Farmers & Merchants Bancorp, Inc. Reports 2024 First-Quarter Financial Results

May 1, 2024
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ARCHBOLD, Ohio, May 01, 2024 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2024 first quarter ended March 31, 2024.

2024 First Quarter Financial and Operating Highlights (on a year-over-year basis unless noted):

  • 84 consecutive quarters of profitability
  • Net income was $5.4 million, or $0.39 per basic and diluted share
  • Net interest income after provision for credit losses increased 6.2% from December 31, 2023, primarily due to a stabilizing net interest margin and solid asset quality
  • Total loans increased 3.9% to $2.54 billion at March 31, 2024
  • Total cash and cash equivalents increased by $123.5 million, or 191.9% to $187.8 million
  • Total assets increased 7.1% to a record $3.29 billion
  • Deposits increased to 4.3% to a record $2.62 billion
  • Stockholders’ equity increased 3.9% to a record $317.7 million
  • Asset quality remains solid as net charge-offs to average loans were 0.00%
  • Allowance for credit losses was 127.28% of nonperforming loans

Lars B. Eller, President and Chief Executive Officer, stated, “Our first quarter financial results demonstrate the strategies we are pursuing to enhance profitability, leverage the operating investments we made last year, and further strengthen our balance sheet. The progress we made, especially from the 2023 fourth quarter is encouraging and is a testament to the hard work of our team members, as well as the local value we provide our Ohio, Indiana and Michigan communities.”

Mr. Eller continued, “We are cautiously optimistic that our net interest margin has stabilized, even as we continue to navigate high levels of deposit competition and overall interest rate uncertainty. Over the past three months, F&M experienced a slight increase in its net interest margin, which combined with stable asset quality, drove a 6.2% increase in net interest income during this period. We expect to benefit from higher productivity of the four offices we opened during 2023 as our local market presence expands. In fact, total deposits at March 31, 2024, included $78.6 million of deposits from these new offices. In addition, we expect our efficiency ratio to improve throughout 2024 as we benefit from the investments we made last year to support a bank with over $4 billion in assets.”

Income Statement
Net income for the 2024 first quarter ended March 31, 2024, was $5.4 million, compared to $6.5 million for the same period last year. Net income per basic and diluted share for the 2024 first quarter was $0.39, compared to $0.47 for the same period last year.

“Core profitability has improved from fourth quarter levels due to higher net interest and noninterest income. We continue to believe that approximately 25% of our loan portfolio will be subject to repricing in 2024, which will benefit the yield on earnings assets and profitability in the coming quarters. Loan growth on a year-over-year basis is expected to be more limited compared to prior years as we focus on the spread between loans and deposits, pursue opportunities to pay down higher cost of funds, and increase our cash position. The progress we are making is encouraging and since the 2023 fourth quarter our cash position has increased by 32.1%, while our Federal Home Loan Bank advances has decreased by 3.4%. We also continue to make progress growing deposits with a prudent focus on managing the interest rates on deposit accounts. On a year-over-year basis, total deposits increased 4.3% and we continue to experience net, new demand deposit account (DDA) growth, which increased 1.4% over the past 12 months,” continued Mr. Eller.  

Deposits
At March 31, 2024, total deposits were $2.62 billion, an increase of 4.3% from March 31, 2023. The Company’s cost of interest-bearing liabilities was 3.06% for the quarter ended March 31, 2024, compared to 1.85% for the quarter ended March 31, 2023, and 3.02% for the 2023 fourth quarter ended December 31, 2023.

Loan Portfolio and Asset Quality
Total loans, net at March 31, 2024, increased 3.9%, or by $94.7 million to $2.52 billion, compared to $2.42 billion at March 31, 2023. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth.

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $19.4 million, or 0.76% of total loans at March 31, 2024, compared to $7.7 million, or 0.32% at March 31, 2023, and $22.4 million, or 0.87% at December 31, 2023. The year-over-year increase in nonperforming loans was primarily due to one agricultural relationship, representing a balance of $16.5 million. F&M expects to receive a paydown on this lending relationship in the second quarter this year.

F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 51.3% of the Company’s total loan portfolio at March 31, 2024. In addition, F&M’s commercial real estate office credit exposure represented 5.5% of the Company's total loan portfolio at March 31, 2024, with a weighted average loan-to-value of approximately 63% and an average loan of approximately $921,000.

F&M’s CRE portfolio included the following categories at March 31, 2024:

CRE Category Dollar
Balance		 Percent of
CRE Portfolio(*)		 Percent of
Total Loan
Portfolio(*)
       
Industrial $259,191   19.9%  10.2%
Multi-family $221,884   17.0%  8.7%
Retail $220,755   16.9%  8.7%
Office $139,021   10.7%  5.5%
Hotels $128,313   9.8%  5.0%
Gas Stations $63,202   4.9%  2.5%
Food Service $47,304   3.6%  1.9%
Senior Living $34,534   2.7%  1.4%
Development $33,961   2.6%  1.3%
Auto Dealers $31,856   2.4%  1.2%
Other $124,379   9.5%  4.9%
Total CRE $1,304,400   100.0%  51.3%
* Numbers have been rounded            
             

At March 31, 2024, the Company’s allowance for credit losses to nonperforming loans was 127.28%, compared to 319.38% at March 31, 2023, and 111.95% at December 31, 2023. The allowance to total loans was 0.97% at March 31, 2024, compared to 1.01% at March 31, 2023. Including accretable yield adjustments, associated with the Company’s recent acquisitions, F&M’s allowance for credit losses to total loans was 1.11% at March 31, 2024, compared to 1.24% at March 31, 2023.

Mr. Eller concluded, “Our asset quality remains strong, and I am pleased to report that during the first quarter one of two larger nonperforming credits paid off in full. In addition, net charge-offs to average outstanding loans remains at historically low levels, we remain well reserved, and we continue to proactively monitor our loan portfolio for any signs of stress. While the macro-economic environment is expected to remain fluid, we believe we are well positioned to navigate this period by maintaining solid asset quality, optimizing our balance sheet, and improving earnings.”

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 3.9% to $317.7 million at March 31, 2024, from $305.8 million at March 31, 2023. At March 31, 2024, the Company had a Tier 1 leverage ratio of 8.40%, compared to 8.36% at March 31, 2023.

Based on a regulatory basis, tangible stockholders’ equity increased to $256.5 million at March 31, 2024, compared to $244.2 million at March 31, 2023. On a per share basis, tangible stockholders’ equity at March 31, 2024, was $18.75 per share, compared to $17.92 per share at March 31, 2023.

For the three months ended March 31, 2024, the Company has declared cash dividends of $0.22 per share, which is a 4.8% increase over the same period last year. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 29 consecutive years. For the three months ended March 31, 2024, the dividend payout ratio was 55.52% compared to 43.79% 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.

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, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023
Interest Income         
Loans, including fees$35,200  $34,493  $33,783  $31,365  $29,703 
Debt securities:         
U.S. Treasury and government agencies 1,045   987   1,005   1,030   1,068 
Municipalities 394   397   392   401   408 
Dividends 333   365   246   148   123 
Federal funds sold 7   8   6   9   21 
Other 1,675   2,020   927   424   479 
Total interest income 38,654   38,270   36,359   33,377   31,802 
Interest Expense         
Deposits 15,279   15,015   13,323   10,434   8,151 
Federal funds purchased and securities sold under agreements to repurchase 284   293   349   427   405 
Borrowed funds 2,689   2,742   2,741   2,113   1,280 
Subordinated notes 284   285   284   285   284 
Total interest expense 18,536   18,335   16,697   13,259   10,120 
Net Interest Income - Before Provision for Credit Losses 20,118   19,935   19,662   20,118   21,682 
Provision for Credit Losses - Loans (289)  278   460   143   817 
Provision for Credit Losses - Off Balance Sheet Credit Exposures (266)  189   (76)  (129)  62 
Net Interest Income After Provision for Credit Losses 20,673   19,468   19,278   20,104   20,803 
Noninterest Income         
Customer service fees 2,782   2,576   2,208   2,361   2,447 
Other service charges and fees 1,057   1,121   1,162   1,803   2,554 
Net gain on sale of loans 107   230   294   108   67 
Net loss on sale of available-for-sale securities -   -   -   -   (891)
Total noninterest income 3,946   3,927   3,664   4,272   4,177 
Noninterest Expense         
Salaries and wages 7,846   6,981   6,777   6,500   6,657 
Employee benefits 2,171   1,218   2,066   2,071   2,165 
Net occupancy expense 1,027   1,187   950   840   856 
Furniture and equipment 1,353   1,370   1,189   1,211   1,252 
Data processing 500   785   840   796   726 
Franchise taxes 555   308   434   379   366 
ATM expense 473   665   640   683   623 
Advertising 530   397   865   830   514 
Net loss on sale of other assets owned -   86   49   -   - 
FDIC assessment 580   594   586   496   306 
Servicing rights amortization - net 168   182   106   164   159 
Consulting fees 186   192   179   231   230 
Other general and administrative 2,452   2,555   2,363   2,643   3,077 
Total noninterest expense 17,841   16,520   17,044   16,844   16,931 
Income Before Income Taxes 6,778   6,875   5,898   7,532   8,049 
Income Taxes 1,419   1,332   1,121   1,531   1,583 
Net Income 5,359   5,543   4,777   6,001   6,466 
Other Comprehensive Income (Loss) (Net of Tax):         
Net unrealized gain (loss) on available-for-sale securities (1,995)  13,261   (4,514)  (5,996)  8,030 
Reclassification adjustment for realized loss on sale of available-for-sale securities -   -   -   -   891 
Net unrealized gain (loss) on available-for-sale securities (1,995)  13,261   (4,514)  (5,996)  8,921 
Tax expense (benefit) (418)  2,784   (947)  (1,260)  1,874 
Other comprehensive income (loss) (1,577)  10,477   (3,567)  (4,736)  7,047 
Comprehensive Income$3,782  $16,020  $1,210  $1,265  $13,513 
Basic Earnings Per Share$0.39  $0.41  $0.35  $0.44  $0.47 
Diluted Earnings Per Share$0.39  $0.41  $0.35  $0.44  $0.47 
Dividends Declared$0.22  $0.22  $0.21  $0.21  $0.21 
                    

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands of dollars, except per share data)

  March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023
  (Unaudited)   (Unaudited) (Unaudited) (Unaudited)
Assets          
Cash and due from banks $186,541  $140,917  $151,711  $69,760  $62,780 
Federal funds sold  1,241   1,284   1,471   1,433   1,545 
Total cash and cash equivalents  187,782   142,201   153,182   71,193   64,325 
           
Interest-bearing time deposits  2,735   2,740   2,989   3,485   4,435 
Securities - available-for-sale  347,516   358,478   348,255   363,225   372,975 
Other securities, at cost  14,744   17,138   16,995   17,535   11,543 
Loans held for sale  2,410   1,576   1,039   1,459   951 
Loans, net of allowance for credit losses of $24,680 3/31/24 and $25,024 12/31/23  2,516,687   2,556,167   2,504,329   2,490,883   2,422,018 
Premises and equipment  35,007   35,790   31,723   30,398   28,679 
Construction in progress  9   8   3,044   2,290   1,565 
Goodwill  86,358   86,358   86,358   86,358   86,358 
Loan servicing rights  5,555   5,648   5,687   5,635   4,985 
Bank owned life insurance  34,123   33,907   33,691   33,470   33,269 
Other assets  54,628   43,218   47,388   41,512   38,972 
           
Total Assets $3,287,554  $3,283,229  $3,234,680  $3,147,443  $3,070,075 
           
Liabilities and Stockholders' Equity          
Liabilities          
Deposits          
Noninterest-bearing $510,731  $528,465  $505,358  $488,678  $520,145 
Interest-bearing          
NOW accounts  829,236   816,790   778,133   770,113   800,230 
Savings  635,430   599,191   591,344   581,192   590,854 
Time  645,985   663,017   700,445   628,757   601,939 
Total deposits  2,621,382   2,607,463   2,575,280   2,468,740   2,513,168 
           
Federal funds purchased and securities sold under agreements to repurchase  28,218   28,218   30,527   51,567   30,496 
Federal Home Loan Bank (FHLB) advances  256,628   265,750   266,286   266,818   164,327 
Subordinated notes, net of unamortized issuance costs  34,731   34,702   34,673   34,644   34,615 
Dividend payable  2,975   2,974   2,838   2,834   2,831 
Accrued expenses and other liabilities  25,930   27,579   21,892   18,177   18,881 
Total liabilities  2,969,864   2,966,686   2,931,496   2,842,780   2,764,318 
           
Commitments and Contingencies          
           
Stockholders' Equity          
Common stock - No par value 20,000,000 shares authorized; issued and outstanding 14,564,425 shares 3/31/24 and 12/31/23  135,482   135,515   135,171   135,647   135,241 
Treasury stock - 881,155 shares 3/31/24 and 899,784 shares 12/31/23  (10,851)  (11,040)  (11,008)  (11,298)  (11,310)
Retained earnings  223,648   221,080   218,510   216,236   213,012 
Accumulated other comprehensive loss  (30,589)  (29,012)  (39,489)  (35,922)  (31,186)
Total stockholders' equity  317,690   316,543   303,184   304,663   305,757 
           
Total Liabilities and Stockholders' Equity $3,287,554  $3,283,229  $3,234,680  $3,147,443  $3,070,075 
                     

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA

   For the Three Months Ended
Selected financial data March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023
Return on average assets  0.66%  0.67%  0.59%  0.77%  0.84%
Return on average equity  6.76%  7.27%  6.26%  7.84%  8.59%
Yield on earning assets  5.00%  4.93%  4.79%  4.53%  4.41%
Cost of interest bearing liabilities  3.06%  3.02%  2.82%  2.35%  1.85%
Net interest spread  1.94%  1.91%  1.97%  2.18%  2.56%
Net interest margin  2.60%  2.57%  2.59%  2.73%  3.01%
Efficiency  74.08%  69.23%  73.07%  69.06%  63.53%
Dividend payout ratio  55.52%  54.23%  60.07%  47.22%  43.79%
Tangible book value per share (1) $18.75  $18.60  $18.36  $18.21  $17.92 
Tier 1 leverage ratio  8.40%  8.20%  8.02%  9.85%  8.36%
Average shares outstanding  13,671,166   13,665,773   13,650,823   13,632,440   13,615,655 
                
Loans March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023
(Dollar amounts in thousands)               
Commercial real estate $1,304,400  $1,337,766  $1,304,118  $1,280,902  $1,225,315 
Agricultural real estate  227,455   223,791   225,672   230,837   227,897 
Consumer real estate  525,178   521,895   512,973   506,866   502,974 
Commercial and industrial  256,051   254,935   250,891   253,444   241,598 
Agricultural  127,670   132,560   123,735   128,344   131,467 
Consumer  74,819   79,591   83,024   88,312   89,588 
Other  26,776   30,136   31,083   28,996   29,316 
Less: Net deferred loan fees, costs and other (2)  (982)  517   (1,890)  (1,908)  (1,503)
Total loans,net $2,541,367  $2,581,191  $2,529,606  $2,515,793  $2,446,652 
                
                
Asset quality data March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023
(Dollar amounts in thousands)               
Nonaccrual loans $19,391  $22,353  $22,447  $6,295  $7,717 
90 day past due and accruing $-  $-  $-  $-  $- 
Nonperforming loans $19,391  $22,353  $22,447  $6,295  $7,717 
Other real estate owned $-  $-  $-  $-  $- 
Nonperforming assets $19,391  $22,353  $22,447  $6,295  $7,717 
                
                
Allowance for credit losses $24,680  $25,024  $25,277  $24,910  $24,634 
Allowance for unfunded  1,946   2,212   2,023   2,099   2,228 
Total Allowance for Credit Losses $26,626  $27,236  $27,300  $27,009  $26,862 
Allowance for credit losses/total loans  0.97%  0.97%  1.00%  0.99%  1.01%
Adjusted credit losses with accretable yield/total loans  1.11%  1.13%  1.18%  1.20%  1.24%
Net charge-offs:               
Quarter-to-date $55  $454  $93  $(133) $60 
Year-to-date $55  $551  $97  $(73) $60 
Net charge-offs to average loans               
Quarter-to-date  0.00%  0.02%  0.00%  -0.01%  0.00%
Year-to-date  0.00%  0.02%  0.00%  0.00%  0.00%
Nonperforming loans/total loans  0.76%  0.87%  0.89%  0.25%  0.32%
Allowance for credit losses/nonperforming loans  127.28%  111.95%  112.61%  395.71%  319.38%
NPA coverage ratio  127.28%  111.95%  112.61%  395.71%  319.38%

(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) Includes carrying value adjustments of $969 thousand as of March 31, 2024 and $2.7 million as of December 31, 2023 related to interest rate swaps associated with fixed rate loans 

 

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
  March 31, 2024 March 31, 2023
Interest Earning Assets: Average
Balance		 Interest/
Dividends		 Annualized
Yield/Rate		 Average
Balance		 Interest/
Dividends		 Annualized
Yield/Rate
Loans $2,577,114  $35,200   5.46% $2,397,061  $29,703   4.96%
Taxable investment securities  384,928   1,686   1.75%  397,480   1,499   1.51%
Tax-exempt investment securities  21,109   86   2.06%  26,352   100   1.92%
Fed funds sold & other  110,388   1,682   6.09%  68,557   500   2.92%
Total Interest Earning Assets  3,093,539  $38,654   5.00%  2,889,450  $31,802   4.41%
             
Nonearning Assets  159,240       180,259     
             
Total Assets $3,252,779      $3,069,709     
             
Interest Bearing Liabilities:            
Savings deposits $1,443,530  $9,407   2.61% $1,400,769  $4,943   1.41%
Other time deposits  650,580   5,872   3.61%  579,409   3,208   2.21%
Other borrowed money  263,280   2,689   4.09%  132,494   1,280   3.86%
Fed funds purchased & securities sold under agreement to repurch.  28,458   284   3.99%  38,853   405   4.17%
Subordinated notes  34,712   284   3.27%  34,596   284   3.28%
Total Interest Bearing Liabilities $2,420,560  $18,536   3.06% $2,186,121  $10,120   1.85%
             
Noninterest Bearing Liabilities  514,986       582,345     
             
Stockholders' Equity $317,233      $301,243     
             
Net Interest Income and Interest Rate Spread   $20,118   1.94%   $21,682   2.56%
             
Net Interest Margin      2.60%      3.01%
             
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
AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
(in thousands of dollars, except percentages)

 For the Three Months Ended March 31, 2024 For the Three Months Ended March 31, 2023
 As Reported Excluding Acc/Amort Difference As Reported Excluding Acc/Amort Difference
 $Yield $Yield $Yield $Yield $Yield $Yield
Interest Earning Assets:                 
Loans$35,2005.46% $34,5255.36% $675 0.10% $29,7034.96% $29,0364.85% $667 0.11%
Taxable investment securities 1,6861.75%  1,6861.75%  - 0.00%  1,4991.51%  1,4991.51%  - 0.00%
Tax-exempt investment securities 862.06%  862.06%  - 0.00%  1001.92%  1001.92%  - 0.00%
Fed funds sold & other 1,6826.09%  1,6826.09%  - 0.00%  5002.92%  5002.92%  - 0.00%
Total Interest Earning Assets 38,6545.00%  37,9794.92%  675 0.08%  31,8024.41%  31,1354.31%  667 0.10%
                  
Interest Bearing Liabilities:                 
Savings deposits$9,4072.61% $9,4072.61% $- 0.00% $4,9431.41% $4,9431.41% $- 0.00%
Other time deposits 5,8723.61%  5,8723.61%  - 0.00%  3,2082.21%  3,6672.53%  (459)-0.32%
Other borrowed money 2,6894.09%  2,7074.11%  (18)-0.02%  1,2803.86%  1,2983.92%  (18)-0.06%
Federal funds purchased and securities sold under agreement to repurchase 2843.99%  2843.99%  - 0.00%  4054.17%  4054.17%  - 0.00%
Subordinated notes 2843.27%  2843.27%  - 0.00%  2843.28%  2843.28%  - 0.00%
Total Interest Bearing Liabilities 18,5363.06%  18,5543.07%  (18)-0.01%  10,1201.85%  10,5971.94%  (477)-0.09%
                  
Interest/Dividend income/yield 38,6545.00%  37,9794.92%  675 0.08%  31,8024.41%  31,1354.31%  667 0.10%
Interest Expense / yield 18,5363.06%  18,5543.07%  (18)-0.01%  10,1201.85%  10,5971.94%  (477)-0.09%
Net Interest Spread 20,1181.94%  19,4251.85%  693 0.09%  21,6822.56%  20,5382.37%  1,144 0.19%
Net Interest Margin 2.60%  2.52%  0.08%  3.01%  2.85%  0.16%
                        

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 Value Year to Date Year to Date
  March 31, 2024 March 31, 2023 March 31, 2024 March 31, 2023
         
Shares Outstanding  13,683,270   13,630,122   13,683,270   13,630,122 
         
Tangible Equity        
Equity $317,690  $305,757  $317,690  $305,757 
Goodwill  86,358   86,358   86,358   86,358 
Other Intangible  7,103   8,882   7,103   8,882 
Comprehensive Loss Adjustment*  -   -   30,589   31,186 
CECL Adjustment**  -   -   1,685   2,528 
Tangible Equity $224,229  $210,517  $256,503  $244,231 
Shares Outstanding  13,683   13,630   13,683   13,630 
Tangible Book Equity per Share $ 16.39   $ 15.44   $ 18.75   $ 17.92  
         
         
  Actual Average Regulatory Average
  Year to Date Year to Date
  March 31, 2024 March 31, 2023 March 31, 2024 March 31, 2023
         
Net Income $5,359  $6,466  $5,359  $6,466 
Acquisition Costs - Tax Adjusted  -   77   -   77 
         
Average Shares Outstanding  13,671,166   13,615,655   13,671,166   13,615,655 
         
Average Tangible Equity        
Average Equity $317,233  $301,243  $317,233  $301,243 
Average Goodwill  86,358   86,358   86,358   86,358 
Average Other Intangible $7,388   9,167  $7,388   9,167 
Average Comprehensive Loss Adjustment*  -   -   30,700   36,764 
Average CECL Adjustment**  -   -   1,685   2,528 
Average Tangible Equity $223,487  $205,718  $255,872  $245,010 
Average Shares Outstanding  13,671   13,616   13,671   13,616 
Average Tangible Book Equity per Share $ 16.35   $ 15.11   $ 18.72   $ 17.99  
         
Return on Average Tangible Equity  9.59%  12.57%  8.38%  10.56%
Return on Average Tangible Equity w/o Acquisition  9.59%  12.72%  8.38%  10.68%

*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. The Bank has elected to spread the capital adjustment over three years. The first year permits 75% of the capital adjustment and the second year permits 50% of the capital adjustment to be removed from the calculation of tangible equity for regulatory purposes.

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