growing loans but believes its strong credit metrics support pursuing solid opportunities[288]

Core Insights - Farmers National Banc (FMNB) reported a revenue of $44.15 million for the quarter ended December 2024, reflecting a year-over-year decline of 1.9% and an EPS of $0.39 compared to $0.41 a year ago, with a revenue surprise of +0.12% over the Zacks Consensus Estimate [1] - The EPS surprise was +14.71% compared to the consensus estimate of $0.34 [1] Financial Performance Metrics - Efficiency Ratio was reported at 56.4%, better than the estimated 60.8% by three analysts [4] - Net Interest Margin stood at 2.7%, matching the average estimate of three analysts [4] - Average Earning Assets were $4.91 billion, slightly below the estimated $5 billion by three analysts [4] - Non-Performing Loans (NCOs) to Average Loans ratio was 0.1%, consistent with the average estimate [4] - Total Noninterest Income was $11.41 million, exceeding the average estimate of $10.82 million [4] - Trust fees were reported at $2.70 million, below the average estimate of $2.90 million [4] - Service charges on deposit accounts were $1.89 million, slightly above the average estimate of $1.86 million [4] - Net Interest Income (tax-equivalent) was $33.36 million, below the average estimate of $33.90 million [4] - Net Interest Income was reported at $32.74 million, lower than the estimated $33.64 million [4] Stock Performance - Shares of Farmers National have returned -3.6% over the past month, contrasting with the Zacks S&P 500 composite's +1.7% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Group 1: Earnings Performance - Farmers National Banc (FMNB) reported quarterly earnings of $0.39 per share, exceeding the Zacks Consensus Estimate of $0.34 per share, but down from $0.41 per share a year ago, representing an earnings surprise of 14.71% [1] - The company posted revenues of $44.15 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.12%, but down from $44.99 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Group 2: Stock Performance and Outlook - Farmers National shares have declined approximately 3.6% since the beginning of the year, while the S&P 500 has gained 3.2% [3] - The current consensus EPS estimate for the upcoming quarter is $0.34 on revenues of $44.65 million, and for the current fiscal year, it is $1.44 on revenues of $181.5 million [7] - The estimate revisions trend for Farmers National is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Group 3: Industry Context - The Zacks Industry Rank for Banks - Midwest is currently in the top 9% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Net income for Q4 2024 was $14.4 million, or $0.38 per diluted share, slightly down from $14.6 million, or $0.39 per diluted share in Q4 2023[3] - Net income for Q4 2024 was $14,391,000, down 8.0% from $14,577,000 in Q4 2023[21] - Total interest income for Q4 2024 was $57,909,000, an increase of 6.7% compared to $55,069,000 in Q4 2023[21] - Net interest income decreased by 6.8% to $32,739,000 in Q4 2024 from $32,830,000 in Q4 2023[21] - Noninterest income decreased to $11.4 million in Q4 2024 from $12.2 million in Q4 2023, primarily due to a decline in net gain on sale of loans[13] - Noninterest income for the twelve months ended December 31, 2024, was $41,716,000, a slight decrease of 0.3% from $41,861,000 in 2023[21] - The company reported a decrease in total net interest income for the twelve months ended December 31, 2024, to $140,588 million from $130,848 million in the previous year[33] Assets and Liabilities - Total assets decreased to $5.12 billion at December 31, 2024, from $5.24 billion at September 30, 2024, but increased from $5.08 billion at December 31, 2023[5] - Total assets as of December 31, 2024, were $5,118,924,000, compared to $5,078,350,000 as of December 31, 2023[22] - Total deposits decreased to $4.27 billion at December 31, 2024, from $4.36 billion at September 30, 2024, but increased by $89.4 million from $4.18 billion at December 31, 2023[7] - Total deposits decreased to $4,266,779,000 in Q4 2024 from $4,177,386,000 in Q4 2023[22] - Total stockholders' equity declined to $406.0 million at December 31, 2024, from $439.7 million at September 30, 2024[8] - Stockholders' equity as of December 31, 2024, was $406,028 thousand, an increase from $404,415 thousand in 2023[31] Loan and Asset Quality - Loans slightly declined to $3.27 billion at December 31, 2024, from $3.28 billion at September 30, 2024, but increased by $70.2 million from December 31, 2023[5] - Non-performing loans increased to $22.8 million at December 31, 2024, compared to $19.1 million at September 30, 2024, and $15.1 million at December 31, 2023[10] - Non-performing loans rose to $22,818 million from $15,063 million year-over-year, indicating a deterioration in asset quality[23] - Annualized Net Charge-offs to Average Net Loans decreased to 0.08% from 0.10% year-over-year[23] - The company reported a net charge-off of $635 million for the quarter, down from $800 million year-over-year[23] Interest Margin and Efficiency - Net interest margin improved to 2.72% in Q4 2024 from 2.66% in Q3 2024, but declined from 2.78% in Q4 2023[9] - The Company expects net interest margin to continue expanding in 2025 as funding costs reprice lower[12] - Net interest margin excluding acquisition marks and PPP interest and fees was 2.56% for the three months ended December 31, 2024, up from 2.48% in the previous quarter[33] - The efficiency ratio excluding certain items for the twelve months ended December 31, 2024, was 59.19%, compared to 55.42% in 2023[32] Capital Ratios - Common Equity Tier 1 Capital Ratio increased to 11.26% from 10.61% year-over-year[23] - Total Risk Based Capital Ratio increased to 14.67% from 14.06% year-over-year[23] - Average tangible common equity for the twelve months ended December 31, 2024, was $218,331 thousand, compared to $165,156 thousand in 2023[31] Acquisitions and Future Outlook - The Company completed the acquisition of Crest Retirement Advisors LLC, expected to enhance fee-based business in 2025[9] - The average balance of loans increased to $3,227,384 thousand in 2024, with an average yield of 5.76%, compared to $3,155,858 thousand and 5.46% in 2023[28]