UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the Quarter ended Sept. 30, 2005

Commission file number 0-12055

FARMERS NATIONAL BANC CORP.

(Exact name of registrant as specified in its charter)

OHIO	34-1371693
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No)
20 South Broad Street
Canfield, OH 44406	44406
(Address of principal executive offices)	(Zip Code)

(330) 533-3341

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ      No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes þ      No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o      No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at October 31, 2005
Common Stock, No Par Value	13,046,198 shares

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Included in Part I of this report:

	Page
	Number
Farmers National Banc Corp. and Subsidiary
Consolidated Balance Sheets		1
Consolidated Statements of Income and Comprehensive Income		2
Condensed Consolidated Statements of Cash Flows		3
Notes to Unaudited Consolidated Financial Statements		4-6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		7-10
Item 3. Quantitative and Qualitative Disclosures About Market Risk		11
Item 4. Controls and Procedures		11
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		11-12
Item 3. Defaults Upon Senior Securities		12
Item 4. Submission of Matters to a Vote of Security Holders		12
Item 5. Other Information		12
Item 6. Exhibits		12-13
SIGNATURES		14
10-Q Certifications		15-16
Section 906 Certifications		17-18
EX-31A 302 Certification for CEO
EX-31B 302 Certification for CFO
EX-32A 906 Certification for CEO
EX-32B 906 Certification for CFO

CONSOLIDATED BALANCE SHEETS
FARMERS NATIONAL BANC CORP. AND SUBSIDIARY
(Unaudited)

	(In Thousands of Dollars)
	September 30,			December 31,
	2005			2004
ASSETS
Cash and due from banks	$	29,736		$	29,619
Federal funds sold		575			3,951
TOTAL CASH AND CASH EQUIVALENTS		30,311			33,570
Securities available for sale		272,820			281,883
Loans		511,896			485,679
Less allowance for loan losses		6,144			6,144
NET LOANS		505,752			479,535
Premises and equipment, net		15,280			15,655
Other assets		8,822			7,196
TOTAL ASSETS	$	832,985		$	817,839
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	55,394		$	57,026
Interest-bearing		571,675			565,198
TOTAL DEPOSITS		627,069			622,224
Federal funds purchased and repurchase agreements		85,466			70,912
Federal Home Loan Bank advances		39,170			42,016
Other borrowings		1,234			1,295
Other liabilities		2,551			2,738
TOTAL LIABILITIES		755,490			739,185
Commitments and contingent liabilities
Stockholders’ Equity:
Common Stock — Authorized 25,000,000 shares; issued 14,144,682 in 2005 and 13,912,515 in 2004		83,548			80,200
Retained earnings		10,922			10,958
Accumulated other comprehensive income (loss)		(1,365	)		893
Treasury stock, at cost; 1,083,984 shares in 2005 and 933,041 in 2004		(15,610	)		(13,397	)
TOTAL STOCKHOLDERS’ EQUITY		77,495			78,654
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	832,985		$	817,839

See accompanying notes.

1

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FARMERS NATIONAL BANC CORP. AND SUBSIDIARY
(Unaudited)

	(In Thousands except Per Share Data)
	For the Three Months Ended					For the Nine Months Ended
	Sept. 30,			Sept. 30,		Sept. 30,			Sept. 30,
	2005			2004		2005			2004
INTEREST INCOME
Interest and fees on loans	$	8,076		$	7,864	$	23,320		$	23,497
Interest and dividends on securities:
Taxable interest		2,004			2,024		6,263			6,272
Nontaxable interest		560			428		1,544			1,146
Dividends		101			112		312			386
Interest on federal funds sold		77			17		196			70
TOTAL INTEREST INCOME		10,818			10,445		31,635			31,371
INTEREST EXPENSE
Deposits		3,018			2,563		8,497			7,696
Short-term borrowings		527			270		1,231			785
Long-term borrowings		440			350		1,267			1,029
TOTAL INTEREST EXPENSE		3,985			3,183		10,995			9,510
NET INTEREST INCOME		6,833			7,262		20,640			21,861
Provision for loan losses		260			240		529			540
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,573			7,022		20,111			21,321
OTHER INCOME
Service charges on deposit accounts		756			726		2,040			1,824
Security gains		105			0		290			0
Other operating income		327			337		993			952
TOTAL OTHER INCOME		1,188			1,063		3,323			2,776
OTHER EXPENSES
Salaries and employee benefits		2,909			2,651		8,747			8,068
Net occupancy expense of premises		317			296		986			940
Furniture and equipment expense, including depreciation		340			338		1,036			995
State and local taxes		227			233		689			689
Loan expenses		116			120		304			289
Other operating expenses		1,157			1,109		3,349			3,329
TOTAL OTHER EXPENSES		5,066			4,747		15,111			14,310
INCOME BEFORE FEDERAL INCOME TAXES		2,695			3,338		8,323			9,787
INCOME TAXES		667			923		2,126			2,740
NET INCOME	$	2,028		$	2,415	$	6,197		$	7,047
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Change in net unrealized gains (losses) on securities, net of reclassifications		(1,338	)		2,051		(2,258	)		(1,522	)
COMPREHENSIVE INCOME	$	690		$	4,466	$	3,939		$	5,525
BASIC EARNINGS PER SHARE	$	0.16		$	0.19	$	0.48		$	0.55
DILUTED EARNINGS PER SHARE	$	0.16		$	0.19	$	0.48		$	0.54
DIVIDENDS PER SHARE	$	0.16		$	0.16	$	0.48		$	0.47

See accompanying notes.

2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FARMERS NATIONAL BANC CORP. AND SUBSIDIARY
(Unaudited)

	(In Thousands of Dollars)
	Nine Months Ended
	Sept. 30,			Sept. 30,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
NET CASH FROM OPERATING ACTIVITIES	$	8,469		$	9,826
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and repayments of securities available for sale		44,705			51,819
Proceeds from sales of securities available for sale		19,758			0
Proceeds from sale of other real estate owned		92			0
Purchases of securities available for sale		(59,467	)		(45,392	)
Loan originations and payments, net		(27,831	)		(10,289	)
Additions to premises and equipment		(357	)		(586	)
NET CASH FROM INVESTING ACTIVITIES		(23,100	)		(4,448	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits		4,845			(6,932	)
Net change in short-term borrowings		14,178			18,470
Proceeds from Federal Home Loan Bank borrowings and other debt		11,094			10,130
Repayment of Federal Home Loan Bank borrowings and other debt		(13,625	)		(23,600	)
Repurchase of Treasury Stock		(2,213	)		(3,487	)
Cash dividends paid		(6,255	)		(6,559	)
Proceeds from dividend reinvestment		3,348			3,492
NET CASH FROM FINANCING ACTIVITIES		11,372			(8,486	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(3,259	)		(3,108	)
Beginning cash and cash equivalents		33,570			33,814
Ending cash and cash equivalents	$	30,311		$	30,706
Supplemental cash flow information:
Interest paid		(10,761	)		(9,518	)
Income taxes paid		(2,455	)		(2,702	)
Supplemental noncash disclosure:
Transfer of loans to other real estate owned		70			0

See accompanying notes.

3

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Principles of Consolidation:

     The consolidated financial statements include the accounts of the company and its wholly-owned subsidiary, The Farmers National Bank of Canfield. All significant intercompany balances and transactions have been eliminated.

Basis of Presentation:

     The unaudited condensed consolidated financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2004 Annual Report to Shareholders included in the Company’s 2004 Annual Report on Form 10-K. The interim condensed consolidated financial statements include all adjustments (consisting of only normal recurring items) that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year.

Estimates:

     To prepare financial statements in conformity with U.S. GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. The allowance for loan losses and fair values of certain securities are particularly subject to change.

Segments:

     The Company provides a broad range of financial services to individuals and companies in northeastern Ohio. While the Company’s chief decision makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all the Company’s banking operations are considered by management to be aggregated in one reportable operating segment.

Stock-Based Compensation:

     Employee compensation expense under stock options is reported using the intrinsic valuation method. No stock-based compensation cost is reflected in net income, as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at the date of grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock Based Compensation.

4

Notes to Unaudited Consolidated Financial Statements (continued)

	Three months ended						Nine months ended
	Sept. 30,						Sept. 30,
(In Thousands, except Per Share Data)	2005			2004			2005			2004
Net income, as reported	$	2,028		$	2,415		$	6,197		$	7,047
Less: Total stock-based employee compensation expense determined under fair-value-based method		(7	)		(8	)		(20	)		(23	)
Pro forma net income	$	2,021		$	2,407		$	6,177		$	7,024
Earnings per share:
Basic earnings per share as reported	$	.16		$	.19		$	.48		$	.55
Pro forma basic earnings per share	$	.16		$	.19		$	.48		$	.54
Diluted earnings per share as reported	$	.16		$	.19		$	.48		$	.54
Pro forma diluted earnings per share	$	.16		$	.19		$	.47		$	.54

Securities:

Securities available for sale at September 30, 2005 and December 31, 2004 are summarized as follows:

			Gross		Gross
(In Thousands of Dollars)			Unrealized		Unrealized
September 30, 2005	Fair Value		Gains		Losses
U.S. Treasury and U.S. Government agencies	$	80,985	$	125	$	(782	)
Corporate debt securities		2,289		30		0
Mortgage-backed securities		118,657		19		(2,627	)
Obligations of states and political subdivisions		57,927		819		(273	)
Total debt securities		259,858		993		(3,682	)
Equity securities		12,962		587		0
TOTALS	$	272,820	$	1,580	$	(3,682	)

			Gross		Gross
(In Thousands of Dollars)			Unrealized		Unrealized
December 31, 2004	Fair Value		Gains		Losses
U.S. Treasury and U.S. Government agencies	$	86,158	$	801	$	(148	)
Corporate debt securities		3,562		98		0
Mortgage-backed securities		133,027		449		(1,548	)
Obligations of states and political subdivisions		44,940		1,437		(63	)
Total debt securities		267,687		2,785		(1,759	)
Equity securities		14,196		348		0
TOTALS	$	281,883	$	3,133	$	(1,759	)

During the first nine months of 2005, unrealized losses on securities have occurred mainly in the shorter duration part of the portfolio. This includes both U.S. Government agencies and mortgage-backed securities. As principal paydowns are received on mortgage-backed securities, fair values

5

Notes to Unaudited Consolidated Financial Statements (continued)

should approach par. Unrealized losses on securities have not been recognized into income because management has the intent and ability to hold for the foreseeable future and the decline in fair value is largely due to increases in market interest rates. The fair value is expected to recover as the securities approach their maturity date and/or market rates change.

Earnings Per Share:

     The computation of basic and diluted earnings per share is shown in the following table:

	Three months ended				Nine months ended
	Sept. 30,				Sept. 30,
(In Thousands, except Per Share Data)	2005		2004		2005		2004
Basic EPS computation
Numerator — Net income	$	2,028	$	2,415	$	6,197	$	7,047
Denominator — Weighted average shares outstanding		13,026,556		12,929,019		12,999,174		12,923,866
Basic earnings per share	$	.16	$	.19	$	.48	$	.55
Diluted EPS computation
Numerator — Net income	$	2,028	$	2,415	$	6,197	$	7,047
Denominator — Weighted average shares outstanding for basic earnings per share		13,026,556		12,929,019		12,999,174		12,923,866
Effect of Stock Options		10,690		16,876		12,154		16,895
Weighted averages shares for diluted earnings per share		13,037,246		12,945,895		13,011,328		12,940,761
Diluted earnings per share	$	.16	$	.19	$	.48	$	.54

Comprehensive Income:

     Comprehensive income consists of net income and other comprehensive income. Other comprehensive income consists solely of unrealized gains and losses on securities available for sale.

Reclassifications:

     Certain items in the prior year financial statements were reclassified to conform to the current presentation.

Newly Issued But Not Yet Effective Accounting Standards:

     In December 2004, the Financial Accounting Standards Board issued a revised version of Statement of Financial Accounting Standards No. 123. It requires that the fair value of stock options and other share-based compensation be measured as of the date the grant is awarded and expensed over the period of employee service, typically the vesting period. It will be required for the Company as of January 1, 2006. Compensation cost will also be recorded for previously awarded options to the extent that they vest after the effective date. The effect of this pronouncement on future operations is not expected to be material.

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

     When used in this Form 10-Q, or in future filings with the Securities and Exchange Commission, in press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “will likely result”, “are expected to”, “will continue”, “is anticipated”, “estimate”, “project”, or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the Corporation’s actual results to be materially different from those indicated. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the market areas the Corporation conducts business, which could materially impact credit quality trends, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the market areas the Corporation conducts business, and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Corporation wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Corporation undertakes no obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2005 and 2004

     The Corporation’s net income for the first nine months of 2005 was $6.197 million, or $.48 per diluted share, which is a 12.06% decrease compared with the $7.047 million, or $.54 per diluted share earned during the same period last year. During the third quarter of 2005, net income was $2.028 million, or $.16 per diluted share which is a 16.02% decrease compared with the $2.415 million, or $.19 per diluted share earned during the same period last year. The Corporation’s annualized return on average assets and return on average equity for the nine month period ended September 30, 2005 was 1.00% and 10.63% respectively, compared to 1.16% and 11.89% for the same period in 2004.

Net Interest Income. Net interest income for the first nine months of 2005 totaled $20.64 million, a decrease of $1.22 million or 5.59% compared to the first nine months of 2004. This decline is due to an increase in interest expense of $1.49 million or 15.62%. Interest expense increased as deposits shifted out of the lower costing savings deposits and into the higher costing time deposits. Interest expense on time deposits increased $1.03 million as average balances grew $40.24 million or 17.88%. Interest income increased $264 thousand or .84% during the same period. The Corporation’s tax equated annualized net interest margin decreased from 3.96% for the period ending September 30, 2004 to 3.72% for the period ending September 30, 2005. This decline was due to a slight shift in deposit mix to higher costing time deposits combined with a 13 basis point decrease in loan yields. Management will continue to evaluate future interest rate changes so that assets and liabilities may be priced accordingly to minimize the impact on the net interest margin.

Net interest income for the quarter ended September 30, 2005 totaled $6.83 million, a decrease of $429 thousand or 5.91% compared to the quarter ended September 30, 2004. While interest income increased $373 thousand or 3.57%, interest expense increased $802 thousand or 25.2%. The increase in interest expense is attributable to both the $24.03 million increase in average interest-bearing liabilities as well as the 39 basis point increase in the cost of interest-bearing liabilities. Average time deposits increased by $56.83 million or 25.17% over the prior year comparable quarter which drove up interest expense on time deposits by $543 thousand. The cost of interest-bearing demand deposits and repurchase agreements are up 49 basis points and 100 basis points respectively over the prior year comparable quarter as the Federal Reserve Bank continues to increase the target for the federal funds sold interest rate.

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Other Income. Total other income for the nine month period ended September 30, 2005 increased by $547 thousand or 19.7% compared to the same period in 2004. This increase is due to both security gains and an increase in fees from overdrafts and return check charges. Security gains amounted to $290 thousand during the first nine months of 2005 and $0 during the same period in 2004. Various types of securities were sold and proceeds reinvested in order to improve the Corporation’s investment yield. Fees from overdrafts and return check charges increased by $239 thousand or 18.41% when comparing the first nine months of 2005 to the first nine months of 2004. Beginning in May of 2004, the Bank began to offer its customers a courtesy overdraft program.

Total other income for the quarter ended September 30, 2005 increased by $125 thousand from the prior year comparable quarter. Security gains resulting from the previously mentioned sales amounted to $105 thousand for the quarter ended September 30, 2005 and $0 during the same period in 2004.

     Other Expense. Other expense was $15.11 million for the first nine months of 2005 compared to $14.31 million for the same time in 2004. This amounted to an increase of 5.6%. Salaries and employee benefits increased $679 thousand or 8.42%. Most of this increase was due to health insurance costs increasing $576 thousand or 49.51%. The efficiency ratio increased to 63.83% for the first nine months of 2005 compared to 58.08% for the first nine months of 2004. The efficiency ratio was adversely impacted by the $1.22 million decline in net interest income. The efficiency ratio is calculated as follows: non-interest expense divided by the sum of net interest income plus non-interest income, excluding security gains. This ratio is a measure of the expense incurred to generate a dollar of revenue. Management will continue to closely monitor and keep the increases in other expenses to a minimum.

Other expense was $5.07 million for the quarter ended September 30, 2005 compared to $4.75 million for the same quarter in 2004. This increase of 6.72% occurred mainly in the area of salaries and employee benefits which increased $258 thousand or 9.73%. Health insurance costs increased $217 thousand or 61.82% over the prior year comparable quarter. Most of the increase is due to higher levels of health insurance claims.

Income Taxes. Income tax expense totaled $2.13 million for the first nine months of 2005 and $2.74 million for the first nine months of 2004, a decrease of $614 thousand or 22.41%. The effective tax rate for the first nine months of 2005 was 25.54% compared to 28% for the same time in 2004. Income tax expense totaled $667 thousand for the quarter ended September 30, 2005 and $923 thousand for the quarter ended September 30, 2004, a decrease of 27.74%. This decrease is a result of the Corporation’s increased purchases of tax-exempt municipal securities combined with a decrease in pretax income.

Other Comprehensive Income. For the first nine months of 2005, the change in net unrealized gains on securities, net of reclassifications, resulted in a loss of $2.26 million compared to a loss of $1.52 million for the same period in 2004. The losses were due to interest rate fluctuations affecting the market values of the entire investment portfolio.

Financial Condition

     Total assets increased $15.15 million or 1.85% since December 31, 2004. The Corporation experienced decreases of $3.26 million in cash and cash equivalents and $9.06 million in securities available for sale, and increases in federal funds purchased and repurchase agreements of $14.55 million, and an increase of $4.85 million in deposits. These changes were used to fund net loan growth of $26.22 million. Capital ratios remain solid, as shown by the ratio of equity to total assets at September 30, 2005 of 9.3%.

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Securities. Securities available for sale decreased $9.06 million, or 3.22% during the nine months ended September 30, 2005. An increase in securities of state and political subdivisions of $13.82 million was partially offset by a decrease in mortgage-backed securities of $12.86 million. In addition, there was a $3.47 million decrease in the net unrealized gains (losses) on securities, resulting from an increase in market interest rates.

Loans. Gross loans increased $26.22 million or 5.4% since December 31, 2004. Commercial Real Estate loans grew $20.29 million or 14.31% since December 31, 2004. Commercial Real Estate loans have grown as the Corporation has used a combination of experienced personnel and marketing strategies to build this section of the portfolio as the local economy continues to recover. In addition, municipal loans increased $3.51 million or 31.5%. Loans contributed 73.72% of total interest income for the nine months ended September 30, 2005 and 74.9% for the nine months ended September 30, 2004.

Allowance for Loan Losses. The allowance for loan losses as a percentage of loans decreased slightly from 1.27% at December 31, 2004 to 1.2% at September 30, 2005. The provision for loan losses for the first nine months of 2005 and 2004 was $529 thousand and $540 thousand, respectively. Net charge-offs totaled $529 thousand for the first nine months of 2005 down from $1.04 million for the first nine months of 2004. Net charge-offs were aided by a recovery of $250 thousand during the second quarter of 2005. The provision for loan losses was $260 thousand for the quarter ended September 30, 2005 compared to $240 thousand for the same time in 2004. The provision closely tracked net charge-offs for the third quarter of 2005. During 2005, approximately 80% of gross charge-offs have occurred in the indirect loan portfolio compared to 87% in 2004. Non-performing loans to total loans has increased slightly from .28% as of December 31, 2004 to .31% as of September 30, 2005.

The provision for loan losses is based on management’s judgment after taking into consideration all factors connected with the collectibility of the existing loan portfolio. Management evaluates the loan portfolio in light of economic conditions, changes in the nature and volume of the loan portfolio, industry standards and other relevant factors. Specific factors considered by management in determining the amounts charged to operating expenses include previous credit loss experience, the status of past due interest and principal payments, the quality of financial information supplied by loan customers and the general condition of the industries in the community to which loans have been made.

Deposits. Total deposits increased $4.85 million since December 31, 2004. Time deposits increased $51.96 million since December 31, 2004. The growth in time deposits was offset by a decrease of $48.22 million in the money market index account. Funds shifted out of the money market index account and into the Common Sense Checking account which increased $19.53 million. This shift out of the money market index account was the result of a concerted effort by the Company to maintain an optimally priced deposit mix. Additionally, other savings accounts decreased $11.17 million since December 31, 2004. The Company prices deposit rates to remain competitive within the market and to attract and retain customers.

Borrowings. Total borrowings increased $11.65 million or 10.2% since December 31, 2004. Securities sold under repurchase agreements increased $10.55 million. Due to the rising rate environment, customers are investing their money short-term in this account.

Capital Resources. Total stockholders’ equity decreased slightly from $78.654 million at December 31, 2004 to $77.495 million at September 30, 2005. During the first nine months of 2005, the mark to market adjustment of securities decreased accumulated other comprehensive income (loss) by $2.26 million and the repurchase of treasury stock decreased stockholders’ equity by $2.21 million.

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

     The capital management function is a regular process which consists of providing capital for both the current financial position and the anticipated future growth of the Corporation. As of September 30, 2005 the Corporation’s total risk-based capital ratio stood at 15.81%, and the Tier I risk-based capital ratio and Tier I leverage ratio were at 14.64% and 9.39%, respectively. Regulations established by the Federal Deposit Insurance Corporation Improvement Act require that for a bank to be considered well capitalized, it must have a total risk-based capital ratio of 10%, a Tier I risk-based capital ratio of 6% and a Tier I leverage ratio of 5%.

Critical Accounting Policies

     The Company follows financial accounting and reporting policies that are in accordance with U.S. GAAP. These policies are presented in Note A to the consolidated audited financial statements in Farmers National Banc Corp.’s 2004 Annual Report to Shareholders included in Farmers National Banc Corp.’s Annual Report on Form 10-K. Critical accounting policies are those policies that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company has identified two accounting policies that are critical accounting policies and an understanding of these policies are necessary to understand our financial statements. These policies relate to determining the adequacy of the allowance for loan losses and other-than-temporary impairment of securities. Additional information regarding these policies are included in the notes to the aforementioned 2004 consolidated financial statements, Note A (Summary of Significant Accounting Policies), Note B (Securities), Note C (Loans), and the sections captioned “Loan Portfolio” and “Investment Securities”.

Liquidity

     The Corporation maintains, in the opinion of management, liquidity sufficient to satisfy depositors’ requirements and meet the credit needs of customers. The Corporation depends on its ability to maintain its market share of deposits as well as acquiring new funds. The Corporation’s ability to attract deposits and borrow funds depends in large measure on its profitability, capitalization and overall financial condition. The Company’s objective in liquidity management is to maintain the ability to meet loan commitments, purchase securities or to repay deposits and other liabilities in accordance with their terms without an adverse impact on current or future earnings. Principal sources of liquidity for the Company include assets considered relatively liquid, such as federal funds sold, cash and due from banks, as well as cash flows from maturities and repayments of loans, and securities.

     The primary investing activities of the Company are originating loans and purchasing securities. During the first nine months of 2005, net cash used in investing activities amounted to $23.1 million compared to $4.45 million for the same period of 2004. Net increases in loans were $27.74 million in 2005 compared to $10.29 million in 2004.

     The primary financing activities of the Company are obtaining deposits, repurchase agreements and other borrowings. Net cash provided by financing activities amounted to $11.37 million for the first nine months of 2005 compared to $8.49 million used in financing activities for the same period in 2004. Most of this change is a result of the net increase in deposits. Deposits increased $4.84 million for the nine month period ended September 30, 2005 compared to decreasing $6.93 million for the same period in 2004. Repayments on Federal Home Loan Bank borrowings and other debt decreased to $13.63 million in 2005 compared to $23.6 million in 2004.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

     The Company’s ability to maximize net income is dependent, in part, on management’s ability to plan and control net interest income through management of the pricing and mix of assets and liabilities. Because a large portion of assets and liabilities of the Company are monetary in nature, changes in interest rates and monetary or fiscal policy affect its financial condition and can have significant impact on the net income of the Company.

     The Company monitors its exposure to interest rate risk on a quarterly basis through simulation analysis which measures the impact changes in interest rates can have on net income. The simulation technique analyzes the effect of a presumed 100 and 200 basis points shift in interest rates and takes into account prepayment speeds on amortizing financial instruments, loan and deposit volumes and rates, non-maturity deposit assumptions and capital requirements. The results of the simulation indicate that in an environment where interest rates rise or fall 100 and 200 basis points over a 12 month period, using August 31, 2005 amounts as a base case, the Company’s change in net interest income would be within the board mandated limits.

The information required by Item 3 has been disclosed in Item 7A of the Company’s Annual Report to Shareholders on Form 10-K for the year ended December 31, 2004. There has been no material change in the disclosure regarding market risk due to the stability of the balance sheet.

Item 4. Controls and Procedures

     Based on their evaluation, as of the end of the period covered by this quarterly report, the Company’s Chief Executive Officer and Chief Financial Officer have concluded the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are effective. There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. The Company’s Chief Executive Officer and Chief Financial Officer have also concluded there have been no changes over the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     There are no material pending legal proceedings to which the registrant or its subsidiary is a party, or of which any of their property is the subject, except proceedings which arise in the ordinary course of business. In the opinion of management, pending legal proceedings will not have a material effect on the consolidated financial position of the registrant and its subsidiary.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of equity securities by the issuer.

On June 16, 2005, the Corporation announced the adoption of a stock repurchase program that authorizes the repurchase of up to 4.9% or approximately 637,469 shares of its outstanding common stock in the open market or in privately negotiated transactions. This program expires in June 2006.

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Item 2. Unregistered Sales of Equity Securities and use of Proceeds (continued)

The following table summarizes the treasury stock purchased by the issuer during the third quarter of 2005:

					Total Number of		Maximum Number of
					Shares Purchased as		Shares that May Yet
	Total Number of		Average Price Paid		Part of Publicly		Be Purchased Under
Period	Shares Purchased		Per Share		Announced Program		the Program
July 1-31		32,520	$	14.26		32,520		594,949
August 1-31		50,000	$	14.22		50,000		544,949
Sept. 1-30		10,000	$	13.65		10,000		534,949
TOTAL		92,520	$	14.18		92,520

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

(a) The following exhibits are filed or incorporated by reference as part of this report:

 2. Not applicable.

 3(i). The Articles of Incorporation, including amendments thereto for the Registrant. Incorporated by reference to Exhibit 4.1 to Farmers National Banc Corp’s Form S-3 Registration Statement dated October 3, 2001. (File No. 0-12055).

 3(ii). The Code of Regulations, including amendments thereto for the Registrant. Incorporated by reference to Exhibit 4.2 to Farmers National Banc Corp’s Form S-3 Registration Statement dated October 3, 2001. (File No. 0-12055).

 4.   Incorporated by reference to initial filing.

10. Not applicable.

11. Refer to notes to unaudited consolidated financial statements.

15. Not applicable.

18. Not applicable.

19. Not applicable.

22. Not applicable.

23. Not applicable.

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Item 6. Exhibits (continued)

24. Not applicable.

31.a Certification of Chief Executive Officer (Filed herewith)

31.b Certification of Chief Financial Officer (Filed herewith)

32.a 906 Certification of Chief Executive Officer (Filed herewith)

32.b 906 Certification of Chief Financial Officer (Filed herewith)

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FARMERS NATIONAL BANC CORP.
Dated: November 8, 2005
/s/ Frank L. Paden
Frank L. Paden
President and Secretary
Dated: November 8, 2005
/s/ Carl D. Culp
Carl D. Culp
Executive Vice President
and Treasurer

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