third quarter of 2026
Filed Oct 28, 2026Farmers National Banc Corp. reports third-quarter 2026 net income of $14.5 million, or $0.25 per diluted share, and adjusted net income of $28.0 million, or $0.47 per diluted share.
Net interest income and margin expanded and loans grew sequentially, but reported earnings reflected $6.1 million of system conversion and acquisition costs, a $10.3 million securities-sale loss, and $600,000 of severance expense. Asset-quality indicators also weakened sequentially.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net income, third quarter of 2026GAAP | $14.5M | – | – |
| Adjusted net income, third quarter of 2026non-GAAP | $28M | – | – |
| Diluted earnings per share, third quarter of 2026GAAP | $0.25 per diluted share | – | – |
| Diluted EPS excluding merger and certain items, third quarter of 2026non-GAAP | $0.47 | – | – |
| Total interest income, third quarter of 2026 ($ in thousands)GAAP | $88.52M | – | – |
| Total interest expense, third quarter of 2026 ($ in thousands)GAAP | $30.58M | – | – |
| Net interest income, third quarter of 2026GAAP | $57.9M | – | – |
| Net interest margin, third quarter of 2026GAAP | 3.54% | – | – |
| Net interest margin excluding acquisition marks and PPP interest and fees, third quarter of 2026non-GAAP | 3.39% | – | – |
| Provision for credit losses, third quarter of 2026GAAP | $2.8M | – | – |
| Noninterest income, third quarter of 2026GAAP | $7.9M | – | – |
| Service charges on deposit accounts, third quarter of 2026 ($ in thousands)GAAP | $2.31M | – | – |
| Bank owned life insurance income, including death benefits, third quarter of 2026 ($ in thousands)GAAP | $1.12M | – | – |
| Trust fees, third quarter of 2026 ($ in thousands)GAAP | $3.18M | – | – |
| Insurance agency commissions, third quarter of 2026 ($ in thousands)GAAP | $1.43M | – | – |
| Security gains (losses), including fair value changes for equity securities, third quarter of 2026 ($ in thousands)GAAP | ($10,342) | – | – |
| Investment commissions, third quarter of 2026 ($ in thousands)GAAP | $1.08M | – | – |
| Net gains on sale of loans, third quarter of 2026 ($ in thousands)GAAP | $390K | – | – |
| Debit card and EFT fees, third quarter of 2026 ($ in thousands)GAAP | $2.58M | – | – |
| Other noninterest income, third quarter of 2026 ($ in thousands)GAAP | $5.00M | – | – |
| Noninterest expense, third quarter of 2026GAAP | $46.6M | – | – |
| Salaries and employee benefits, third quarter of 2026 ($ in thousands)GAAP | $22.54M | – | – |
| System conversion / merger related costs, third quarter of 2026 ($ in thousands)GAAP | $6.11M | – | – |
| Core processing charges, third quarter of 2026 ($ in thousands)GAAP | $2.68M | – | – |
| Efficiency ratio, tax equivalent basis, third quarter of 2026GAAP | 68.00% | – | – |
| Efficiency ratio excluding certain items, third quarter of 2026non-GAAP | 50.19% | – | – |
| Return on average assets, annualized, third quarter of 2026GAAP | 0.81% | – | – |
| Return on average equity, annualized, third quarter of 2026GAAP | 7.45% | – | – |
| Total assets at September 30, 2026GAAP | $7.12B | – | – |
| Total loans, net of allowance, at September 30, 2026GAAP | $4.8B | 1.6% | – |
| Total deposits at September 30, 2026GAAP | $5.81B | – | – |
| Cash and cash equivalents at September 30, 2026 ($ in thousands)GAAP | $111.9M | – | – |
| Debt securities available for sale at September 30, 2026 ($ in thousands)GAAP | $1.40B | – | – |
| Stockholders' equity at September 30, 2026 ($ in thousands)GAAP | $716.5M | – | – |
| Non-performing loans at September 30, 2026GAAP | $47.9M | – | – |
| Non-performing loans to total loans at September 30, 2026other | 0.99% | – | – |
| Loans 30-89 days delinquent at September 30, 2026GAAP | $23.4M | – | – |
| Annualized net charge-offs to average net loans, third quarter of 2026other | 0.22% | – | – |
| Allowance for credit losses to total loans at September 30, 2026GAAP | 1.10% | – | – |
| Common Equity Tier 1 Capital Ratio at September 30, 2026other | 11.98% | – | – |
| Total Risk Based Capital Ratio at September 30, 2026other | 14.82% | – | – |
| Tangible common equity ratio at September 30, 2026non-GAAP | 6.02% | – | – |
| Total wealth management assets under care at September 30, 2026other | $5.2B | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
fourth quarter of 2026 outlook
- NoteNet interest margin is expected to settle into a range of approximately 3.43% to 3.46%.
- NoteThe Company intends to pay off the remaining $72.0 million of fixed-to-floating rate subordinated notes due December 15, 2031, on December 15, 2026.
Capital returns
- Cash dividends per share were $0.18 for the third quarter of 2026.
- The Company intends to pay off the remaining $72.0 million of fixed-to-floating rate subordinated notes due December 15, 2031, on December 15, 2026.
What drove it
- The March 2, 2026 acquisition of Middlefield Banc Corp. added $1.82 billion in assets, $1.49 billion in total loans and $1.49 billion in deposits since December 2025.
- The 1.6% sequential increase in loans was driven by gains across all business lines, including 1.4% sequential growth in the commercial portfolio.
- The $90.5 million securities restructuring increased the yield of the securities sold from 1.61% to approximately 5.25%.
- Net interest margin benefited from the acquisition, higher yields on interest earning assets, lower funding costs on interest bearing liabilities, the securities restructuring and greater accretion of loan marks associated with a large Middlefield loan payoff.
- Other noninterest income included $3.9 million from the full payoff of a troubled loan that Middlefield had partially charged off before the acquisition.
Concerns
- The Company recognized a $10.3 million loss on the sale of securities during the quarter.
- The value of securities declined by $91.3 million during the quarter due to the rapid rise in U.S. Treasury rates, and the Company anticipates continued rate volatility in the bond market in 2026 and 2027.
- Non-performing loans increased to $47.9 million from $44.6 million at June 30, 2026, while loans 30-89 days delinquent increased to $23.4 million from $18.9 million.
- Provision for credit losses and unfunded commitments was $2.8 million, compared to a provision for credit losses of $1.4 million in the third quarter of 2025.
- Reported third-quarter expense included $6.1 million of system conversion and acquisition-related costs and $600,000 of severance expense.
What to watch
- Whether net interest margin settles within the approximately 3.43% to 3.46% fourth-quarter 2026 range.
- The realization of Middlefield-related cost savings after the core system conversion, including expected declines in several expense categories beginning in the fourth quarter of 2026.
- The planned December 15, 2026 redemption of the remaining $72.0 million subordinated notes.
- Trends in non-performing loans, 30-89 day delinquencies, credit-loss provisioning and securities portfolio valuation.
Balance sheet and cash flow
- Total assets were $7.12 billion at September 30, 2026, compared to $7.14 billion at June 30, 2026.
- Cash and cash equivalents were $111,919 at September 30, 2026, compared to $164,754 at June 30, 2026. Amounts are in thousands.
- Total deposits were $5.81 billion at September 30, 2026, compared to $5.83 billion at June 30, 2026.
- The Company had access to an additional $465.3 million in FHLB borrowing capacity at September 30, 2026, along with $453.8 million in available for sale securities that are available for pledging.
- The loan to deposit ratio was 83.6% at September 30, 2026.
Analysis
Farmers reported $14.5 million of third-quarter net income, or $0.25 per diluted share, versus $12.5 million and $0.33 per diluted share in the third quarter of 2025. Reported earnings were reduced by $6.1 million of system conversion and acquisition-related costs, a $10.3 million securities-sale loss and $600,000 of severance expense. Adjusted net income was $28.0 million, or $0.47 per diluted share, compared with $15.7 million and $0.42 per diluted share a year earlier.
Core spread performance improved. Net interest income rose to $57.9 million from $36.3 million, and net interest margin expanded to 3.54% from 3.00%. Excluding acquisition marks and PPP interest and fees, net interest margin was 3.39%, compared with 2.87%. Management cited the Middlefield acquisition, higher yields on interest earning assets, lower funding costs, the securities restructuring and loan-mark accretion tied to a large Middlefield loan payoff.
The balance sheet was broadly stable sequentially following the acquisition. Total assets were $7.12 billion, net loans were $4.80 billion and deposits were $5.81 billion. Loans increased 1.6% sequentially, including 1.4% sequential commercial portfolio growth. The securities restructuring covered $90.5 million of securities and moved the yield on securities sold from 1.61% to approximately 5.25%, but produced a $10.3 million loss. The company also reported a $91.3 million decline in the value of securities during the quarter as U.S. Treasury rates rose.
Noninterest income was $7.9 million, down from $11.4 million, principally reflecting the securities loss. Service charges, trust fees, investment commissions and debit card and EFT fees were higher than a year earlier, and other noninterest income included $3.9 million from a Middlefield troubled-loan payoff. Noninterest expense rose to $46.6 million from $31.7 million, reflecting the acquisition, conversion-related costs and severance. The GAAP efficiency ratio was 68.00%, while the non-GAAP ratio excluding certain items was 50.19%.
Credit quality warrants attention. Non-performing loans rose to $47.9 million from $44.6 million at June 30, 2026, non-performing loans to total loans increased to 0.99% from 0.93%, and 30-89 day delinquencies increased to $23.4 million from $18.9 million. The company recorded $2.8 million of provision for credit losses and unfunded commitments. For the fourth quarter, management expects net interest margin to settle into a range of approximately 3.43% to 3.46% and expects post-conversion cost savings to begin contributing to expense reductions.
Management, verbatim
As expected, the third quarter was a period of strategic execution and transformation for Farmers, as we completed our core technology conversion, executed the integration of the March 2026 Middlefield acquisition, and repositioned our investment securities portfolio. These actions represent important milestones in our ongoing strategy to improve operating efficiency, enhance profitability, and grow our community banking franchise. With these significant initiatives largely behind us, we expect to begin realizing their financial benefits in the fourth quarter, with additional contributions expected in 2027. We remain focused on leveraging our expanded capabilities and growing market presence to drive sustainable, profitable growth.
Kevin J. Helmick, President and CEO
Not in the filing
stated, not guessed- Operating cash flow was not reported.
- Free cash flow was not reported.
- Share repurchases were not reported.
- No gross margin, revenue, operating income, operating margin, or tax-rate guidance was provided.
- No previous-release outlook was provided, so no comparison with prior guidance is available.
- No operating segment revenue disclosure was provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.