Farmers National Completes Core Conversion, Restructures Securities

The Tip Desk · November 10, 2026 · 4 min read

Net interest income was $57.9 million and the margin reached 3.54% after a $90.5 million securities restructure and Middlefield integration costs.

Farmers National Banc Corp. (FMNB), the Canfield, Ohio community bank, reported net income of $14.5 million, or $0.25 a share, for the third quarter of 2026, compared with $12.5 million, or $0.33 a share, a year earlier.

The quarter was a period of strategic execution rather than a clean run-rate. The company completed its Jack Henry core conversion, finished integrating the March 2026 Middlefield Banc Corp. acquisition, and restructured $90.5 million of securities, recognizing a $10.3 million loss. Net income also included $6.1 million of Middlefield and core-conversion expense and $600,000 of severance. Excluding those items, adjusted net income was $28.0 million, or $0.47 a share.

Net interest income rose to $57.9 million from $56.0 million in the second quarter. Average interest-earning assets were $6.65 billion, versus $4.92 billion a year earlier, a lift the company said was driven primarily by Middlefield. The net interest margin expanded 10 basis points sequentially to 3.54% from 3.44%, after a 32 bps sequential expansion in the second quarter from 3.12% in the first quarter. The company attributed the third-quarter lift to the securities restructuring, a steeper yield curve, and greater accretion of loan marks after a large Middlefield loan payoff. Excluding acquisition marks, NIM was 3.39%.

The securities restructure lifted the yield on the bonds sold from 1.61% to about 5.25%, with a 3.1-year payback on the loss. Available-for-sale securities ended the quarter at $1.40 billion. The company also recorded a $91.3 million decline in securities values from a rapid rise in U.S. Treasury rates and said it anticipates continued rate volatility in 2026 and 2027.

Outstanding loans grew 1.6% sequentially, or 6.6% annualized, reversing a sequential decline in the second quarter when net loans fell to $4.72 billion from $4.75 billion at March 31 on heavier-than-expected Middlefield commercial payoffs. The third-quarter gain included 1.4% sequential growth in the commercial portfolio. Net loans were $4.80 billion at September 30. Total assets were $7.12 billion. Deposits were $5.81 billion; the company said the June-to-September drop was primarily seasonal public-funds timing.

Noninterest income fell to $7.9 million from $14.4 million in the second quarter as the securities loss more than offset Middlefield and wealth growth. Trust fees were $3.2 million. Other noninterest income was $5.0 million, including $3.9 million on the full payoff of a loan Middlefield had partially charged off before the acquisition.

Noninterest expense was $46.6 million. System conversion and acquisition-related costs were $6.1 million, lifting the GAAP efficiency ratio to 68.0% from 55.6% in the second quarter; excluding those items the ratio was 50.2%. Salaries and benefits were $22.5 million. The company said several expense categories, including occupancy and equipment, should begin to decline in the fourth quarter as remaining Middlefield cost savings accrue after conversion.

Non-performing loans rose to $47.9 million from $44.6 million at June 30, after a $15.2 million sequential decline in the second quarter from $59.9 million at March 31. NPLs were 0.99% of loans. The provision for credit losses and unfunded commitments was $2.8 million. Annualized net charge-offs were 0.22% of average loans. The allowance was 1.10% of loans.

CET1 capital was 11.98% at September 30. The company intends to pay off $72.0 million of subordinated notes on December 15, 2026, before the coupon resets from 3.125% to about 6.20%, and said it believes it has ample capital and liquidity to do so.

President and CEO Kevin J. Helmick said that with the conversion, Middlefield integration, and securities repositioning largely behind the company, it expects to begin realizing their financial benefits in the fourth quarter, with additional contributions expected in 2027. The company now expects NIM to settle into a range of approximately 3.43% to 3.46% in the fourth quarter of 2026.