FMNB Farmers National Banc Corp.

Risks

• Risks Relating to Economic and Market Conditions
• Changes in economic, political, and market conditions may adversely affect our industry and our business.
• Changes in interest rates could adversely affect our income and financial condition.
• Defaults by another larger financial institution could adversely affect financial markets generally.
• Risks Related to Our Business
• We extend credit to a variety of customers based on internally set standards and judgment. We manage credit risk through a program of underwriting standards, the review of certain credit decisions and an on-going process of assessment of the quality of credit already extended. Our credit standards and on-going process of credit assessment might not protect us from significant credit losses.
• We have significant exposure to risks associated with commercial real estate and residential real estate in our primary markets.
• Our indirect lending exposes us to increased credit risks.
• Commercial and industrial loans may expose us to greater financial and credit risk than other loans.
• Our allowance for loan loss may not be adequate to cover actual future losses.
• We are subject to certain risks with respect to liquidity.
• Our business strategy includes continuing our growth plans. Our business, financial condition or results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively.
• We may experience difficulties in integrating acquired businesses, or acquisitions may not perform as expected.
• We may fail to realize all of the anticipated benefits of acquisitions, which could reduce our anticipated profitability.
• We may not be able to attract and retain skilled people.
• Strong competition within our markets could reduce our ability to attract and retain business.
• Consumers may decide not to use banks to complete their financial transactions.
• We are exposed to operational risk.
• We depend on our subsidiaries for dividends, distributions and other payments.
• We may elect or be compelled to seek additional capital in the future, but that capital may not be available when it is needed.
• Risks Related to the Legal and Regulatory Environment
• Increases in FDIC insurance premiums may have a material adverse effect on our earnings.
• Legislative or regulatory changes or actions, or significant litigation, could adversely impact us or the businesses in which we are engaged.
• Our results of operations, financial condition or liquidity may be adversely impacted by issues arising in foreclosure practices, including delays in the foreclosure process, related to certain industry deficiencies, as well as potential losses in connection with actual or projected repurchases and indemnification payments related to mortgages sold into the secondary market.
• Environmental liability associated with commercial lending could have a material adverse effect on our business, financial condition or results of operations.
• Impairment of investment securities, goodwill, other intangible assets, or deferred tax assets could require charges to earnings, which could result in a negative impact on our results of operations.
• Changes and uncertainty in tax laws could adversely affect our performance.
• Anti-takeover provisions could delay or prevent an acquisition or change in control by a third party.
• We may be a defendant from time to time in the future in a variety of litigation and other actions, which could have a material adverse effect on our business, financial condition or results of operations.