On October 22, 2025, Canfield, OH-based Farmers National Banc Corp. (NASDAQ: FMNB) (KBRA Senior Unsecured Debt rating: BBB/Stable Outlook) announced a definitive agreement with Middlefield, OH-based Middlefield Banc Corp., (NASDAQ: MBCN) (“Middlefield”, $2.0 billion assets, $1.6 billion deposits) in an all-stock deal valued at $299.0 million, reflective of a price to TBV of 1.6x with expected TBV dilution earn back of ~3 years. The merger is expected to close in 1Q26. The proforma bank will have $7.4 billion in assets, $5.0 billion in loans, and $6.1 billion in deposits. Overall, the impact on FMNB’s capital position is expected to be moderate, with a reported pro forma CET1 ratio of approximately 11.2% (compared to 11.7% as of 3Q25) and an improvement in the pro forma TCE ratio to 6.4% from 5.5%. While the proforma capital levels will remain slightly below the rated peer median, we view them as appropriate given FMNB’s risk profile. Furthermore, we anticipate continued strengthening of capital levels, supported by steady earnings growth and the company’s diversified business model.

This transaction marks the largest whole-bank acquisition in the past decade, accounting for approximately 38% of FMNB’s total assets. Over this period, FMNB has successfully completed six bank acquisitions, demonstrating a consistent and effective acquisition strategy. Notably, this deal enhances FMNB’s presence in Northeast Ohio and broadens its footprint across Central and Western Ohio particularly in the rapidly growing Columbus market. FMNB considers Columbus a key strategic market and has already made targeted investments there, including the acquisition of Crest Retirement Advisors and the establishment of an LPO. Middlefield further accelerates FMNB’s expansion strategy in the Columbus market. With a loan-to-deposit ratio of 75%, FMNB is well-positioned to capitalize on loan growth opportunities in select markets. The company’s strong balance sheet flexibility and stable, low-cost funding base provide the capacity to support and sustain organic loan growth. Additionally, FMNB has $4.6 billion in assets under care (AUC) and anticipates significant opportunities to cross-sell complementary banking services particularly in wealth management, including trust and retirement consulting. The company also expects to drive organic loan growth, with a strategic focus on expanding its C&I portfolio. While the CRE concentration is projected to rise modestly, it will remain well below regulatory thresholds.

FMNB projects a proforma ROA of ~ 1.5% by 2027, reflecting anticipated cost savings from the integration of MBCN and additional efficiencies gained through the conversion to the new core platform, Jack Henry. We note that FMNB has historically demonstrated strong earnings performance, with ROA consistently above 1.0%, supported by a healthy NIM, meaningful fee income generation (~25% of total revenue), and improved operating efficiency driven by cost synergies achieved through effective integration of prior acquisitions. FMNB’s loan review process covered 57% of Middlefield’s loan portfolio, resulting in a credit mark of $28.5 million, or 1.74% of MBCN’s total loans. The transaction also includes an estimated AFS rate mark of $18.9 million accreted over four years which is conservative in our view.

The acquisition of Middlefield Banc Corp. represents a strategically significant expansion that enhances FMNB’s position in the fast-growing Columbus market. The combined entity, with 83 branches, offers meaningful opportunities to deepen market penetration across Northeast and Central Ohio. The increased scale enhances FMNB’s ability to compete for larger lending relationships while supporting continued organic growth. Overall, we view the transaction as well aligned with FMNB’s inorganic growth strategy and broader market expansion objectives.

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