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FARMERS NATIONAL BANC CORP /OH/

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Business Summary

Farmers National Banc Corp. operates in the domestic banking, trust, retirement consulting, insurance and financial management industries . The Company and its subsidiaries operate principally through The Farmers National Bank of Canfield and Farmers Trust Company . The Bank is a full-service national banking association engaged in commercial and retail banking mainly in the northeastern region of Ohio and the western region of Pennsylvania . Ohio and Pennsylvania have a high density of financial service providers, many of which are significantly larger institutions that have greater financial resources than the Bank . Competition for loans comes principally from savings banks, savings and loan associations, commercial banks, mortgage banking companies, credit unions, insurance companies and other financial service companies . The most direct competition for deposits has historically come from savings and loan associations, savings banks, commercial banks and credit unions . Additional competition for deposits comes from non-depository competitors such as the mutual fund industry, securities and brokerage firms and insurance companies .

The Company's competitive positioning is not extensively discussed in the filing beyond noting that it faces significant competition from larger institutions with greater financial resources . The filing does not name specific primary competitors or provide market share data. The Company's stated competitive advantages are not explicitly enumerated in a single section, but the filing describes its core values of Integrity, Respect, Diligence, Stewardship, Commitment, Relationships and Performance and its commitment to attracting, developing, and retaining associates who reflect the communities in which it serves .

The Company's principal business consists of owning and supervising its subsidiaries . The Company generates revenue through net interest income from its loan and securities portfolios and through noninterest income from service charges on deposit accounts, trust fees, insurance agency commissions, retirement plan consulting fees, debit card fees, bank owned life insurance income, security gains or losses, gains on the sale of loans, other mortgage banking income, and other operating income . The Company's business activities are managed and financial performance is primarily aggregated and reported in two lines of business: the Bank segment and the Trust segment . The Bank's commercial and retail banking services include checking accounts, savings accounts, time deposit accounts, commercial, mortgage and installment loans, home equity loans, home equity lines of credit, night depository, safe deposit boxes, money orders, bank checks, automated teller machines, internet banking, travel cards, "E" Bond transactions, brokerage services and other miscellaneous services normally offered by commercial banks . Farmers Trust offers a full complement of personal and corporate trust services in the areas of estate settlement, trust administration, employee benefit plans and retirement services . Farmers Insurance offers a variety of insurance products through licensed representatives . Farmers Investments was formed with the primary purpose of investing in municipal securities .

The Bank's commercial and retail banking services include checking accounts, savings accounts, time deposit accounts, commercial, mortgage and installment loans, home equity loans, home equity lines of credit, night depository, safe deposit boxes, money orders, bank checks, automated teller machines, internet banking, travel cards, "E" Bond transactions, brokerage services and other miscellaneous services normally offered by commercial banks . The Bank's loan portfolio is composed of commercial real estate loans, commercial loans, residential real estate loans, consumer loans, and agricultural loans . As of December 31, 2025, commercial real estate loans totaled $1,396,955 , commercial loans totaled $341,737 , residential real estate loans totaled $1,032,966 , consumer loans totaled $266,735 , and agricultural loans totaled $266,320 . The Bank's investment securities portfolio includes U.S. Treasury securities, U.S. government sponsored enterprise debt securities, mortgage-backed securities, Small Business Administration securities, obligations of states and political subdivisions, and corporate bonds . Total debt securities available for sale were $1,343,457 at December 31, 2025 .

Farmers Trust offers a full complement of personal and corporate trust services in the areas of estate settlement, trust administration, employee benefit plans and retirement services . During 2024, Farmers Trust acquired substantially all of the assets, in a cash transaction, of Crest Retirement Advisors, LLC . Farmers Trust operates five offices located in Boardman, Canton, Howland, Wooster and Fairview Park, Ohio . Trust fees increased to $11.1 million for the twelve months ended December 31, 2025 , compared to $10.1 million for the twelve months ended December 31, 2024 . Retirement plan consulting fees increased to $3.7 million for 2025 compared to $2.6 million for 2024 . Insurance agency commissions were $6.5 million in 2025 compared to $5.5 million in 2024 . Debit card fees increased to $7.9 million in 2025 compared to $7.5 million in 2024 .

On October 22, 2025, the Company announced the signing of a definitive merger agreement with Middlefield Banc Corp. pursuant to which Middlefield will merge with and into Farmers in an all-stock transaction . Pursuant to the Agreement, each share of Middlefield common stock outstanding immediately prior to completion of the merger will be converted into 2.6 shares of Farmers common stock . The merger was expected to close in the first quarter of 2026 . On March 2, 2026, the Company completed its previously announced merger with Middlefield Banc Corp. . The Company announced its intention to convert its core system to Jack Henry . System conversion and Merger related costs increased from $92,000 in 2024 to $4.0 million in 2025 . The Company purchased $15.0 million in bank owned life insurance policies during the first quarter of 2025 . During 2025, no shares were repurchased under the 2023 Repurchase Program . There were 497,047 shares left to repurchase under this plan at December 31, 2025 .

The Company recorded net income of $54.6 million for the year ended December 31, 2025 , compared to $45.9 million for the year ended December 31, 2024 . The Company reported $1.45 per diluted common share in 2025 compared to $1.22 per diluted common share in 2024 . The Company recognized net interest income of $142.4 million for the year ended December 31, 2025 , compared to $128.4 million for the year ended December 31, 2024 . The tax-equivalent net interest margin increased from 2.69% for 2024 to 2.95% for 2025 . Noninterest income increased to $46.1 million for the year ended December 31, 2025 compared to $41.7 million for the year ended December 31, 2024 . Noninterest expense totaled $116.5 million for the year ended December 31, 2025 compared to $106.7 million for the year ended December 31, 2024 . Income tax expense increased from $9.5 million for the year ended December 31, 2024 , to $10.5 million for the year ended December 31, 2025 .

Business Outlook

A major growth vector is the completed merger with Middlefield Banc Corp., which was completed on March 2, 2026 . The Company expects the merger to result in certain synergies, business opportunities and growth prospects, although it may not fully realize these expectations . The Company also intends to continue pursuing a profitable growth strategy both within its existing markets and in new markets . The trust business continued to grow in 2025 as the value of assets under management increased , and revenue from the retirement plan consulting business is expected to continue to increase in 2026 .

Another growth vector is the Company's investment in technology, including the announced intention to convert its core system to Jack Henry . The Company's future success depends, in part, upon its ability to address customer needs by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in its operations . This could include the development, implementation, and adaptation of digital or cryptocurrency, blockchain, and other "fintech" technology .The effective income tax rate was 16.1% in 2025 and 17.1% for 2024 .

The filing does not contain a specific operational outlook for supply chain, manufacturing capacity, or headcount strategy beyond noting that as of December 31, 2025, Farmers and its subsidiaries had 706 full-time equivalent employees .The Company paid cash dividends of $0.17 per share in each quarter of 2025 and 2024 . On March 1, 2023, the Company announced that its Board of Directors authorized the purchase of up to 1,000,000 shares of its common stock . During 2025, no shares were repurchased under this plan . There were 497,047 shares left to repurchase under this plan at December 31, 2025 .

The filing identifies several headwinds and constraints. The Company has significant exposure to risks associated with commercial real estate and residential real estate in its primary markets . The Company's business depends significantly on general economic conditions in northeastern Ohio and western Pennsylvania . A significant decline in general economic conditions caused by inflation, recession, unemployment, acts of terrorism or other factors beyond control could have an adverse effect . The Company's indirect lending exposes it to increased credit risks . Commercial and industrial loans may expose the Company to greater financial and credit risk than other loans . The Company may be unable to integrate the business of the Company and Middlefield successfully or realize the anticipated benefits of the Merger .

The filing identifies additional headwinds including strong competition within the Company's markets which could reduce its ability to attract and retain business . Consumers may decide not to use banks to complete their financial transactions, which could result in the loss of fee income and customer deposits . The Company is exposed to operational risk, including reputational risk, legal and compliance risk, and the risk of fraud or theft . Unauthorized disclosure of sensitive or confidential customer information, whether through a data breach or cyber-attack, could severely harm the business . Changes in interest rates could adversely affect the Company's income and financial condition . Inflation may adversely impact the Company's business and its customers . Increases in FDIC insurance premiums may have a material adverse effect on earnings .

Risk Factors

The Company has significant exposure to risks associated with commercial real estate and residential real estate in its primary markets, as a majority of its loan portfolio consisted of such loans as of December 31, 2025 . The Company's business depends significantly on general economic conditions in northeastern Ohio and western Pennsylvania . The Company's indirect lending exposes it to increased credit risks, as a portion of its current lending involves the purchase of consumer automobile installment sales contracts from automobile dealers . The Company may be unable to integrate the business of the Company and Middlefield successfully or realize the anticipated benefits of the Merger, which was completed on March 2, 2026 . The Company's allowance for credit losses may not be adequate to cover the expected, lifetime losses in its loan portfolio, and the determination of the allowance requires management to make various assumptions and judgments about the collectability of loans . The Company is subject to certain risks with respect to liquidity, as core deposits comprised approximately 93.0% of total deposits at December 31, 2025 .

Management Priorities

Management's message emphasizes the Company's core values of Integrity, Respect, Diligence, Stewardship, Commitment, Relationships and Performance . The Company is committed to attracting, developing, and retaining associates who reflect the communities in which it serves . Management highlights the increase in net interest margin from 2.69% for 2024 to 2.95% for 2025 , attributing it to higher yields on interest earning assets and lower funding costs on interest bearing liabilities . Management notes that the Federal Reserve rate cuts late in 2024 and 2025 have benefited funding costs, while the lag effects of assets repricing continued to drive earning asset yields higher . The trust business continued to grow in 2025 as the value of assets under management increased . Revenue from the retirement plan consulting business is expected to continue to increase in 2026 . The Company announced the plan to acquire Middlefield in October of 2025 along with its intention to convert its core system to Jack Henry .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — General
  2. [2] Item 1, Business — General
  3. [3] Item 1, Business — The Farmers National Bank of Canfield
  4. [4] Item 1, Business — The Farmers National Bank of Canfield
  5. [5] Item 1, Business — The Farmers National Bank of Canfield
  6. [6] Item 1, Business — The Farmers National Bank of Canfield
  7. [7] Item 1, Business — The Farmers National Bank of Canfield
  8. [8] Item 1, Business — The Farmers National Bank of Canfield
  9. [9] Item 1, Business — Human Capital
  10. [10] Item 1, Business — Human Capital
  11. [11] Item 1, Business — General
  12. [12] Item 7, MD&A — Results of Operations
  13. [13] Item 1, Business — General
  14. [14] Item 1, Business — The Farmers National Bank of Canfield
  15. [15] Item 1, Business — Farmers Trust Company
  16. [16] Item 1, Business — Farmers National Insurance, LLC
  17. [17] Item 1, Business — Farmers of Canfield Investment Company
  18. [18] Item 1, Business — The Farmers National Bank of Canfield
  19. [19] Item 7, MD&A — Loan Portfolio
  20. [20] Item 7, MD&A — Loan Portfolio
  21. [21] Item 7, MD&A — Loan Portfolio
  22. [22] Item 7, MD&A — Loan Portfolio
  23. [23] Item 7, MD&A — Loan Portfolio
  24. [24] Item 7, MD&A — Loan Portfolio
  25. [25] Item 7, MD&A — Investment Securities
  26. [26] Item 7, MD&A — Investment Securities
  27. [27] Item 1, Business — Farmers Trust Company
  28. [28] Item 1, Business — Farmers Trust Company
  29. [29] Item 1, Business — Farmers Trust Company
  30. [30] Item 7, MD&A — Noninterest Income
  31. [31] Item 7, MD&A — Noninterest Income
  32. [32] Item 7, MD&A — Noninterest Income
  33. [33] Item 7, MD&A — Noninterest Income
  34. [34] Item 7, MD&A — Noninterest Income
  35. [35] Item 7, MD&A — Noninterest Income
  36. [36] Item 7, MD&A — Noninterest Income
  37. [37] Item 7, MD&A — Noninterest Income
  38. [38] Item 1, Business — The Farmers National Bank of Canfield
  39. [39] Item 1, Business — The Farmers National Bank of Canfield
  40. [40] Item 1, Business — The Farmers National Bank of Canfield
  41. [41] Item 1, Business — The Farmers National Bank of Canfield
  42. [42] Item 7, MD&A — Noninterest Expenses
  43. [43] Item 7, MD&A — Noninterest Expenses
  44. [44] Item 7, MD&A — Noninterest Expenses
  45. [45] Item 7, MD&A — Noninterest Income
  46. [46] Item 5, Market for Registrant's Common Equity
  47. [47] Item 5, Market for Registrant's Common Equity
  48. [48] Item 7, MD&A — Results of Operations
  49. [49] Item 7, MD&A — Results of Operations
  50. [50] Item 7, MD&A — Results of Operations
  51. [51] Item 7, MD&A — Results of Operations
  52. [52] Item 7, MD&A — Net Interest Income
  53. [53] Item 7, MD&A — Net Interest Income
  54. [54] Item 7, MD&A — Net Interest Income
  55. [55] Item 7, MD&A — Net Interest Income
  56. [56] Item 7, MD&A — Noninterest Income
  57. [57] Item 7, MD&A — Noninterest Income
  58. [58] Item 7, MD&A — Noninterest Expenses
  59. [59] Item 7, MD&A — Noninterest Expenses
  60. [60] Item 7, MD&A — Income Taxes
  61. [61] Item 7, MD&A — Income Taxes
  62. [62] Item 1, Business — The Farmers National Bank of Canfield
  63. [63] Item 1A, Risk Factors
  64. [64] Item 1A, Risk Factors
  65. [65] Item 7, MD&A — Noninterest Income
  66. [66] Item 7, MD&A — Noninterest Income
  67. [67] Item 7, MD&A — Noninterest Expenses
  68. [68] Item 1A, Risk Factors
  69. [69] Item 1A, Risk Factors
  70. [70] Item 7, MD&A — Income Taxes
  71. [71] Item 7, MD&A — Income Taxes
  72. [72] Item 1, Business — Human Capital
  73. [73] Item 5, Market for Registrant's Common Equity
  74. [74] Item 5, Market for Registrant's Common Equity
  75. [75] Item 5, Market for Registrant's Common Equity
  76. [76] Item 5, Market for Registrant's Common Equity
  77. [77] Item 1A, Risk Factors
  78. [78] Item 1A, Risk Factors
  79. [79] Item 1A, Risk Factors
  80. [80] Item 1A, Risk Factors
  81. [81] Item 1A, Risk Factors
  82. [82] Item 1A, Risk Factors
  83. [83] Item 1A, Risk Factors
  84. [84] Item 1A, Risk Factors
  85. [85] Item 1A, Risk Factors
  86. [86] Item 1A, Risk Factors
  87. [87] Item 1A, Risk Factors
  88. [88] Item 1A, Risk Factors
  89. [89] Item 1A, Risk Factors
  90. [90] Item 1A, Risk Factors
  91. [91] Item 1A, Risk Factors
  92. [92] Item 1A, Risk Factors
  93. [93] Item 1A, Risk Factors
  94. [94] Item 1A, Risk Factors
  95. [95] Item 1A, Risk Factors
  96. [96] Item 1, Business — Human Capital
  97. [97] Item 1, Business — Human Capital
  98. [98] Item 7, MD&A — Net Interest Income
  99. [99] Item 7, MD&A — Net Interest Income
  100. [100] Item 7, MD&A — Net Interest Income
  101. [101] Item 7, MD&A — Net Interest Income
  102. [102] Item 7, MD&A — Noninterest Income
  103. [103] Item 7, MD&A — Noninterest Income
  104. [104] Item 7, MD&A — Noninterest Expenses
  105. [105] Item 7, MD&A — Results of Operations
  106. [106] Item 7, MD&A — Results of Operations
  107. [107] Item 7, MD&A — Results of Operations
  108. [108] Item 7, MD&A — Results of Operations
  109. [109] Item 7, MD&A — Net Interest Income
  110. [110] Item 7, MD&A — Net Interest Income
  111. [111] Item 7, MD&A — Net Interest Income
  112. [112] Item 7, MD&A — Net Interest Income
  113. [113] Item 7, MD&A — Net Interest Income
  114. [114] Item 7, MD&A — Net Interest Income
  115. [115] Item 7, MD&A — Noninterest Income
  116. [116] Item 7, MD&A — Noninterest Income
  117. [117] Item 7, MD&A — Noninterest Expenses
  118. [118] Item 7, MD&A — Noninterest Expenses
  119. [119] Item 7, MD&A — Summary of Credit Loss Experience
  120. [120] Item 7, MD&A — Summary of Credit Loss Experience
  121. [121] Item 7, MD&A — Income Taxes
  122. [122] Item 7, MD&A — Income Taxes
  123. [123] Item 7, MD&A — Income Taxes
  124. [124] Item 7, MD&A — Income Taxes
  125. [125] Item 7, MD&A — Stockholders' Equity
  126. [126] Item 7, MD&A — Stockholders' Equity
  127. [127] Item 7, MD&A — Stockholders' Equity
  128. [128] Item 7, MD&A — Stockholders' Equity
  129. [129] Item 7, MD&A — Stockholders' Equity
  130. [130] Item 7, MD&A — Deposits
  131. [131] Item 7, MD&A — Deposits
  132. [132] Item 7, MD&A — Loan Portfolio
  133. [133] Item 7, MD&A — Loan Portfolio
  134. [134] Item 7, MD&A — Summary of Credit Loss Experience
  135. [135] Item 7, MD&A — Summary of Credit Loss Experience
  136. [136] Item 7, MD&A — Summary of Credit Loss Experience
  137. [137] Item 7, MD&A — Summary of Credit Loss Experience
  138. [138] Item 7, MD&A — Nonperforming Assets
  139. [139] Item 7, MD&A — Nonperforming Assets

Analysis on 6/21/2026