Farmers & Merchants Bancorp, Inc. Reports 2024 First-Quarter Financial Results
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 | $ | 35,200 | 5.46 | % | $ | 34,525 | 5.36 | % | $ | 675 | 0.10 | % | $ | 29,703 | 4.96 | % | $ | 29,036 | 4.85 | % | $ | 667 | 0.11 | % | |||||||
| Taxable investment securities | 1,686 | 1.75 | % | 1,686 | 1.75 | % | - | 0.00 | % | 1,499 | 1.51 | % | 1,499 | 1.51 | % | - | 0.00 | % | |||||||||||||
| Tax-exempt investment securities | 86 | 2.06 | % | 86 | 2.06 | % | - | 0.00 | % | 100 | 1.92 | % | 100 | 1.92 | % | - | 0.00 | % | |||||||||||||
| Fed funds sold & other | 1,682 | 6.09 | % | 1,682 | 6.09 | % | - | 0.00 | % | 500 | 2.92 | % | 500 | 2.92 | % | - | 0.00 | % | |||||||||||||
| Total Interest Earning Assets | 38,654 | 5.00 | % | 37,979 | 4.92 | % | 675 | 0.08 | % | 31,802 | 4.41 | % | 31,135 | 4.31 | % | 667 | 0.10 | % | |||||||||||||
| Interest Bearing Liabilities: | |||||||||||||||||||||||||||||||
| Savings deposits | $ | 9,407 | 2.61 | % | $ | 9,407 | 2.61 | % | $ | - | 0.00 | % | $ | 4,943 | 1.41 | % | $ | 4,943 | 1.41 | % | $ | - | 0.00 | % | |||||||
| Other time deposits | 5,872 | 3.61 | % | 5,872 | 3.61 | % | - | 0.00 | % | 3,208 | 2.21 | % | 3,667 | 2.53 | % | (459 | ) | -0.32 | % | ||||||||||||
| Other borrowed money | 2,689 | 4.09 | % | 2,707 | 4.11 | % | (18 | ) | -0.02 | % | 1,280 | 3.86 | % | 1,298 | 3.92 | % | (18 | ) | -0.06 | % | |||||||||||
| Federal funds purchased and securities sold under agreement to repurchase | 284 | 3.99 | % | 284 | 3.99 | % | - | 0.00 | % | 405 | 4.17 | % | 405 | 4.17 | % | - | 0.00 | % | |||||||||||||
| Subordinated notes | 284 | 3.27 | % | 284 | 3.27 | % | - | 0.00 | % | 284 | 3.28 | % | 284 | 3.28 | % | - | 0.00 | % | |||||||||||||
| Total Interest Bearing Liabilities | 18,536 | 3.06 | % | 18,554 | 3.07 | % | (18 | ) | -0.01 | % | 10,120 | 1.85 | % | 10,597 | 1.94 | % | (477 | ) | -0.09 | % | |||||||||||
| Interest/Dividend income/yield | 38,654 | 5.00 | % | 37,979 | 4.92 | % | 675 | 0.08 | % | 31,802 | 4.41 | % | 31,135 | 4.31 | % | 667 | 0.10 | % | |||||||||||||
| Interest Expense / yield | 18,536 | 3.06 | % | 18,554 | 3.07 | % | (18 | ) | -0.01 | % | 10,120 | 1.85 | % | 10,597 | 1.94 | % | (477 | ) | -0.09 | % | |||||||||||
| Net Interest Spread | 20,118 | 1.94 | % | 19,425 | 1.85 | % | 693 | 0.09 | % | 21,682 | 2.56 | % | 20,538 | 2.37 | % | 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 | |
