Farmers National Banc Corp. announced net income of $13.9 million, or $0.37 per diluted share, for the second quarter of 2025. This represents an increase from $11.8 million, or $0.31 per diluted share, reported in the second quarter of 2024. The company's non-GAAP earnings per share of $0.37 exceeded the analyst consensus of $0.36.
GAAP revenue for the quarter reached $47.0 million, surpassing the $46.0 million GAAP estimate. Net interest margin expanded from 2.71% in Q2 2024 to 2.91% in Q2 2025, reflecting higher loan yields and reduced funding costs. Noninterest income climbed 25.8% year-over-year, driven by increases in insurance agency commissions to $1.8 million, trust fees to $2.6 million, and retirement plan consulting income, which rose 25.7% due to Crest Retirement Advisors.
Total loans increased by $52.0 million, with commercial loan balances up $43.6 million, representing annualized growth rates of 6.4% and 8.8% respectively. The efficiency ratio improved to 56.7% in Q2 2025, down from 60.8% in Q2 2024, indicating better operating leverage as noninterest expense rose more slowly than revenue.
However, asset quality trends showed deterioration, with non-performing loans rising to $27.8 million, or 0.84% of total loans, in Q2 2025. This is an increase from $20.7 million (0.64%) in Q1 2025 and $22.8 million (0.70%) in Q4 2024. The increase was primarily due to two non-owner occupied commercial real estate loans in the Pittsburgh area being classified as nonaccrual.
This led to a specific credit reserve of $2.6 million and a provision for credit losses of $3.5 million, a significant jump from $1.1 million in Q2 2024. Despite this, actual loan losses, measured by net charge-offs to average loans, remained low and stable at 0.07%.
Management indicated expectations for further net interest margin expansion through the rest of fiscal 2025, contingent on Federal Reserve policy rates. The quarterly dividend was maintained at $0.17 per share.
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