KBRA Affirms Ratings for Farmers National Banc Corp.
7 Oct 2026 | New York
KBRA affirms the senior unsecured debt rating of BBB, the subordinated debt rating of BBB-, and the short-term debt rating of K3 for Canfield, Ohio-based Farmers National Banc Corp. (NASDAQ: FMNB) (“the company”). In addition, KBRA affirms the deposit and senior unsecured debt ratings of BBB+, the subordinated debt rating of BBB, and the short-term deposit and debt ratings of K2 for its subsidiary, The Farmers National Bank of Canfield. The Outlook for all long-term ratings is Stable.
Key Credit Considerations
The ratings reflect favorable profitability trends, supported by strong core earnings and solid NIM expansion, with additional benefits from the acquisition of Middlefield Banc Corp. ("Middlefield"), which added approximately $2 billion in assets and closed in March 2026. The transaction meaningfully enhances FMNB’s scale and earnings capacity while expanding its presence in Northeast Ohio and broadening the franchise across Central and Western Ohio, particularly in the faster-growing Columbus market. Profitability has improved toward historical levels, with ROA trending around 1.20%, still below management's ~1.40% target over the intermediate term. The earnings profile also benefits from comparatively sizable and resilient fee-based revenue streams, which provide meaningful revenue diversification and earnings stability. Noninterest income consistently represents 20%–25% of operating revenue, well above rated peer levels. The company’s wealth management and trust platform, with $5.1 billion of AUC, generates attractive recurring fee revenue supported by favorable secular growth trends. FMNB’s strategy of building targeted scale in wealth management also deepens customer relationships and provides opportunities to cross-sell additional banking products and services over time.
FMNB’s funding profile is a key rating strength, characterized by a strong, low-cost deposit base and conservative liquidity position. The company’s funding advantage is supported by strong market share in Youngstown and suburban Cleveland, which provides a stable source of relationship-based deposits. Management’s continued focus on cultivating full banking relationships, particularly among small- and mid-sized businesses, supports deposit franchise stability and should help sustain a favorable funding mix over the longer term.
FMNB maintains strong asset quality, supported by prudent underwriting, a diversified loan portfolio, and solid credit administration. The recent increase in problem assets, including an NPA ratio of 0.94%, largely reflects normalization from historically benign credit conditions and a limited number of C&I and office credits, including certain loans acquired from Middlefield. Management expects favorable resolution of these credits over time. Nonetheless, improved earnings capacity, stronger capital levels, and loan loss reserves representing 1.12% of loans provide meaningful capacity to absorb potential credit deterioration.
FMNB’s regulatory core capital ratios have gradually strengthened, reflecting continued internal capital generation supported by improved earnings. The TCE ratio also increased to 7.0%, narrowing the gap with the rated peer average after declining to 5.0% a year earlier. The improvement in tangible capital primarily reflects the benefits of the company’s 2025 securities portfolio restructuring, stronger retained earnings, subsequent AOCI recovery, and accretion associated with the Middlefield transaction.
Rating Sensitivities
Sustained strong profitability consistent with higher-rated peers, continued strengthening of capital ratios to levels above rated peer averages, and successful realization of the increased scale and anticipated operating synergies from the recent acquisition, while maintaining strong credit quality, could support positive rating momentum over time. Conversely, credit deterioration beyond expectations relative to peers that results in elevated credit costs and materially pressures earnings, or more aggressive capital management that weakens capital ratios, could result in negative rating pressure.
To access ratings and relevant documents, click here.