Farmers National Banc Corp. (FMNB): Análise de Pestle [Jan-2025 Atualizado]

No cenário dinâmico do setor bancário regional, a Farmers National Banc Corp. (FMNB) navega em uma complexa rede de influências externas que moldam sua trajetória estratégica. Desde as colinas de Ohio e Pensilvânia até os intrincados corredores de estruturas regulatórias federais, essa análise abrangente de pilotes revela as forças multifacetadas que impulsionam o ecossistema operacional do banco. À medida que as instituições financeiras enfrentam desafios e oportunidades sem precedentes, o FMNB está na interseção de inovação tecnológica, resiliência econômica e bancos focados na comunidade, oferecendo uma lente fascinante no mundo intrincado dos serviços financeiros modernos.

Farmers National Banc Corp. (FMNB) - Análise de Pestle: Fatores Políticos

Regulamentos bancários regionais em Ohio e Pensilvânia

A Farmers National Banc Corp. opera principalmente em Ohio e Pensilvânia, com 106 escritórios bancários nesses estados a partir do quarto trimestre de 2023. O cenário regulatório afeta diretamente as estratégias operacionais do banco.

Estado	Número de escritórios bancários	Custos de conformidade regulatória
Ohio	74	US $ 1,2 milhão anualmente
Pensilvânia	32	US $ 0,5 milhão anualmente

Políticas monetárias do Federal Reserve

As políticas monetárias do Federal Reserve influenciam significativamente as estratégias de empréstimos e os ambientes de taxa de juros da FMNB.

• Taxa atual de fundos federais: 5,25% - 5,50% em janeiro de 2024
• Margem de juros líquidos da FMNB: 3,72% no terceiro trimestre 2023
• Portfólio de empréstimos Total: US $ 3,46 bilhões a partir do terceiro trimestre de 2023

Conformidade da Lei de Reinvestimento Comunitário

O FMNB mantém a conformidade ativa com os requisitos da Lei de Reinvestimento da Comunidade (CRA) em seus mercados regionais.

CLA CLATA	Investimento comunitário	Empréstimos para pequenas empresas
Satisfatório	US $ 42,3 milhões em 2023	US $ 126,5 milhões em empréstimos para pequenas empresas

Supervisão bancária federal

A abordagem do atual governo federal para a regulamentação bancária apresenta possíveis considerações estratégicas para o FMNB.

• Índice de capital regulatório: 13,6% (bem acima, exigiu 10%)
• Departamento de conformidade Headcount: 37 funcionários
• Orçamento anual de conformidade regulatória: US $ 2,8 milhões

Farmers National Banc Corp. (FMNB) - Análise de Pestle: Fatores Econômicos

Estabilidade econômica regional do meio -oeste

O PIB de Ohio em 2023 foi de US $ 822,7 bilhões. A taxa de desemprego em Ohio era de 3,8% em dezembro de 2023. A renda familiar média na região de serviço principal do banco era de US $ 62.435.

Indicador econômico	2023 valor	2024 Projeção
PIB de Ohio	US $ 822,7 bilhões	US $ 838,4 bilhões
Taxa de desemprego	3.8%	3.6%
Renda familiar regional	$62,435	$64,200

Impacto da taxa de juros

A margem de juros líquidos da FMNB foi de 3,52% no terceiro trimestre de 2023. A taxa de referência da Federal Reserve foi de 5,33% em dezembro de 2023.

Métrica financeira	2023 valor	2024 Previsão
Margem de juros líquidos	3.52%	3.45-3.60%
Taxa de fundos alimentados	5.33%	5.25-5.50%

Desempenho do setor agrícola e de manufatura

O setor agrícola de Ohio gerou US $ 124,6 bilhões em 2023. A manufatura contribuiu com US $ 130,2 bilhões para a economia do estado.

Setor	2023 Contribuição econômica	Taxa de crescimento
Agricultura	US $ 124,6 bilhões	2.3%
Fabricação	US $ 130,2 bilhões	2.7%

Dinâmica de recuperação econômica

O volume de empréstimos comerciais aumentou 4,2% no quarto trimestre 2023. As aprovações de empréstimos para pequenas empresas aumentaram 3,8% em comparação com o trimestre anterior.

Métrica de empréstimo	Q4 2023 Valor	Mudança de ano a ano
Volume de empréstimos comerciais	US $ 345 milhões	4.2%
Aprovações de empréstimos para pequenas empresas	US $ 87,6 milhões	3.8%

Farmers National Banc Corp. (FMNB) - Análise de Pestle: Fatores sociais

População envelhecida na zona rural de Ohio e Pensilvânia

Em 2022, a idade média de Ohio era de 39,4 anos, com 17,6% da população com 65 anos ou mais. A idade média da Pensilvânia foi de 40,8 anos, com 19,2% com 65 anos ou mais.

Estado	Idade mediana	População 65+	Porcentagem populacional rural
Ohio	39,4 anos	17.6%	22.4%
Pensilvânia	40,8 anos	19.2%	24.7%

Adoção bancária digital

Em 2023, 78% dos adultos de 18 a 44 anos usaram bancos móveis, em comparação com 42% desses 65 anos ou mais.

Faixa etária	Uso bancário móvel	Frequência bancária on -line
18-29	89%	4-5 vezes por semana
30-44	72%	3-4 vezes por semana
45-64	51%	2-3 vezes por semana
65+	42%	1-2 vezes por semana

Serviços financeiros focados na comunidade

Bancos comunitários locais como o FMNB atendem a 37% dos empréstimos para pequenas empresas nos mercados rurais de Ohio e Pensilvânia a partir de 2023.

Tipo de serviço	Quota de mercado	Crescimento anual
Empréstimos para pequenas empresas	37%	4.2%
Bancos pessoais	42%	3.7%
Empréstimos agrícolas	28%	3.5%

Expectativas bancárias digitais e pessoais

92% dos clientes bancários esperam experiências de omnichannel sem costura em 2023, com 68% preferindo modelos de interação híbrida.

Preferência de interação bancária	Percentagem
Somente digital	32%
Híbrido (Digital + pessoalmente)	68%

Farmers National Banc Corp. (FMNB) - Análise de Pestle: Fatores tecnológicos

Investimento em plataformas bancárias digitais e desenvolvimento de aplicativos móveis

A partir do quarto trimestre de 2023, a Farmers National Banc Corp. registrou US $ 12,4 milhões investidos em iniciativas de transformação digital. Downloads de aplicativos bancários móveis aumentaram 37% ano a ano, atingindo 126.847 usuários ativos.

Categoria de investimento digital	Despesas ($)	Porcentagem do orçamento de TI
Plataforma bancária móvel	4,750,000	28.3%
Infraestrutura bancária on -line	3,650,000	21.7%
Sistemas de segurança digital	2,900,000	17.3%

Aprimoramento da segurança cibernética

O investimento em segurança cibernética atingiu US $ 5,2 milhões em 2023, representando um aumento de 22% em relação ao ano anterior. O banco implementou sistemas avançados de detecção de ameaças com taxa de identificação de ameaças em tempo real de 99,8%.

Métricas de segurança cibernética	2023 desempenho
Incidentes totais de segurança	43
Pavalteu ataques cibernéticos	1,237
Tempo médio de resposta	12,4 minutos

Inteligência artificial e integração de aprendizado de máquina

Modelos de avaliação de risco orientados por IA analisaram 487.000 transações de clientes em 2023, reduzindo o risco de crédito em 16,5%. Algoritmos de aprendizado de máquina melhoraram a precisão da aprovação do empréstimo para 94,3%.

Aplicação da IA	Métrica de desempenho	Porcentagem de melhoria
Avaliação de risco de crédito	Taxa de precisão	94.3%
Detecção de fraude	FALSO REDUÇÃO Positiva	37.6%

Blockchain e inovações de fintech

A Farmers National Banc Corp. alocou US $ 1,8 milhão para pesquisa em blockchain e implementação potencial. O programa piloto de blockchain atual abrange 3,2% da infraestrutura de processamento de transações.

Investimento em blockchain	Valor ($)	Porcentagem de cobertura
Pesquisa e desenvolvimento	1,800,000	3.2%
Transações do programa piloto	42,500	2.7%

Farmers National Banc Corp. (FMNB) - Análise de Pestle: Fatores Legais

Conformidade estrita com regulamentos bancários e requisitos de relatório

A partir do quarto trimestre 2023, os agricultores nacionais da Banc. mantém a conformidade abrangente com os regulamentos bancários federais, incluindo:

Área de conformidade regulatória	Porcentagem de conformidade	Órgão regulatório
Lei de Sigilo Banco (BSA)	100%	FinCen
Lavagem anti-dinheiro (AML)	99.8%	Federal Reserve
Conformidade com Dodd-Frank	100%	Sec

Estratégias em andamento em litígios e gerenciamento de riscos regulatórios

Processos legais ativos a partir de 2024:

Tipo de ação legal	Número de casos	Despesas legais estimadas
Disputas contratuais	3	$425,000
Investigações regulatórias	1	$215,000

Leis de proteção ao consumidor que regem os serviços financeiros e as práticas de empréstimo

Métricas de conformidade para proteção ao consumidor:

• Taxa de conformidade da Lei da Verdade em Empréstimos (TILA): 99,9%
• ADEIRA DE OPORTUNIDADE DE CRÉDITO IGAL (ECOA) ADENÇÃO: 100%
• Implementação da Lei de Relatórios de Crédito Justo (FCRA): 99,7%

Obrigações de relatórios da Comissão de Valores Mobiliários

Sec Detalhes de conformidade de relatórios:

Requisito de relatório	Frequência de arquivamento	Taxa de envio oportuna
Relatório anual de 10-K	Anualmente	100%
Relatório trimestral de 10-Q	Trimestral	100%
Eventos materiais de 8-K	Conforme necessário	100%

Farmers National Banc Corp. (FMNB) - Análise de Pestle: Fatores Ambientais

Iniciativas bancárias sustentáveis ​​e opções de financiamento verde

A partir de 2024, a Farmers National Banc Corp. alocou US $ 42,5 milhões para programas de financiamento verde. A carteira de empréstimos sustentáveis ​​do banco aumentou 17,3% em comparação com o ano fiscal anterior.

Categoria de financiamento verde	Investimento total ($)	Porcentagem de portfólio
Projetos de energia renovável	18,750,000	44.1%
Empréstimos agrícolas sustentáveis	12,600,000	29.6%
Atualizações de eficiência energética	11,150,000	26.3%

Avaliação de risco climático em portfólios de empréstimos agrícolas e comerciais

As métricas de avaliação de risco climático para as portfólios de empréstimos da FMNB revelaram uma abordagem abrangente de gerenciamento de riscos:

• Triagem de risco ajustada ao clima implementado para 94% dos empréstimos agrícolas
• Portfólio de empréstimo comercial Pontuação de mitigação de risco: 87,6%
• Exposição financeira potencial estimada relacionada ao clima: US $ 156,3 milhões

Melhorias de eficiência energética em operações corporativas e instalações de ramificação

Estatísticas de redução do consumo de energia para instalações corporativas da FMNB em 2024:

Medida de eficiência	Economia de energia	Redução de custos ($)
Atualizações de iluminação LED	22,4% de redução	387,000
Otimização do sistema HVAC	18,7% de redução	462,500
Instalação do painel solar	35,2% de energia renovável	276,800

ESG (Ambiental, Social, Governança) Desenvolvimento de Estratégia de Investimentos

Métricas de estratégia de investimento ESG da FMNB para 2024:

• Portfólio de investimento total alinhado à ESG: US $ 276,8 milhões
• Alocação de investimento ambiental: 42,3%
• Alvo de redução de emissões de carbono: 25% até 2030
• Conformidade de relatórios de sustentabilidade: 100%

Categoria de investimento ESG	Valor do investimento ($)	Porcentagem de portfólio
Tecnologias ambientais	117,150,400	42.3%
Investimentos de impacto social	89,400,600	32.3%
Fundos de melhoria de governança	70,249,000	25.4%

Farmers National Banc Corp. (FMNB) - PESTLE Analysis: Social factors

Aging customer base in core rural markets requires personalized, in-branch service.

You are managing a dual-market challenge: serving an older, more branch-reliant customer base in your core rural markets while expanding into younger, suburban areas. In core operating areas like Mahoning County, Ohio, the median age in 2023 was 43.4, which is notably higher than the Ohio state median of 39.6. This demographic shift is accelerating; the 65 and older age group in this county was the fastest-growing cohort between 2010 and 2022, increasing by 19%. This older customer base prioritizes the personal, in-branch experience and relationship banking over purely digital channels.

This reality means FMNB must maintain a strong physical presence and highly trained staff. Your commitment to local decision-making and personalized service is a critical defense against national banks that are rapidly closing branches. The high median age defintely validates the continued investment in the existing 62 banking locations.

Demand for digital-first banking from younger customers in suburban expansion areas.

The social trend in your newer suburban markets, particularly in Central Ohio following the acquisition of Crest Retirement Advisors LLC, demands a digital-first approach. These areas are attracting younger, highly-skilled knowledge workers who expect seamless mobile and online banking. To compete for these customers, FMNB is making a significant, strategic investment in its core technology.

Here's the quick math on the digital infrastructure move:

• Strategic decision announced in Q3 2025 to transition to Jack Henry's Silverlake core platform.
• The core platform transition is expected to save the Company approximately $2.0 million per year once fully converted in August 2026.
• This translates to an estimated $0.04 in diluted earnings per share (EPS) savings annually.

This investment is crucial for future customer acquisition, though it requires a charge of $3.1 million for consulting services in the third quarter of 2025. You must balance the cost of this digital overhaul with the need to keep the in-branch experience strong for the older, high-deposit customer base.

Wealth Management and Insurance services address the need for holistic financial planning.

The increasing complexity of retirement and estate planning, driven by an aging population with accumulated assets, creates a significant opportunity for fee-based services. FMNB's strategy to grow its Wealth Management business is directly addressing this social need for holistic financial planning.

The acquisition of Crest Retirement Advisors LLC in December 2024 was a clear move to expand retirement consulting services, especially in the growing Central Ohio market. This focus on fee-based services provides a stable revenue stream that is less sensitive to interest rate fluctuations than traditional lending.

Metric	Value (as of 2025)	Source
Total Wealth Management Assets Under Care	$4.4 billion (June 30, 2025)	FMNB Financials
Total Banking Assets	$5.2 billion (June 30, 2025)	FMNB Financials
Insurance Subsidiary	Farmers National Insurance, LLC (wholly-owned)	FMNB Corporate Structure

The integration of Farmers Trust Company and Farmers National Insurance, LLC allows you to offer a complete suite of services-from banking and trust administration to insurance products-which is a key competitive advantage for clients seeking a single, trusted financial partner.

Community focus remains a key competitive advantage against national banks.

The strong social value placed on local institutions in the communities FMNB serves remains a powerful competitive moat. Your identity as a community bank, founded in 1887, is a significant trust factor that national competitors cannot easily replicate.

This commitment is not just marketing; it is operationalized through tangible community investment and service:

• Employees dedicated over 4,400+ hours to community service in 2024.
• Local decision-making ensures financial support is directed to projects that have the biggest impact on neighbors.
• Sponsorships in 2025, such as providing ATMs and volunteer support at county fairs, reinforce your role as an active, engaged partner.

This deep community connection drives loyalty, which is essential for retaining the high-value, long-term deposit relationships that are the bedrock of your funding.

Farmers National Banc Corp. (FMNB) - PESTLE Analysis: Technological factors

Core processing system modernization is a continuous, high-cost capital expenditure.

The biggest near-term technological factor for Farmers National Banc Corp. is the massive undertaking of core system modernization, a necessary but costly move to remain competitive. You saw this directly in the third quarter of 2025, where the company incurred a significant, non-recurring charge of $3.1 million for consulting services alone, associated with the strategic decision to transition core platform vendors. This is a clear example of the capital drain required to update decades-old infrastructure.

Here's the quick math: that $3.1 million charge hit Q3 2025 net income, but the long-term payoff is clear. Farmers National Banc Corp. is moving to Jack Henry's Silverlake core platform, a change expected to generate approximately $2.0 million in annual savings, or about $0.04 in diluted earnings per share, once the conversion is finalized in August 2026. This transition is a painful, upfront cost for a crucial future efficiency gain.

Core System Transition Metric	Value (Q3 2025 Data)	Impact
Q3 2025 Consulting Charge (Pretax)	$3.1 million	Immediate negative impact on Q3 2025 earnings.
Expected Annual Cost Savings (Post-2026)	$2.0 million	Long-term positive impact on operating efficiency.
Expected Annual EPS Benefit (Post-2026)	$0.04 per diluted share	Clear, quantifiable return on investment for shareholders.
New Core Platform Vendor	Jack Henry's Silverlake	Strategic move to a modern, scalable system.

Significant investment needed in cybersecurity to protect customer data and comply with new regulations.

The cost of keeping customer data safe is not optional; it's a non-negotiable operating expense that grows every year. For a regional bank like Farmers National Banc Corp., the threat landscape is serious, especially as the average cost of a data breach in the financial industry climbed to $6.08 million in 2024. Your technology budget must defintely reflect this reality.

The focus isn't just on firewalls anymore; it's on operational resilience (the ability to recover quickly) and compliance with evolving data privacy laws. This means continuous spending on security information and event management (SIEM) systems and specialized staff. For the industry, cybersecurity/data privacy was the issue most likely to affect the banking sector in 2025, according to 28% of financial professionals surveyed. You need to invest proactively to avoid a multi-million-dollar breach that could erode customer trust and wipe out a quarter's worth of net income.

Mobile banking platform upgrades are crucial to prevent customer churn.

Your digital platform is the new branch lobby. If your mobile banking experience is clunky, customers will simply move their deposits to a competitor with a better app. Farmers National Banc Corp. has already seen the payoff from its focus on digital offerings, with core deposits growing by a strong $71.7 million since March 2025, representing an 8.8% annualized growth rate.

This growth confirms that the current digital strategy is working to attract and retain customers. Still, platform upgrades are a continuous requirement. You must ensure the mobile experience can handle the increased transaction volume and offer features like real-time payments and personalized financial management tools to keep that deposit growth momentum going. If the digital experience lags, that 8.8% annualized deposit growth rate will quickly reverse.

Adoption of Artificial Intelligence (AI) for fraud detection and loan underwriting efficiency.

AI (Artificial Intelligence) is no longer just for the mega-banks; it's a tool for regional bank efficiency. While Farmers National Banc Corp. has not disclosed specific AI deployments, the opportunity to drive down costs and improve risk management is too large to ignore. Banks are using machine learning to reduce manual processes, and this is where FMNB can gain an edge in its Ohio and Pennsylvania markets.

The most immediate and high-impact applications for you are:

• Fraud Detection: Using AI models to analyze transaction patterns in real-time, catching anomalies that human analysts or rule-based systems miss.
• Loan Underwriting: Employing machine learning to process loan applications faster, reducing the time-to-decision and cutting origination costs.
• Customer Service: Deploying intelligent chatbots for routine inquiries, freeing up human staff for complex, high-value interactions.

This is a major opportunity for the company to 'Drive efficiencies through Six Sigma operating framework,' a stated strategic goal, by automating processes that drag down the efficiency ratio. The goal is to move beyond mere digital presence to true digital intelligence.

Farmers National Banc Corp. (FMNB) - PESTLE Analysis: Legal factors

Compliance with the Community Reinvestment Act (CRA) is vital for branch network expansion.

The regulatory environment requires Farmers National Banc Corp. to maintain a strong Community Reinvestment Act (CRA) record, especially as the bank pursues its growth-by-acquisition strategy. CRA compliance is a non-negotiable factor in gaining approval from the Office of the Comptroller of the Currency (OCC) for new branch openings or, more critically, for mergers and acquisitions.

The most recent public CRA rating for The Farmers National Bank of Canfield, FMNB's subsidiary, is Satisfactory. This rating was released by the OCC in May 2025, based on an evaluation period that concluded in 2024. This rating is sufficient to proceed with expansion plans, but it is not the highest possible rating.

A 'Satisfactory' rating means the bank is meeting the credit needs of its community, but an 'Outstanding' rating would provide a smoother path for regulatory approval of future acquisitions. For example, the OCC's May 2025 release showed other national banks receiving an 'Outstanding' rating.

• Current CRA Rating (2025): Satisfactory
• Impact on M&A: A satisfactory rating is adequate, but an 'Outstanding' rating reduces regulatory friction for major transactions.
• Branch Activity: During the last evaluation period, the bank opened three branches and closed seven, demonstrating a strategic, but net-negative, adjustment to the branch footprint.

Stricter consumer protection laws, especially around overdraft fees, impact non-interest income.

While Farmers National Banc Corp. (with pro forma assets of $7.4 billion following its announced acquisition) falls below the $10 billion asset threshold for the strictest part of the Consumer Financial Protection Bureau (CFPB)'s new overdraft rule, the overall market trend is a significant legal risk. The CFPB finalized a rule in December 2024 that requires banks over that threshold to cap overdraft fees at $5 or justify a higher fee based on cost.

This regulatory pressure has already pushed the industry average U.S. bank overdraft fee down to $26.77 in 2025. Consumers paid an estimated $12.1 billion in combined overdraft and Non-Sufficient Funds (NSF) fees in 2024, but the new CFPB rule is projected to save consumers up to $5 billion annually across the industry.

Even without a direct mandate, FMNB will be forced to compete with larger institutions that have eliminated or drastically reduced fees, pressuring its meaningful non-interest income, which accounted for approximately 26% of operating revenue in the first half of 2025.

New data privacy laws (like state-level equivalents to GDPR) increase compliance costs.

The growing patchwork of state-level data privacy laws, similar to the European Union's General Data Protection Regulation (GDPR), is increasing operational complexity and compliance costs for regional banks operating across multiple states like FMNB (Ohio and Pennsylvania).

The CFPB's new Open Banking rules, finalized in October 2024, mandate that banks share consumer financial data with third parties upon request, requiring significant investment in secure, compliant Application Programming Interfaces (APIs). For mid-sized banks with assets between $1 billion and $10 billion, compliance costs are reported to be around 2.9% of non-interest expenses.

Here's the quick math on compliance costs: FMNB reported a decline in professional fees to $785,000 in the fourth quarter of 2024 due to lower legal and consulting expense, but this trend is defintely at risk of reversing as new data security and open banking rules take effect.

Mergers and Acquisitions (M&A) activity is subject to rigorous anti-trust and regulatory approval.

FMNB's strategy relies heavily on M&A, making regulatory approval a critical legal factor. The bank has a proven track record, having completed six bank acquisitions in the past decade.

The most recent and significant transaction is the announced acquisition of Middlefield Banc Corp. on October 22, 2025, valued at approximately $299.0 million. This deal is subject to customary regulatory approvals from the Federal Reserve and the OCC, and is expected to close by the end of the first quarter of 2026.

The pro forma size of the combined entity will be approximately $7.4 billion in assets, which keeps it below the threshold for the most intense regulatory scrutiny, but the current political climate has seen increased anti-trust focus on even regional bank mergers. This means the approval timeline is a key risk factor for the projected financial benefits, such as the expected tangible book value dilution earn back of approximately three years.

Legal/Regulatory Factor	2025 Status/Value	Near-Term Impact/Risk
CRA Rating (The Farmers National Bank of Canfield)	Satisfactory (OCC, May 2025)	Adequate for M&A, but not 'Outstanding,' which could slow down future regulatory approvals.
Overdraft Fee Regulation (CFPB Rule)	CFPB cap of $5 applies to banks >$10B; FMNB is below this threshold at $5.2B (pre-M&A).	Indirect pressure to reduce fees to remain competitive, risking a portion of the 26% non-interest income contribution.
M&A Regulatory Approval	Acquisition of Middlefield Banc Corp. for $299.0 million announced Oct 2025; expected close Q1 2026.	Anti-trust scrutiny on regional mergers could delay the expected 2026 closing and realization of synergies.
Data Privacy/Compliance Costs	Compliance costs for mid-sized banks are ~2.9% of non-interest expenses.	New Open Banking rules (Oct 2024) require costly tech upgrades to manage secure data sharing and new state-level privacy mandates.

Farmers National Banc Corp. (FMNB) - PESTLE Analysis: Environmental factors

Minimal direct impact, but growing investor pressure for basic Environmental, Social, and Governance (ESG) reporting.

As a regional bank, Farmers National Banc Corp.'s direct environmental footprint is small, mostly limited to its branch network operations. Still, the pressure from institutional investors and regulators for transparent Environmental, Social, and Governance (ESG) disclosure is defintely increasing. You're seeing this shift across the entire financial sector, so even community banks are getting pulled into the reporting cycle.

While Farmers National Banc Corp. has not published a standalone, comprehensive ESG report as of late 2025, their focus is on the 'S' and 'G' components, particularly in community development and corporate governance. The environmental component remains a secondary, mostly operational concern. This is a gap that will need to be addressed as capital markets increasingly use ESG ratings to screen investments.

Physical risks from climate change (e.g., severe weather) could affect collateral values in agricultural lending.

The most significant environmental risk for Farmers National Banc Corp. is indirect, stemming from the physical impacts of climate change on the agricultural sector in its core operating regions of Ohio and Pennsylvania. Severe weather events-flash flooding, prolonged drought, and unseasonal temperature swings-directly impact crop yields and, consequently, the financial health of farm borrowers. This, in turn, risks the value of the underlying collateral (farmland and equipment) that secures the loans.

Here's the quick math: Farmers National Banc Corp. has a substantial exposure to agricultural assets. As of late 2024, the total portfolio for Farmland loans and Agricultural loans was approximately $258.75 million ($200.24 million in Farmland and $58.51 million in Agricultural loans). A single, catastrophic weather event could impair a portion of this portfolio, creating a material credit risk that's outside the bank's typical control.

The total value at risk is significant. It's a portfolio-level vulnerability that requires proactive risk modeling, not just reactive credit review.

Green lending programs are a small but growing opportunity for commercial real estate.

While not a core strategic pillar, Farmers National Banc Corp. is already involved in the emerging green lending space, which is a clear opportunity. They've capitalized on the demand for energy-efficient properties by financing LEED certified commercial real estate projects (Leadership in Energy and Environmental Design) and working with customers in the solar farm business.

This activity, though likely a small fraction of the total loan portfolio of $3.34 billion as of September 30, 2025, provides a foothold in a high-growth market segment. It's a smart way to diversify commercial lending while attracting businesses focused on sustainability.

The opportunity lies in formalizing a Green Lending framework to capture more of this market:

• Offer preferential rates for energy-efficient equipment financing.
• Develop specific loan products for commercial solar installations.
• Partner with state programs for green building incentives.

Operational focus on reducing energy consumption in the branch network.

The bank's most direct environmental action is its internal focus on operational efficiency, which naturally includes reducing energy consumption across its branch and office network. This focus is primarily cost-driven, but it delivers an environmental benefit.

The bank's overall efficiency ratio improved significantly from 60.8% in the second quarter of 2024 to 56.7% in the second quarter of 2025. While this improvement is due to multiple factors, including technology upgrades and expense management, energy efficiency is a key component of prudent expense control in a physical branch network.

What this estimate hides is the lack of a public metric-like a year-over-year reduction in kilowatt-hours (kWh) per square foot-which would be necessary for a robust ESG disclosure. Still, the cost-saving mandate drives positive environmental outcomes.

So, the next step is for the Strategy team to map these five key risks-NIM compression, regulatory capital increase, cybersecurity investment, digital platform lag, and CRA compliance-to the projected 2025 Net Income of $55 million.