Release Details

Farmers & Merchants Bancorp, Inc. Reports 2023 Third-Quarter and Year-to-Date Financial Results

October 26, 2023

ARCHBOLD, Ohio, Oct. 26, 2023 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2023 third quarter and year-to-date September 30, 2023.

2023 Third Quarter Financial and Operating Highlights (on a year-over-year basis unless noted):

  • 82 consecutive quarters of profitability
  • Net income was $4.8 million, or $0.35 per basic and diluted share
  • Stockholders’ equity increased 8.1% to $303.2 million
  • Regulatory tangible book value per share increased 2.8% to $18.36 per share
  • Total loans were a record of $2.53 billion and increased 7.2% from $2.36 billion at December 31, 2022
  • Total assets increased 16.2% to a record $3.23 billion
  • Deposits increased 4.3% to a record $2.58 billion
  • Asset quality remains strong as nonperforming loans were 0.89% of total loans
  • Net charge-offs to average loans were 0.00%
  • Allowance for credit losses was 112.61% of nonperforming loans
  • Tier 1 leverage ratio decreased to 8.02% from 9.11% last year
  • Strategic investments to support long-term growth continue as F&M has opened new offices, unveiled new branding and a new logo, launched new deposit products, and implemented new features across its website and online banking platform

Lars B. Eller, President and Chief Executive Officer, stated, “Throughout 2023, we have been focused on executing against our strategic growth plan, while simultaneously navigating a challenging banking environment. I am pleased with the progress we are making as F&M opened two full-service offices in Oxford and Toledo, Ohio last quarter and since the end of the third quarter, the Bank has opened additional offices in Fort Wayne, Indiana and Birmingham, Michigan. We have also recently launched a new shared services group formation, invested in new internal audit and marketing capabilities, and restructured our HR department.”

Mr. Eller continued, “With most of the planned investments behind us, we are focused on scaling our new offices by expanding relationships within these new and existing markets. Early indications are encouraging and reflect F&M’s strong team of local bankers. As a result of our efforts across our new and existing offices, third-quarter deposits increased 4.3% from the second quarter to a record $2.58 billion, which included a 3.3% increase in non-interest-bearing deposits. We expect future deposit growth over the next quarters as our growth strategies accelerate and we benefit from new checking accounts that have been opened since the start of the year.”

Income Statement
Net income for the 2023 third quarter ended September 30, 2023, was $4.8 million, compared to $9.0 million for the same period last year. Net income per basic and diluted share for the 2023 third quarter was $0.35, compared to $0.68 for the same period last year. Net income for the 2023 nine months ended September 30, 2023, was $17.2 million, compared to $25.3 million for the same period last year. Net income per basic and diluted share for the 2023 nine months was $1.26, compared to $1.94 for the same period last year.

“The rapid rise in the Federal Funds Rate continued to impact our cost of funds and increase the competition for deposits. As a result, our cost of interest-bearing liabilities has increased to 2.82% at September 30, 2023, from 0.68% at September 30, 2022. Our loan portfolio has also lagged in capturing sufficient yield to match the higher cost of funds mainly due to the timing to reprice our commercial real estate adjustable-rate mortgages. 13.3% of the loan portfolio will be subject to repricing next quarter with 22.3% subject to repricing in the next twelve months. These trends during the third quarter caused a 12.9% year-over-year decline in net interest income and impacted overall profitability. As we navigate a challenging rate environment over the near term, we continue to believe we are well positioned for net income growth to re-accelerate in 2024 and beyond, as we benefit from continued strong asset quality, and the contribution of our growth initiatives,” continued Mr. Eller.

Deposits
At September 30, 2023, total deposits were $2.58 billion, an increase of 12.8% from September 30, 2022, and an increase of 4.3% from December 31, 2022. The Company’s cost of interest-bearing liabilities was 2.82% for the quarter ended September 30, 2023, compared to 0.68% for the quarter ended September 30, 2022, and 1.32% for the quarter ended December 31, 2022.

At September 30, 2023, F&M’s average deposit account had an average balance of $25,426. In addition, uninsured deposits to total deposits were approximately 9.1% for the quarter ended September 30, 2023, and the percentage of uninsured by the FDIC was 18.84%.  

Loan Portfolio and Asset Quality
Total loans, net at September 30, 2023, increased 18.1%, or by $3.87 million to $2.53 billion, compared to $2.14 billion at September 30, 2022, and up 7.2% from $2.36 billion at December 31, 2022. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of the Peoples acquisition. Not including the Peoples acquisition, total net loans increased 13.2% organically, or by $282.8 million from the same period a year ago.

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $22.4 million, or 0.89% of total loans at September 30, 2023, compared to $5.5 million, or 0.26% at September 30, 2022. At September 30, 2023, nonperforming loans increased by $16.2 million from June 30, 2023, which was primarily due to one agricultural relationship where the Bank is well collateralized and does not foresee a loss.

F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 51.6% of the Company’s total loan portfolio at September 30, 2023. In addition, F&M’s commercial real estate office credit exposure represented 5.1% of the Company's total loan portfolio at September 30, 2023, with a weighted average loan-to-value of approximately 64% and an average loan of $870,000.

F&M’s CRE portfolio included the following categories at September 30, 2023:


CRE Category
 Dollar
Balance
 
Percent of CRE Portfolio(*)
 
Percent of Total Loan Portfolio(*)
Multi-family $        241,804 18.5% 9.5%
Industrial $        228,644 17.5% 9.0%
Retail $        212,383 16.3% 8.4%
Hotels $        133,579 10.2% 5.3%
Office $        129,619 9.9% 5.1%
Gas Stations $        61,484 4.7% 2.4%
Food Service $        49,578 3.8% 2.0%
Mixed Use $        39,842 3.1% 1.6%
Senior Living $        35,788 2.7% 1.4%
Other $        171,387 13.1% 6.8%
Total CRE $        1,304,118 100.0% 51.4%

* Numbers have been rounded

At September 30, 2023, the Company’s allowance for credit losses to nonperforming loans was 112.61%, compared to 365.44% at September 30, 2022. The allowance to total loans was 1.00% at September 30, 2023, compared to 0.93% at September 30, 2022. As a result of F&M’s recent acquisitions, the Company had an accretable yield adjustment of $4.6 million at September 30, 2023, which further enhances F&M’s allowance, compared to $6.0 million at September 30, 2022. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.18% at September 30, 2023, compared to 1.21% at September 30, 2022.

Mr. Eller concluded, “At September 30, 2023, we saw nonperforming loans increase to 0.89% primarily due to one agricultural relationship where the Bank is well collateralized and does not foresee a loss. As we work through this credit, we are closely monitoring our loan portfolio for signs of stress, but overall, we expect our conservative credit culture and pricing will allow us to maintain excellent asset quality throughout various economic cycles. In addition, at September 30, 2023, we had the lowest level of loans over 30 days past due this year.   While we continue to believe 2023 will be a transitional year, we believe we are well positioned to emerge from this period with increased market share and higher profitability and I look forward to reporting on our success in the coming quarters. Our financial performance ratios reflect the pressure on the net interest margin and the cost of the strategic investments we have made. We are cognizant of the short-term expense and are confident it will enable long-term gains.”

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 8.1% to $303.2 million at September 30, 2023, from $280.6 million at September 30, 2022. At September 30, 2023, the Company had a Tier 1 leverage ratio of 8.02%, compared to 9.11% at September 30, 2022.

Based on a regulatory basis, tangible stockholders’ equity increased to $250.9 million at September 30, 2023, compared to $234.1 million at September 30, 2022. On a per share basis, tangible stockholders’ equity at September 30, 2023, was $18.36 per share, compared to $17.86 per share at September 30, 2022.

For the nine months ended September 30, 2023, the Company has declared cash dividends of $0.63 per share, which is a 4.6% increase over the same period last year. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for over 28 consecutive years. For the nine months ended September 30, 2023, the dividend payout ratio was 60.07% compared to 30.45% for the same period last year.

About Farmers & Merchants State Bank:
Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) is the holding company of F&M Bank, a local independent community bank that has been serving its communities since 1897. F&M Bank provides commercial banking, retail banking and other financial services. Our locations are in Butler, Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Shelby, Williams, and Wood counties in Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, Steuben and Wells counties. The Michigan footprint includes Oakland County, and F&M has Loan Production Offices in West Bloomfield, Michigan; Muncie, Indiana; and Bryan, Ohio.

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 Exchange 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, capital market conditions, or the effects of the COVID-19 pandemic, and its impacts on our credit quality and business operations, as well as its impact on general economic and financial 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 or through F&M’s website www.fm.bank.

Non-GAAP Financial Measures
This press release includes disclosure of financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers & Merchants Bancorp, Inc. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers & Merchants Bancorp, Inc.’s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial measures is included within this press release.

Company Contact:Investor and Media Contact:
Lars B. Eller
President and Chief Executive Officer Farmers & Merchants Bancorp, Inc.
(419) 446-2501
leller@fm.bank
Andrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
andrew@smberger.com


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME 
(Unaudited) (in thousands of dollars, except per share data) 
  
   Three Months Ended  Nine Months Ended 
   September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 September 30, 2023 September 30, 2022 
Interest Income                
Loans, including fees  $33,783  $31,365  $29,703  $27,302  $24,119  $94,851  $66,962  
Debt securities:                
U.S. Treasury and government agencies   1,005   1,030   1,068   1,118   1,049   3,103   3,107  
Municipalities   392   401   408   420   373   1,201   995  
Dividends   246   148   123   126   93   517   192  
Federal funds sold   6   9   21   2   -   36   19  
Other   927   424   479   524   213   1,830   382  
Total interest income   36,359   33,377   31,802   29,492   25,847   101,538   71,657  
Interest Expense                
Deposits   13,323   10,434   8,151   4,978   2,166   31,908   4,905  
Federal funds purchased and securities sold                
under agreements to repurchase   349   427   405   463   416   1,181   734  
Borrowed funds   2,741   2,113   1,280   1,209   398   6,134   951  
Subordinated notes   284   285   284   285   284   853   837  
Total interest expense   16,697   13,259   10,120   6,935   3,264   40,076   7,427  
Net Interest Income - Before Provision for Credit Losses*   19,662   20,118   21,682   22,557   22,583   61,462   64,230  
Provision for Credit Losses - Loans*    460   143   817   755   1,637   1,420   3,845  
Provision for Credit Losses - Off Balance Sheet Credit Exposures*  (76)  (129)  62   -   -   (143)  -  
Net Interest Income After Provision for Credit Losses*  19,278   20,104   20,803   21,802   20,946   60,185   60,385  
Noninterest Income                
Customer service fees   2,208   2,361   2,447   2,862   2,300   7,016   7,096  
Other service charges and fees   1,162   1,803   2,554   1,115   1,105   5,519   3,111  
Net gain on sale of loans   294   108   67   165   327   469   1,188  
Net loss on sale of available-for-sale securities   -   -   (891)                                     -                                    - (891)  -  
Total noninterest income   3,664   4,272   4,177   4,142   3,732   12,113   11,395  
Noninterest Expense                
Salaries and wages   6,777   6,500   6,657   6,353   5,479   19,934   16,347  
Employee benefits   2,066   2,071   2,165   1,911   1,392   6,302   4,992  
Net occupancy expense   950   840   856   753   693   2,646   1,813  
Furniture and equipment   1,189   1,211   1,252   1,096   1,047   3,652   3,111  
Data processing   840   796   726   1,917   781   2,362   2,039  
Franchise taxes   434   379   366   (45)  254   1,179   1,429  
ATM expense   640   683   623   561   580   1,946   1,656  
Advertising   865   830   514   531   578   2,209   1,115  
Net (gain) loss on sale of other assets owned   49   -   -   12                                    - 49   (271) 
FDIC assessment   586   496   306   250   271   1,388   655  
Mortgage servicing rights amortization - net   106   164   159   110   (50)  429   35  
Consulting fees   179   231   230   637   254   640   665  
Other general and administrative   2,363   2,643   3,077   2,964   2,192   8,083   6,613  
Total noninterest expense   17,044   16,844   16,931   17,050   13,471   50,819   40,199  
Income Before Income Taxes   5,898   7,532   8,049   8,894   11,207   21,479   31,581  
Income Taxes   1,121   1,531   1,583   1,706   2,253   4,235   6,254  
Net Income   4,777   6,001   6,466   7,188   8,954   17,244   25,327  
Other Comprehensive Income (Loss) (Net of Tax):                
Net unrealized gain (loss) on available-for-sale securities  (4,514)  (5,996)  8,030   (628)  (8,197)  (2,480)  (43,738) 
Reclassification adjustment for realized loss on sale of available-for-sale securities   -   -   891   -   -   891   -  
Net unrealized gain (loss) on available-for-sale securities  (4,514)  (5,996)  8,921   (628)  (8,197)  (1,589)  (43,738) 
Tax expense (benefit)   (947)  (1,260)  1,874   (132)  (1,721)  (333)  (9,185) 
Other comprehensive income (loss)   (3,567)  (4,736)  7,047   (496)  (6,476)  (1,256)  (34,553) 
Comprehensive Income (Loss)  $1,210  $1,265  $13,513  $6,692  $2,478  $15,988  $(9,226) 
Basic Earnings Per Share  $0.35  $0.44  $0.47  $0.53  $0.68  $1.26  $1.94  
Diluted Earnings Per Share  $0.35  $0.44  $0.47  $0.53  $0.68  $1.26  $1.94  
Dividends Declared  $0.2100  $0.2100  $0.2100  $0.2100  $0.2100  $0.6300  $0.6025  
                 
*ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method.         


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands of dollars, except share data)
 
   September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022
   (Unaudited) (Unaudited) (Unaudited)   (Unaudited)
Assets           
          Cash and due from banks $151,711  $69,760  $62,780  $83,085  $69,680 
          Federal funds sold  1,471   1,433   1,545   1,324   990 
 Total cash and cash equivalents  153,182   71,193   64,325   84,409   70,670 
            
          Interest-bearing time deposits  2,989   3,485   4,435   4,442   5,187 
          Securities - available-for-sale  348,255   363,225   372,975   390,789   395,485 
          Other securities, at cost  16,995   17,535   11,543   9,799   8,227 
          Loans held for sale  1,039   1,459   951   827   2,182 
          Loans, net  2,504,329   2,490,883   2,422,018   2,336,074   2,122,626 
          Premises and equipment  31,723   30,398   28,679   28,381   26,484 
          Construction in progress  3,044   2,290   1,565   278                                    -
          Goodwill  86,358   86,358   86,358   86,358   80,434 
          Loan servicing rights  5,687   5,635   4,985   3,549   3,583 
          Bank owned life insurance  33,691   33,470   33,269   33,073   28,051 
          Other assets  47,388   41,512   38,972   37,372   40,831 
            
Total Assets $3,234,680  $3,147,443  $3,070,075  $3,015,351  $2,783,760 
            
 Liabilities and Stockholders' Equity          
Liabilities          
          Deposits          
 Noninterest-bearing $505,358  $488,678  $520,145  $532,794  $506,928 
 Interest-bearing          
      NOW accounts  778,133   770,113   800,230   750,887   705,888 
      Savings  591,344   581,192   590,854   627,203   607,375 
      Time  700,445   628,757   601,939   557,980   462,845 
 Total deposits  2,575,280   2,468,740   2,513,168   2,468,864   2,283,036 
            
          Federal funds purchased and securities          
               sold under agreements to repurchase  30,527   51,567   30,496   54,206   55,802 
          Federal Home Loan Bank (FHLB) advances  266,286   266,818   164,327   127,485   102,147 
          Other borrowings  -   -   -   10,000   10,000 
          Subordinated notes, net of unamortized issuance costs  34,673   34,644   34,615   34,586   34,557 
          Dividend payable  2,838   2,834   2,831   2,832   2,727 
          Accrued expenses and other liabilities  21,892   18,177   18,881   19,238   14,913 
 Total liabilities  2,931,496   2,842,780   2,764,318   2,717,211   2,503,182 
            
Commitments and Contingencies          
            
Stockholders' Equity          
          Common stock - No par value 20,000,000 shares authorized; issued and        
              outstanding 14,564,425 shares 9/30/23 and 12/31/22  135,171   135,647   135,241   135,497   121,811 
          Treasury stock - 898,843 shares 9/30/23 and 956,003 shares 12/31/22 (11,008)  (11,298)  (11,310)  (11,573)  (11,547)
          Retained earnings  218,510   216,236   213,012   212,449   208,051 
          Accumulated other comprehensive loss  (39,489)  (35,922)  (31,186)  (38,233)  (37,737)
                  Total stockholders' equity  303,184   304,663   305,757   298,140   280,578 
            
Total Liabilities and Stockholders' Equity $3,234,680  $3,147,443  $3,070,075  $3,015,351  $2,783,760 
            


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA
                     
   For the Three Months EndedFor the Nine Months Ended
Selected financial data September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 September 30, 2023 September 30, 2022
Return on average assets  0.59%  0.77%  0.84%  0.96%  1.31% 0.73%  1.25%
Return on average equity  6.26%  7.84%  8.59%  10.00%  12.53% 7.52%  11.72%
Yield on earning assets  4.79%  4.53%  4.41%  4.18%  4.00% 4.57%  3.76%
Cost of interest bearing liabilities  2.82%  2.35%  1.85%  1.32%  0.68% 2.35%  0.53%
Net interest spread  1.97%  2.18%  2.56%  2.86%  3.32% 2.22%  3.23%
Net interest margin  2.59%  2.73%  3.01%  3.20%  3.49% 2.77%  3.37%
Efficiency  73.07%  69.06%  63.53%  50.46%  51.19% 68.24%  53.16%
Dividend payout ratio  60.07%  47.22%  43.79%  39.39%  30.45% 49.50%  40.58%
Tangible book value per share (1) $18.36  $18.21  $17.92  $17.69  $17.86      
Tier 1 leverage ratio  8.02%  9.85%  8.36%  8.39%  9.11%     
Average shares outstanding  13,650,823   13,632,440   13,615,655   13,606,876   13,083,145  13,633,101   13,071,859 
                     
Loans September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022     
(Dollar amounts in thousands)                    
Commercial real estate $1,304,118  $1,280,902  $1,225,315  $1,152,603  $1,063,661      
Agricultural real estate  225,672   230,837   227,897   220,819   205,089      
Consumer real estate  512,973   506,866   502,974   494,423   416,001      
Commercial and industrial  250,891   253,444   241,598   242,360   229,388      
Agricultural  123,735   128,344   131,467   128,733   128,615      
Consumer  83,024   88,312   89,588   89,147   70,602      
Other  31,083   28,996   29,316   29,818   30,662      
  Less: Net deferred loan fees and costs  (1,890)  (1,908)  (1,503)  (1,516)  (1,402)     
Total loans,net $2,529,606  $2,515,793  $2,446,652  $2,356,387  $2,142,616      
                     
                     
Asset quality data September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022     
(Dollar amounts in thousands)                    
Nonaccrual loans $22,447  $6,295  $7,717  $4,689  $5,470      
90 day past due and accruing $-  $-  $-  $-  $-      
Nonperforming loans $22,447  $6,295  $7,717  $4,689  $5,470      
Other real estate owned $-  $-  $-  $-  $-      
Nonperforming assets $22,447  $6,295  $7,717  $4,689  $5,470      
                     
                     
Allowance for credit losses (2) $25,277  $24,910  $24,507  $20,313  $19,990      
Accretable yield adjustment  4,565   5,209   5,754   6,427   5,959      
Adjusted credit losses with accretable yield included (2) $29,842  $30,119  $30,261  $26,740  $25,949      
Allowance for credit losses/total loans (2)  1.00%  0.99%  1.00%  0.86%  0.93%     
Adjusted credit losses with accretable yield/total loans (2) 1.18%  1.20%  1.24%  1.13%  1.21%     
Net charge-offs:                    
   Quarter-to-date $93  $(133) $60  $431  $71      
   Year-to-date $97  $(73) $60  $529  $97      
Net charge-offs to average loans                    
   Quarter-to-date  0.00%  -0.01%  0.00%  0.02%  0.00%     
   Year-to-date  0.00%  -0.00%  0.00%  0.03%  0.00%     
Nonperforming loans/total loans  0.89%  0.25%  0.32%  0.20%  0.26%     
Allowance for credit losses/nonperforming loans (2)  112.61%  395.71%  319.22%  273.67%  365.44%     
                     
(1) Tangible Equity = Stockholder Equity less goodwill, other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities) plus CECL adjustment   
(2) ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method.         
                     


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
(in thousands of dollars, except percentages)
           
             
  For the Three Months Ended For the Three Months Ended
  September 30, 2023 September 30, 2022
Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate
Loans $2,536,885 $33,783 5.33% $2,082,486 $24,119 4.63%
Taxable investment securities  393,910  1,559 1.58%  422,250  1,426 1.35%
Tax-exempt investment securities  23,986  84 1.77%  25,169  89 1.79%
Fed funds sold & other  85,515  933 4.36%  58,266  213 1.46%
Total Interest Earning Assets  3,040,296 $36,359 4.79%  2,588,171 $25,847 4.00%
             
Nonearning Assets  180,193      150,044    
             
Total Assets $3,220,489     $2,738,215    
             
Interest Bearing Liabilities:            
Savings deposits $1,367,168 $7,673 2.24% $1,328,344 $1,586 0.48%
Other time deposits  667,880  5,650 3.38%  423,668  580 0.55%
Other borrowed money  266,467  2,741 4.11%  60,455  398 2.63%
Fed funds purchased & securities            
  sold under agreement to repurch.  34,128  349 4.09%  63,388  416 2.63%
Subordinated notes  34,654  284 3.28%  34,538  284 3.29%
Total Interest Bearing Liabilities $2,370,297 $16,697 2.82% $1,910,393 $3,264 0.68%
             
Noninterest Bearing Liabilities  544,801      542,077    
             
Stockholders' Equity $305,391     $285,745    
             
Net Interest Income and Interest Rate Spread   $19,662 1.97%   $22,583 3.32%
             
Net Interest Margin     2.59%     3.49%
             
    Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts  
             
             
  For the Nine Months Ended For the Nine Months Ended
  September 30, 2023 September 30, 2022
Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate
Loans $2,470,770 $94,851 5.12% $1,997,081 $66,962 4.47%
Taxable investment securities  396,917  4,544 1.53%  424,882  4,065 1.28%
Tax-exempt investment securities  24,865  277 1.88%  21,794  229 1.77%
Fed funds sold & other  67,869  1,866 3.67%  101,922  401 0.52%
Total Interest Earning Assets  2,960,421 $101,538 4.57%  2,545,679 $71,657 3.76%
             
Nonearning Assets  176,568      158,378    
             
Total Assets $3,136,989     $2,704,057    
             
Interest Bearing Liabilities:            
Savings deposits $1,373,110 $18,854 1.83% $1,315,793 $2,951 0.30%
Other time deposits  620,071  13,054 2.81%  439,534  1,954 0.59%
Other borrowed money  204,927  6,134 3.99%  54,184  951 2.34%
Fed funds purchased & securities            
  sold under agreement to repurch.  37,649  1,181 4.18%  42,584  734 2.30%
Subordinated notes  34,625  853 3.28%  34,509  837 3.23%
Total Interest Bearing Liabilities $2,270,382 $40,076 2.35% $1,886,604 $7,427 0.53%
             
Noninterest Bearing Liabilities  561,001      529,439    
             
Stockholders' Equity $305,606     $288,014    
             
Net Interest Income and Interest Rate Spread   $61,462 2.22%   $64,230 3.23%
             
Net Interest Margin     2.77%     3.37%
             
    Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts  
             


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF TANGIBLE BOOK VALUE
         
         
  Actual End of Period Regulatory End of Period
Non-GAAP Reconciliation of Tangible Book ValueYear to Date Year to Date
  September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
         
Shares Outstanding  13,665,582   13,107,500   13,665,582   13,107,500 
         
Tangible Equity        
  Equity $303,184  $280,578  $303,184  $280,578 
  Goodwill  86,358   80,434   86,358   80,434 
  Other Intangible  7,992   3,744   7,992   3,744 
Comprehensive Loss Adjustment*  -   -   39,489   37,737 
CECL Adjustment**  -   -   2,528   - 
Tangible Equity $208,834  $196,400  $250,851  $234,137 
Shares Outstanding  13,666   13,108   13,666   13,108 
Tangible Book Equity per Share $ 15.28  $ 14.98  $ 18.36  $ 17.86 
         
         
  Actual Average Regulatory Average
  Year to Date Year to Date
  September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
         
Net Income $17,244  $25,327  $17,244  $25,327 
Acquisition Costs - Tax Adjusted  147   463   147   463 
         
Average Shares Outstanding  13,633,101   13,071,859   13,633,101   13,071,859 
         
Average Tangible Equity        
  Average Equity $305,606  $288,014  $305,606  $288,014 
  Average Goodwill  86,358   80,434   86,358   80,434 
  Average Other Intangible  8,717   4,119   8,717   4,119 
Average Comprehensive Loss Adjustment*  -   -   35,497   21,181 
Average CECL Adjustment**  -   -   2,528   - 
Average Tangible Equity $210,531  $203,461  $248,556  $224,642 
Average Shares Outstanding  13,633   13,072   13,633   13,072 
Average Tangible Book Equity per Share $ 15.44  $ 15.56  $ 18.23  $ 17.19 
         
Return on Average Tangible Equity  10.92%  16.60%  9.25%  15.03%
Return on Average Tangible Equity w/o Acquisition 11.01%  16.90%  9.33%  15.31%
         
         
*The Bank has adopted the Accumulated Other Comprehensive Income (AOCI) opt out election which removed AOCI
from the calculation of tangible equity for regulatory purposes.      
**ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method and
the Bank has elected to spread the Capital adjustment over three years. The first year permits 75% of the capital adjustment to be removed
from the calculation of tangible equity for regulatory purposes.