Business Wire | Oct 27, 2021 08:00AM EDT

Farmers National Banc Corp. Announces Strong Third Quarter 2021 Results

Oct. 27, 2021

CANFIELD, Ohio--(BUSINESS WIRE)--Oct. 27, 2021--Farmers National Banc Corp. ("Farmers" or the "Company") (NASDAQ: FMNB) today announced financial results for the three and nine months ended September 30, 2021.

Net income for the third quarter of 2021 was $16.0 million, or $0.56 per diluted share, which compares to $10.9 million, or $0.38 per diluted share, for the three months ended September 30, 2020. The results for the quarter were positively impacted by a negative provision for credit losses totaling $948,000 pre-tax which was primarily due to a release of reserves for credit losses. Net income excluding acquisition costs (non-GAAP) for the quarter ended September 30, 2021 was $16.5 million or $0.58 per diluted share, compared to $10.9 million or $0.39 per diluted share for the same quarter in 2020.

Net income for the nine months ended September 30, 2021, totaled $46.1 million, or $1.63 per diluted share, compared to $30.5 million, or $1.07 per diluted share for the nine months ended September 30, 2020. Net income excluding acquisition costs (non-GAAP) for the nine months ended September 30, 2021 was $46.6 million, or $1.65 per share, compared to $31.7 million, or $1.11 per share for the same period in 2020.

On June 22, 2021, Farmers entered into an agreement and plan of merger with Cortland Bancorp Inc. ("Cortland"), the parent company of Cortland Savings and Banking Company ("Cortland Bank"). The transaction has received the approval of Cortland's shareholders and all customary regulatory approvals. The transaction is expected to close on November 1, 2021 and will enable Farmers to continue building local scale throughout Northeast Ohio as Farmers' market share increases in Trumbull, Mahoning and Cuyahoga Counties. As of September 30, 2021, Cortland had total assets of $799.2 million, which included gross loans of $500.0 million, deposits of $693.0 million and equity of $83.0 million.

Kevin J. Helmick, President and CEO, stated, "We are pleased with our ability to post record earnings and find ways to win even as the impact from PPP loans begins to wane. Our strong net interest margin and fee businesses, outstanding credit quality and tight expense control have contributed to this record performance. With the closing of the Cortland Bank acquisition in November, we are poised to realize additional economies of scale which should allow us to continue our momentum into 2022."

Balance Sheet

Total assets at September 30, 2021, were $3.32 billion compared to $3.07 billion at December 31, 2020. Total loans were $1.89 billion at September 30, 2021, compared to $1.96 billion at June 30, 2021 and $2.08 billion at December 31, 2020. Through the nine months ended September 30, 2021, total loans have declined $183.8 million due to a $71.8 million decrease in PPP loans, a decline of $36.9 million in 1-4 family residential loans due to the continued level of refinance activity in 2021 and declines in commercial and commercial real estate due to a high degree of liquidity in the system that has resulted in a greater level of payoffs. Securities have grown to $1.18 billion at September 30, 2021, compared to $996.3 million at June 30, 2021 and $575.6 million at December 31, 2020.

Total deposits grew to $2.87 billion at September 30, 2021, which represents growth of $87.6 million from June 30, 2021 and $255.5 million in growth, or 9.8%, compared to December 31, 2020. Growth has come from increases in both noninterest-bearing and interest-bearing deposits as customers continue to carry higher balances in their accounts.

Total stockholders' equity was $377.5 million at September 30, 2021, compared to $366.9 million at June 30, 2021 and $350.1 million at December 31, 2020. The Company has not been able to repurchase any of its common shares in the third quarter due to the announcement of the Cortland transaction but still has 548,913 common shares remaining to be repurchased under the Company's existing authorization.

Credit Quality

Due to a decline in loan balances, a decrease in a specific reserve on one loan, and a continued decline in historical loss ratios, the Company recorded a negative provision for credit losses of $948,000 for the quarter ended September 30, 2021, compared to the $2.6 million of loan loss provision recorded in the third quarter of 2020. Net charge-offs for the current quarter were $286,000, compared to $219,000 in the same quarter in 2020. Total net charge-offs as a percentage of average net loans outstanding was 0.06% for the quarter ended September 30, 2021, compared to 0.04% for the same quarter in 2020. As an overall percentage of loans, the allowance for credit losses decreased to 1.22% for the current quarter compared to 1.27% for the quarter ended June 30, 2021. Excluding the PPP loans, this allowance for credit losses to gross loans ratio increased to 1.26% (non-GAAP) as of September 30, 2021, and the ratio of the allowance for credit losses to gross loans, excluding PPP loans and acquired loans is 1.42% (non-GAAP).

Non-performing loans to loans ticked up to 0.78% at June 30, 2021, compared to 0.71% at June 30, 2021. This increase was primarily driven by the nonperformance of one credit. Early stage delinquencies, defined as 30-89 days past due, were $6.9 million, or 0.37% of total loans, at September 30, 2021, compared to $7.6 million, or 0.39% of total loans, for the prior quarter.

Net interest income

Net interest income was $26.5 million for the third quarter of 2021 compared to $24.2 million for the third quarter of 2020. The increase was due to growth in average interest earning assets and the impact of PPP fees offset by a decline in the net interest margin of 8 basis points. The net interest margin was 3.47% for the current quarter which is down from the 3.52% net interest margin reported in the second quarter of 2021 and lower than the 3.55% net interest margin reported in the third quarter of 2020. Excluding the impact of acquisition marks and PPP interest and fees (non-GAAP), the net interest margin for the third quarter of 2021 was 3.37% compared to 3.35% for the second quarter of 2021 and 3.60% for the third quarter of 2020.

Noninterest income

Noninterest income was down slightly to $9.0 million for the quarter ended September 30, 2021 compared to $9.2 million in the same quarter in 2020. Net gains on the sale of loans was down $1.7 million for the third quarter of 2021 compared to the third quarter of 2020 due to lower origination volumes. This decline was offset by an increase in trust fees of $362,000, or 18.4%, investment commissions of $285,000, or 80.7%, security gains of $389,000 and bank owned life insurance income of $144,000.

Noninterest expense

Total noninterest expense for the third quarter of 2021 decreased to $17.1 million compared to $17.5 million in the same quarter in 2020. Excluding merger related costs and a $326,000 prepayment penalty for the payoff of a $25 million FHLB advance, noninterest expense declined $1.1 million from the third quarter of 2020 to the third quarter of 2021. The $342,000 decline in noninterest expense from the third quarter of 2020 to the third quarter of 2021 was primarily due to a $923,000 decline in salaries and employee benefits offset by an increase of $180,000 in occupancy and equipment, $256,000 in professional fees and $414,000 in merger related expenses. The drop in salary and employee benefits was due to lower health insurance costs compared to the same quarter in 2020 along with lower incentive compensation expense and a greater amount of contra salary expense related deferred loan costs.

Covid Support Efforts

Farmers offered special financial assistance to support customers who were experiencing financial hardships related to the COVID-19 pandemic. The Company offered three month deferrals upon request by the borrowers, beginning in the middle of March, 2020 and concluding at the end of the three month deferral period. For those borrowers in industries that were greatly impacted by COVID-19, additional deferrals were considered and granted beyond the initial three month period. The range of deferred months for subsequent requests was three to nine months. The decline in deferred loans and balances was due to borrowers not requesting additional deferments and beginning to restart payments under the original terms of their loan. At September 30, 2021, Farmers had one customer with a loan balance of $5.0 million still on deferral. This customer is expected to come off of deferral in the 4th quarter of 2021.

Farmers is also a preferred SBA lender and we dedicated significant additional staff and other resources to help our customers complete and submit their applications and supporting documentation for loans offered under the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, so they could obtain SBA approval and receive funding as quickly as possible. During the initial 2020 period of the PPP program, the Company facilitated PPP assistance to 1,714 business customers totaling $199.8 million. The Company, on behalf of its customers, began processing borrower applications for PPP forgiveness at the beginning of September 2020. The SBA has up to ninety days to review an application for PPP forgiveness and provide a decision at the end of that review. Once forgiveness of the PPP loans has been communicated and payment is received from the SBA, the Company will record the cash received from the SBA, pay-off the loans based on the amount of forgiveness provided and accelerate the amount of net deferred loan fees/costs recognized for the portion of the PPP loans that are forgiven. During the period ended September 30, 2021, the Company has received life to date payments from the SBA for forgiveness of loans totaling $198.4 million, or approximately 99.2% of the PPP loans originated in 2020. The Company has processed $84.0 million in new loans for PPP loan funding during 2021. The Company has also received payments from the SBA for forgiveness of loans totaling $29.2 million, or approximately 34.7% of PPP loans originated in 2021.

About Farmers National Banc Corp.

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $3.3 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 41 banking locations in Mahoning, Trumbull, Columbiana, Stark, Wayne, Medina, Geauga and Cuyahoga Counties in Ohio and Beaver County 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 September 30, 2021 are $3.0 billion. Farmers National Insurance, LLC and Bowers Insurance Agency, Inc., wholly-owned subsidiaries of The Farmers National Bank of Canfield, offer 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 allowance for credit losses to gross loans, excluding PPP loans and acquired loans, 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.

Forward-Looking Statements

This earnings release contains 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 the forward-looking statements include impacts from the COVID-19 pandemic, including further resurgence in the spread of COVID-19, on local, national and global economic conditions; higher default rates on loans made to our customers related to COVID-19 and its impact on our customers' operations and financial condition; unexpected changes in interest rates or disruptions in the mortgage markets related to COVID-19 or other responses to the health crisis; impacts of the upcoming U.S. elections on the regulatory landscape, capital markets, and response to and management of the COVID-19 pandemic including further economic stimulus from the federal government; Farmers' failure to integrate Cortland and Cortland Bank with Farmers in accordance with expectations; deviations from performance expectations related to Cortland and Cortland Bank; and the other factors contained in Farmers' Annual Report on Form 10-K for the year ended December 31, 2020 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 SubsidiariesConsolidated Financial Highlights(Amounts in thousands, except per share results) Unaudited Consolidated For the Three Months Ended For the Nine MonthsStatements of EndedIncome Sept. June March Dec. Sept. Sept. Sept. Percent 30, 30, 31, 31, 30, 30, 30,

2021 2021 2021 2020 2020 2021 2020 Change

Total interest $28,375 $28,609 $27,790 $28,833 $27,635 $84,774 $83,494 1.5%incomeTotal interest 1,841 2,119 2,523 3,030 3,470 6,483 13,106 -50.5%expenseNet interest 26,534 26,490 25,267 25,803 24,165 78,291 70,388 11.2%incomeProvision for (948) 50 425 3,000 2,600 (473) 6,100 -107.8%credit lossesNoninterest 9,015 9,508 10,183 10,499 9,217 28,706 25,662 11.9%incomeAcquisition 472 104 12 1,798 58 588 1,425 -58.7%related costsOther expense 16,656 16,966 17,356 17,796 17,412 50,978 51,961 -1.9%

Income before 19,369 18,878 17,657 13,708 13,312 55,904 36,564 52.9%income taxesIncome taxes 3,358 3,303 3,101 2,351 2,443 9,762 6,045 61.5%

Net income $16,011 $15,575 $14,556 $11,357 $10,869 $46,142 $30,519 51.2%

Average diluted 28,361 28,353 28,336 28,322 28,291 28,339 28,421sharesoutstandingBasic earnings 0.57 0.55 0.52 0.40 0.39 1.63 1.08per shareDiluted 0.56 0.55 0.51 0.40 0.38 1.63 1.07earnings pershareCash dividends 3,107 3,107 3,107 3,100 3,101 9,321 9,305

Cash dividends 0.11 0.11 0.11 0.11 0.11 0.33 0.33per sharePerformanceRatiosNet Interest 3.47% 3.52% 3.54% 3.69% 3.55% 3.50% 3.64%Margin(Annualized)EfficiencyRatio (Tax 46.04% 45.70% 47.76% 50.07% 50.37% 46.49% 53.48%equivalentbasis)Return on 1.92% 1.90% 1.87% 1.49% 1.46% 1.90% 1.45%Average Assets(Annualized)Return on 16.93% 17.17% 16.81% 13.10% 12.87% 17.05% 12.84%Average Equity(Annualized)Dividends to 19.41% 19.95% 21.35% 27.30% 28.53% 20.20% 30.49%Net IncomeOtherPerformanceRatios(Non-GAAP)Return on 1.97% 1.93% 1.87% 1.52% 1.50% 1.92% 1.47%AverageTangible AssetsReturn on 19.63% 19.81% 19.30% 15.48% 15.30% 19.67% 15.14%AverageTangible EquityReturn onAverageTangible Equity 20.20% 19.91% 19.31% 17.43% 15.37% 19.88% 15.71%excludingacquisitioncosts Consolidated Statements of Financial ConditionSept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

2021

2021

2021

2020

2020

AssetsCash and cash equivalents$79,808

$149,357

$326,385

$254,621

$199,575

Securities available for sale1,183,361

996,271

802,866

575,600

481,509

Other investments19,041

20,573

21,317

21,528

23,276

Loans held for sale2,628

1,922

3,993

4,766

7,076

Loans1,894,216

1,959,865

2,037,404

2,078,044

2,147,158

Less allowance for credit losses (a)23,136

24,806

24,935

22,144

19,341

Net Loans1,871,080

1,935,059

2,012,469

2,055,900

2,127,817

Other assets161,129

156,876

157,494

158,733

149,926

Total Assets$3,317,047

$3,260,058

$3,324,524

$3,071,148

$2,989,179

Liabilities and Stockholders' EquityDepositsNoninterest-bearing$675,938

$663,640

$675,045

$608,791

$577,334

Interest-bearing2,190,475

2,115,183

2,158,009

2,002,087

1,960,998

Total deposits2,866,413

2,778,823

2,833,054

2,610,878

2,538,332

Other interest-bearing liabilities49,649

78,369

79,683

78,906

81,690

Other liabilities23,461

35,958

64,432

31,267

29,189

Total liabilities2,939,523

2,893,150

2,977,169

2,721,051

2,649,211

Stockholders' Equity377,524

366,908

347,355

350,097

339,968

Total Liabilities and Stockholders' Equity$3,317,047

$3,260,058

$3,324,524

$3,071,148

$2,989,179

Period-end shares outstanding28,322

28,322

28,308

28,258

28,186

Book value per share$13.33

$12.95

$12.27

$12.39

$12.06

Tangible book value per share (Non-GAAP)*11.61

11.23

10.53

10.63

10.23

* Tangible book value per share is calculated by dividing tangible common equity by outstanding sharesCapital and LiquidityCommon Equity Tier 1 Capital Ratio (b)14.58%

13.95%

13.49%

13.22%

12.98%

Total Risk Based Capital Ratio (b)16.25%

15.54%

15.10%

14.72%

14.36%

Tier 1 Risk Based Capital Ratio (b)15.18%

14.39%

13.93%

13.67%

13.43%

Tier 1 Leverage Ratio (b)10.17%

9.70%

9.69%

9.77%

9.67%

Equity to Asset Ratio11.38%

11.25%

10.45%

11.40%

11.37%

Tangible Common Equity Ratio (c)10.06%

9.90%

9.10%

9.94%

9.82%

Net Loans to Assets56.41%

59.36%

60.53%

66.94%

71.18%

Loans to Deposits66.08%

70.53%

71.92%

79.59%

84.59%

Asset QualityNon-performing loans$14,744

$13,873

$11,640

$13,835

$11,841

Other Real Estate Owned0

30

30

0

73

Non-performing assets14,744

13,903

11,670

13,835

11,914

Loans 30 - 89 days delinquent6,944

7,606

7,183

9,297

10,134

Charged-off loans411

502

284

387

393

Recoveries125

323

200

190

174

Net Charge-offs286

179

84

197

219

Annualized Net Charge-offs toAverage Net Loans Outstanding0.06%

0.04%

0.02%

0.04%

0.04%

Allowance for Credit Losses to Total Loans (a)1.22%

1.27%

1.22%

1.07%

0.90%

Non-performing Loans to Total Loans0.78%

0.71%

0.57%

0.67%

0.55%

Allowance to Non-performing Loans (a)156.92%

178.81%

214.22%

160.06%

163.34%

Non-performing Assets to Total Assets0.44%

0.43%

0.35%

0.45%

0.40%

(a) CECL method used for the 2021 quarters. Prior periods used the incurred loss methodology.(b) Sept. 30, 2021 ratio is estimated(c) This is a non-GAAP financial measure. A reconciliation to GAAP is shown belowConsolidated Statements of Financial Condition Sept. 30, June 30, March 31, Dec. 31, Sept. 30,

2021 2021 2021 2020 2020

AssetsCash and cash $79,808 $149,357 $326,385 $254,621 $199,575equivalentsSecurities available for 1,183,361 996,271 802,866 575,600 481,509saleOther investments 19,041 20,573 21,317 21,528 23,276

Loans held for sale 2,628 1,922 3,993 4,766 7,076

Loans 1,894,216 1,959,865 2,037,404 2,078,044 2,147,158

Less allowance for 23,136 24,806 24,935 22,144 19,341credit losses (a)Net Loans 1,871,080 1,935,059 2,012,469 2,055,900 2,127,817

Other assets 161,129 156,876 157,494 158,733 149,926

Total Assets $3,317,047 $3,260,058 $3,324,524 $3,071,148 $2,989,179

Liabilities and Stockholders' EquityDepositsNoninterest-bearing $675,938 $663,640 $675,045 $608,791 $577,334

Interest-bearing 2,190,475 2,115,183 2,158,009 2,002,087 1,960,998

Total deposits 2,866,413 2,778,823 2,833,054 2,610,878 2,538,332

Other interest-bearing 49,649 78,369 79,683 78,906 81,690liabilitiesOther liabilities 23,461 35,958 64,432 31,267 29,189

Total liabilities 2,939,523 2,893,150 2,977,169 2,721,051 2,649,211

Stockholders' Equity 377,524 366,908 347,355 350,097 339,968

Total Liabilities and $3,317,047 $3,260,058 $3,324,524 $3,071,148 $2,989,179Stockholders' Equity Period-end shares 28,322 28,322 28,308 28,258 28,186outstandingBook value per share $13.33 $12.95 $12.27 $12.39 $12.06

Tangible book value per 11.61 11.23 10.53 10.63 10.23share (Non-GAAP)* * Tangible book value per share is calculated by dividing tangible commonequity by outstanding shares Capital and LiquidityCommon Equity Tier 1 14.58% 13.95% 13.49% 13.22% 12.98%Capital Ratio (b)Total Risk Based Capital 16.25% 15.54% 15.10% 14.72% 14.36%Ratio (b)Tier 1 Risk Based 15.18% 14.39% 13.93% 13.67% 13.43%Capital Ratio (b)Tier 1 Leverage Ratio 10.17% 9.70% 9.69% 9.77% 9.67%(b)Equity to Asset Ratio 11.38% 11.25% 10.45% 11.40% 11.37%

Tangible Common Equity 10.06% 9.90% 9.10% 9.94% 9.82%Ratio (c)Net Loans to Assets 56.41% 59.36% 60.53% 66.94% 71.18%

Loans to Deposits 66.08% 70.53% 71.92% 79.59% 84.59%

Asset QualityNon-performing loans $14,744 $13,873 $11,640 $13,835 $11,841

Other Real Estate Owned 0 30 30 0 73

Non-performing assets 14,744 13,903 11,670 13,835 11,914

Loans 30 - 89 days 6,944 7,606 7,183 9,297 10,134delinquentCharged-off loans 411 502 284 387 393

Recoveries 125 323 200 190 174

Net Charge-offs 286 179 84 197 219

Annualized NetCharge-offs toAverage Net Loans 0.06% 0.04% 0.02% 0.04% 0.04%OutstandingAllowance for Credit 1.22% 1.27% 1.22% 1.07% 0.90%Losses to Total Loans(a)Non-performing Loans to 0.78% 0.71% 0.57% 0.67% 0.55%Total LoansAllowance to 156.92% 178.81% 214.22% 160.06% 163.34%Non-performing Loans (a)Non-performing Assets to 0.44% 0.43% 0.35% 0.45% 0.40%Total Assets (a) CECL method used for the 2021 quarters. Prior periods used the incurredloss methodology.(b) Sept. 30, 2021 ratio is estimated(c) This is a non-GAAP financial measure. A reconciliation to GAAP is shownbelowReconciliation of Total Assets to Tangible AssetsFor the Three Months Ended

For the Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

2021

2021

2021

2020

2020

2021

2020

Total Assets$3,317,047

$3,260,058

$3,324,524

$3,071,148

$2,989,179

$3,317,047

$2,989,179

Less Goodwill and other intangibles48,670

48,985

49,301

49,617

51,608

48,670

51,608

Tangible Assets$3,268,377

$3,211,073

$3,275,223

$3,021,531

$2,937,571

$3,268,377

$2,937,571

Average Assets3,304,708

3,280,316

3,155,695

3,033,005

2,957,702

3,247,466

2,814,339

Less average Goodwill and other intangibles48,879

49,193

49,509

51,476

51,754

49,192

48,655

Average Tangible Assets$3,255,829

$3,231,123

$3,106,186

$2,981,529

$2,905,948

$3,198,274

$2,765,684

Reconciliation of Common Stockholders' Equity to Tangible Common EquityFor the Three Months Ended

For the Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

2021

2021

2021

2020

2020

2021

2020

Stockholders' Equity$377,524

$366,908

$347,355

$350,097

$339,968

$377,524

$339,968

Less Goodwill and other intangibles48,670

48,985

49,301

49,617

51,608

48,670

51,608

Tangible Common Equity$328,854

$317,923

$298,054

$300,480

$288,360

$328,854

$288,360

Average Stockholders' Equity375,208

363,753

351,190

344,949

335,982

361,933

317,448

Less average Goodwill and other intangibles48,879

49,193

49,509

51,476

51,754

49,192

48,655

Average Tangible Common Equity$326,329

$314,560

$301,681

$293,473

$284,228

$312,741

$268,793

Reconciliation of Net Income, Excluding Acquisition Related CostsFor the Three Months Ended

For the Nine Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Sept. 30,

Sept. 30,

2021

2021

2021

2020

2020

2021

2020

Net income$16,011

$15,575

$14,556

$11,357

$10,869

$46,142

$30,519

Acquisition related costs - tax equated468

83

9

1,431

50

499

1,154

Net income - Adjusted$16,479

$15,658

$14,565

$12,788

$10,919

$46,641

$31,673

Diluted EPS excluding acquisition costs$0.58

$0.55

$0.51

$0.45

$0.39

$1.65

$1.11

Reconciliation of Total Assets to Tangible Assets For the Three Months Ended For the Nine Months Ended

Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30,

2021 2021 2021 2020 2020 2021 2020

Total Assets $3,317,047 $3,260,058 $3,324,524 $3,071,148 $2,989,179 $3,317,047 $2,989,179

Less Goodwill 48,670 48,985 49,301 49,617 51,608 48,670 51,608and otherintangiblesTangible $3,268,377 $3,211,073 $3,275,223 $3,021,531 $2,937,571 $3,268,377 $2,937,571AssetsAverage 3,304,708 3,280,316 3,155,695 3,033,005 2,957,702 3,247,466 2,814,339AssetsLess averageGoodwill and 48,879 49,193 49,509 51,476 51,754 49,192 48,655otherintangiblesAverage $3,255,829 $3,231,123 $3,106,186 $2,981,529 $2,905,948 $3,198,274 $2,765,684TangibleAssets Reconciliation of Common Stockholders' Equity to Tangible Common Equity For the Three Months Ended For the Nine Months Ended

Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30,

2021 2021 2021 2020 2020 2021 2020

Stockholders' $377,524 $366,908 $347,355 $350,097 $339,968 $377,524 $339,968EquityLess Goodwill 48,670 48,985 49,301 49,617 51,608 48,670 51,608and otherintangiblesTangible $328,854 $317,923 $298,054 $300,480 $288,360 $328,854 $288,360Common EquityAverage 375,208 363,753 351,190 344,949 335,982 361,933 317,448Stockholders'EquityLess averageGoodwill and 48,879 49,193 49,509 51,476 51,754 49,192 48,655otherintangiblesAverage $326,329 $314,560 $301,681 $293,473 $284,228 $312,741 $268,793TangibleCommon Equity Reconciliation of Net Income, Excluding Acquisition Related Costs For the Three Months Ended For the Nine Months Ended

Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30,

2021 2021 2021 2020 2020 2021 2020

Net income $16,011 $15,575 $14,556 $11,357 $10,869 $46,142 $30,519

Acquisition 468 83 9 1,431 50 499 1,154related costs- tax equatedNet income - $16,479 $15,658 $14,565 $12,788 $10,919 $46,641 $31,673AdjustedDiluted EPSexcluding $0.58 $0.55 $0.51 $0.45 $0.39 $1.65 $1.11acquisitioncostsReconciliation of Allowance for Credit Losses to Gross Loans, Excluding PPP Loans and Acquired LoansFor the Three Months EndedSept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

2021

2021

2021

2020

2020

Gross Loans$1,894,216

$1,959,865

$2,037,404

$2,078,044

$2,147,158

PPP Loans, net53,580

92,073

136,826

125,396

194,490

Loans less PPP1,840,636

1,867,792

1,900,578

1,952,648

1,952,668

Allowance for Credit Losses to Gross Loans Excluding PPP (a)1.26%

1.33%

1.31%

1.13%

0.99%

Acquired Loans211,954

233,790

251,616

272,150

294,712

Loans less PPP and Acquired$1,628,682

$1,634,002

$1,648,962

$1,680,498

$1,657,956

Allowance for Credit Losses to Gross Loans Excluding PPP and Acquired (a)1.42%

1.52%

1.51%

1.32%

1.17%

(a) CECL method used for the 2021 quarters. Prior periods used the incurred loss methodology.For the Three Months EndedSept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

End of Period Loan Balances2021

2021

2021

2020

2020

Commercial real estate$690,407

$704,809

$702,556

$713,936

$710,730

Commercial302,356

351,261

406,064

404,492

481,593

Residential real estate376,901

383,187

400,982

413,841

416,859

HELOC106,750

107,153

107,501

110,352

109,768

Consumer189,497

190,064

193,295

203,061

209,883

Agricultural loans226,896

223,427

227,073

232,129

219,896

Total, excluding net deferred loan costs$1,892,807

$1,959,901

$2,037,471

$2,077,811

$2,148,729

For the Three Months EndedSept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Noninterest Income2021

2021

2021

2020

2020

Service charges on deposit accounts$924

$790

$808

$930

$904

Bank owned life insurance income340

300

284

187

196

Trust fees2,335

2,358

2,236

1,950

1,973

Insurance agency commissions799

948

1,001

776

784

Security gains (losses)459

32

488

179

70

Retirement plan consulting fees334

389

320

394

341

Investment commissions638

523

504

450

353

Net gains on sale of loans1,466

2,191

2,900

3,610

3,119

Other mortgage banking fee income, net32

(55)

(115)

108

(21)

Debit card and EFT fees1,128

1,226

1,084

1,061

1,048

Other operating income560

806

673

854

450

Total Noninterest Income$9,015

$9,508

$10,183

$10,499

$9,217

For the Three Months EndedSept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

Noninterest Expense2021

2021

2021

2020

2020

Salaries and employee benefits$9,321

$9,866

$9,976

$9,638

$10,244

Occupancy and equipment1,899

1,890

2,275

2,060

1,719

State and local taxes552

551

554

515

576

Professional fees1,009

830

1,056

341

753

Merger related costs472

104

12

1,798

58

Advertising391

196

260

478

460

FDIC insurance140

120

170

100

200

Intangible amortization316

316

316

332

332

Core processing charges860

831

627

831

925

Telephone and data117

139

138

154

182

Other operating expenses2,051

2,227

1,984

3,347

2,021

Total Noninterest Expense$17,128

$17,070

$17,368

$19,594

$17,470

Reconciliation of Allowance for Credit Losses to Gross Loans, Excluding PPPLoans and Acquired Loans For the Three Months Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30,

2021 2021 2021 2020 2020

Gross Loans $1,894,216 $1,959,865 $2,037,404 $2,078,044 $2,147,158

PPP Loans, net 53,580 92,073 136,826 125,396 194,490

Loans less PPP 1,840,636 1,867,792 1,900,578 1,952,648 1,952,668

Allowance for Credit 1.26% 1.33% 1.31% 1.13% 0.99%Losses to Gross LoansExcluding PPP (a)Acquired Loans 211,954 233,790 251,616 272,150 294,712

Loans less PPP and $1,628,682 $1,634,002 $1,648,962 $1,680,498 $1,657,956AcquiredAllowance for CreditLosses to Gross Loans 1.42% 1.52% 1.51% 1.32% 1.17%Excluding PPP andAcquired (a) (a) CECL method used for the 2021 quarters. Prior periods used theincurred loss methodology. For the Three Months Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30,

End of Period Loan 2021 2021 2021 2020 2020BalancesCommercial real estate $690,407 $704,809 $702,556 $713,936 $710,730

Commercial 302,356 351,261 406,064 404,492 481,593

Residential real estate 376,901 383,187 400,982 413,841 416,859

HELOC 106,750 107,153 107,501 110,352 109,768

Consumer 189,497 190,064 193,295 203,061 209,883

Agricultural loans 226,896 223,427 227,073 232,129 219,896

Total, excluding net $1,892,807 $1,959,901 $2,037,471 $2,077,811 $2,148,729deferred loan costs For the Three Months Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30,

Noninterest Income 2021 2021 2021 2020 2020

Service charges on $924 $790 $808 $930 $904deposit accountsBank owned life 340 300 284 187 196insurance incomeTrust fees 2,335 2,358 2,236 1,950 1,973

Insurance agency 799 948 1,001 776 784commissionsSecurity gains (losses) 459 32 488 179 70

Retirement plan 334 389 320 394 341consulting feesInvestment commissions 638 523 504 450 353

Net gains on sale of 1,466 2,191 2,900 3,610 3,119loansOther mortgage banking 32 (55) (115) 108 (21)fee income, netDebit card and EFT fees 1,128 1,226 1,084 1,061 1,048

Other operating income 560 806 673 854 450

Total Noninterest Income $9,015 $9,508 $10,183 $10,499 $9,217

For the Three Months Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30,

Noninterest Expense 2021 2021 2021 2020 2020

Salaries and employee $9,321 $9,866 $9,976 $9,638 $10,244benefitsOccupancy and equipment 1,899 1,890 2,275 2,060 1,719

State and local taxes 552 551 554 515 576

Professional fees 1,009 830 1,056 341 753

Merger related costs 472 104 12 1,798 58

Advertising 391 196 260 478 460

FDIC insurance 140 120 170 100 200

Intangible amortization 316 316 316 332 332

Core processing charges 860 831 627 831 925

Telephone and data 117 139 138 154 182

Other operating expenses 2,051 2,227 1,984 3,347 2,021

Total Noninterest $17,128 $17,070 $17,368 $19,594 $17,470Expense Average Balance Sheets and Related Yields and Rates(Dollar Amounts in Thousands)Three Months EndedThree Months EndedSeptember 30, 2021September 30, 2020AVERAGEAVERAGEBALANCEINTEREST (1)RATE (1)BALANCEINTEREST (1)RATE (1)EARNING ASSETSLoans (2)$1,917,443

$22,665

4.69%

$2,142,624

$24,331

4.52%

Taxable securities727,271

3,222

1.76

197,311

1,263

2.55

Tax-exempt securities (2)360,371

3,065

3.37

254,533

2,459

3.84

Other investments19,380

113

2.31

22,999

138

2.39

Federal funds sold and other95,871

32

0.13

159,151

52

0.13

Total earning assets3,120,336

29,097

3.70

2,776,618

28,243

4.05

Nonearning assets184,372

181,084

Total assets$3,304,708

$2,957,702

INTEREST-BEARING LIABILITIESTime deposits$361,566

$692

0.76%

$476,205

$1,869

1.56%

Brokered time deposits0

0

0

57,000

157

1.10

Savings deposits525,560

152

0.11

476,097

256

0.21

Demand deposits1,278,099

502

0.16

913,946

871

0.38

Short term borrowings5,671

0

0.00

4,476

14

1.24

Long term borrowings51,767

495

3.79

76,554

303

1.57

Total interest-bearing liabilities$2,222,663

1,841

0.33

$2,004,278

3,470

0.69

NONINTEREST-BEARING LIABILITIESAND STOCKHOLDERS' EQUITYDemand deposits684,419

592,539

Other liabilities22,418

24,903

Stockholders' equity375,208

335,982

TOTAL LIABILITIES ANDSTOCKHOLDERS' EQUITY$3,304,708

$2,957,702

Net interest income and interest rate spread$27,256

3.37%

$24,773

3.36%

Net interest margin3.47%

3.55%

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.(2) For 2021, adjustments of $87 thousand and $635 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2020, adjustments of $103 thousand and $505 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.Average Balance Sheets and Related Yields and Rates(Dollar Amounts in Thousands) Three Months Ended Three Months Ended September 30, 2021 September 30, 2020 AVERAGE AVERAGE BALANCE INTEREST RATE BALANCE INTEREST RATE (1) (1) (1) (1)EARNING ASSETSLoans (2) $1,917,443 $22,665 4.69% $2,142,624 $24,331 4.52%

Taxable securities 727,271 3,222 1.76 197,311 1,263 2.55

Tax-exempt securities (2) 360,371 3,065 3.37 254,533 2,459 3.84

Other investments 19,380 113 2.31 22,999 138 2.39

Federal funds sold and 95,871 32 0.13 159,151 52 0.13otherTotal earning assets 3,120,336 29,097 3.70 2,776,618 28,243 4.05

Nonearning assets 184,372 181,084

Total assets $3,304,708 $2,957,702

INTEREST-BEARINGLIABILITIESTime deposits $361,566 $692 0.76% $476,205 $1,869 1.56%

Brokered time deposits 0 0 0 57,000 157 1.10

Savings deposits 525,560 152 0.11 476,097 256 0.21

Demand deposits 1,278,099 502 0.16 913,946 871 0.38

Short term borrowings 5,671 0 0.00 4,476 14 1.24

Long term borrowings 51,767 495 3.79 76,554 303 1.57

Total interest-bearing $2,222,663 1,841 0.33 $2,004,278 3,470 0.69liabilitiesNONINTEREST-BEARINGLIABILITIESAND STOCKHOLDERS' EQUITYDemand deposits 684,419 592,539

Other liabilities 22,418 24,903

Stockholders' equity 375,208 335,982

TOTAL LIABILITIES ANDSTOCKHOLDERS' EQUITY $3,304,708 $2,957,702

Net interest income and $27,256 3.37% $24,773 3.36%interest rate spreadNet interest margin 3.47% 3.55%

(1) Interest and yields are calculated on a tax-equivalent basis whereapplicable.(2) For 2021, adjustments of $87 thousand and $635 thousand, respectively, weremade to tax equate income on tax exempt loans and tax exempt securities. For2020, adjustments of $103 thousand and $505 thousand, respectively, were madeto tax equate income on tax exempt loans and tax exempt securities. Theseadjustments were based on a marginal federal income tax rate of 21%, lessdisallowances.Nine Months EndedNine Months EndedSeptember 30, 2021September 30, 2020AVERAGEAVERAGEBALANCEINTEREST (1)RATE (1)BALANCEINTEREST (1)RATE (1)EARNING ASSETSLoans (2)$1,992,003

$70,234

4.71%

$2,066,178

$73,370

4.78%

Taxable securities524,774

7,452

1.90

205,168

4,088

2.66

Tax-exempt securities (2)327,938

8,630

3.52

246,218

7,161

3.88

Other investments20,372

355

2.33

24,008

415

2.31

Federal funds sold and other203,197

161

0.11

104,201

231

0.33

Total earning assets3,068,284

86,832

3.78

2,645,773

85,265

4.35

Nonearning assets179,182

168,566

Total assets$3,247,466

$2,814,339

INTEREST-BEARING LIABILITIESTime deposits$397,378

$2,955

0.99%

$488,051

$6,492

1.78%

Brokered time deposits15,692

75

0.64

82,138

959

1.56

Savings deposits512,716

510

0.13

452,938

844

0.25

Demand deposits1,196,910

1,861

0.21

809,619

3,357

0.55

Short term borrowings4,395

7

0.21

26,440

352

1.78

Long term borrowings67,335

1,075

2.13

84,483

1,102

1.74

Total interest-bearing liabilities$2,194,426

6,483

0.39

$1,943,669

13,106

0.90

NONINTEREST-BEARING LIABILITIESAND STOCKHOLDERS' EQUITYDemand deposits$669,255

$533,400

Other liabilities21,852

19,822

Stockholders' equity361,933

317,448

TOTAL LIABILITIES ANDSTOCKHOLDERS' EQUITY$3,247,466

$2,814,339

Net interest income and interest rate spread$80,349

3.39%

$72,159

3.45%

Net interest margin3.50%

3.64%

(1) Interest and yields are calculated on a tax-equivalent basis where applicable.(2) For 2021, adjustments of $274 thousand and $1.8 million, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2020, adjustments of $299 thousand and $1.5 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20211027005080/en/

CONTACT: Kevin J. Helmick, President and CEO 20 South Broad Street, P.O. Box 555 Canfield, OH 44406 330.533.3341 Email: exec@farmersbankgroup.com