Corporate

Release Details

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

July 26, 2023
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ARCHBOLD, Ohio, July 26, 2023 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) the holding company of F&M Bank, today reported financial results for the 2023 second quarter and year-to-date June 30, 2023.

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

  • 81 consecutive quarters of profitability
  • Net income was $6.0 million, or $0.44 per basic and diluted share
  • Stockholders’ equity increased 8.5% to $304.7 million
  • Regulatory tangible book value per share increased 4.5% to $18.21 per share
  • Organic loan growth of 18.5%, excluding PPP loans and the Peoples-Sidney Financial Corporation acquisition
  • Total loans were a record of $2.52 billion and increased 6.8% from $2.36 billion at December 31, 2022
  • Total assets increased 17.7% to a record $3.15 billion
  • Deposits increased 11.0% to $2.50 billion
  • Uninsured deposits to total deposits of approximately 18% at June 30, 2023
  • Strong asset quality continues as nonperforming loans were 0.25% of total loans
  • Net charge-offs to average loans were -0.01%
  • Allowance for credit losses was 395.71% of nonperforming loans
  • Tier 1 leverage ratio increased to 9.85% from 8.75% last year
  • Strategic investments to support long-term growth continue as F&M has unveiled new branding and logo, opened two new offices, launched new deposit products, and started construction on a new regional headquarters in Fort Wayne, Indiana and the first full-service office in Michigan

Lars B. Eller, President and Chief Executive Officer, stated, “Our second quarter results demonstrate the power of F&M’s operating platform as we ended the quarter with strong capital levels, robust asset quality, and record loans and assets. These trends provide us with the flexibility to navigate a challenging banking landscape, while supporting our communities, investing in our multi-year strategic growth plan, and returning capital back to our shareholders. Most importantly, our longstanding financial success and operating growth reflects the continued commitment, experience, and hard work of our team members across our Ohio, Indiana, and Michigan markets.”

“I am pleased to report that we continue to make meaningful progress investing in our business to support our growth, enhance our operations, and execute against our recently developed three-year strategic growth plan. During the second quarter we unveiled our new branding and forward-looking logo, which was the culmination of a multi-year brand exploration process. All updates to office signage are expected to be completed by September 2023. In addition, we relocated our Auburn, Indiana office and opened new offices in downtown Toledo, Ohio, and Oxford, Ohio. Construction began on our new regional facility in Fort Wayne, and we added a highly experienced lending team in our Fort Wayne region, which will greatly expand our commitment to Eastern Indiana. We also broke ground on our first full-service office in Birmingham, Michigan following our hugely successful loan production office in Southeast Michigan. Finally, we launched new deposit products to enhance our offerings to current and prospective customers,” continued Mr. Eller.

Income Statement
Net income for the 2023 second quarter ended June 30, 2023, was $6.0 million, compared to $8.3 million for the same period last year. Net income per basic and diluted share for the 2023 second quarter was $0.44, compared to $0.63 for the same period last year. Net income for the 2023 first half ended June 30, 2023, was $12.5 million, compared to $16.4 million for the same period last year. Net income per basic and diluted share for the 2023 first half was $0.92, compared to $1.25 for the same period last year.

Mr. Eller commented: “F&M is not immune from the rapid rise in the Federal Funds Rate and the impact this has had on cost of funds and the competition for deposits it has created over the past 12 months. As a result, our cost of interest-bearing liabilities has increased by over 430% to 2.35% at June 30, 2023. In addition, year-to-date profitability has been impacted by several strategic one-time expenses including the conversion of our credit card platform, an opportunistic sale of investments, and the investments we are making in our infrastructure. Despite these near-term impacts, we believe we are well positioned for net income growth to re-accelerate in 2024 and beyond, as we benefit from continued strong asset quality, the contribution of our growth initiatives, and controlled operating expenses,” continued Mr. Eller.

Deposits
At June 30, 2023, total deposits were $2.47 billion, an increase of 11.0% from June 30, 2022. The Company’s cost of interest-bearing liabilities was 2.35% for the quarter ended June 30, 2023, compared to 0.44% for the quarter ended June 30, 2022, and 1.32% for the quarter ended December 31, 2022.  

At June 30, 2023, F&M’s average deposit account had an average balance of $25,009. In addition, uninsured deposits to total deposits were approximately 18% for the quarter ended June 30, 2023, compared to approximately 21% at December 31, 2022.

Loan Portfolio and Asset Quality
Total loans, net at June 30, 2023, increased 23.6%, or by $481.0 million to a record $2.52 billion, compared to $2.03 billion at June 30, 2022, and up 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 18.5% organically, or by $376.3 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 $6.3 million, or 0.25% of total loans at June 30, 2023, compared to $5.2 million, or 0.26% of total loans at June 30, 2022. During the second quarter, one large farm loan that was paid off and another loan that was refinanced through another bank, and second quarter 2023 nonperforming loans improved by $1.4 million, or 18.4% over the past three months.

F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 50.9% of the Company’s total loan portfolio at June 30, 2023. In addition, F&M’s commercial real estate office credit exposure represented 5.0% of the Company's total loan portfolio at June 30, 2023, with a weighted average loan-to-value of approximately 64% and an average loan of $845,000.

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





CRE Category		 

Dollar
Balance		 

Percent of CRE Portfolio(*)		 

Percent of Total Loan Portfolio(*)
Multi Family $244,883 19.1% 9.7%
Retail $218,624 17.1% 8.7%
Industrial $216,605 16.9% 8.6%
Hotels $135,511 10.6% 5.4%
Office $125,039 9.8% 5.0%
Gas Stations $59,922 4.7% 2.4%
Food Service $43,585 3.4% 1.7%
Mixed Use $42,425 3.3% 1.7%
Senior Living $36,238 2.8% 1.4%
Other $158,069 12.3% 6.3%
Total CRE $1,225,315 100.0% 50.1%
* Numbers have been rounded


At June 30, 2023, the Company’s allowance for credit losses to nonperforming loans was 395.71%, compared to 351.44% at June 30, 2022. The allowance to total loans was 0.99% at June 30, 2023, compared to 0.91% at June 30, 2022. As a result of F&M’s recent acquisitions, the Company had an accretable yield adjustment of $5.2 million at June 30, 2023, which further enhances F&M’s allowance, compared to $6.7 million at June 30, 2022. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.20% at June 30, 2023, compared to 1.24% at June 30, 2022.

Mr. Eller concluded, “I am proud of our team’s performance throughout the first half of 2023. The progress we are making serving our communities, and investing in our growth initiatives is encouraging. While 2023 is expected to be a transitional year, we believe we are well positioned to emerge from this period with increased market share and higher profitability. We also continue to focus on returning capital back to shareholders through our longstanding cash dividend program, which has increased on an annual basis for 28 consecutive years.”

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 8.5% to $304.7 million at June 30, 2023, from $280.9 million at June 30, 2022. At June 30, 2023, the Company had a Tier 1 leverage ratio of 9.85%, compared to 8.75% at June 30, 2022.

Based on a regulatory basis, tangible stockholders’ equity increased to $248.3 million at June 30, 2023, compared to $227.7 million at June 30, 2022. On a per share basis, regulatory tangible stockholders’ equity at June 30, 2023, was $18.21 per share, compared to $17.43 per share at June 30, 2022.

For the six months ended June 30, 2023, the Company has declared cash dividends of $0.42 per share, which is a 7.0% increase over the 2022 six-month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for over 28 consecutive years and has grown its dividend by over 160% since 2007. For the six months ended June 30, 2023, the dividend payout ratio was 45.44% compared to 30.08% for the same period last year.

About Farmers & Merchants Bancorp, Inc.:
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, and we have 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 Six Months Ended
 June 30,
2023		 March 31,
2023		 December 31,
2022		 September 30,
2022		 June 30,
2022		 June 30,
2023		 June 30,
2022
Interest Income             
Loans, including fees$31,365  $29,703  $27,302  $24,119  $22,388  $61,068  $42,843 
Debt securities:             
U.S. Treasury and government agencies 1,030   1,068   1,118   1,049   1,035   2,098   2,058 
Municipalities 401   408   420   373   322   809   622 
Dividends 148   123   126   93   57   271   99 
Federal funds sold 9   21   2   -   9   30   19 
Other 424   479   524   213   100   903   169 
Total interest income 33,377   31,802   29,492   25,847   23,911   65,179   45,810 
Interest Expense             
Deposits 10,434   8,151   4,978   2,166   1,379   18,585   2,739 
Federal funds purchased and securities sold             
under agreements to repurchase 427   405   463   416   166   832   318 
Borrowed funds 2,113   1,280   1,209   398   218   3,393   553 
Subordinated notes 285   284   285   284   284   569   553 
Total interest expense 13,259   10,120   6,935   3,264   2,047   23,379   4,163 
Net Interest Income - Before Provision for Credit Losses* 20,118   21,682   22,557   22,583   21,864   41,800   41,647 
Provision for Credit Losses - Loans* 143   817   755   1,637   1,628   960   2,208 
Provision for Credit Losses - Off Balance Sheet Credit Exposures* (129)  62   -   -   -   (67)  - 
Net Interest Income After Provision for Credit Losses* 20,104   20,803   21,802   20,946   20,236   40,907   39,439 
Noninterest Income             
Customer service fees 2,361   2,447   2,862   2,300   2,148   4,808   4,796 
Other service charges and fees 1,803   2,554   1,115   1,105   1,008   4,357   2,006 
Net gain on sale of loans 108   67   165   327   164   175   861 
Net loss on sale of available-for-sale securities -   (891)  -   - - (891)  - 
Total noninterest income 4,272   4,177   4,142   3,732   3,320   8,449   7,663 
Noninterest Expense             
Salaries and wages 6,500   6,657   6,353   5,479   5,366   13,157   10,868 
Employee benefits 2,071   2,165   1,911   1,392   1,546   4,236   3,600 
Net occupancy expense 840   856   753   693   522   1,696   1,120 
Furniture and equipment 1,211   1,252   1,096   1,047   1,008   2,463   2,064 
Data processing 796   726   1,917   781   654   1,522   1,258 
Franchise taxes 379   366   (45)  254   757   745   1,175 
ATM expense 683   623   561   580   544   1,306   1,076 
Advertising 830   514   531   578   300   1,344   537 
Net (gain) loss on sale of other assets owned -   -   12   - (266)  -   (271)
FDIC assessment 496   306   250   271   270   802   384 
Mortgage servicing rights amortization - net 164   159   110   (50)  59   323   85 
Consulting fees 231   230   637   254   233   461   411 
Other general and administrative 2,643   3,077   2,964   2,192   2,242   5,720   4,421 
Total noninterest expense 16,844   16,931   17,050   13,471   13,235   33,775   26,728 
Income Before Income Taxes 7,532   8,049   8,894   11,207   10,321   15,581   20,374 
Income Taxes 1,531   1,583   1,706   2,253   2,050   3,114   4,001 
Net Income 6,001   6,466   7,188   8,954   8,271   12,467   16,373 
Other Comprehensive Income (Loss) (Net of Tax):             
Net unrealized gain (loss) on available-for-sale securities (5,996)  8,030   (628)  (8,197)  (14,602)  2,034   (35,541)
Reclassification adjustment for realized loss on sale of available-for-sale securities -   891   -   -   -   891   - 
Net unrealized gain (loss) on available-for-sale securities (5,996)  8,921   (628)  (8,197)  (14,602)  2,925   (35,541)
Tax expense (benefit) (1,260)  1,874   (132)  (1,721)  (3,067)  614   (7,464)
Other comprehensive income (loss) (4,736)  7,047   (496)  (6,476)  (11,535)  2,311   (28,077)
Comprehensive Income (Loss)$1,265  $13,513  $6,692  $2,478  $(3,264) $14,778  $(11,704)
Basic Earnings Per Share$0.44  $0.47  $0.53  $0.68  $0.63  $0.92  $1.25 
Diluted Earnings Per Share$0.44  $0.47  $0.53  $0.68  $0.63  $0.92  $1.25 
Dividends Declared$0.2100  $0.2100  $0.2100  $0.2100  $0.2025  $0.4200  $0.3925 
              
*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)
 
 June 30,
2023		 March 31,
2023		 December 31,
2022		 September 30,
2022		 June 30,
2022
 (Unaudited) (Unaudited)   (Unaudited) (Unaudited)
Assets         
Cash and due from banks$69,760  $62,780  $83,085  $69,680  $69,955 
Federal funds sold 1,433   1,545   1,324   990   1,484 
Total cash and cash equivalents 71,193   64,325   84,409   70,670   71,439 
          
Interest-bearing time deposits 3,485   4,435   4,442   5,187   6,684 
Securities - available-for-sale 363,225   372,975   390,789   395,485   399,687 
Other securities, at cost 17,535   11,543   9,799   8,227   8,735 
Loans held for sale 1,459   951   827   2,182   4,230 
Loans, net 2,490,883   2,422,018   2,336,074   2,122,626   2,016,394 
Premises and equipment 30,398   28,679   28,381   26,484   26,492 
Construction in progress 2,290   1,565   278   - -
Goodwill 86,358   86,358   86,358   80,434   80,434 
Loan servicing rights 5,635   4,985   3,549   3,583   3,426 
Bank owned life insurance 33,470   33,269   33,073   28,051   27,874 
Other assets 41,512   38,972   37,372   40,831   29,321 
          
Total Assets$3,147,443  $3,070,075  $3,015,351  $2,783,760  $2,674,716 
          
Liabilities and Stockholders' Equity         
Liabilities         
Deposits         
Noninterest-bearing$488,678  $520,145  $532,794  $506,928  $503,395 
Interest-bearing         
NOW accounts 770,113   800,230   750,887   705,888   678,552 
Savings 581,192   590,854   627,203   607,375   617,850 
Time 628,757   601,939   557,980   462,845   424,249 
Total deposits 2,468,740   2,513,168   2,468,864   2,283,036   2,224,046 
          
Federal funds purchased and securities         
sold under agreements to repurchase 51,567   30,496   54,206   55,802   71,944 
Federal Home Loan Bank (FHLB) advances 266,818   164,327   127,485   102,147   42,635 
Other borrowings -   -   10,000   10,000   -
Subordinated notes, net of unamortized issuance costs 34,644   34,615   34,586   34,557   34,528 
Dividend payable 2,834   2,831   2,832   2,727   2,626 
Accrued expenses and other liabilities 18,177   18,881   19,238   14,913   18,064 
Total liabilities 2,842,780   2,764,318   2,717,211   2,503,182   2,393,843 
          
Commitments and Contingencies         
          
Stockholders' Equity         
Common stock - No par value 20,000,000 shares authorized; issued and        
outstanding 14,564,425 shares 6/30/23 and 12/31/22 135,647   135,241   135,497   121,811   123,145 
Treasury stock - 929,513 shares 6/30/23 and 956,003 shares 12/31/22 (11,298)  (11,310)  (11,573)  (11,547)  (11,822)
Retained earnings 216,236   213,012   212,449   208,051   200,811 
Accumulated other comprehensive loss (35,922)  (31,186)  (38,233)  (37,737)  (31,261)
Total stockholders' equity 304,663   305,757   298,140   280,578   280,873 
          
Total Liabilities and Stockholders' Equity$3,147,443  $3,070,075  $3,015,351  $2,783,760  $2,674,716 



FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA
                     
   For the Three Months EndedFor the Six Months Ended
Selected financial data June 30,
2023		 March 31,
2023		 December 31,
2022		 September 30,
2022		 June 30,
2022		 June 30,
2023		 June 30,
2022
Return on average assets  0.77%  0.84%  0.96%  1.31%  1.23%  0.81%  1.22%
Return on average equity  7.84%  8.59%  10.00%  12.53%  11.66%  8.21%  11.32%
Yield on earning assets  4.53%  4.41%  4.18%  4.00%  3.79%  4.47%  3.63%
Cost of interest bearing liabilities  2.35%  1.85%  1.32%  0.68%  0.44%  2.10%  0.44%
Net interest spread  2.18%  2.56%  2.86%  3.32%  3.35%  2.37%  3.19%
Net interest margin  2.73%  3.01%  3.20%  3.49%  3.47%  2.87%  3.30%
Efficiency  69.06%  63.53%  50.46%  51.19%  50.17%  66.04%  57.90%
Dividend payout ratio  47.22%  43.79%  39.39%  30.45%  30.02%  45.44%  30.08%
Tangible book value per share (1) $18.21  $17.92  $17.69  $17.86  $17.43      
Tier 1 leverage ratio  9.85%  8.36%  8.39%  9.11%  8.75%     
Average shares outstanding  13,632,440   13,615,655   13,606,876   13,083,145   13,065,975   13,624,094   13,066,123 
                     
Loans June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022
 June 30, 2022    
(Dollar amounts in thousands)                    
Commercial real estate $1,280,902  $1,225,315  $1,152,603  $1,063,661  $979,176      
Agricultural real estate  230,837   227,897   220,819   205,089   199,972      
Consumer real estate  506,866   502,974   494,423   416,001   410,450      
Commercial and industrial  253,444   241,598   242,360   229,388   232,975      
Agricultural  128,344   131,467   128,733   128,615   127,143      
Consumer  88,312   89,588   89,147   70,602   55,411      
Other  28,996   29,316   29,818   30,662   31,243      
Less: Net deferred loan fees and costs  (1,908)  (1,503)  (1,516)  (1,402)  (1,552)     
Total loans,net $2,515,793  $2,446,652  $2,356,387  $2,142,616  $2,034,818      
                     
                     
Asset quality data June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022     
(Dollar amounts in thousands)                    
Nonaccrual loans $6,295  $7,717  $4,689  $5,470  $5,247      
Troubled debt restructuring $-  $-  $3,645  $3,978  $2,748      
90 day past due and accruing $-  $-  $-  $-  $-      
Nonperforming loans $6,295  $7,717  $4,689  $5,470  $5,247      
Other real estate owned $-  $-  $-  $-  $-      
Nonperforming assets $6,295  $7,717  $4,689  $5,470  $5,247      
                     
                     
Allowance for credit losses(2) $24,910  $24,507  $20,313  $19,990  $18,424      
Accretable yield adjustment  5,209   5,754   6,427   5,959   6,724      
Adjusted credit losses with accretable yield included(2) $30,119  $30,261  $26,740  $25,949  $25,148      
Allowance for credit losses/total loans(2)  0.99%  1.00%  0.86%  0.93%  0.91%     
Adjusted credit losses with accretable yield/total loans(2)  1.20%  1.24%  1.13%  1.21%  1.24%     
Net charge-offs:                    
Quarter-to-date $(133) $60  $431  $71  $(25)     
Year-to-date $(73) $60  $529  $97  $26      
Net charge-offs to average loans   0.28%              
Quarter-to-date  -0.01%  0.00%  0.02%  0.00%  0.00%     
Year-to-date  -0.00%  0.00%  0.03%  0.00%  0.00%     
Nonperforming loans/total loans  0.25%  0.32%  0.20%  0.26%  0.26%     
Allowance for credit losses/nonperforming loans(2)  395.71%  319.22%  273.67%  365.44%  351.44%     
                     
(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
 June 30, 2023 June 30, 2022
Interest Earning Assets:Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate
Loans$2,476,795  $31,365   5.07% $1,999,357  $22,388   4.48%
Taxable investment securities 399,257   1,486   1.49%  422,482   1,344   1.27%
Tax-exempt investment securities 24,259   93   1.94%  21,649   70   1.64%
Fed funds sold & other 49,160   433   3.52%  81,091   109   0.54%
Total Interest Earning Assets 2,949,471  $33,377   4.53%  2,524,579  $23,911   3.79%
            
Nonearning Assets 169,599       161,031     
            
Total Assets$3,119,070      $2,685,610     
            
Interest Bearing Liabilities:           
Savings deposits$1,356,798  $6,238   1.84% $1,312,444  $777   0.24%
Other time deposits 612,929   4,196   2.74%  435,091   602   0.55%
Other borrowed money 215,884   2,113   3.92%  39,172   218   2.23%
Fed funds purchased & securities           
sold under agreement to repurch. 39,966   427   4.27%  35,260   166   1.88%
Subordinated notes 34,625   285   3.29%  34,509   284   3.29%
Total Interest Bearing Liabilities$2,260,202  $13,259   2.35% $1,856,476  $2,047   0.44%
            
Noninterest Bearing Liabilities 552,867       545,439     
            
Stockholders' Equity$306,001      $283,695     
            
Net Interest Income and Interest Rate Spread  $20,118   2.18%   $21,864   3.35%
            
Net Interest Margin     2.73%      3.47%
            
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 Six Months Ended For the Six Months Ended
 June 30, 2023 June 30, 2022
Interest Earning Assets:Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate
Loans$2,437,148  $61,068   5.01% $1,953,671  $42,843   4.39%
Taxable investment securities 398,383   2,985   1.50%  426,189   2,639   1.24%
Tax-exempt investment securities 25,303   193   1.93%  20,119   140   1.76%
Fed funds sold & other 58,853   933   3.17%  124,050   188   0.30%
Total Interest Earning Assets 2,919,687  $65,179   4.47%  2,524,029  $45,810   3.63%
            
Nonearning Assets 174,702       162,949     
            
Total Assets$3,094,389      $2,686,978     
            
Interest Bearing Liabilities:           
Savings deposits$1,378,518  $11,181   1.62% $1,302,005  $1,365   0.21%
Other time deposits 596,168   7,404   2.48%  447,471   1,374   0.61%
Other borrowed money 174,171   3,393   3.90%  51,180   553   2.16%
Fed funds purchased & securities           
sold under agreement to repurch. 39,409   832   4.22%  32,182   318   1.98%
Subordinated notes 34,610   569   3.29%  34,495   553   3.21%
Total Interest Bearing Liabilities$2,222,876  $23,379   2.10% $1,867,333  $4,163   0.44%
            
Noninterest Bearing Liabilities 567,878       530,478     
            
Stockholders' Equity$303,635      $289,167     
            
Net Interest Income and Interest Rate Spread  $41,800   2.37%   $41,647   3.19%
            
Net Interest Margin     2.87%      3.30%
            
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 June 30, 2023 For the Three Months Ended June 30, 2022
 As Reported Excluding Acc/AmortDifference As Reported Excluding Acc/AmortDifference
 $Yield $Yield $Yield $Yield $Yield $Yield
Interest Earning Assets:                 
Loans$31,3655.07% $30,6974.96% $668 0.11% $22,3884.48% $21,9864.40% $402 0.08%
Taxable investment securities 1,4861.49%  1,4861.49%  - 0.00%  1,3441.27%  1,3441.27%  - 0.00%
Tax-exempt investment securities 931.94%  931.94%  - 0.00%  701.64%  701.64%  - 0.00%
Fed funds sold & other 4333.52%  4333.52%  - 0.00%  1090.54%  1090.54%  - 0.00%
Total Interest Earning Assets 33,3774.53%  32,7094.44%  668 0.09%  23,9113.79%  23,5093.73%  402 0.06%
                  
Interest Bearing Liabilities:                 
Savings deposits$6,2381.84% $6,2381.84% $- 0.00% $7770.24% $7770.24% $- 0.00%
Other time deposits 4,1962.74%  4,2912.80%  (95)-0.06%  6020.55%  1,2221.12%  (620)-0.57%
Other borrowed money 2,1133.92%  2,1303.95%  (17)-0.03%  2182.23%  2392.44%  (21)-0.21%
Federal funds purchased and                 
securties sold under agreement to                 
repurchase 4274.27%  4274.27%  - 0.00%  1661.88%  1661.88%  - 0.00%
Subordinated notes 2853.29%  2853.29%  - 0.00%  2843.29%  2843.29%  - 0.00%
Total Interest Bearing Liabilities 13,2592.35%  13,3712.37%  (112)-0.02%  2,0470.44%  2,6880.58%  (641)-0.14%
                  
Interest/Dividend income/yield 33,3774.53%  32,7094.44%  668 0.09%  23,9113.79%  23,5093.73%  402 0.06%
Interest Expense / yield 13,2592.35%  13,3712.37%  (112)-0.02%  2,0470.44%  2,6880.58%  (641)-0.14%
Net Interest Spread 20,1182.18%  19,3382.07%  780 0.11%  21,8643.35%  20,8213.15%  1,043 0.20%
Net Interest Margin 2.73%  2.63%  0.10%  3.47%  3.30%  0.17%
                  
                  
 For the Six Months Ended June 30, 2023 For the Six Months Ended June 30, 2022
 As Reported Excluding Acc/AmortDifference As Reported Excluding Acc/AmortDifference
 $Yield $Yield $Yield $Yield $Yield $Yield
Interest Earning Assets:                 
Loans$61,0685.01% $59,7334.90% $1,335 0.11% $42,8434.39% $42,0674.31% $776 0.08%
Taxable investment securities 2,9851.50%  2,9851.50%  - 0.00%  2,6391.24%  2,6391.24%  - 0.00%
Tax-exempt investment securities 1931.93%  1931.93%  - 0.00%  1401.76%  1401.76%  - 0.00%
Fed funds sold & other 9333.17%  9333.17%  - 0.00%  1880.30%  1880.30%  - 0.00%
Total Interest Earning Assets 65,1794.47%  63,8444.38%  1,335 0.09%  45,8103.63%  45,0343.57%  776 0.06%
                  
Interest Bearing Liabilities:                 
Savings deposits$11,1811.62% $11,1811.62% $- 0.00% $1,3650.21% $1,3650.21% $- 0.00%
Other time deposits 7,4042.48%  7,9582.67%  (554)-0.19%  1,3740.61%  2,6131.17%  (1,239)-0.56%
Other borrowed money 3,3933.90%  3,4283.94%  (35)-0.04%  5532.16%  5952.33%  (42)-0.17%
Federal funds purchased and                 
securties sold under agreement to                 
repurchase 8324.22%  8324.22%  - 0.00%  3181.98%  3181.98%  - 0.00%
Subordinated notes 5693.29%  5693.29%  - 0.00%  5533.21%  5533.21%  - 0.00%
Total Interest Bearing Liabilities 23,3792.10%  23,9682.16%  (589)-0.06%  4,1630.44%  5,4440.58%  (1,281)-0.14%
                  
Interest/Dividend income/yield 65,1794.47%  63,8444.38%  1,335 0.09%  45,8103.63%  45,0343.57%  776 0.06%
Interest Expense / yield 23,3792.10%  23,9682.16%  (589)-0.06%  4,1630.44%  5,4440.58%  (1,281)-0.14%
Net Interest Spread 41,8002.37%  39,8762.22%  1,924 0.15%  41,6473.19%  39,5902.99%  2,057 0.20%
Net Interest Margin 2.87%  2.74%  0.13%  3.30%  3.14%  0.16%
                  



FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME
         
         
  (in thousands of dollars) (in thousands of dollars)
  Three Months Ended Six Months Ended
Non-GAAP Reconciliation of Net Income June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
  (Unaudited) (Unaudited)
Net income as reported $6,001  $8,271  $12,467  $16,373 
Acquisition expenses  88   -   184   145 
Tax effect on acquisition expenses  (18)  -   (37)  (30)
Net income excluding acquisition expenses and tax effect $6,071  $8,271  $12,614  $16,488 
         
Weighted average common shares outstanding including participating securities  13,632,440   13,065,975   13,624,094   13,066,123 
         
Basic and diluted earnings per share $0.45  $0.63  $0.93  $1.26 
         



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
 June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
        
Shares Outstanding 13,634,912   13,065,825   13,634,912   13,065,825 
        
Tangible Equity       
Equity$304,663  $280,872  $304,663  $280,872 
Goodwill 86,358   80,434   86,358   80,434 
Other Intangible 8,437   3,974   8,437   3,974 
Comprehensive Loss Adjustment* -   -   35,922   31,261 
CECL Adjustment** -   -   2,528   - 
Tangible Equity$209,868  $196,464  $248,318  $227,725 
Shares Outstanding 13,635   13,066   13,635   13,066 
Tangible Book Equity per Share$15.39  $15.04  $18.21  $17.43 
        
        
 Actual Average Regulatory Average
 Year to Date Year to Date
 June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
        
Net Income$12,467  $16,373  $12,467  $16,373 
Acquisition Costs - Tax Adjusted 147   115   147   115 
        
Average Shares Outstanding 13,624,094   13,066,123   13,624,094   13,066,123 
        
Average Tangible Equity       
Average Equity$303,635  $289,167  $303,635  $289,167 
Average Goodwill 86,358   80,434   86,358   80,434 
Average Other Intangible 8,942   4,235   8,942   4,235 
Average Comprehensive Loss Adjustment* -   -   34,921   16,893 
Average CECL Adjustment** -   -   2,528   
Average Tangible Equity$208,336  $204,498  $245,784  $221,391 
Average Shares Outstanding 13,624   13,066   13,624   13,066 
Average Tangible Book Equity per Share$15.29  $15.65  $18.04  $16.94 
        
Return on Average Tangible Equity 11.97%  16.01%  10.14%  14.79%
Return on Average Tangible Equity w/o Acquisition 12.11%  16.12%  10.26%  14.89%
        
*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.      

 


 

  
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