Core Viewpoint - Farmers National Banc reported strong second-quarter 2025 results, exceeding earnings and revenue expectations, while facing increased credit risk from commercial real estate exposures [1][5]. Financial Performance - Non-GAAP earnings per share (EPS) reached $0.37, surpassing the analyst consensus of $0.36, and showing a year-over-year increase of 19.4% from $0.31 in Q2 2024 [2][5]. - Revenue (GAAP) was $47.0 million, exceeding the estimate of $46.0 million and reflecting a slight year-over-year increase of 1.1% from $46.5 million in Q2 2024 [2][5]. - Net interest margin improved to 2.91%, up from 2.71% in Q2 2024, indicating better loan yields and reduced funding costs [2][7]. - The efficiency ratio improved to 56.7%, down from 60.8% in the previous year, demonstrating enhanced operational efficiency [2][7]. Loan and Revenue Growth - Total loans increased by $52.0 million, with commercial loans rising by $43.6 million, resulting in annualized growth rates of 6.4% and 8.8%, respectively [6]. - Noninterest income grew significantly, with a 25.8% increase compared to Q2 2024, driven by higher insurance agency commissions and trust fees [6]. Asset Quality and Credit Risk - Non-performing loans rose to $27.8 million, or 0.84% of total loans, up from $20.7 million (0.64%) in Q1 2025, primarily due to two commercial real estate loans classified as nonaccrual [8]. - A specific credit reserve of $2.6 million was established, with a provision for credit losses of $3.5 million, a notable increase from $1.1 million in Q2 2024 [9]. Management Outlook - Management is optimistic about further net interest margin expansion, influenced by potential changes in Federal Reserve policy rates [10]. - The quarterly dividend remained unchanged at $0.17 per share, continuing a consistent payout history [10].