Farmers National Banc Corp. Reports Solid Results for Fourth Quarter of 2023

Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB) today announced net income of $14.6 million, or $0.39 per diluted share, for the three months ended December 31, 2023, compared to $13.4 million, or $0.39 per diluted share, for the three months ended December 31, 2022. Net income for the fourth quarter of 2023 included pretax items of $452,000 for acquisition related costs, a gain of $915,000 on the sale of commercial loans, $1.0 million in expense for severance/contract payouts for staff resignations, and combined net losses of $217,000 on the sale of securities and the sale of other assets. Excluding these items (non-GAAP), net income for the fourth quarter of 2023 increased 7.8% to $15.2 million from $14.1 million for the same period last year. Net income per diluted share excluding these items (non-GAAP), was $0.41 for the fourth quarter of 2023, compared to $0.42 per diluted share for the fourth quarter of 2022.

Kevin J. Helmick, President and CEO, stated “Our solid fourth quarter results demonstrate our success enhancing profitability throughout an extremely challenging operating environment. This is a testament to our team’s focus on supporting our customers, maintaining excellent asset quality, and controlling operating costs. We expect the economic environment will remain fluid in 2024, but we believe Farmers is well positioned to navigate this period as a result of the value our team members provide our Ohio and Pennsylvania communities, as well as our continued focus on maintaining strong asset quality and profitability.”

Balance Sheet

The Company’s total assets were $5.08 billion at December 31, 2023, compared to $4.97 billion at September 30, 2023 and $4.08 billion at December 31, 2022. The increase from December was primarily due to the acquisition of Emclaire Financial Corp. (“Emclaire”) which added $977.6 million in assets in the first quarter of 2023. Loans have increased by $793.4 million since December 31, 2022 and $29.6 million, or 3.7% annualized, since September 30, 2023. Emclaire was responsible for $740.7 million of the increase in loans since December 31, 2022. Growth in the fourth quarter of 2023 was concentrated in commercial real estate.

The Company had securities available for sale of $1.30 billion at December 31, 2023, compared to $1.21 billion at September 30, 2023, and $1.27 billion at December 31, 2022. The increase since December is due to the acquisition of Emclaire which added $127.0 million in available for sale securities and a decrease in the amount of gross unrealized losses on the portfolio which totaled $266.5 million at December 31, 2022, compared to a gross unrealized loss of $217.1 million at December 31, 2023. The Company also had sales and runoff from the portfolio during the twelve months ended December 31, 2023. Bond market volatility was extreme in 2023 and this volatility may remain in 2024. The Company expects that it will continue to allow the size of the securities portfolio to shrink via runoff to optimize profitability and provide liquidity for future loan growth.

At December 31, 2023, deposits totaled $4.18 billion compared to $4.26 billion at September 30, 2023 and $4.51 billion at December 31, 2022. During the fourth quarter of 2023, the Company allowed $254.3 million in brokered time deposits to mature and replaced the funding with less expensive short term borrowings. In addition, public fund seasonality resulted in $95.3 million in shrinkage during the quarter offset by $15.3 million in growth in other deposit categories. The increase from December 31, 2022, was driven by $875.8 million in deposits assumed in the acquisition of Emclaire offset by a decline in brokered time deposits of $138.1 million and runoff in other deposit categories.

Total stockholders’ equity increased to $404.4 million at December 31, 2023, from $316.0 million at September 30, 2023, and $292.3 million at December 31, 2022. The year-over-year increase was primarily due to the acquisition of Emclaire and an increase in retained earnings and a decrease in the unrealized loss from accumulated other comprehensive income. The increase in total stockholders’ equity since September 30, 2023, was primarily due to a decline in the accumulated other comprehensive loss which decreased $79.7 million as market rates dropped rapidly during the fourth quarter of 2023.

Credit Quality

As of December 31, 2023, the Company’s non-performing loans totaled $15.1 million compared to $18.4 million at September 30, 2023, and $14.8 million at December 31, 2022. The year-over-year increase was primarily due to the addition of Emclaire while the decrease since September 30 was due to the sale of non-performing loans. The non-performing loans to total loans ratio was 0.47% at December 31, 2023, 0.58% at September 30, 2023, and 0.62% at December 31, 2022. Non-performing assets to total assets was 0.30% at December 31, 2023, 0.37% at September 30, 2023, and 0.36% at December 31, 2022. The Company also continues to experience low levels of early-stage delinquencies, defined as loans 30-89 days delinquent. At December 31, 2023, these early-stage delinquencies totaled $16.7 million, or 0.52% of total loans compared to $13.3 million, or 0.42% of total loans at September 30, 2023, and $9.6 million, or 0.40% of total loans, at December 31, 2022.

The Company recorded provision for credit losses and unfunded commitments of $286,000 for the fourth quarter of 2023 compared to $243,000 for the third quarter of 2023 and $416,000 for the fourth quarter of 2022. Annualized net charge-offs as a percentage of average loans were 0.10% for the three months ended December 31, 2023, compared to 0.10% for the same period in 2022. For the year ended December 31, 2023, net charge-offs as a percentage of average loans were 0.07% compared to 0.11% for last year. The allowance for credit losses to total loans was 1.08% at December 31, 2023, compared to 1.10% at September 30, 2023, and 1.12% at December 31, 2022.

Net Interest Income

Net interest income for the three months ended December 31, 2023, totaled $32.8 million in the fourth quarter of 2023 compared to $33.8 million in the third quarter of 2023 and $29.4 million for the fourth quarter of 2022. Earning assets were greater in the fourth quarter of 2023 compared to the fourth quarter of 2022 due to the acquisition of Emclaire but this was partially offset by a decline of 21 basis point in the net interest margin. The net interest margin was 2.78% for the quarter ending December 31, 2023, compared to 2.86% in the third quarter of 2023 and 2.99% for the fourth quarter of 2022. Excluding the impact of acquisition marks and related accretion and PPP interest and fees, the net interest margin (non-GAAP) for the fourth quarter of 2023 was 2.58% compared to 2.61% for the third quarter of 2023 and 2.97% for the fourth quarter of 2022. The decline in net interest margin between the fourth quarter of 2023 and the fourth quarter of 2022 was due to increases in funding costs outstripping the increase in yields on earning assets. This increase in funding costs has been due to the rapid increase in deposit rates due to intense competition for deposits, the Federal Reserve’s rate hiking cycle, and runoff of deposit balances which are being replaced with more costly wholesale funding.

Noninterest Income

The Company recorded $12.2 million in noninterest income during the fourth quarter of 2023 compared to $8.2 million during the fourth quarter of 2022. Service charges on deposit accounts increased to $1.7 million in the fourth quarter of 2023 compared to $1.2 million for the same period in 2022 primarily due to the acquisition of Emclaire. Bank owned life insurance income, other mortgage banking fee income and debit card income have also increased in the fourth quarter of 2023 compared to the fourth quarter of 2022 due to the Emclaire acquisition. Trust fees increased by $283,000 in the fourth quarter of 2023 compared to the fourth quarter of 2022 as growth in this line of business continued. Insurance agency commissions also exhibited outstanding growth as insurance commissions increased by $407,000 for the quarter ending December 31, 2023 compared to same quarter a year ago. Growth for the year in this business has been solid as pricing in the insurance business has been very strong and increased annuity sales have bolstered results. Investment commissions are up slightly for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022, as markets have been resilient in 2023 and the Company begins to expand into Pennsylvania. Net gains on the sale of loans have increased by over $1.0 million between the fourth quarter of 2022 and the fourth quarter of 2023. Of this increase, $915,000 was driven by the sale of commercial loans discussed previously. Traditional gains on the sale of mortgage loans remain sluggish due to high interest rates. Other noninterest income increased $910,000 in the fourth quarter of 2023 compared to the prior year’s fourth quarter. This increase was primarily driven by higher income associated with the Company’s investments in SBIC funds. The earnings on these funds can be volatile from period to period.

Noninterest Expense

The Company reported noninterest expense of $27.0 million for the three months ended December 31, 2023, compared to $21.1 million for the three months ended December 31, 2022. The increase in expense is primarily due to the acquisition of Emclaire along with the $1.0 million in severance expense associated with staff resignations. Salaries and employee benefits increased $3.5 million to $14.9 million in the fourth quarter of 2023 compared to $11.4 million during the same period in 2022. The acquisition of Emclaire, normal raise activity and the severance were the primary reasons for the increase. Occupancy and equipment expense increased $1.1 million primarily due to the acquisition. FDIC and state and local taxes increased $474,000 due to the acquisition and the increase in the rate paid for FDIC insurance in 2023. Core processing charges increased due to the acquisition. Merger related costs were $452,000 for the fourth quarter of 2023 compared to $584,000 in the fourth quarter of 2022. Other noninterest expense increased due to the acquisition.

Liquidity

At December 31, 2023, the Company’s loan to deposit ratio was 76.6% and the Company’s average deposit balance per account (excluding collateralized deposits) was $23,678. The Company has access to an additional $819.5 million of FHLB borrowing capacity at December 31, 2023 along with $214.3 million of available for sale securities that are not pledged. With a deep and diverse deposit base and access to a large amount of additional funding capacity, the Company is well positioned to navigate the current banking landscape.

About Farmers National Banc Corp.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $5.1 billion in banking assets. Farmers National Banc Corp.’s wholly-owned subsidiaries are comprised of The Farmers National Bank of Canfield, a full-service national bank engaged in commercial and retail banking with 64 banking locations in Mahoning, Trumbull, Columbiana, Portage, Stark, Wayne, Medina, Geauga and Cuyahoga Counties in Ohio and Beaver, Butler, Allegheny, Jefferson, Clarion, Venango, Clearfield, Mercer, Elk and Crawford Counties in Pennsylvania, and Farmers Trust Company, which operates five trust offices and offers services in the same geographic markets. Total wealth management assets under care at December 31, 2023 are $3.5 billion. Farmers National Insurance, LLC, a wholly-owned subsidiary of The Farmers National Bank of Canfield, offers a variety of insurance products.

Non-GAAP Disclosure

This press release includes disclosures of Farmers’ tangible common equity ratio, return on average tangible assets, return on average tangible equity, net income excluding costs related to acquisition activities and certain items, return on average assets excluding merger costs and certain items, return on average equity excluding merger costs and certain items, net interest margin excluding acquisition marks and related accretion and PPP interest and fees and efficiency ratio less certain items, which are financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers’ marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures to their GAAP equivalents are included in the tables following Consolidated Financial Highlights below.

Cautionary Statements Regarding Forward-Looking Statements

We make statements in this news release and our related investor conference call, and we may from time to time make other statements, that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about Farmers’ financial condition, results of operations, asset quality trends and profitability. Forward-looking statements are not historical facts but instead represent only management’s current expectations and forecasts regarding future events, many of which, by their nature, are inherently uncertain and outside of Farmers’ control. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions, as well as any statements related to future expectations of performance or conditional verbs, such as “will,” “would,” “should,” “could” or “may.” Farmers’ actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Factors that could cause Farmers’ actual results to differ materially from those described in certain forward-looking statements include significant changes in near-term local, regional, and U.S. economic conditions including those resulting from continued high rates of inflation, tightening monetary policy of the Board of Governors of the Federal Reserve, and possibility of a recession; Farmers’ failure to integrate Emclaire with Farmers in accordance with expectations; deviations from performance expectations related to Emclaire; continuing impacts from the length and extent of the economic impacts of the COVID-19 pandemic; and the other factors contained in Farmers’ Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (SEC) and available on Farmers’ website (www.farmersbankgroup.com) and on the SEC’s website (www.sec.gov). Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management’s views as of any subsequent date. Farmers does not undertake any obligation to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

Farmers National Banc Corp. and Subsidiaries Consolidated Financial Highlights (Amounts in thousands, except per share results) Unaudited
Consolidated Statements of Income	For the Three Months Ended															For the Twelve Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,			Dec. 31,			Percent
		2023			2023			2023			2023			2022			2023			2022		Change
Total interest income	$	55,069		$	54,229		$	52,804		$	51,233		$	38,111		$	213,335		$	142,086		50.1	%
Total interest expense		22,239			20,461			18,226			14,623			8,679			75,549			17,920		321.6	%
Net interest income		32,830			33,768			34,578			36,610			29,432			137,786			124,166		11.0	%
Provision (credit) for credit losses		286			243			25			8,599			416			9,153			1,122		715.8	%
Noninterest income		12,156			9,831			9,449			10,425			8,200			41,861			44,202		-5.3	%
Acquisition related costs		452			268			442			4,313			584			5,475			4,070		34.5	%
Other expense		26,520			27,448			25,944			26,409			20,511			106,321			90,341		17.7	%
Income before income taxes		17,728			15,640			17,616			7,714			16,121			58,698			72,835		-19.4	%
Income taxes		3,151			2,326			2,650			639			2,765			8,766			12,238		-28.4	%
Net income	$	14,577		$	13,314		$	14,966		$	7,075		$	13,356		$	49,932		$	60,597		-17.6	%
Average diluted shares outstanding		37,426			37,379			37,320			37,933			33,962			37,498			33,929
Basic earnings per share		0.39			0.36			0.40			0.19			0.39			1.34			1.79
Diluted earnings per share		0.39			0.36			0.40			0.19			0.39			1.33			1.79
Cash dividends per share		0.17			0.17			0.17			0.17			0.17			0.68			0.65
Performance Ratios
Net Interest Margin (Annualized)		2.78	%		2.86	%		2.92	%		3.07	%		2.99	%		2.91	%		3.18	%
Efficiency Ratio (Tax equivalent basis)		57.84	%		60.11	%		56.28	%		62.53	%		52.59	%		59.24	%		53.68	%
Return on Average Assets (Annualized)		1.17	%		1.06	%		1.18	%		0.56	%		1.31	%		0.99	%		1.46	%
Return on Average Equity (Annualized)		17.98	%		14.49	%		16.12	%		7.71	%		20.16	%		13.97	%		17.24	%
Dividends to Net Income		43.68	%		47.82	%		42.54	%		90.50	%		43.10	%		25.64	%		36.31	%
Other Performance Ratios (Non-GAAP)
Return on Average Tangible Assets		1.22	%		1.09	%		1.23	%		0.58	%		1.34	%		1.03	%		1.50	%
Return on Average Tangible Equity		43.77	%		30.29	%		33.55	%		16.31	%		32.81	%		30.23	%		24.31	%

Consolidated Statements of Financial Condition
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,
		2023		2023		2023		2023		2022
Assets
Cash and cash equivalents	$	103,658	$	93,923	$	116,063	$	128,001	$	75,551
Debt securities available for sale		1,299,701		1,210,736		1,316,878		1,355,449		1,268,025
Other investments		35,311		35,342		44,975		39,670		33,444
Loans held for sale		3,711		1,910		2,197		1,703		858
Loans		3,198,127		3,168,554		3,155,200		3,152,339		2,404,750
Less allowance for credit losses		34,440		34,753		34,957		36,011		26,978
Net Loans		3,163,687		3,133,801		3,120,243		3,116,328		2,377,772
Other assets		472,282		495,451		473,098		468,735		326,550
Total Assets	$	5,078,350	$	4,971,163	$	5,073,454	$	5,109,886	$	4,082,200
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing	$	1,026,630	$	1,039,524	$	1,084,232	$	1,106,870	$	896,957
Interest-bearing		3,150,756		3,217,869		3,165,381		3,207,121		2,526,760
Brokered time deposits		0		254,257		21,135		82,169		138,051
Total deposits		4,177,386		4,511,650		4,270,748		4,396,160		3,561,768
Other interest-bearing liabilities		443,663		88,550		388,437		292,324		183,211
Other liabilities		52,886		54,981		47,278		46,760		44,926
Total liabilities		4,673,935		4,655,181		4,706,463		4,735,244		3,789,905
Stockholders' Equity		404,415		315,982		366,991		374,642		292,295
Total Liabilities
and Stockholders' Equity	$	5,078,350	$	4,971,163	$	5,073,454	$	5,109,886	$	4,082,200
Period-end shares outstanding		37,503		37,489		37,457		37,439		34,055
Book value per share	$	10.78	$	8.43	$	9.80	$	10.01	$	8.58
Tangible book value per share (Non-GAAP)*		5.71		3.33		4.67		4.84		5.60

* Tangible book value per share is calculated by dividing tangible common equity by outstanding shares

	For the Three Months Ended															For the Twelve Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,		Dec. 31,
Capital and Liquidity		2023			2023			2023			2023			2022		2023		2022
Common Equity Tier 1 Capital Ratio (a)		10.63	%		10.37	%		10.25	%		10.04	%		13.71	%
Total Risk Based Capital Ratio (a)		14.08	%		13.83	%		13.76	%		13.60	%		17.79	%
Tier 1 Risk Based Capital Ratio (a)		11.11	%		10.86	%		10.74	%		10.54	%		14.32	%
Tier 1 Leverage Ratio (a)		8.02	%		7.84	%		7.68	%		7.43	%		9.84	%
Equity to Asset Ratio		7.96	%		6.36	%		7.23	%		7.33	%		7.16	%
Tangible Common Equity Ratio (b)		4.38	%		2.61	%		3.58	%		3.69	%		4.79	%
Net Loans to Assets		62.30	%		63.04	%		61.50	%		60.99	%		58.25	%
Loans to Deposits		76.56	%		70.23	%		73.88	%		71.71	%		67.52	%
Asset Quality
Non-performing loans	$	15,063		$	18,368		$	17,956		$	17,959		$	14,803
Non-performing assets		15,321			18,522			18,167			18,053			14,876
Loans 30 - 89 days delinquent		16,705			13,314			12,321			10,219			9,605
Charged-off loans		972			525			971			469			754		2,937		3,304
Recoveries		172			139			172			198			184		681		646
Net Charge-offs		800			386			799			271			570		2,256		2,658
Annualized Net Charge-offs to Average Net Loans		0.10	%		0.05	%		0.10	%		0.03	%		0.10	%	0.07	%	0.11	%
Allowance for Credit Losses to Total Loans		1.08	%		1.10	%		1.11	%		1.14	%		1.12	%
Non-performing Loans to Total Loans		0.47	%		0.58	%		0.57	%		0.57	%		0.62	%
Loans 30 - 89 Days Delinquent to Total Loans		0.52	%		0.42	%		0.39	%		0.32	%		0.40	%
Allowance to Non-performing Loans		228.64	%		189.20	%		194.68	%		200.52	%		182.25	%
Non-performing Assets to Total Assets		0.30	%		0.37	%		0.36	%		0.35	%		0.36	%

(a) December 31, 2023 ratio is estimated

(b) This is a non-GAAP financial measure. A reconciliation to GAAP is shown below

	For the Three Months Ended
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,
End of Period Loan Balances	2023		2023		2023		2023		2022
Commercial real estate	$	1,335,806	$	1,295,847	$	1,284,974	$	1,286,830	$	1,028,050
Commercial		346,354		357,691		362,664		361,845		293,643
Residential real estate		843,697		842,729		849,533		853,074		475,791
HELOC		142,441		140,772		138,535		137,319		132,179
Consumer		259,784		261,136		260,326		260,596		221,260
Agricultural loans		261,288		261,738		250,807		244,938		246,937
Total, excluding net deferred loan costs	$	3,189,370	$	3,159,913	$	3,146,839	$	3,144,602	$	2,397,860
	For the Three Months Ended
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,
End of Period Customer Deposit Balances	2023		2023		2023		2023		2022
Noninterest-bearing demand	$	1,026,630	$	1,039,524	$	1,084,232	$	1,106,870	$	896,957
Interest-bearing demand		1,362,609		1,426,349		1,383,326		1,473,001		1,224,884
Money market		593,975		588,043		610,051		599,037		435,369
Savings		468,890		488,991		511,642		535,321		441,978
Certificate of deposit		720,259		714,486		660,362		599,762		424,529
Total customer deposits	$	4,172,363	$	4,257,393	$	4,249,613	$	4,313,991	$	3,423,717

	For the Three Months Ended												For the Twelve Months Ended
	Dec. 31,		Sept. 30,			June 30,		March 31,		Dec. 31,			Dec. 31,			Dec. 31,
Noninterest Income		2023		2023			2023		2023		2022			2023			2022
Service charges on deposit accounts	$	1,677	$	1,712		$	1,501	$	1,432	$	1,203		$	6,322		$	4,716
Bank owned life insurance income, including death benefits		617		694			584		547		590			2,442			1,810
Trust fees		2,656		2,617			2,248		2,587		2,373			10,108			9,638
Insurance agency commissions		1,540		1,116			1,332		1,456		1,133			5,444			4,402
Security gains (losses), including fair value changes for equity securities		19		(624	)		13		121		(366	)		(471	)		(454	)
Retirement plan consulting fees		357		360			382		307		337			1,406			1,389
Investment commissions		589		520			476		393		508			1,978			2,183
Net gains on sale of loans		1,280		395			406		310		242			2,391			2,062
Other mortgage banking fee income (loss), net		139		185			234		153		98			711			291
Debit card and EFT fees		1,697		1,763			1,810		1,789		1,407			7,059			5,814
Other noninterest income		1,585		1,093			463		1,330		675			4,471			12,351
Total Noninterest Income	$	12,156	$	9,831		$	9,449	$	10,425	$	8,200		$	41,861		$	44,202
	For the Three Months Ended												For the Twelve Months Ended
	Dec. 31,		Sept. 30,			June 30,		March 31,		Dec. 31,			Dec. 31,			Dec. 31,
Noninterest Expense		2023		2023			2023		2023		2022			2023			2022
Salaries and employee benefits	$	14,871	$	14,233		$	13,625	$	14,645	$	11,385		$	57,374		$	45,013
Occupancy and equipment		3,896		3,810			3,859		3,869		2,753			15,434			11,379
FDIC insurance and state and local taxes		1,484		1,648			1,494		1,222		1,010			5,848			3,951
Professional fees		1,004		1,043			1,190		1,114		938			4,351			6,114
Merger related costs		452		268			442		4,313		584			5,475			4,070
Advertising		414		492			478		409		472			1,793			1,947
Intangible amortization		578		725			1,222		909		702			3,434			1,973
Core processing charges		1,057		1,274			1,144		1,164		742			4,639			3,348
Other noninterest expenses		3,216		4,223			2,932		3,077		2,509			13,448			16,616
Total Noninterest Expense	$	26,972	$	27,716		$	26,386	$	30,722	$	21,095		$	111,796		$	94,411

Business Combination
Consideration
Cash		$	33,440
Stock			59,202
Fair value of total consideration transferred		$	92,642
Fair value of assets acquired
Cash and cash equivalents		$	20,265
Securities available for sale			126,970
Other investments			7,795
Loans, net			740,659
Premises and equipment			14,808
Bank owned life insurance			22,485
Core deposit intangible			19,249
Current and deferred taxes			17,708
Other assets			7,682
Total assets acquired			977,621
Fair value of liabilities assumed
Deposits			875,813
Short-term borrowings			75,000
Accrued interest payable and other liabilities			7,104
Total liabilities			957,917
Net assets acquired		$	19,704
Goodwill created			72,938
Total net assets acquired		$	92,642

Average Balance Sheets and Related Yields and Rates
(Dollar Amounts in Thousands)
	Three Months Ended						Three Months Ended
	December 31, 2023						December 31, 2022
	AVERAGE				YIELD/		AVERAGE				YIELD/
	BALANCE		INTEREST (1)		RATE (1)		BALANCE		INTEREST (1)		RATE (1)
EARNING ASSETS
Loans (2)	$	3,188,581	$	44,868	5.63	%	$	2,394,872	$	29,092	4.86	%
Taxable securities		1,113,107		6,536	2.35			1,105,545		5,556	2.01
Tax-exempt securities (2)		411,860		3,235	3.14			453,917		3,580	3.15
Other investments		37,625		529	5.62			33,901		326	3.85
Federal funds sold and other		65,236		564	3.46			59,108		336	2.27
Total earning assets		4,816,409		55,732	4.63			4,047,343		38,890	3.84
Nonearning assets		163,905						33,154
Total assets	$	4,980,314					$	4,080,497
INTEREST-BEARING LIABILITIES
Time deposits	$	712,485	$	6,291	3.53	%	$	370,914	$	1,261	1.36	%
Brokered time deposits		96,634		1,315	5.44			115,021		1,034	3.60
Savings deposits		1,068,465		2,918	1.09			871,584		879	0.40
Demand deposits - interest bearing		1,393,252		7,922	2.27			1,301,475		3,805	1.17
Short term borrowings		206,826		2,749	5.32			85,641		777	3.63
Long term borrowings		88,609		1,043	4.71			88,138		922	4.18
Total interest-bearing liabilities	$	3,566,271		22,238	2.49		$	2,832,773		8,678	1.23
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Demand deposits - noninterest bearing		1,035,405						938,881
Other liabilities		54,306						43,904
Stockholders' equity		324,332						264,939
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	4,980,314					$	4,080,497
Net interest income and interest rate spread			$	33,494	2.14	%			$	30,212	2.61	%
Net interest margin					2.78	%					2.99	%

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.

(2) For 2023, adjustments of $86 thousand and $577 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $72 thousand and $707 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. These adjustments were based on a marginal federal income tax rate of 21%, less disallowances.

	Twelve Months Ended						Twelve Months Ended
	December 31, 2023						December 31, 2022
	AVERAGE				YIELD/		AVERAGE				YIELD/
	BALANCE		INTEREST (1)		RATE (1)		BALANCE		INTEREST (1)		RATE (1)
EARNING ASSETS
Loans (2)	$	3,155,858	$	172,161	5.46	%	$	2,358,724	$	108,100	4.58	%
Taxable securities		1,143,547		26,231	2.29			1,081,966		20,843	1.93
Tax-exempt securities (2)		419,557		13,283	3.17			465,855		14,952	3.21
Other investments		39,559		1,986	5.02			33,153		871	2.63
Federal funds sold and other		74,950		2,476	3.30			76,253		684	0.90
Total earning assets		4,833,471		216,137	4.47			4,015,951		145,450	3.62
Nonearning assets		205,683						128,757
Total assets	$	5,039,154					$	4,144,708
INTEREST-BEARING LIABILITIES
Time deposits	$	654,717	$	19,462	2.97	%	$	360,687	$	3,044	0.84	%
Brokered time deposits		132,895		6,204	4.67			56,965		1,240	2.18
Savings deposits		1,113,561		9,899	0.89			846,418		1,352	0.16
Demand deposits - interest bearing		1,415,425		27,541	1.95			1,392,058		7,449	0.54
Short term borrowings		160,964		8,357	5.19			55,668		1,408	2.53
Long term borrowings		88,439		4,086	4.62			87,972		3,427	3.90
Total interest-bearing liabilities	$	3,566,001		75,549	2.12		$	2,799,768		17,920	0.64
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Demand deposits - noninterest bearing	$	1,065,389					$	959,294
Other liabilities		50,302						34,180
Stockholders' equity		357,462						351,466
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	5,039,154					$	4,144,708
Net interest income and interest rate spread			$	140,588	2.35	%			$	127,530	2.98	%
Net interest margin					2.91	%					3.18	%

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.

(2) For 2023, adjustments of $353 thousand and $2.4 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $310 thousand and $3.1 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. These adjustments were based on a marginal federal income tax rate of 21%, less disallowances.

Reconciliation of Total Assets to Tangible Assets
	For the Three Months Ended										For the Twelve Months Ended
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,		Dec. 31,
		2023		2023		2023		2023		2022		2023		2022
Total Assets	$	5,078,350	$	4,971,163	$	5,073,454	$	5,109,886	$	4,082,200	$	5,078,350	$	4,082,200
Less Goodwill and other intangibles		190,288		191,326		192,052		193,273		101,666		190,288		101,666
Tangible Assets	$	4,888,062	$	4,779,837	$	4,881,402	$	4,916,613	$	3,980,534	$	4,888,062	$	3,980,534
Average Assets		4,980,314		5,058,969		5,070,444		5,085,009		4,080,497		5,039,154		4,144,708
Less average Goodwill and other intangibles		191,108		191,804		192,972		193,368		102,126		192,306		102,151
Average Tangible Assets	$	4,789,206	$	4,867,165	$	4,877,472	$	4,891,641	$	3,978,371	$	4,846,848	$	4,042,557

Reconciliation of Common Stockholders' Equity to Tangible Common Equity
	For the Three Months Ended										For the Twelve Months Ended
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,		Dec. 31,
		2023		2023		2023		2023		2022		2023		2022
Stockholders' Equity	$	404,415	$	315,982	$	366,991	$	374,642	$	292,295	$	404,415	$	292,295
Less Goodwill and other intangibles		190,288		191,326		192,052		193,273		101,666		190,288		101,666
Tangible Common Equity	$	214,127	$	124,656	$	174,939	$	181,369	$	190,629	$	214,127	$	190,629
Average Stockholders' Equity		324,332		367,600		371,421		366,851		264,939		357,462		351,466
Less average Goodwill and other intangibles		191,108		191,804		192,972		193,368		102,126		192,306		102,151
Average Tangible Common Equity	$	133,224	$	175,796	$	178,449	$	173,483	$	162,813	$	165,156	$	249,315

Reconciliation of Net Income, Less Merger and Certain Items
	For the Three Months Ended															For the Twelve Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,			Dec. 31,
		2023			2023			2023			2023			2022			2023			2022
Net income	$	14,577		$	13,314		$	14,966		$	7,075		$	13,356		$	49,932		$	60,597
Acquisition related costs - after tax		358			234			354			3,449			475			4,395			3,290
Acquisition related provision - after tax		0			0			0			6,077			0			6,077			0
Employee severence - after tax		798			0			0			0			0			798			0
Lawsuit settlement income - after tax		0			0			0			0			0			0			(6,616	)
Lawsuit settlement contingent legal expense - after tax		0			0			0			0			0			0			1,639
Lawsuit settlement expense - after tax		0			620			0			0			0			620			0
Charitable donation - after tax		0			0			0			0			0			0			4,740
Net (gain) on loan sale - after tax		(723	)		0			0			0			0			(723	)		0
Net loss (gain) on asset/security sales - after tax		171			604			(5	)		(72	)		268			698			344
Net income - Adjusted	$	15,181		$	14,772		$	15,315		$	16,529		$	14,099		$	61,797		$	63,994
Diluted EPS excluding merger and certain items	$	0.41		$	0.40		$	0.41		$	0.44		$	0.42		$	1.65		$	1.89
Return on Average Assets excluding merger and certain items (Annualized)		1.22	%		1.17	%		1.21	%		1.30	%		1.36	%		1.23	%		1.54	%
Return on Average Equity excluding merger and certain items (Annualized)		18.72	%		16.07	%		16.49	%		18.02	%		21.29	%		17.29	%		18.21	%
Return on Average Tangible Equity excluding acquisition costs and certain items (Annualized)		45.58	%		33.61	%		34.33	%		38.11	%		34.64	%		37.42	%		25.67	%

Efficiency ratio excluding certain items
	For the Three Months Ended															For the Twelve Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,			Dec. 31,
		2023			2023			2023			2023			2022			2023			2022
Net interest income, tax equated	$	33,494		$	34,448		$	35,273		$	37,374		$	30,212		$	140,588		$	127,530
Noninterest income		12,156			9,831			9,449			10,425			8,200			41,861			44,202
Legal settlement income		0			0			0			0			0			0			(8,375	)
Net (gain) on loan sale		(915	)		0			0			0			0			(915	)		0
Net loss (gain) on asset/security sales		217			764			(6	)		(91	)		338			883			435
Net interest income and noninterest income adjusted		44,952			45,043			44,716			47,708			38,750			182,417			163,792
Noninterest expense less intangible amortization		26,394			26,991			25,163			29,813			20,393			108,361			92,438
Charitable donation		0			0			0			0			0			0			6,000
Legal settlement expense		0			785			0			0			0			785			0
Contingent legal settlement expense		0			0			0			0			0			0			2,075
Employee severence		1,010			0			0			0			0			1,010			0
Acquisition related costs		452			268			442			4,313			584			5,475			4,070
Noninterest expense adjusted		24,932			25,938			24,721			25,500			19,809			101,091			80,293
Efficiency ratio excluding certain items		55.46	%		57.58	%		55.28	%		53.45	%		51.12	%		55.42	%		49.02	%

Net interest margin excluding acquisition marks and PPP interest and fees
	For the Three Months Ended															For the Twelve Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Dec. 31,			Dec. 31,
		2023			2023			2023			2023			2022			2023			2022
Net interest income, tax equated	$	33,494		$	34,448		$	35,273		$	37,374		$	30,212		$	140,588		$	127,530
Acquisition marks		2,475			2,959			2,884			2,628			174			10,946			1,793
PPP interest and fees		1			1			3			0			10			5			1,392
Adjusted and annualized net interest income		124,072			125,952			129,544			138,984			120,112			129,637			124,345
Average earning assets		4,816,409			4,820,888			4,830,910			4,866,263			4,047,343			4,833,471			4,015,951
Less PPP average balances		229			247			277			310			485			254			11,914
Adjusted average earning assets		4,816,180			4,820,641			4,830,633			4,865,953			4,046,858			4,833,217			4,004,037
Net interest margin excluding marks and PPP interest and fees		2.58	%		2.61	%		2.68	%		2.86	%		2.97	%		2.68	%		3.11	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240123953680/en/

The Farmers National Banc Stock at the time of publication of the news with a raise of +0,74 % to 13,65USD on Nasdaq stock exchange (24. Januar 2024, 02:00 Uhr).