Business Wire | Oct 28, 2020 08:00AM EDT

Farmers National Banc Corp. Announces 2020 Third Quarter Financial Results

Oct. 28, 2020

CANFIELD, Ohio--(BUSINESS WIRE)--Oct. 28, 2020--Farmers National Banc Corp. (Farmers) (NASDAQ: FMNB) today reported financial results for the three months ended September 30, 2020.

Net income for the three months ended September 30, 2020 was $10.9 million, or $0.38 per diluted share, which compares to $9.2 million, or $0.33 per diluted share, for the three months ended September 30, 2019 and $11 million or $0.39 per diluted share for the linked quarter. Net income excluding acquisition costs (non-GAAP) for the quarter ended September 30, 2020 was $10.9 million or $0.39 per share, compared to $9.3 million or $0.33 per share for the same quarter in 2019 and $11.1 million or $0.39 per share for the most recent prior quarter.

Annualized return on average assets and annualized return on average equity were 1.46% and 12.87%, respectively, for the three month period ending September 30, 2020, compared to 1.51% and 12.49% for the same three month period in 2019, and 1.56% and 14.02% for the linked quarter. Farmers' annualized return on average tangible equity (non-GAAP) was 15.30% for the quarter ended September 30, 2020 compared to 14.80% for the same quarter in 2019 and 16.69% for the linked quarter.

Net income for the nine months ended September 30, 2020 was $30.5 million, or $1.07 per diluted share, compared to $26.1 million or $0.94 per diluted share for the same nine month period in 2019. Annualized return on average assets and return on average equity were 1.45% and 12.84%, respectively, for the nine months ended September 30, 2020, compared to 1.47% and 12.52% for the same period in 2019.

Kevin J. Helmick, President and CEO, stated, "Our record third quarter financial results demonstrate that when our customers and communities win, we win, and we remain focused on ensuring our customers are well positioned to achieve their financial goals. At the onset of the COVID-19 crisis, we helped our commercial and agricultural customers by providing relief on their loans in the form of payment deferrals. The significant decline in the balance of deferred loans reflects the diversity of our loan portfolio and our strong asset quality, and at September 30, 2020, we only had 5 loans in loan payment deferral status for a balance of only $0.8 million. In addition, we helped secure nearly $200 million for our customers in the form of PPP loans, helping protect jobs within our local communities, and we are now working with these borrowers on the forgiveness process."

Farmers is offering special financial assistance to support customers who are experiencing financial hardships related to the COVID-19 pandemic. The following table reports the number and amount of payment deferrals by loan type as of dates listed:

March 31, 2020 June 30, 2020 September 30, 2020

(dollars in Outstanding Number Outstanding Number Outstanding Numberthousands) Balance of Balance of Balance of Loans Loans Loans

Commercial real $75,809 78 $43,954 44 $155 1estate

Commercial 11,839 81 8,515 69 0 0

Agricultural 1,492 11 8,340 22 469 2

Residential real 5,506 41 3,785 37 222 1estate

Consumer 2,840 127 1,858 100 2 1

Total $97,486 338 $66,452 272 $848 5

The Company offered three month deferrals upon request by the borrowers. The deferral requests began in the middle of March, 2020 and concluded at the end of the three month deferral period. The decline in deferred loans and balances was due to the ending of the deferment period and not all borrowers requested additional deferments as most continued to pay under the original terms of their loan.

Farmers is also a preferred SBA lender and dedicated significant additional staff and other resources to help our customers complete and submit their applications and supporting documentation for loans offered under the new 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 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. At October 22, 2020, the Company had received payments from the SBA for forgiveness of loans totaling $1.8 million, or approximately 1% of the total PPP loans.

2020 Third Quarter Financial Highlights

* Loans Total loans were $2.15 billion at September 30, 2020, compared to $1.78 billion at September 30, 2019, representing an increase of 20.4%. Excluding the $182.1 million of loans added from the Maple Leaf acquisition, loan growth was 10.1%. The increase in loans was a direct result of Farmers' focus on loan growth utilizing a talented lending and credit team, while adhering to a sound underwriting discipline. The increase in loans has occurred primarily in the PPP category, with $194.5 million, net of deferred fees, in outstanding balances. Loans now comprise 77.5% of the Bank's average earning assets for the quarter ended September 30, 2020, compared to 79.3% for the same period in 2019. The growth in loans has resulted in a 6.8% increase in tax equated loan interest income, including fees, in the third quarter of 2020 compared to the same quarter in 2019. A summary of loans summarized by industries that have particular vulnerability to the effects of COVID-19 and their outstanding balance as a percentage of total loans is shown in the following table:

(dollars in thousands) Outstanding Balance % of total loans

Restaurants and Catering Facilities $50,388 2.35%

Hotels 41,351 1.93%

Golf Courses 7,562 0.35%

Energy 753 0.04%

Total $100,054 4.67%

* Deposits and Liquidity Farmers maintains, in the opinion of management, liquidity sufficient to satisfy depositors' requirements and meet the credit needs of its customers. The Company's non-brokered deposits increased 29% from $1.9 billion at September 30, 2019 to $2.5 billion at September 30, 2020. The loan to deposit ratio at September 30, 2020 stands at 84.6%, a slight decrease compared to 87.4% one year ago. The Company has additional borrowing capacity at the Federal Home Loan Bank of Cincinnati and approved lines of credit at two domestic banks.

* Loan quality Non-performing assets to total assets remain at a low level, currently at 0.40%, but increased from the 0.28% reported one year ago. Early stage delinquencies were $10.1 million, or 0.47% of total loans, at September 30, 2020, compared to $10.3 million, or 0.48% of total loans, for the quarter ended June 30, 2020. Net charge-offs for the current quarter were $219 thousand, compared to $511 thousand in the same quarter in 2019. Total net charge-offs as a percentage of average net loans outstanding is 0.04% for the quarter ended September 30, 2020, compared to 0.08% for the most recent quarter. The Company increased its provision for loan losses to $2.6 million, an increase of $200 thousand compared to the $2.4 million provision recorded in the most recent quarter. This additional provision is the amount determined to be required as a result of the impact of increased negative factors that exist in the current economic environment. As an overall percentage of loans, the allowance for loan losses increased to 0.90% during the current quarter compared to 0.79% during the quarter ended June 30, 2020. Excluding the PPP loans, this allowance for loan losses to gross loans ratio increases to 0.99% (non-GAAP). The ratio of the allowance for loan losses to gross loans, excluding PPP loans and acquired loans is 1.17%. It is also important to note that the average FICO score of our indirect lending portfolio stands at a healthy 769 and our consumer loan portfolio average FICO score is currently 757. In accordance with the accounting relief provisions of the CARES Act, the Bank has postponed adoption of the current expected credit losses ("CECL") accounting standards, primarily due to the impact the COVID-19 pandemic is having on the economy and the lack of reasonable and supportable economic forecasts.

* Net interest margin The net interest margin for the three months ended September 30, 2020 was 3.59%, a 20 basis points decrease from the quarter ended September 30, 2019, and 15 basis points less than the 3.74% reported for the linked quarter. In comparing the third quarter of 2020 to the same period in 2019, asset yields decreased 62 basis points, while the cost of interest-bearing liabilities decreased 53 basis points. Most of the decrease in the asset yields was the result of lower rates earned on loans, declining from 5.11% to 4.55% due to the decrease in the prime lending rate and the addition of the lower yielding PPP loans. The cost of interest bearing liabilities decreased as the Federal Funds target rate was lowered to a target of 0-0.25% at the start of the COVID-19 pandemic in the United States. Each of the major interest-bearing liability categories experienced cost decreases compared to one year ago. The net interest margin for the quarter ended September 30, 2020 excluding interest and fees from PPP loans is 3.69%. The net interest margin is also impacted by the additional accretion as a result of the discounted loan portfolios acquired in the previous mergers, which increased the net interest margin by 5 basis points for the quarter ended September 30, 2020 and 4 basis points for the quarter ended September 30, 2019.

* Noninterest income Noninterest income increased 24.96% to $9.5 million for the quarter ended September 30, 2020 compared to $7.6 million in the same quarter in 2019. Gains on the sales of mortgage loans increased $2.2 million or 192.91%, as lower interest rates prompted an increase in mortgage loan refinancing and new home purchases. Insurance agency commissions increased $103 thousand or 15.12% and debit card interchange fees increased $113 thousand or 12.09%, but those increases were offset by a $304 thousand or 25.17% decrease in deposit account service charge income due to a change in consumer behavior during the COVID-19 pandemic. Other operating income was $306 thousand or 40.48% lower due to reduced income from Small Business Investment Company Fund investments and commercial loan interest rate swap fees.

* Noninterest expenses Farmers has remained committed to managing the level of noninterest expenses. Total noninterest expenses for the third quarter of 2020 increased 7.02% to $17.7 million compared to $16.6 million in the same quarter in 2019, primarily as a result of increases in salaries and employee benefits of $822 thousand or 8.72%, FDIC insurance premiums of $120 thousand or 150% as a result of the small bank assessment credit issued in the prior quarter, occupancy expense of $104 thousand or 6.44% and state and local taxes of $108 thousand or 23.08%. Other operating expenses decreased $37 thousand or 1.60%. Annualized noninterest expenses excluding acquisition costs (non-GAAP) measured as a percentage of quarterly average assets decreased from 2.70% in the third quarter of 2019 to 2.38% in the third quarter of 2020.

* Efficiency ratio The efficiency ratio for the quarter ended September 30, 2020 improved to 50.66% compared to 55.90% for the same quarter in 2019. The improvement in mortgage banking income and net interest income, accompanied with careful management of noninterest expenses were the main drivers of the improvement.

Mr. Helmick concluded, "Despite the impacts of the COVID-19 crisis, we expect 2020 to be another good year of growth and profitability at Farmers, and we are excited about our potential for 2021 as a result of our diverse income streams, strong capital levels, favorable asset quality, and experienced management team. I want to extend my sincere thanks to all of our associates for their dedication and hard work during these unprecedented times. We remain committed to doing the right thing for our communities. On behalf of everyone at Farmers, we are proud to help our local business and individual customers alike."

Founded in 1887, Farmers National Banc Corp. is a diversified financial services company headquartered in Canfield, Ohio, with $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 42 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, 2020 are $2.5 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 and net income excluding costs related to acquisition activities, 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 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; and the other factors contained in Farmers' Annual Report on Form 10-K for the year ended December 31, 2019, 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



ConsolidatedStatements For the Three Months Ended For the Nine Months Endedof Income

Sept. June March Dec. Sept. Sept. Sept. Percent 30, 30, 31, 31, 30, 30, 30, Change 2020 2020 2020 2019 2019 2020 2019

Totalinterest $27,635 $28,142 $27,717 $25,847 $25,931 $83,494 $76,139 9.7%income

Totalinterest 3,470 4,221 5,415 4,682 5,174 13,106 14,926 -12.2%expense

Net interest 24,165 23,921 22,302 21,165 20,757 70,388 61,213 15.0%income

Provisionfor loan 2,600 2,400 1,100 600 550 6,100 1,850 229.7%losses

Noninterest 9,467 9,136 7,870 7,814 7,576 26,473 21,348 24.0%income

Acquisitionrelated 58 48 1,319 104 112 1,425 93 1432.3%costs

Other 17,662 17,692 17,418 16,414 16,446 52,772 49,404 6.8%expense

Incomebefore 13,312 12,917 10,335 11,861 11,225 36,564 31,214 17.1%income taxes

Income taxes 2,443 1,906 1,696 2,186 2,071 6,045 5,129 17.9%

Net income $10,869 $11,011 $8,639 $9,675 $9,154 $30,519 $26,085 17.0%



Averagediluted 28,291 28,280 28,710 27,829 27,819 28,421 27,898sharesoutstanding

Basicearnings per 0.39 0.39 0.30 0.35 0.33 1.08 0.94share

Dilutedearnings per 0.38 0.39 0.30 0.35 0.33 1.07 0.94share

Cash 3,101 3,100 3,104 2,767 2,767 9,305 7,771dividends

Cashdividends 0.11 0.11 0.11 0.10 0.10 0.33 0.28per share

PerformanceRatios

Net InterestMargin 3.59% 3.74% 3.75% 3.84% 3.79% 3.69% 3.81%(Annualized)

EfficiencyRatio (Tax 50.66% 50.75% 59.72% 54.51% 55.90% 53.78% 57.32%equivalentbasis)

Return onAverage 1.46% 1.56% 1.32% 1.58% 1.51% 1.45% 1.47%Assets(Annualized)

Return onAverage 12.87% 14.02% 11.53% 12.78% 12.49% 12.84% 12.52%Equity(Annualized)

Dividends to 28.53% 28.15% 35.93% 28.60% 30.23% 30.49% 29.79%Net Income

OtherPerformanceRatios(Non-GAAP)

Return onAverage 1.50% 1.58% 1.33% 1.62% 1.55% 1.47% 1.49%TangibleAssets

Return onAverage 15.30% 16.69% 13.81% 15.03% 14.80% 15.14% 14.79%TangibleEquity

Return onAverageTangibleEquity 15.37% 16.75% 15.50% 15.17% 14.95% 15.71% 14.83%excludingacquisitioncosts

Consolidated Statements of Financial Condition

Sept. 30,2020

June 30,2020

March 31,2020

Dec. 31,2019

Sept. 30,2019

Assets

Cash and cash equivalents

$199,575

$103,954

$83,107

$70,760

$85,675

Securities available for sale

481,509

475,614

448,043

432,233

423,193

Equity securities

8,307

8,375

8,080

7,909

7,856

Loans held for sale

7,076

3,395

3,272

2,600

2,079

Loans

2,147,158

2,149,690

1,976,582

1,811,539

1,784,125

Less allowance for loan losses

19,341

16,960

14,952

14,487

14,261

Net Loans

2,127,817

2,132,730

1,961,630

1,797,052

1,769,864

Other assets

164,895

161,612

164,256

138,604

144,543

Total Assets

$2,989,179

$2,885,680

$2,668,388

$2,449,158

$2,433,210

Liabilities and Stockholders' Equity

Deposits

Noninterest-bearing

$577,334

$593,162

$449,952

$434,126

$432,609

Interest-bearing

1,960,998

1,846,323

1,796,325

1,574,838

1,608,043

Total deposits

2,538,332

2,439,485

2,246,277

2,008,964

2,040,652

Other interest-bearing liabilities

81,690

80,115

96,852

122,197

76,324

Other liabilities

29,189

34,728

21,523

18,688

23,011

Total liabilities

2,649,211

2,554,328

2,364,652

2,149,849

2,139,987

Stockholders' Equity

339,968

331,352

303,736

299,309

293,223

Total Liabilities

and Stockholders' Equity

$2,989,179

$2,885,680

$2,668,388

$2,449,158

$2,433,210

Period-end shares outstanding

28,186

28,180

28,127

27,671

27,669

Book value per share

$12.06

$11.76

$10.80

$10.82

$10.60

Tangible book value per share (Non-GAAP)*

10.23

9.92

8.94

9.28

9.04

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

Capital and Liquidity

Common Equity Tier 1 Capital Ratio (a)

12.61%

12.65%

12.26%

12.94%

12.70%

Total Risk Based Capital Ratio (a)

13.51%

13.92%

13.43%

13.82%

13.58%

Tier 1 Risk Based Capital Ratio (a)

12.71%

13.10%

12.70%

13.06%

12.83%

Tier 1 Leverage Ratio (a)

10.01%

9.71%

10.18%

10.69%

10.42%

Equity to Asset Ratio

11.37%

11.48%

11.38%

12.22%

12.05%

Tangible Common Equity Ratio (b)

9.82%

9.86%

9.61%

10.67%

10.47%

Net Loans to Assets

71.18%

73.91%

73.51%

73.37%

72.74%

Loans to Deposits

84.59%

88.12%

87.99%

90.17%

87.43%

Asset Quality

Non-performing loans

$11,841

$12,225

$11,845

$6,345

$6,749

Other Real Estate Owned

73

41

131

19

74

Non-performing assets

11,914

12,266

11,976

6,364

6,823

Loans 30 - 89 days delinquent

10,134

10,336

19,067

11,893

9,076

Charged-off loans

393

524

749

519

674

Recoveries

174

132

114

145

163

Net Charge-offs

219

392

635

374

511

Annualized Net Charge-offs to

Average Net Loans Outstanding

0.04%

0.08%

0.13%

0.09%

0.12%

Allowance for Loan Losses to Total Loans

0.90%

0.79%

0.76%

0.80%

0.80%

Non-performing Loans to Total Loans

0.55%

0.57%

0.60%

0.35%

0.38%

Allowance to Non-performing Loans

163.34%

138.73%

126.23%

228.32%

211.31%

Non-performing Assets to Total Assets

0.40%

0.43%

0.45%

0.26%

0.28%

(a) September 30, 2020 ratio is estimated (b) This is a non-GAAP financial measure. A reconciliation to GAAP is shown below



Consolidated Statements of Financial Condition

Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 2020 2020 2020 2019 2019

Assets

Cash and cash $199,575 $103,954 $83,107 $70,760 $85,675equivalents

Securities 481,509 475,614 448,043 432,233 423,193available for sale

Equity securities 8,307 8,375 8,080 7,909 7,856

Loans held for sale 7,076 3,395 3,272 2,600 2,079

Loans 2,147,158 2,149,690 1,976,582 1,811,539 1,784,125

Less allowance for 19,341 16,960 14,952 14,487 14,261loan losses

Net Loans 2,127,817 2,132,730 1,961,630 1,797,052 1,769,864

Other assets 164,895 161,612 164,256 138,604 144,543

Total Assets $2,989,179 $2,885,680 $2,668,388 $2,449,158 $2,433,210

Liabilities andStockholders'Equity

Deposits

Noninterest-bearing $577,334 $593,162 $449,952 $434,126 $432,609

Interest-bearing 1,960,998 1,846,323 1,796,325 1,574,838 1,608,043

Total deposits 2,538,332 2,439,485 2,246,277 2,008,964 2,040,652

Otherinterest-bearing 81,690 80,115 96,852 122,197 76,324liabilities

Other liabilities 29,189 34,728 21,523 18,688 23,011

Total liabilities 2,649,211 2,554,328 2,364,652 2,149,849 2,139,987

Stockholders' 339,968 331,352 303,736 299,309 293,223Equity

Total Liabilities

and Stockholders' $2,989,179 $2,885,680 $2,668,388 $2,449,158 $2,433,210Equity

Period-end shares 28,186 28,180 28,127 27,671 27,669outstanding

Book value per $12.06 $11.76 $10.80 $10.82 $10.60share

Tangible book valueper share 10.23 9.92 8.94 9.28 9.04(Non-GAAP)*

* Tangible book value per share is calculated by dividing tangible commonequity by average outstanding shares

Capital andLiquidity

Common Equity Tier 12.61% 12.65% 12.26% 12.94% 12.70%1 Capital Ratio (a)

Total Risk Based 13.51% 13.92% 13.43% 13.82% 13.58%Capital Ratio (a)

Tier 1 Risk Based 12.71% 13.10% 12.70% 13.06% 12.83%Capital Ratio (a)

Tier 1 Leverage 10.01% 9.71% 10.18% 10.69% 10.42%Ratio (a)

Equity to Asset 11.37% 11.48% 11.38% 12.22% 12.05%Ratio

Tangible Common 9.82% 9.86% 9.61% 10.67% 10.47%Equity Ratio (b)

Net Loans to Assets 71.18% 73.91% 73.51% 73.37% 72.74%

Loans to Deposits 84.59% 88.12% 87.99% 90.17% 87.43%

Asset Quality

Non-performing $11,841 $12,225 $11,845 $6,345 $6,749loans

Other Real Estate 73 41 131 19 74Owned

Non-performing 11,914 12,266 11,976 6,364 6,823assets

Loans 30 - 89 days 10,134 10,336 19,067 11,893 9,076delinquent

Charged-off loans 393 524 749 519 674

Recoveries 174 132 114 145 163

Net Charge-offs 219 392 635 374 511

Annualized NetCharge-offs to

Average Net Loans 0.04% 0.08% 0.13% 0.09% 0.12%Outstanding

Allowance for LoanLosses to Total 0.90% 0.79% 0.76% 0.80% 0.80%Loans

Non-performingLoans to Total 0.55% 0.57% 0.60% 0.35% 0.38%Loans

Allowance toNon-performing 163.34% 138.73% 126.23% 228.32% 211.31%Loans

Non-performingAssets to Total 0.40% 0.43% 0.45% 0.26% 0.28%Assets



(a) September 30, 2020 ratio is estimated(b) This is a non-GAAP financial measure. A reconciliation to GAAP is shownbelow

Reconciliation of Total Assets to Tangible Assets

For the Nine Months Ended

Sept. 30,2020

June 30,2020

March 31,2020

Dec. 31,2019

Sept. 30,2019

Sept. 30,2020

Sept. 30,2019

Total Assets

$2,989,179

$2,885,680

$2,668,388

$2,449,158

$2,433,210

$2,989,179

$2,433,210

Less Goodwill and other intangibles

51,608

51,866

52,337

42,645

42,973

51,608

42,973

Tangible Assets

$2,937,571

$2,833,814

$2,616,051

$2,406,513

$2,390,237

$2,937,571

$2,390,237

Average Assets

2,957,702

2,842,730

2,641,597

2,424,574

2,409,010

2,814,339

2,372,697

Less average Goodwill and other intangibles

51,754

52,052

51,103

42,859

43,187

48,655

43,510

Average Tangible Assets

$2,905,948

$2,790,678

$2,590,494

$2,381,715

$2,365,823

$2,765,684

$2,329,187

Reconciliation of Common Stockholders' Equity to Tangible Common Equity

For the Nine Months Ended

Sept. 30,2020

June 30,2020

March 31,2020

Dec. 31,2019

Sept. 30,2019

Sept. 30,2020

Sept. 30,2019

Stockholders' Equity

$339,968

$331,352

$303,736

$299,309

$293,223

$339,968

$293,223

Less Goodwill and other intangibles

51,608

51,866

52,337

42,645

42,973

51,608

42,973

Tangible Common Equity

$288,360

$279,486

$251,399

$256,664

$250,250

$288,360

$250,250

Average Stockholders' Equity

335,982

315,988

301,408

300,355

290,673

317,448

278,657

Less average Goodwill and other intangibles

51,754

52,052

51,103

42,859

43,187

48,655

43,510

Average Tangible Common Equity

$284,228

$263,936

$250,305

$257,496

$247,486

$268,793

$235,147

Reconciliation of Net Income, Excluding Acquisition Related Costs

For the Three Months Ended

For the Nine Months Ended

Sept. 30,2020

June 30,2020

March 31,2020

Dec. 31,2019

Sept. 30,2019

Sept. 30,2020

Sept. 30,2019

Net income

$10,869

$11,011

$8,639

$9,675

$9,154

$30,519

$26,085

Acquisition related costs - tax equated

50

41

1,063

90

97

1,154

77

Net income - Adjusted

$10,919

$11,052

$9,702

$9,765

$9,251

$31,673

$26,162

Diluted EPS excluding acquisition costs

$0.39

$0.39

$0.34

$0.35

$0.33

$1.11

$0.94

End of Period Loan BalancesSept. 30,2020

June 30,2020

March 31,2020

Dec. 31,2019

Sept. 30,2019

Commercial real estate

$710,730

$715,342

$714,477

$616,778

$602,580

Commercial

481,593

472,012

283,033

255,823

251,613

Residential real estate

526,627

528,853

541,534

500,024

499,996

Consumer

209,883

208,374

210,173

209,271

207,319

Agricultural loans

219,896

221,556

223,977

226,333

219,487

Total, excluding net deferred loan costs

$2,148,729

$2,146,137

$1,973,194

$1,808,229

$1,780,995

For the Three Months Ended

Noninterest IncomeSept. 30,2020

June 30,2020

March 31,2020

Dec. 31,2019

Sept. 30,2019

Service charges on deposit accounts

$904

$753

$1,095

$1,139

$1,208

Bank owned life insurance income

196

204

208

192

204

Trust fees

1,973

1,852

1,857

1,891

1,905

Insurance agency commissions

784

681

883

696

681

Security gains (losses)

70

(26)

157

28

22

Retirement plan consulting fees

341

408

380

343

338

Investment commissions

353

304

423

435

384

Net gains on sale of loans

3,348

3,658

1,366

1,517

1,143

Debit card and EFT fees

1,048

967

851

922

935

Other operating income

450

335

650

651

756

Total Noninterest Income

$9,467

$9,136

$7,870

$7,814

$7,576

For the Three Months Ended

Noninterest ExpenseSept. 30,2020

June 30,2020

March 31,2020

Dec. 31,2019

Sept. 30,2019

Salaries and employee benefits

$10,244

$9,713

$10,231

$9,128

$9,422

Occupancy and equipment

1,719

1,675

1,800

1,667

1,615

State and local taxes

576

583

464

416

468

Professional fees

753

823

816

787

654

Merger related costs

58

48

1,319

104

112

Advertising

460

322

271

607

437

FDIC insurance

200

225

225

79

80

Intangible amortization

332

331

332

326

326

Core processing charges

925

934

861

876

900

Telephone and data

182

348

203

235

236

Other operating expenses

2,271

2,738

2,215

2,293

2,308

Total Noninterest Expense

$17,720

$17,740

$18,737

$16,518

$16,558

Reconciliationof Total For the Nine MonthsAssets to EndedTangibleAssets

Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30, 2020 2020 2020 2019 2019 2020 2019

Total Assets $2,989,179 $2,885,680 $2,668,388 $2,449,158 $2,433,210 $2,989,179 $2,433,210

Less Goodwilland other 51,608 51,866 52,337 42,645 42,973 51,608 42,973intangibles

Tangible $2,937,571 $2,833,814 $2,616,051 $2,406,513 $2,390,237 $2,937,571 $2,390,237Assets

Average Assets 2,957,702 2,842,730 2,641,597 2,424,574 2,409,010 2,814,339 2,372,697

Less averageGoodwill and 51,754 52,052 51,103 42,859 43,187 48,655 43,510otherintangibles

AverageTangible $2,905,948 $2,790,678 $2,590,494 $2,381,715 $2,365,823 $2,765,684 $2,329,187Assets



Reconciliation of Common Stockholders' For the Nine MonthsEquity to Tangible Common Equity Ended

Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30, 2020 2020 2020 2019 2019 2020 2019

Stockholders' $339,968 $331,352 $303,736 $299,309 $293,223 $339,968 $293,223Equity

Less Goodwilland other 51,608 51,866 52,337 42,645 42,973 51,608 42,973intangibles

Tangible $288,360 $279,486 $251,399 $256,664 $250,250 $288,360 $250,250Common Equity

AverageStockholders' 335,982 315,988 301,408 300,355 290,673 317,448 278,657Equity

Less averageGoodwill and 51,754 52,052 51,103 42,859 43,187 48,655 43,510otherintangibles

AverageTangible $284,228 $263,936 $250,305 $257,496 $247,486 $268,793 $235,147Common Equity

Reconciliation of NetIncome, ExcludingAcquisition 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, 2020 2020 2020 2019 2019 2020 2019

Net income $10,869 $11,011 $8,639 $9,675 $9,154 $30,519 $26,085

Acquisitionrelated costs 50 41 1,063 90 97 1,154 77- tax equated

Net income - $10,919 $11,052 $9,702 $9,765 $9,251 $31,673 $26,162Adjusted

Diluted EPSexcluding $0.39 $0.39 $0.34 $0.35 $0.33 $1.11 $0.94acquisitioncosts

End of Period Sept. 30, June 30, March 31, Dec. 31, Sept. 30,Loan Balances 2020 2020 2020 2019 2019

Commercial $710,730 $715,342 $714,477 $616,778 $602,580real estate

Commercial 481,593 472,012 283,033 255,823 251,613

Residential 526,627 528,853 541,534 500,024 499,996real estate

Consumer 209,883 208,374 210,173 209,271 207,319

Agricultural 219,896 221,556 223,977 226,333 219,487loans

Total,excluding net $2,148,729 $2,146,137 $1,973,194 $1,808,229 $1,780,995deferred loancosts

For the Three Months Ended

Noninterest Sept. 30, June 30, March 31, Dec. 31, Sept. 30,Income 2020 2020 2020 2019 2019

Servicecharges on $904 $753 $1,095 $1,139 $1,208depositaccounts

Bank ownedlife insurance 196 204 208 192 204income

Trust fees 1,973 1,852 1,857 1,891 1,905

Insuranceagency 784 681 883 696 681commissions

Security gains 70 (26) 157 28 22(losses)

Retirementplan 341 408 380 343 338consultingfees

Investment 353 304 423 435 384commissions

Net gains on 3,348 3,658 1,366 1,517 1,143sale of loans

Debit card and 1,048 967 851 922 935EFT fees

Otheroperating 450 335 650 651 756income

TotalNoninterest $9,467 $9,136 $7,870 $7,814 $7,576Income

For the Three Months Ended

Noninterest Sept. 30, June 30, March 31, Dec. 31, Sept. 30,Expense 2020 2020 2020 2019 2019

Salaries andemployee $10,244 $9,713 $10,231 $9,128 $9,422benefits

Occupancy and 1,719 1,675 1,800 1,667 1,615equipment

State and 576 583 464 416 468local taxes

Professional 753 823 816 787 654fees

Merger related 58 48 1,319 104 112costs

Advertising 460 322 271 607 437

FDIC insurance 200 225 225 79 80

Intangible 332 331 332 326 326amortization

Coreprocessing 925 934 861 876 900charges

Telephone and 182 348 203 235 236data

Otheroperating 2,271 2,738 2,215 2,293 2,308expenses

TotalNoninterest $17,720 $17,740 $18,737 $16,518 $16,558Expense

Average Balance Sheets and Related Yields and Rates(Dollar Amounts in Thousands)

Three Months EndedSeptember 30, 2020

Three Months EndedSeptember 30, 2019

AVERAGE BALANCE

INTEREST (1)

RATE (1)

AVERAGE BALANCE

INTEREST (1)

RATE (1)

EARNING ASSETS

Loans (2)

$2,127,059

$24,331

4.55%

$1,768,205

$22,790

5.11%

Taxable securities

197,311

1,263

2.55

190,044

1,196

2.50

Tax-exempt securities (2)

254,533

2,459

3.84

219,686

2,137

3.86

Equity securities

15,182

138

3.62

12,057

151

4.97

Federal funds sold and other

151,162

52

0.14

38,451

205

2.12

Total earning assets

2,745,247

28,243

4.09

2,228,443

26,479

4.71

Nonearning assets

212,455

180,567

Total assets

$2,957,702

$2,409,010

INTEREST-BEARING LIABILITIES

Time deposits

$476,205

$1,869

1.56%

$418,551

$2,116

2.01%

Brokered time deposits

57,000

157

1.10

105,276

650

2.35

Savings deposits

476,097

256

0.21

403,863

317

0.31

Demand deposits

913,946

871

0.38

660,433

1,622

0.97

Short term borrowings

4,476

14

1.24

53,009

289

2.16

Long term borrowings

76,554

303

1.57

35,870

180

1.99

Total interest-bearing liabilities

$2,004,278

3,470

0.69

$1,677,002

5,174

1.22

NONINTEREST-BEARING LIABILITIES

AND STOCKHOLDERS' EQUITY

Demand deposits

592,539

429,539

Other liabilities

24,903

11,796

Stockholders' equity

335,982

290,673

TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

$2,957,702

$2,409,010

Net interest income and interest rate spread

$24,773

3.40%

$21,305

3.49%

Net interest margin

3.59%

3.79%

(1) Interest and yields are calculated on a tax-equivalent basis where applicable. (2) For 2020, adjustments of $103 thousand and $505 thousand, respectively, were made to tax equate income on tax exempt loans and tax exempt securities. For 2019, adjustments of $106 thousand and $442 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.

Nine Months EndedSeptember 30, 2020

Nine Months EndedSeptember 30, 2019

AVERAGE BALANCE

INTEREST (1)

RATE (1)

AVERAGE BALANCE

INTEREST (1)

RATE (1)

EARNING ASSETS

Loans (2)

$2,052,239

$73,370

4.78%

$1,748,828

$66,792

5.11%

Taxable securities

205,168

4,088

2.66

193,992

3,678

2.53

Tax-exempt securities

246,218

7,161

3.88

212,989

6,213

3.90

Equity securities (2)

16,388

415

3.38

12,057

497

5.51

Federal funds sold and other

93,091

231

0.33

33,918

559

2.20

Total earning assets

2,613,104

85,265

4.36

2,201,784

77,739

4.72

Nonearning assets

201,235

170,913

Total assets

$2,814,339

$2,372,697

INTEREST-BEARING LIABILITIES

Time deposits

$488,051

$6,492

1.78%

$395,932

$5,758

1.94%

Brokered time deposits

82,138

959

1.56

82,414

1,475

2.39

Savings deposits

452,938

844

0.25

413,438

965

0.31

Demand deposits

809,619

3,357

0.55

627,414

4,301

0.92

Short term borrowings

26,440

352

1.78

116,468

2,151

2.47

Long term borrowings

84,483

1,102

1.74

15,943

276

2.31

Total interest-bearing liabilities

$1,943,669

13,106

0.90

$1,651,609

14,926

1.21

NONINTEREST-BEARING LIABILITIES

AND STOCKHOLDERS' EQUITY

Demand deposits

$533,400

$427,808

Other liabilities

19,822

14,623

Stockholders' equity

317,448

278,657

TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY

$2,814,339

$2,372,697

Net interest income and interest rate spread

$72,159

3.46%

$62,813

3.51%

Net interest margin

3.69%

3.81%

(1) Interest and yields are calculated on a tax-equivalent basis where applicable. (2) 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. For 2019, adjustments of $315 thousand and $1.3 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/20201028005118/en/

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