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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT Pursuant

to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 21, 2021

 

Farmers & Merchants Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Ohio	001-38084	34-1469491
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)

 

307 North Defiance Street, Archbold, Ohio	43502
(Address of Principal Executive Offices)	(Zip Code)

Registrant's Telephone Number, including Area Code (419) 446-2501

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of Each Exchange
Common Stock, No Par Value	FMAO	NASDAQ Capital Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17-CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

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ITEM 2.02.Results of Operation and Financial Condition

On July 21, 2021, Farmers & Merchants Bancorp, Inc. issued a press release announcing its earnings for the three and six months ended June 30, 2021.  A copy of the press release is attached hereto as Exhibit 99 and is incorporated by reference herein.

ITEM 9.01.Financial Statements and Exhibits

(d)

Exhibits.

 

Exhibit Number	Exhibit
99	Corrected Company Press Release dated July 21, 2021

 

104	The Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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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 hereunto authorized.

 

	FARMERS & MERCHANTS BANCORP, INC.
		(Registrant)
Dated: July 21, 2021		/s/ Lars B. Eller
		Lars B. Eller
		President and Chief Executive Officer
		/s/ Barbara J. Britenriker
		Barbara J. Britenriker
		Executive Vice President and Chief Financial Officer

 

Exhibit 99

 

 

 

Farmers & Merchants Bancorp, Inc. Reports

2021 Second-Quarter and Year-to-Date Financial Results

 

ARCHBOLD, OHIO, July 21, 2021, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2021 second quarter and year-to-date June 30, 2021.

 

2021 Second Quarter Financial and Operating Highlights

(compared to the 2020 second quarter period unless noted):

 

“I am excited by the progress F&M is making as we continue to achieve strong execution across all of our key business strategies, while deepening customer relationships, expanding into new markets, and delivering robust operating and financial results,” stated Lars B. Eller, President and Chief Executive Officer.  “In 2019 we created a strategic plan aimed at growing earnings and creating value for shareholders by increasing total assets from $1.6 billion to $3.0 billion by 2023.  We expect earnings growth will accelerate in the coming quarters as we benefit from the progress we are making on executing our strategic growth plan.”

 

On April 30, 2021, F&M successfully closed the acquisition of Ossian Financial Services, Inc (“OFSI”).  OFSI is F&M’s third recent acquisition in Northeast Indiana and immediately enhances the Company’s growing franchise within the state.  The integration and conversion were completed during the second quarter, and OFSI’s offices and online portal have transitioned to F&M.  Also, in the 2021 second quarter, the Company announced the upcoming acquisition of Perpetual Federal Savings Bank (“PFSB”), expanding F&M’s community banking franchise into the compelling Urbana, Columbus, Dayton, Springfield, Piqua, Tipp City, Troy, and Sidney markets.  The Company expects the PFSB acquisition to close in October 2021.  

 

Mr. Eller continued, “Acquisition growth is an important component of our strategic growth plan and over the past 12 months we have announced two bank acquisitions and acquired an Indiana based wealth management company.  Through the OFSI and PFSB acquisitions, we expect to add a combined $513 million in new assets and $413 million

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in new deposits.  F&M will also see expense benefits as we re-align our footprint and add new customers to a single platform, which will help to contribute to earnings and allow us to further invest in technology to improve the experience for our customers and employees.”  

 

Mr. Eller continued, “Despite our recent growth and expansion, we remain committed to honoring the community banking values that are responsible for our accomplishments over the past 124 years and continue to drive our success today.  As a result, F&M has continued to experience strong organic loan growth outside of PPP and acquired loans during the first half of 2021.  Organic loans have increased 3.9% year-to-date.  In addition, our credit portfolio remains strong and 30+ days past due accounts as of June 30^, 2021 were 0.12%, the lowest level since 2018.”  

 

Income Statement

Net income for the 2021 second quarter ended June 30, 2021, was $5.0 million, compared to $4.8 million for the same period last year.  Net income per basic and diluted share for the 2021 second quarter was $0.44, compared to $0.43 for the same period last year.  Net income for the 2021 first half ended June 30, 2021, was $9.9 million, compared to $8.9 million for the same period last year.  Net income per basic and diluted share for the 2021 first half was $0.88, compared to $0.80 for the same period last year.  

 

Net income for the 2021 second quarter and first half included one-time tax adjusted expenses of $0.8 million and $1.0 million, respectively.  On a per share basis, for the 2021 second quarter and first half, net income included one-time tax adjusted expenses of $0.08 or $0.11, respectively, per basic and diluted share.  

 

Mr. Eller continued, “F&M’s larger size and expanded footprint have helped establish diversity within our revenue streams and insulated our earnings.  For the 2021 first half, noninterest income as a percent of total revenue has increased to 20.8%, compared to 15.7% for the same period last year.  In addition, during the 2021 first half, we have incurred several one-time costs due to our strategic growth focus, which has reduced the level of profitability we are accustomed to seeing.  However, we expect to realize significant long-term benefits from our strategies and we believe we will experience an acceleration in profitability in the coming quarters.”

 

Deposits

At June 30, 2021, total deposits were $1.854 billion, an increase of 25.5% from June 30, 2020, and an increase of 16.2% from December 31, 2020.  The significant organic deposit growth being experienced is a result of continued strength in expanding relationships with new and existing customers, the benefits of PPP activity, and the completion of the Ossian Financial Services, Inc. acquisition. In addition, we continue to see growing customer preferences to more stable and secure saving instruments as deposits have increased since the COVID-19 crisis began.

 

Loan Portfolio and Asset Quality

Total loans, net at June 30, 2021, increased 8.4%, or by $113.7 million to $1.458 billion, compared to $1.345 billion at June 30, 2020, and up from $1.303 billion at December 31, 2020. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of the Ossian Financial Services, Inc. acquisition.  In addition, during the 2021 second quarter, the Company processed $12.9 million of PPP loan forgiveness and principal payments received, resulting in a total of $47.0 million of PPP loans within F&M’s loan portfolio at June 30, 2021.  

 

Mr. Eller continued: “At June 30, 2021, there were only two loans totaling $0.6 million of COVID-related payment modifications, all of which are interest-only modifications and secured by real estate.  This compares to 190 loans representing a balance of $165 million in deferrals at the peak last year.  As economic activity stabilizes, and our loan performance improves better than pre-pandemic levels, we expect contributions to our allowance for loan losses will also stabilize and align with loan growth in future periods.”    

 

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors.  Nonperforming loans were $7.0 million, or 0.48% of total loans at June 30, 2021, compared to $8.5 million, or 0.63% at June 30, 2020.  

 

Mr. Eller continued, “As we work to integrate and close our recent acquisitions, we remain focused on operational excellence, investments in technology, supporting our communities, and ensuring a best-in-class experience for our customers.  In addition, we are committed to attracting and retaining experienced professionals across our organization, and I am encouraged with the addition of Frank R. Simon to our Board of Directors.  We continue to

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believe 2021 will be a transformative year for F&M and we expect our enhanced scale and operating platform will magnify shareholder value.”

 

Stockholders’ Equity and Dividends

Total stockholders’ equity increased 4.3% to $250.6 million at June 30, 2021, from $240.3 million at June 30, 2020. At June 30, 2021, the Company had a Tier 1 leverage ratio of 8.78%, compared to 10.70% at June 30, 2020.

 

Tangible stockholders’ equity increased to $189.6 million at June 30, 2021, compared to $181.7 million at June 30, 2020. On a per share basis, tangible stockholders’ equity at June 30, 2021, was $16.94 per share, compared to $16.33 per share at June 30, 2020.

 

For the six months ended June 30, 2021, the Company has declared cash dividends of $0.34 per share, which is a 6.3% increase over the 2020 six-month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for over 26 consecutive years. For the six months ended June 30, 2021, the dividend payout ratio was 38.18% compared to 39.69% for the same period last year.

 

About Farmers & 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. Our locations are in Fulton, Defiance, Hancock, Henry, Lucas, Williams, and Wood counties in Northwest Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, 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 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.  

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME

(Unaudited) (in thousands of dollars, except per share data)

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (in thousands of dollars, except share data)

 

 

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES

(in thousands of dollars, except percentages)

 

 

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES

(in thousands of dollars, except percentages)

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

 

 

 

 

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATION OF NET INCOME