Welcome to today's conference call announcing Farmers National Banc Corp.'s acquisition of Cortland Bancorp. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypads. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Andrew Berger, investor relations. Thank you, sir. You may begin. Thanks, Laura. Good morning, everyone, and thank you for joining us today to review Farmers National Banc Corp.'s acquisition of Cortland Bancorp. Before we continue, I want to remind everyone that any forward-looking statements made during this presentation are subject to the safe harbor statement found in our filings with the Securities and Exchange Commission. Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the company's actual results, performance, and achievements to be materially different from those expressed or implied by the forward-looking statements. Farmers assumes no obligation to update any forward-looking statements to reflect future events, information, or circumstances that arise after the date of this presentation. For further information concerning issues that could materially affect actual results, performance, achievements related to forward-looking statements, please refer to the factors disclosed periodically in Farmers' filings with the Securities and Exchange Commission, as well as the disclosure statement in the presentation and Farmers' press release dated June 23rd, 2021. A press release and presentation on the acquisition of Cortland Bancorp are also available on farmersbankgroup.com and the investor relations section of our website. In addition, this call is being webcast and a replay will also be available on the company's investor relations website. Now I'm pleased to introduce Kevin Helmick, Farmers' Chief Executive Officer. Kevin, please go ahead. Thank you, Andy. Good morning, and thanks for taking the time to be with us today. We're excited to share with you that earlier this morning, Farmers National Banc Corp. announced the acquisition of Cortland Bancorp. Cortland Bancorp is headquartered in Cortland, Ohio, and is the holding company for The Cortland Savings and Banking Company. On a consolidated basis, Cortland Bank has almost $792 million in assets with 13 locations in Northeast Ohio. With Farmers currently sitting at $3.3 billion in assets, this transaction will increase our assets to $4.1 billion. On today's call, we will share with you our strategic rationale and financial implications of this opportunity. Our transaction with Cortland Bank is strategically important as it accelerates our growth and geographic footprint in Northeast Ohio by allowing us to further penetrate the attractive Cleveland suburban markets to include Strongsville and Hudson. Additionally, this transaction will serve as Farmers' entrance into Summit and Portage counties. In 2018, Farmers National Bank was named the number one performing bank in Ohio by Bank Director. Farmers was also recognized as one of the best employers in Ohio by Crain's Cleveland in 2020. Cortland Bank is a well-run institution with an emphasis on excellent customer service with cost-efficient delivery. We will be able to improve the client experience by increasing credit capacity, providing access to wealth management services, and adding a broader array of digital capabilities and technology enhancements. The combined company will consist of 48 locations throughout Northeast Ohio and Western Pennsylvania. The transaction will increase deposit market share to number two in Trumbull County and number three in Mahoning County. As mentioned, we are very excited to offer Farmers' robust wealth management services to Cortland's customers to include Farmers Trust Company, Farmers National Investments, Farmers National Insurance, Farmers Retirement Services, and our private banking program. There are a number of benefits that will transpire from this transaction. The most important is the cultural fit that will allow us to preserve our lending and risk philosophies, as well as our customer-first culture. This deal combines Cortland Bank's strong mortgage program with Farmers' strong mortgage program to create a best-in-class mortgage franchise in Northeast Ohio. This acquisition also enhances the depth and breadth of the leadership team with the addition of two new Cortland Bank executives. James Gasior, Cortland's President and CEO, will join Farmers' executive team as Senior Executive Vice President and Head of Corporate Development. Timothy Carney, Cortland's Executive Vice President and Chief Operating Officer, will join Farmers as Senior Executive Vice President and our Chief Banking Officer. This deal will also fortify the board of directors with two additional directors from Cortland Bank to be named at a later date. We will acquire Cortland Bank and merge into one combined company that will operate under the name Farmers National Bank. The transaction is expected to close in the fourth quarter of 2021. Once closed, we'll be working towards a conversion date in the first quarter of 2022. This transaction brings our total acquisitions to eight since 2009, including five banks and three fee-based businesses. We have demonstrated a successful track record in our previous mergers as talent, skill, and passion run deep in Farmers' ranks. We have the confidence that our acquisition experience should help mitigate integration risk with this transaction. Additionally, we expect our growth rates and profitability to be significantly enhanced as a combined company. I will now turn the call over to Carl Culp, our CFO, for additional details around the financial ramifications of this deal. Carl? Thank you, Kevin. Good morning, everyone. As I mentioned, I will walk through some of the financial metrics of the deal with Cortland. Looking at page 10 of the presentation, the Cortland Bank acquisition is structured as a stock and cash transaction, whereby shareholders of Cortland will elect to receive either 1.75 shares of Farmers common stock or $28 in cash for each share of Cortland they hold. This will be subject to an overall limitation of 75% of the shares exchanged for Farmers shares and 25% for cash. Based on Farmers' closing share price of $16.87 on June 22nd, the total value of the transaction is $124 million, or $29.14 per share. The purchase price was approximately 153% of tangible book value and 12.8 times earnings for the last 12 months for Cortland. On page 11 of the presentation, we lay out the key assumptions, which include cost savings of 39%, with 75% realized in 2022 and 100% thereafter. Regarding credit due diligence, management completed an in-depth review of Cortland's $518.6 million loan portfolio. Our due diligence team consisted of senior commercial credit and commercial banking personnel, as well as senior consumer mortgage underwriting and collections personnel. Management also engaged a national accounting firm and a third-party specialist to assess the loan diligence, portfolio analytics, and development of the credit mark. Turning now to slide 12 of the presentation, looking at the pro forma combined company with Cortland, we are very excited about the earnings accretion for 2022, which is anticipated to be just over 12% of our 2022 consensus estimates and over 13% on a fully phased-in basis going forward. Our capital levels remain strong post-acquisition, and we anticipate our regulatory capital levels to be comfortably in excess of well-capitalized levels. Tangible book value per share dilution is expected to be earned back in approximately 3.3 years using the crossover method. The due diligence team reviewed approximately 66% of the target commercial loan portfolio, including 100% of its loan relationships with exposure greater than $1 million. Approximately 93% of the bank's classified loans were also reviewed during this process. We believe this comprehensive review provides an accurate assessment of the loan portfolio, and the credit mark is both conservative and prudent in today's environment. I will now turn the call back to Kevin for his final comments. Well, thanks, Carl. As you can see, we are very excited about this opportunity. This is a quality company that offers tremendous upside for our shareholders, given our experience in integrating deals in banking and fee-based businesses, coupled with our established risk management practices. This concludes our prepared commentary, and we will now open the call for questions. Once again, this is Kevin Helmick, and joining me for the Q&A session is Carl Culp, our Chief Financial Officer. I will now turn the call back into the hands of our call facilitator, Andy Berger. Thanks, Andy. Conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment while we pull for questions. The first question comes from the line of Michael Perito with KBW. You may proceed with your question. Hey, good morning, guys. Hey, Mike. Good morning. Carl, congratulations. Morning, Mike. on the retirement. Well deserved. Hope you enjoy yourself. Thank you very much, Mike. That's very appreciated. A few questions. Let's dive right in. I wanted to start on the loan portfolio. It seems like it's a little commercial real estate heavy, although they do have a nice C&I portion as well. I was curious if you could maybe just provide a little color. The loan yields look pretty similar overall, but just a little bit more color on where they've had success and what type of commercial portfolio it is comparative to yours. Yeah. Thanks, Mike. I'll let Carl provide some of the financial metrics around it, but I'll provide a little bit of color. As you know we have a pretty diverse loan portfolio, so bringing on Cortland that has about 50% as CRE really didn't give us any angst. We took a pretty deep dive over quite a while exploring the portfolio. Because of the crossover in our market, we're pretty familiar with most of the credits, especially the larger ones and the relationships. We're going to be retaining many of the lenders that are on those relationships. I think from that standpoint, our familiarity with the markets that they're in really helps from that perspective. Carl, I know we talked about, and you have ready concentration levels and can give Mike an idea on our comfort regarding that. Carl, you might be on mute. Yeah, I'm sorry. My phone, yeah, skipped there for a second. Yeah, when we take a look at our total combined CRE portfolio, Mike, pro forma, it's around $877 million. with our Looking total combined owner-occupied and non-owner occupied CRE together as a percentage of Tier 1 capital, it projects out to just a little under 200%. We feel we have comfortable room from a capital standpoint. We feel they underwrite loans in a very similar fashion as we do. As we went through the due diligence process, we became very comfortable with their underwriting process and have a good understanding. Yeah, we feel real good about that. Is it fair to say that, when I look at the deposit franchises, it seems like Cortland has good non-interest, I'm sure there's some decent retail account in there, deposit accounts in there, but I was a little surprised to see no real consumer lending in the mix. Is that probably towards the top of the list of areas where you guys think maybe there could be some near-term opportunities, in terms of revenue enhancements? Yeah, Mike, we like the retail franchise that we're getting. I think, we named two locations, specifically Strongsville and Hudson, are really attractive markets. Hudson in Summit County and Strongsville in Cuyahoga. Also, locations in Portage County, we get an entree into those. We do have some lending processes that we think we can aid in the enhancement for consumer lending. I'd be remiss if I didn't mention mortgage. We know some of their mortgage team, and are very comfortable with our ability to double down in Northeast Ohio with a strong mortgage offering. I think there are real opportunities there. Mike, you know us well enough to know that we use that retail distribution network for wealth management as well. We're very excited. We see some of those markets as being untapped. The Central and Northern Trumbull County market, Portage, and then obviously Strongsville, Fairlawn, and Hudson that we mentioned earlier. It's even more in addition to the consumer lending, it's generating additional fees, and servicing clients in that way as well. Got it. Yeah. Point, Kevin, just on the mortgage side, just looking at their financials, at their reg data, the mortgage gain on sale, the mortgage banking revenues have been pretty strong the last two quarters. Just curious, as you guys think about the EPS accretion you communicated, what type of mortgage production are you guys assuming over the one or two-year period? Yeah, Mike, as you know from previous calls with us, we do expect a slowdown in the second half of the year. We very much stressed the portfolio and the growth as we did with ours. Anticipating some slowdown, I think we still are hearing pretty good indicators about the pipelines. Certainly we would expect it to slow a little bit in the second half. As far as specific numbers, Mike, I think our projections for Farmers hold, which, Carl, if you have those numbers at the ready, we can share them. I know we were predicting roughly about half the type of volume that we had seen on a monthly basis in the first quarter. That's right, Kevin. Yeah. For the back half of the year. Yeah. That Yes. I guess it's fair to say that you guys aren't modeling in the $3.5 million-$4 million quarterly run rate. No. Yeah. Okay. No, we try to have pretty conservative estimates, Mike. Just try to read the market and understand what pipelines are too. Got it. Okay. Just lastly for me, I think obviously the financial merits of the deal are pretty clear, the accretion, et cetera. Obviously there's scale to be gained through this deal as well, which can be critical. I was just curious, how do you think this transaction impacts the overall growth rate of the company and where you see that heading and what opportunities that could stem from this deal that could be added to that growth rate? Are there any considerations that we should be thinking about that might be headwinds towards achieving growth rates similar to where you guys were in past years from this transaction? Yeah. Mike, I think that's a good question. Obviously we try to bring those out in any of the publications that we've made. Again, I'll reiterate, entree into new growth markets that we didn't have, that they have a foothold in, like Strongsville and Hudson, our wealth management line of business. Just adding some really capable, experienced lenders across the footprint, Northeast Ohio. Loan growth, as we all know, is at a premium right now. We think it continues to enhance. It increases our house limit as well as our legal lending limit, so we can deepen the relationships that we have with some of our key borrowers, in providing them, getting a better share of wallet, I guess, across the board. Taking a really strong deposit franchise, a bank that's known for their commercial lending and mortgage capability, and just layering on our capabilities, we think we'll be able to see continued strong growth for both franchises. The scale, as you pointed out, Mike, it goes without saying, in a post-pandemic world, all we've learned about leveraging technology and managing risk is only aided by smart strategic deals that we think this is. Carl, happy to hand it over to you if you have any additional thoughts for Mike. No, I think you covered it well, Kevin. Thank you. All right, guys. Well, thanks for taking my questions. I appreciate it. Thanks, Mike. Our next question comes from the line of Scott Siefers with Piper Sandler. You may proceed with your question. Thank you. Morning, guys. Congrats on the deal, Carl, definitely very much congratulations on your retirement. Wish you all the best there. Thank you. A quick question on the cost savings. Given the overlap, the 39% number looks certainly achievable. Maybe some quick thoughts on where those come from, how much will just come from the back office not having a need for two, and then how much, if any, comes from branch closures. I think you might've said it in your opening remarks, Kevin, maybe a reminder on what's the timing for the conversion again? Yeah, sure. Thanks, Scott, Always good to talk with you. I'll start with the last question first. Our conversion, we're really thinking first quarter of 2022. Amazing. Yeah. Aiming for a close sometime in the fourth quarter and then hopefully not too deep in the fourth quarter. The conversion will be in the first quarter. As far as the expenses go, one of the things that we try to do is when we look at in-market deals, the workforce and talent is at a premium, and so we have a number of open positions. Being able to fill those positions with people that are familiar with the market and a good cultural fit is key. I would lead with that comment. I think as far as cost saves goes, when we look at the number, roughly 50% would come from the consolidation of the workforces. If there's any other questions, I'm happy to elaborate, but that's about what we have penciled in, Scott. Okay, perfect. Just I guess on potential for additional transactions, you still have pretty strong capital ratios. I guess if we look back, you guys have averaged one a year for the last several years, but it's been a little lumpy in there. Some years more active, some years less. Just curious about your interest in additional deals, or does this sort of take things off the table for the time being? Scott, that's right. We've had these discussions in the past. I think there's work to be done. Obviously getting through the regulatory apps and all the blocking and tackling in the first 90 days is really important to us. In the past, we've used integration firms. We'll once again, with our experienced team of bankers on both sides of this transaction, we will once again use an integration firm. It helps run things a little bit smoother. It provides additional resources. We think it kind of enables us to get back in the queue a little bit sooner. To predict that right now, we will continue to have conversations, how we've been pretty strategic when we look at things. I think we would be ready, but there are certain things we have to get through in the first 90 to even, I'll say, 120 days, and kind of let the dust settle, and we'll be back at it if it makes sense. Perfect. I guess last question. I suspect you guys have known each other really well for a long time, just given the overlap, cultural fit, et cetera. To the extent you can or are comfortable, can you share with us if this was a negotiated transaction, or was it an auction opened up to others? No. Yeah, we would share that it was negotiated, and of course, we'll provide a lot more details, Scott, as you know, in the S-4. I would just go to tell you, Jim and Tim, they've been Ohio bankers for many years, and we over the years have become friends with them, as we have a lot of bankers. As time went by and we compared the organizations and discussed needs for the future and some of the things we wanted to accomplish together, this just made the most sense. The boards got behind it, and we think it's compelling for both sides. I appreciate the question, though. Perfect. All right, good. Well, thank you guys very much. I appreciate the time. Thanks, Scott. Our next question comes from the line of Daniel Tamayo with Raymond James. You may proceed with your question. Hi, guys. Congratulations on the deal. Carl, congratulations on your retirement. Thank you. answered here. I guess just in terms of, you talked a little bit about going forward once this deal is closed, what you're looking for. Does this change your strategy in terms of the footprint you want to stay in? Do you think now you're ready to move outside of this core footprint going forward? Yeah. Hi, Daniel. That's a great question. What really drives us in transactions. Its relationships and kind of the cultural fit. We've taken the approach over the last eight or 10 years that getting to a particular asset size, even though we know it provides scale, and is an ingredient in our decision-making, it's really more about the fit and the cultural fit. We've had so much success, going back to the NBOH days and Tri-State, the Maple Leaf transaction, which we closed in January of 2020, of doing those deals that I think it'll continue to drive that. I would have to tell you though, that this type of expansion creates the opportunity to network differently and broader, and create additional relationships. I think with that, it gives you more natural opportunities. We really don't close the door on anything. We look at whether it's on the bank side or especially on the fee-based side, transactions that make sense. You know us well enough now to know that we love some of the smaller markets that provide such stability, especially in core deposits and with our wealth management products and good solid lending. We also like some of the more growth-oriented markets and creating that diversity in our footprint to us makes a lot of sense. When we have an ability to add markets like Strongsville and Hudson to existing markets like Canton and Wooster and Beachwood, it makes all the sense in the world. Not to mention some of the other markets that we own that are in Cortland's footprint and our existing footprint. I would answer it that we still let our core principles drive us. We also recognize that with an expansion like this, it expands those opportunities as well, and we'll be able to look at more. That sounds great. I appreciate all the color. That's all I had. Great. Thanks, Daniel. Ladies and gentlemen, we have reached the end of today's question and answer session. I would like to turn this call back over to Mr. Kevin Helmick for closing remarks. Well, once again, we thank everyone for joining for this exciting day and exciting announcement for the franchises of Farmers National Bank and Cortland Bank. We look forward to reconnecting with many of you that have joined the call today. Once again, thanks for joining. That's all. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.