Farmers National Banc Corp. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported net income of $14.5 million ($0.25 per diluted share) for the third quarter of 2026, compared to $12.5 million ($0.33 per diluted share) in the third quarter of 2025.
• Adjusted net income (non-GAAP) was $28.0 million ($0.47 per diluted share), excluding acquisition, core conversion, and security restructure costs.
• Net interest income increased to $57.9 million in Q3 2026 from $36.3 million in Q3 2025.
• Net interest margin (NIM) increased to 3.54% in Q3 2026 from 3.00% in Q3 2025 and 3.44% in Q2 2026.
• Noninterest income declined to $7.9 million in Q3 2026 from $11.4 million in Q3 2025.
• Noninterest expense increased to $46.6 million in Q3 2026 from $31.7 million in Q3 2025.
• Efficiency ratio was 68.0% in Q3 2026, compared to 50.2% excluding acquisition and core conversion costs (non-GAAP).
• Total assets were $7.12 billion at September 30, 2026, up from $5.25 billion at December 31, 2025.
• Total loans (net of allowance) increased to $4.80 billion at September 30, 2026, from $3.27 billion at December 31, 2025.
• Total deposits were $5.81 billion at September 30, 2026, up from $4.34 billion at December 31, 2025.
• Total stockholders' equity was $716.5 million at September 30, 2026, down from $784.0 million at June 30, 2026.
• Annualized net charge-offs as a percentage of average loans were 0.22% in Q3 2026, compared to 0.07% in Q3 2025.
• Allowance for credit losses to total loans was 1.10% at September 30, 2026.

Guidance and Future Outlook:

• Management expects to begin realizing financial benefits from strategic initiatives (core conversion, acquisition integration, security repositioning) in the fourth quarter of 2026, with additional contributions expected in 2027.
• The Company anticipates the net interest margin to settle into a range of approximately 3.43% to 3.46% in the fourth quarter of 2026.
• The Company anticipates continued rate volatility in the bond market in 2026 and 2027, which will affect the value of the securities portfolio.

Business Segments and Product Lines:

• Outstanding loan growth was 1.6% for the quarter (6.6% annualized), driven by strong gains across all business lines, including 1.4% sequential growth in the commercial portfolio.
• The Company completed a core system conversion to Jack Henry during the quarter.
• Wealth management assets under care totaled $5.2 billion at September 30, 2026.
• Trust fees increased to $3.2 million in Q3 2026 from $2.7 million in Q3 2025.
• Investment commissions increased to $1.1 million in Q3 2026 from $658,000 in Q3 2025.
• Debit card income increased to $2.6 million in Q3 2026 from $2.1 million in Q3 2025.
• The Company recognized $3.9 million of other income from the full payoff of a loan partially charged off by Middlefield Banc Corp. prior to acquisition.
• Net gains on the sale of loans were $390,000 in Q3 2026, down from $559,000 in Q3 2025, impacted by higher rates hurting mortgage volumes.

Market and Competitive Landscape:

• The increase in net interest income and assets was primarily driven by the March 2, 2026, acquisition of Middlefield Banc Corp., which added $1.82 billion in assets and $1.49 billion in total loans.
• The security restructuring resulted in an increase in the yield of securities sold from 1.61% to approximately 5.25%.
• The Company saw a decline in the value of securities of $91.3 million during the quarter due to the rapid rise in U.S. Treasury rates.

Risks and Challenges:

• The Company recognized a $10.3 million loss on the sale of securities during the quarter due to a $90.5 million security restructuring.
• Non-performing loans increased to $47.9 million at September 30, 2026, from $44.6 million at June 30, 2026.
• Loans 30-89 days delinquent increased to $23.4 million at September 30, 2026, from $18.9 million at June 30, 2026.
• The provision for credit losses and unfunded commitments was $2.8 million in Q3 2026, compared to $1.4 million in Q3 2025, primarily due to increased CECL factors.
• The increase in net charge-offs was associated with the partial charge-off of a non-performing loan.
• The interest rate on $72.0 million of fixed-to-floating rate subordinated notes is due to reset from 3.125% to approximately 6.20% on December 15, 2026.
• Forward-looking statements note risks including changes in economic conditions, inflation, monetary policy, tariff policies, and the possibility of a recession.

Management Commentary and Tone:

• Kevin J. Helmick, President and CEO, described the third quarter as a period of "strategic execution and transformation," highlighting the completion of the core technology conversion, Middlefield acquisition integration, and investment securities portfolio repositioning.
• Management stated these actions represent important milestones to improve operating efficiency, enhance profitability, and grow the community banking franchise.
• Management indicated that several expense categories, including occupancy and equipment, should begin to decline in the fourth quarter of 2026 as cost savings related to Middlefield accrue post-system conversion.

Other Key Points:

• The Company completed a $90.5 million security restructuring and recognized a $10.3 million loss, with a projected payback period on the loss of 3.1 years.
• The Company intends to pay off the remaining $72.0 million of fixed-to-floating rate subordinated notes on December 15, 2026, citing ample capital and liquidity.
• The Company has access to an additional $465.3 million in FHLB borrowing capacity and $453.8 million in available-for-sale securities available for pledging at September 30, 2026.
• The loan-to-deposit ratio was 83.6% at September 30, 2026.
• Cash dividends per share were $0.18 for the quarter ended September 30, 2026, compared to $0.17 in the prior quarter.
• The Company has achieved 175 consecutive quarters of profitability.