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What changed in FARMERS NATIONAL BANC CORP /OH/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FARMERS NATIONAL BANC CORP /OH/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+264 added−303 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-07)

Top changes in FARMERS NATIONAL BANC CORP /OH/'s 2024 10-K

264 paragraphs added · 303 removed · 217 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

67 edited+7 added−20 removed123 unchanged
Biggest changeThe rules have several requirements, including having these officers certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of the Company’s internal controls, they have made certain disclosures about the Company’s internal controls to its auditors and the audit committee of the Board of Directors and they have included information in the Company’s Quarterly and Annual Reports about their evaluation and whether there have been significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the evaluation.
Biggest changeThe rules have several requirements, including having these officers certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of the Company’s internal controls, they have made certain disclosures about the Company’s internal controls to its auditors and the audit committee of the Board of Directors and they have included information in the Company’s Quarterly and Annual Reports about their evaluation and whether there have been significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the evaluation. 10 Executive and Incentive Compensation In June 2010, the Federal Reserve Board, OCC and FDIC issued joint interagency guidance on incentive compensation policies (the “Joint Guidance”) intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking.
Additional competition for deposits comes from non-depository competitors such as the mutual fund industry, securities and brokerage firms and insurance companies. Farmers Trust Company During 2009, the Company acquired the Farmers Trust. Farmers Trust offers a full complement of personal and corporate trust services in the areas of estate settlement, trust administration, employee benefit plans and retirement services.
Additional competition for deposits comes from non-depository competitors such as the mutual fund industry, securities and brokerage firms and insurance companies. Farmers Trust Company During 2009, the Company acquired Farmers Trust. Farmers Trust offers a full complement of personal and corporate trust services in the areas of estate settlement, trust administration, employee benefit plans and retirement services.
Farmers makes available free of charge on or through its website the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such documents filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after the Company has filed these documents with the Commission.
Farmers makes available free of charge on or through its website the Company’s annual reports on 2 Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such documents filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after the Company has filed these documents with the Commission.
For further discussion of risks related to cybersecurity, see “Item 1A Risk Factors.” See also the Company’s disclosures regarding risk management, strategy, governance and incident disclosure under Item 1C." Future Legislation and Regulation Various and significant legislation affecting financial institutions and the financial industry is from time to time introduced in the U.S.
For further discussion of risks related to cybersecurity, see “Item 1A Risk Factors.” See also the Company’s disclosures regarding risk management, strategy, governance and incident disclosure under “Item 1C.” Future Legislation and Regulation Various and significant legislation affecting financial institutions and the financial industry is from time to time introduced in the U.S.
In reviewing applications to approve merger and other acquisition transactions, the OCC and other bank regulatory authorities may include among their considerations the competitive effect and public benefits of the transactions, the capital position of the combined organization, the applicant’s performance under the CRA and fair housing laws, and the effectiveness of the entities 5 in restricting money laundering activities.
In reviewing applications to approve merger and other acquisition transactions, the OCC and other bank regulatory authorities may include among their considerations the competitive effect and public benefits of the transactions, the capital position of the combined organization, the applicant’s performance under the CRA and fair housing laws, and the effectiveness of the entities in restricting money laundering activities.
Upon the origination or renewal of a loan or advance, the FHLB is required by law to obtain and maintain a security interest in certain types of collateral. 4 The FHLB is required to establish standards of community investment or service that its members must maintain for continued access to long-term advances from the FHLB.
Upon the origination or renewal of a loan or advance, the FHLB is required by law to obtain and maintain a security interest in certain types of collateral. The FHLB is required to establish standards of community investment or service that its members must maintain for continued access to long-term advances from the FHLB.
State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations and many states have recently implemented or modified their data breach notification and data privacy 12 requirements. The Company expects this trend of state-level cybersecurity regulatory activity to continue, and continues to monitor these developments.
State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations and many states have recently implemented or modified their data breach notification and data privacy requirements. The Company expects this trend of state-level cybersecurity regulatory activity to continue, and continues to monitor these developments.
For a discussion of Farmers’ financial performance for the fiscal year ended December 31, 2023, see the Consolidated Financial Statements and Notes to the Consolidated Financial Statements found in Item 8 of this Annual Report on Form 10-K. The Farmers National Bank of Canfield On January 1, 2023, Farmers National Banc Corp.
For a discussion of Farmers’ financial performance for the fiscal year ended December 31, 2024, see the Consolidated Financial Statements and Notes to the Consolidated Financial Statements found in Item 8 of this Annual Report on Form 10-K. The Farmers National Bank of Canfield On January 1, 2023, Farmers National Banc Corp.
The Bank does not engage in any of the trading activities or own any of the types of funds prohibited by the Volcker Rule. 8 Prompt Corrective Action The federal banking agencies have established a system of prompt corrective action to resolve certain problems of undercapitalized institutions.
The Bank does not engage in any of the trading activities or own any of the types of funds prohibited by the Volcker Rule. Prompt Corrective Action The federal banking agencies have established a system of prompt corrective action to resolve certain problems of undercapitalized institutions.
As a result, it is subject to regulation and deposit insurance assessments by the FDIC. Dividends and Transactions with Affiliates The Company is a legal entity separate and distinct from the Bank and its other subsidiaries.
As a result, it is subject to regulation and deposit insurance assessments by the FDIC. 5 Dividends and Transactions with Affiliates The Company is a legal entity separate and distinct from the Bank and its other subsidiaries.
Investor Relations The Company maintains an Internet site at http://www.farmersbankgroup.com , which contains an Investor Relations section that provides access to the Company’s filings with the Securities and Exchange Commission (the 2 “Commission”).
Investor Relations The Company maintains an Internet site at http://www.farmersbankgroup.com , which contains an Investor Relations section that provides access to the Company’s filings with the Securities and Exchange Commission (the “Commission”).
The SEC adopted a new rule on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies in 2023, which applies to all public companies subject to the reporting requirements of the Securities Exchange Act of 1934 and requires disclosure of material cybersecurity incidents in Current Reports on Form 8-K and periodic disclosure of cybersecurity risk management, strategy, and governance in annual reports in Annual Reports on Form 10-K.
The SEC adopted a new rule on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies in 2023, which applies to all public companies subject to the reporting requirements of the Exchange Act and requires disclosure of material cybersecurity incidents in Current Reports on Form 8-K and periodic disclosure of cybersecurity risk management, strategy, and governance in annual reports in Annual Reports on Form 10-K.
A discussion of the general development of the Bank’s business and information regarding its financial performance throughout 2023, is discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Annual Report on Form 10-K. The Bank faces significant competition in offering financial services to customers.
A discussion of the general development of the Bank’s business and information regarding its financial performance throughout 2024, is discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Annual Report on Form 10-K. The Bank faces significant competition in offering financial services to customers.
Jackson is the Executive Vice President and Chief Information Officer of Farmers Bank, a position he has held since May 2009. Prior to coming to the Company, Mr. Jackson was Assistant Vice President and Information Technology Manager with Home Savings Bank since 1993. He has over 30 years of experience in the IT field. Mr.
Jackson is the Executive Vice President and Chief Information Officer of Farmers Bank, a position he has held since May 2009. Prior to coming to the Company, Mr. Jackson was Assistant Vice President and Information Technology Manager with Home Savings Bank since 1993. He has over 31 years of experience in the IT field. Mr.
To the extent that the following discussion describes legislation, statutes, regulations or policies applicable to the Company or its subsidiaries, the discussion is qualified in its entirety by reference to the full text of the legislation, statutes, regulations and policies that are described herein, as they may be amended or revised by the U.S.
To the extent that the following discussion describes legislation, statutes, regulations or policies applicable to the Company or its subsidiaries, the discussion is qualified in its entirety by reference to the full text of the legislation, statutes, regulations and policies that are described herein, as they may be amended or revised by the United States ("U.S").
Nicastro served as Staffing and Compliance Manager for Huntington National Bank (2007-2008) and Regional Human Resources Manager for Sky Bank from 2004 until 2007. Mr. Nicastro has an MBA, and has more than 25 years of experience in Human Resource Management from both large multi-national banks and regional community banks.
Nicastro served as Staffing and Compliance Manager for Huntington National Bank (2007-2008) and Regional Human Resources Manager for Sky Bank from 2004 until 2007. Mr. Nicastro has an MBA, and has more than 26 years of experience in Human Resource Management from both large multi-national banks and regional community banks.
Sabat was appointed to that position in June 2021 and previously served as Controller of Farmers Bank since April 2006. Prior to coming to the Company, Mr. Sabat was with a regional public accounting firm. Mr. Sabat has 28 years of experience in the accounting, finance and auditing fields.
Sabat was appointed to that position in June 2021 and previously served as Controller of Farmers Bank since April 2006. Prior to coming to the Company, Mr. Sabat was with a regional public accounting firm. Mr. Sabat has 29 years of experience in the accounting, finance and auditing fields.
Prior to the merger Mr. Oberhaus served as the SVP and Chief Risk Officer of First National Bank of Orrville and brings more than 25 years of experience in banking. Mr. Sabat is the Senior Vice President and Chief Accounting Officer of Farmers Bank. Mr.
Prior to the merger Mr. Oberhaus served as the SVP and Chief Risk Officer of First National Bank of Orrville and brings more than 26 years of experience in banking. Mr. Sabat is the Senior Vice President and Chief Accounting Officer of Farmers Bank. Mr.
For a bank holding company to be eligible to declare itself a financial holding company, all of the depository institution subsidiaries must be well-capitalized and well-managed and have satisfactory or better ratings under the Community Reinvestment Act.
For a bank holding company to be eligible to declare itself a financial holding company, all of the depository institution subsidiaries must be well-capitalized and well-managed and have satisfactory or better ratings under the Community Reinvestment Act of 1977 (the "CRA").
Tier 2 capital, which can be included in the total capital ratio, generally consists of other preferred stock and subordinated debt meeting certain conditions plus limited amounts of the allowance for loan and lease losses, subject to specified eligibility criteria, less applicable deductions.
Tier 2 capital, which can be included in the total capital ratio, generally consists of other preferred stock and subordinated debt meeting certain conditions plus limited amounts of the allowance for credit losses, subject to specified eligibility criteria, less applicable deductions.
Matuszak served as the Vice President, Cloud Services with Wellmark Blue Cross Blue Shield for 6 years, becoming Vice President, Cloud Services and CISO n 2019. Mr. Matuszak has more than 25 years of experience in operations, facilities, cybersecurity and software development throughout the financial services, insurance and healthcare industries.
Matuszak served as the Vice President, Cloud Services with Wellmark Blue Cross Blue Shield for 6 years, becoming Vice President, Cloud Services and CISO in 2019. Mr. Matuszak has more than 26 years of experience in operations, facilities, cybersecurity and software development throughout the financial services, insurance and healthcare industries.
He was appointed as an executive officer in 2012. 14 Mr. Matuszak is the Senior Executive Vice President, Chief Operating Officer of Farmers Bank, a position he has held since December of 2022. Most recently, Mr.
He was appointed as an executive officer in 2012. 13 Mr. Matuszak is the Senior Executive Vice President and Chief Operating Officer of Farmers Bank, a position he has held since December of 2022. Most recently, Mr.
Any such change in statutes, regulations or regulatory policies applicable to the Company could have a material effect on the business of the Company. 13 Information About Our Executive Officers The names, ages and positions of Farmers’ executive officers as of March 1, 2024: Name Age Title Troy Adair 57 Executive Vice President, Secretary and Treasurer of Farmers and Senior Executive Vice President and Chief Financial Officer of Farmers Bank Kevin J.
Any such change in statutes, regulations or regulatory policies applicable to the Company could have a material effect on the business of the Company. 12 Information About Our Executive Officers The names, ages and positions of Farmers’ executive officers as of March 1, 2025: Name Age Title Troy Adair 58 Executive Vice President, Secretary, Treasurer and Chief Financial Officer of Farmers and Senior Executive Vice President and Chief Financial Officer of Farmers Bank Kevin J.
We are committed to attracting, developing, and retaining associates who reflect the communities in which we serve. As of December 31, 2023, Farmers and its subsidiaries had 666 full-time equivalent employees.
We are committed to attracting, developing, and retaining associates who reflect the communities in which we serve. As of December 31, 2024, Farmers and its subsidiaries had 682 full-time equivalent employees.
Farmers Insurance is a subsidiary of Farmers Bank and does not account for a material portion of revenue and, therefore, will not be discussed individually, but as part of the Bank. Farmers of Canfield Investment Company Farmers Investments was formed during 2014, with the primary purpose of investing in municipal securities.
Jones Agency, Inc., doing business as Champion Insurance. Farmers Insurance is a subsidiary of Farmers Bank and does not account for a material portion of revenue and, therefore, will not be discussed individually, but as part of the Bank. Farmers of Canfield Investment Company Farmers Investments was formed during 2014, with the primary purpose of investing in municipal securities.
On August 26, 2020, the federal banking agencies issued a final rule that made certain technical changes to the interim final rule, including expanding the pool of eligible institutions. The changes in the final rule applied only to those banking organizations that elected the CECL transition relief provided for under the rule. The Company did not elect this transition relief.
On August 26, 2020, the federal 7 banking agencies issued a final rule that made certain technical changes to the interim final rule, including expanding the pool of eligible institutions. The changes in the final rule applied only to those banking organizations that elected the CECL transition relief provided for under the rule.
A bank holding company may elect to become a financial holding company if each of its subsidiary banks is well capitalized under the prompt corrective action regulations of the Federal Deposit Insurance Corporation (the “FDIC”), is well managed, and has at least a satisfactory rating under the Community Reinvestment Act of 1977 (the “CRA”).
A bank holding company may elect to become a financial holding company if each of its subsidiary banks is well capitalized under the prompt corrective action regulations of the Federal Deposit Insurance Corporation (the “FDIC”), is well managed, and has at least a satisfactory rating under the CRA.
The Company operates principally through its wholly-owned subsidiaries, The Farmers National Bank of Canfield (the “Bank” or “Farmers Bank”), Farmers Trust Company (“Farmers Trust”), and Farmers National Captive, Inc. (“Captive”). The Captive was dissolved in November of 2023. Farmers National Insurance, LLC (“Farmers Insurance”) and Farmers of Canfield Investment Co. (“Investments or “Farmers Investments”) are wholly-owned subsidiaries of the Bank.
The Company operates principally through its wholly-owned subsidiaries, The Farmers National Bank of Canfield (the “Bank” or “Farmers Bank”) and Farmers Trust Company (“Farmers Trust”). A third subsidiary, Farmers National Captive, Inc. (“Captive”), was dissolved in November of 2023. Farmers National Insurance, LLC (“Farmers Insurance”) and Farmers of Canfield Investment Co.
In July 2013, the Federal banking regulators approved a final rule to implement the revised capital adequacy standards of the Basel Committee on Banking Supervision (“Basel III”), and to address relevant provisions of the Dodd-Frank Act.
The Federal Reserve Bank monitors the capital adequacy of Farmers and the FDIC monitors the capital adequacy of Farmers Bank. 6 In July 2013, the Federal banking regulators approved a final rule to implement the revised capital adequacy standards of the Basel Committee on Banking Supervision (“Basel III”), and to address relevant provisions of the Dodd-Frank Act.
Helmick was promoted to Senior Vice President of Wealth Management and Retail Services where he was responsible for the management and oversight of the retail investment area of Farmers Bank, Farmers Insurance, and all branch sales and operational functions. Mr.
Helmick served as the Vice President and Program Manager for Farmers Investments. In 2008, Mr. Helmick was promoted to Senior Vice President of Wealth Management and Retail Services where he was responsible for the management and oversight of the retail investment area of Farmers Bank, Farmers Insurance, and all branch sales and operational functions. Mr.
He is a certified public accountant and was appointed as an executive officer in 2012. Mr. Shaffer serves as Senior Executive Vice President and Chief Credit Officer and has held that title since February of 2021. Previously, Mr. Shaffer served as Regional President and held that title from July of 2015 through 2020. Mr.
He is a certified public accountant and was appointed as an executive officer in 2012. Mr. Shaffer serves as Senior Executive Vice President and Chief Banking Officer and has held that title since January of 2025. Previously, Mr. Shaffer served as Chief Credit Officer from 2021 through January 2025.
Capital Adequacy Both Farmers and Farmers Bank are subject to risk-based capital requirements imposed by their respective primary federal banking regulator. The Federal Reserve Bank monitors the capital adequacy of Farmers and the FDIC monitors the capital adequacy of Farmers Bank.
Capital Adequacy Both Farmers and Farmers Bank are subject to risk-based capital requirements imposed by their respective primary federal banking regulator.
The DRR reached 1.40% on June 30, 2019, but as of June 30, 2020, the DRR fell below the statutory minimum to 1.30%. This resulted in the FDIC adopting a restoration plan that requires the restoration of the DRR to 1.35% by September 30, 2028.
The DRR reached 1.40% on June 30, 2019, but as of June 30, 2020, the DRR fell below the statutory minimum to 1.30%. This resulted in the FDIC adopting a restoration plan that requires the restoration of the DRR to 1.35% by September 30, 2028. The restoration plan maintained the scheduled assessment rates for all insured institutions.
These and other corporate governance policies have been provided previously to shareholders and are available, along with other information on Farmers’ corporate governance practices, on the Company’s website at www.farmersbankgroup.com .
The Board of Directors reviews the Company’s corporate governance practices on a continuing basis. These and other corporate governance policies have been provided previously to shareholders and are available, along with other information on Farmers’ corporate governance practices, on the Company’s website at www.farmersbankgroup.com .
Shaffer 62 Senior Executive Vice President and Chief Credit Officer of Farmers Bank Amber Wallace Soukenik 58 Senior Executive Vice President and Chief Retail/Marketing Officer of Farmers Bank Mark J. Wenick 64 Senior Executive Vice President and Chief Wealth Management Officer of Farmers Bank Officers are generally elected annually by the Board of Directors.
Shaffer 63 Senior Executive Vice President and Chief Banking Officer of Farmers Bank Amber Wallace Soukenik 59 Senior Executive Vice President and Chief Retail/Marketing Officer of Farmers Bank Mark J. Wenick 65 Senior Executive Vice President and Chief Wealth Management Officer of Farmers Bank Officers are generally elected annually by the Board of Directors.
Nicastro 53 Executive Vice President and Chief Human Resources Officer of Farmers Bank Michael Oberhaus 47 Executive Vice President and Chief Risk Officer of Farmers Bank Joseph W. Sabat 63 Senior Vice President and Chief Accounting Officer of Farmers Bank Timothy F.
Nicastro 54 Executive Vice President and Chief Human Resources Officer of Farmers Bank Michael Oberhaus 48 Executive Vice President and Chief Risk Officer of Farmers Bank Joseph W. Sabat 64 Senior Vice President and Chief Accounting Officer of Farmers Bank Timothy F.
Helmick 52 President and Chief Executive Officer of Farmers and Farmers Bank Brian E. Jackson 54 Executive Vice President and Chief Information Officer of Farmers Bank Michael E. Matuszak 56 Senior Executive Vice President and Chief Operating Officer of Farmers Bank Mark A.
Helmick 53 President and Chief Executive Officer of Farmers and Farmers Bank Brian E. Jackson 55 Executive Vice President and Chief Information Officer of Farmers Bank Michael E. Matuszak 57 Senior Executive Vice President and Chief Operating Officer of Farmers Bank Mark A.
In the event of Farmers’ bankruptcy, any commitment by Farmers to a federal bank regulatory agency to maintain the capital of Farmers Bank will be assumed by the bankruptcy trustee and entitled to a priority of payment. 6 The Federal Deposit Insurance Act of 1950, as amended, provides that, in the event of the “liquidation or other resolution” of an insured depository institution such as the Bank, the insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, nondeposit creditors, including the Company, with respect to any extensions of credit they have made to such insured depository institution.
The Federal Deposit Insurance Act of 1950, as amended, provides that, in the event of the “liquidation or other resolution” of an insured depository institution such as the Bank, the insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, nondeposit creditors, including the Company, with respect to any extensions of credit they have made to such insured depository institution.
The FDIC may terminate insurance coverage upon a finding that an insured depository institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition, or has violated any applicable law, regulation, rule, order or condition enacted or imposed by the institution’s regulatory agency.
The Bank’s deposits are insured up to applicable limits by the DIF of the FDIC and subject to deposit insurance assessments to maintain the DIF. 4 The FDIC may terminate insurance coverage upon a finding that an insured depository institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition, or has violated any applicable law, regulation, rule, order or condition enacted or imposed by the institution’s regulatory agency.
Shaffer was appointed as an executive officer in 2014. Ms. Wallace Soukenik has served as Senior Executive Vice President and Chief Retail/Marketing Officer for Farmers Bank since November 2013. In August 2008, Ms. Wallace Soukenik joined Farmers Bank as Senior Vice President and Director of Marketing. She has 33 years of experience in the marketing field.
Shaffer has over 35 years of banking and lending experience in the Mahoning Valley market. Mr. Shaffer was appointed as an executive officer in 2014. Ms. Wallace Soukenik has served as Senior Executive Vice President and Chief Retail/Marketing Officer for Farmers Bank since November 2013. In August 2008, Ms.
Farmers cannot predict the scope and timing of any such future legislation and, if enacted, the effect that it could have on its business, financial condition or results of operations.
Farmers cannot predict the scope and timing of any such future legislation and, if enacted, the effect that it could have on its business, financial condition or results of operations. Also, such statutes, regulations and policies are continually under review by the U.S.
The restoration plan maintained the scheduled assessment rates for all insured institutions. 9 As insurer, the FDIC is authorized to conduct examinations of, and to require reporting by, federally-insured institutions. It also may prohibit any federally-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the DIF.
As insurer, the FDIC is authorized to conduct examinations of, and to require reporting by, federally-insured institutions. It also may prohibit any federally-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the DIF. The FDIC also has the authority to take enforcement actions against insured institutions.
It also may require the Company to provide financial support to its banking and other subsidiaries, maintain capital balances in excess of those desired by management and pay higher deposit insurance premiums as a result of the deterioration in the financial condition of depository institutions in general. 3 Significant aspects of the laws and regulations that have, or could have a material impact on Farmers and its subsidiaries are described below.
It also may require the Company to provide financial support to its banking and other subsidiaries, maintain capital balances in excess of those desired by management and pay higher deposit insurance premiums as a result of the deterioration in the financial condition of depository institutions in general.
Prior to joining the Company, Ms. Wallace Soukenik served as the Assistant Vice President of Marketing and Physician Relations at Trumbull Memorial Hospital. She was appointed as an executive officer in 2012. Mr. Wenick is Senior Executive Vice President and Chief Wealth Management Officer of Farmers Bank. Prior to coming to Farmers National Bank in 2017, Mr.
Wallace Soukenik joined Farmers Bank as Senior Vice President and Director of Marketing. She has 34 years of experience in the marketing field. Prior to joining the Company, Ms. Wallace Soukenik served as the Assistant Vice President of Marketing and Physician Relations at Trumbull Memorial Hospital. She was appointed as an executive officer in 2012. Mr.
Also, such statutes, regulations and policies are continually under review by Congress and state legislatures and federal and state regulatory agencies and are subject to change at any time, particularly in the current economic and regulatory environment.
Congress and state legislatures and federal and state regulatory agencies and are subject to change at any time, particularly in the current economic and regulatory environment.
Basel III provides for a number of deductions from and adjustments to CET1, including the deduction of mortgage servicing rights, deferred tax assets dependent upon future taxable income and significant investments in non-consolidated financial entities if any one such category exceeds 10.0% of CET1 or if all such categories in the aggregate exceed 15.0% of CET1. 7 In addition to Basel III, the Dodd-Frank Act requires or permits federal banking agencies to adopt regulations affecting capital requirements in a number of respects, including potentially more stringent capital requirements for systemically important financial institutions.
Basel III provides for a number of deductions from and adjustments to CET1, including the deduction of mortgage servicing rights, deferred tax assets dependent upon future taxable income and significant investments in non-consolidated financial entities if any one such category exceeds 10.0% of CET1 or if all such categories in the aggregate exceed 15.0% of CET1.
Supervision and Regulation Introduction The Company and its subsidiaries are subject to extensive regulation by federal and state regulatory agencies. The regulation of financial holding companies and their subsidiaries is intended primarily for the protection of consumers, depositors, borrowers, the Deposit Insurance Fund (the “DIF”) and the banking system as a whole and not for the protection of shareholders.
The regulation of financial holding companies and their subsidiaries is intended primarily for the protection of consumers, depositors, borrowers, the Deposit Insurance Fund (the “DIF”) and the banking system as a whole and not for the protection of shareholders.
Prior to that time, Mr. Adair was the treasurer of Home Savings Bank/Premier Bank from February 2016 through June of 2021 and Director of Risk Management from February of 2002 to February of 2016. Mr. Adair has 36 years of experience in finance and accounting in the banking industry. Mr.
Adair joined Farmers in June of 2021 as Executive Vice President of Finance. Prior to that time, Mr. Adair was the treasurer of Home Savings Bank/Premier Bank from February 2016 through June of 2021 and Director of Risk Management from February of 2002 to February of 2016. Mr.
For example, a bank that is not “well capitalized” generally is prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, and the holding company of any undercapitalized depository institution must guarantee, in part, specific aspects of the bank’s capital plan for the plan to be acceptable.
For example, a bank that is not “well capitalized” generally is prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, and the holding company of any undercapitalized depository institution must guarantee, in part, specific aspects of the bank’s capital plan for the plan to be acceptable. 8 Federal law permits the OCC to order the pro rata assessment of shareholders of a national bank whose capital stock has become impaired, by losses or otherwise, to relieve a deficiency in such national bank’s capital stock.
During 2019, National Associates Inc. was combined with the Farmers Trust entity. Farmers Trust operates five offices located in Boardman, Canton, Howland, Wooster and Fairview Park, Ohio. Farmers National Captive, Inc. Captive was formed during 2016 and operated until November 20, 2023 when the Company dissolved the entity.
During 2024, Farmers Trust acquired substantially all of the assets, in a cash transaction, of Crest Retirement Advisors, LLC ("Crest"). Farmers Trust operates five offices located in Boardman, Canton, Howland, Wooster and Fairview Park, Ohio. Farmers National Captive, Inc. Captive was formed during 2016 and operated until November 20, 2023 when the Company dissolved the entity.
This rule also requires bank service providers to notify their bank organization customers of a computer-security incident that has occurred, or is reasonably likely to cause, a material service disruption or degradation for four or more hours.
This rule also requires bank service providers to notify their bank organization customers of a computer-security incident that has occurred, or is reasonably likely to cause, a material service disruption or degradation for four or more hours. 11 The Cyber Incident Reporting for Critical Infrastructure Act, enacted in March 2022, requires certain covered entities to report a covered incident to the U.S.
Congress and state legislatures as well as federal and state regulatory agencies and are subject to change at any time, particularly in the current economic and regulatory environment. Any such change in applicable legislation, statutes, regulations or regulatory policies could have a material adverse effect on the Company and its business, financial condition or results of operations.
Any such change in applicable legislation, statutes, regulations or regulatory policies could have a material adverse effect on the Company and its business, financial condition or results of operations. 3 Regulatory Agencies Financial Holding Company . Farmers elected to be a financial holding company.
In addition, federal banking agencies are required, when reviewing bank holding company acquisition and bank merger applications, to take into account the effectiveness of the anti-money laundering policies, procedures and controls of the applicants. 10 Corporate Governance The Sarbanes-Oxley Act of 2002 effected broad reforms to areas of corporate governance and financial reporting for public companies under the jurisdiction of the Commission.
In addition, federal banking agencies are required, when reviewing bank holding company acquisition and bank merger applications, to take into account the effectiveness of the anti-money laundering policies, procedures and controls of the applicants.
In view of the changing conditions in the economy, the money markets and activities of monetary and fiscal authorities, Farmers can make no predictions as to future changes in interest rates, credit availability or deposit levels.
In view of the changing conditions in the economy, the money markets and activities of monetary and fiscal authorities, Farmers can make no predictions as to future changes in interest rates, credit availability or deposit levels. 9 Community Reinvestment Act The CRA requires depository institutions to assist in meeting the credit needs of their market areas consistent with safe and sound banking practice.
Community Reinvestment Act The CRA requires depository institutions to assist in meeting the credit needs of their market areas consistent with safe and sound banking practice. Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low and moderate-income individuals and communities.
Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low and moderate-income individuals and communities. Depository institutions are periodically examined for compliance with the CRA and are assigned ratings.
In December 2018, the federal banking agencies issued a final rule to address regulatory treatment of credit loss allowances under the Current Expected Credit Losses (“CECL”).
Requirements of higher capital levels or higher levels of liquid assets could adversely impact the Company’s net income and return on equity. In December 2018, the federal banking agencies issued a final rule to address regulatory treatment of credit loss allowances under the Current Expected Credit Losses (“CECL”).
Helmick has been with the Company for 29 years and has a retail and investment background, including an MBA and CFP designation. From 1997 through 2008, Mr. Helmick served as the Vice President and Program Manager for Farmers Investments. In 2008, Mr.
Helmick was Secretary of Farmers and Executive Vice President – Wealth Management and Retail Services of Farmers Bank since January 2012. Mr. Helmick has been with the Company for 30 years and has a retail and investment background, including an MBA and CFP designation. From 1997 through 2008, Mr.
Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack.
Department of Homeland Security's Cybersecurity & Infrastructure Security Agency ("CISA") within 72 hours after a covered entity reasonably believes an incident has occurred. Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack.
The term of office for all the above executive officers is for the period ending with the next annual meeting. Principal Occupation and Business Experience of Executive Officers Mr.
The term of office for all the above executive officers is for the period ending with the next annual meeting. Principal Occupation and Business Experience of Executive Officers Mr. Adair has served as Executive Vice President, Secretary, Treasurer and Chief Financial Officer of Farmers and Senior Executive Vice President and Chief Financial Officer of Farmers Bank since August 2021. Mr.
Shaffer also served as the Director of Commercial Banking & Private Client Services. In October of 2011, Mr. Shaffer joined Farmers Bank as the Commercial Lending Manager, overseeing commercial lending, small business lending and treasury management. Mr. Shaffer has over 34 years of Banking and Lending experience in the Mahoning Valley market. Mr.
He was previously Regional President and held that title from July of 2015 through 2020. Mr. Shaffer also served as the Director of Commercial Banking & Private Client Services. In October of 2011, Mr. Shaffer joined Farmers Bank as the Commercial Lending Manager, overseeing commercial lending, small business lending and treasury management. Mr.
Helmick is the President and Chief Executive Officer of Farmers and Farmers Bank, a position he has held since November 2013. Prior to becoming President, Mr. Helmick was Secretary of Farmers and Executive Vice President – Wealth Management and Retail Services of Farmers Bank since January 2012. Mr.
Adair has 37 years of experience in finance and accounting in the banking industry. Mr. Helmick is the President and Chief Executive Officer of Farmers and Farmers Bank, a position he has held since November 2013. Prior to becoming President, Mr.
Wenick was regional president of Chemical Bank for 3 years. Prior to that, Mr. Wenick spent 5 years in local bank investment and trust positions. He brings more than 40 years of financial expertise in the area of wealth management.
Wenick is Senior Executive Vice President and Chief Wealth Management Officer of Farmers Bank. Prior to coming to Farmers National Bank in 2017, Mr. Wenick was regional president of Chemical Bank for 3 years. Prior to that, Mr. Wenick spent 5 years in local bank investment and trust positions.
The Company’s principal executive offices are located at 20 South Broad Street, Canfield, Ohio 44406, and its telephone number is (330) 533-3341.
Although Farmers directs the overall policies of its subsidiaries, including lending practices and financial resources, most day-to-day affairs are managed by their respective officers. The Company’s principal executive offices are located at 20 South Broad Street, Canfield, Ohio 44406, and its telephone number is (330) 533-3341.
These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations. In November 2021, the federal bank regulatory agencies issued a final rules, that became effective in May 2022, requiring banking organizations that experience a computer-security incident to notify certain entities.
If the Bank fails to observe the regulatory guidance, it could be subject to various regulatory sanctions, including financial penalties. In November 2021, the federal bank regulatory agencies issued a final rules that became effective in May 2022, requiring banking organizations that experience a computer-security incident to notify certain entities.
Capital loans from the Company to the Bank are subordinate in right of payment to deposits and certain other indebtedness of the Bank.
Capital loans from the Company to the Bank are subordinate in right of payment to deposits and certain other indebtedness of the Bank. In the event of Farmers’ bankruptcy, any commitment by Farmers to a federal bank regulatory agency to maintain the capital of Farmers Bank will be assumed by the bankruptcy trustee and entitled to a priority of payment.
The Company and its subsidiaries operate in the domestic banking, trust, retirement consulting, insurance and financial management industries. The Company’s principal business consists of owning and supervising its subsidiaries. Although Farmers directs the overall policies of its subsidiaries, including lending practices and financial resources, most day-to-day affairs are managed by their respective officers.
(“Investments" or “Farmers Investments”) are wholly-owned subsidiaries of the Bank. The Company and its subsidiaries operate in the domestic banking, trust, retirement consulting, insurance and financial management industries. The Company’s principal business consists of owning and supervising its subsidiaries.
The Company’s corporate governance policies include an Audit Committee Charter, a Compensation Committee Charter, Corporate Governance and Nominating Committee Charter and Code of Business Conduct and Ethics. The Board of Directors reviews the Company’s corporate governance practices on a continuing basis.
Corporate Governance The Sarbanes-Oxley Act of 2002 effected broad reforms to areas of corporate governance and financial reporting for public companies under the jurisdiction of the Commission. The Company’s corporate governance policies include an Audit Committee Charter, a Compensation Committee Charter, Corporate Governance and Nominating Committee Charter and Code of Business Conduct and Ethics.
Removed
Jones Agency, Inc., doing business as Champion Insurance. During 2016, the Bank completed the acquisition of the Bowers Insurance Agency, Inc. (“Bowers”). The transaction involved both cash and stock. All activity has been merged into Farmers Insurance.
Added
We prohibit retaliation against an individual who reported a concern or assisted with an inquiry or investigation. Supervision and Regulation Introduction The Company and its subsidiaries are subject to extensive regulation by federal and state regulatory agencies.
Removed
We prohibit retaliation against an individual who reported a concern or assisted with an inquiry or investigation. Our Company has taken workplace safety very seriously throughout the COVID-19 pandemic (“COVID-19”). As the scope of the pandemic broadened, Farmers implemented specific protocols in our Disaster Recovery Plan designed to safeguard our employees and clients.
Added
Significant aspects of the laws and regulations that have, or could have a material impact on Farmers and its subsidiaries are described below.
Removed
We secured and distributed the necessary PPE to all locations, enacted all applicable government-mandated/CDC-recommended guidelines for safe social distancing (including the installation of Plexiglass barriers, floor spacing markers and hand-sanitizer stations), restricted lobby access as needed, promoted the use of drive-thru banking, internet banking and the use of ITM’s, provided additional PTO time for front-line employees, enabled secure work-from-home access for back-office/support personnel, paid additional bonuses to associates making less than $50,000 annually, waived medical plan cost-sharing for tele-health and COVID-19 testing, provided increased facility cleaning and disinfecting frequency including the introduction of germ mitigation services and allowing for flexible scheduling options where appropriate.
Added
Congress and state legislatures as well as federal and state regulatory agencies and are subject to change at any time, particularly in the current economic and regulatory environment.
Removed
Regulatory Agencies Financial Holding Company . Farmers elected to be a financial holding company.
Added
In addition to Basel III, the Dodd-Frank Act requires or permits federal banking agencies to adopt regulations affecting capital requirements in a number of respects, including potentially more stringent capital requirements for systemically important financial institutions. Accordingly, the regulations ultimately applicable to the Company may differ substantially from Basel III.
Removed
The Bank’s deposits are insured up to applicable limits by the DIF of the FDIC and subject to deposit insurance assessments to maintain the DIF.
Added
The Company did not elect this transition relief.
Removed
Accordingly, the regulations ultimately applicable to the Company may differ substantially from Basel III. Requirements of higher capital levels or higher levels of liquid assets could adversely impact the Company’s net income and return on equity.
Added
See Exhibit 97.1 for the policy relating to recovery of erroneously awarded compensation. Cybersecurity Federal banking regulators issued two related statements regarding cybersecurity in 2015.
Removed
Federal law permits the OCC to order the pro rata assessment of shareholders of a national bank whose capital stock has become impaired, by losses or otherwise, to relieve a deficiency in such national bank’s capital stock.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+11 added−23 removed113 unchanged
Biggest changeNegative public opinion can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, social media and other marketing activities, the implementation of environmental, social, and governance practices, and from actions taken by government regulators and community organizations in response to any of the foregoing.
Biggest changeSimilar to any large organization, we are exposed to many types of operational risk, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems. 20 Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, social media and other marketing activities, the implementation of environmental, social, and governance practices, and from actions taken by government regulators and community organizations in response to any of the foregoing.
In order to attract and retain qualified employees, we must compensate them at market levels. If we 21 are unable to continue to attract and retain qualified employees, or do so at rates necessary to maintain our competitive position, our performance, including our competitive position, could suffer, and, in turn, adversely affect our business, financial condition or results of operations.
In order to attract and retain qualified employees, we must compensate them at market levels. If we are unable to continue to attract and retain qualified employees, or do so at rates necessary to maintain our competitive position, our performance, including our competitive position, could suffer, and, in turn, adversely affect our business, financial condition or results of operations.
As cyber-attacks and other attempted information security threats continue to evolve, we may be required to spend significant additional resources in efforts to modify and enhance our protective measures or in investigating or remediating of security breaches or vulnerabilities. We depend on our subsidiaries for dividends, distributions and other payments.
As cyber-attacks and other attempted information security threats continue to evolve, we may be required to spend significant additional resources in efforts to modify and enhance our protective measures or in investigating or remediating of security breaches or vulnerabilities. 21 We depend on our subsidiaries for dividends, distributions and other payments.
In addition, we may not be able to obtain appropriate types or levels of insurance in the future, nor may we be able to obtain adequate replacement policies with acceptable terms, if at all. 26 Item 1B. Unresolve d Staff Comments. There are no matters of unresolved staff comments from the Commission staff.
In addition, we may not be able to obtain appropriate types or levels of insurance in the future, nor may we be able to obtain adequate replacement policies with acceptable terms, if at all. Item 1B. Unresolve d Staff Comments. There are no matters of unresolved staff comments from the Commission staff.
We are further exposed to the risk that our external vendors may be unable to fulfill their contractual 22 obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as we are) and to the risk that our (or our vendors’) business continuity and data security systems prove to be inadequate.
We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as we are) and to the risk that our (or our vendors’) business continuity and data security systems prove to be inadequate.
Although Management believes that the Company’s allowance for credit losses is adequate to absorb losses on any existing loans that may become uncollectible, we cannot estimate loan losses with certainty, and we cannot provide any assurances that our allowance for loan losses will prove sufficient to cover actual credit losses in the future.
Although Management believes that the Company’s allowance for credit losses is adequate to absorb losses on any existing loans that may become 15 uncollectible, we cannot estimate loan losses with certainty, and we cannot provide any assurances that our allowance for loan losses will prove sufficient to cover actual credit losses in the future.
These bank failures led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions, which in turn led to a 17 greater focus by institutions, investors, and regulators on the on-balance sheet liquidity of and funding sources for financial institutions and the composition of its deposits.
These bank failures led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions, which in turn led to a greater focus by institutions, investors, and regulators on the on-balance sheet liquidity of and funding sources for financial institutions and the composition of its deposits.
In addition to laws, regulations and actions directed at the operations of banks, proposals to reform the housing finance market consider winding down Fannie Mae and Freddie Mac, which could negatively affect our sales of loans. 24 In addition to laws, regulations and actions directed at the operations of banks, proposals to reform the housing finance market consider winding down Fannie Mae and Freddie Mac, which could negatively affect our sales of loans.
In addition to laws, regulations and actions directed at the operations of banks, proposals to reform the housing finance market consider winding down Fannie Mae and Freddie Mac, which could negatively affect our sales of loans.
Investor advocacy groups, 25 investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.
Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.
Impairment of investment securities, goodwill, other intangible assets, or deferred tax assets could require charges to earnings, which could result in a negative impact on our results of operations. Quarterly, the Company evaluates its security portfolio to see if any security has a fair value less that its amortized cost.
Impairment of investment securities, goodwill, other intangible assets, or deferred tax assets could require charges to earnings, which could result in a negative impact on our results of operations. Quarterly, the Company evaluates its security portfolio to see if any security has a fair value less than its amortized cost.
Because we have a significant amount of real estate loans, additional decreases in real estate values could adversely affect the value of property used as 15 collateral and our ability to sell the collateral upon foreclosure.
Because we have a significant amount 14 of real estate loans, additional decreases in real estate values could adversely affect the value of property used as collateral and our ability to sell the collateral upon foreclosure.
Our business strategy includes continuing our growth plans. Our business, financial condition or results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. We intend to continue pursuing a profitable growth strategy both within our existing markets and in new markets.
Our business, financial condition or results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. We intend to continue pursuing a profitable growth strategy both within our existing markets and in new markets.
Some of the laws enacted by the United States Congress and regulations promulgated by federal regulatory agencies subject us, and other financial institutions to which such laws and regulations apply, to additional restrictions, oversight and costs that may have an impact on our business, results of operations or the trading price of our common shares.
Congress and regulations promulgated by federal regulatory agencies subject us, and other financial institutions to which such laws and regulations apply, to additional restrictions, oversight and costs that may have an impact on our business, results of operations or the trading price of our common shares.
As of December 31, 2023, a majority of our loan portfolio consisted of commercial real estate and residential real estate loans, including real estate development, construction and residential and commercial mortgage loans. 18 Consequently, real estate-related credit risks are a significant concern for us.
As of December 31, 2024, a majority of our loan portfolio consisted of commercial real estate and residential real estate loans, including real estate development, construction and residential and commercial mortgage loans. Consequently, real estate-related credit risks are a significant concern for us.
Potential difficulties we may encounter as part of the integration process include the following: • employees may voluntarily or involuntarily exit the Company because of the acquisitions; • our management team may have its attention diverted while trying to integrate the acquired companies; • we may encounter obstacles when incorporating the acquired operations into our operations; • differences in business backgrounds, corporate cultures and management philosophies; • potential unknown liabilities and unforeseen increased expenses; • previously undetected operational or other issues; and • the acquired operations may not otherwise perform as expected or provide expected results.
Potential difficulties we may encounter as part of the acquisition and integration process include the following: • time and expense associated with identifying and evaluating potential acquisitions or expansions; • employees may voluntarily or involuntarily exit the Company because of the acquisitions; • our management team may have its attention diverted while trying to integrate the acquired companies; • we may encounter obstacles when incorporating the acquired operations into our operations; • differences in business backgrounds, corporate cultures and management philosophies; • potential unknown liabilities and unforeseen increased expenses; • previously undetected operational or other issues; and • the acquired operations may not otherwise perform as expected or provide expected results.
Core deposits – savings and money market accounts, time deposits less than $250 thousand and demand deposits—comprised approximately 93.3% of total deposits at December 31, 2023. Additional available unused wholesale sources of liquidity include advances from the FHLB, issuances through dealers in the capital markets and access to certificates of deposit issued through brokers.
Core deposits – savings and money market accounts, time deposits less than $250 thousand and demand deposits—comprised approximately 91.6% of total deposits at December 31, 2024. Additional available unused wholesale sources of liquidity include advances from the FHLB, issuances through dealers in the capital markets and access to certificates of deposit issued through brokers.
Liquidity is further provided by unencumbered, or unpledged, investment securities that totaled $214.3 million at December 31, 2023. An inability to raise funds through deposits, borrowings, the sale or pledging as collateral of loans and other assets could have a substantial negative effect on our liquidity.
Liquidity is further provided by unencumbered, or unpledged, investment securities that totaled $414.0 million at December 31, 2024. An inability to raise funds through deposits, borrowings, the sale or pledging as collateral of loans and other assets could have a substantial negative effect on our liquidity.
Our ability to borrow could also be impaired by factors that are not specific to us, such as severe disruption of the financial markets or negative news and expectations about the 20 prospects for the financial services industry as a whole, as evidenced by recent turmoil in the domestic and worldwide credit markets.
Our ability to borrow could also be impaired by factors that are not specific to us, such as severe disruption of the financial markets or negative news and expectations about the prospects for the financial services industry as a whole, as evidenced by recent turmoil in the domestic and worldwide credit markets. Our business strategy includes continuing our growth plans.
In light of conditions in the global financial markets and the global economy that occurred in the last decade, regulators have increased their focus on the regulation of the financial services industry.
In light of conditions in the global financial markets and the global economy that occurred in the last decade, regulators have increased their focus on the regulation of the financial services industry. Most recently, the U.S.
Therefore, there can be no assurance additional capital can be raised when needed or that capital can be raised on acceptable terms. Impairment to our ability to raise capital may have a material adverse effect on our business, financial condition or results of operations.
Therefore, there can be no assurance additional capital can be raised when needed or that capital can be raised on acceptable terms. Impairment to our ability to raise capital may have a material adverse effect on our business, financial condition or results of operations. We may not be able to adapt to technological change.
Inflation may adversely impact our business and our customers. Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. Although the U.S.
Inflation may adversely impact our business and our customers. Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. There is no guarantee that the U.S.
There is no guarantee that the U.S. Treasury Department, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.
Treasury Department, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.
If general economic conditions worsen, we may experience higher levels of delinquencies, repossessions and charge-offs. Commercial and industrial loans may expose us to greater financial and credit risk than other loans. As of December 31, 2023, approximately 12.7% of our loan portfolio consisted of commercial and industrial loans.
If general economic conditions worsen, we may experience higher levels of delinquencies, repossessions and charge-offs. 17 Commercial and industrial loans may expose us to greater financial and credit risk than other loans. As of December 31, 2024, approximately 10.8% of our loan portfolio consisted of commercial and industrial loans.
Since late 2008, the FDIC has taken various actions intended to maintain a strong funding position and restore reserve ratios of the Deposit Insurance Fund.
The FDIC maintains the Deposit Insurance Fund to resolve the cost of bank failures. Since late 2008, the FDIC has taken various actions intended to maintain a strong funding position and restore reserve ratios of the Deposit Insurance Fund.
We may also experience a higher or more volatile provision for credit losses due to higher levels of nonperforming loans and net charge-offs if commercial and consumer customers are unable to make scheduled loan payments.
We may also experience a higher or more volatile provision for credit losses due to higher levels of nonperforming loans and net charge-offs if commercial and consumer customers are unable to make scheduled loan payments. 18 We are subject to certain risks with respect to liquidity.
Our earnings and cash flow are dependent upon our net interest income. Net interest income is the difference between the interest income generated by our interest-earning assets (consisting primarily of loans and, to a lesser extent, securities) and the interest expense generated by our interest-bearing liabilities (consisting primarily of deposits and wholesale borrowings).
Net interest income is the difference between the interest income generated by our interest-earning assets (consisting primarily of loans and, to a lesser extent, securities) and the interest expense generated by our interest-bearing liabilities (consisting primarily of deposits and wholesale borrowings).
We may not be able to adapt to technological change. 23 The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers while reducing costs.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers while reducing costs.
Any of these factors could adversely affect each company’s ability to maintain relationships with customers, suppliers, employees and other constituencies or our ability to achieve the anticipated benefits of the acquisition or could reduce each company’s earnings or otherwise adversely affect our business and financial results after the acquisition.
Any of these factors could adversely affect each company’s ability to maintain relationships with customers, suppliers, employees and other constituencies or our ability to achieve the anticipated benefits of the acquisition or could reduce each company’s earnings or otherwise adversely affect our business and financial results after the acquisition. 19 We may fail to realize all of the anticipated benefits of acquisitions, which could reduce our anticipated profitability.
We may fail to realize all of the anticipated benefits of acquisitions, which could reduce our anticipated profitability. We expect that our acquisitions will result in certain synergies, business opportunities and growth prospects, although we may not fully realize these expectations. Our assumptions underlying estimates of expected cost savings may be inaccurate or general industry and business conditions may deteriorate.
We expect that our acquisitions will result in certain synergies, business opportunities and growth prospects, although we may not fully realize these expectations. Our assumptions underlying estimates of expected cost savings may be inaccurate or general industry and business conditions may deteriorate.
We cannot be assured of the amount of timing of losses, nor whether the allowance for credit losses will be adequate in the future. 19 If our assumptions prove to be incorrect, our allowance for credit losses may not be sufficient to cover the expected losses from our loan portfolio, resulting in the need for additions to the allowance for credit losses which could have a material adverse impact on our financial condition and results of operations.
If our assumptions prove to be incorrect, our allowance for credit losses may not be sufficient to cover the expected losses from our loan portfolio, resulting in the need for additions to the allowance for credit losses which could have a material adverse impact on our financial condition and results of operations.
In any event, any reduced liquidity could negatively impact our ability to be able to fund loans, or to pay the principal and interest on any of our outstanding debt securities at any time, including when due. 16 Changes in Interest rates could adversely affect our income and financial condition.
Credit losses in excess of our reserves may adversely affect our financial condition and results of operations. In any event, any reduced liquidity could negatively impact our ability to be able to fund loans, or to pay the principal and interest on any of our outstanding debt securities at any time, including when due.
Our estimates of future credit losses is susceptible to changes in economic, operating and other conditions, including changes in regulations and interest rates, which may be beyond our control, and the losses may exceed current estimates.
Our estimates of future credit losses is susceptible to changes in economic, operating and other conditions, including changes in regulations and interest rates, which may be beyond our control, and the losses may exceed current estimates. We cannot be assured of the amount of timing of losses, nor whether the allowance for credit losses will be adequate in the future.
We have a limited ability to control the amount of premiums we are required to pay for FDIC insurance. If there are additional financial institution failures or other significant legislative or regulatory changes, the FDIC may be required to increase assessment rates or take actions similar to those taken after 2008.
If there are additional financial institution failures or other significant legislative or regulatory changes, the FDIC may be required to increase assessment rates or take actions similar to those taken after 2008.
We may experience difficulties in integrating acquired businesses, or acquisitions may not perform as expected. We completed the acquisition of Emclaire on January 1, 2023. The successful integration of this acquisition depends on our ability to manage the operations and personnel of the acquired businesses. Integrating operations is complex and requires significant efforts and expenses.
We may experience difficulties in integrating acquired businesses, or acquisitions may not perform as expected. In the future, we may acquire other financial institutions or assets of financial institution. The successful integration of these potential acquisitions depends on our ability to manage the operations and personnel of the acquired businesses. Integrating operations is complex and requires significant efforts and expenses.
Most recently, the United States Congress and the federal agencies regulating the financial services industry have acted on an unprecedented scale in responding to the stresses experienced in the global financial markets.
Congress and the federal agencies regulating the financial services industry have acted on an unprecedented scale in responding to the stresses experienced in the global financial markets. Some of the laws enacted by the U. S.
Changes to our taxes could have a material adverse effect on our results of operations and, as described in the above risk discussion and below, the fair value of net deferred tax assets. In addition, our customers are subject to a wide variety of federal, state and local taxes.
We are subject to extensive federal, state and local taxes, including income, excise, sales/use, payroll, financial institutions tax, withholding and ad valorem taxes. Changes to our taxes could have a material adverse effect on our results of operations and, as described in the above risk discussion and below, the fair value of net deferred tax assets.
Deferred tax assets are only recognized to the extent it is more likely than not they will be realized. Should management determine it is not more likely than not that the deferred tax assets will be realized, a valuation allowance with a change to earnings would be reflected in the period.
Should management determine it is more likely than not that the deferred tax assets will be realized, a valuation allowance with a change to earnings would be reflected in the period. 24 Changes and uncertainty in tax laws could adversely affect our performance.
Changes in taxes paid by our customers may adversely affect their ability to purchase homes or consumer products, which could adversely affect their demand for our loans and deposit products. In addition, such negative effects on our customers could result in defaults on the loans we have made and decrease the value of mortgage-backed securities in which we have invested.
In addition, such negative effects on our customers could result in defaults on the loans we have made and decrease the value of mortgage-backed securities in which we have invested.
Nevertheless, we could face delays and challenges in the foreclosure process arising from claims relating to industry practices generally, which could adversely affect recoveries and our financial results, whether through increased expenses of litigation and property maintenance, deteriorating values of underlying mortgaged properties or unsuccessful litigation results generally.
Nevertheless, we could face delays and challenges in the foreclosure process arising from claims relating to industry practices generally, which could adversely affect recoveries and our financial results, whether through increased expenses of litigation and property maintenance, deteriorating values of underlying mortgaged properties or unsuccessful litigation results generally. 23 In addition, in connection with the origination and sale of residential mortgages into the secondary market, we make certain representations and warranties, which, if breached, may require us to repurchase such loans, substitute other loans or indemnify the purchasers of such loans for actual losses incurred in respect of such loans.
We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological changes affecting the financial services industry could negatively affect our growth, revenue and net income.
We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers.
The rule, as mandated by the Dodd-Frank Act, finalized a target size for the Deposit Insurance Fund at 2 percent of insured deposits. The FDIC recently adopted rules revising assessments in a manner that benefits banks with assets of less than $10 billion, although there can be no assurance that such assessments will not change in the future.
The FDIC recently adopted rules revising assessments in a manner that benefits banks with assets of less than $10 billion, although there can be no assurance that such assessments will not change in the future. 22 We have a limited ability to control the amount of premiums we are required to pay for FDIC insurance.
While we do not believe that the circumstances of these banks' failures and liquidations are indicators of broader issues with the banking system, the failures may reduce customer confidence, affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets and/or have a negative reputational ramification for the financial services industry, including us.
During 2023, several high profile bank failures caused uncertainty in the investor community and negative confidence among bank customers generally. 16 These failures and any additional failures that could occur may reduce customer confidence, affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets and/or have a negative reputational ramification for the financial services industry, including us.
Risks Related to the Legal and Regulatory Environment Increases in FDIC insurance premiums may have a material adverse effect on our earnings. The FDIC maintains the Deposit Insurance Fund to resolve the cost of bank failures.
Failure to successfully keep pace with technological change affecting the financial services industry, and failure to successfully manage the risks associated with the implementation of these new technologies, could negatively affect our growth, revenue and net income. Risks Related to the Legal and Regulatory Environment Increases in FDIC insurance premiums may have a material adverse effect on our earnings.
Removed
The economic impact of a pandemic could adversely affect our business, financial condition and results of operations. Our business is dependent upon the willingness and ability of our customers to conduct banking and other financial transactions.
Added
Changes to United States tariff and import/export regulations may have a negative effect on our industry and our business. There has been on-going discussion and commentary regarding potential significant changes to United States trade policies and tariffs, including imposing higher tariffs or implementing more restrictive trade policies.
Removed
The spread of a highly infectious or contagious disease, such as COVlD-19, may negatively impact global, national and local economies, which in turn may disrupt the businesses, activities, and operations of our customers, as well as our business and operations.
Added
The current administration has created significant uncertainty about the future relationship between the United States and other countries with respect to the trade policies and tariffs.
Removed
Credit losses in excess of our reserves may adversely affect our financial condition and results of operations.
Added
These tariffs or other trade restrictions on products and materials that our customers import or export, or the perception that any of these tariffs or other trade restrictions could occur, could cause the prices of our customers’ products to increase which could reduce demand for such products, or reduce our customer margins, and adversely impact their revenues, financial results and ability to service debt.
Removed
Treasury Department, FDIC and Federal Reserve Board have announced a program to provide up to $25.0 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediately liquidity may exceed the capacity of such program.
Added
This could adversely affect our financial condition and results of operations. In addition, to the extent changes in the political environment have a negative impact on us or on the markets in which we operate, our business, financial condition and results of operations could be materially and adversely impacted in the future.
Removed
The bank failures of Silicon Valley Bank in California, Signature Bank in New York, and First Republic Bank in California, and the decision of Silvergate Bank in California to voluntarily liquidate its assets and wind down operations, each of which occurred during the first and second quarters of 2023, caused uncertainty in the investor community and negative confidence among bank customers generally.
Added
Changes in Interest rates could adversely affect our income and financial condition. Our earnings and cash flow are dependent upon our net interest income.
Removed
A transition away from the London Interbank Offered Rate (“LIBOR”) as a reference rate for financial instruments could negatively affect our income and expenses and the value of various financial instruments.
Added
We depend on the accuracy and completeness of information about our customers. In deciding whether to extend credit or enter into other transactions and in evaluating and monitoring our loan portfolio, we rely on information provided to us by or on behalf of customers and other third parties, including financial statements, credit reports, and other financial information.
Removed
LIBOR is used extensively in the United States and globally as a benchmark for various commercial and financial contracts, including adjustable rate mortgages, corporate debt, interest rate swaps and other derivatives. LIBOR is set based on interest rate information reported by certain banks, which may stop reporting such information after 2021.
Added
We also rely on representations from our customers, counterparties, and other third parties, such as independent auditors, as to the accuracy and completeness of that information. Reliance on inaccurate, incomplete, fraudulent or misleading financial or business information could result in a material adverse effect on our business, financial condition or results of operation.
Removed
On July 27, 2017, the United Kingdom’s Financial Conduct Authority (“FCA”) announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.
Added
In addition, our implementation of certain new technologies, such as those related to artificial intelligence and algorithms, in our business processes may have unintended consequences due to their limitations, potential manipulation or our failure to use them effectively. Cloud technologies are also critical to the operation of our systems, and our reliance on cloud technologies is growing.
Removed
On November 30, 2020, to facilitate an orderly LIBOR transition, the OCC, the FDIC, and the Federal Reserve Board jointly announced that entering into new contracts using LIBOR as a reference rate after December 31, 2021, would create a safety and soundness risk.
Added
The rule, as mandated by the Dodd-Frank Act, finalized a target size for the Deposit Insurance Fund at 2 percent of insured deposits.
Removed
On March 5, 2021, the FCA announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative immediately after December 31, 2021, in the case of 1-week and 2-month LIBOR, and immediately after June 30, 2023, in the case of the remaining LIBOR settings.
Added
Deferred tax assets are only recognized to the extent it is more likely than not they will be realized.
Removed
In the United States, efforts to identify a set of alternative U.S. dollar reference interest rates are ongoing, and the Alternative Reference Rate Committee (“ARRC”) has recommended the use of a Secured Overnight Funding Rate (“SOFR”). SOFR is different from LIBOR in that it is a backward looking secured rate rather than a forward-looking unsecured rate.
Added
In addition, our customers are subject to a wide variety of federal, state and local taxes. Changes in taxes paid by our customers may adversely affect their ability to purchase homes or consumer products, which could adversely affect their demand for our loans and deposit products.
Removed
These differences could lead to a greater disconnect between our costs to raise funds for SOFR as compared to LIBOR. For cash products and loans, ARRC has also recommended Term SOFR, which is a forward looking SOFR based on SOFR futures and may in part reduce differences between SOFR and LIBOR.
Removed
There are operational issues, which may create a delay in the transition to SOFR or other substitute indices, leading to uncertainty across the industry. These consequences cannot be entirely predicted and could have an adverse impact on the market value for or value of LIBOR-linked securities, loans, derivatives over loans and other financial obligations or extensions of credit.
Removed
We have limited exposure to LIBOR, with total exposure as of December 31, 2023 of approximately $1.5 million. We do not believe the change to a benchmark like SOFR will have a material impact on our financial condition, results of operations or cash flows.
Removed
Furthermore, a pandemic could result in the recognition of credit losses in our loan portfolios and increases in our allowance for credit losses, particularly if businesses are forced to close or operate at reduced capacities, the impact on the national economy could worsen, or more clients draw on their lines of credit or seek additional loans to help finance their businesses.
Removed
Small and mid-sized businesses make up a significant portion of our commercial loan portfolio and are particularly vulnerable to adverse financial effects of a pandemic due to their increased reliance on continuing cash flow to fund day-to-day operations.
Removed
Although federal government programs such as the Paycheck Protection Program (“PPP”) that were designed to support individuals, households and businesses impacted by the economic disruptions caused by the COVID-19 pandemic were to provide relief to these types of businesses, there can be no assurance that these programs will succeed.
Removed
As of December 31, 2023, we hold and service a non material balance of PPP loans.
Removed
While a large number of our PPP borrowers have applied for and received full or partial forgiveness of their loan obligations, we still have credit risk on the remaining PPP loans in the event that a determination is made by the SBA that there is a deficiency in the manner in which a loan was originated, funded or serviced, including any issue with the eligibility of a borrower to receive funding.
Removed
In such a case, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if the SBA has already paid under the guaranty, seek recovery of any related loss from us. We are subject to certain risks with respect to liquidity.
Removed
Similar to any large organization, we are exposed to many types of operational risk, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems.
Removed
In addition, in connection with the origination and sale of residential mortgages into the secondary market, we make certain representations and warranties, which, if breached, may require us to repurchase such loans, substitute other loans or indemnify the purchasers of such loans for actual losses incurred in respect of such loans.
Removed
Changes and uncertainty in tax laws could adversely affect our performance. We are subject to extensive federal, state and local taxes, including income, excise, sales/use, payroll, financial institutions tax, withholding and ad valorem taxes.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Bank expects risks and exposures related to cybersecurity attacks to remain high for the foreseeable future. For further discussion of risks related to cybersecurity, see “Item 1A Risk Factors.” See also the Company’s disclosures regarding risk management, strategy, governance and incident disclosure under Item 1C.
Biggest changeThe Bank expects risks and exposures related to cybersecurity attacks to remain high for the foreseeable future. For further discussion of risks related to cybersecurity, see “Item 1A Risk Factors.” 25 Governance The Chief Risk Officer is responsible for overseeing the assessment and management of the Company's information security program.
In the ordinary course of its business, the Bank relies on electronic communications and information systems to conduct its operations and to store sensitive data, and employs a variety of preventative and detective tools to monitor, block, and provide alerts regarding suspicious activity, as well as to report on any suspected advanced persistent threats.
Cybersecurity Risk Management and Strategy In the ordinary course of its business, the Bank relies on electronic communications and information systems to conduct its operations and to store sensitive data, and employs a variety of preventative and detective tools to monitor, block, and provide alerts regarding suspicious activity, as well as to report on any suspected advanced persistent threats.
Removed
Item 1C. Cybersecurity The Cyber Incident Reporting for Critical Infrastructure Act, enacted in March 2022, requires certain covered entities to report a covered incident to the U.S. Department of Homeland Security's Cybersecurity & Infrastructure Security Agency ("CISA") within 72 hours after a covered entity reasonably believes an incident has occurred.
Added
The Chief Information Officer is responsible for execution, management, and administration of the information security tools and defenses of the program.
Removed
Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack.
Removed
The SEC adopted a new rule on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies in 2023, which applies to all public companies subject to the reporting requirements of the Securities Exchange Act of 1934 and requires disclosure of material cybersecurity incidents in Current Reports on Form 8-K and periodic disclosure of cybersecurity risk management, strategy, and governance in annual reports in Annual Reports on Form 10-K.
Removed
State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations and many states have recently implemented or modified their data breach notification and data privacy requirements. The Company expects this trend of state-level cybersecurity regulatory activity to continue, and continues to monitor these developments.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Pr operties. At December 31, 2023, the Company conducted its business from its main office at 20 and 30 South Broad Street, Canfield, Ohio and 64 full-service banking centers and 3 stand-alone loan production offices located in northeast Ohio and western Pennsylvania. Farmers Trust operates five offices in northeast Ohio and Farmers Insurance operates two offices.
Biggest changeItem 2. Pr operties. At December 31, 2024, the Company conducted its business from its main office at 30 South Broad Street, Canfield, Ohio and 62 full-service banking centers and 2 stand-alone loan production offices located in northeast Ohio. Farmers Trust operates five offices in northeast Ohio and Farmers Insurance operates two offices.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, it is possible that the ultimate resolution of these matters, if unfavorable, may be material to the results of operations in a particular future period as the time and amount of any resolution of such actions and its relationship to the future results of operations are not known. Item 4. Mine Safe ty Disclosures Not applicable. 27 Part II
Biggest changeHowever, it is possible that the ultimate resolution of these matters, if unfavorable, may be material to the results of operations in a particular future period as the time and amount of any resolution of such actions and its relationship to the future results of operations are not known. Item 4. Mine Safe ty Disclosures. Not applicable. 26 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeQuarter Ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 High $ 15.08 $ 13.31 $ 14.25 $ 14.72 Low $ 11.56 $ 10.82 $ 11.25 $ 10.38 Cash dividends paid per share $ 0.17 $ 0.17 $ 0.17 $ 0.17 Quarter Ended March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 High $ 20.00 $ 17.28 $ 15.69 $ 15.46 Low $ 16.19 $ 14.47 $ 13.06 $ 12.41 Cash dividends paid per share $ 0.16 $ 0.16 $ 0.16 $ 0.17 The following table provides information regarding the Company's purchases of its common shares during the quarter ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number of Shares that May Yet be Purchased Under the Program Beginning balance 497,047 October 0 $ 0 0 497,047 November 4,766 12.16 0 497,047 December 437 14.09 0 497,047 Ending balance 5,203 $ 12.32 0 497,047 On July 30, 2019, the Company announced that its Board of Directors authorized the purchase of up to 1,500,000 shares of its common stock in the open market or in privately negotiated transactions, from time to time and subject to market and other conditions.
Biggest changeQuarter Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 High $ 14.75 $ 13.36 $ 16.32 $ 16.29 Low $ 12.29 $ 11.55 $ 12.01 $ 13.64 Cash dividends paid per share $ 0.17 $ 0.17 $ 0.17 $ 0.17 Quarter Ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 High $ 15.08 $ 13.31 $ 14.25 $ 14.72 Low $ 11.56 $ 10.82 $ 11.25 $ 10.38 Cash dividends paid per share $ 0.17 $ 0.17 $ 0.17 $ 0.17 The following table provides information regarding the Company's purchases of its common shares during the quarter ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number of Shares that May Yet be Purchased Under the Program Beginning balance 497,047 October 1,918 $ 14.67 0 497,047 November 2,120 13.80 0 497,047 December 0 0 0 497,047 Ending balance 4,038 $ 14.21 0 497,047 On July 30, 2019, the Company announced that its Board of Directors authorized the purchase of up to 1,500,000 shares of its common stock in the open market or in privately negotiated transactions, from time to time and subject to market and other conditions.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuers Purchases of Equity Securities Market Information regarding the Company’s Common Shares. Farmers’ common shares currently trade under the symbol “FMNB” on the Nasdaq Capital Market. Farmers had approximately 4,097 holders of record of common shares at March 1, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuers Purchases of Equity Securities. Market Information regarding the Company’s Common Shares. Farmers’ common shares currently trade under the symbol “FMNB” on the Nasdaq Capital Market. Farmers had approximately 3,970 holders of record of common shares at March 1, 2025.
On March 1, 2023, the Company announced that its Board of Directors authorized the purchase of up to 1,000,000 shares of its common stock in the open market or in privately negotiated transactions, from time to time and subject to market and other conditions. This 2023 Repurchase Program supersedes the Company’s prior share repurchase program discussed above.
During the first two months of 2023, 347,846 shares were repurchased under this plan. On March 1, 2023, the Company announced that its Board of Directors authorized the purchase of up to 1,000,000 shares of its common stock in the open market or in privately negotiated transactions, from time to time and subject to market and other conditions.
The 2023 Repurchase Program may be modified, suspended or terminated by the Company at any time. During 2023, shares totaling 502,953 were repurchased under this plan. There were 497,047 shares left to repurchase under this plan at December 31, 2023. Item 6. R eserved. 28
This 2023 Repurchase Program supersedes the Company’s prior share repurchase program discussed above. The 2023 Repurchase Program may be modified, suspended or terminated by the Company at any time. During 2024, no shares were repurchased under this plan. There were 497,047 shares left to repurchase under this plan at December 31, 2024. Ite m 6. Reserved. 27
Removed
No shares were repurchased in 2022. Shares totaling 10,851 were repurchased during 2021. During the first two months of 2023, 347,846 shares were repurchased under this plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAverage Balance Sheets and Related Yields and Rates (Table Dollar Amounts in Thousands except Per Share Data) Years ended December 31, 2023 2022 2021 AVERAGE AVERAGE AVERAGE BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE EARNING ASSETS Loans (1) (2) $ 3,155,858 $ 172,161 5.46 % $ 2,358,724 $ 108,100 4.58 % $ 2,041,347 $ 95,180 4.66 % Taxable securities 1,143,547 26,231 2.29 1,081,966 20,843 1.93 617,475 11,399 1.85 Tax-exempt securities (1) 419,557 13,283 3.17 465,855 14,952 3.21 348,627 12,027 3.45 Other investments 39,559 1,986 5.02 33,153 871 2.63 21,912 498 2.27 Federal funds sold and other cash 74,950 2,476 3.30 76,253 684 0.90 180,718 200 0.11 Total earning assets 4,833,471 216,137 4.47 4,015,951 145,450 3.62 3,210,079 119,304 3.72 NONEARNING ASSETS Noninterest-earning assets 205,683 128,757 195,805 195,805 Total Assets $ 5,039,154 $ 4,144,708 $ 3,405,884 INTEREST-BEARING LIABILITIES Time deposits $ 654,717 $ 19,462 2.97 % $ 360,687 $ 3,044 0.84 % $ 393,039 $ 3,652 0.93 % Brokered time deposits 132,895 6,204 4.67 56,965 1,240 2.18 11,737 75 0.64 Savings deposits 1,113,561 9,899 0.89 846,418 1,352 0.16 569,179 712 0.13 Demand deposits - interest bearing 1,415,425 27,541 1.95 1,392,058 7,449 0.54 1,240,014 2,336 0.19 Short term borrowings 160,964 8,357 5.19 55,668 1,408 2.53 3,957 11 0.28 Long term borrowings 88,439 4,086 4.62 87,972 3,427 3.90 70,057 1,683 2.40 Total Interest-Bearing Liabilities 3,566,001 75,549 2.12 2,799,768 17,920 0.64 2,287,983 8,469 0.37 NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY Demand deposits - noninterest bearing 1,065,389 959,294 714,978 Other Liabilities 50,302 34,180 23,498 Stockholders' equity 357,462 351,466 379,425 Total Liabilities and Stockholders' Equity $ 5,039,154 $ 4,144,708 $ 3,405,884 Net interest income and interest rate spread $ 140,588 2.35 % $ 127,530 2.98 % $ 110,835 3.35 % Net interest margin 2.91 % 3.18 % 3.45 % (1) Interest on certain tax-exempt loans and tax-exempt securities in 2023, 2022 and 2021 is not taxable for Federal income tax purposes.
Biggest changeThe increase in deposit costs was driven by the movement of lower cost checking and savings deposits into certificates of deposit while the increase in borrowed funds was due a lower level of brokered CDs utilized in 2024. 29 Average Balance Sheets and Related Yields and Rates (Table Dollar Amounts in Thousands except Per Share Data) Years ended December 31, 2024 2023 2022 AVERAGE AVERAGE AVERAGE BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE EARNING ASSETS Loans (1) (2) $ 3,227,384 $ 186,032 5.76 % $ 3,155,858 $ 172,161 5.46 % $ 2,358,724 $ 108,100 4.58 % Taxable securities 1,110,905 26,838 2.42 1,143,547 26,231 2.29 1,081,966 20,843 1.93 Tax-exempt securities (1) 386,643 12,165 3.15 419,557 13,283 3.17 465,855 14,952 3.21 Other investments 35,402 1,450 4.10 39,559 1,986 5.02 33,153 871 2.63 Federal funds sold and other cash 96,288 3,727 3.87 74,950 2,476 3.30 76,253 684 0.90 Total earning assets 4,856,622 230,212 4.74 4,833,471 216,137 4.47 4,015,951 145,450 3.62 NONEARNING ASSETS Noninterest-earning assets 234,297 205,683 128,757 Total Assets $ 5,090,919 $ 5,039,154 $ 4,144,708 INTEREST-BEARING LIABILITIES Time deposits $ 745,945 $ 29,329 3.93 % $ 654,717 $ 19,462 2.97 % $ 360,687 $ 3,044 0.84 % Brokered time deposits 25,389 1,108 4.36 132,895 6,204 4.67 56,965 1,240 2.18 Savings deposits 1,095,470 16,144 1.47 1,113,561 9,899 0.89 846,418 1,352 0.16 Demand deposits - interest bearing 1,396,193 34,588 2.48 1,415,425 27,541 1.95 1,392,058 7,449 0.54 Total interest-bearing deposits 3,262,997 81,169 2.49 3,316,598 63,106 1.90 2,656,128 13,085 0.49 Short term borrowings 293,488 14,105 4.81 160,964 8,357 5.19 55,668 1,408 2.53 Long term borrowings 87,749 4,090 4.66 88,439 4,086 4.62 87,972 3,427 3.90 Total borrowed funds 381,237 18,195 4.77 249,403 12,443 4.99 143,640 4,835 3.37 Total Interest-Bearing Liabilities 3,644,234 99,364 2.73 3,566,001 75,549 2.12 2,799,768 17,920 0.64 NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY Demand deposits - noninterest bearing 981,115 1,065,389 959,294 Other Liabilities 58,134 50,302 34,180 Stockholders' equity 407,436 357,462 351,466 Total Liabilities and Stockholders' Equity $ 5,090,919 $ 5,039,154 $ 4,144,708 Net interest income and interest rate spread $ 130,848 2.01 % $ 140,588 2.35 % $ 127,530 2.98 % Net interest margin 2.69 % 2.91 % 3.18 % (1) Interest on certain tax-exempt loans and tax-exempt securities in 2024, 2023 and 2022 is not taxable for Federal income tax purposes.
This increase was due to the average loan balances increasing $797.1 in 2023 primarily due to the acquisition of Emclaire. The yield on loans increased to 5.46% in 2023 from 4.58% in 2022. Income on taxable securities increased by $5.4 million in 2023 due to the average balance being higher by $61.6 million.
This increase was due to the average loan balances increasing $797.1 million in 2023 primarily due to the acquisition of Emclaire. The yield on loans increased to 5.46% in 2023 from 4.58% in 2022. Income on taxable securities increased by $5.4 million in 2023 due to the average balance being higher by $61.6 million.
The cohort method and the PD/LGD. Cohort relies on the creation of cohorts to capture loans that qualify for a particular segment, as of a point in time. Those loans are then tracked over their remaining lives to determine their loss experience.
The cohort method and the PD/LGD method. Cohort relies on the creation of cohorts to capture loans that qualify for a particular segment, as of a point in time. Those loans are then tracked over their remaining lives to determine their loss experience.
FDIC insurance and state and local taxes increased to $5.8 million in 2023 from $4.0 million in 2022. The Emclaire acquisition along with higher FDIC assessment rates in 2023 drove the increase. Professional fees decreased by $1.7 million in 2023 to $4.4 million from $6.1 million for the twelve months ended December 31, 2022.
FDIC insurance and state and local taxes increased to $5.8 million in 2023 from $4.0 million in 2022. The Emclaire acquisition along with higher FDIC assessment rates in 2023 drove the increase. 34 Professional fees decreased by $1.7 million in 2023 to $4.4 million from $6.1 million for the twelve months ended December 31, 2022.
The increase was primarily due to the acquisition of Emclaire but 2023 also included $785,000 for the settlement of a lawsuit whereas 2022 did not have any of this expense. 33 Income Taxes Income tax expense decreased to $8.8 million for the year ended December 31, 2023, from $12.2 million for the year ended December 31, 2022.
The increase was primarily due to the acquisition of Emclaire but 2023 also included $785,000 for the settlement of a lawsuit whereas 2022 did not have any of this expense. Income Taxes Income tax expense decreased to $8.8 million for the year ended December 31, 2023, from $12.2 million for the year ended December 31, 2022.
The probability of default (“PD”) portion of PD/LGD is defined by the Company as 90 days past due, placed on non-accrual, or is partially or wholly, charged-off. Typically, a one-year time period is used to asses PD. PD can be measured and applied using various risk criteria. Risk rating is one common way to apply PDs.
The probability of default (“PD”) portion of PD/LGD is defined by the Company as 90 days past due, placed on non-accrual, or is partially or wholly, charged-off. Typically, a one-year time period is used to assess PD. PD can be measured and applied using various risk criteria. Risk rating is one common way to apply PDs.
Recognizing that forecasts of macroeconomic conditions are inherently uncertain, the Company believes that its process to consider the available information and associated risks and uncertainties is appropriately governed and that its estimates of expected credit losses were reasonable and appropriate for the period ended December 31, 2023. The Company uses two methodologies to analyze loan pools.
Recognizing that forecasts of macroeconomic conditions are inherently uncertain, the Company believes that its process to consider the available information and associated risks and uncertainties is appropriately governed and that its estimates of expected credit losses were reasonable and appropriate for the period ended December 31, 2024. The Company uses two methodologies to analyze loan pools.
Factors that could cause or contribute to such differences include, without limitation, risks and uncertainties detailed from time to time in Farmers’ filings with the Securities and Exchange Commission, including without limitation the risk factors disclosed in Item 1A, “Risk Factors” of this Annual Report on Form 10-K.
Factors that could cause or contribute to such differences include, without limitation, risks and uncertainties detailed from time to time in Farmers’ filings with the Commission, including without limitation the risk factors disclosed in Item 1A, “Risk Factors” of this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following presents a discussion and analysis of Farmers’ financial condition and results of operations by its management. The review highlights the principal factors affecting earnings and the significant changes in balance sheet items for the years 2023, 2022 and 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following presents a discussion and analysis of Farmers’ financial condition and results of operations by its management. The review highlights the principal factors affecting earnings and the significant changes in balance sheet items for the years 2024, 2023 and 2022.
Without considering offsetting or correlated effects in other qualitative components of the Company’s allowance for credit losses, the comparison between these two scenarios for the exposures below reflect the following differences: • An increase of approximately $686 thousand for residential real estate loans and lending-related commitments • An increase of approximately $1.12 million for commercial real non-owner occupied loans and lending-related commitments 46 This analysis relates only to the modeled credit loss estimates and is not intended to estimate changes in the overall allowance for credit losses as it does not reflect any potential changes in the other adjustments to the quantitative calculation, which would also be influenced by the judgment management applies to the modeled lifetime loss estimates to reflect the uncertainty and imprecision of these modeled lifetime loss estimates based on then-current circumstances and conditions.
Without considering offsetting or correlated effects in other qualitative components of the Company’s allowance for credit losses, the comparison between these two scenarios for the exposures below reflect the following differences: • An increase of approximately $650 thousand for residential real estate loans and lending-related commitments • An increase of approximately $1.16 million for commercial real non-owner occupied loans and lending-related commitments This analysis relates only to the modeled credit loss estimates and is not intended to estimate changes in the overall allowance for credit losses as it does not reflect any potential changes in the other adjustments to the quantitative calculation, which would also be influenced by the judgment management applies to the modeled lifetime loss estimates to reflect the uncertainty and imprecision of these modeled lifetime loss estimates based on then-current circumstances and conditions.
As of December 31, 2023, there were no concentrations of loans exceeding 10% of total loans that are not disclosed as a category of loans. As of that date, there were also no other interest-earning assets that are either nonaccrual, past due, restructured or non-performing.
As of December 31, 2024, there were no concentrations of loans exceeding 10% of total loans that are not disclosed as a category of loans. As of that date, there were also no other interest-earning assets that are either nonaccrual, past due, restructured or non-performing.
The following, which is not intended to be an all-encompassing list, summarizes several factors that could cause the Company’s actual results to differ materially from those anticipated or expected in any forward-looking statement: • general economic conditions in markets where the Company conducts business, which could materially impact credit quality trends; • the length and extent of the continued economic impacts of the COVID-19 pandemic; • the length and extent of the economic impacts of the ongoing conflict in Ukraine; • actions by the Federal Reserve Board, U.S.
The following, which is not intended to be an all-encompassing list, summarizes several factors that could cause the Company’s actual results to differ materially from those anticipated or expected in any forward-looking statement: • general economic conditions in markets where the Company conducts business, which could materially impact credit quality trends; • the length and extent of the economic impacts of the ongoing conflict in Ukraine; • actions by the Federal Reserve Board, U.S.
Investments in liquid assets maintained by the Company and the Bank are based upon management’s assessment of (1) the need for funds, (2) expected deposit flows, (3) yields available on short-term liquid assets, and (4) objectives of the asset and liability management program. 44 The Bank’s Asset/Liability Committee (ALCO) is responsible for monitoring liquidity guidelines, policies and procedures.
Investments in liquid assets maintained by the Company and the Bank are based upon management’s assessment of (1) the need for funds, (2) expected deposit flows, (3) yields available on short-term liquid assets, and (4) objectives of the asset and liability management program. The Bank’s Asset/Liability Committee (“ALCO”) is responsible for monitoring liquidity guidelines, policies and procedures.
To demonstrate the sensitivity of credit loss estimates to macroeconomic forecasts as of December 31, 2023, the Company compared the modeled estimates under its relative adverse scenario for two of the Company’s largest loan pools to its central scenario for the same loan pools.
To demonstrate the sensitivity of credit loss estimates to macroeconomic forecasts as of December 31, 2024, the Company compared the modeled estimates under its relative adverse scenario for two of the Company’s largest loan pools to its central scenario for the same loan pools.
To the extent the adoption of new accounting standards materially affects financial condition, results of operations or liquidity, the impacts are discussed in the applicable sections of this financial review and notes to the consolidated financial statements. 48
To the extent the adoption of new accounting standards materially affects financial condition, results of operations or liquidity, the impacts are discussed in the applicable sections of this financial review and notes to the consolidated financial statements. 47
Farmers maintains an allowance for credit losses. The allowance for credit losses is presented as a reserve against loans on the balance sheets. Credit losses are charged off against the allowance for credit losses, while recoveries of amounts previously charged off are credited to the allowance for credit losses.
Farmers maintains an allowance for credit losses. The allowance for credit losses is presented as a reserve against loans on the balance sheet. Credit losses are charged off against the allowance for credit losses, while recoveries of amounts previously charged off are credited to the allowance for credit losses.
Recent Accounting Pronouncements and Developments 47 Note 1 to the consolidated financial statements discusses new accounting policies adopted by Farmers during 2023 and 2022 and the expected impact of accounting policies recently issued or proposed but not yet required to be adopted.
Recent Accounting Pronouncements and Developments Note 1 to the consolidated financial statements discusses new accounting policies adopted by Farmers during 2024 and 2023 and the expected impact of accounting policies recently issued or proposed but not yet required to be adopted.
The following table shows the carrying value of investment securities by type of obligation at the dates indicated: December 31, 2023 2022 U.S.
The following table shows the carrying value of investment securities by type of obligation at the dates indicated: December 31, 2024 2023 U.S.
The Company invests in these funds, consisting of affordable housing tax credit investments and SBIC funds, in efforts to comply with Community Reinvestment Act regulations. The commitments have no predetermined due dates but are expected to be funded sporadically over the next ten years.
The Company invests in these funds, consisting of affordable housing tax credit investments and SBIC funds, in efforts to comply with CRA regulations. The commitments have no predetermined due dates but are expected to be funded sporadically over the next ten years.
PCE inflation of 2.40%, and U.S. unemployment of 4.10%, the Company’s relative adverse scenario assumes a four-quarter forecast with a contraction of U.S. real GDP, a PCE inflation between 5.00% and 7.00% and an elevated U.S. unemployment rate between 6.00% and 7.00%.
PCE inflation of 2.50%, and U.S. unemployment of 4.30%, the Company’s relative adverse scenario assumes a four-quarter forecast with a contraction of U.S. real GDP, a PCE inflation between 5.00% and 7.00% and an elevated U.S. unemployment rate between 6.00% and 7.00%.
At December 31, 2023, on a consolidated basis, Farmers had intangibles of $22.8 million subject to amortization and $167.4 million in goodwill, which was not subject to periodic amortization. The Company accounts for acquisitions under Financial Accounting Standards Board (“FASB”) ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting.
At December 31, 2024, on a consolidated basis, Farmers had intangibles of $20.8 million subject to amortization and $167.5 million in goodwill, which was not subject to periodic amortization. The Company accounts for acquisitions under Financial Accounting Standards Board (“FASB”) ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting.
Noninterest Income Noninterest income declined to $41.9 million for the year ended December 31, 2023 compared to $44.2 million for the year ended December 31, 2022. The major categories of noninterest income are discussed below. Service charges on deposit accounts totaled $6.3 million in 2023 compared to $4.7 million in 2022. The increase was due to the acquisition of Emclaire.
Noninterest Income Noninterest income declined to $41.9 million for the year ended December 31, 2023 compared to $44.2 million for the year ended December 31, 2022. The major categories of noninterest income are discussed below. 33 Service charges on deposit accounts totaled $6.3 million in 2023 compared to $4.7 million in 2022.
Farmers typically obtains an external appraisal to validate its internal collateral valuation as soon as is practical and adjusts the associated loss reserve, if necessary. 39 The following table summarizes the Company’s nonperforming loans and nonperforming assets for the years ending 2019 through 2023: Nonperforming Assets December 31, 2023 2022 2021 2020 2019 Nonaccrual loans: Commercial Real Estate $ 5,852 $ 4,057 $ 3,004 $ 389 $ 108 Commercial 1,802 3,840 7,190 3,789 1,169 Residential Real Estate 3,807 3,438 4,280 5,783 2,801 Consumer 461 494 682 864 858 Agricultural 2,486 2,482 314 680 542 Total Nonaccrual Loans $ 14,408 $ 14,311 $ 15,470 $ 11,505 $ 5,478 Loans Past Due 90 Days or More 655 492 725 2,330 867 Total Nonperforming Loans $ 15,063 $ 14,803 $ 16,195 $ 13,835 $ 6,345 Repossessed assets 166 73 0 0 0 Total Nonperforming Assets $ 15,229 $ 14,876 $ 16,195 $ 13,835 $ 6,345 Percentage of Nonperforming Loans to Total Loans 0.47 % 0.62 % 0.69 % 0.67 % 0.35 % Percentage of Nonperforming Assets to Total Assets 0.30 % 0.36 % 0.39 % 0.45 % 0.26 % Loans Delinquent 30-89 days $ 16,705 $ 9,605 $ 8,891 $ 9,297 $ 11,893 Percentage of Loans Delinquent 30-89 days to Total Loans 0.52 % 0.40 % 0.38 % 0.45 % 0.66 % Percentage of Nonaccrual Loans to Total Loans 0.45 % 0.60 % 0.66 % 0.55 % 0.30 % Percentage of Allowance for Credit Losses to Nonaccrual Loans 239.03 % 188.51 % 189.94 % 192.49 % 264.41 % The following table summarizes the Company’s allocation of the allowance for credit losses for under CECL for 2023, 2022 and 2021 and the allowance for loan losses for prior years: December 31, 2023 2022 2021 2020 2019 Loans to Loans to Loans to Loans to Loans to Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans Commercial Real Estate $ 18,150 48.1 % $ 14,840 50.5 % $ 15,879 51.0 % $ 10,775 43.1 % $ 6,127 43.6 % Commercial 5,086 12.6 4,186 14.6 4,949 15.7 5,022 21.6 2,443 16.9 Residential Real Estate 6,917 30.8 4,374 25.3 4,870 24.9 3,684 25.2 3,032 27.6 Consumer 4,287 8.5 3,578 9.6 3,688 8.4 2,663 10.0 2,885 11.9 $ 34,440 100.0 % $ 26,978 100.0 % $ 29,386 100.0 % $ 22,144 100.0 % $ 14,487 100.0 % The allowance allocated to each of the four loan categories should not be interpreted as an indication that charge-offs in 2023 occurred in the same proportions or that the allocation indicates future charge-off trends.
Farmers typically obtains an external appraisal to validate its internal collateral valuation as soon as is practical and adjusts the associated loss reserve, if necessary. 39 The following table summarizes the Company’s nonperforming loans and nonperforming assets for the years ending 2020 through 2024: Nonperforming Assets December 31, 2024 2023 2022 2021 2020 Nonaccrual loans: Commercial Real Estate $ 10,642 $ 5,852 $ 4,057 $ 3,004 $ 389 Commercial 3,858 1,802 3,840 7,190 3,789 Residential Real Estate 4,983 3,807 3,438 4,280 5,783 Consumer 600 461 494 682 864 Agricultural 2,120 2,486 2,482 314 680 Total Nonaccrual Loans $ 22,203 $ 14,408 $ 14,311 $ 15,470 $ 11,505 Loans Past Due 90 Days or More 615 655 492 725 2,330 Total Nonperforming Loans $ 22,818 $ 15,063 $ 14,803 $ 16,195 $ 13,835 Repossessed assets 33 166 73 0 0 Total Nonperforming Assets $ 22,851 $ 15,229 $ 14,876 $ 16,195 $ 13,835 Percentage of Nonperforming Loans to Total Loans 0.70 % 0.47 % 0.62 % 0.69 % 0.67 % Percentage of Nonperforming Assets to Total Assets 0.45 % 0.30 % 0.36 % 0.39 % 0.45 % Loans Delinquent 30-89 days $ 13,032 $ 16,705 $ 9,605 $ 8,891 $ 9,297 Percentage of Loans Delinquent 30-89 days to Total Loans 0.40 % 0.52 % 0.40 % 0.38 % 0.45 % Percentage of Nonaccrual Loans to Total Loans 0.68 % 0.45 % 0.60 % 0.66 % 0.55 % Percentage of Allowance for Credit Losses to Nonaccrual Loans 161.52 % 239.03 % 188.51 % 189.94 % 192.49 % The following table summarizes the Company’s allocation of the allowance for credit losses under CECL for the years 2021 through 2024 and the allowance for loan losses in 2020: December 31, 2024 2023 2022 2021 2020 Loans to Loans to Loans to Loans to Loans to Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans Commercial Real Estate $ 19,259 48.6 % $ 18,150 48.1 % $ 14,840 50.5 % $ 15,879 51.0 % $ 10,775 43.1 % Commercial 4,628 12.4 5,086 12.6 4,186 14.6 4,949 15.7 5,022 21.6 Residential Real Estate 7,271 30.7 6,917 30.8 4,374 25.3 4,870 24.9 3,684 25.2 Consumer 4,705 8.3 4,287 8.5 3,578 9.6 3,688 8.4 2,663 10.0 $ 35,863 100.0 % $ 34,440 100.0 % $ 26,978 100.0 % $ 29,386 100.0 % $ 22,144 100.0 % The allowance allocated to each of the four loan categories should not be interpreted as an indication that charge-offs in 2024 occurred in the same proportions or that the allocation indicates future charge-off trends.
Bank Owned Life Insurance The Company owns bank owned life insurance policies on the lives of certain members of management. The purpose of this investment is to help offset the costs of employee benefit plans. The cash surrender value of these 42 policies increased to $99.5 million at December 31, 2023, compared to $75.0 million at December 31, 2022.
Bank Owned Life Insurance The Company owns bank owned life insurance policies on the lives of certain members of management. The purpose of this investment is to help offset the costs of employee benefit plans. The cash surrender value of these policies increased to $101.4 million at December 31, 2024, compared to $99.5 million at December 31, 2023.
The increase was due to the increased usage of short term borrowings and an increase in the cost of those borrowings due to the Federal Reserve increasing the fed funds rate. Interest on long-term borrowings increased to $4.1 million in 2023 from $3.4 million in 2022.
Interest expense on short-term borrowings was $8.4 million in 2023 compared to $1.4 million in 2022. The increase was due to the increased usage of short term borrowings and an increase in the cost of those borrowings due to the Federal Reserve increasing the fed funds rate.
Investment Securities The debt securities available for sale increased $31.7 million in 2023 to $1.30 billion at December 31, 2023, from $1.27 billion at December 31, 2022. For additional information regarding Farmers’ investment securities see Note 3 to the Consolidated Financial Statements.
Investment Securities The debt securities available for sale decreased $33.1 million in 2024 to $1.27 billion at December 31, 2024, from $1.30 billion at December 31, 2023. For additional information regarding Farmers’ investment securities see Note 3 to the Consolidated Financial Statements.
This increase was offset by lower SBIC income in 2023 compared to 2022. Noninterest Expenses Noninterest expense totaled $111.8 million for the twelve months ended December 31, 2023 compared to $94.4 million for the twelve months ended December 31, 2022. The increase is primarily due to the merger with Emclaire and normal increases in operating expenses.
Noninterest Expenses Noninterest expense totaled $111.8 million for the twelve months ended December 31, 2023 compared to $94.4 million for the twelve months ended December 31, 2022. The increase is primarily due to the merger with Emclaire and normal increases in operating expenses.
Treasury and other government agencies, including those that impact money supply, market interest rates and inflation; • disruptions in the mortgage and lending markets and significant or unexpected fluctuations in interest rates related to governmental responses to inflation, including financial stimulus packages and interest rate changes; • general business conditions in the banking industry; • the regulatory environment; • general fluctuations in interest rates; • demand for loans in the market areas where the Company conducts business; • rapidly changing technology and evolving banking industry standards; • competitive factors, including increased competition with regional and national financial institutions; 29 • Farmers' ability to attract, recruit and retain skilled employees; and • new service and product offerings by competitors and price pressures.
Treasury and other government agencies, including those that impact money supply, market interest rates and inflation; • disruptions in the mortgage and lending markets and significant or unexpected fluctuations in interest rates related to governmental responses to inflation, including financial stimulus packages and interest rate changes; • general business conditions in the banking industry; • the regulatory environment; • general fluctuations in interest rates; • demand for loans in the market areas where the Company conducts business; • rapidly changing technology and evolving banking industry standards; • competitive factors, including increased competition with regional and national financial institutions; • Farmers' ability to attract, recruit and retain skilled employees; and • new service and product offerings by competitors and price pressures. 28 Other factors not currently anticipated may also materially and adversely affect the Company’s results of operations, cash flows and financial position.
This line of business was down due to the heavy demand for annuities in lieu of traditional investment products. The net gains on the sale of loans increased by $329,000 between 2022 and 2023.
Investment commissions declined slightly to $2.0 million in 2023 from $2.2 million in 2022. This line of business was down due to the heavy demand for annuities in lieu of traditional investment products. The net gains on the sale of loans increased by $329,000 between 2022 and 2023.
Fixed rate terms are offered with terms between fifteen and thirty years while adjustable rate products are offered with maturities up to thirty years. The Company sells all fixed rate loans that are secondary market eligible.
Farmers originated both fixed rate and adjustable rate mortgages during 2024. Fixed rate terms are offered with terms between fifteen and thirty years while adjustable rate products are offered with maturities up to thirty years. The Company sells all fixed rate loans that are secondary market eligible.
For example, compared to the Company’s central scenario that is based on a four-quarter forecasted change in U.S. real GDP of 1.40% from 4Q2023 to 4Q2024, U.S.
For example, compared to the Company’s central scenario that is based on a four-quarter forecasted change in U.S. real GDP of 2.10% from 4Q2024 to 4Q2025, U.S.
The increase was driven by better margins in the insurance industry in 2023 along with increased sales of annuity products as rates on these products were very attractive to customers. Investment commissions declined slightly to $2.0 million in 2023 from $2.2 million in 2022.
Insurance agency commissions increased by $1.0 million to $5.4 million in 2023 from $4.4 million in 2022. The increase was driven by better margins in the insurance industry in 2023 along with increased sales of annuity products as rates on these products were very attractive to customers.
The Bank monitors and controls concentrations within a particular industry or segment of the economy. These loans are made for purposes such as equipment purchases, capital and leasehold improvements, the purchase of inventory, general working capital and small business lines of credit. Agricultural loans increased from $247.2 million in 2022 to $261.8 million in 2023, an increase of $14.6 million.
The Bank monitors and controls concentrations within a particular industry or segment of the economy. These loans are made for purposes such as equipment purchases, capital and leasehold improvements, the purchase of inventory, general working capital and small business lines of credit. 37 Agricultural loans increased from $261.8 million in 2023 to $263.0 million in 2024.
Refer to Note 18 to the consolidated financial statements for additional information regarding the effective tax rate. Comparison of Operating Results for the Years Ended December 31, 2022 and 2021. The Company reported net income of $60.6 million for the year ended December 31, 2022, compared to $51.8 million for the year ended December 31, 2021.
Refer to Note 18 to the consolidated financial statements for additional information regarding the effective tax rate. 32 Comparison of Operating Results for the Years Ended December 31, 2023 and 2022. The Company recorded net income of $49.9 million for the year ended December 31, 2023, compared to $60.6 million for the year ended December 31, 2022.
During 2023, 2022 and 2021 the Company used the CECL methodology while the incurred loss methodology was used in prior years: Years Ended December 31, 2023 2022 2021 2020 2019 Balance at Beginning of Year $ 26,978 $ 29,386 $ 22,144 $ 14,487 $ 13,592 Charge-Offs: Commercial Real Estate (349 ) (300 ) (70 ) (122 ) (45 ) Commercial (1,272 ) (2,042 ) (388 ) (412 ) (200 ) Residential Real Estate (384 ) (92 ) (297 ) (172 ) (400 ) Consumer (932 ) (870 ) (912 ) (1,347 ) (1,702 ) Total Charge-Offs (2,937 ) (3,304 ) (1,667 ) (2,053 ) (2,347 ) Recoveries on Previous Charge-Offs: Commercial Real Estate 1 3 33 31 4 Commercial 103 75 199 11 13 Residential Real Estate 81 89 162 85 58 Consumer 496 479 411 483 717 Total Recoveries 681 646 805 610 792 Net Charge-Offs (2,256 ) (2,658 ) (862 ) (1,443 ) (1,555 ) Impact of CECL adoption 0 0 2,160 0 0 Provision For Credit Losses and Day One Purchase entry 9,718 250 5,944 9,100 2,450 Balance at End of Year $ 34,440 $ 26,978 $ 29,386 $ 22,144 $ 14,487 Ratio of Net Commercial Real Estate Charge-offs To Average Loans Outstanding 0.01 % 0.01 % 0.00 % 0.00 % 0.00 % Ratio of Net Commercial Charge-offs To Average Loans Outstanding 0.04 % 0.08 % 0.01 % 0.02 % 0.01 % Ratio of Net Residential Real Estate Charge-offs To Average Loans Outstanding 0.01 % 0.00 % 0.01 % 0.00 % 0.02 % Ratio of Net Consumer Charge-offs To Average Loans Outstanding 0.01 % 0.02 % 0.02 % 0.04 % 0.06 % Allowance for Credit Losses/Total Loans 1.08 1.12 1.26 1.07 0.80 The provision for credit losses, which includes the provision for unfunded commitments, and the day one purchase entry for the Emclaire loans amounted to $9.2 million in 2023, compared to $1.1 million in 2022.
During the years 2021-2024, the Company used the CECL methodology while the incurred loss methodology was used in 2020: Years Ended December 31, 2024 2023 2022 2021 2020 Balance at Beginning of Year $ 34,440 $ 26,978 $ 29,386 $ 22,144 $ 14,487 Charge-Offs: Commercial Real Estate (4,619 ) (349 ) (300 ) (70 ) (122 ) Commercial (1,742 ) (1,272 ) (2,042 ) (388 ) (412 ) Residential Real Estate (155 ) (384 ) (92 ) (297 ) (172 ) Consumer (1,471 ) (932 ) (870 ) (912 ) (1,347 ) Total Charge-Offs (7,987 ) (2,937 ) (3,304 ) (1,667 ) (2,053 ) Recoveries on Previous Charge-Offs: Commercial Real Estate 22 1 3 33 31 Commercial 520 103 75 199 11 Residential Real Estate 177 81 89 162 85 Consumer 447 496 479 411 483 Total Recoveries 1,166 681 646 805 610 Net Charge-Offs (6,821 ) (2,256 ) (2,658 ) (862 ) (1,443 ) Impact of CECL adoption 0 0 0 2,160 0 Provision For Credit Losses and Day One Purchase entry 8,244 9,718 250 5,944 9,100 Balance at End of Year $ 35,863 $ 34,440 $ 26,978 $ 29,386 $ 22,144 Ratio of Net Commercial Real Estate Charge-offs To Average Loans Outstanding 0.14 % 0.01 % 0.01 % 0.00 % 0.00 % Ratio of Net Commercial Charge-offs To Average Loans Outstanding 0.04 % 0.04 % 0.08 % 0.01 % 0.02 % Ratio of Net Residential Real Estate Charge-offs To Average Loans Outstanding 0.00 % 0.01 % 0.00 % 0.01 % 0.00 % Ratio of Net Consumer Charge-offs To Average Loans Outstanding 0.03 % 0.01 % 0.02 % 0.02 % 0.04 % Allowance for Credit Losses/Total Loans 1.10 1.08 1.12 1.26 1.07 The provision for credit losses, which includes the provision for unfunded commitments, declined to $8.0 million in 2024 compared to $9.2 million in 2023.
At December 31, 2023, under the minimum capital requirements associated with the Basel Committee on capital and liquidity regulation (Basel III), Farmers Bank and Farmers are required to have actual and minimum capital ratios, which are detailed in Note 16 of the Consolidated Financial Statements.
At December 31, 2024, under the 44 minimum capital requirements associated with the Basel III, Farmers Bank and Farmers are required to have actual and minimum capital ratios, which are detailed in Note 16 of the Consolidated Financial Statements. Farmers Bank and Farmers had capital ratios above the minimum levels at December 31, 2024 and 2023.
The average balance of interest-bearing deposits increased $660.5 million in 2023 primarily due to the Emclaire acquisition while the cost of interest-bearing deposits increased by 141 bp year over year.
The average balance of interest-bearing deposits increased $660.5 million in 2023 primarily due to the Emclaire acquisition while the cost of interest-bearing deposits increased by 141 bp year over year. Interest expense related to interest-bearing deposits was $63.1 million in 2023 compared to $13.1 million in 2022.
This increase was primarily due to the increased cost of some of the long term borrowings that are tied to variable rates and which continued to increase in 2023.
Interest on long-term borrowings increased to $4.1 million in 2023 from $3.4 million in 2022. This increase was primarily due to the increased cost of some of the long term borrowings that are tied to variable rates and which continued to increase in 2023.
Although the Company has a diversified loan portfolio, the credit risk in the loan portfolio is largely influenced by general economic conditions and trends of the counties and markets in which the debtors operate, and the resulting impact on the operations of borrowers or on the value of any underlying collateral.
Although the Company has a diversified loan portfolio, the credit risk in the loan portfolio is largely influenced by general economic conditions and trends of the counties and markets in which the debtors operate, and the resulting impact on the operations of borrowers or on the value of any underlying collateral. 38 The credit loss estimation process involves procedures that consider the unique characteristics of the Company’s loan portfolio segments.
Loss given default (“LGD”) is to determine the percentage of loss by facility or collateral type. LGD estimates can sometimes be driven, or influenced, by product type, industry or geography. The Company uses PD/LGD primarily for commercial loan portfolios.
Risk rating is one common way to apply PDs. LGD is to determine the percentage of loss by facility or collateral type. LGD estimates can sometimes be driven, or influenced, by product type, industry or geography. The Company uses PD/LGD primarily for commercial loan portfolios.
Commercial loans at December 31, 2022, were $294.4 million compared to $347.8 million at December 31, 2023 with the increase due to the Emclaire acquisition. The Bank’s commercial loans are granted to customers within the immediate trade area of the Bank. The mix is diverse, covering a wide range of borrowers, business types and local municipalities.
Commercial loans at December 31, 2024, totaled $351.5 million compared to $347.8 million at December 31, 2023. The Bank’s commercial loans are granted to customers within the immediate trade area of the Bank. The mix is diverse, covering a wide range of borrowers, business types and local municipalities.
A model of risk characteristics, such as loss history and delinquency experience, trends in past due and non-performing loans, as well as existing economic conditions and supportable forecasts are used to determine credit loss assumptions. 38 The Company uses two methodologies to analyze loan pools. The cohort method (“cohort”) and the probability of default/loss given default (“PD/LGD”).
These segments are disaggregated into the loan pools for monitoring. A model of risk characteristics, such as loss history and delinquency experience, trends in past due and non-performing loans, as well as existing economic conditions and supportable forecasts are used to determine credit loss assumptions. The Company uses two methodologies to analyze loan pools.
The Company’s agricultural loan portfolio contains a diverse mix of dairy, crops, land, poultry and cattle loans. Consumer loans increased from $228.8 million at December 31, 2022, to $267.9 million at December 31, 2023.
The Company’s agricultural loan portfolio contains a diverse mix of dairy, crops, land, poultry and cattle loans. Consumer loans increased to $268.5 million at December 31, 2024, from $267.9 million at December 31, 2023. The consumer loan portfolio includes indirect auto loans and other consumer loan products.
Deposits in amounts in excess of the FDIC insurance limit were $1.37 billion at December 31, 2023. Short-Term Borrowings The Company's short-term borrowings increased from $95.0 million at December 31, 2022, to $355.0 million at December 31, 2023.
Deposits in amounts in excess of the FDIC insurance limit were $1.42 billion at December 31, 2024. Short-Term Borrowings The Company's short-term borrowings decreased by $50.0 million from $355.0 million at December 31, 2023, to $305.0 million at December 31, 2024.
Average balances and average rates paid on deposits are as follows: Years Ended December 31 2023 2022 2021 Amount Rate Amount Rate Amount Rate Noninterest-bearing demand $ 1,065,389 0.00 % $ 959,294 0.00 % $ 714,978 0.00 % Interest-bearing demand 1,415,425 1.95 % 1,392,058 0.54 % 1,240,014 0.19 % Money market 602,445 1.62 % 389,036 0.14 % 246,900 0.24 % Savings 511,116 0.03 % 457,382 0.02 % 322,279 0.04 % Brokered time deposits 132,895 4.67 % 56,965 2.18 % 11,737 0.64 % Certificates of deposit 654,717 2.97 % 360,687 0.84 % 393,039 0.93 % Total $ 4,381,987 1.44 % $ 3,615,422 0.64 % $ 2,928,947 0.34 % The following table sets forth the maturities of retail certificates of deposit having principal amounts $250 thousand or greater at December 31, 2023 (in thousands): Retail certificates of deposit maturing in quarter ending: March 31, 2024 $ 113,393 June 30, 2024 95,571 September 30, 2024 11,771 December 31, 2024 27,224 After December 31, 2024 10,199 Total retail certificates of deposit with balances $250,000 or greater $ 258,158 Uninsured deposits for bank and savings and loan registrants are U.S. federally insured depository institutions as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit or similar state deposit insurance regimes and amounts in any other uninsured investment or deposit account that are classified as deposits and not subject to any federal or state deposit insurance regimes.
Average balances and average rates paid on deposits are as follows: Years Ended December 31 2024 2023 2022 Amount Rate Amount Rate Amount Rate Noninterest-bearing demand $ 981,115 0.00 % $ 1,065,389 0.00 % $ 959,294 0.00 % Interest-bearing demand 1,396,193 2.48 % 1,415,425 1.95 % 1,392,058 0.54 % Money market 659,807 2.43 % 602,445 1.62 % 389,036 0.14 % Savings 435,663 0.03 % 511,116 0.03 % 457,382 0.02 % Brokered time deposits 25,389 4.36 % 132,895 4.67 % 56,965 2.18 % Certificates of deposit 745,945 3.93 % 654,717 2.97 % 360,687 0.84 % Total $ 4,244,112 1.91 % $ 4,381,987 1.44 % $ 3,615,422 0.64 % The following table sets forth the maturities of retail certificates of deposit having principal amounts $250,000 or greater at December 31, 2024 (in thousands): Retail certificates of deposit maturing in quarter ending: March 31, 2025 $ 136,533 June 30, 2025 112,131 September 30, 2025 12,207 December 31, 2025 13,115 After December 31, 2025 11,025 Total retail certificates of deposit with balances $250,000 or greater $ 285,011 Uninsured deposits for bank and savings and loan registrants are U.S. federally insured depository institutions as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit or similar state deposit insurance regimes and amounts in any other uninsured investment or deposit account that are classified as deposits and not subject to any federal or state deposit insurance regimes.
Bank owned life insurance income increased by $632,000 to $2.4 million for the twelve months ended December 31, 2023, compared to $1.8 million for the twelve months ended December 31, 2022. The increase was due to the addition of Emclaire offset by a decline of $79,000 on the proceeds from death benefits received from the policies.
The increase was due to the acquisition of Emclaire. Bank owned life insurance income increased by $632,000 to $2.4 million for the twelve months ended December 31, 2023, compared to $1.8 million for the twelve months ended December 31, 2022.
For the consumer loan category, which represents approximately 8.5% of total loans and in 2023, the gross charge-offs accounted for 31.7% of the losses of the entire loan portfolio. There were no loans other than those identified above, that management has known information about possible credit problems of borrowers and their ability to comply with the loan repayment terms.
The gross charge-offs in the commercial real estate portfolio, were $4.6 million for 2024, which represented approximately 57.8% of the gross losses for the entire loan portfolio. There were no loans other than those identified above, that management has known information about possible credit problems of borrowers and their ability to comply with the loan repayment terms.
Treasury securities $ 53,210 $ 52,280 U.S. government sponsored enterprise debt securities 74,745 75,816 Mortgage-backed securities - residential and collateralized mortgage obligations 594,385 602,496 Small Business Administration 2,917 3,474 Obligations of states and political subdivisions 556,169 530,080 Corporate bonds 18,275 3,879 Debt securities available for sale $ 1,299,701 $ 1,268,025 Other investments 15,114 15,244 Total securities $ 1,314,815 $ 1,283,269 41 A summary of debt securities held at December 31, 2023 classified according to maturity and including weighted average yield for each range of maturities is set forth below: December 31, 2023 Type and Maturity Grouping Fair Value Weighted Average Yield U.S.
Treasury securities $ 52,606 $ 53,210 U.S. government sponsored enterprise debt securities 62,501 74,745 Mortgage-backed securities - residential and collateralized mortgage obligations 626,643 594,385 Small Business Administration 2,475 2,917 Obligations of states and political subdivisions 504,880 556,169 Corporate bonds 17,448 18,275 Debt securities available for sale $ 1,266,553 $ 1,299,701 Other investments 14,736 15,114 Total securities $ 1,281,289 $ 1,314,815 41 A summary of debt securities held at December 31, 2024 classified according to maturity and including weighted average yield for each range of maturities is set forth below: December 31, 2024 Type and Maturity Grouping Fair Value Weighted Average Yield U.S.
The probability of default (“PD”) portion of PD/LGD is defined by the Company as 90 days past due, placed on non-accrual, or is partially or wholly charged-off. Typically, a one-year time period is used to asses PD. PD can be measured and applied using various risk criteria. Risk rating is one common way to apply PDs.
The Company uses cohort primarily for consumer loan portfolios. 46 The PD portion of PD/LGD is defined by the Company as 90 days past due, placed on non-accrual, or is partially or wholly charged-off. Typically, a one-year time period is used to assess PD. PD can be measured and applied using various risk criteria.
The primary reason for this increase was the sale of nonaccrual commercial loans that generated a gain of $915,000 in 2023 offset by lower gain on sale figures on the sale of 1-4 family mortgage loans.
The primary reason for this increase was the sale of nonaccrual commercial loans that generated a gain of $915,000 in 2023 offset by lower gain on sale figures on the sale of 1-4 family mortgage loans. Mortgage volume continues to be negatively impacted by the higher interest rate environment and the lack of supply of homes for sale.
The Company’s allowance for credit losses represents management’s estimate of expected credit losses over the remaining expected life of the Company’s financial assets measured at amortized cost and certain off-balance sheet lending-related commitments. 45 The allowance for credit losses involves significant judgment on a number of matters including the weighting of macroeconomic forecasts and microeconomic statistics, incorporation of historical loss experience, assessment of risk characteristics, assignment of risk ratings, valuation of collateral, and the determination of remaining expected life.
The allowance for credit losses involves significant judgment on a number of matters including the weighting of macroeconomic forecasts and microeconomic statistics, incorporation of historical loss experience, assessment of risk characteristics, assignment of risk ratings, valuation of collateral, and the determination of remaining expected life.
In addition, these statements speak only as of the date made. The Company does not undertake, and expressly disclaims, any obligation to update or alter any statements whether as a result of new information, future events or otherwise, expect as may be required by applicable law.
The Company does not undertake, and expressly disclaims, any obligation to update or alter any statements whether as a result of new information, future events or otherwise, expect as may be required by applicable law. Results of Operations Comparison of Operating Results for the Years Ended December 31, 2024 and 2023.
Those characteristics include, but are not limited to, internal or external credit score, risk ratings, financial asset, loan type, collateral type, size, effective interest rate, term, or geographical location. The Company uses cohort primarily for consumer loan portfolios.
The Company aggregates financial assets on the basis of similar risk characteristics when evaluating loans on a collective basis. Those characteristics include, but are not limited to, internal or external credit score, risk ratings, financial asset, loan type, collateral type, size, effective interest rate, term, or geographical location.
Cohort relies on the creation of cohorts to capture loans that qualify for a particular segment, as of a point in time. Those loans are then tracked over their remaining lives to determine their loss experience. The Company aggregates financial assets on the basis of similar risk characteristics when evaluating loans on a collective basis.
The cohort method (“cohort”) and the probability of default/loss given default method (“PD/LGD”). Cohort relies on the creation of cohorts to capture loans that qualify for a particular segment, as of a point in time. Those loans are then tracked over their remaining lives to determine their loss experience.
(2) Nonaccrual loans are included in the average balance totals. 31 RATE AND VOLUME ANALYSIS (Table Dollar Amounts in Thousands except Per Share Data) The following table analyzes by rate and volume the dollar amount of changes in the components of the interest differential: 2023 change from 2022 2022 change from 2021 Net Change Due Change Due Net Change Due Change Due Change To Volume To Rate Change To Volume To Rate Tax Equivalent Interest Income Loans $ 64,061 $ 36,533 $ 27,528 $ 12,920 $ 14,798 $ (1,878 ) Taxable securities 5,388 1,186 4,202 9,444 8,575 869 Tax-exempt securities (1,669 ) (1,486 ) (183 ) 2,925 4,044 (1,119 ) Other investments 1,115 168 947 373 255 118 Funds sold and other cash 1,792 (12 ) 1,804 484 (116 ) 600 Total interest income $ 70,687 $ 36,389 $ 34,298 $ 26,146 $ 27,556 $ (1,410 ) Interest Expense Time deposits $ 16,418 $ 2,481 $ 13,937 $ (608 ) $ (301 ) $ (307 ) Brokered time deposits 4,964 1,653 3,311 1,165 289 876 Savings deposits 8,547 427 8,120 640 347 293 Demand deposits 20,092 125 19,967 5,113 286 4,827 Short term borrowings 6,949 2,663 4,286 1,397 144 1,253 Long term borrowings 659 18 641 1,744 430 1,314 Total interest expense $ 57,629 $ 7,367 $ 50,262 $ 9,451 $ 1,195 $ 8,256 Increase (decrease) in tax equivalent net interest income $ 13,058 $ 29,022 $ (15,964 ) $ 16,695 $ 26,361 $ (9,666 ) The amount of change not solely due to rate or volume changes was allocated between the change due to rate and the change due to volume based on the relative size of the rate and volume changes.
(2) Nonaccrual loans are included in the average balance totals. 30 RATE AND VOLUME ANALYSIS (Table Dollar Amounts in Thousands except Per Share Data) The following table analyzes by rate and volume the dollar amount of changes in the components of the interest differential: 2024 change from 2023 2023 change from 2022 Net Change Due Change Due Net Change Due Change Due Change To Volume To Rate Change To Volume To Rate Tax Equivalent Interest Income Loans $ 13,871 $ 3,902 $ 9,969 $ 64,061 $ 36,533 $ 27,528 Taxable securities 607 (749 ) 1,356 5,388 1,186 4,202 Tax-exempt securities (1,118 ) (1,042 ) (76 ) (1,669 ) (1,486 ) (183 ) Other investments (536 ) (209 ) (327 ) 1,115 168 947 Funds sold and other cash 1,251 705 546 1,792 (12 ) 1,804 Total interest income $ 14,075 $ 2,607 $ 11,468 $ 70,687 $ 36,389 $ 34,298 Interest Expense Time deposits $ 9,867 $ 2,712 $ 7,155 $ 16,418 $ 2,481 $ 13,937 Brokered time deposits (5,096 ) (5,019 ) (77 ) 4,964 1,653 3,311 Savings deposits 6,245 (161 ) 6,406 8,547 427 8,120 Demand deposits 7,047 (374 ) 7,421 20,092 125 19,967 Short term borrowings 5,748 6,880 (1,132 ) 6,949 2,663 4,286 Long term borrowings 4 (32 ) 36 659 18 641 Total interest expense $ 23,815 $ 4,006 $ 19,809 $ 57,629 $ 7,367 $ 50,262 Increase (decrease) in tax equivalent net interest income $ (9,740 ) $ (1,399 ) $ (8,341 ) $ 13,058 $ 29,022 $ (15,964 ) The amount of change not solely due to rate or volume changes was allocated between the change due to rate and the change due to volume based on the relative size of the rate and volume changes.
The increase was due to a $10.7 million increase in income before income taxes. Income taxes are computed using the appropriate effective tax rates for each period. The effective tax rates are less than the statutory tax rate primarily due to nontaxable interest and dividend income. The effective income tax rate was 16.8% for 2022 and 16.5% in 2021.
Income taxes are computed using the appropriate effective tax rates for each period. The effective tax rates are less than the statutory tax rate primarily due to nontaxable interest and dividend income. The effective income tax rate was 17.1% in 2024 and 14.9% for 2023.
During 2013, the Federal banking regulators approved a final rule to implement revised capital adequacy standards of the Basel Committee on Banking Supervision, commonly called Basel III, and to address relevant provisions of the Dodd-Frank Act.
At year-end 2024 and 2023, the most recent regulatory notifications categorized Farmers Bank as well capitalized under the regulatory framework for prompt corrective action. During 2013, the Federal banking regulators approved a final rule to implement revised capital adequacy standards of the Basel Committee on Banking Supervision, commonly called Basel III, and to address relevant provisions of the Dodd-Frank Act.
Treasury securities Maturing within one year $ 195 2.09 % Maturing after one year but within five years 96 2.18 % Maturing after five years but within ten years 52,919 1.10 % Maturing after ten years 0 0.00 % Total U.S.
Treasury securities Maturing within one year $ 99 2.18 % Maturing after one year but within five years 35,629 1.04 % Maturing after five years but within ten years 16,878 1.21 % Maturing after ten years 0 0.00 % Total U.S.
Mortgage volume continues to be negatively impacted by the higher interest rate environment and the lack of supply of homes for sale. 32 Other mortgage banking income was up $420,000 in 2023 compared to 2022. The increase was driven by slower prepayment speeds on the mortgage servicing portfolio in 2023 due to the higher level of interest rates.
Gains on the sale of loans continues to be negatively impacted by a lower level of saleable mortgage volume due to the higher interest rate environment and the lack of supply of homes for sale. Other mortgage banking income declined by $276,000 in 2024 compared to 2023.
Other factors not currently anticipated may also materially and adversely affect the Company’s results of operations, cash flows and financial position. There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in the presentation are reasonable, you should not place undue reliance on any forward-looking statement.
There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in the presentation are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made.
As provided for under GAAP, management has up to 12 months following the date of the acquisition to finalize the fair values of acquired assets and assumed liabilities, where it was not possible to estimate the acquisition date fair value upon consummation.
Assets acquired and liabilities assumed in a business combination are recorded at the estimated fair value on their purchase date. As provided for under GAAP, management has up to 12 months following the date of the acquisition to finalize the fair values of acquired assets and assumed liabilities.
Loans acquired in a business combination transaction are evaluated either individually or in pools of loans with similar characteristics; including consideration of a credit component.
In particular, the valuation of acquired loans involves significant estimates, assumptions and judgment based on information available as of the acquisition date. Loans acquired in a business combination transaction are evaluated either individually or in pools of loans with similar characteristics; including consideration of a credit component.
Other operating income increased by $495,000 to $4.5 million for the twelve months ended December 31, 2023, from $4.0 million for the twelve months ended December 31, 2022. This increase was primarily due to increased non recurring income associated with recoveries on Emclaire and Cortland loans that were charged off prior to acquisition.
This increase was primarily due to increased non-recurring income associated with recoveries on Emclaire and Cortland loans that were charged off prior to acquisition. This increase was offset by lower SBIC income in 2023 compared to 2022.
Commitments 12/31/2023 Note Ref. 2024 2025 2026 2027 2028 Thereafter Deposits without maturity $ 3,452,104 Certificates of deposit and brokered time deposits 11 656,154 $ 32,302 $ 20,007 $ 5,569 $ 4,302 $ 6,948 Long-term borrowings 13 0 0 0 0 0 93,000 Leases 9 1,175 1,092 975 898 917 5,659 There are also $13.1 million of commitments to various partnership investment funds.
Commitments 12/31/2024 Note Ref. 2025 2026 2027 2028 2029 Thereafter Deposits without maturity $ 3,429,116 Certificates of deposit and brokered time deposits 11 790,004 $ 21,574 $ 9,018 $ 4,098 $ 6,550 $ 6,419 Long-term borrowings 13 0 0 0 0 0 90,000 Leases 9 1,393 1,279 1,198 1,214 1,110 5,652 There are also $17.1 million of commitments to various partnership investment funds.
Major categories of noninterest income are discussed below. Service charges on deposit accounts increased to $4.7 million in 2022 from $3.7 million for the year ended December 31, 2021. The increase was due to acquisition of Cortland and an increased level of overdraft fee income.
Noninterest Income Noninterest income declined slightly to $41.7 million for the year ended December 31, 2024 compared to $41.9 million for the year ended December 31, 2023. The major categories of noninterest income are discussed below. Service charges on deposit accounts increased to $7.3 million for 2024 compared to $6.3 million in 2023.
Years Ended December 31, 2023 2022 2021 2020 2019 Commercial Real Estate $ 1,334,600 41.6 % $ 1,026,822 42.6 % $ 1,010,674 43.3 % $ 712,818 34.3 % $ 615,521 34.0 % Commercial 347,819 10.9 294,406 12.2 312,532 13.4 401,003 19.3 255,458 14.1 Residential Real Estate 986,032 30.8 607,557 25.3 580,242 24.9 523,340 25.2 499,301 27.6 Consumer 267,875 8.4 228,794 9.5 195,343 8.4 208,842 10.0 214,998 11.9 Agricultural 261,801 8.2 247,171 10.3 232,291 10.0 232,041 11.1 226,261 12.4 Total Loans $ 3,198,127 100.0 % $ 2,404,750 100.0 % $ 2,331,082 100.0 % $ 2,078,044 100.0 % $ 1,811,539 100.0 % The following schedule sets forth maturities based on remaining scheduled repayments of principal for loans listed above as of December 31, 2023: Types of Loans 1 Year or less 1 to 5 Years 5 to 15 Years Over 15 Years Commercial $ 40,494 $ 162,646 $ 92,343 $ 52,336 Commercial Real Estate $ 104,853 $ 416,506 $ 695,711 $ 117,530 Residential Real Estate $ 4,413 $ 53,654 $ 239,594 $ 688,371 Consumer $ 4,030 $ 105,730 $ 125,574 $ 32,541 Agricultural $ 3,204 $ 32,813 $ 54,089 $ 171,695 The amounts of loans as of December 31, 2023, based on remaining scheduled repayments of principal, are shown in the following table: Loan Sensitivities 1 Year or less Over 1 Year Total Floating or Adjustable Rates of Interest $ 74,389 $ 1,455,807 $ 1,530,196 Fixed Rates of Interest 82,605 1,585,326 1,667,931 Total Loans $ 156,994 $ 3,041,133 $ 3,198,127 Total loans were $3.20 billion at year-end 2023, compared to $2.40 billion at year-end 2022, an increase of $793.4 million.
Years Ended December 31, 2024 2023 2022 2021 2020 Commercial Real Estate $ 1,381,573 42.2 % $ 1,334,600 41.6 % $ 1,026,822 42.6 % $ 1,010,674 43.3 % $ 712,818 34.3 % Commercial 351,533 10.8 347,819 10.9 294,406 12.2 312,532 13.4 401,003 19.3 Residential Real Estate 1,003,678 30.8 986,032 30.8 607,557 25.3 580,242 24.9 523,340 25.2 Consumer 268,533 8.2 267,875 8.4 228,794 9.5 195,343 8.4 208,842 10.0 Agricultural 263,029 8.0 261,801 8.2 247,171 10.3 232,291 10.0 232,041 11.1 Total Loans $ 3,268,346 100.0 % $ 3,198,127 100.0 % $ 2,404,750 100.0 % $ 2,331,082 100.0 % $ 2,078,044 100.0 % 35 The following schedule sets forth maturities based on remaining scheduled repayments of principal for loans listed above as of December 31, 2024: Types of Loans 1 Year or less 1 to 5 Years 5 to 15 Years Over 15 Years Commercial $ 19,713 $ 181,984 $ 97,994 $ 51,842 Commercial Real Estate $ 124,311 $ 514,111 $ 630,941 $ 112,211 Residential Real Estate $ 9,782 $ 48,963 $ 215,293 $ 729,639 Consumer $ 4,076 $ 107,972 $ 132,043 $ 24,442 Agricultural $ 4,105 $ 36,625 $ 49,288 $ 173,011 The amounts of loans as of December 31, 2024, based on remaining scheduled repayments of principal, are shown in the following table: Loan Sensitivities 1 Year or less Over 1 Year Total Floating or Adjustable Rates of Interest $ 99,059 $ 1,524,346 $ 1,623,405 Fixed Rates of Interest 62,928 1,582,013 1,644,941 Total Loans $ 161,987 $ 3,106,359 $ 3,268,346 Total loans were $3.27 billion at December 31, 2024, compared to $3.20 billion at December 31, 2023, an increase of $70.2 million.
The provision for credit losses is based on management’s judgment after taking into consideration all factors connected with the collectability of the existing loan portfolio. Management evaluates the loan portfolio in light of economic conditions, changes in the nature and volume of the loan portfolio, industry standards and other relevant reasonable and supportable forecasts.
Management evaluates the loan portfolio in light of economic conditions, changes in the nature and volume of the loan portfolio, industry standards and other relevant reasonable and supportable forecasts.
The four-quarter forecast incorporates three macroeconomic variables (“MEVs”) that are relevant for exposures across the Company. • U.S. changes in real gross domestic product (GDP). • U.S. personal consumption expenditures (PCE) inflation. • U.S. civilian unemployment rate.
The four-quarter forecast incorporates three macroeconomic variables (“MEVs”) that are relevant for exposures across the Company. • U.S. changes in real gross domestic product (GDP). • U.S. personal consumption expenditures (PCE) inflation. • U.S. civilian unemployment rate. 45 Changes in the Company’s assumptions and forecasts of economic conditions could significantly affect its estimate of expected credit losses in the portfolio at the balance sheet date or lead to significant changes in the estimate from one reporting period to the next.
The increased figure for the current year was mainly a result of the day one purchase entry associated with the acquisition of Emclaire. The Company adopted ASU 2016-13 in 2021, to calculate the allowance for credit losses (“ACL”) which requires estimating credit losses over the life of the credits.
The increased net charge-off figure in 2024 was driven by a charge-off of $4.4 million for a single commercial credit backed by office space. The Company adopted ASU 2016-13 in 2021, to calculate the allowance for credit losses (“ACL”) which requires estimating credit losses over the life of the credits.
Trust fees increased to $10.1 million in 2023 from $9.6 million in 2022. The trust business continued to expand in 2023 as the Company added revenue producers in the new Pennsylvania markets. Insurance agency commissions increased by $1.0 million to $5.4 million in 2023 from $4.4 million in 2022.
The increase was due to the addition of Emclaire offset by a decline of $79,000 on the proceeds from death benefits received from the policies. Trust fees increased to $9.0 million in 2023 from $8.5 million in 2022. The trust business continued to expand in 2023 as the Company added revenue producers in the new Pennsylvania markets.
The increase was primarily due to an increase in the average balance of loans and securities offset by a decline in the yields received on loans and tax exempt securities. Interest income on loans increased to $107.8 million for the year ended December 31, 2022 compared to $94.8 million for the year ended December 31, 2021.
The increase was primarily due to an increase in the yield on loans and securities associated with the higher interest rate environment. Interest income on loans increased to $185.7 million for the year ended December 31, 2024, compared to $171.8 million for the year ended December 31, 2023.
To minimize risks associated with changes in the borrower’s future repayment capacity, the Bank generally requires scheduled periodic principal and interest payments on all types of loans and normally requires collateral. Commercial real estate loans increased to $1.33 billion at December 31, 2023 from $1.03 billion at December 31, 2022.
Management has developed and maintains comprehensive underwriting guidelines and a loan review function that monitors credits during and after the approval process. To minimize risks associated with changes in the borrower’s future repayment capacity, the Bank generally requires scheduled periodic principal and interest payments on all types of loans and normally requires collateral.
The Company uses short term borrowings to manage the ongoing fluctuations with loans and deposits, when necessary. 43 Long-Term Borrowings Total long-term borrowings increased $452 thousand from $88.2 million at December 31. 2022, to $88.7 million at December 31, 2023. See Note 13 within Item 8 of this Annual report on Form 10-K for additional detail.
See Note 13 within Item 8 of this Annual report on Form 10-K for additional detail. 43 Stockholders’ Equity Total stockholders’ equity increased $1.6 million from $404.4 million at December 31, 2023, to $406.0 million at December 31, 2024.
The allowance for credit losses increased to $34.4 million at December 31, 2023, compared to $27.0 million at December 31, 2022. The increase was primarily due to the day one purchase entry for the acquisition of Emclaire's loans.
The allowance for credit losses increased to $35.9 million at December 31, 2024, compared to $34.4 million at December 31, 2023. The increase was primarily driven by growth in the loan portfolio.
A provision for credit losses is charged to operations based on management’s periodic evaluation of adequacy of the allowance.
A provision for credit losses is charged to operations based on management’s periodic evaluation of adequacy of the allowance. The Company’s allowance for credit losses represents management’s estimate of expected credit losses over the remaining expected life of the Company’s financial assets measured at amortized cost and certain off-balance sheet lending-related commitments.
Results of Operations Comparison of Operating Results for the Years Ended December 31, 2023 and 2022. The Company recorded net income of $49.9 million for the year ended December 31, 2023, compared to $60.6 million for the year ended December 31, 2022.
The Company recorded net income of $45.9 million for the year ended December 31, 2024, compared to $49.9 million for the year ended December 31, 2023. The Company reported $1.22 per diluted common share in 2024 compared to $1.33 per diluted common share in 2023.
For the commercial loan category, which represents 12.6% of the total loan portfolio, management relies on the Bank’s internal loan review procedures and allocates accordingly based on loan classifications. The gross charge-offs in the commercial loan portfolio, were $1.3 million for 2023, which represented approximately 43.3% of the losses for the entire loan portfolio.
For the commercial real estate and commercial categories, which represent 42.2% and 10.8% of the total loan portfolio in 2024, respectively, management relies on the Bank’s internal loan review procedures and allocates accordingly based on loan classifications.
Debit card fees increased to $7.1 million in 2023 compared to $5.8 million in 2022. The increase was primarily due to the addition of Emclaire. The Company recorded an $8.4 million gain related to a legal settlement in 2022. No gain was recorded in 2023.
The Company recorded an $8.4 million gain related to a legal settlement in 2022. No gain was recorded in 2023. Other operating income increased by $495,000 to $4.5 million for the twelve months ended December 31, 2023, from $4.0 million for the twelve months ended December 31, 2022.
The increase was primarily due to the acquisition of Emclaire which added $22.5 million to the balance. The Company also had earnings of $2.4 million on the policies in 2023 offset slightly by proceeds from a death benefit.
The increase was due to earnings on the policies in 2024 offset slightly by proceeds from a death benefit. 42 Deposits Total deposits increased to $4.3 billion at December 31, 2024, from $4.2 billion at December 31, 2023, an increase of $89.4 million. Noninterest bearing deposits declined $61.1 million during 2024 to $965.5 million from $1.03 billion.
The payment amounts represent those amounts contractually due to the recipient and do not include any unamortized premiums or discounts or other similar carrying value adjustments. Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.
Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+5 added−3 removed6 unchanged
Biggest changeThe assumptions and predictions include inputs to compute baseline net interest income, expected changes in rates on interest bearing deposit accounts and loans, competition and various other factors that are difficult to accurately predict. 2023 2022 ALCO Changes In Interest Rate (basis points) Result Result Guideline Net Interest Income Change +400 -6.2 % * -12.5 % +300 -5.0 % -5.4 % -10.0 % +200 -3.4 % -3.6 % -7.5 % +100 -1.9 % -1.8 % -5.0 % -100 1.4 % 1.1 % -5.0 % -200 2.3 % 1.5 % -10.0 % -300 3.1 % 1.6 % -15.0 % -400 2.7 % * -20.0 % Net Present Value Of Equity Change +400 -36.4 % * -12.5 % +300 -26.8 % -20.9 % -10.0 % +200 -17.3 % -13.4 % -7.5 % +100 -8.7 % -6.4 % -5.0 % -100 5.3 % 3.9 % -10.0 % -200 7.2 % 5.5 % -15.0 % -300 5.1 % 4.4 % -20.0 % -400 3.5 % * -25.0 % * Not calculated for December 31, 2022 The yield curve at December 31, 2023, has changed dramatically over the past two years.
Biggest changeThe assumptions and predictions include inputs to compute baseline net interest income, expected changes in rates on interest bearing deposit accounts and loans, competition and various other factors that are difficult to accurately predict. 2024 2023 ALCO Changes In Interest Rate (basis points) Result Result Guideline Net Interest Income Change +400 -9.0 % -6.2 % -12.5 % +300 -7.0 % -5.0 % -10.0 % +200 -4.7 % -3.4 % -7.5 % +100 -2.5 % -1.9 % -5.0 % -100 2.2 % 1.4 % -5.0 % -200 3.9 % 2.3 % -10.0 % -300 5.5 % 3.1 % -15.0 % -400 6.1 % 2.7 % -20.0 % Net Present Value Of Equity Change +400 -37.2 % -36.4 % -12.5 % +300 -27.3 % -26.8 % -10.0 % +200 -17.7 % -17.3 % -7.5 % +100 -9.0 % -8.7 % -5.0 % -100 5.5 % 5.3 % -10.0 % -200 7.1 % 7.2 % -15.0 % -300 4.4 % 5.1 % -20.0 % -400 1.5 % 3.5 % -25.0 % The yield curve has changed dramatically over the past three years.
Other factors, such as market demand, interest rate outlook, regulatory restraint and strategic planning also have an effect on the desired balance sheet structure. 50
Other factors, such as market demand, interest rate outlook, regulatory restraint and strategic planning also have an effect on the desired balance sheet structure. 49
The Company has no market risk sensitive instruments held for trading purposes. With the largest amount of interest sensitive assets and liabilities maturing within twelve months, the Company monitors this area most closely. Early withdrawal of deposits, prepayments of loans and loan delinquencies are some of the factors that can impact actual results in comparison to our simulation analysis.
The Company has no market risk sensitive instruments held for trading purposes. A large amount of interest sensitive assets and liabilities mature within twelve months and the Company monitors this area closely. Early withdrawal of deposits, prepayments of loans and loan delinquencies are some of the factors that can impact actual results in comparison to our simulation analysis.
The remaining results of the simulations in the table above indicate that interest rate change results fall within internal limits established by the Company at both December 31, 2023, and December 31, 2022. A report on interest rate risk is presented to the Board of Directors and the Asset/Liability Committee on a quarterly basis.
The remaining results of the simulations in the table above indicate that interest rate change results fall within internal limits established by the Company at both December 31, 2024, and December 31, 2023. A report on interest rate risk is presented to the Board of Directors and the ALCO on a quarterly basis.
This unprecedented outcome was created by the events occurring over the past two years, namely, the massive influx of liquidity in the form of deposits in 2020 and 2021 from government assistance while interest rates were at their lowest; the deployment of those funds at those low rates; and now the usage of those deposits as consumers drain their accounts in this highly inflationary economy, which prevents the Company from investing in the higher rates now available.
This unprecedented outcome was created by the events occurring over the past four years, namely, the massive influx of liquidity in the form of deposits in 2020 and 2021 from government assistance while interest rates were at their lowest; the deployment of these funds at the prevailing low rates; and now the usage of the deposits as consumers utilize their deposits in an effort to maintain living standards in this highly inflationary economy, which prevents the Company from investing in the higher rates that are now available.
With the EVE model moving rates even higher, it further exacerbates the differential between market rates and book rates, thereby creating the out of internal policy consequence. To mitigate these results, the Company has prioritized loan growth, while employing strategies to shrink the investment portfolio, in an effort to close the gap between the book rates and market rates.
With the EVE model moving rates even higher than the current rates, it further exacerbates the differential between market rates and book rates, thereby creating the out of internal policy consequence.
However, the elevated rates do bring back into play the 400 basis point scenarios, which have not been modeled in recent years. The above table presents results in the up rate scenarios that exceed internal policy limits for the Economic Value of Equity (“EVE”).
The above table presents results in the up rate scenarios that exceed internal policy limits for the Economic Value of Equity (“EVE”) for both year end periods.
Removed
The Federal Open Market Committee, in an intense efforts to diffuse inflation, has raised the discount rate 5.25% over the past eight quarters, the fastest pace on record. These movements have inverted the yield curve, whereby the two-year treasury yield now exceeds the ten-year treasury yield by 35 basis points at year end 2023.
Added
From March 2022 to July 2023, in an intense effort to diffuse inflation, the Federal Open Market Committee raised the discount rate from 0.25% to 5.50%. The committee then held the discount rate at 5.50% until September 2024 when they cut the discount rate by a total of 100 basis points over the last four months of 2024.
Removed
With the entire curve highly elevated, asset valuation has declined substantially, as evidenced by the 14.3% valuation reserve on the investment portfolio. For interest rate risk modeling purposes, although further rate increases are possible, movement beyond 25 more basis points is doubtful.
Added
These rate cuts were an attempt to guide the economy into a “soft landing”, where the still comparatively elevated rate will continue to bring down inflation without harming the job market or the economy.
Removed
The Company 49 has also utilized short term wholesale funding in response to deposit shrinkage so as not to incur long term cost increases on its core deposits.
Added
To mitigate these results, the Company has prioritized employing strategies to shrink the longer duration investment portfolio and replace the 48 balances with assets having a shorter duration, including loans, in an effort to close the gap between the book and market rates.
Added
Any growth in lending will be done in a measured manner given the uncertain economic backdrop that exists today. The Company recognizes the risk that is inherent in growing loans but feels that its historical record of prudent underwriting, its low loan to deposit ratio and its strong credit metrics provide the ability to pursue solid opportunities in the marketplace.
Added
In addition, any loan growth will be broad based and will encompass consumer, indirect, 1-4 family, commercial and industrial and commercial real estate, so as not to increase the risk in any one portfolio or sector.

Other FMNB 10-K year-over-year comparisons