FMNB 10-Q Quarterly Report June 30, 2025

FARMERS NATIONAL BANC CORP /OH/

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fmnb20250630_10q.htm

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

☐ Transition Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the Quarterly period ended June 30, 2025

Commission file number 001-35296

FARMERS NATIONAL BANC CORP.

(Exact name of registrant as specified in its charter)

ohio	34-1371693
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No)

20 South Broad Street Canfield , OH	44406
(Address of principal executive offices)	(Zip Code)

( 330 ) 533-3341

(Registrant ’ s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, No Par Value	FMNB	The NASDAQ Stock Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Small reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at July 31, 2025
Common Stock, No Par Value		37,646,549 shares

Table of Contents

		Page Number
PART I - FINANCIAL INFORMATION

Item 1	Financial Statements (Unaudited)

	Included in Part I of this report:

	Farmers National Banc Corp. and Subsidiaries

	Consolidated Condensed Balance Sheets (Unaudited)	2
	Consolidated Condensed Statements of Income (Unaudited)	3
	Consolidated Condensed Statements of Comprehensive Income (Unaudited)	4
	Consolidated Condensed Statements of Stockholders ’ Equity (Unaudited)	5
	Consolidated Condensed Statements of Cash Flows (Unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2	Management ’ s Discussion and Analysis of Financial Condition and Results of Operations	42

Item 3	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4	Controls and Procedures	50

PART II - OTHER INFORMATION		50

Item 1	Legal Proceedings	50

Item 1A	Risk Factors	50

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3	Defaults Upon Senior Securities	51

Item 4	Mine Safety Disclosures	51

Item 5	Other Information	51

Item 6	Exhibits	52

SIGNATURES		53

10-Q Certifications

Section 906 Certifications

Table of Contents

CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)

FARMERS NATIONAL BANC CORP. AND SUBSIDIARIES

	(In Thousands of Dollars)
	*June 30,*			*December 31,*
	*2025*			*2024*
ASSETS
Cash and due from banks	$	20,100		$	20,426
Federal funds sold and other		70,640			65,312
TOTAL CASH AND CASH EQUIVALENTS		90,740			85,738
Securities available for sale (Amortized cost $ 1,497,929 in 2025 and $ 1,510,681 in 2024)		1,274,899			1,266,553
Other investments		42,410			45,405
Loans held for sale, at fair value		2,174			5,005
Loans		3,303,359			3,268,346
Less allowance for credit losses		38,563			35,863
NET LOANS		3,264,796			3,232,483
Premises and equipment, net		55,788			52,274
Goodwill		167,450			167,450
Other intangibles, net		19,281			20,750
Bank owned life insurance		117,624			101,418
Tax credit investments		34,294			22,000
Other assets		108,972			119,848
TOTAL ASSETS	$	5,178,428		$	5,118,924

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	995,865		$	965,507
Interest-bearing		3,325,564			3,226,321
Brokered time deposits		74,988			74,951
TOTAL DEPOSITS		4,396,417			4,266,779
Short-term borrowings		203,000			305,000
Long-term borrowings		86,428			86,150
Other liabilities		54,835			54,967
TOTAL LIABILITIES		4,740,680			4,712,896
Commitments and contingent liabilities
Stockholders' Equity:
Common Stock, no par value; 50,000,000 shares authorized; 39,321,709 shares issued in 2025 and 2024; 37,641,666 and 37,585,612 shares outstanding, respectively		365,790			366,059
Retained earnings		271,869			257,173
Accumulated other comprehensive (loss)		( 176,738	)		( 193,265	)
Treasury stock, at cost; 1,680,043 and 1,736,097 shares in 2025 and 2024, respectively		( 23,173	)		( 23,939	)
TOTAL STOCKHOLDERS' EQUITY		437,748			406,028
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	5,178,428		$	5,118,924

See accompanying notes

Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)

FARMERS NATIONAL BANC CORP. AND SUBSIDIARIES

	(In Thousands except Per Share Data)
	For the Three Months Ended						For the Six Months Ended
	*June 30,*			*June 30,*			*June 30,*			*June 30,*
	*2025*			*2024*			*2025*			*2024*
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	47,050		$	46,513		$	93,758		$	91,530
Taxable securities		7,384			6,813			14,480			13,227
Tax exempt securities		2,377			2,455			4,828			5,090
Dividends		462			322			1,003			684
Federal funds sold and other interest income		429			743			939			1,369
TOTAL INTEREST AND DIVIDEND INCOME		57,702			56,846			115,008			111,900
INTEREST EXPENSE
Deposits		20,240			20,160			39,957			38,549
Short-term borrowings		1,536			3,584			3,954			7,524
Long-term borrowings		1,005			1,036			1,980			2,074
TOTAL INTEREST EXPENSE		22,781			24,780			45,891			48,147
NET INTEREST INCOME		34,921			32,066			69,117			63,753
Provision for credit losses		3,586			1,395			3,608			1,125
(Credit) for unfunded commitments		( 38	)		( 283	)		( 264	)		( 462	)
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		31,373			30,954			65,773			63,090
NONINTEREST INCOME
Service charges on deposit accounts		1,749			1,846			3,507			3,429
Bank owned life insurance income		832			652			1,642			1,359
Trust fees		2,596			2,345			5,237			4,854
Insurance agency commissions		1,828			1,255			3,569			2,783
Security gains (losses), including fair value changes for equity securities		36			( 124	)		( 1,278	)		( 2,244	)
Retirement plan consulting fees		783			623			1,581			1,241
Investment commissions		721			478			1,250			910
Net gains on sale of loans		329			417			655			714
Other mortgage banking income, net		27			192			174			317
Debit card and EFT fees		2,017			1,760			3,882			3,327
Other operating income		1,204			162			2,384			1,273
TOTAL NONINTEREST INCOME		12,122			9,606			22,603			17,963
NONINTEREST EXPENSES
Salaries and employee benefits		14,722			14,558			30,888			29,627
Occupancy and equipment		4,119			3,815			8,258			7,545
FDIC insurance and state and local taxes		1,262			1,185			2,524			2,530
Professional fees		1,026			1,194			2,223			2,448
Advertising		454			445			910			876
Intangible amortization		735			630			1,469			1,318
Core processing charges		1,401			1,099			2,798			2,234
Other operating expenses		3,456			3,477			6,631			6,864
TOTAL NONINTEREST EXPENSES		27,175			26,403			55,701			53,442
INCOME BEFORE INCOME TAXES		16,320			14,157			32,675			27,611
INCOME TAXES		2,410			2,374			5,187			4,588
NET INCOME	$	13,910		$	11,783		$	27,488		$	23,023
EARNINGS PER SHARE - basic	$	0.37		$	0.32		$	0.73		$	0.62
EARNINGS PER SHARE - diluted	$	0.37		$	0.31		$	0.73		$	0.61

See accompanying notes

Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

FARMERS NATIONAL BANC CORP. AND SUBSIDIARIES

	(In Thousands of Dollars)
	For the Three Months Ended						For the Six Months Ended
	*June 30,*			*June 30,*			*June 30,*			*June 30,*
	*2025*			*2024*			*2025*			*2024*
NET INCOME	$	13,910		$	11,783		$	27,488		$	23,023
Other comprehensive income (loss):
Net unrealized holding gains (losses) on available for sale securities		655			( 8,285	)		19,764			( 27,460	)
Reclassification adjustment for losses realized in income on sales		0			126			1,334			2,259
Reclassification adjustment for (gains) losses realized in income on fair value hedge		58			211			( 177	)		1,556
Net unrealized holding gains (losses)		713			( 7,948	)		20,921			( 23,645	)
Income tax effect		( 150	)		1,669			( 4,394	)		4,966
Unrealized holding gains (losses), net of reclassification and tax		563			( 6,279	)		16,527			( 18,679	)
Change in funded status of post-retirement plan, net of tax		0			0			0			0
Other comprehensive income (loss), net of tax		563			( 6,279	)		16,527			( 18,679	)
TOTAL COMPREHENSIVE INCOME	$	14,473		$	5,504		$	44,015		$	4,344

See accompanying notes

Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS ’ EQUITY (Unaudited)

FARMERS NATIONAL BANC CORP. AND SUBSIDIARIES

(Table Dollar Amounts in Thousands except Per Share Data)

							Accumulated
							Other
	Common			Retained			Comprehensive			Treasury
	Stock			Earnings			Income (Loss)			Stock			Total
Balance December 31, 2024	$	366,059		$	257,173		$	( 193,265	)	$	( 23,939	)	$	406,028
Net income					13,578									13,578
Other comprehensive income								15,964						15,964
Restricted share issuance		( 491	)								491			0
Stock based compensation expense		642												642
Vesting of Incentive Plan		( 565	)								565			0
Share forfeitures for taxes											( 683	)		( 683	)
Dividends paid at $ 0.17 per share					( 6,395	)								( 6,395	)
Balance March 31, 2025	$	365,645		$	264,356		$	( 177,301	)	$	( 23,566	)	$	429,134
Net income					13,910									13,910
Other comprehensive (loss)								563						563
Restricted share issuance		( 421	)								421			0
Stock based compensation expense		645												645
Vesting of Incentive Plan		( 79	)								79			0
Share forfeitures for taxes											( 107	)		( 107	)
Dividends paid at $ 0.17 per share					( 6,397	)								( 6,397	)
Balance June 30, 2025	$	365,790		$	271,869		$	( 176,738	)	$	( 23,173	)	$	437,748

							Accumulated
							Other
	Common			Retained			Comprehensive			Treasury
	Stock			Earnings			Income (Loss)			Stock			Total
Balance December 31, 2023	$	365,305		$	236,757		$	( 172,554	)	$	( 25,093	)	$	404,415
Net income					11,240									11,240
Other comprehensive (loss)								( 12,400	)					( 12,400	)
Restricted share issuance		( 363	)								367			4
Restricted share forfeitures		153									( 155	)		( 2	)
Stock based compensation expense		662												662
Vesting of Incentive Plan		( 914	)								919			5
Share forfeitures for taxes											( 529	)		( 529	)
Dividends paid at $ 0.17 per share					( 6,369	)								( 6,369	)
Balance March 31, 2024	$	364,843		$	241,628		$	( 184,954	)	$	( 24,491	)	$	397,026
Net income					11,783									11,783
Other comprehensive (loss)								( 6,279	)					( 6,279	)
Restricted share issuance		( 484	)								489			5
Stock based compensation expense		626												626
Share forfeitures for taxes											( 79	)		( 79	)
Dividends paid at $ 0.17 per share					( 6,388	)								( 6,388	)
Balance June 30, 2024	$	364,985		$	247,023		$	( 191,233	)	$	( 24,081	)	$	396,694

See accompanying notes.

Table of Contents

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

FARMERS NATIONAL BANC CORP. AND SUBSIDIARIES

	(In Thousands of Dollars)
	Six Months Ended
	*June 30,*			*June 30,*
	*2025*			*2024*
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	27,488		$	23,023
Adjustments to reconcile net income to net cash from operating activities:
Provision for credit losses		3,608			1,125
Credit for unfunded loans		( 264	)		( 462	)
Depreciation and amortization		3,349			3,103
Net amortization (accretion) of securities		( 181	)		330
Available for sale security losses		1,334			2,259
Realized gains on equity securities		( 56	)		( 15	)
Gains on premises and equipment sales and disposals, net		( 113	)		0
Stock compensation expense		1,287			1,288
Earnings on bank owned life insurance		( 1,531	)		( 1,275	)
Income recognized from death benefit on bank owned life insurance		( 111	)		( 84	)
Origination of loans held for sale		( 38,327	)		( 35,222	)
Proceeds from loans held for sale		40,213			35,476
Net gains on sale of loans		( 655	)		( 714	)
Net change in other assets and liabilities		( 6,353	)		1,474
NET CASH FROM OPERATING ACTIVITIES		29,688			30,306
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and repayments of securities available for sale		33,680			26,308
Proceeds from sales of securities available for sale		23,901			44,756
Purchases of securities available for sale		( 45,983	)		( 45,883	)
Proceeds from sales of equity securities		55			41
Purchase of equity securities		( 57	)		( 42	)
Proceeds from maturities and repayments of SBIC funds		910			556
Purchases of SBIC funds		( 2,465	)		( 520	)
Proceeds from redemption of regulatory stock		11,945			5,224
Purchase of regulatory stock		( 7,337	)		( 7,527	)
Loan originations and payments, net		( 29,458	)		( 32,285	)
Purchase of portfolio loans		( 8,044	)		( 8,069	)
Proceeds from loans held for sale previously classified as portfolio loans		3,445			1,594
Proceeds from BOLI death benefit		460			551
Purchase of company owned life insurance		( 15,000	)		0
Proceeds from land, building and equipment sales		298			0
Additions to premises and equipment		( 5,092	)		( 3,778	)
NET CASH FROM INVESTING ACTIVITIES		( 38,742	)		( 19,074	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits		129,638			28,449
Net change in short-term borrowings		( 102,000	)		51,000
Cash dividends paid		( 12,727	)		( 12,688	)
Cash paid for withholding taxes on share-based awards		( 855	)		( 664	)
NET CASH FROM FINANCING ACTIVITIES		14,056			66,097
NET CHANGE IN CASH AND CASH EQUIVALENTS		5,002			77,329
Beginning cash and cash equivalents		85,738			103,658
Ending cash and cash equivalents	$	90,740		$	180,987
Supplemental cash flow information:
Interest paid	$	46,658		$	55,188
Supplemental noncash disclosures:
Issuance of stock awards	$	1,556		$	2,049
Transfer of loans to loans held for sale	$	1,845		$	0
Lease liabilities arising from obtaining right-of-use assets	$	273		$	0

See accompanying notes

Table of Contents

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Principles of Consolidation:

Farmers National Banc Corp. (“Company” or “Farmers”) is a Financial Holding Company registered under the Bank Holding Company Act of 1956, as amended. The Company provides full banking services through its nationally chartered subsidiary, The Farmers National Bank of Canfield (“Bank”). The consolidated financial statements also include the accounts of the Bank’s subsidiaries; Farmers National Insurance, LLC (“Insurance”) and Farmers of Canfield Investment Co. (“Investments”). The Company provides trust and retirement consulting services through its subsidiary, Farmers Trust Company (“Trust”), and insurance services through the Bank’s subsidiary, Insurance. The consolidated financial statements include the accounts of the Company, the Bank and its subsidiaries, along with the Trust company. All significant intercompany balances and transactions have been eliminated in the consolidation.

Basis of Presentation:

The unaudited consolidated condensed financial statements have been prepared in conformity with the instructions to Form 10 -Q and Article 10 of Regulation S- X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2024 Annual Report to Shareholders included in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2024 (“ 2024 Form 10 -K”). The interim consolidated financial statements include all adjustments (consisting of only normal recurring items) that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year. Certain items included in the prior period financial statements were reclassified to conform to the current period presentation. There was no effect on net income or total stockholders’ equity.

Estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Segments:

The Company provides a broad range of financial services to individuals and companies in northeastern Ohio and western Pennsylvania. Operations are managed and financial performance is primarily aggregated and reported in two lines of business, the Bank segment and the Trust segment.

Equity:

There are 50,000,000 shares authorized and available for issuance as of June 30, 2025 . Outstanding shares at June 30, 2025 were 37,641,666 .

Comprehensive Income:

Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized gains and losses on securities available for sale and changes in the funded status of the post-retirement plan, which are recognized as components of stockholders’ equity, net of tax effect.

Updates to Significant Accounting Policies:

New Accounting Standard:

On March 29, 2024, the FASB issued ASU 2024 - 02, Codification Improvements — Amendments to Remove References to the Concepts Statements . ASU 2024 - 02 removes various references to the FASB’s Concepts Statements from the FASB’s Accounting Standards Codification (Codification or GAAP). The Concepts Statements are non-authoritative guidance issued by the FASB that provide the objectives, qualitative characteristics and other concepts that govern the development of accounting principles by the FASB. ASU 2024 - 02 applies to all reporting entities and updates the Codification by eliminating discrete references to the Concepts Statements across a variety of defined terms and Topics within the Codification. The FASB does not expect these updates to have a significant effect on current accounting practice. The amendments in ASU 2024 - 02 are effective for public business entities for fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of this standard is not expected to have a material effect on the Company’s operating results or financial condition.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ) Improvements to Income Tax Disclosures . The amendments in this update related to the rate reconciliation and income taxes paid disclosures improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments of this update are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of this standard is not expected to have a material effect on the Company’s operating results or financial condition.

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ) Improvements to Reportable Segment Disclosures . The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The main new provision requires significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. The amendments of this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The standard was adopted by the company and footnote16 - Segment information has been updated per the ASU.

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Business Combinations:

On December 16, 2024, Farmers Trust acquired substantially all of the assets of Crest Retirement Advisors, LLC, for $ 600,000 , with an additional $ 400,000 in contingent consideration payable over two years. Intangible assets of $ 770,000 were recorded along with goodwill of $ 4,000 .

Securities:

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at June 30, 2025 and December 31, 2024 , and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss). No allowance for credit losses have been recognized for the securities portfolio at June 30, 2025 or December 31, 2024 .

			Gross		Gross
	Amortized		Unrealized		Unrealized
(In Thousands of Dollars)	Cost		Gains		Losses			Fair Value
June 30, 2025
U.S. Treasury and U.S. government sponsored entities	$	121,056	$	26	$	( 11,845	)	$	109,237
State and political subdivisions		594,437		1,210		( 109,647	)		486,000
Corporate bonds		17,569		210		( 504	)		17,275
Mortgage-backed securities		605,297		394		( 96,746	)		508,945
Collateralized mortgage obligations		157,115		438		( 6,384	)		151,169
Small Business Administration		2,455		0		( 182	)		2,273
Totals	$	1,497,929	$	2,278	$	( 225,308	)	$	1,274,899

			Gross		Gross
	Amortized		Unrealized		Unrealized
(In Thousands of Dollars)	Cost		Gains		Losses			Fair Value
December 31, 2024
U.S. Treasury and U.S. government sponsored entities	$	132,292	$	0	$	( 17,185	)	$	115,107
State and political subdivisions		609,950		1,294		( 106,364	)		504,880
Corporate bonds		17,849		172		( 573	)		17,448
Mortgage-backed securities		605,350		34		( 112,517	)		492,867
Collateralized mortgage obligations		142,525		85		( 8,834	)		133,776
Small Business Administration		2,715		0		( 240	)		2,475
Totals	$	1,510,681	$	1,585	$	( 245,713	)	$	1,266,553

The proceeds from sales of available-for-sale securities and the associated gains and losses are as follows:

	*Three Months Ended*					*Six Months Ended*
	*June 30,*					*June 30,*
(In Thousands of Dollars)	*2025*		*2024*			*2025*			*2024*
Proceeds	$	0	$	464		$	23,901		$	44,756
Gross gains		0		0			0			17
Gross losses		0		( 125	)		( 1,334	)		( 2,276	)

The amortized cost and fair value of the debt securities portfolio are shown in the table below by expected maturity. Expected maturities may differ from contractual maturities if issuers have the right to call or prepay obligations with or without call, or prepayment penalties. Securities not due at a single maturity date are shown separately.

	*June 30, 2025*
(In Thousands of Dollars)	Amortized Cost		Fair Value
Maturity
Within one year	$	3,493	$	3,485
One to five years		56,426		51,968
Five to ten years		176,719		161,858
Beyond ten years		496,424		395,201
Mortgage-backed, collateralized mortgage obligations and Small Business Administration securities		764,867		662,387
Total	$	1,497,929	$	1,274,899

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The following table summarizes the investment securities with unrealized losses for which an allowance for credit losses has not been recorded at June 30, 2025 and December 31, 2024 , aggregated by major security type and length of time in a continuous unrealized loss position.

	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In Thousands of Dollars)	Value		Loss			Value		Loss			Value		Loss
June 30, 2025

U.S. Treasury and U.S. government sponsored entities	$	1,045	$	( 13	)	$	107,303	$	( 11,832	)	$	108,348	$	( 11,845	)
State and political subdivisions		36,417		( 2,310	)		412,515		( 107,337	)		448,932		( 109,647	)
Corporate bonds		3,724		( 42	)		8,415		( 462	)		12,139		( 504	)
Mortgage-backed securities		9,399		( 79	)		452,400		( 96,667	)		461,799		( 96,746	)
Collateralized mortgage obligations		67,299		( 797	)		51,047		( 5,587	)		118,346		( 6,384	)
Small Business Administration		0		0			2,273		( 182	)		2,273		( 182	)
Total	$	117,884	$	( 3,241	)	$	1,033,953	$	( 222,067	)	$	1,151,837	$	( 225,308	)

	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In Thousands of Dollars)	Value		Loss			Value		Loss			Value		Loss
December 31, 2024

U.S. Treasury and U.S. government sponsored entities	$	4,592	$	( 320	)	$	110,515	$	( 16,865	)	$	115,107	$	( 17,185	)
State and political subdivisions		66,436		( 4,946	)		400,911		( 101,418	)		467,347		( 106,364	)
Corporate bonds		4,303		( 146	)		8,568		( 427	)		12,871		( 573	)
Mortgage-backed securities		30,143		( 365	)		460,172		( 112,152	)		490,315		( 112,517	)
Collateralized mortgage obligations		65,046		( 2,210	)		51,405		( 6,624	)		116,451		( 8,834	)
Small Business Administration		0		0			2,475		( 240	)		2,475		( 240	)
Total	$	170,520	$	( 7,987	)	$	1,034,046	$	( 237,726	)	$	1,204,566	$	( 245,713	)

As of June 30, 2025 , the Company’s security portfolio consisted of 923 securities, 818 of which were in an unrealized loss position. The treasury, agency, mortgage-backed securities, collateralized mortgage obligations and small business administration securities that the Company owns are all issued by government sponsored entities and therefore contain no potential for credit loss. The Company does not consider any of its available-for-sale securities with unrealized losses to be attributable to credit-related factors, as the unrealized losses have occurred as a result of changes in noncredit related factors such as changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration. The vast majority of the Company's state and political subdivisions holdings are of high credit quality and are rated AA or higher. In addition, management has both the ability and intent to hold the securities for a period of time sufficient to allow for the recovery in fair value. As of June 30, 2025 , the Company has not recorded an allowance for credit losses on available for sale (“AFS”) securities.

At December 31, 2024 , the Company’s security portfolio consisted of 946 securities, 842 of which were in an unrealized loss position. The treasury, agency, mortgage-backed securities, collateralized mortgage obligations and small business administration securities that the Company owns are all issued by government sponsored entities and therefore contain no potential for credit loss. At December 31, 2024, the Company did not consider any of its available-for-sale securities with unrealized losses to be attributable to credit-related factors, as the unrealized losses have occurred as a result of changes in noncredit related factors such as changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration. The vast majority of the Company's state and political subdivisions holdings are of high credit quality and are rated AA or higher. In addition, management had both the ability and intent to hold the securities for a period of time sufficient to allow for the recovery in fair value. At December 31, 2024 , the Company had not recorded an allowance for credit losses on available for sale (“AFS”) securities.

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Equity Securities

The Company also holds equity securities which include $ 16.0 million in Small Business Investment Company (“SBIC”) partnership investments as well as $ 336,000 in local and regional bank holdings and other miscellaneous equity funds at June 30, 2025 . At December 31, 2024 , the Company held $ 14.5 million in SBIC investments and $ 277,000 in local and regional bank holdings and other miscellaneous equity funds. These investments are held at modified cost and any changes in the modified costs are recognized in income in both 2025 and 2024 .

Loans:

Loan balances were as follows:

(In Thousands of Dollars)	*June 30, 2025*			*December 31, 2024*
Commercial real estate
Owner occupied	$	402,058		$	391,302
Non-owner occupied		703,132			695,699
Farmland		216,905			206,786
Other		279,972			295,713
Commercial
Commercial and industrial		363,009			349,966
Agricultural		53,694			55,606
Residential real estate
1-4 family residential		849,443			845,081
Home equity lines of credit		171,312			158,014
Consumer
Indirect		227,612			232,822
Direct		17,761			19,143
Other		7,990			7,989
Total loans	$	3,292,888		$	3,258,121
Net deferred loan costs		10,471			10,225
Allowance for credit losses		( 38,563	)		( 35,863	)
Net loans	$	3,264,796		$	3,232,483

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Allowance for credit loss activity

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and six month periods ended June 30, 2025 and 2024 :

Three Months Ended June 30, 2025

	Commercial						Residential
(In Thousands of Dollars)	Real Estate			Commercial			Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	19,480		$	4,383		$	7,065		$	4,621		$	35,549
Provision for credit losses		2,149			901			191			345			3,586
Loans charged off		( 22	)		( 341	)		( 58	)		( 327	)		( 748	)
Recoveries		20			30			12			114			176
Total ending allowance balance	$	21,627		$	4,973		$	7,210		$	4,753		$	38,563

Six Months Ended June 30, 2025

	Commercial						Residential
(In Thousands of Dollars)	Real Estate			Commercial			Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	19,259		$	4,628		$	7,271		$	4,705		$	35,863
Provision (Credit) for credit losses		2,412			776			( 43	)		463			3,608
Loans charged off		( 66	)		( 654	)		( 77	)		( 649	)		( 1,446	)
Recoveries		22			223			59			234			538
Total ending allowance balance	$	21,627		$	4,973		$	7,210		$	4,753		$	38,563

Three Months Ended June 30, 2024

	Commercial						Residential
(In Thousands of Dollars)	Real Estate			Commercial			Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	17,481		$	4,543		$	6,840		$	4,295		$	33,159
(Credit) Provision for credit losses		( 258	)		428			628			597			1,395
Loans charged off		0			( 372	)		( 51	)		( 238	)		( 661	)
Recoveries		0			29			5			64			98
Total ending allowance balance	$	17,223		$	4,628		$	7,422		$	4,718		$	33,991

Six Months Ended June 30, 2024

	Commercial						Residential
(In Thousands of Dollars)	Real Estate			Commercial			Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	18,150		$	5,087		$	6,916		$	4,287		$	34,440
(Credit) Provision for credit losses		( 799	)		490			559			875			1,125
Loans charged off		( 146	)		( 1,015	)		( 81	)		( 701	)		( 1,943	)
Recoveries		18			66			28			257			369
Total ending allowance balance	$	17,223		$	4,628		$	7,422		$	4,718		$	33,991

The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Company's historical loss experience from December 31, 2011 to June 30, 2025 . As of June 30, 2025 , the Company expects that the markets in which it operates will experience minimal changes to economic conditions, stable trend in unemployment rate, and a level trend of delinquencies. Management adjusted historical loss experience for these expectations. No reversion adjustments were necessary, as the starting point for the Company's estimate was a cumulative loss rate covering the expected contractual term of the portfolio. While there are many factors that go into the calculation of the allowance for credit losses, the change in the balances from June 30, 2024 to June 30, 2025 is largely attributed to three commercial real estate non-owner occupied relationships individually evaluated and specifically reserved for, loss ratio trends of commercial real estate non-owner occupied, and increased loan balances. These factors were partially offset by adjustments made to the maximum loss rates that anchor the qualitative factors and adjustments to the Portfolio Composition and Growth qualitative factor.

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The following tables present the amortized cost basis of loans on nonaccrual status and loans past due over 89 days still accruing as of June 30, 2025 and December 31, 2024 :

	Nonaccrual with		Nonaccrual with		Loans past due
	no allowance		an allowance		over 89 days
(In Thousands of Dollars)	for credit loss		for credit loss		still accruing
June 30, 2025
Commercial real estate
Owner occupied	$	195	$	401	$	0
Non-owner occupied		1,976		16,702		0
Farmland		0		50		0
Other		0		1,082		0
Commercial
Commercial and industrial		182		3,231		0
Agricultural		0		256		0
Residential real estate
1-4 family residential		664		2,019		0
Home equity lines of credit		30		441		0
Consumer
Indirect		11		561		0
Direct		0		18		0
Other		0		0		0
Total loans	$	3,058	$	24,761	$	0

	Nonaccrual with		Nonaccrual with		Loans past due
	no allowance		an allowance		over 89 days
(In Thousands of Dollars)	for credit loss		for credit loss		still accruing
December 31, 2024
Commercial real estate
Owner occupied	$	0	$	937	$	0
Non-owner occupied		0		8,105		0
Farmland		1,757		3		0
Other		0		0		525
Commercial
Commercial and industrial		145		3,713		0
Agricultural		177		183		0
Residential real estate
1-4 family residential		513		3,967		90
Home equity lines of credit		94		409		0
Consumer
Indirect		37		463		0
Direct		66		34		0
Other		0		0		0
Total loans	$	2,789	$	17,814	$	615

The above table for the period ending December 31, 2024 does not include a $ 1.52 million owner occupied commercial real estate loan and a $ 77,000 commercial & industrial loan that were held for sale and in nonaccrual status. There were no loans that were held for sale and in nonaccrual status for the period ending June 30, 2025 .

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The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of June 30, 2025 and December 31, 2024 :

(In Thousands of Dollars)	Real Estate		Business Assets		Vehicles		Cash
June 30, 2025
Commercial real estate
Owner occupied	$	346	$	0	$	0	$	0
Non-owner occupied		29,473		0		0		0
Farmland		0		0		0		0
Other		1,082		0		0		0
Commercial
Commercial and industrial		0		2,485		0		0
Agricultural		0		0		0		0
Residential real estate
1-4 family residential		3,203		0		0		0
Home equity lines of credit		249		0		0		0
Consumer
Indirect		0		0		30		0
Direct		0		0		6		0
Other		0		0		0		0
Total loans	$	34,353	$	2,485	$	36	$	0

(In Thousands of Dollars)	Real Estate		Business Assets		Vehicles		Cash
December 31, 2024
Commercial real estate
Owner occupied	$	0	$	0	$	0	$	0
Non-owner occupied		8,119		0		0		0
Farmland		1,757		0		0		0
Other		0		0		0		0
Commercial
Commercial and industrial		0		2,591		0		0
Agricultural		0		177		0		0
Residential real estate
1-4 family residential		3,573		0		0		0
Home equity lines of credit		264		0		0		0
Consumer
Indirect		0		0		70		0
Direct		0		0		9		66
Other		0		0		0		0
Total loans	$	13,713	$	2,768	$	79	$	66

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The following tables present the aging of the amortized cost basis in past due loans as of June 30, 2025 and December 31, 2024 by class of loans.

					90 Days
					or More
	30-59 Days		60-89 Days		Past Due		Total		Loans Not
(In Thousands of Dollars)	Past Due		Past Due		and Nonaccrual		Past Due		Past Due		Total
June 30, 2025
Commercial real estate
Owner occupied	$	1,684	$	0	$	596	$	2,280	$	399,553	$	401,833
Non-owner occupied		551		0		18,678		19,229		683,526		702,755
Farmland		1,450		216		50		1,716		215,021		216,737
Other		0		0		1,082		1,082		278,377		279,459
Commercial
Commercial and industrial		1,391		378		3,413		5,182		359,378		364,560
Agricultural		353		185		256		794		53,792		54,586
Residential real estate
1-4 family residential		7,208		1,874		2,683		11,765		838,312		850,077
Home equity lines of credit		618		79		471		1,168		170,336		171,504
Consumer
Indirect		1,420		248		572		2,240		233,797		236,037
Direct		66		0		18		84		17,734		17,818
Other		5		1		0		6		7,987		7,993
Total loans	$	14,746	$	2,981	$	27,819	$	45,546	$	3,257,813	$	3,303,359

					90 Days
					or More
	30-59 Days		60-89 Days		Past Due		Total		Loans Not
(In Thousands of Dollars)	Past Due		Past Due		and Nonaccrual		Past Due		Past Due		Total
December 31, 2024
Commercial real estate
Owner occupied	$	95	$	446	$	937	$	1,478	$	389,630	$	391,108
Non-owner occupied		15		52		8,105		8,172		687,112		695,284
Farmland		53		0		1,760		1,813		204,787		206,600
Other		0		113		525		638		294,543		295,181
Commercial
Commercial and industrial		941		324		3,858		5,123		346,410		351,533
Agricultural		284		26		360		670		55,759		56,429
Residential real estate
1-4 family residential		6,688		1,943		4,570		13,201		832,338		845,539
Home equity lines of credit		104		0		503		607		157,532		158,139
Consumer
Indirect		1,385		473		500		2,358		238,997		241,355
Direct		59		30		100		189		18,996		19,185
Other		0		1		0		1		7,992		7,993
Total loans	$	9,624	$	3,408	$	21,218	$	34,250	$	3,234,096	$	3,268,346

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Loan Restructurings

The Company evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications. Therefore, the disclosures related to loan restructurings are only for modifications that directly affect cash flows.

Any restructuring of a loan in which the borrower has experienced financial difficulty and the terms of the loan are more favorable than would generally be considered for borrowers with the same credit characteristics would be individually evaluated. Otherwise, the restructured loan remains in the appropriate segment in the ACL model.

The following table presents the amortized cost basis of loans that were both experiencing financial difficulty and modified during the three and six months ended June 30, 2025 and June 30, 2024 , by class and type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below:

Three Months Ended June 30, 2025	Amortized Cost
							Combination				% of Total
							Term Extension				Class of
	Payment		Term		Interest Rate		and Interest				Financing
(In Thousands of Dollars)	Deferral		Extension		Reduction		Rate Reduction		Total		Receivable
Commercial real estate
Non-owner occupied	$	0	$	11,128	$	0	$	0	$	11,128		0.02	%
Commercial
Commercial and industrial		0		0		0		58	$	58		0.00	%
Residential real estate
1-4 family residential		103		0		0		0	$	103		0.00	%
Home equity lines of credit		0		0		0		75	$	75		0.00	%
Total modifications to borrowers experiencing financial difficulty	$	103	$	11,128	$	0	$	133	$	11,364		0.00	%

Six Months Ended June 30, 2025	Amortized Cost
							Combination				% of Total
							Term Extension				Class of
	Payment		Term		Interest Rate		and Interest				Financing
(In Thousands of Dollars)	Deferral		Extension		Reduction		Rate Reduction		Total		Receivable
Commercial real estate
Non-owner occupied	$	0	$	11,128	$	0	$	0	$	11,128		0.02	%
Commercial
Commercial and industrial		124		0		0		58	$	182		0.00	%
Residential real estate
1-4 family residential		103		0		0		0	$	103		0.00	%
Home equity lines of credit		0		14		0		75	$	89		0.00	%
Total modifications to borrowers experiencing financial difficulty	$	227	$	11,142	$	0	$	133	$	11,502		0.00	%

Three Months Ended June 30, 2024	Amortized Cost
							Combination				% of Total
							Term Extension				Class of
	Payment		Principal		Interest Rate		and Interest				Financing
(In Thousands of Dollars)	Deferral		Forgiveness		Reduction		Rate Reduction		Total		Receivable
Residential real estate
Home equity lines of credit	$	0	$	0	$	0	$	20	$	20		0.01	%
Total modifications to borrowers experiencing financial difficulty	$	0	$	0	$	0	$	20	$	20		0.00	%

Six Months Ended June 30, 2024	Amortized Cost
							Combination				% of Total
							Term Extension				Class of
	Payment		Principal		Interest Rate		and Interest				Financing
(In Thousands of Dollars)	Deferral		Forgiveness		Reduction		Rate Reduction		Total		Receivable
Residential real estate
1-4 family residential	$	0	$	0	$	29	$	20	$	49		0.03	%
Total modifications to borrowers experiencing financial difficulty	$	0	$	0	$	29	$	20	$	49		0.00	%

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The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three and six months ended June 30, 2025 and June 30, 2024 :

	Payment Deferral		Term Extension		Interest Rate Reduction
	Weighted-Average		Weighted-Average Years		Weighted-Average
	Principal Deferred		Added to the Life		Contractual Interest Rate
Three Months Ended June 30, 2025					From			To
Commercial real estate
Non-owner occupied				1
Commercial
Commercial and industrial				6		10.25	%		8.00	%
Residential real estate
1-4 family residential	$	6
Home equity lines of credit				10		7.75	%		4.00	%

	Payment Deferral		Term Extension		Interest Rate Reduction
	Weighted-Average		Weighted-Average Years		Weighted-Average
	Principal Deferred		Added to the Life		Contractual Interest Rate
Six Months Ended June 30, 2025					From			To
Commercial real estate
Non-owner occupied				1
Commercial
Commercial and industrial	$	112		6		10.25	%		8.00	%
Residential real estate
1-4 family residential		6
Home equity lines of credit				9		7.75	%		4.00	%

Payment Deferral

Term Extension

Interest Rate Reduction

Weighted-Average

Weighted-Average Years

Weighted-Average

Principal Deferred

Added to the Life

Contractual Interest Rate

Three Months Ended June 30, 2024

From

Residential real estate

Home Equity Lines of Credit

10.75

7.25

Payment Deferral

Term Extension

Interest Rate Reduction

Weighted-Average

Weighted-Average Years

Weighted-Average

Principal Deferred

Added to the Life

Contractual Interest Rate

Six Months Ended June 30, 2024

From

Residential real estate

1-4 family residential

10.45

5.92

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified in the three and six months ended June 30, 2025 and June 30, 2024 :

Three Months Ended June 30, 2025	Payment status (Amortized cost Basis)
			30 - 89		90+
(In Thousands of Dollars)	Current		Days past due		Days past due
Accrual restructured loans
Commercial real estate
Non-owner occupied	$	11,128	$	0	$	0
Commercial
Commercial and industrial		0		0		0
Residential real estate
1-4 family residential		103		0		0
Home equity lines of credit		75		0		0
Total accruing restructured loans	$	11,306	$	0	$	0

Nonaccrual restructured loans
Commercial real estate
Non-owner occupied	$	0	$	0	$	0
Commercial
Commercial and industrial		58		0		0
Residential real estate
1-4 family residential		0		0		0
Home equity lines of credit		0		0		0
Total nonaccrual restructured loans		58		0		0
Total restructured loans	$	11,364	$	0	$	0

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Six Months Ended June 30, 2025	Payment status (Amortized cost Basis)
			30 - 89		90+
(In Thousands of Dollars)	Current		Days past due		Days past due
Accrual restructured loans
Commercial real estate
Non-owner occupied	$	11,128	$	0	$	0
Commercial
Commercial and industrial		0		0		0
Residential real estate
1-4 family residential		103		0		0
Home equity lines of credit		89		0		0
Total accruing restructured loans	$	11,320	$	0	$	0

Nonaccrual restructured loans
Commercial real estate
Non-owner occupied	$	0	$	0	$	0
Commercial
Commercial and industrial		58		0		124
Residential real estate
1-4 family residential		0		0		0
Home equity lines of credit		0		0		0
Total nonaccrual restructured loans	$	58	$	0	$	124
Total restructured loans	$	11,378	$	0	$	124

Three Months Ended June 30, 2024	Payment status (Amortized cost Basis)
			30 - 89		90+
(In Thousands of Dollars)	Current		Days past due		Days past due
Accrual restructured loans
Residential real estate
Home equity lines of credit	$	20	$	0	$	0
Total accruing restructured loans	$	20	$	0	$	0

Nonaccrual restructured loans
Total nonaccrual restructured loans	$	0	$	0	$	0
Total restructured loans	$	20	$	0	$	0

Six Months Ended June 30, 2024	Payment status (Amortized cost Basis)
			30 - 89		90+
(In Thousands of Dollars)	Current		Days past due		Days past due
Accrual restructured loans
Residential real estate
Home equity lines of credit	$	20	$	0	$	0
Total accruing restructured loans	$	20	$	0	$	0

Nonaccrual restructured loans
Residential real estate
Home equity lines of credit		0		29		0
Total nonaccrual restructured loans	$	0	$	29	$	0
Total restructured loans	$	20	$	29	$	0

Table of Contents

As of June 30, 2025 , the Company had no commitments to lend any additional funds on restructured loans.

The following table presents the amortized cost basis of loans that had a payment default during the three and six months ended June 30, 2025 and June 30, 2024 , and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty. For purposes of this disclosure a default occurs when within 12 months of the original modification, a loan is 30 days contractually past due under the modified terms:

Three Months Ended June 30, 2025	Amortized Cost
							Combination
							Term Extension
	Payment		Term		Interest Rate		and Interest Rate
(In Thousands of Dollars)	Deferral		Extension		Reduction		Reduction
Commercial
Commercial and industrial	$	0	$	0	$	0	$	0
Residential real estate
Home equity lines of credit		0		0		0		0
Total modifications to borrowers experiencing financial difficulty	$	0	$	0	$	0	$	0

Six Months Ended June 30, 2025	Amortized Cost
							Combination
							Term Extension
	Payment		Term		Interest Rate		and Interest Rate
(In Thousands of Dollars)	Deferral		Extension		Reduction		Reduction
Commercial
Commercial and industrial	$	124	$	0	$	0	$	0
Residential real estate
Home equity lines of credit		0		0		0		19
Total modifications to borrowers experiencing financial difficulty	$	124	$	0	$	0	$	19

Three Months Ended June 30, 2024	Amortized Cost
							Combination
							Term Extension
	Payment		Term		Interest Rate		and Interest Rate
(In Thousands of Dollars)	Deferral		Extension		Reduction		Reduction
Residential real estate
Home equity lines of credit	$	0	$	0	$	29	$	0
Total modifications to borrowers experiencing financial difficulty	$	0	$	0	$	29	$	0

Six Months Ended June 30, 2024	Amortized Cost
							Combination
							Term Extension
	Payment		Term		Interest Rate		and Interest Rate
(In Thousands of Dollars)	Deferral		Extension		Reduction		Reduction
Residential real estate
1-4 family residential	$	0	$	0	$	30	$	41
Home equity lines of credit		0		0		29		0
Total modifications to borrowers experiencing financial difficulty	$	0	$	0	$	59	$	41

Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance of the credit losses is adjusted by the same amount.

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Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company establishes a risk rating at origination for all commercial loan and commercial real estate relationships. For relationships over $ 3 million, management monitors the loans on an ongoing basis for any changes in the borrower’s ability to service their debt. Management also affirms the risk ratings for the loans in their respective portfolios on an annual basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Substandard loans are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. For residential, consumer indirect and direct loan classes, the Company evaluates credit quality based on the aging status of the loan and by payment activity. Nonperforming loans are loans past due 90 days and still accruing interest and nonaccrual loans.

Table of Contents

The following table presents total loans by risk categories and year of origination:

	Term Loans Amortized Cost Basis by Origination Year
(In Thousands of Dollars)													*Revolving*
As of June 30, 2025	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Loans*		*Total*
Commercial real estate - Owner occupied:
Risk Rating
Pass	$	31,538	$	50,068	$	55,261	$	43,181	$	57,614	$	154,668	$	2,236	$	394,566
Special mention		0		670		1,822		0		1,094		79		0		3,665
Substandard		0		0		1,349		588		1		1,664		0		3,602
Total commercial real estate - Owner occupied loans	$	31,538	$	50,738	$	58,432	$	43,769	$	58,709	$	156,411	$	2,236	$	401,833

Commercial real estate - Owner Occupied: Current period gross write-offs	$	0	$	0	$	0	$	0	$	22	$	0	$	0	$	22

Commercial real estate - Non-owner occupied:
Risk Rating
Pass	$	34,515	$	63,118	$	50,257	$	121,201	$	77,106	$	288,451	$	9,619	$	644,267
Special mention		0		0		0		4,021		309		4,462		200		8,992
Substandard		0		6,932		127		7,339		10,461		22,988		0		47,847
Doubtful		0		0		0		0		1,649		0		0		1,649
Total commercial real estate - Non-owner occupied loans	$	34,515	$	70,050	$	50,384	$	132,561	$	89,525	$	315,901	$	9,819	$	702,755

Commercial real estate - Non-owner occupied: Current period gross write-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Commercial real estate - Farmland:
Risk Rating
Pass	$	10,645	$	26,256	$	24,145	$	37,260	$	17,535	$	96,783	$	3,360	$	215,984
Special mention		0		81		0		0		0		0		0		81
Substandard		0		0		0		0		360		312		0		672
Total commercial real estate - Farmland loans	$	10,645	$	26,337	$	24,145	$	37,260	$	17,895	$	97,095	$	3,360	$	216,737

Commercial real estate - Farmland: Current period gross write-offs	$	0	$	0	$	0	$	0	$	0	$	44	$	0	$	44

Commercial real estate - Other:
Risk Rating
Pass	$	15,329	$	44,333	$	90,026	$	64,039	$	27,500	$	26,284	$	2,122	$	269,633
Special mention		0		0		0		7,315		0		1,407		0		8,722
Substandard		0		0		970		0		111		23		0		1,104
Total commercial real estate - Other loans	$	15,329	$	44,333	$	90,996	$	71,354	$	27,611	$	27,714	$	2,122	$	279,459

Commercial real estate - Other: Current period gross write-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Table of Contents

	Term Loans Amortized Cost Basis by Origination Year (Continued)
(In Thousands of Dollars)													*Revolving*
As of June 30, 2025	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Loans*		*Total*
Commercial - Commercial and industrial:
Risk Rating
Pass	$	46,742	$	75,552	$	62,669	$	46,730	$	16,356	$	24,163	$	79,742	$	351,954
Special mention		0		0		0		2,418		305		169		1,919		4,811
Substandard		0		248		54		2,837		863		1,759		2,034		7,795
Total commercial - Commercial and industrial loans	$	46,742	$	75,800	$	62,723	$	51,985	$	17,524	$	26,091	$	83,695	$	364,560

Commercial - Commercial and industrial: Current period gross write-offs	$	0	$	79	$	144	$	189	$	56	$	47	$	28	$	543

Commercial - Agricultural:
Risk Rating
Pass	$	6,277	$	8,177	$	9,355	$	10,119	$	3,656	$	1,682	$	15,056	$	54,322
Special mention		0		0		0		0		0		0		0		0
Substandard		0		66		33		44		29		92		0		264
Total commercial - Agricultural loans	$	6,277	$	8,243	$	9,388	$	10,163	$	3,685	$	1,774	$	15,056	$	54,586

Commercial - Agricultural: Current period gross write-offs	$	0	$	81	$	16	$	1	$	0	$	13	$	0	$	111

Residential real estate - 1-4 family residential:
Payment Performance
Performing	$	37,221	$	90,715	$	66,211	$	150,974	$	146,564	$	352,168	$	3,541	$	847,394
Nonperforming		0		0		412		168		379		1,724		0		2,683
Total residential real estate - 1-4 family residential loans	$	37,221	$	90,715	$	66,623	$	151,142	$	146,943	$	353,892	$	3,541	$	850,077

Residential real estate - 1-4 family residential: Current period gross write-offs	$	0	$	0	$	0	$	0	$	18	$	31	$	0	$	49

Residential real estate - Home equity lines of credit:
Payment Performance
Performing	$	0	$	26	$	116	$	433	$	127	$	4,652	$	165,679	$	171,033
Nonperforming		0		0		0		99		0		372		0		471
Total residential real estate - Home equity lines of credit loans	$	0	$	26	$	116	$	532	$	127	$	5,024	$	165,679	$	171,504

Residential real estate - Home equity lines of credit: Current period gross write-offs	$	0	$	0	$	0	$	28	$	0	$	0	$	0	$	28

Table of Contents

	Term Loans Amortized Cost Basis by Origination Year (Continued)
(In Thousands of Dollars)													*Revolving*
As of June 30, 2025	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Loans*		*Total*
Consumer - Indirect:
Payment Performance
Performing	$	36,226	$	67,297	$	46,906	$	39,221	$	19,028	$	26,787	$	0	$	235,465
Nonperforming		0		78		115		75		151		153		0		572
Total consumer - Indirect loans	$	36,226	$	67,375	$	47,021	$	39,296	$	19,179	$	26,940	$	0	$	236,037

Consumer - Indirect: Current period gross write-offs	$	0	$	139	$	8	$	33	$	40	$	299	$	0	$	519

Consumer - Direct:
Payment Performance
Performing	$	2,309	$	2,050	$	1,767	$	1,515	$	821	$	9,005	$	333	$	17,800
Nonperforming		0		0		7		2		0		9		0		18
Total consumer - Direct loans	$	2,309	$	2,050	$	1,774	$	1,517	$	821	$	9,014	$	333	$	17,818

Consumer - Direct: Current period gross write-offs	$	0	$	6	$	10	$	7	$	0	$	12	$	0	$	35

Consumer - Other:
Payment Performance
Performing	$	0	$	1	$	0	$	101	$	64	$	364	$	7,463	$	7,993
Nonperforming		0		0		0		0		0		0		0		0
Total consumer - Other loans	$	0	$	1	$	0	$	101	$	64	$	364	$	7,463	$	7,993

Consumer - Other: Current period gross write-offs	$	0	$	0	$	5	$	0	$	1	$	89	$	0	$	95

Table of Contents

	Term Loans Amortized Cost Basis by Origination Year
(In Thousands of Dollars)													*Revolving*
As of December 31, 2024	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Loans*		*Total*
Commercial real estate - Owner occupied:
Risk Rating
Pass	$	45,588	$	56,389	$	46,323	$	60,179	$	45,428	$	127,665	$	1,984	$	383,556
Special mention		0		3,228		0		1,118		0		519		0		4,865
Substandard		0		0		659		0		0		1,962		66		2,687
Total commercial real estate - Owner occupied loans	$	45,588	$	59,617	$	46,982	$	61,297	$	45,428	$	130,146	$	2,050	$	391,108

Commercial real estate - Owner Occupied: Current period gross write-offs	$	0	$	0	$	72	$	0	$	21	$	0	$	0	$	93

Commercial real estate - Non-owner occupied:
Risk Rating
Pass	$	61,974	$	44,323	$	125,547	$	78,933	$	71,322	$	251,465	$	8,978	$	642,542
Special mention		0		0		6,284		313		1,356		10,024		150		18,127
Substandard		7,065		407		0		11,249		7,129		7,931		0		33,781
Doubtful		0		0		0		834		0		0		0		834
Total commercial real estate - Non-owner occupied loans	$	69,039	$	44,730	$	131,831	$	91,329	$	79,807	$	269,420	$	9,128	$	695,284

Commercial real estate - Non-owner occupied: Current period gross write-offs	$	0	$	0	$	0	$	4,380	$	146	$	0	$	0	$	4,526

Commercial real estate - Farmland:
Risk Rating
Pass	$	19,832	$	20,803	$	39,126	$	18,734	$	31,620	$	71,162	$	3,071	$	204,348
Substandard		0		0		0		317		0		1,935		0		2,252
Total commercial real estate - Farmland loans	$	19,832	$	20,803	$	39,126	$	19,051	$	31,620	$	73,097	$	3,071	$	206,600

Commercial real estate - Farmland: Current period gross write-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Commercial real estate - Other:
Risk Rating
Pass	$	40,993	$	108,346	$	65,724	$	39,091	$	8,493	$	21,744	$	728	$	285,119
Special mention		0		990		7,480		112		0		1,448		0		10,030
Substandard		0		0		0		0		0		32		0		32
Total commercial real estate - Other loans	$	40,993	$	109,336	$	73,204	$	39,203	$	8,493	$	23,224	$	728	$	295,181

Commercial real estate - Other: Current period gross write-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Table of Contents

	Term Loans Amortized Cost Basis by Origination Year (Continued)
(In Thousands of Dollars)													*Revolving*
As of December 31, 2024	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Loans*		*Total*
Commercial - Commercial and industrial:
Risk Rating
Pass	$	84,491	$	72,388	$	55,279	$	26,780	$	10,744	$	20,223	$	70,675	$	340,580
Special mention		0		0		0		167		165		46		84		462
Substandard		31		118		5,653		282		244		1,682		2,481		10,491
Total commercial - Commercial and industrial loans	$	84,522	$	72,506	$	60,932	$	27,229	$	11,153	$	21,951	$	73,240	$	351,533

Commercial - Commercial and industrial: Current period gross write-offs	$	48	$	273	$	389	$	125	$	228	$	257	$	313	$	1,633

Commercial - Agricultural:
Risk Rating
Pass	$	9,085	$	11,703	$	13,160	$	5,481	$	1,768	$	850	$	13,958	$	56,005
Special mention		0		0		0		0		0		0		61		61
Substandard		0		0		35		29		162		137		0		363
Total commercial - Agricultural loans	$	9,085	$	11,703	$	13,195	$	5,510	$	1,930	$	987	$	14,019	$	56,429

Commercial - Agricultural: Current period gross write-offs	$	0	$	1	$	49	$	13	$	29	$	17	$	0	$	109

Residential real estate - 1-4 family residential:
Payment Performance
Performing	$	79,820	$	69,319	$	157,403	$	153,569	$	119,770	$	257,827	$	3,261	$	840,969
Nonperforming		0		0		473		278		1,626		2,193		0		4,570
Total residential real estate - 1-4 family residential loans	$	79,820	$	69,319	$	157,876	$	153,847	$	121,396	$	260,020	$	3,261	$	845,539

Residential real estate - 1-4 family residential: Current period gross write-offs	$	0	$	0	$	0	$	37	$	0	$	118	$	0	$	155

Residential real estate - Home equity lines of credit:
Payment Performance
Performing	$	0	$	119	$	153	$	127	$	68	$	4,118	$	153,051	$	157,636
Nonperforming		0		0		29		0		0		376		98		503
Total residential real estate - Home equity lines of credit loans	$	0	$	119	$	182	$	127	$	68	$	4,494	$	153,149	$	158,139

Residential real estate - Home equity lines of credit: Current period gross write-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Table of Contents

	Term Loans Amortized Cost Basis by Origination Year (Continued)
(In Thousands of Dollars)													*Revolving*
As of December 31, 2024	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Loans*		*Total*
Consumer - Indirect:
Payment Performance
Performing	$	78,306	$	55,525	$	49,548	$	23,331	$	14,183	$	19,962	$	0	$	240,855
Nonperforming		0		57		233		97		62		51		0		500
Total consumer - Indirect loans	$	78,306	$	55,582	$	49,781	$	23,428	$	14,245	$	20,013	$	0	$	241,355

Consumer - Indirect: Current period gross write-offs	$	10	$	100	$	206	$	192	$	174	$	430	$	0	$	1,112

Consumer - Direct:
Payment Performance
Performing	$	2,735	$	2,319	$	2,406	$	1,075	$	792	$	9,432	$	326	$	19,085
Nonperforming		0		0		6		15		66		13		0		100
Total consumer - Direct loans	$	2,735	$	2,319	$	2,412	$	1,090	$	858	$	9,445	$	326	$	19,185

Consumer - Direct: Current period gross write-offs	$	0	$	7	$	38	$	6	$	5	$	120	$	0	$	176

Consumer - Other:
Payment Performance
Performing	$	0	$	0	$	0	$	60	$	0	$	409	$	7,524	$	7,993
Nonperforming		0		0		0		0		0		0		0		0
Total consumer - Other loans	$	0	$	0	$	0	$	60	$	0	$	409	$	7,524	$	7,993

Consumer - Other: Current period gross write-offs	$	0	$	0	$	1	$	0	$	0	$	182	$	0	$	183

The previous table for the period ending December 31, 2024 does not include a $ 1.63 million non-owner occupied commercial real estate loan that was held for sale and risk rated substandard. For the period ending June 30, 2025 , there were no loans that were held for sale and risk rated substandard. In the 1 - 4 family residential real estate portfolio at June 30, 2025 , other real estate owned and foreclosure properties were $ 52,000 and $ 415,000 , respectively. At December 31, 2024 , other real estate owned and foreclosure properties were $ 52,000 and $ 631,000 , respectively.

The Company follows ASU 2016 - 13 to calculate the allowance for credit losses which requires projecting credit losses over the lifetime of the credits. The ACL is adjusted through the provision for credit losses and reduced by net charge offs of loans. 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.

The credit loss estimation process involves procedures that consider the unique characteristics of the Company’s loan portfolio segments. 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 cohort method and the probability of default/loss given default (“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 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. The Company uses cohort primarily for consumer loan portfolios.

The probability of default portion of PD/LGD is defined by the Company as 90 days past due, placed on non-accrual, loan restructuring for borrowers experiencing financial difficulty or is partially, or wholly, charged-off. Typically, a one -year time period is used to assess probability of default (“PD”). PD can be measured and applied using various risk criteria. Risk rating is one common way to apply PDs. 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.

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The following table presents the loan pools and the associated methodology used during the calculation of the allowance for credit losses in 2025 .

Portfolio Segments	Loan Pool	Methodology	Loss Drivers
Residential real estate	1 - 4 Family Residential Real Estate - 1st Liens	Cohort	Credit Loss History
	1 - 4 Family Residential Real Estate - 2nd Liens	Cohort	Credit Loss History
Home Equity Lines of Credit	Home Equity Lines of Credit	Cohort	Credit Loss History
Consumer Finance	Cash Reserves	Cohort	Credit Loss History
	Direct	Cohort	Credit Loss History
	Indirect	Cohort	Credit Loss History
Commercial	Commercial and Industrial	PD/LGD	Credit Loss History
	Agricultural	PD/LGD	Credit Loss History
	Municipal	PD/LGD	Credit Loss History
Commercial real estate	Owner Occupied	PD/LGD	Credit Loss History
	Non-Owner Occupied	PD/LGD	Credit Loss History
	Multifamily	PD/LGD	Credit Loss History
	Farmland	PD/LGD	Credit Loss History
	Construction	PD/LGD	Credit Loss History

According to the accounting standard, an entity may make an accounting policy election not to measure an allowance for credit losses for accrued interest receivable if the entity writes off the applicable accrued interest receivable balance in a timely manner. The Company has made the accounting policy election not to measure an allowance for credit losses for accrued interest receivables for all loan segments. Current policy dictates that a loan will be placed on nonaccrual status, with the current accrued interest receivable balance being written off, upon the loan being 90 days delinquent or when the loan is deemed to be collateral dependent and the collateral analysis shows insufficient collateral coverage based on a current assessment of the value of the collateral.

In addition, ASC Topic 326 requires the Company to establish a liability for anticipated credit losses for unfunded commitments. To accomplish this, the Company must first establish a loss expectation for extended (funded) commitments. This loss expectation, expressed as a ratio to the amortized cost basis, is then applied to the portion of unfunded commitments not considered unilaterally cancelable, and considered by the company’s management as likely to fund over the life of the instrument. At June 30, 2025 , the Company had $ 686 million in unfunded commitments and set aside $ 1.30 million in anticipated credit losses. At December 31, 2024 , the Company had $ 692 million in unfunded commitments and set aside $ 1.56 million in anticipated credit losses. The $ 6 million decrease in unfunded commitments and $ 260,000 decrease in the reserve for anticipated credit losses is due to existing construction loan projects that are moving forward and advances are being made to the loan. This reserve is recorded in other liabilities as opposed to the ACL.

The determination of the ACL is complex and the Company makes decisions on the effects of factors that are inherently uncertain. Evaluations of the loan portfolio and individual credits require certain estimates, assumptions and judgments as to the facts and circumstances related to particular situations or credits. The ACL was $ 38.6 million at June 30, 2025 and $ 35.9 million at December 31, 2024 . The increase of $ 2.7 million was due to the individual evaluation of three commercial real estate non-owner occupied relationships which increased the Company's specific reserve, increased loss ratio trends of commercial real estate non-owner occupied loans, and increased loan balances. These factors were partially offset by the adjustments to the maximum loss ratio that anchors the qualitative factors and adjustments to the Portfolio Composition and Growth and Commercial Concentration qualitative factors of certain loan pools.

Purchased Loans

Under ASU Topic 326, when loans are purchased with evidence of more than significant deterioration of credit, they are accounted for as purchase credit deteriorated (“PCD”). PCD loans acquired in a transaction are marked to fair value and a mark on yield is recorded. In addition, an adjustment is made to the ACL for the expected loss on the acquisition date. These loans are assessed on a regular basis and subsequent adjustments to the ACL are recorded on the income statement. During 2025 , the Company has not acquired any additional PCD loans. The outstanding balance at June 30, 2025 and related allowance on PCD loans is as follows:

	*June 30, 2025*				*December 31, 2024*
(In Thousands of Dollars)		Loan Balance		ACL Balance		Loan Balance		ACL Balance
Commercial real estate
Owner Occupied	$	298	$	10	$	333	$	11
Non-owner Occupied		25,418		1,466		26,890		420
Farmland		0		0		3		0
Commercial
Commercial and industrial		1,025		62		1,561		115
Agricultural		88		6		117		8
Residential real estate
1-4 family residential		1,194		6		1,264		7
Home equity lines of credit		4		0		3		0
Total	$	28,027	$	1,550	$	30,171	$	561

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Revenue from Contracts with Customers:

All material revenue from contracts with customers in the scope of ASC 606 is recognized within noninterest income. ASC 606 rules govern the disclosure of revenue tied to contracts. The following table presents the Company’s noninterest income by revenue stream and reportable segment, net of eliminations, for the three and six months ended June 30, 2025 and 2024 .

	Trust		Bank
(In Thousands of Dollars)	Segment		Segment		Totals
For Three Months Ended June 30, 2025
Service charges on deposit accounts	$	0	$	1,749	$	1,749
Debit card and EFT fees		0		2,017		2,017
Trust fees		2,596		0		2,596
Insurance agency commissions		0		1,828		1,828
Retirement plan consulting fees		783		0		783
Investment commissions		0		721		721
Other (outside the scope of ASC 606)		0		2,428		2,428
Total noninterest income	$	3,379	$	8,743	$	12,122

	Trust		Bank
(In Thousands of Dollars)	Segment		Segment		Totals
For Six Months Ended June 30, 2025
Service charges on deposit accounts	$	0	$	3,507	$	3,507
Debit card and EFT fees		0		3,882		3,882
Trust fees		5,237		0		5,237
Insurance agency commissions		0		3,569		3,569
Retirement plan consulting fees		1,581		0		1,581
Investment commissions		0		1,250		1,250
Other (outside the scope of ASC 606)		0		3,577		3,577
Total noninterest income	$	6,818	$	15,785	$	22,603

	Trust		Bank
(In Thousands of Dollars)	Segment		Segment		Totals
For Three Months Ended June 30, 2024
Service charges on deposit accounts	$	0	$	1,846	$	1,846
Debit card and EFT fees		0		1,760		1,760
Trust fees		2,345		0		2,345
Insurance agency commissions		0		1,255		1,255
Retirement plan consulting fees		623		0		623
Investment commissions		0		478		478
Other (outside the scope of ASC 606)		0		1,299		1,299
Total noninterest income	$	2,968	$	6,638	$	9,606

	Trust		Bank
(In Thousands of Dollars)	Segment		Segment		Totals
For Six Months Ended June 30, 2024
Service charges on deposit accounts	$	0	$	3,429	$	3,429
Debit card and EFT fees		0		3,327		3,327
Trust fees		4,854		0		4,854
Insurance agency commissions		0		2,783		2,783
Retirement plan consulting fees		1,241		0		1,241
Investment commissions		0		910		910
Other (outside the scope of ASC 606)		0		1,419		1,419
Total noninterest income	$	6,095	$	11,868	$	17,963

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A description of the Company’s revenue streams under ASC 606 follows:

Service charges on deposit accounts – The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Management reviewed the deposit account agreements, and determined that the agreements can be terminated at any time by either the Bank or the account holder. Transaction fees, such as balance transfers, wires and overdraft charges are settled the day the performance obligation is satisfied. The Bank’s monthly service charges and maintenance fees are for services provided to the customer on a monthly basis and are considered a series of services that have the same pattern of transfer each month. The review of service charges assessed on deposit accounts included the amount of variable consideration that is a part of the monthly charges. It was found that the waiver of service charges due to insufficient funds and dormant account fees is immaterial and would not require a change in the accounting treatment for these fees under the revenue standards.

Debit Card Interchange Fees – Customers and the Bank have an account agreement and maintain deposit balances with the Bank. Customers use a bank issued debit card to purchase goods and services, and the Bank earns interchange fees on those transactions, typically a percentage of the sale amount of the transaction. The Bank records the amount due when it receives the settlement from the payment network. Payments from the payment network are received and recorded into income on a daily basis. There are no contingent debit card interchange fees recorded by the Company that could be subject to a clawback in future periods.

Trust fees – Services provided to Trust customers are a series of distinct services that have the same pattern of transfer each month. Fees for trust accounts are billed and drafted from trust accounts monthly. The Company records these fees on the income statement on a monthly basis. Fees are assessed based on the total investable assets of the customer’s trust account. A signed contract between the Company and the customer is maintained for all customer trust accounts with payment terms identified. It is probable that the fees will be collectible as funds being managed are accessible by the asset manager. Past history of trust fee income recorded by the Company indicates that it is highly unlikely that a significant reversal could occur. There are no contingent incentive fees recorded by the Company that could be subject to a clawback in future periods.

Insurance Agency Commissions – Insurance agency commissions are received from insurance carriers for the agency’s share of commissions from customer premium payments. These commissions are recorded into income when checks are received from the insurance carriers, and there is no contingent portion associated with these commission checks. There may be a short time-lag in recording revenue when cash is received instead of recording the revenue when the policy is signed by the customer, but the time lag is insignificant and does not impact the revenue recognition process.

Insurance also receives incentive checks from the insurance carriers for achieving specified levels of production with particular carriers. These amounts are recorded into income when a check is received, and there are no contingent amounts associated with these payments that may be clawed back by the carrier in the future. Similar to the monthly commissions explained in the preceding paragraph, there may be a short time-lag in recording incentive revenue on a cash basis as opposed to estimating the amount of incentive revenue expected to be earned, this does not materially impact the recognition of Insurance revenue. If there were any amounts that would need to be refunded for one specific Insurance customer, management believes the reversal would not be significant.

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Other potential situations surrounding the recognition of Insurance revenue include estimating potential refunds due to the likely cancellation of a percentage of customers canceling their policies and recording revenue at the time of policy renewals.

Retirement Plan Consulting Fees – Revenue is recognized based on the level of work performed for the client. Any payments that are received for work to be performed in the future are recorded in a deferred revenue account, and recorded into income when the fees are earned.

Investment Commissions – Investment commissions are earned through the sales of non-deposit investment products to customers of the Company. The sales are conducted through a third -party broker-dealer. When the commissions are received and recorded into income on the Bank’s income statement, there is no contingent portion that may need to be refunded back to the broker dealer.

Other – Income items included in “Other” are Bank owned life insurance income, security gains, net gains on the sale of loans and other operating income. Any amounts within the scope of ASC 606 are deemed immaterial.

Fair Value:

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Investment Securities

The Company uses a third party service to estimate fair value on available for sale securities on a monthly basis. The Company’s service provider uses a leading evaluation pricing service for U.S. domestic fixed income securities and values securities using exit pricing requirements. The Company independently corroborates the fair value received through this pricing service by obtaining the pricing through a second source at the end of each quarter. The fair values for investment securities, which consist of equity securities that are recorded at fair value to comply with exit pricing, are determined by quoted market prices in active markets, if available (Level 1 ). The equity securities change in fair value is recorded in the income statement. For securities where quoted prices are not available, fair values are calculated based on quoted prices for similar assets in active markets, quoted prices for similar assets in markets that are not active or inputs other than quoted prices, which provide a reasonable basis for fair value determination. Such inputs may include interest rates and yield curves, prepayment speeds, credit risks and default rates. The inputs used are principally derived from observable market data (Level 2 ). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3 ). The fair values of Level 3 investment securities are determined by using unobservable inputs to measure fair value of assets for which there is little, if any, market activity at the measurement date, using reasonable inputs and assumptions based on the best information at the time, to the extent that inputs are available without undue cost and effort.

At June 30, 2025 , the Company determined that no securities had a fair value less than amortized cost that was as a result of credit deterioration as outlined in ASU 2016 - 13.

Loans Held For Sale, at Fair Value

The fair value of loans held for sale is estimated based upon binding contracts or quotes from third party investors (Level 2 ).

Mortgage Banking Derivatives

The fair value of mortgage banking derivatives are calculated using derivative valuation models that utilize quoted prices for similar assets adjusted for the specific attributes of the commitments and other observable market data at the valuation date (Level 2 ).

Loan Servicing Rights

Loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount at the end of each quarter. If the carrying amount of an individual tranche exceeds the fair value then an impairment is recorded on that tranche so that the servicing asset is carried at fair value. The calculation of the fair value is performed by an independent third party and the model uses factors such as the interest rate, prepayment speeds and other default rate assumptions that market participants would use in estimating the future net servicing income that can be validated against available market data (Level 2 ).

Interest Rate Swaps

The Company periodically enters into interest rate swap agreements with its commercial customers who desire a fixed rate loan term that is longer than the Company is willing to extend. The Company enters into a reciprocal swap agreement with a third party that offsets the interest rate risk from the interest rate extended to the customer. The fair value of these interest rate swap derivative instruments is calculated by an independent third party and are based upon valuation models that use observable market data as of the measurement date (Level 2 ).

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The Company also entered into a fair value hedge to mitigate the risk of further interest rate increases and the subsequent impact on the valuation of the company’s state and political subdivision municipal bond portfolio. The Company uses an independent third party to perform a market valuation analysis for this derivative (Level 2 ).

Collateral Dependent Loans

Fair value estimates of collateral dependent loans that are individually reviewed are based on the fair value of the collateral, less estimated costs to sell. Loans carried at fair value generally receive individual allocations of the allowance for credit losses in 2024 and 2025 . For collateral dependent loans, fair value is commonly based on recent real estate appraisals or in quoted sales price in certain instances. Appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Adjustments to a quoted price are routinely made to factor in data that affect the marketability of the collateral. Such adjustments, in both instances, are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. These loans are evaluated on a quarterly basis and adjusted accordingly.

Other Real Estate Owned

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair values are commonly based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent loans and other real estate owned are performed by certified general appraisers (for commercial and commercial real estate properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the Appraisal Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On an annual basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what adjustments should be made to appraisals to arrive at fair value.

Assets measured at fair value on a recurring basis are summarized below:

			*Fair Value Measurements at June 30, 2025 Using:*
			Quoted
			Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(In Thousands of Dollars)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Investment securities available-for sale
U.S. Treasury and U.S. government sponsored entities	$	109,237	$	0	$	109,237	$	0
State and political subdivisions		486,000		0		486,000		0
Corporate bonds		17,275		0		15,856		1,419
Mortgage-backed securities-residential		508,945		0		508,945		0
Collateralized mortgage obligations		151,169		0		151,169		0
Small Business Administration		2,273		0		2,273		0
Total investment securities		1,274,899		0		1,273,480		1,419

Equity securities		336		336		0		0
Loans held for sale		2,174		0		2,174		0
Interest rate swaps		1,783		0		1,783		0
Interest rate lock commitments		87		0		87		0
Financial Liabilities
Interest rate swaps		1,783		0		1,783		0
Fair value hedge derivative		571		0		571		0
Mortgage banking derivative		68		0		68		0

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			*Fair Value Measurements at December 31, 2024 Using:*
			Quoted
			Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(In Thousands of Dollars)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Investment securities available-for sale
U.S. Treasury and U.S. government sponsored entities	$	115,107	$	0	$	115,107	$	0
State and political subdivisions		504,880		0		504,880		0
Corporate bonds		17,448		0		16,039		1,409
Mortgage-backed securities-residential		492,867		0		492,867		0
Collateralized mortgage obligations		133,776		0		133,776		0
Small Business Administration		2,475		0		2,475		0
Total investment securities		1,266,553		0		1,265,144		1,409

Equity securities		277		277		0		0
Loans held for sale		5,005		0		5,005		0
Interest rate swaps		3,766		0		3,766		0
Interest rate lock commitments		19		0		19		0
Mortgage banking derivative		17		0		17		0
Financial Liabilities
Interest rate swaps		3,766		0		3,766		0
Fair value hedge derivative		168		0		168		0

There were no significant transfers between Level 1 and Level 2 during the periods presented above.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3 ):

	*Three Months ended*					*Six Months Ended*
	*June 30,*					*June 30,*
(In Thousands of Dollars)	2025			2024		*2025*			*2024*
Beginning Balance	$	1,412		$	1,340	$	1,409		$	1,340
Transfers between levels		0			0		0			0
Acquired and/or purchased		0			0		0			0
Discount accretion (premium amortization)		15			13		29			26
Repayments, calls and maturities		0			0		0			0
Changes in unrealized gains (losses)		( 8	)		44		( 19	)		31
Ending Balance	$	1,419		$	1,397	$	1,419		$	1,397

Assets measured at fair value on a non-recurring basis are summarized below:

			*Fair Value Measurements at June 30, 2025 Using:*
			Quoted
			Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(In Thousands of Dollars)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Individually evaluated loans
Commercial real estate
Owner occupied	$	126	$	0	$	0	$	126
Non-owner occupied		12,112		0		0		12,112
Other		1,041		0		0		1,041
Commercial and industrial		2,170		0		0		2,170
1–4 family residential		535		0		0		535
Mortgage servicing rights		847		0		847		0

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			*Fair Value Measurements at December 31, 2024 Using:*
			Quoted
			Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(In Thousands of Dollars)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Individually evaluated loans
Commercial real estate
Non-owner occupied	$	7,286	$	0	$	0	$	7,286
Commercial and industrial		2,418		0		0		2,418
1–4 family residential		1,132		0		0		1,132
Mortgage servicing rights		403		0		403		0

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at the periods ended June 30, 2025 and December 31, 2024 :

					Range
			Valuation	Unobservable	(Weighted
June 30, 2025	Fair value		Technique(s)	Input(s)	Average)
Individually evaluated loans
Commercial real estate	$	13,279	Income Approach	Adjustment for difference between cap rates of comparable sales	(54.04%) - 64.36% (42.03%)
Commercial		2,170	Quoted price for collateral	Offer Price	12.71 %
Residential		535	Sales comparison	Adjustment for differences between comparable sales	(19.11%) - 13.04% 3.62%

					Range
			Valuation	Unobservable	(Weighted
December 31, 2024	Fair value		Technique(s)	Input(s)	Average)
Individually evaluated loans
Commercial real estate	$	7,286	Income approach	Adjustment for difference between cap rates of comparable sales	(56.03%) - 69.02% (40.71%)
Commercial		2,418	Quoted price for collateral	Offer Price	6.67 %
Residential		1,132	Sales comparison	Adjustment for differences between comparable sales	(8.91%) - (6.22%) (7.16%)

The carrying amounts and estimated fair values of financial instruments not previously disclosed at June 30, 2025 and December 31, 2024 are as follows:

			*Fair Value Measurements at June 30, 2025 Using:*
	Carrying
(In Thousands of Dollars)	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	90,740	$	20,100	$	70,640	$	0	$	90,740
Regulatory stock		26,061		n/a		n/a		n/a		n/a
Loans, net		3,264,796		0		0		3,151,770		3,151,770
Financial liabilities
Deposits		4,396,417		3,550,026		844,293		0		4,394,319
Short-term borrowings		203,000		0		203,000		0		203,000
Long-term borrowings		86,428		0		76,694		0		76,694

			*Fair Value Measurements at December 31, 2024 Using:*
	Carrying
(In Thousands of Dollars)	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	85,738	$	20,426	$	65,312	$	0	$	85,738
Regulatory stock		30,669		n/a		n/a		n/a		n/a
Loans, net		3,232,483		0		0		3,082,292		3,082,292
Financial liabilities
Deposits		4,266,779		3,429,116		835,967		0		4,265,083
Short-term borrowings		305,000		0		305,000		0		305,000
Long-term borrowings		86,150		0		78,721		0		78,721

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Goodwill and Intangible Assets:

Goodwill associated with the Company’s past acquisitions totaled $ 167.4 million at June 30, 2025 and December 31, 2024 . Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value, which is determined through an impairment test. Management performs goodwill impairment testing on an annual basis as of September 30, or whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying value. As of June 30, 2025, no events or changes in circumstances indicated that the fair value of the reporting unit was below its carrying value. The Company will continue to monitor its goodwill for possible impairment.

Acquired Intangible Assets

Acquired intangible assets were as follows:

	*June 30, 2025*					*December 31, 2024*
	Gross Carrying		Accumulated			Gross Carrying		Accumulated
(In Thousands of Dollars)	Amount		Amortization			Amount		Amortization
Amortized intangible assets:
Customer relationship intangibles	$	7,975	$	( 7,170	)	$	7,975	$	( 7,088	)
Non-compete contracts		457		( 433	)		457		( 426	)
Trade name		1,131		( 481	)		1,131		( 468	)
Core deposit intangible		32,115		( 14,313	)		32,115		( 12,946	)
Total	$	41,678	$	( 22,397	)	$	41,678	$	( 20,928	)

Aggregate amortization expense was $ 735,000 and $ 1.5 million for the three and six month periods ended June 30, 2025 Amortization expense was $ 630,000 and $ 1.3 million for the three and six month periods ended June 30, 2024.

Estimated amortization expense for each of the next five periods and thereafter:

2025 (6 months)	$	1,430
2026		2,798
2027		2,684
2028		2,674
2029		2,665
Thereafter		7,030
Total	$	19,281

Leases:

The Company has operating leases for branch office locations, vehicles, land and certain office equipment such as printers and copiers. The leases have remaining lease terms of up to 17.1 years, some of which had options to extend the lease for up to 15 years, while the Fairlawn lending building lease was terminated in April of 2025. The Fairview Park building lease was scheduled to terminate in April of 2025, but has been extended until April of 2027. This lease location has an initial right of use asset and lease liability recorded of $ 124,000 . The Beachwood branch lease located at 24755 Chagrin Blvd. was terminated effective January 31, 2025, and the Branch was moved into a new location at 22835 Chagrin Blvd on February 3, 2025. This new lease location was effective in December of 2024, with an initial right of use asset and lease liability recorded of $ 971,000 .

The right of use assets and lease liabilities were $ 7.8 million and $ 8.0 million as of June 30, 2025 , respectively, and $ 9.7 million and $ 9.9 million at December 31, 2024 , respectively. The right of use assets are included in other assets while the lease liabilities are included in other liabilities on the balance sheet.

Lease expense for the three and six month periods ended June 30, 2025 and 2024 was $ 351,000 and $ 644,000 , respectively. Lease expense for the three and six month periods ended June 30, 2024 was $ 327,000 and $ 658,000 , respectively. The weighted-average remaining lease term for all leases was 8.93 years as of June 30, 2025 . The weighted-average discount rate was 3.46 % for all leases as of June 30, 2025 .

Maturities of lease liabilities are as follows as of June 30, 2025 :

2025 (6 months)	$	664
2026		1,264
2027		1,141
2028		1,081
2029		964
Thereafter		4,386
Total Payments		9,500
Less: lease liability expense		( 1,463	)
Total	$	8,037

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Derivative Financial Instruments:

Interest Rate Swaps

The Company maintains an interest rate protection program for commercial loan customers. Under this program, the Company provides a variable rate loan while creating a fixed rate loan for the customer by the customer entering into an interest rate swap with terms that match the loan. The Company offsets its risk exposure by entering into an offsetting interest rate swap with an unaffiliated institution. The Company had interest rate swaps associated with commercial loans with a notional value of $ 66.8 million and fair value of $ 1.8 million in other assets and $ 1.8 million in other liabilities at June 30, 2025 . At December 31, 2024 , the Company had interest rate swaps associated with commercial loans with a notional value of $ 65.7 million and fair value of $ 3.8 million in other assets and $ 3.8 million in other liabilities. The interest rate swaps with both the customers and third parties are not designated as hedges under FASB ASC 815. As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by FASB ASC 820.

There were no net gains or losses for interest rate swaps for the three or six month periods ended June 30, 2025 and 2024 .

Interest Rate Swap Designated as a Fair Value Hedge

The Company has one interest rate swap with a notional amount of $ 100.0 million that was in place at both June 30, 2025 and December 31, 2024 . This swap is designated as a fair value hedge to mitigate the risk of further interest rate increases and the subsequent impact on the valuation of the company’s state and political subdivision municipal bond portfolio. The gross aggregate fair value of the swap at June 30, 2025 is $( 571,000 ) and is recorded as a $ 579,000 mark to market adjustment in other liabilities and $ 8,000 recorded to other assets for the accrued interest receivable in the Consolidated Balance Sheet. At December 31, 2024 , the gross aggregate fair value of the swap was $( 168,000 ) and was recorded as a $ 418,000 mark to market adjustment in other liabilities, and $ 250,000 was recorded to other assets for the accrued interest receivable in the Consolidated Balance Sheet. The Company expects the hedge to remain in effect for the remaining term of the swap, which matures August 2026. A summary of the interest rate swap designated as a fair value hedge is presented below:

(In Thousands of Dollars)		*June 30, 2025*			*December 31, 2024*
Notional amount fair value hedge	$	100,000		$	100,000
Fixed pay rates		4.35	%		4.35	%
Variable SOFR receive rates		4.45	%		4.49	%
Remaining maturity (in years)		1.1			1.6
Fair value	$	( 571	)	$	( 168	)

Mortgage Banking Derivatives

Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third -party investors are considered derivatives. The Company enters into forward commitments for the future delivery of residential mortgage loans when the interest rate locks are committed in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships.

The net gains (losses) relating to non-designated derivative instruments used for risk management are included in Net Gains on Sale of Loans on the Consolidated Statements of Income and are summarized below for the quarters ended June 30, 2025 and June 30, 2024 :

	*Three Months Ended*						*Six Months Ended*
	*June 30,*						*June 30,*
	*2025*			*2024*			*2025*			*2024*
Forward sales contracts	$	( 53	)	$	16		$	( 85	)	$	18
Interest rate lock commitments		31			( 8	)		67			( 55	)

The following table reflects the amount and fair value of mortgage banking derivatives included in the Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 :

	*June 30, 2025*				*December 31, 2024*
	*Notional*		*Fair*		*Notional*		*Fair*
(In Thousands of Dollars)	*Amount*		*Value*		*Amount*		*Value*
Included in other assets:
Forward sales contracts	$	0	$	0	$	6,500	$	17
Interest rate lock commitments		10,664		87		4,896		19
Mortgage banking derivative		112		1		0		0
Total included in other assets	$	10,776	$	88	$	11,396	$	36

Included in other liabilities:
Forward sales contracts	$	11,000	$	68	$	0	$	0

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Earnings Per Share:

The computation of basic and diluted earnings per share is shown in the following table:

	*Three Months Ended*				*Six Months Ended*
	*June 30,*				*June 30,*
	*2025*		*2024*		*2025*		*2024*
Basic EPS
Net income (In thousands of dollars)	$	13,910	$	11,783	$	27,488	$	23,023
Weighted average shares outstanding		37,442,047		37,325,648		37,411,497		37,301,931
Basic earnings per share	$	0.37	$	0.32	$	0.73	$	0.62

Diluted EPS
Net income (In thousands of dollars)	$	13,910	$	11,783	$	27,488	$	23,023
Weighted average shares outstanding for basic earnings per share		37,442,047		37,325,648		37,411,497		37,301,931
Dilutive effect of restricted stock awards		179,965		161,485		210,662		177,655
Weighted average shares for diluted earnings per share		37,622,012		37,487,133		37,622,159		37,479,586
Diluted earnings per share	$	0.37	$	0.31	$	0.73	$	0.61

There were 145,125 and 100,718 restricted stock awards that were considered anti-dilutive for the three and six month periods ended June 30, 2025 , respectively. There were 159,178 and 160,678 restricted stock awards that were considered anti-dilutive for the three and six month periods ended June 30, 2024.

Stock Based Compensation:

In April of 2022, the Company, with the approval of shareholders, created the 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan permits the award of up to one million shares to the Company’s directors and employees to attract and retain exceptional personnel, motivate performance and, most importantly, to help align the interests of the Company’s executives with those of the Company’s shareholders. The 2022 Plan replaced the 2017 Plan. There were 66,080 service time based share awards and 102,336 performance based share awards granted under the 2022 Plan during the six month period ended June 30, 2025 , as shown in the table below. The actual number of performance based shares issued will depend on the relative performance of the Company’s average return on equity compared to a group of peer companies over a three year vesting period, ending December 31, 2027. As of June 30, 2025 , 379,265 shares are still available to be awarded from the 2022 Plan. The 2017 Plan has been sunset.

The restricted stock awards were granted with a fair value price equal to the market price of the Company’s common stock at the date of the grant. Expense recognized was $ 645,000 and $ 1.3 million for the three and six months ended June 30, 2025 , respectively. During prior periods, the expense recognized was $ 626,000 and $ 1.3 million for the three and six months ended June 30, 2024 , respectively. As of June 30, 2025 , there was $ 3.5 million of total unrecognized compensation expense related to the nonvested shares granted under the Plan. The remaining cost is expected to be recognized over 2.7 years.

The following is the activity under the Plans during the six month period ended June 30, 2025 .

	Maximum			Weighted		Maximum			Weighted
	Awarded			Average		Awarded			Average
	Service			Grant Date		Performance			Grant Date
	Units			Fair Value		Units			Fair Value
Beginning balance - non-vested shares		231,430		$	14.35		222,920		$	14.57
Granted		66,080			13.65		102,336			14.38
Vested		( 101,333	)		13.93		( 47,514	)		14.06
Forfeited		( 1,762	)		12.44		( 8,085	)		12.44
Ending balance - non-vested shares		194,415		$	13.37		269,657		$	14.13

The following is the activity under the Plans during the six month period ended June 30, 2024 .

	Maximum			Weighted		Maximum			Weighted
	Awarded			Average		Awarded			Average
	Service			Grant Date		Performance			Grant Date
	Units			Fair Value		Units			Fair Value
Beginning balance - non-vested shares		253,776		$	14.97		209,484		$	15.01
Granted		61,425			13.07		99,253			13.81
Vested		( 63,506	)		12.92		( 66,192	)		13.79
Forfeited		( 11,167	)		17.24		( 19,625	)		15.05
Ending balance - non-vested shares		240,528		$	14.47		222,920		$	14.57

The 148,847 shares that vested during the six month period ended June 30, 2025 had a weighted average fair value of $ 13.97 per share.

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Other Comprehensive Income (Loss):

The following tables represent the changes in accumulated other comprehensive income (loss) by component, net of tax, for the three and six month periods ended June 30, 2025 and 2024 .

				Reclassification
	Net unrealized			adjustment for
	holding (losses)			(gains) losses
	gains on available			realized in income			Change in funded status
(In Thousands of Dollars)	for sale securities			on fair value hedge			of post-retirement plan			Total
Balance December 31, 2024	$	( 192,860	)	$	( 403	)	$	( 2	)	$	( 193,265	)
Other comprehensive (loss) before reclassification		15,096			0			0			15,096
Amounts reclassified from accumulated other comprehensive income		1,054			( 186	)		0			868
Net current period other comprehensive (loss) income		16,150			( 186	)		0			15,964
Balance March 31, 2025	$	( 176,710	)	$	( 589	)	$	( 2	)	$	( 177,301	)
Other comprehensive (loss) before reclassification		517			0			0			517
Amounts reclassified from accumulated other comprehensive income		0			46			0			46
Net current period other comprehensive (loss) income		517			46			0			563
Balance June 30, 2025	$	( 176,193	)	$	( 543	)	$	( 2	)	$	( 176,738	)

Balance December 31, 2023	$	( 171,539	)	$	( 1,013	)	$	( 2	)	$	( 172,554	)
Other comprehensive income before reclassification		( 15,149	)		0			0			( 15,149	)
Amounts reclassified from accumulated other comprehensive (loss)		1,686			1,063			0			2,749
Net current period other comprehensive income		( 13,463	)		1,063			0			( 12,400	)
Balance March 31, 2024	$	( 185,002	)	$	50		$	( 2	)	$	( 184,954	)
Other comprehensive (loss) before reclassification		( 6,545	)		0			0			( 6,545	)
Amounts reclassified from accumulated other comprehensive income		99			167			0			266
Net current period other comprehensive (loss)		( 6,446	)		167			0			( 6,279	)
Balance June 30, 2024	$	( 191,448	)	$	217		$	( 2	)	$	( 191,233	)

Amounts reclassified out of each component of accumulated other comprehensive income (loss) were not material for the three and six month periods ended June 30, 2025 and 2024 .

Regulatory Capital Matters:

Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action by regulators that, if undertaken, could have a direct material effect on the financial statements. Management believes that as of June 30, 2025 , the Company and the Bank meet all capital adequacy requirements to which they are subject.

The FDIC and other federal banking regulators revised the risk-based capital requirements applicable to financial holding companies and insured depository institutions, including the Company and the Bank, to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision (“Basel III”).

The common equity tier 1 capital, tier 1 capital and total capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. The leverage ratio is calculated by dividing tier 1 capital by adjusted average total assets.

Basel III limits capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5 % of common equity tier 1 capital, tier 1 capital and total capital to risk-weighted assets in addition to the amount necessary to meet minimum risk-based capital requirements. Excluding the additional buffer, Basel III requires the Company and the Bank to maintain (i) a minimum ratio of common equity tier 1 capital to risk-weighted assets of at least 4.5 %, (ii) a minimum ratio of tier 1 capital to risk-weighted assets of at least 6.0 %, (iii) a minimum ratio of total capital to risk-weighted assets of at least 8.0 % and (iv) a minimum leverage ratio of at least 4.0 %.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If only adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At June 30, 2025 and December 31, 2024 , the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

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Actual and required capital amounts and ratios, which do not include the capital conservation buffer, are presented below at June 30, 2025 and December 31, 2024 :

											To be Well Capitalized
						Requirement For Capital					Under Prompt Corrective
	Actual					Adequacy Purposes:					Action Provisions:
	Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2025
Common equity tier 1 capital ratio
Consolidated	$	432,040		11.56	%	$	168,120		4.5	%		N/A		N/A
Bank		472,048		12.67	%		167,621		4.5	%		242,120		6.5	%
Total risk based capital ratio
Consolidated		561,901		15.04	%		298,880		8.0	%		N/A		N/A
Bank		511,909		13.74	%		297,994		8.0	%		372,492		10.0	%
Tier 1 risk based capital ratio
Consolidated		450,040		12.05	%		224,160		6.0	%		N/A		N/A
Bank		472,048		12.67	%		223,495		6.0	%		297,994		8.0	%
Tier 1 leverage ratio
Consolidated		450,040		8.67	%		207,544		4.0	%		N/A		N/A
Bank		472,048		9.12	%		206,974		4.0	%		258,718		5.0	%

December 31, 2024
Common equity tier 1 capital ratio
Consolidated	$	415,825		11.14	%	$	167,991		4.5	%		N/A		N/A
Bank		442,747		11.88	%		167,712		4.5	%	$	242,251		6.5	%
Total risk based capital ratio
Consolidated		543,250		14.55	%		298,651		8.0	%		N/A		N/A
Bank		480,173		12.88	%		298,155		8.0	%		372,694		10.0	%
Tier 1 risk based capital ratio
Consolidated		433,825		11.62	%		223,988		6.0	%		N/A		N/A
Bank		442,747		11.88	%		223,616		6.0	%		298,155		8.0	%
Tier 1 leverage ratio
Consolidated		433,825		8.36	%		207,544		4.0	%		N/A		N/A
Bank		442,747		8.55	%		207,066		4.0	%		258,832		5.0	%

Segment Information:

The Company's reportable segments are determined by the Chief Financial Officer, who is the designated chief operating decision maker, based upon information provided about the Company's products and services offered, primarily distinguished between the banking and trust operations. The segments are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. The chief operating decision maker uses revenue streams to evaluate product pricing and significant expenses to assess performance of each segment to evaluate compensation of certain employees. Segment pretax profit is used to assess the performance of the banking segment by monitoring the net interest margin and non-interest expenses. Segment pretax profit is also used to assess the performance of the trust segment by monitoring trust service fees, retirement plan consulting fees and non-interest expenses. Loans and investments provide the significant revenues in the banking operation, while trust service fees and retirement plan consulting fees provide the significant revenues in trust operations. Interest expense, provisions for credit losses and payroll provide the significant expenses in the banking operation, while payroll provides the significant expense in the trust segment. All operations are domestic.

Accounting policies for segments are the same as those described in the Financial Statement Notes. Income taxes are calculated on operating income. Transactions among segments are made at fair value.

Significant segment totals are reconciled to the financial statements as follows:

	Trust		Bank		Consolidated
(In Thousands of Dollars)	Segment		Segment		Segment totals
June 30, 2025
Total assets for reportable segments	$	17,910	$	5,162,387	$	5,180,297
Eliminations and other						( 1,869	)
Total consolidated assets					$	5,178,428

	Trust		Bank		Consolidated
(In Thousands of Dollars)	Segment		Segment		Segment totals
December 31, 2024
Total assets for reportable segments	$	17,204	$	5,104,012	$	5,121,216
Eliminations and other						( 2,292	)
Total consolidated assets					$	5,118,924

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	Trust		Bank		Consolidated
(In Thousands of Dollars)	Segment		Segment		Segment totals
For Three Months Ended June 30, 2025
Interest income - loans including fees	$	0	$	47,050	$	47,050
Interest income - investments		0		9,729		9,729
Trust fees		2,596		0		2,596
Retirement plan consulting fees		783		0		783
Total consolidated segment revenues		3,379		56,779		60,158
Reconciliation of revenue
Other revenues						9,666
Total consolidated revenues						69,824

Interest expense - deposits		0		20,240		20,240
Interest expense - borrowings		0		2,541		2,541
Provision for credit losses and unfunded loans		0		3,548		3,548
Payroll expenses		1,441		13,258		14,699
Total consolidated segment expenses		1,441		39,587		41,028

Segment profit		1,938		17,192		19,130
Reconciliation of expenses
Other expenses *						12,476
Total consolidated expenses						53,504

Total consolidated income before taxes					$	16,320
Other segment disclosures
Occupancy and equipment		140		3,964		4,104
Intangible amortization		23		712		735

	Trust		Bank		Consolidated
(In Thousands of Dollars)	Segment		Segment		Segment totals
For Six Months Ended June 30, 2025
Interest income - loans including fees	$	0	$	93,758	$	93,758
Interest income - investments		0		19,243		19,243
Trust fees		5,237		0		5,237
Retirement plan consulting fees		1,581		0		1,581
Total consolidated segment revenues		6,818		113,001		119,819
Reconciliation of revenue
Other revenues						17,792
Total consolidated revenues						137,611

Interest expense - deposits		0		39,957		39,957
Interest expense - borrowings		0		5,934		5,934
Provision for credit losses and unfunded loans		0		3,344		3,344
Payroll expenses		2,915		27,939		30,854
Total consolidated segment expenses		2,915		77,174		80,089

Segment profit		3,903		35,827		39,730
Reconciliation of expenses
Other expenses *						24,847
Total consolidated expenses						104,936

Total consolidated income before taxes					$	32,675
Other segment disclosures
Occupancy and equipment		283		7,948		8,231
Intangible amortization		46		1,424		1,470

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	Trust		Bank		Consolidated
(In Thousands of Dollars)	Segment		Segment		Segment totals
For Three Months Ended June 30, 2024
Interest income - loans including fees	$	0	$	46,513	$	46,513
Interest income - investments		0		9,222		9,222
Trust fees		2,345		0		2,345
Retirement plan consulting fees		623		0		623
Total consolidated segment revenues		2,968		55,735		58,703
Reconciliation of revenue
Other revenues						7,749
Total consolidated revenues						66,452

Interest expense - deposits		0		20,160		20,160
Interest expense - borrowings		0		4,620		4,620
Provision for credit losses and unfunded loans		0		1,112		1,112
Payroll expenses		1,368		13,174		14,542
Total consolidated segment expenses		1,368		39,066		40,434

Segment profit		1,600		16,669		18,269
Reconciliation of expenses
Other expenses *						11,861
Total consolidated expenses						52,295

Total consolidated income before taxes					$	14,157
Other segment disclosures
Occupancy and equipment		91		3,714		3,805
Intangible amortization		12		617		629

	Trust		Bank		Consolidated
(In Thousands of Dollars)	Segment		Segment		Segment totals
For Six Months Ended June 30, 2024
Interest income - loans including fees	$	0	$	91,530	$	91,530
Interest income - investments		0		18,225		18,225
Trust fees		4,854		0		4,854
Retirement plan consulting fees		1,241		0		1,241
Total consolidated segment revenues		6,095		109,755		115,850
Reconciliation of revenue
Other revenues						14,013
Total consolidated revenues						129,863

Interest expense - deposits		0		38,549		38,549
Interest expense - borrowings		0		9,598		9,598
Provision for credit losses and unfunded loans		0		663		663
Payroll expenses		2,730		26,868		29,598
Total consolidated segment expenses		2,730		75,678		78,408

Segment profit		3,365		34,077		37,442
Reconciliation of expenses
Other expenses *						23,844
Total consolidated expenses						102,252

Total consolidated income before taxes					$	27,611
Other segment disclosures
Occupancy and equipment		190		7,338		7,528
Intangible amortization		24		1,294		1,318

* The Bank segment includes Farmers National Insurance and Farmers of Canfield Investment Co.

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Short-term borrowings:

The Bank had short-term advances from the Federal Home Loan Bank ("FHLB") of $ 203 million at June 30, 2025 , and $ 305.0 million at December 31, 2024 . The interest rate on these borrowings was 4.37 % for the period ended June 30, 2025 , and 4.45 % for the period ended December 31, 2024 . These short-term borrowings were borrowed using the FHLB's short term repurchase advance program, as these products allow the most flexibility to meet the Bank's varying liquidity needs. These FHLB advances were secured by pledged assets which are described in the following Long-Term Borrowings footnote.

The Bank has access to a line of credit for $ 25.0 million at a major domestic bank that is below prime rate. The line and terms are periodically reviewed by the lending bank and is generally subject to withdrawal at their discretion. There were no outstanding borrowings under this line at June 30, 2025 , or December 31, 2024 .

Farmers has one unsecured revolving line of credit for $ 5.0 million. This line can be renewed annually and has an interest rate of prime with a floor of 3.5 %. There was no outstanding balance on this line at either June 30, 2025 , or December 31, 2024 .

Long-term borrowings:

There were no long-term advances from the FHLB at June 30, 2025 , or at December 31, 2024 .

Long-term and short-term FHLB advances are secured by a blanket pledge of residential mortgage, commercial real estate, and multi-family loans totaling $ 1.7 billion for both periods ending June 30, 2025 and December 31, 2024 . Based on this collateral, the Bank is eligible to borrow an additional $ 596.9 million at June 30, 2025 .

In November 2021, the Company completed the issuance of $ 75.0 million aggregate principal amount, fixed-to-floating rate subordinated notes due December 15, 2031, in a private offering exempt from the registration requirements under the Securities Act of 1933, as amended. The notes carry a fixed rate of 3.125 % for five years at which time they will convert to a floating rate based on the three -month term secured overnight funding rate, plus a spread of 220 basis points. The net proceeds from the sale were approximately $ 73.8 million, after deducting the offering expenses. The Company’s intent was to use the proceeds from the sale for general corporate purposes, which may include, without limitation, providing capital to support its growth organically or through acquisitions, in financing investments, capital expenditures, repurchasing its common shares and for investments in the Bank as regulatory capital. The subordinated debentures are included in Total Capital under current regulatory guidelines and interpretations.

In August 2024, the Company bought back and retired $ 3 million of the outstanding subordinated notes. The Company may, at its option, beginning December 15, 2026, redeem additional portions of the notes, in whole or in part, from time to time, subject to certain conditions.

On November 1, 2021, the Company completed its acquisition of Cortland, which included the assumption of Floating Rate Junior Subordinated Debt Securities due September 15, 2037 ( the “junior subordinated debt securities”) at an acquisition-date fair value of $ 4.3 million, held in a wholly-owned statutory trust whose common securities were wholly-owned by Cortland. The sole assets of the statutory trust are the junior subordinated debt securities and related payments. The junior subordinated debt securities and the back-up obligations, in the aggregate, constitute a full and unconditional guarantee of the obligations of the statutory trust under the capital securities held by third -party investors. The securities bear interest at a rate of 1.45 % over the 3 -month term SOFR rate that includes an additional spread adjustment of 26 basis points. The rate at June 30, 2025 was 6.03 % and at December 31, 2024 the rate was 6.07 %.

On January 7, 2020, the Company completed its acquisition of Maple Leaf, which included the assumption of Floating Rate Junior Subordinated Debt Securities due December 15, 2036 ( the “junior subordinated debt securities”) held in a wholly-owned statutory trust whose common securities were wholly-owned by Maple Leaf. The sole assets of the statutory trust are the junior subordinated debt securities and related payments. The junior subordinated debt securities and the back-up obligations, in the aggregate, constitute a full and unconditional guarantee of the obligations of the statutory trust under the capital securities held by third -party investors. The securities bear interest at a rate of 1.80 % over the 3 -month term SOFR rate that includes an additional spread adjustment of 26 basis points. The rate at June 30, 2025 was 6.38 % and at December 31, 2024 the rate was 6.42 %.

In 2015, the Company completed its acquisition of National Bancshares Corporation, which included the assumption of Floating Rate Junior Subordinated Debt Securities due June 15, 2035 ( the “junior subordinated debt securities”) held in a wholly-owned statutory trust, TSEO Statutory Trust I. The sole assets of the statutory trust are the junior subordinated debt securities and related payments. The junior subordinated debt securities and the back-up obligations, in the aggregate, constitute a full and unconditional guarantee of the obligations of the statutory trust under the capital securities held by third -party investors. The securities bear interest at a rate of 1.70 % over the 3 -month term SOFR rate that includes an additional spread adjustment of 26 basis points. The rate at June 30, 2025 was 6.28 % and at December 31, 2024 the rate was 6.32 %.

In all three instances, the Company may redeem the junior subordinated debentures at any quarter-end, in whole, or in part, at par. This type of subordinated debenture qualifies as Tier 1 capital for regulatory purposes in determining and evaluating the Company’s capital adequacy.

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A summary of all junior subordinated debentures issued by the Company to affiliates and subordinated debentures follows. For the junior subordinated debentures, these amounts represent the par value of the obligations owed to these affiliates, including the Company’s equity interest in the trusts along with any unamortized fair value marks. For the subordinated debentures, these amounts represent the par value less the remaining deferred offering expense associated with the issuance of the debentures. Balances were as follows at June 30, 2025 and December 31, 2024 :

(In Thousands of Dollars)		*June 30, 2025*		*December 31, 2024*
TSEO Statutory Trust I	$	2,594	$	2,570
Maple Leaf Financial Statutory Trust II		8,075		7,964
Cortland Statutory Trust I		4,465		4,437
Total junior subordinated debentures owed to unconsolidated subsidiary trusts	$	15,134	$	14,971
Subordinated Debentures	$	71,294	$	71,179
Total long-term borrowings	$	86,428	$	86,150

Tax Credit Investments:

The Company invests in qualified affordable housing projects, as well as solar investment tax credits.

At June 30, 2025 and December 31, 2024 , the balance of the investment for qualified affordable housing projects was $ 27.0 million and $ 22.0 million, respectively. Total unfunded commitments related to the investments in qualified affordable housing projects totaled $ 17.7 million and $ 13.9 million at June 30, 2025 and December 31, 2024 . The Company expects to complete the fulfillment of these commitments during the year ending 2040.

In the second quarters ended June 30, 2025 and June 30, 2024 , the Company recognized amortization expense of $ 492,000 and $ 407,000 , respectively, from its investment in qualified affordable housing projects. In the six month periods ended June 30, 2025 and June 30, 2024, the Company recognized amortization expense of $ 965,000 and $ 813,000 , respectively, from its investment in qualified affordable housing projects. This amortization expense was included within income tax expense on the consolidated statements of income.

Additionally, during the second quarters ended June 30, 2025 and June 30, 2024 , the Company recognized tax credits and other benefits from its investment in affordable housing tax credits of $ 589,000 and $ 502,000 , respectively. In the six month periods ended June 30, 2025 and June 30, 2024, the Company recognized tax credits and other benefits from its investment in affordable housing tax credits of $ 1.2 million and $ 1.0 million, respectively. The qualified affordable housing investment credits are included in the net changes in other assets and liabilities in the cash flows from operating activities in the consolidated statements of cash flows. During the six month periods ended June 30, 2025 and June 30, 2024 , the Company did not incur impairment losses related to its investment in affordable housing tax credits.

In the first quarter of 2025, the Company began investing in solar investment tax credits and at June 30, 2025 the balance of the investment was $ 7.3 million. Total unfunded commitments related to the investments in solar investment tax credits totaled $ 6.3 million at June 30, 2025 . The Company expects this investment to be fully funded during 2025. There were no investments in solar investment tax credits at December 31, 2024 .

In the second quarter ended June 30, 2025, the Company recognized amortization expense of $ 2.4 million from its investment in solar investment tax credits. In the six month period ended June 30, 2025, the Company recognized amortization expense of $ 2.4 million from its investment in solar investment tax credits. This amortization expense was included within income tax expense on the consolidated statements of income. The Company did not have a similar investment in 2024.

Additionally, during the second quarter ended June 30, 2025, the Company recognized tax credits and other benefits from its investment in solar investment tax credits of $ 2.6 million. In the six month period ended June 30, 2025, the Company recognized tax credits and other benefits from its investment in solar investment tax credits of $ 2.6 million. The solar investment tax credits are included in the net changes in other assets and liabilities in the cash flows from operating activities in the consolidated statements of cash flows. During the six month period ended June 30, 2025, the Company did not incur impairment losses related to its investment in solar investment tax credits. The Company did not have a similar investment in 2024.

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Item 2. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are not statements of historical fact, but rather statements based on the Company’s current expectations, beliefs and assumptions regarding the future of Farmers’ business, future plans and strategies, projections, anticipated events and trends, its intended results and future performance, the economy and other future conditions. Forward-looking statements are preceded by terms such as “will,” “would,” “should,” “could,” “may,” “expect,” “estimate,” “believe,” “anticipate,” “intend,” “plan,” “project,” or variations of these words, or similar expressions. Forward-looking statements are not a guarantee of future performance and actual future results could differ materially from those contained in forward-looking information. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Numerous uncertainties, risks, and changes could cause or contribute to Farmers’ actual results, performance, and achievements to be materially different from those expressed or implied by the forward-looking statements.

Factors that could cause or contribute to such differences include, without limitation, risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission (the “Commission”), including without limitation, the risk factors disclosed in Item 1A, “Risk Factors,” in the Company’s 2024 Form 10-K, as updated in Item 1A, “Risk Factors,” in this Quarterly Report on Form 10-Q.

Many of these factors are beyond the Company’s ability to control or predict, and readers are cautioned not to put undue reliance on those forward-looking statements. 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;

	•	the length and extent of U.S. and foreign country tariff policies and their impact on global, national, and regional economic conditions;
	•	actions by the Federal Reserve Board, U.S. 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.

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. 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, except as may be required by applicable law.

Recent Market and Regulatory Developments

Various and significant legislation affecting financial institutions and the financial industry is from time to time introduced in the U.S. Congress and state legislatures, as well as by regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system.

On July 4, 2025, the “One Big Beautiful Bill Act” (“OBBBA”) was signed into law by President Trump. OBBBA delivers a sweeping legislative package aimed at fulfilling key economic and policy priorities of the Trump administration – it extends and modifies certain key provisions from the Tax Cuts and Jobs Act of 2017 and expands certain incentives from the Inflation Reduction Act of 2022 while accelerating the phase-out of others. Because OBBBA was effective after the close of the calendar quarter, no financial statement impact was reflected in the second quarter of 2025. While several key provisions will impact the Company going forward, and we are still evaluating the provisions of OBBBA, we do not expect the impacts to be material to the Company or its financial results.

Also, such statutes, regulations and policies are continually under review by Congress, state legislatures and 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 statutes, regulations or regulatory policies applicable to the Company could have a material effect on the business of the Company.

Results of Operations. The following is a comparison of selected financial ratios and other results at or for the three and six month periods ended June 30, 2025 and 2024:

	At or for the Three Months Ended						At or for the Six Months Ended
	June 30,						June 30,
(In Thousands, except Per Share Data)	2025			2024			2025			2024
Total assets	$	5,178,428		$	5,156,853		$	5,178,428		$	5,156,853
Net income	$	13,910		$	11,783		$	27,488		$	23,023
Diluted earnings per share	$	0.37		$	0.31		$	0.73		$	0.61
Return on average assets (annualized)		1.08	%		0.93	%		1.07	%		0.91	%
Return on average equity (annualized)		13.08	%		12.15	%		13.10	%		11.76	%
Dividends to net income		54.21	%		54.04	%		54.13	%		55.61	%
Net loans to assets		63.05	%		62.12	%		63.05	%		62.12	%
Loans to deposits		75.14	%		76.97	%		75.14	%		76.97	%

Net Income. The Company reported net income of $13.9 million, or $0.37 per diluted share, for the quarter ended June 30, 2025 compared to $11.8 million, or $0.31 per diluted share, for the quarter ended June 30, 2024. The results for the second quarter of 2025 were impacted by pretax gains on the sale of investment securities and other assets totaling $173,000.

The Company reported net income of $27.5 million, or $0.73 per diluted share, for the six months ended June 30, 2025 compared to $23.0 million, or $0.61 per diluted share, for the six months ended June 30, 2024. The year-to-date results were impacted by net pretax losses on the sale of investment securities and other assets totaling $1.2 million.

Net Interest Income . The following schedule details the various components of net interest income for the periods indicated. All asset yields are calculated on a tax-equivalent basis where applicable. Security yields are based on amortized cost.

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Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

	Three Months Ended							Three Months Ended
	June 30, 2025							June 30, 2024
	AVERAGE							AVERAGE
	BALANCE		INTEREST		RATE (1)			BALANCE		INTEREST		RATE (1)
EARNING ASSETS
Loans (2)	$	3,274,394	$	47,160		5.76	%	$	3,215,141	$	46,590		5.80	%
Taxable securities		1,141,799		7,384		2.59	%		1,118,598		6,813		2.44	%
Tax-exempt securities (2)		364,531		2,900		3.18	%		379,761		2,973		3.13	%
Other investments		40,206		462		4.60	%		33,441		322		3.85	%
Federal funds sold and other		65,841		429		2.61	%		78,591		743		3.78	%
TOTAL EARNING ASSETS		4,886,771		58,335		4.77	%		4,825,532		57,441		4.76	%
Nonearning assets		245,890							218,984
TOTAL ASSETS	$	5,132,661						$	5,044,516

INTEREST-BEARING LIABILITIES
Time deposits	$	751,828	$	6,584		3.50	%	$	744,422	$	7,233		3.89	%
Brokered time deposits		96,461		1,047		4.34	%		0		0		0.00	%
Savings deposits		1,145,277		4,284		1.50	%		1,102,443		4,117		1.49	%
Demand deposits - interest bearing		1,440,090		8,325		2.31	%		1,391,767		8,810		2.53	%
Total interest-bearing deposits		3,433,656		20,240		2.36	%		3,238,632		20,160		2.49	%

Short term borrowings		137,725		1,536		4.46	%		299,543		3,585		4.79	%
Long term borrowings		86,354		1,005		4.66	%		88,834		1,035		4.66	%
Total borrowed funds		224,079		2,541		4.54	%		388,377		4,620		4.76	%

TOTAL INTEREST-BEARING LIABILITIES		3,657,735		22,781		2.49	%		3,627,009		24,780		2.73	%

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits - noninterest bearing		992,990							972,290
Other liabilities		56,687							57,336
Stockholders' equity		425,249							387,881
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	5,132,661						$	5,044,516
Net interest income and interest rate spread			$	35,554		2.28	%			$	32,661		2.03	%
Net interest margin						2.91	%						2.71	%

(1)	Rates are calculated on an annualized basis.

(2)

Interest on certain tax-exempt loans and tax-exempt securities in 2025 and 2024 is not taxable for Federal income tax purposes. In order to compare the tax-exempt yields on these assets to taxable yields, the interest earned on these assets is adjusted to a pre-tax equivalent amount based on the marginal corporate federal income tax rate of 21%

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Average Balance Sheets and Related Yields and Rates

(Dollar Amounts in Thousands)

	Six Months Ended							Six Months Ended
	June 30, 2025							June 30, 2024
	AVERAGE							AVERAGE
	BALANCE		INTEREST		RATE (1)			BALANCE		INTEREST		RATE (1)
EARNING ASSETS
Loans (2)	$	3,268,186	$	93,970		5.75	%	$	3,198,239	$	91,686		5.73	%
Taxable securities		1,138,707		14,480		2.54	%		1,109,972		13,227		2.38	%
Tax-exempt securities (2)		370,770		5,890		3.18	%		393,918		6,182		3.14	%
Other investments		42,177		1,003		4.76	%		33,924		684		4.03	%
Federal funds sold and other		69,687		939		2.69	%		75,174		1,369		3.64	%
TOTAL EARNING ASSETS		4,889,527		116,282		4.76	%		4,811,227		113,148		4.70	%
Nonearning assets		236,226							223,014
TOTAL ASSETS	$	5,125,753						$	5,034,241

INTEREST-BEARING LIABILITIES
Time deposits	$	739,103	$	13,216		3.58	%	$	738,159	$	14,281		3.87	%
Brokered time deposits		119,798		2,585		4.32	%		0		0		0.00	%
Savings deposits		1,130,350		8,296		1.47	%		1,093,511		7,716		1.41	%
Demand deposits - interest bearing		1,412,543		15,860		2.25	%		1,371,058		16,553		2.41	%
Total interest-bearing deposits		3,401,794		39,957		2.35	%		3,202,728		38,550		2.41	%

Short term borrowings		177,862		3,954		4.45	%		312,167		7,524		4.82	%
Long term borrowings		86,282		1,980		4.59	%		88,778		2,073		4.67	%
Total borrowed funds		264,144		5,934		4.49	%		400,945		9,597		4.79	%

TOTAL INTEREST-BEARING LIABILITIES		3,665,938		45,891		2.50	%		3,603,673		48,147		2.67	%

NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits		985,347							983,728
Other liabilities		54,802							55,125
Stockholders' equity		419,666							391,715
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	5,125,753						$	5,034,241
Net interest income and interest rate spread			$	70,391		2.26	%			$	65,001		2.03	%
Net interest margin						2.88	%						2.70	%

(1)	Rates are calculated on an annualized basis.

(2)

Net Interest Income. Net interest income for the three months ended June 30, 2025, was $34.9 million compared to $32.1 million for the three months ended June 30, 2024. A 20 basis point increase in the net interest margin along with a higher earning asset base were the primary reasons for this increase.

The net interest margin for the three-month period ended June 30, 2025, was 2.91% compa red to 2.71% for the same period in 2024 . Interest-earning asset yields increased 1 basis point in the second quarter of 2025 compared to the second quarter of 2024 while the cost of interest-bearing liabilities decreased 24 basis points when comparing these two periods. This decrease in funding costs has been due to the reduction in the Fed Funds rate in the fourth quarter of 2024. Deposit costs have declined as a result of this action.

Net interest income for the six-month period ended June 30, 2025, was $69.1 million compared to $63.8 million for the same period in 2024. The increase in net interest income was driven by the same factors as discussed above. The net interest margin was 2.88% for the six-month period ended June 30, 2025 compared to 2.70% for the same period in 2024. The increase in net interest margin for the six-month period ended June 30, 2024, was also driven by the same factors discussed previously.

Provision for Credit Losses and Provision for Unfunded Loans. The provision for credit losses and unfunded loans was $3.5 million for the three months ended June 30, 2025 , compared to $1.1 million for the three months ended June 30, 2024 . The provision in the second quarter of 2025 was driven primarily by $2.6 million in specific reserves placed on two nonperforming loans.

For the first six months of 2025, the Company recorded a provision for credit losses and unfunded loans of $3.3 million compared to a provision for credit losses and unfunded loans of $663,000 for the same period of 2024. The increase in the provision was mainly due to the specific reserves placed on two nonperforming loans discussed previously.

Noninterest Income. Noninterest income for the second quarter of 2025 was of $12.1 million compared to $9.6 million for the second quarter of 2024 . This increase was due to improved profitability across all fee based lines of business and a lower level of losses on the sale of available for sale securities.

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Service charges on deposit accounts declined $97,000 to $1.7 million for the second quarter of 2025 compared to $1.8 million for the second quarter in 2024 . Bank owned life insurance income increased $180,000 during the second quarter of 2025 to $832,000 compared to $652,000 in the second quarter of 2024 as policy crediting rates have increased over the last twelve months. Trust fees increased to $2.6 million at June 30, 2025 , from $2.3 million at June 30, 2024 . The increase was due to continued growth in the business unit. Insurance agency commissions grew to $1.8 million in the second quarter of 2025 from $1.3 million in the second quarter of 2024 . The Company shared in the commission from the purchase of the new BOLI policies which added $329,000 to insurance commissions for the quarter. Annuity sales also continue to drive growth. Gain on the sale of securities totaled $36,000 in the second quarter of 2025 compared to losses on the sale of securities of $124,000 during the second quarter of 2024 . Retirement plan consulting fees increased to $783,000 in the second quarter of 2025 from $330,000 in the second quarter of 2024 primarily due to the acquisition of Crest Retirement Advisors LLC in late December of 2024. Investment commissions grew $243,000 in the second quarter of 2025 compared to the second quarter of 2024. The Company has a strong sales team in this line of business and is looking to grow with deeper penetration into newer markets. Debit card income grew from $1.8 million in the second quarter of 2024 to $2.0 million in the second quarter of 2025 as better volumes were realized in the current period. Other noninterest income was $1.2 million in the second quarter of 2025 compared to $162,000 in the second quarter of 2024. SBIC income was $587,000 in the second quarter of 2025 compared to a loss of $1,000 in the second quarter of 2025. The Company also realized gains on the sale of assets of $137,000 in the second quarter of 2025 compared to losses on the sale of assets of $391,000 in the second quarter of 2024.

For the six months ended June 30, 2025, noninterest income increased by $4.6 million compared to the six months ended June 30, 2024. The increase was primarily due to improved profitability across all fee based lines of business and a lower level of losses on the sale of available for sale securities.

Service charges on deposit accounts increased to $3.5 million in the first six months of 2025 compared to $3.4 million in the same period in 2024 due to the fee increases discussed above. Bank owned life insurance income increased to $1.6 million for the six months ended June 30, 2025 compared to $1.4 million for the six months ended June 30, 2024. The Company purchased an additional $15.0 million in policies during the first quarter of 2025 and policy crediting rates have increased over the last twelve months. Trust fees increased to $5.2 million in the first six months of 2025 from $4.9 million in the first six months of 2024 due to continued strong growth in this line of business. Insurance agency commissions were $3.6 million for the six months ended June 30, 2025 compared to $2.8 million for the same period in 2024. The Company shared in the commission from the purchase of the new BOLI policies which added $329,000 to insurance commissions for the year. Annuity sales also continue to drive growth. Loss on the sale of securities was $1.3 million and $2.2 million for the six months ended June 30 2025 and 2024, respectfully. The bank restructured $23.8 million at the end of the first quarter of 2025 resulting in the loss realized on the sale. Retirement plan consulting fees increased to $1.6 million in the first half of 2025 from $1.2 million in the same period of 2024 primarily due to the acquisition of Crest Retirement Advisors LLC in late December of 2024. Investment commissions grew $340,000 in the first half of 2025 compared to the same time frame in 2024. The Company has a strong sales team in this line of business and is looking to grow with deeper penetration into newer markets. Debit card income grew from $3.3 million in the first half of 2024 to $3.9 million in the first six months of 2025 as better volumes were realized in the current period. Other noninterest income increased to $2.4 million in the first six months of 2025 from $1.3 million in the first six months of 2024. SBIC income was $1.3 mil lion in the first six months of 2025 compared to a $462,000 in the same period of 2024.

Noninterest Expense. Noninterest expense totaled $27.2 million for the quarter ended June 30, 2025 compared to $26.4 million for the quarter ended June 30, 2024 . Salaries and employee benefits were $14.7 million in the second quarter of 2025 compared to $14.6 million in the second quarter of 2024 . The increase was primarily driven by higher salaries associated with employee raises, the acquisition of Crest Retirement in the fourth quarter of 2024 and higher commission expense from increased revenue in the fee-based businesses offset by lower healthcare expense. Occupancy and equipment expense increased to $4.1 million in the second quarter of 2025 from $3.8 million in the second quarter of 2024 due to increased maintenance costs in 2025, the result of more severe winter weather. Professional fess declined to $1.0 million in the second quarter of 2025 from $1.2 million in the second quarter of 2024 due primarily to lower legal expenses in 2025. Core processing expense increased to $1.4 million in the second quarter of 2025 from $1.1 million in the second quarter of 2024. The increase was due to annual increases and timing differences.

Noninterest expense increased to $55.7 million for the six months ended June 30, 2025 from $53.4 million for the same period in 2024. Salaries and employee benefits were $30.9 million in the first half of 2025 compared to $29.6 million in the first six months of 2024. The increase was primarily driven by higher salaries associated with employee raises, the acquisition of Crest Retirement in the fourth quarter of 2024 and higher commission expense from increased revenue in the fee-based businesses offset by lower healthcare expense. Occupancy and equipment expense increased $713,000 from $7.5 million for the six months ended June 30, 2024 to $8.3 million for the same period in 2025 due to increased maintenance costs in 2025 as a result of more severe winter weather. Core processing charges were $2.8 million for the first six months of 2025 compared to $2.2 million for the first six months of 2024 as a result of annual increases and timing differences.

Income Taxes . Income tax expense was $2.4 million for the three months ended June 30, 2025 and June 30, 2024 .

Income tax expense was $5.2 million for the six months ended June 30, 2025 compared to $4.6 million for the same period in 2024 due to higher pretax income in 2025.

Financial Condition

Cash and Cash Equivalents . Cash and cash equivalents increased $5.0 million during the first six months of 2025 to $90.7 million from $85.7 million at December 31, 2024 . The increase in the cash balances was primarily due to the Company intentionally holding more liquidity on its balance sheet at June 30, 2025 .

Securities . The Company had securities available for sale totaling $1.27 billion as of June 30, 2025 and December 31, 2024. Net unrealized losses on the portfolio totaled $223.0 million at June 30, 2025, compared to $244.1 million at December 31, 2024. The Company also restructured $23.9 million of available for sale securities and reinvested the proceeds into securities with yields approximately 260 basis points higher than those sold. The earn back on the $1.3 million loss that was incurred on the sale is approximately 2.2 years. The Company anticipates continued volatility in the bond market in 2025.

Loans. Net loans (excluding loans held for sale) increased to $3.30 billion at June 30, 2025 from $3.27 billion at December 31, 2024 . The increase in 2025 is primarily due to increases in commercial and commercial real estate loans.

The following tables present the amortized cost basis of the Company's commercial real estate portfolio segment by industry as of June 30, 2025 and December 31, 2024 :

			% of Commercial						Weighted Average			Weighted Average
(In Thousands of Dollars)	Amortized Cost		Real Estate			% of Total Portfolio			Loan-to-Value			Occupancy
June 30, 2025
Commercial real estate
Retail	$	341,684		21.34	%		10.34	%		53.13	%		87.09	%
Farmland		216,965		13.55	%		6.57	%		48.96	%		100.00	%
Warehouse/Industrial		194,976		12.18	%		5.90	%		51.50	%		90.71	%
Office		197,175		12.32	%		5.97	%		58.13	%		76.90	%
Multifamily		178,369		11.14	%		5.40	%		60.20	%		70.57	%
Medical		138,736		8.67	%		4.20	%		50.97	%		92.62	%
Hotel		43,873		2.74	%		1.33	%		45.93	%		79.74	%
Special Purpose		79,750		4.98	%		2.41	%		51.77	%		98.62	%
Restaurant		49,152		3.07	%		1.49	%		50.00	%		100.00	%
Multifamily - Construction		67,648		4.23	%		2.05	%		59.59	%		31.20	%
All Other		92,684		5.79	%		2.81	%		48.63	%		93.80	%
Total	$	1,601,012		100.00	%		48.47	%

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			% of Commercial						Weighted Average			Weighted Average
(In Thousands of Dollars)	Amortized Cost		Real Estate			% of Total Portfolio			Loan-to-Value			Occupancy
December 31, 2024
Commercial real estate
Retail	$	345,354		21.75	%		10.57	%		53.93	%		85.07	%
Farmland		206,600		13.01	%		6.32	%		49.63	%		100.00	%
Warehouse/Industrial		186,316		11.73	%		5.70	%		54.26	%		72.23	%
Office		192,269		12.11	%		5.88	%		53.70	%		74.06	%
Multifamily		158,168		9.96	%		4.84	%		61.16	%		85.75	%
Medical		147,353		9.28	%		4.51	%		46.27	%		92.60	%
Hotel		44,301		2.79	%		1.36	%		45.24	%		79.65	%
Special Purpose		85,361		5.37	%		2.61	%		51.83	%		98.53	%
Restaurant		50,990		3.21	%		1.56	%		51.36	%		100.00	%
Multifamily - Construction		73,857		4.65	%		2.26	%		53.28	%		29.61	%
All Other		97,605		6.14	%		2.99	%		48.05	%		94.97	%
Total	$	1,588,174		100.00	%		48.60	%

Allowance for Credit Losses . The following table indicates key asset quality ratios that management evaluates on an ongoing basis. The amortized cost balances were used in the calculations.

Asset Quality History

(In Thousands of Dollars)

	6/30/2025			3/31/2025			12/31/2024			9/30/2024			6/30/2024
Nonperforming loans	$	27,819		$	20,724		$	22,818		$	19,076		$	12,870
Nonperforming loans as a % of total loans		0.84	%		0.64	%		0.70	%		0.58	%		0.40	%
Non-performing assets	$	28,052		$	20,902		$	22,093		$	19,137		$	12,975
Non-performing assets as a % of total assets		0.54	%		0.41	%		0.45	%		0.37	%		0.25	%
Loans delinquent 30-89 days	$	17,727		$	11,192		$	13,032		$	15,562		$	18,546
Loans delinquent 30-89 days as a % of total loans		0.54	%		0.34	%		0.40	%		0.47	%		0.57	%
Allowance for credit losses	$	38,563		$	35,549		$	35,863		$	36,186		$	33,991
Allowance for credit losses as a % of total loans		1.17	%		1.09	%		1.10	%		1.10	%		1.05	%
Allowance for credit losses as a % of nonperforming loans		138.62	%		171.54	%		157.17	%		189.69	%		264.11	%
Net charge-offs for the quarter	$	572		$	336		$	635		$	4,612		$	563
Annualized net charge-offs to average net loans outstanding		0.07	%		0.04	%		0.08	%		0.58	%		0.07	%

The Company's allowance for credit losses increased to $38.6 million for the period ended June 30, 2025, from $35.9 million for the period ended December 31, 2024. The increase in provision was primarily driven by $2.6 million in specific reserves placed on two nonperforming loans. The Company estimates the ACL based on the amortized cost basis of the underlying loan and has made an accounting policy election to exclude accrued interest from the loan’s amortized cost basis and the related measurement of the ACL. Estimating the amount of the ACL is a function of a number of factors, including but not limited to changes in the loan portfolio, net charge-offs, trends in past due and nonaccrual loans, and the level of potential problem loans, all of which may be susceptible to significant change.

Based on the evaluation of the adequacy of the allowance for credit losses, management believes that the allowance for credit losses at June 30, 2025 is adequate. 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 estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Specific factors considered by management in determining the amounts charged to operating expenses include previous credit loss experience, the status of past due interest and principal payments, the quality of financial information supplied by loan customers and the general condition of the industries in the community to which loans have been made.

Deposits. Total deposits increased to $4.40 billion at June 30, 2025 from $4.27 billion at December 31, 2024 . Customer deposits grew $129.6 million, including an increase of $34.7 million in public funds. The additional deposits were used to pay down borrowings.

Short-term Borrowings. Total short-term borrowing balances decreased from $305.0 million at December 31, 2024 to $203.0 million at June 30, 2025 . This decrease was due to the Company using the proceeds from deposits to pay down short-term borrowings.

Total Stockholders' Equity. Total stockholders’ equity increased to $437.7 million at June 30, 2025 from $406.0 million at December 31, 2024 . The increase was primarily due to a $16.5 million decrease in the accumulated other comprehensive loss coupled with growth in retained earnings of $14.7 million due to $27.5 million of net income recognized during the first half of the year partially offset by dividends paid on outstanding common shares.

The capital management function is a regular process that consists of providing capital for both the current financial position and the anticipated future growth of the Company. At June 30, 2025 , the Company is required to maintain 4.5% common equity tier 1 to risk weighted assets excluding the conservation buffer to be adequately capitalized. The Company’s common equity tier 1 to risk weighted assets was 11.56%, total risk-based capital ratio stood at 15.04%, and the Tier 1 risk-based capital ratio and Tier 1 leverage ratio were at 12.05% and 8.67%, respectively, at June 30, 2025 . Management believes that the Company and the Bank meet all capital adequacy requirements to which they are subject, as of June 30, 2025 .

Federal bank regulatory agencies finalized a rule that simplifies capital requirements for community banks by allowing them to adopt a simple leverage ratio to measure capital adequacy. The community bank leverage ratio framework removes requirements for calculating and reporting risk-based capital ratios for a qualifying community bank that opts into the framework. The Company has not elected to adopt this framework.

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Critical Accounting Policies

The Company follows financial accounting and reporting policies that are in accordance with U.S. GAAP. These policies are presented in Note 1 of the consolidated audited financial statements in the Company’s Annual Report to Shareholders included in the Company’s 2024 Form 10-K. Critical accounting policies are those policies that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company has identified two accounting policies that are critical accounting policies and an understanding of these policies is necessary to understand the Company’s financial statements. These policies relate to determining the adequacy of the allowance for credit losses and if there is any impairment of goodwill or other intangible. Additional information regarding these policies is included in the notes to the aforementioned 2024 consolidated financial statements, Note 1 (Summary of Significant Accounting Policies), Note 4 (Loans), and the sections captioned “Loan Portfolio.”

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. 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.

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. Refer to Note 4 for further information on these judgments as well as the Company’s policies and methodologies used to determine the Company’s allowance for credit losses.

A significant judgment involved in estimating the Company’s allowance for credit losses relates to the macroeconomic forecasts used to estimate credit losses over the four-quarter forecast period within the Company’s methodology. The four-quarter forecast incorporates three macroeconomic variables (“MEV”) 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.

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.

It is difficult to estimate how potential changes in any one factor or input might affect the overall allowance for credit losses because management considers a wide variety of factors and inputs in estimating the allowance for credit losses. Changes in the factors and inputs considered may not occur at the same rate and may not be consistent across all product types, and changes in factors and inputs may be directionally inconsistent, such that improvement in one factor or input may offset deterioration in others.

To consider the impact of a hypothetical alternate macroeconomic forecast, the Company compared the modeled credit losses determined using its central and relative adverse macroeconomic scenarios. The central and relative adverse scenarios each included the three MEVs, but differed in the levels, paths and peaks/troughs of those variables over the four-quarter forecast period.

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 4Q2024 to 4Q2025, U.S. PCE inflation of 3.00%, and U.S. unemployment of 4.50%, 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%. This analysis is not intended to estimate expected future changes in the allowance for credit losses, for a number of reasons, including:

•

The impacts of changes in the MEVs are both interrelated and nonlinear, so the results of this analysis cannot be simply extrapolated for more severe changes in macroeconomic variables.

•

Expectations of future changes in portfolio composition and borrower behavior can significantly affect the allowance for credit losses.

To demonstrate the sensitivity of credit loss estimates to macroeconomic forecasts as of June 30, 2025 , 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. 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 $649,000 for residential real estate loans and lending-related commitments

•

An increase of approximately $900,000 for commercial real estate non-owner occupied loans and lending-related commitments

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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.

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 June 30, 2025 .

The Company uses two methodologies to analyze loan pools. 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 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. The Company uses cohort primarily for consumer loan portfolios.

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. 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.

Management believes that the accounting for goodwill and other intangible assets also involves a higher degree of judgment than most other significant accounting policies. GAAP establishes standards for the amortization of acquired intangible assets and the impairment assessment of goodwill. Goodwill arising from business combinations represents the value attributable to unidentifiable intangible assets in the business acquired. The Company’s goodwill relates to the value inherent in the banking industry and that value is dependent upon the ability of the Company’s subsidiaries to provide quality, cost-effective services in a competitive marketplace. The goodwill value is supported by revenu e that is in part driven by the volume of business transacted. A decrease in earnings resulting from a decline in the customer base or the inability to deliver cost-effective services over sustained periods can lead to impairment of goodwill that could adversely impact earnings in future periods. GAAP requires an annual evaluation of goodwill for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The fair value of the goodwill is estimated by reviewing the past and projected operating results for the subsidiaries and comparable industry information. At June 30, 2025 , on a consolidated basis, Farmers had intangibles of $19.3 million subject to amortization and $167.5 million in goodwill, which was not subject to periodic amortization.

Liquidity

The Company maintains, in the opinion of management, liquidity sufficient to satisfy depositors’ requirements and meet the credit needs of customers. The Company depends on its ability to maintain its market share of deposits as well as its potential of acquiring new funds. The Company’s ability to attract deposits and borrow funds depends in large measure on its profitability, capitalization and overall financial condition. The Company’s objective in liquidity management is to maintain the ability to meet loan commitments, purchase securities or to repay deposits and other liabilities in accordance with their terms without an adverse impact on current or future earnings. Principal sources of liquidity for the Company include assets considered relatively liquid, such as federal funds sold, cash-due from banks, as well as cash flows from maturities and repayments of loans, and to a lesser extent securities.

Along with its liquid assets, the Bank has additional sources of liquidity available which help to ensure that adequate funds are available as needed. These other sources include, but are not limited to, access to funds in the wholesale arena, the ability to obtain deposits through the adjustment of interest rates and the purchasing of federal funds and borrowings on approved lines of credit at major domestic banks. The Bank has a line of credit totaling $25.0 million and the Company has a revolving line of credit with a correspondent bank totaling $5.0 million. There was no balance on either of these lines at June 30, 2025 or December 31, 2024 . The Company also has access to borrow $12.1 million at the Federal Reserve Discount Window, however, there was no balance on this line at June 30, 2025 or December 31, 2024 . The Federal Reserve Discount Window can be an additional source of funds with the posting of additional collateral. As of June 30, 2025 , the Bank had $203.0 million in outstanding balances with the FHLB. Additional borrowing capacity at the FHLB was approximately $596.9 million at June 30, 2025 . The Bank views its membership in the FHLB as a solid source of liquidity. Management feels that its liquidity position is adequate and will continue to monitor the position on a monthly basis.

Off-Balance Sheet Arrangements

In the normal course of business, to meet the financial needs of our customers, we are a party to financial instruments with off-balance sheet risk. These financial instruments generally include commitments to originate mortgage, commercial and consumer loans, and involve to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the Consolidated Balance Sheets. The Bank’s maximum exposure to credit loss in the event of nonperformance by the borrower is represented by the contractual amount of those instruments. Because some commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The same credit policies are used in making commitments as are used for on-balance sheet instruments. Collateral is required in instances where deemed necessary. Undisbursed balances of loans closed include funds not disbursed but committed for construction projects. Unused lines of credit include funds not disbursed, but committed for, home equity, commercial and consumer lines of credit. Financial standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Those guarantees are primarily used to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Total unused commitments were $736.6 million at June 30, 2025 , and $692.4 million at December 31, 2024 . Additionally, the Company has committed up to $20.2 million in subscriptions in SBIC investment funds. At June 30, 2025 , the Company had invested $15.2 million in these funds.

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Recent Market and Regulatory Developments

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Important considerations in asset/liability management are liquidity, the balance between interest rate sensitive assets and liabilities and the adequacy of capital. Interest rate sensitive assets and liabilities are those which have rates subject to change within a future time period due to maturity of the instrument or changes in market rates. While liquidity management involves meeting the funds flow requirements of the Company, the management of interest rate sensitivity focuses on the structure of these assets and liabilities with respect to maturity and repricing characteristics. Managing interest rate sensitive assets and liabilities provides a means of tempering fluctuating interest rates and maintaining net interest margins through periods of changing interest rates. The Company monitors interest rate sensitive assets and liabilities to determine the overall interest rate position over various time frames.

The Company considers the primary market exposure to be interest rate risk. Simulation analysis is used to monitor the Company’s exposure to changes in interest rates, and the effect of the change to net interest income. The following table shows the effect on net interest income and the net present value of equity from a sudden and sustained 400 basis point increase to a 400 basis point decrease in market interest rates. The 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.

Changes In Interest Rate	June 30, 2025			December 31, 2024			ALCO
(basis points)	Result			Result			Guidelines
Net Interest Income Change
+400		-7.4	%		-9.0	%		-12.5	%
+300		-5.8	%		-7.0	%		-10.0	%
+200		-3.9	%		-4.7	%		-7.5	%
+100		-2.1	%		-2.5	%		-5.0	%
-100		1.6	%		2.2	%		-5.0	%
-200		2.9	%		3.9	%		-10.0	%
-300		4.0	%		5.5	%		-15.0	%
-400		4.3	%		6.1	%		-20.0	%
Net Present Value Of Equity Change
+400		-31.0	%		-37.2	%		-12.5	%
+300		-23.2	%		-27.3	%		-10.0	%
+200		-14.8	%		-17.7	%		-7.5	%
+100		-7.4	%		-9.0	%		-5.0	%
-100		4.1	%		5.5	%		-10.0	%
-200		4.6	%		7.1	%		-15.0	%
-300		1.0	%		4.4	%		-20.0	%
-400		-3.9	%		1.5	%		-25.0	%

The yield curve has changed dramatically over the past three years. 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. These rate cuts were an attempt to guide the economy into a “soft landing”, where the still comparatively elevated rate was set at a level that was intended to continue to bring down inflation without harming the job market or the economy. There have been no further changes to the discount rate in the first six months of 2025.

The above table presents results in the up rate scenarios that exceed internal policy limits for the Economic Value of Equity (“EVE”) for both of the periods presented. This unprecedented outcome was created by the events occurring over the past five 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 the current economy, which prevents the Company from investing in the higher rates that are now available. 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. To mitigate these results, the Company has prioritized employing strategies to shrink the longer duration investment portfolio and replace the balances with assets having a shorter duration, including loans, in an effort to close the gap between the book and market rates. 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. 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.

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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 June 30, 2025 , and December 31, 2024 . A report on interest rate risk is presented to the Board of Directors and the Asset/Liability Committee on a quarterly basis. 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. In addition, changes in rates on interest sensitive assets and liabilities may not be equal, which could result in a change in net interest margin.

Interest rate sensitivity management provides some degree of protection against net interest income volatility. It is not possible or necessarily desirable to attempt to eliminate this risk completely by matching interest sensitive assets and liabilities. Other factors, such as market demand, interest rate outlook, regulatory restraint and strategic planning also have an effect on the desired balance sheet structure.

Item 4. Controls and Procedures

Based on their evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s Chief Executive Officer and Chief Financial Officer have concluded the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are effective. There were no changes in the Company’s internal controls over financial reporting (as defined in Rule 13a–15(f) under the Exchange Act) that occurred during the fiscal quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is a defendant in lawsuits and other adversary proceedings arising in the ordinary course of business. Legal costs incurred in connection with the resolution of claims and lawsuits are generally expensed as incurred, although the Company establishes accruals where losses are deemed probable and reasonably estimable. The Company’s assessment of the current exposure with respect to adverse claims in legal matters could change in the event of the discovery of additional facts in such matters or upon determinations by judges, juries, administrative agencies or other finders of fact that are inconsistent with the Company’s evaluation of claims. It is possible that the ultimate resolution of 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 1A. Risk Factors

There are no material changes from the risk factors set forth under Part I, Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 except as set forth below:

Significant changes to the size, structure, powers and operations of the federal government, changes to U.S. economic policies, and uncertainties regarding these changes may cause economic disruptions which could adversely impact our business, results of operations and financial condition.

The current U.S. administration has implemented significant changes in federal priorities in the operations, structure, and policy focus of various federal agencies, as well as regulatory priorities, policy approaches and interpretations of existing laws by those federal agencies. Moreover, leadership transitions at key federal agencies have impacted and may continue to impact rulemaking, supervision, enforcement, and examination priorities across the financial regulatory landscape. These developments may have varying and unpredictable effects on the banking and financial services industry that, which makes it difficult to anticipate and mitigate attendant risks. Compliance with changing federal and regulatory priorities could, among other things, increase the costs of operating our business, reduce the demand for our products and services, impact our ability to achieve our business goals, and increase our legal, operational and reputational risks, any or all of which could materially adversely affect our results of operations.

The current U.S. administration also has implemented rapid shifts in macroeconomic policies, such as those relating to trade restrictions and tariffs, which have created significant uncertainties regarding U.S. economic growth, the potential for recession, and concerns over inflation. In order to mitigate the impact of unpredictable U.S. actions, global companies and governments may reduce the use of the U.S. dollar in world trade and financial transactions, which could result in further volatility in the financial markets and U.S. economy. Slow economic growth, economic contraction or recession, or shifts in broader consumer and business trends in the U.S. generally and regions we serve could significantly impact our ability to originate loans, the ability of borrowers to repay loans, and the value of the collateral securing loans.

Other political and economic events within the United States, including changes in or disagreements over U.S. monetary policy and actions of the Federal Reserve, disagreements over long-term federal budget and deficit reduction plans, the threat of a U.S. government shutdown, disagreements over, or threats not to increase, the U.S. government’s borrowing limit, and risk of further downgrade of the ratings of U.S. government debt obligations, also may negatively impact financial markets and the U.S. and regional economy.

Further, the perception of the potential for additional, significant changes in federal regulatory or economic policy also has increased uncertainty and may exacerbate declines in investor and consumer confidence, which in turn may adversely impact financial markets and the broader economy of the U.S. and the economy of regions we serve, perhaps suddenly and to a significant degree.

Regional business and economic conditions are a major driver of our results of operations. Difficult conditions in the regional business and economic environment, including those caused by the lack of stability and predictability of U.S. policymaking, may materially adversely affect our operating expenses, the quality of our assets, credit losses, and the demand for our products and services.

For further discussion of risk factors related to the Company, refer to Part 1, Item 1A, “Risk Factors,” contained in the Company’s 2024 Annual Report on Form10-K. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition.

Additional risk factors not currently known to us or that we currently deem immaterial may also adversely affect us.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of equity securities by the issuer.

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 2019 share repurchase program. The 2023 Repurchase Program may be modified, suspended or terminated by the Company at any time.

					Total Number of		Maximum Number
					Shares Purchased		of Shares that May
	Total Number of		Average Price		as Part of Publicly		Yet be Purchased
Period	Shares Purchased		Paid per Share		Announced Program		Under the Program
Beginning balance								497,047
April 1 - 30		7,895	$	12.72		0		497,047
May 1 - 31		2,093		13.36		0		497,047
June 1 - 30		0		0		0		497,047
Ending balance		9,988		0		0		497,047

There was no treasury stock activity under the program during the three month period ended June 30, 2025.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Securities Trading Plans of Directors and Executive Officers

During the three months ended June 30, 2025 , none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5 - 1 (c) of the Exchange Act or any “non-Rule 10b5 - 1 trading arrangement” (as defined in Item 408 (c) of Regulation S-K).

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Item 6. Exhibits

The following exhibits are filed or incorporated by reference as part of this report:

3.1	Articles of Incorporation of Farmers National Banc Corp., as amended (incorporated by reference from Exhibit 4.1 to the Company’s Registration Statement on Form S-3 filed with the Commission on October 3, 2001).

3.2	Amendment to Articles of Incorporation of Farmers National Banc Corp., as amended (incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 1, 2013).

3.3	Amendment to Articles of Incorporation of Farmers National Banc Corp., as amended (incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 20, 2018).

3.4	Amended Code of Regulations of Farmers National Banc Corp. (incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 17, 2020).

10.1*	Form of Executive Officer Change in Control Agreement (filed herewith).

10.2*	Form of Senior Officer Change in Control Agreement (filed herewith).

31.1	Rule 13a-14(a)/15d-14(a) Certification of Kevin J. Helmick, President and Chief Executive Officer of the Company (principal executive officer) (filed herewith).

31.2	Rule 13a-14(a)/15d-14(a) Certification of A. Troy Adair, Executive Vice President, Chief Financial Officer and Secretary of the Company (principal financial officer) (filed herewith).

32.1	Certification pursuant to 18 U.S.C. Section 1350 of Kevin J. Helmick, President and Chief Executive Officer of the Company (principal executive officer) (filed herewith).

32.2	Certification pursuant to 18 U.S.C. Section 1350 of A. Troy Adair, Executive Vice President, Chief Financial Officer and Secretary of the Company (principal financial officer) (filed herewith).

101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in iXBRL (Inline Extensible Business Reporting Language), filed herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows; and (vi) Notes to Unaudited Consolidated Financial Statements.

104	The cover page from the Company’s Quarterly report on Form 10-Q for the quarter ended June 30, 2025, has been formatted in Inline XBRL.

* Constitutes a management contract or compensatory plan or arrangement.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FARMERS NATIONAL BANC CORP.

Dated: August 7, 2025

/s/ Kevin J. Helmick

Kevin J. Helmick

President and Chief Executive Officer

Dated: August 7, 2025

/s/ A. Troy Adair

A. Troy Adair

Senior Executive Vice President, Chief Financial Officer and Secretary

TABLE OF CONTENTS

Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 2. Management Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II - Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits

Exhibits

3.2 Amendment to Articles of Incorporation of Farmers National Banc Corp., as amended (incorporated by reference from Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the Commission on May 1, 2013). 3.3 Amendment to Articles of Incorporation of Farmers National Banc Corp., as amended (incorporated by reference from Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the Commission on April 20, 2018). 3.4 Amended Code of Regulations of Farmers National Banc Corp. (incorporated by reference from Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the Commission on April 17, 2020). 10.1* Form of Executive Officer Change in Control Agreement (filed herewith). 10.2* Form of Senior Officer Change in Control Agreement (filed herewith). 31.1 Rule 13a-14(a)/15d-14(a) Certification of Kevin J. Helmick, President and Chief Executive Officer of the Company (principal executive officer) (filed herewith). 31.2 Rule 13a-14(a)/15d-14(a) Certification of A. Troy Adair, Executive Vice President, Chief Financial Officer and Secretary of the Company (principal financial officer) (filed herewith). 32.1 Certification pursuant to 18 U.S.C. Section 1350 of Kevin J. Helmick, President and Chief Executive Officer of the Company (principal executive officer) (filed herewith). 32.2 Certification pursuant to 18 U.S.C. Section 1350 of A. Troy Adair, Executive Vice President, Chief Financial Officer and Secretary of the Company (principal financial officer) (filed herewith).

FMNB 10-Q Quarter ended June 30, 2025

Exhibits