Farmers & Merchants Bancorp, Inc. Reports Record 2020 First Quarter Financial Results
2020 First Quarter Financial Highlights Include (on a year-over-year basis unless noted):
- Net interest income after provision for loan losses was stable at
$12.6 million , despite a$1.4 million increase in the first quarter provision for loan losses - Noninterest income increased 15.8% to
$3.1 million - Strong organic growth drove a 13.5% increase in net total loans and a 13.6% increase in total deposits
- Net income increased 27.3% to
$4.1 million , or$0.37 per basic and diluted share - Net charge-offs to average loans was 0.01%, compared to 0.02% for the same period last year
- Return on average assets was 1.02%, compared to 0.97% for the same period last year (last year’s first quarter included one-time tax adjusted expenses related to the
Bank of Geneva acquisition) - F&M remains well capitalized under regulatory guidelines with a tier 1 capital to average assets of 11.56%
“For over 120 years, F&M has supported its local communities and we are committed to helping our retail, commercial, and agricultural customers through the unprecedented challenges created by the COVID-19 crisis,” stated
“As the crisis has evolved, we have strengthened our relationships by increasing the amount of financial relief, assistance, and advice we are providing customers. Since the onset of the COVID-19 crisis, we have started offering several financial relief programs to our customers including forbearance agreements for home loans, a ‘Skip-a-pay’ program for consumer installment loans, waiving late payment fees, offering interest only payment alternatives for commercial and ag customers, and temporarily reducing account fees by eliminating certain requirements on deposit accounts. In addition, as a community bank, we have the agility to respond to evolving market conditions, while offering quick financial support and decisions to our customers. Through our efforts, almost 500 loans to small business customers have been approved by the
Income Statement
Net income for the 2020 first quarter ended
“We expect
Deposits
At
Loan Portfolio and Asset Quality
Total loans, net at
“The COVID-19 pandemic combined with the country’s response to the crisis is materially impacting the ability of individuals, businesses and other entities to meet their financial obligations. Fortunately, F&M has no exposure to the energy sector, while our exposure to industries most likely impacted by the pandemic is limited. In fact, loans in the restaurant, hospitality (hotel) and entertainment industries represent 8.67% of our loan portfolio at
Stockholders’ Equity and Dividends
Total stockholders’ equity increased 9.0% to
Tangible stockholders’ equity increased to
For the 2020 first quarter, the company declared cash dividends of
About
Safe harbor statement
Non-GAAP Financial Measures
This press release includes disclosure of financial measures not prepared in accordance with generally accepted accounting principles in
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
(Unaudited) (in thousands of dollars, except per share data)
Three Months Ended | |||||||||||||||||||
2020 |
2019 |
2019 |
2019 |
2019 |
|||||||||||||||
Interest Income | |||||||||||||||||||
Loans, including fees | $ | 15,883 | $ | 15,608 | $ | 15,202 | $ | 16,723 | $ | 14,680 | |||||||||
Debt securities: | |||||||||||||||||||
1,146 | 840 | 972 | 816 | 713 | |||||||||||||||
Municipalities | 262 | 225 | 190 | 211 | 211 | ||||||||||||||
Dividends | 45 | 60 | 69 | 76 | 88 | ||||||||||||||
Federal funds sold | 6 | 97 | 120 | 162 | 37 | ||||||||||||||
Other. | 122 | 319 | 459 | 295 | 133 | ||||||||||||||
Total interest income | 17,464 | 17,149 | 17,012 | 18,283 | 15,862 | ||||||||||||||
Interest Expense | |||||||||||||||||||
Deposits | 2,901 | 3,336 | 3,654 | 3,339 | 2,613 | ||||||||||||||
Federal funds purchased and securities sold | |||||||||||||||||||
under agreements to repurchase | 244 | 207 | 201 | 141 | 185 | ||||||||||||||
Borrowed funds | 266 | 270 | 257 | 269 | 287 | ||||||||||||||
Total interest expense | 3,411 | 3,813 | 4,112 | 3,749 | 3,085 | ||||||||||||||
Net Interest Income - Before Provision for Loan Losses | 14,053 | 13,336 | 12,900 | 14,534 | 12,777 | ||||||||||||||
Provision for Loan Losses | 1,430 | 728 | 247 | 133 | 30 | ||||||||||||||
Net Interest Income After Provision For Loan Losses | 12,623 | 12,608 | 12,653 | 14,401 | 12,747 | ||||||||||||||
Noninterest Income | |||||||||||||||||||
Customer service fees | 1,586 | 1,732 | 1,722 | 1,694 | 1,578 | ||||||||||||||
Other service charges and fees | 1,039 | 1,132 | 1,179 | 1,091 | 1,041 | ||||||||||||||
Net gain on sale of loans | 227 | 119 | 260 | 196 | 102 | ||||||||||||||
Net gain (loss) on sale of available-for-sale securities | 270 | - | - | - | (26 | ) | |||||||||||||
Total noninterest income | 3,122 | 2,983 | 3,161 | 2,981 | 2,695 | ||||||||||||||
Noninterest Expense | |||||||||||||||||||
Salaries and wages | 4,223 | 4,029 | 4,158 | 3,830 | 4,312 | ||||||||||||||
Employee benefits | 1,677 | 1,410 | 1,331 | 1,223 | 1,594 | ||||||||||||||
Net occupancy expense | 564 | 406 | 630 | 614 | 667 | ||||||||||||||
Furniture and equipment | 758 | 596 | 720 | 763 | 696 | ||||||||||||||
Data processing | 442 | 396 | 482 | 376 | 1,299 | ||||||||||||||
Franchise taxes | 368 | 246 | 248 | 229 | 258 | ||||||||||||||
ATM expense | 414 | 434 | 416 | 418 | 447 | ||||||||||||||
Advertising | 303 | 340 | 587 | 382 | 260 | ||||||||||||||
Net loss on sale of other assets owned | 1 | 16 | 22 | 28 | 15 | ||||||||||||||
72 | (11 | ) | - | 98 | 96 | ||||||||||||||
Mortgage servicing rights amortization | 132 | 158 | 149 | 105 | 75 | ||||||||||||||
Consulting fees | 139 | 264 | 196 | 95 | 113 | ||||||||||||||
Other general and administrative | 1,602 | 1,482 | 1,667 | 1,551 | 1,679 | ||||||||||||||
Total noninterest expense | 10,695 | 9,766 | 10,606 | 9,712 | 11,511 | ||||||||||||||
Income Before Income Taxes | 5,050 | 5,825 | 5,208 | 7,670 | 3,931 | ||||||||||||||
Income Taxes | 945 | 1,102 | 933 | 1,490 | 707 | ||||||||||||||
Net Income | 4,105 | 4,723 | 4,275 | 6,180 | 3,224 | ||||||||||||||
Other Comprehensive Income (Loss) (Net of Tax): | |||||||||||||||||||
Net unrealized gain (loss) on available-for-sale securities | 4,998 | (472 | ) | 841 | 3,061 | 1,749 | |||||||||||||
Reclassification adjustment for (gain) loss on sale of available-for-sale securities | (270 | ) | - | - | - | 26 | |||||||||||||
Net unrealized gain (loss) on available-for-sale securities | 4,728 | (472 | ) | 841 | 3,061 | 1,775 | |||||||||||||
Tax expense (benefit) | 993 | (99 | ) | 176 | 643 | 373 | |||||||||||||
Other comprehensive income (loss) | 3,735 | (373 | ) | 665 | 2,418 | 1,402 | |||||||||||||
Comprehensive Income | $ | 7,840 | $ | 4,350 | $ | 4,940 | $ | 8,598 | $ | 4,626 | |||||||||
Basic and Diluted Earnings Per Share | $ | 0.37 | $ | 0.43 | $ | 0.38 | $ | 0.56 | $ | 0.29 | |||||||||
Dividends Declared | $ | 0.16 | $ | 0.16 | $ | 0.15 | $ | 0.15 | $ | 0.15 | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands of dollars, except per share data)
2020 |
2019 |
2019 |
2019 |
2019 |
||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 49,844 | $ | 50,137 | $ | 103,188 | $ | 108,085 | $ | 48,740 | ||||||||||
Federal funds sold | 40,993 | 1,159 | 11,404 | 15,193 | 33,109 | |||||||||||||||
Total cash and cash equivalents | 90,837 | 51,296 | 114,592 | 123,278 | 81,849 | |||||||||||||||
Interest-bearing time deposits | 4,869 | 4,309 | 4,554 | 4,509 | 4,509 | |||||||||||||||
Securities - available-for-sale | 204,121 | 222,293 | 190,465 | 204,415 | 174,682 | |||||||||||||||
Other securities, at cost | 5,810 | 5,810 | 5,789 | 5,789 | 5,789 | |||||||||||||||
Loans held for sale | 2,153 | 4,248 | 606 | 1,909 | 859 | |||||||||||||||
Loans, net | 1,239,108 | 1,211,771 | 1,151,937 | 1,084,448 | 1,091,829 | |||||||||||||||
Premises and equipment | 26,120 | 26,351 | 25,990 | 26,013 | 25,205 | |||||||||||||||
47,340 | 47,340 | 47,340 | 47,340 | 47,340 | ||||||||||||||||
Mortgage servicing rights | 2,672 | 2,629 | 2,556 | 2,465 | 2,397 | |||||||||||||||
Other real estate owned | 185 | 214 | 351 | 329 | 510 | |||||||||||||||
Bank owned life insurance | 15,313 | 15,235 | 15,151 | 15,050 | 14,963 | |||||||||||||||
Other assets | 16,597 | 15,834 | 15,549 | 15,002 | 15,729 | |||||||||||||||
Total Assets | $ | 1,655,125 | $ | 1,607,330 | $ | 1,574,880 | $ | 1,530,547 | $ | 1,465,661 | ||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Deposits | ||||||||||||||||||||
Noninterest-bearing | $ | 261,786 | $ | 265,156 | $ | 261,719 | $ | 242,510 | $ | 236,847 | ||||||||||
Interest-bearing | ||||||||||||||||||||
NOW accounts | 463,734 | 423,655 | 430,646 | 430,505 | 418,773 | |||||||||||||||
Savings | 341,256 | 322,973 | 310,667 | 293,179 | 272,875 | |||||||||||||||
Time | 281,931 | 276,563 | 274,996 | 276,153 | 258,929 | |||||||||||||||
Total deposits | 1,348,707 | 1,288,347 | 1,278,028 | 1,242,347 | 1,187,424 | |||||||||||||||
Federal Funds Purchased and | ||||||||||||||||||||
securities sold under agreements to repurchase | 30,585 | 48,073 | 30,056 | 27,102 | 25,521 | |||||||||||||||
24,788 | 24,806 | 24,669 | 24,532 | 24,682 | ||||||||||||||||
Dividend payable | 1,768 | 1,768 | 1,657 | 1,654 | 1,654 | |||||||||||||||
Accrued expenses and other liabilities | 12,820 | 14,078 | 13,062 | 10,865 | 9,446 | |||||||||||||||
Total liabilities | 1,418,668 | 1,377,072 | 1,347,472 | 1,306,500 | 1,248,727 | |||||||||||||||
Commitments and Contingencies | ||||||||||||||||||||
Stockholders' Equity | ||||||||||||||||||||
Common stock - No par value 20,000,000 shares authorized; issued | ||||||||||||||||||||
and outstanding 12,230,000 shares |
81,844 | 81,535 | 81,264 | 81,955 | 81,760 | |||||||||||||||
(12,636 | ) | (12,456 | ) | (12,453 | ) | (12,707 | ) | (12,680 | ) | |||||||||||
Retained earnings | 162,416 | 160,081 | 157,126 | 153,993 | 149,466 | |||||||||||||||
Accumulated other comprehensive income (loss) | 4,833 | 1,098 | 1,471 | 806 | (1,612 | ) | ||||||||||||||
Total stockholders' equity | 236,457 | 230,258 | 227,408 | 224,047 | 216,934 | |||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 1,655,125 | $ | 1,607,330 | $ | 1,574,880 | $ | 1,530,547 | $ | 1,465,661 | ||||||||||
SELECT FINANCIAL DATA
For the Three Months Ended | ||||||||||||||||||||
Selected financial data | 2020 |
2019 |
2019 |
2019 |
2019 |
|||||||||||||||
Return on average assets | 1.02% | 1.18% | 1.10% | 1.63% | 0.97% | |||||||||||||||
Return on average equity | 7.06% | 8.26% | 7.54% | 11.21% | 5.99% | |||||||||||||||
Yield on earning assets | 4.66% | 4.63% | 4.74% | 5.25% | 4.80% | |||||||||||||||
Cost of interest bearing liabilities | 1.22% | 1.40% | 1.55% | 1.45% | 1.26% | |||||||||||||||
Net interest spread | 3.44% | 3.23% | 3.19% | 3.80% | 3.54% | |||||||||||||||
Net interest margin | 3.75% | 3.60% | 3.60% | 4.18% | 3.87% | |||||||||||||||
Efficiency | 63.09% | 63.67% | 65.86% | 56.00% | 73.11% | |||||||||||||||
Dividend payout ratio | 43.07% | 43.34% | 38.67% | 26.78% | 42.77% | |||||||||||||||
Tangible book value per share (1) | $ | 16.26 | $ | 16.01 | $ | 15.68 | $ | 15.49 | $ | 15.05 | ||||||||||
Tier 1 capital to average assets | 11.56% | 11.52% | 11.45% | 11.77% | 13.07% | |||||||||||||||
Loans | 2020 |
2019 |
2019 |
2019 |
2019 |
|||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Commercial real estate | $ | 570,217 | $ | 551,309 | $ | 502,137 | $ | 443,257 | $ | 440,993 | ||||||||||
Agricultural real estate | 194,383 | 199,105 | 200,791 | 193,768 | 191,752 | |||||||||||||||
Consumer real estate | 174,731 | 165,349 | 159,074 | 159,540 | 160,967 | |||||||||||||||
Commercial and industrial | 143,261 | 135,631 | 130,150 | 125,609 | 137,949 | |||||||||||||||
Agricultural | 109,584 | 111,820 | 110,270 | 113,755 | 112,898 | |||||||||||||||
Consumer | 49,022 | 49,237 | 49,552 | 48,952 | 47,647 | |||||||||||||||
Other | 8,336 | 8,314 | 8,167 | 7,341 | 7,392 | |||||||||||||||
Less: Net deferred loan fees and costs | (1,893 | ) | (1,766 | ) | (1,445 | ) | (1,091 | ) | (1,133 | ) | ||||||||||
Total loans,net | $ | 1,247,641 | $ | 1,218,999 | $ | 1,158,696 | $ | 1,091,131 | $ | 1,098,465 | ||||||||||
Asset quality data | 2020 |
2019 |
2019 |
2019 |
2019 |
|||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Nonaccrual loans | $ | 3,344 | $ | 3,400 | $ | 3,275 | $ | 1,328 | $ | 1,188 | ||||||||||
Troubled debt restructuring | $ | 1,934 | $ | 956 | $ | 1,051 | $ | 981 | $ | 173 | ||||||||||
90 day past due and accruing | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Nonperforming loans | $ | 3,344 | $ | 3,400 | $ | 3,275 | $ | 1,328 | $ | 1,188 | ||||||||||
Other real estate owned | $ | 185 | $ | 214 | $ | 351 | $ | 329 | $ | 510 | ||||||||||
Nonperforming assets | $ | 3,529 | $ | 3,614 | $ | 3,626 | $ | 1,657 | $ | 1,698 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Allowance for loan and lease losses | $ | 8,533 | $ | 7,228 | $ | 6,759 | $ | 6,964 | $ | 6,636 | ||||||||||
Allowance for loan and lease losses/total loans | 0.68% | 0.59% | 0.58% | 0.64% | 0.60% | |||||||||||||||
Net charge-offs: | ||||||||||||||||||||
Quarter-to-date | $ | 125 | $ | 295 | $ | 171 | $ | 86 | $ | 169 | ||||||||||
Year-to-date | $ | 125 | $ | 685 | $ | 426 | $ | 255 | $ | 169 | ||||||||||
Net charge-offs to average loans | ||||||||||||||||||||
Quarter-to-date | 0.01% | 0.03% | 0.02% | 0.01% | 0.02% | |||||||||||||||
Year-to-date | 0.01% | 0.06% | 0.04% | 0.02% | 0.02% | |||||||||||||||
Nonperforming loans/total loans | 0.27% | 0.28% | 0.28% | 0.12% | 0.11% | |||||||||||||||
Allowance for loan and lease losses/nonperforming loans | 256.66% | 187.17% | 173.25% | 375.51% | 558.92% | |||||||||||||||
(1) Tangible Equity = Stockholder Equity less goodwill and other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities) | ||||||||||||||||||||
AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
(in thousands of dollars, except percentages)
For the Three Months Ended | For the Three Months Ended | |||||||||||||||
Interest Earning Assets: | Average Balance |
Interest/ Dividends |
Yield/ Rate |
Average Balance |
Interest/ Dividends |
Yield/ Rate |
||||||||||
Loans | $ | 1,236,848 | $ | 15,883 | 5.14% | $ | 1,108,031 | $ | 14,680 | 5.30% | ||||||
190,158 | 1,321 | 2.78% | 151,885 | 842 | 2.22% | |||||||||||
28,832 | 132 | 2.32% | 34,513 | 170 | 2.49% | |||||||||||
Fed Funds Sold & Other | 46,393 | 128 | 1.10% | 31,394 | 170 | 2.17% | ||||||||||
Total Interest Earning Assets | 1,502,231 | $ | 17,464 | 4.66% | 1,325,823 | $ | 15,862 | 4.80% | ||||||||
Nonearning Assets | 114,326 | 4,540 | ||||||||||||||
Total Assets | $ | 1,616,557 | $ | 1,330,363 | ||||||||||||
Interest Bearing Liabilities: | ||||||||||||||||
Savings Deposits | $ | 773,130 | $ | 1,485 | 0.77% | 671,227 | 1,527 | 0.91% | ||||||||
Other Time Deposits | 277,579 | 1,416 | 2.04% | 243,342 | 1,086 | 1.79% | ||||||||||
Other Borrowed Money | 24,787 | 266 | 4.29% | 29,392 | 287 | 3.91% | ||||||||||
Sold under Agreement to Repurch. | 38,954 | 244 | 2.51% | 33,794 | 185 | 2.19% | ||||||||||
Total Interest Bearing Liabilities | $ | 1,114,450 | $ | 3,411 | 1.22% | $ | 977,755 | $ | 3,085 | 1.26% | ||||||
Noninterest bearing Liabilities | 269,550 | 137,279 | ||||||||||||||
Stockholders Equity | $ | 232,557 | $ | 215,329 | ||||||||||||
Net Interest Income and interest rate spread | $ | 14,053 | 3.44% | $ | 12,777 | 3.54% | ||||||||||
Net Interest Margin | 3.75% | 3.87% | ||||||||||||||
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 | ||||||||||||||||
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 |
Source: Farmers & Merchants Bancorp, Inc.