Farmers National Banc Corp. Reports Results for Second Quarter of 2023

Farmers National Banc Corp. (“Farmers” or the “Company”) (NASDAQ: FMNB) reported today net income of $15.0 million, or $0.40 per diluted share, for the three months ended June 30, 2023, compared to $16.0 million, or $0.47 per diluted share, for the three months ended June 30, 2022. Net income for the second quarter of 2023 included pretax items of $442,000 for acquisition related costs and combined net gains of $6,000 on the sale of securities and the sale of other assets. Excluding these items (non-GAAP), net income for the second quarter of 2023 would have been $15.3 million, or $0.41 per diluted share.

Kevin J. Helmick, President and CEO, stated “As we navigate an extremely fluid banking landscape, we will continue to focus on prudent expense management, growing revenue, and maintaining a strong balance sheet, while supporting our communities and investing in our growth strategies. We believe this approach will drive long-term shareholder value as we emerge from this challenging period a stronger and more profitable company,” concluded Mr. Helmick.

Balance Sheet

The Company’s total assets were $5.07 billion at June 30, 2023 compared to $5.11 billion at March 31, 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 $1.05 billion in assets in the first quarter of 2023. Gross loans (excluding loans held for sale) have increased by $750.5 million since December 31, 2022 and $2.9 million since March 31, 2023. Emclaire was responsible for $740.7 million of the increase in loans since December 31, 2022.

Securities available for sale were $1.32 billion at June 30, 2023, compared to $1.36 billion at March 31, 2023, and $1.27 billion at December 31, 2022. The increase since December is due to the addition of $127.0 million in available for sale securities from Emclaire and a reduction in the gross amount of unrealized losses which totaled $266.5 million at December 31, 2022 compared to a gross unrealized loss of $245.0 million at June 30, 2023. Offsetting these increases, the Company also had sales and runoff from the portfolio in the first six months of 2023. While bond market volatility is expected to continue throughout 2023, the Company will continue to look to opportunistically shrink the size of the securities portfolio to increase liquidity and optimize profitability.

Total customer deposits (excluding brokered time deposits) were $4.25 billion at June 30, 2023, compared to $4.31 billion at March 31, 2023 and $3.42 billion at December 31, 2022. The increase from December was driven by $875.8 million in deposits assumed in the acquisition of Emclaire. Competition for deposits remains high and the Company expects this will continue to place pressure on funding costs and deposit volumes.

Total stockholders’ equity was $367.0 million at June 30, 2023 compared to $374.6 million at March 31, 2023, and $292.3 million at December 31, 2022. The increase since December is primarily due to the acquisition of Emclaire and an increase in retained earnings along with a decrease in the loss from accumulated other comprehensive income offset by increased treasury stock activity. The Company repurchased 850,799 shares of its common stock during the first quarter of 2023 but did not repurchase any shares during the second quarter. The accumulated other comprehensive loss has declined $17.0 million between December 31, 2022 and June 30, 2023 as market rates declined during the first half of 2023 and pricing on available for sale securities improved.

Liquidity

The Company continues to monitor its deposit base and balance sheet composition as well as its access to other sources of liquidity. At June 30, 2023, the Company’s loan to deposit ratio was 73.9% and the Company’s average deposit balance per account was $27,539. In addition, the Company’s ratio of uninsured deposits (excluding collateralized deposits) is approximately 15.0% which remains significantly lower than the banking institutions that failed in the first quarter of 2023.

The Company has access to an additional $707.8 million of FHLB borrowing capacity at June 30, 2023 along with $290.0 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.

Credit Quality

The provision for credit losses and unfunded commitments was $25,000 for the second quarter of 2023 compared to $616,000 for the second quarter of 2022. Annualized net charge-offs as a percentage of average loans was 0.10% for the three months ended June 30, 2023, compared to 0.01% for the same period in 2022. The allowance for credit losses to total loans was 1.11% at June 30, 2023 compared to 1.14% at March 31, 2023, and 1.12% at December 31, 2022.

Non-performing loans (NPLs) were $18.0 million at June 30, 2023 compared to $18.0 million at March 31, 2023, and $14.8 million at December 31, 2022. The increase since December was primarily due to the addition of Emclaire. The NPL to loans ratio was 0.57% at June 30, 2023 compared to 0.57% at March 31, 2023 and 0.62% at December 31, 2022. Non-performing assets to assets was 0.36% at June 30, 2023, compared to 0.35% at March 31, 2023, and 0.36% at December 31, 2022. Early stage delinquencies, defined as 30-89 days delinquent, were $12.3 million, or 0.39% of total loans, at June 30, 2023, compared to $9.6 million, or 0.40% of total loans, at December 31, 2022.

Net Interest Income

The Company recorded net interest income of $34.6 million in the second quarter of 2023 compared to $31.7 million for the second quarter of 2022. The Company had more earning assets in 2023 due to the acquisition of Emclaire but this was partially offset by a decline of 33 basis point in the net interest margin. The net interest margin was 2.92% for the second quarter of 2023 compared to 3.07% in the first quarter of 2023 and 3.25% for the second quarter of 2022. The decline in net interest margin between the second quarter of 2023 and the second 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 continued Federal Reserve rate hiking cycle, and runoff of deposit balances which are being replaced by more costly wholesale funding. Excluding the impact of acquisition marks and related accretion and PPP interest and fees, the net interest margin (non-GAAP) for the second quarter of 2023 was 2.68% compared to 2.86% for the first quarter of 2023 and 3.16% for the second quarter of 2022.

Noninterest Income

Noninterest income totaled $9.4 million for the three months ended June 30, 2023, compared to $9.5 million for the three months ended June 30, 2022. Service charges on deposit accounts have increased by $362,000 in the second quarter of 2023 compared to the second quarter of 2022. The increase is 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 second quarter of 2023 compared to the second quarter of 2022 due to the Emclaire acquisition. Insurance agency commissions are up $246,000 in the second quarter of 2023 compared to the second quarter of 2022 as growth in the insurance business and increased annuity sales have bolstered income. Investment commissions are down slightly for the quarter ended June 30, 2023 compared to the quarter ended June 30, 2022, as customers have been more interested in the annuities mentioned above as opposed to traditional investment products. Net gains on the sale of loans have increased but are still sluggish due to the high level of interest rates and lack of loan volume. Other noninterest income has declined by $1.3 million for the quarter ending June 30, 2023 compared to the second quarter of 2022. This decrease is primarily due to a decline in the income associated with the Company’s investments in SBA/SBIC funds. The performance of these funds in 2022 was much better than had been experienced historically and 2023 has returned to more normal levels of profitability.

Noninterest Expense

Noninterest expense was $26.4 million for the three months ended June 30, 2023, compared to $21.5 million for the three months ended June 30, 2022. The increase in expense is primarily due to the acquisition of Emclaire. Salaries and employee benefits increased $2.6 million to $13.6 million in the second quarter of 2023 compared to the same period in 2022. The acquisition of Emclaire along with normal raise activity were the primary reasons for the increase. Occupancy and equipment expense increased primarily due to the acquisition. FDIC and state and local taxes increased due to the acquisition and the increase in the rate paid for FDIC insurance in 2023. Intangible amortization expense increased due to the acquisition and due to some acceleration of the core deposit intangible recorded in the Cortland Bancorp acquisition in 2021. The Company recorded an additional $359,000 of intangible amortization in the second quarter of 2023 related to the Cortland acquisition. Merger related costs were $442,000 for the second quarter of 2023 compared to $674,000 in the second quarter of 2022.

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 65 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 June 30, 2023 are $3.2 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 Six Months Ended
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			June 30,			June 30,			Percent
		2023			2023			2022			2022			2022			2023			2022		Change
Total interest income	$	52,804		$	51,233		$	38,111		$	36,410		$	34,286		$	104,037		$	67,565		54.0	%
Total interest expense		18,226			14,623			8,679			4,629			2,575			32,849			4,612		612.3	%
Net interest income		34,578			36,610			29,432			31,781			31,711			71,188			62,953		13.1	%
Provision (credit) for credit losses		25			8,599			416			448			616			8,624			258		3242.6	%
Noninterest income		9,449			10,425			8,200			8,827			9,477			19,874			27,175		-26.9	%
Acquisition related costs		442			4,313			584			872			674			4,755			2,614		81.9	%
Other expense		25,944			26,409			20,511			20,527			20,787			52,353			49,303		6.2	%
Income before income taxes		17,616			7,714			16,121			18,761			19,111			25,330			37,953		-33.3	%
Income taxes		2,650			639			2,765			3,315			3,160			3,289			6,158		-46.6	%
Net income	$	14,966		$	7,075		$	13,356		$	15,446		$	15,951		$	22,041		$	31,795		-30.7	%
Average diluted shares outstanding		37,320			37,933			33,962			33,932			33,923			37,624			33,927
Basic earnings per share		0.40			0.19			0.39			0.46			0.47			0.59			0.94
Diluted earnings per share		0.40			0.19			0.39			0.46			0.47			0.59			0.94
Cash dividends per share		0.17			0.17			0.17			0.16			0.16			0.34			0.32
Performance Ratios
Net Interest Margin (Annualized)		2.92	%		3.07	%		2.99	%		3.21	%		3.25	%		3.00	%		3.25	%
Efficiency Ratio (Tax equivalent basis)		56.28	%		62.53	%		52.59	%		50.55	%		49.95	%		59.50	%		55.56	%
Return on Average Assets (Annualized)		1.18	%		0.56	%		1.31	%		1.48	%		1.54	%		0.87	%		1.53	%
Return on Average Equity (Annualized)		16.12	%		7.71	%		20.16	%		18.71	%		17.97	%		11.94	%		15.67	%
Dividends to Net Income		42.54	%		90.50	%		43.10	%		35.06	%		33.95	%		58.09	%		34.07	%
Other Performance Ratios (Non-GAAP)
Return on Average Tangible Assets		1.23	%		0.58	%		1.34	%		1.52	%		1.57	%		0.90	%		1.56	%
Return on Average Tangible Equity		33.55	%		16.31	%		32.81	%		27.06	%		25.23	%		25.05	%		20.96	%

Consolidated Statements of Financial Condition
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
	2023			2023			2022			2022			2022
Assets
Cash and cash equivalents	$	116,063		$	128,001		$	75,551		$	79,981		$	65,458
Securities available for sale		1,316,878			1,355,449			1,268,025			1,295,133			1,361,682
Other investments		44,975			39,670			33,444			34,399			34,451
Loans held for sale		2,197			1,703			858			2,142			2,714
Loans		3,155,200			3,152,339			2,404,750			2,399,981			2,374,485
Less allowance for credit losses		34,957			36,011			26,978			27,282			27,454
Net Loans		3,120,243			3,116,328			2,377,772			2,372,699			2,347,031
Other assets		473,098			468,735			326,550			335,668			303,028
Total Assets	$	5,073,454		$	5,109,886		$	4,082,200		$	4,120,022		$	4,114,364
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing	$	1,084,232		$	1,106,870		$	896,957		$	934,638		$	983,713
Interest-bearing		3,165,381			3,207,121			2,526,760			2,590,054			2,586,829
Brokered time deposits		21,135			82,169			138,051			42,459			54,996
Total deposits		4,270,748			4,396,160			3,561,768			3,567,151			3,625,538
Other interest-bearing liabilities		388,437			292,324			183,211			243,098			137,985
Other liabilities		47,278			46,760			44,926			44,154			29,392
Total liabilities		4,706,463			4,735,244			3,789,905			3,854,403			3,792,915
Stockholders' Equity		366,991			374,642			292,295			265,619			321,449
Total Liabilities
and Stockholders' Equity	$	5,073,454		$	5,109,886		$	4,082,200		$	4,120,022		$	4,114,364
Period-end shares outstanding		37,457			37,439			34,055			34,060			34,032
Book value per share	$	9.80		$	10.01		$	8.58		$	7.80		$	9.45
Tangible book value per share (Non-GAAP)*		4.67			4.84			5.60			4.79			6.46

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

Capital and Liquidity
Common Equity Tier 1 Capital Ratio (a)		10.39	%		10.04	%		13.71	%		13.36	%		13.30	%
Total Risk Based Capital Ratio (a)		13.94	%		13.60	%		17.79	%		17.44	%		17.46	%
Tier 1 Risk Based Capital Ratio (a)		10.89	%		10.54	%		14.32	%		13.97	%		13.92	%
Tier 1 Leverage Ratio (a)		7.68	%		7.43	%		9.84	%		10.24	%		9.56	%
Equity to Asset Ratio		7.23	%		7.33	%		7.16	%		6.45	%		7.81	%
Tangible Common Equity Ratio (b)		3.58	%		3.69	%		4.79	%		4.06	%		5.47	%
Net Loans to Assets		61.50	%		60.99	%		58.25	%		57.59	%		57.04	%
Loans to Deposits		73.88	%		71.71	%		67.52	%		67.28	%		65.49	%
Asset Quality
Non-performing loans	$	17,956		$	17,959		$	14,803		$	12,976		$	14,107
Non-performing assets		18,167			18,053			14,876			13,042			14,107
Loans 30 - 89 days delinquent		12,321			10,219			9,605			6,659			8,716
Charged-off loans		971			469			754			783			177
Recoveries		172			198			184			178			135
Net Charge-offs		799			271			570			605			42
Annualized Net Charge-offs to Average Net Loans		0.10	%		0.03	%		0.10	%		0.10	%		0.01	%
Allowance for Credit Losses to Total Loans		1.11	%		1.14	%		1.12	%		1.14	%		1.16	%
Non-performing Loans to Total Loans		0.57	%		0.57	%		0.62	%		0.54	%		0.59	%
Allowance to Non-performing Loans		194.68	%		200.52	%		182.25	%		210.25	%		194.61	%
Non-performing Assets to Total Assets		0.36	%		0.35	%		0.36	%		0.32	%		0.34	%

(a) June 30, 2023 ratio is estimated

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

		For the Three Months Ended
		June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
End of Period Loan Balances		2023			2023			2022			2022			2022
Commercial real estate		$	1,284,974		$	1,286,830		$	1,028,050		$	1,028,484		$	1,040,243
Commercial			362,664			361,845			293,643			296,932			285,981
Residential real estate			849,533			853,074			475,791			474,014			464,489
HELOC			138,535			137,319			132,179			132,267			129,392
Consumer			260,326			260,596			221,260			222,706			218,219
Agricultural loans			250,807			244,938			246,937			239,081			230,477
Total, excluding net deferred loan costs		$	3,146,839		$	3,144,602		$	2,397,860		$	2,393,484		$	2,368,801

	For the Three Months Ended
	June 30,				March 31,			Dec. 31,			Sept. 30,			June 30,
End of Period Customer Deposit Balances			2023			2023			2022			2022			2022
Noninterest-bearing demand	$		1,084,232		$	1,106,870		$	896,957		$	934,638		$	983,713
Interest-bearing demand			1,383,326			1,473,001			1,224,884			1,399,227			1,416,129
Money market			610,051			599,037			435,369			393,005			372,723
Savings			511,642			535,321			441,978			460,709			455,555
Certificate of deposit			660,362			599,762			424,529			337,113			342,422
Total customer deposits	$		4,249,613		$	4,313,991		$	3,423,717		$	3,524,692		$	3,570,542

	For the Three Months Ended															For the Six Months Ended
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			June 30,			June 30,
Noninterest Income		2023			2023			2022			2022			2022			2023			2022
Service charges on deposit accounts	$	1,501		$	1,432		$	1,203		$	1,229		$	1,139		$	2,933		$	2,284
Bank owned life insurance income, including death benefits		584			547			590			406			405			1,131			814
Trust fees		2,248			2,587			2,373			2,370			2,376			4,835			4,895
Insurance agency commissions		1,332			1,456			1,133			1,136			1,086			2,788			2,133
Security gains (losses), including fair value changes for equity securities		13			121			(366	)		(17	)		(60	)		134			(71	)
Retirement plan consulting fees		382			307			337			332			323			689			720
Investment commissions		476			393			508			424			557			869			1,251
Net gains on sale of loans		406			310			242			326			365			716			1,494
Other mortgage banking fee income (loss), net		234			153			98			94			39			387			99
Debit card and EFT fees		1,810			1,789			1,407			1,463			1,528			3,599			2,944
Other noninterest income		463			1,330			675			1,064			1,719			1,793			10,612
Total Noninterest Income	$	9,449		$	10,425		$	8,200		$	8,827		$	9,477		$	19,874		$	27,175

	For the Three Months Ended															For the Six Months Ended
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			June 30,			June 30,
Noninterest Expense		2023			2023			2022			2022			2022			2023			2022
Salaries and employee benefits	$	13,625		$	14,645		$	11,385		$	10,724		$	11,073		$	28,270		$	22,904
Occupancy and equipment		3,859			3,869			2,753			3,028			2,918			7,728			5,598
FDIC insurance and state and local taxes		1,494			1,222			1,010			1,017			979			2,716			1,924
Professional fees		1,190			1,114			938			985			1,056			2,304			4,191
Merger related costs		442			4,313			584			872			674			4,755			2,614
Advertising		478			409			472			596			487			887			879
Intangible amortization		1,222			909			702			432			419			2,131			839
Core processing charges		1,144			1,164			742			738			1,123			2,308			1,868
Other noninterest expenses		2,932			3,077			2,509			3,007			2,732			6,009			11,100
Total Noninterest Expense	$	26,386		$	30,722		$	21,095		$	21,399		$	21,461		$	57,108		$	51,917

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			16,103
Bank owned life insurance			22,485
Core deposit intangible			19,249
Current and deferred taxes			17,246
Other assets			6,387
Total assets acquired			977,159
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		$	19,242
Goodwill created			73,400
Total net assets acquired		$	92,642

Average Balance Sheets and Related Yields and Rates
(Dollar Amounts in Thousands)
	Three Months Ended						Three Months Ended
	June 30, 2023						June 30, 2022
	AVERAGE				YIELD/		AVERAGE				YIELD/
	BALANCE		INTEREST (1)		RATE (1)		BALANCE		INTEREST (1)		RATE (1)
EARNING ASSETS
Loans (2)	$	3,144,461	$	42,422	5.40	%	$	2,337,251	$	25,792	4.41	%
Taxable securities		1,157,284		6,654	2.30			1,100,538		5,223	1.90
Tax-exempt securities (2)		415,003		3,278	3.16			474,034		3,832	3.23
Other investments		41,361		594	5.74			34,030		216	2.54
Federal funds sold and other		72,801		551	3.03			69,532		95	0.55
Total earning assets		4,830,910		53,499	4.43			4,015,385		35,158	3.50
Nonearning assets		225,131						140,334
Total assets	$	5,056,041					$	4,155,719
INTEREST-BEARING LIABILITIES
Time deposits	$	646,782	$	4,525	2.80	%	$	354,692	$	552	0.62	%
Brokered time deposits		59,402		686	4.62			45,767		49	0.43
Savings deposits		1,133,371		2,402	0.85			837,726		141	0.07
Demand deposits - interest bearing		1,428,409		6,878	1.93			1,430,273		909	0.25
Short term borrowings		213,549		2,727	5.11			42,527		97	0.91
Long term borrowings		88,382		1,008	4.56			87,914		827	3.76
Total interest-bearing liabilities	$	3,569,895		18,226	2.04		$	2,798,899		2,575	0.37
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Demand deposits - noninterest bearing		1,067,605						972,174
Other liabilities		47,120						29,665
Stockholders' equity		371,421						354,981
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	5,056,041					$	4,155,719
Net interest income and interest rate spread			$	35,273	2.39	%			$	32,583	3.13	%
Net interest margin					2.92	%					3.25	%

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

(2) For 2023, adjustments of $91 thousand and $604 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $78 thousand and $794 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.

	Six Months Ended									Six Months Ended
	June 30, 2023									June 30, 2022
	AVERAGE						YIELD/			AVERAGE						YIELD/
	BALANCE			INTEREST (1)			RATE (1)			BALANCE			INTEREST (1)			RATE (1)
EARNING ASSETS
Loans (2)	$	3,140,500		$	83,365		5.31	%		$	2,326,392		$	51,438		4.42	%
Taxable securities		1,164,400			13,204		2.27				1,054,506			9,810		1.86
Tax-exempt securities (2)		426,743			6,797		3.19				467,947			7,559		3.23
Other investments		38,976			970		4.98				32,584			346		2.12
Federal funds sold and other		77,870			1,161		2.98				93,591			143		0.31
Total earning assets		4,848,489			105,497		4.35				3,975,020			69,296		3.49
Nonearning assets		221,955									192,085
Total assets	$	5,070,444								$	4,167,105
INTEREST-BEARING LIABILITIES
Time deposits	$	618,637		$	7,864		2.54	%		$	366,617		$	1,196		0.65	%
Brokered time deposits		144,747			3,007		4.15				30,745			64		0.42
Savings deposits		1,143,539			4,356		0.76				840,533			308		0.07
Demand deposits - interest bearing		1,423,211			11,971		1.68				1,420,957			1,327		0.19
Short term borrowings		147,436			3,648		4.95				22,486			98		0.87
Long term borrowings		88,326			2,003		4.54				87,856			1,619		3.69
Total interest-bearing liabilities	$	3,565,896			32,849		1.84			$	2,769,194			4,612		0.33
NONINTEREST-BEARING LIABILITIES
AND STOCKHOLDERS' EQUITY
Demand deposits - noninterest bearing	$	1,087,403								$	964,380
Other liabilities		47,996									27,842
Stockholders' equity		369,149									405,689
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	5,070,444								$	4,167,105
Net interest income and interest rate spread				$	72,648		2.51	%					$	64,684		3.16	%
Net interest margin							3.00	%								3.25	%

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

(2) For 2023, adjustments of $178 thousand and $1.3 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2022, adjustments of $162 thousand and $1.6 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 Six Months Ended
	June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		June 30,		June 30,
		2023		2023		2022		2022		2022		2023		2022
Total Assets	$	5,073,454	$	5,109,886	$	4,082,200	$	4,120,022	$	4,114,364	$	5,073,454	$	4,114,364
Less Goodwill and other intangibles		192,052		193,273		101,666		102,368		101,767		192,052		101,767
Tangible Assets	$	4,881,402	$	4,916,613	$	3,980,534	$	4,017,654	$	4,012,597	$	4,881,402	$	4,012,597
Average Assets		5,070,444		5,085,009		4,080,497		4,164,855		4,155,719		5,070,444		4,167,105
Less average Goodwill and other intangibles		192,972		193,368		102,126		101,981		102,042		193,169		102,251
Average Tangible Assets	$	4,877,472	$	4,891,641	$	3,978,371	$	4,062,874	$	4,053,677	$	4,877,275	$	4,064,854

Reconciliation of Common Stockholders' Equity to Tangible Common Equity
	For the Three Months Ended										For the Six Months Ended
	June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		June 30,		June 30,
		2023		2023		2022		2022		2022		2023		2022
Stockholders' Equity	$	366,991	$	374,642	$	292,295	$	265,619	$	321,449	$	366,991	$	321,449
Less Goodwill and other intangibles		192,052		193,273		101,666		102,368		101,767		192,052		101,767
Tangible Common Equity	$	174,939	$	181,369	$	190,629	$	163,251	$	219,682	$	174,939	$	219,682
Average Stockholders' Equity		371,421		366,851		264,939		330,300		354,981		369,149		405,689
Less average Goodwill and other intangibles		192,972		193,368		102,126		101,981		102,042		193,169		102,251
Average Tangible Common Equity	$	178,449	$	173,483	$	162,813	$	228,319	$	252,939	$	175,980	$	303,438

Reconciliation of Net Income, Less Merger and Certain Items
	For the Three Months Ended															For the Six Months Ended
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			June 30,			June 30,
		2023			2023			2022			2022			2022			2023			2022
Net income	$	14,966		$	7,075		$	13,356		$	15,446		$	15,951		$	22,041		$	31,795
Acquisition related costs - after tax		354			3,449			475			711			564			3,803			2,104
Acquisition related provision - after tax		0			6,077			0			0			0			6,077			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
Charitable donation - after tax		0			0			0			0			0			0			4,740
Net loss (gain) on asset/security sales - after tax		(5	)		(72	)		268			4			(25	)		(77	)		72
Net income - Adjusted	$	15,315		$	16,529		$	14,099		$	16,161		$	16,490		$	31,844		$	33,734
Diluted EPS excluding merger and one-time items	$	0.41		$	0.44		$	0.42		$	0.48		$	0.49		$	0.85		$	0.99
Return on Average Assets excluding merger and certain items (Annualized)		1.21	%		1.30	%		1.36	%		1.55	%		1.59	%		1.26	%		1.62	%
Return on Average Equity excluding merger and certain items (Annualized)		16.49	%		18.02	%		21.29	%		19.57	%		18.58	%		17.25	%		16.63	%
Return on Average Tangible Equity excluding acquisition costs and certain items (Annualized)		34.33	%		38.11	%		34.64	%		28.31	%		26.08	%		36.19	%		22.23	%

Efficiency ratio excluding certain items
	For the Three Months Ended															For the Six Months Ended
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			June 30,			June 30,
		2023			2023			2022			2022			2022			2023			2022
Net interest income, tax equated	$	35,273		$	37,374		$	30,212		$	32,636		$	32,583		$	72,648		$	64,684
Noninterest income		9,449			10,425			8,200			8,827			9,477			19,874			27,175
Legal settlement income		0			0			0			0			0			0			(8,375	)
Net loss (gain) on asset/security sales		(6	)		(91	)		338			6			(32	)		(97	)		91
Net interest income and noninterest income adjusted		44,716			47,708			38,750			41,469			42,028			92,425			83,575
Noninterest expense less intangible amortization		25,163			29,813			20,393			20,967			21,042			54,976			51,078
Charitable donation		0			0			0			0			0			0			6,000
Contingent legal settlement expense		0			0			0			0			0			0			2,075
Acquisition related costs		442			4,313			584			872			674			4,755			2,614
Noninterest income adjusted		24,721			25,500			19,809			20,095			20,368			50,221			40,389
Efficiency ratio excluding one-time items		55.28	%		53.45	%		51.12	%		48.46	%		48.46	%		54.34	%		48.33	%

Net interest margin excluding acquisition marks and PPP interest and fees
	For the Three Months Ended															For the Six Months Ended
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			June 30,			June 30,
		2023			2023			2022			2022			2022			2023			2022
Net interest income, tax equated	$	35,273		$	37,374		$	30,212		$	32,636		$	32,583		$	72,648		$	64,684
Acquisition marks		2,884			2,628			174			215			349			5,512			1,338
PPP interest and fees		3			0			10			62			634			3			1,320
Adjusted and annualized net interest income		129,544			138,984			120,112			129,436			126,400			134,266			124,052
Average earning assets		4,830,910			4,866,263			4,047,343			4,065,085			4,015,385			4,848,489			3,975,020
Less PPP average balances		277			310			485			1,586			16,019			271			22,972
Adjusted average earning assets		4,830,633			4,865,953			4,046,858			4,063,499			3,999,366			4,848,218			3,952,048
Net interest margin excluding marks and PPP interest and fees		2.68	%		2.86	%		2.97	%		3.19	%		3.16	%		2.77	%		3.14	%

 

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The Farmers National Banc Stock at the time of publication of the news with a fall of -0,07 % to 13,83USD on Nasdaq stock exchange (26. Juli 2023, 02:00 Uhr).