Release Details

Farmers & Merchants Bancorp, Inc. Reports 2017 First-Quarter Financial Results

April 19, 2017

ARCHBOLD, Ohio, April 19, 2017 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (OTCQX:FMAO) today reported financial results for the 2017 first quarter ended March 31, 2017.

2017 First Quarter Financial Highlights Include (on a year-over-year basis unless noted):

  • 56 consecutive quarters of profitability
  • Total assets were $1,067,551,000
  • Total loans increased 9.1% to $772,273,000
  • Net interest income after provision for loan losses increased 9.5% to $8,469,000
  • Net income increased 14.4% to $2,839,000
  • Earnings per basic and diluted share increased 13.0% to $0.61
  • Noninterest income was $2,584,000
  • Return on average assets was 1.07%, up from 0.99%
  • Return on average equity was 8.97%, up from 8.18%

Paul S. Siebenmorgen, President and Chief Executive Officer, stated, “The 2017 first quarter financial results demonstrate the continued strength and favorable momentum of F&M’s expanding banking franchise.  Over the past five years, we have invested in expanding our physical presence by opening four F&M locations in higher growth markets, while also investing in digital banking channels such as online and mobile resources.  Most recently, we launched a new website to enhance our online presence.  We also expanded our customer statements that have additional account information, F&M branding, and the ability to communicate new marketing offerings.  These investments make it easier for F&M’s customers to interact with the bank, and we remain committed to building robust, modern, and personalized financial products and services.  F&M’s record first quarter profitability and outstanding loan balances are directly tied to our relationship building which is the foundation of our future success.  I am pleased with the favorable start to 2017 and look forward to another good year of growth and profitability.” 

Income Statement
Net income for the 2017 first quarter ended March 31, 2017 was $2,839,000, or $0.61 per basic and diluted share, compared to $2,481,000, or $0.54 per basic and diluted share for the same period last year. The 14.4% improvement in net income for the 2017 first quarter was primarily due to a 9.5% increase in net interest income after provision for loan losses, partially offset by a 3.2% decrease in noninterest income and a 1.2% increase in noninterest expense. 

Loan Portfolio and Asset Quality
Total loans at March 31, 2017 increased 9.1% to a record $772,273,000, compared to $707,660,000 at March 31, 2016, and up 1.6% from $760,149,000 at December 31, 2016.  The year-over-year improvement resulted primarily from a 10.9% increase in commercial real estate loans, a 12.2% increase in commercial and industrial loans, an 11.6% increase in agricultural, a 20.9% increase in consumer loans, and a 6.8% increase in agricultural real estate loans, offset by a 4.1% reduction in consumer real estate loans. 

Asset quality remains strong as the company’s provision for loan losses for the 2017 first quarter was $73,000, compared to $277,000 for the 2016 first quarter.  The allowance for loan losses to nonperforming loans was 479.0% at March 31, 2017, compared to 310.5% at March 31, 2016.  Net charge-offs for the quarter ended March 31, 2017 were $7,000, or 0.00% of average loans, compared to $49,000 or 0.01% of average loans, for the quarter ended March 31, 2016.

Stockholders’ Equity and Dividends
Tangible stockholders’ equity increased to $122,984,000 at March 31, 2017, compared to $120,763,000 at December 31, 2016, and $117,627,000 at March 31, 2016.  On a per share basis, tangible stockholders’ equity at March 31, 2017 was $26.61, compared with $26.13 at December 31, 2016, and $25.54 at March 31, 2016. The increase in tangible stockholders’ equity is the result of growth in retained earnings due to increased profitability. At March 31, 2017, the company had a Tier 1 leverage ratio of 11.81%, compared to 11.72% at March 31, 2016. 

For the 2017 first quarter, the company declared cash dividends of $0.23 per share, which represents a dividend payout ratio of 37.1% compared to 40.5% for the same period last year.

Mr. Siebenmorgen concluded, “Economic trends remain stable within our local communities.  Loan demand and asset quality was strong for the 2017 first quarter, as total loans increased 9.1%, while non-performing assets declined 28.1%.  The year-over-year growth in loans was a result of higher commercial, agricultural, and consumer demand.  Total interest income was up 8.0% during the 2017 first quarter, driven by loan growth, while total loans to total assets increased 220 basis points to 72.3% from 70.1% for the same period last year.  Overall, we are pleased with the direction we are headed and optimistic favorable financial and business trends will continue in 2017, as we focus on proactively managing risk with asset growth, expanding market share in our Ft. Wayne and Toledo markets, and executing our de-novo and acquisition growth strategies.”

About Farmer & Merchants State Bank:
The Farmers & Merchants State Bank is a local independent community bank that has been serving Northwest Ohio and Northeast Indiana since 1897. The Farmers & Merchants State Bank provides commercial banking, retail banking and other financial services through its 24 offices. Our locations are in Fulton, Defiance, Henry, Lucas, Williams, and Wood counties in Northwest Ohio. In Northeast Indiana we have offices located in DeKalb, Allen and Steuben counties.

Safe harbor statement
Farmers & Merchants Bancorp, Inc. ("F&M") wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995. Statements by F&M, including management's expectations and comments, may not be based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties inherent in general and local banking conditions, competitive factors specific to markets in which F&M and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions or capital market conditions. F&M assumes no responsibility to update this information. For more details, please refer to F&M's SEC filing, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such filings can be viewed at the SEC's website, www.sec.gov.

 
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME (Unaudited)
(in thousands of dollars, except per share data)
 
      Three Months Ended
      March 31, 2017 March 31, 2016
Interest Income        
Loans, including fees     $ 8,700   $ 8,006  
Debt securities:                
U.S. Treasury and government agencies       642     580  
Municipalities       315     369  
Dividends       42     38  
Federal funds sold       -     -  
Other       22     11  
Total interest income       9,721     9,004  
Interest Expense                
Deposits       1,030     854  
Federal funds purchased and securities sold                
under agreements to repurchase       113     105  
Borrowed funds       36     37  
Total interest expense       1,179     996  
Net Interest Income - Before Provision for Loan Losses       8,542     8,008  
Provision for Loan Losses        73     277  
Net Interest Income After Provision                
For Loan Losses       8,469     7,731  
Noninterest Income                
Customer service fees       1,481     1,478  
Other service charges and fees       871     910  
Net gain on sale of loans       201     169  
Net gain on sale of available for sale securities       31     113  
Total noninterest income       2,584     2,670  
Noninterest Expense                
Salaries and Wages       3,001     2,840  
Employee benefits       922     862  
Net occupancy expense       413     378  
Furniture and equipment       472     412  
Data processing       311     411  
Franchise taxes       225     214  
Net loss on sale of other assets owned       -     45  
FDIC Assessment       83     121  
Mortgage servicing rights amortization       84     89  
Other general and administrative       1,560     1,614  
Total other operating expenses       7,071     6,986  
Income Before Income Taxes       3,982     3,415  
Income Taxes       1,143     934  
Net Income       2,839     2,481  
Other Comprehensive Income (Net of Tax):                
Net unrealized gain on available for sale securities       412     1,945  
Reclassification adjustment for gain on sale of available for
  sale securities
      (31 )   (113 )
Net unrealized gain on available for sale securities       381     1,832  
Tax expense       129     623  
Other comprehensive income       252     1,209  
Comprehensive Income     $ 3,091   $ 3,690  
Earnings Per Share - Basic and Diluted     $ 0.61   $ 0.54  
Dividends Declared     $ 0.23   $ 0.22  
                 

 

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
 
            March 31, 2017 December 31, 2016
ASSETS:                
Cash and due from banks     $ 23,547     $ 19,204  
Interest bearing deposits with banks       15,295       8,144  
Federal funds sold         1,052       974  
Total cash and cash equivalents       39,894       28,322  
                 
Interest-bearing time deposits       1,845       1,915  
Securities - available for sale       206,388       218,527  
Other securities, at cost       3,717       3,717  
Loans held for sale         1,067       2,055  
Loans, net           764,356       751,310  
Premises and equipment       21,222       21,457  
Goodwill             4,074       4,074  
Mortgage Servicing Rights       2,209       2,192  
Other Real Estate Owned       774       774  
Bank Owned Life Insurance       14,452       14,376  
Other assets           7,553       7,176  
                 
TOTAL ASSETS       $ 1,067,551     $ 1,055,895  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY        
LIABILITIES:            
Deposits:                
Noninterest bearing     $ 178,153     $ 186,390  
Interest bearing          
NOW accounts       292,364       230,446  
Savings       236,230       226,537  
Time       187,944       198,830  
Total deposits       894,691       842,203  
Federal funds purchased and securities          
sold under agreement to repurchase       27,961       70,324  
Federal Home Loan Bank  (FHLB) advances       10,000       10,000  
Dividend Payable       1,053       1,053  
Accrued expenses and other liabilities       6,129       6,738  
Total Liabilities       939,834       930,318  
                 
COMMITMENTS AND CONTINGENCIES          
                 
SHAREHOLDERS' EQUITY:          
Common stock - No par value 10,000,000 shares authorized;        
issued and outstanding 5,200,000 shares 3/31/17 and 12/31/16   12,049       11,947  
Treasury Stock - 579,125 shares 3/31/17, 579,125 shares 12/31/16   (12,267 )     (12,267 )
Retained Earnings         129,655       127,869  
Accumulated other comprehensive loss       (1,720 )     (1,972 )
Total Shareholders' Equity       127,717       125,577  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,067,551     $ 1,055,895  
                 

 

    For the Three Months Ended
    March 31
Selected financial data   2017       2016  
Return on average assets   1.07%       0.99%  
Return on average equity   8.97%       8.18%  
Yield on earning assets   3.99%       3.97%  
Cost of interest bearing liabilities   0.65%       0.58%  
Net interest spread   3.34%       3.39%  
Net interest margin   3.51%       3.54%  
Efficiency   62.86%       65.04%  
Dividend payout ratio   37.09%       40.51%  
Tangible book value per share $ 26.61     $ 25.54  
Tier 1 Leverage Ratio   11.81%       11.72%  
           
    March 31
Loans   2017       2016  
(Dollar amounts in thousands)          
Commercial real estate $ 382,758     $ 345,223  
Agricultural real estate   63,609       59,533  
Consumer real estate   84,763       88,365  
Commercial and industrial   115,415       102,892  
Agricultural   86,950       77,909  
Consumer   33,840       27,995  
Industrial development bonds   5,667       6,420  
Less: Net deferred loan fees and costs   (729 )     (677 )
Total loans $ 772,273     $ 707,660  
           
    March 31
Asset quality data   2017       2016  
(Dollar amounts in thousands)          
Nonaccrual loans $ 1,430     $ 2,003  
Troubled debt restructuring $ 551     $ 1,232  
90 day past due and accruing $ -     $ -  
Nonperforming loans $ 1,430     $ 2,003  
Other real estate owned $ 774     $ 1,061  
Non-performing assets $ 2,204     $ 3,064  
           
(Dollar amounts in thousands)          
Allowance for loan and lease losses $ 6,850     $ 6,285  
Allowance for loan and lease losses/total loans   0.89%       0.89%  
Net charge-offs:          
Quarter-to-date $ 7     $ 49  
Year-to-date $ 7     $ 49  
Net charge-offs to average loans          
Quarter-to-date   0.00%       0.01%  
Year-to-date   0.00%       0.01%  
Non-performing loans/total loans   0.19%       0.28%  
Allowance for loan and lease losses/nonperforming loans   478.96%       310.50%  
           

 

Company Contact:
Marty Filogamo
Senior Vice President – Marketing Manager
Farmers & Merchants Bancorp, Inc.
(419) 445-3501 ext. 15435
mfilogamo@fm-bank.com.

Investor and Media Contact:
Andrew M. Berger
Managing Director
SM Berger & Company, Inc. 
(216) 464-6400
andrew@smberger.com