Release Details

Farmers & Merchants Bancorp, Inc. Reports Record 2022 First Quarter Financial Results

April 20, 2022

ARCHBOLD, Ohio, April 20, 2022 (GLOBE NEWSWIRE) --  Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2022 first quarter ended March 31, 2022.

2022 First Quarter Financial Highlights Include (on a year-over-year basis unless noted):

  • Net income increased 65.0% to a quarterly record of $8.1 million, from $4.9 million
  • Earnings increased 40.9% to $0.62 per basic and diluted share, from $0.44 per basic and diluted share
  • Average shares outstanding increased 16.7% as a result of the Perpetual Federal Savings Bank Acquisition
  • Total loans increased 46.3% to a record $1.962 billion, and included $463,000 of PPP loans
  • Organic loan growth of 22.0%, excluding PPP loans and loan balances at time of acquisitions
  • Total loans increased 5.6% from $1.857 billion at December 31, 2021
  • Total assets increased 34.8% to a record $2.686 billion, and up 1.8% from December 31, 2021
  • Deposits increased 33.8% to a record $2.254 billion, and up 2.7% from December 31, 2021
  • Net charge-offs to average loans were 0.00%, the fourth consecutive quarter at or below 0.00%
  • Return on average equity increased to 11.00% from 7.87%
  • Return on average tangible equity increased to 14.86% from 10.10% on a year-over-year basis

Lars B. Eller, President and Chief Executive Officer, stated, “F&M achieved record financial results for the first quarter, as our business benefits from the Perpetual Federal Savings Bank, Inc., and Ossian Financial Services, Inc. acquisitions, the Adams County Financial Resources asset purchase, our new Fort Wayne office, our three new LPOs, and the completion of our office realignment program. Organic loan growth increased 22.0% on a year-over-year basis and loans are up 5.6% from December 31, 2021. In fact, this is our third consecutive quarter of year-over-year organic loan growth over 10.0%. While we expect our growth rate to normalize in 2022, positive momentum across our business remains strong and we believe we are well positioned to grow our balance sheet and earnings throughout 2022.”

Income Statement

Net income for the 2022 first quarter ended March 31, 2022, was $8.1 million, compared to $4.9 million for the same period last year. Net income per basic and diluted share for the 2022 first quarter was $0.62, compared to $0.44 for the same period last year.

Mr. Eller continued, “Profitability is benefitting from our larger scale, strong asset quality, and prudent expense management. Our efficiency ratio improved to 55.44% during the 2022 first quarter, compared to 62.57% at March 31, 2021, and 58.76% at December 31, 2021. Strong profitability also drove higher returns, and ROAA, ROAE, and ROATCE all expanded on a year-over-year and sequential basis.”

Deposits
At March 31, 2022, total deposits were $2.254 billion, an increase of 33.8% from March 31, 2021, and an increase of 2.7% from December 31, 2021. F&M continues to see growing customer preferences to more stable and secure saving instruments as deposits have increased since the COVID-19 crisis began. The Company’s cost of interest-bearing liabilities improved to 0.45% for the quarter ended March 31, 2022, compared to 0.53% for the quarter ended March 31, 2021, and 0.51% for the quarter ended December 31, 2021.

Loan Portfolio and Asset Quality
Total loans, net at March 31, 2022, increased 46.3%, or by $620.5 million to $1.962 billion, compared to $1.342 billion at March 31, 2021, and up 5.6% from $1.857 billion at December 31, 2021. The year-over-year improvement resulted primarily from the contribution of continued strong organic loan growth and the completion of both the Perpetual Federal Savings Bank, Inc. and Ossian Financial Services, Inc. acquisitions.

Loans increased 22.0% organically from the same period a year ago when not including the Perpetual and Ossian acquisitions, and the impact of PPP loans. During the 2022 first quarter, the Company processed $2.4 million of PPP loan forgiveness and principal payments received, resulting in a total of $463,000 of PPP loans within F&M’s loan portfolio at March 31, 2022.

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $8.6 million, or 0.44% of total loans at March 31, 2022, compared to $8.1 million, or 0.61% at March 31, 2021. The $500,000 year-over-year increase in nonperforming loans was primarily a result of the addition of $385.1 million of loans associated with the Perpetual and Ossian acquisitions, reflecting strong asset quality at F&M as well as its recently acquired banks.

Mr. Eller continued, “Despite the significant loan growth we have recently experienced, we have remained focused on controlling risk. Nonperforming assets have increased 3.5% over the past 12 months, despite a 46.3% increase in our loan portfolio over this period. As a result, nonperforming assets to total assets were 0.32% at March 31, 2022, compared to 0.42% at March 31, 2021. In addition, we continue to prudently fund our allowance for loan and lease losses which has increased 16.3% on a year-over-year basis. At March 31, 2022, our allowance for loan and lease losses to nonperforming loans was 198.29%, compared to 177.24% at March 31, 2021.”  

“Our record first quarter financial results reflect the power of our strategic growth plan, the value we provide our local communities, and the hard work and dedication of our team members. While uncertainty has expanded across the global economy and interest rates have started increasing, I believe 2022 will be another record year of earnings growth and value creation for our shareholders, customers, employees, and communities,” concluded Mr. Eller.

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 16.1% to $286.5 million at March 31, 2022, from $246.8 million at March 31, 2021. At March 31, 2022, the Company had a Tier 1 leverage ratio of 8.51%, compared to 10.39% at March 31, 2021.

Tangible stockholders’ equity increased to $221.6 million at March 31, 2022, compared to $195.9 million at March 31, 2021. On a per share basis, tangible stockholders’ equity at March 31, 2022, was $16.96 per share, compared to $17.50 per share at March 31, 2021. The 3.1% year-over-year decline in tangible book value per share was due to a 16.7% year-over-year increase in the average shares outstanding as a result of the Perpetual Federal Savings Bank acquisition.

For the 2022 first quarter, the company declared cash dividends of $0.19 per share, which is an 11.8% increase over the 2021 first quarter declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 27 consecutive years. For the 2022 first quarter, the dividend payout ratio was 30.64% compared to 38.48% 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 Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Williams, and Wood counties in Western 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 Oxford, 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.


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, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021  
Interest Income             
Loans, including fees  $20,455  $21,008  $18,766 $16,259 $15,612   
Debt securities:             
U.S. Treasury and government agencies   1,023   964   924  857  751   
Municipalities   300   289   284  289  308   
Dividends   42   49   44  31  50   
Federal funds sold   10   10   10  6  5   
Other.   69   103   94  88  39   
Total interest income   21,899   22,423   20,122  17,530  16,765   
Interest Expense             
Deposits   1,360   1,581   1,221  1,276  1,340   
Federal funds purchased and securities sold             
under agreements to repurchase   152   155   165  163  166   
Borrowed funds   335   361   87  115  222   
Subordinated notes   269   291   199  -  -   
Total interest expense   2,116   2,388   1,672  1,554  1,728   
Net Interest Income - Before Provision for Loan Losses  19,783   20,035   18,450  15,976  15,037   
Provision for Loan Losses    580   444   659  641  1,700   
Net Interest Income After Provision For Loan Losses  19,203   19,591   17,791  15,335  13,337   
Noninterest Income             
Customer service fees   2,648   2,417   2,242  2,198  2,814   
Other service charges and fees   998   1,026   1,010  874  838   
Net gain on sale of loans   697   1,074   822  955  1,046   
Net gain on sale of available-for-sale securities   -   -   -  -  293   
Total noninterest income   4,343   4,517   4,074  4,027  4,991   
Noninterest Expense             
Salaries and wages   5,502   5,761   5,442  4,591  4,390   
Employee benefits   2,054   1,792   1,621  1,915  1,994   
Net occupancy expense   598   532   529  546  577   
Furniture and equipment   1,056   782   903  848  791   
Data processing   604   1,020   1,548  428  505   
Franchise taxes   418   361   372  294  446   
ATM expense   532   478   460  459  449   
Advertising   237   431   439  331  235   
Net (gain) loss on sale of other assets owned   (5)  13   219  227  (25)  
FDIC assessment   114   265   296  276  236   
Mortgage servicing rights amortization   26   266   285  524  505   
Consulting fees   178   761   256  394  223   
Other general and administrative   2,179   1,964   1,951  2,227  2,033   
Total noninterest expense   13,493   14,426   14,321  13,060  12,359   
Income Before Income Taxes   10,053   9,682   7,544  6,302  5,969   
Income Taxes   1,951   1,999   1,624  1,319  1,060   
Net Income   8,102   7,683   5,920  4,983  4,909   
Other Comprehensive Income (Loss) (Net of Tax):             
Net unrealized gain (loss) on available-for-sale securities  (20,939)  (5,170)  173  786  (6,737)  
Reclassification adjustment for realized gain on sale of available-for-sale securities  -   -   -  -  (293)  
Net unrealized gain (loss) on available-for-sale securities  (20,939)  (5,170)  173  786  (7,030)  
Tax expense (benefit)   (4,397)  (1,085)  36  165  (1,476)  
Other comprehensive income (loss)   (16,542)  (4,085)  137  621  (5,554)  
Comprehensive Income  $(8,440) $3,598  $6,057 $5,604 $(645)  
Basic and Diluted Earnings Per Share  $0.62  $0.59  $0.53 $0.44 $0.44   
Dividends Declared  $0.19  $0.19  $0.18 $0.17 $0.17   
              



FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(Unaudited) (in thousands of dollars, except share data) 
  
   March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021  
   (Unaudited)   (Unaudited) (Unaudited) (Unaudited)  
Assets             
          Cash and due from banks $94,118  $135,485  $112,875  $93,636  $118,139   
          Federal funds sold  45,404   45,338   45,203   57,483   57,361   
 Total cash and cash equivalents  139,522   180,823   158,078   151,119   175,500   
              
          Interest-bearing time deposits  8,677   10,913   14,622   18,597   4,405   
          Securities - available-for-sale  413,996   429,931   426,717   407,500   352,974   
          Other securities, at cost  8,568   8,162   4,905   6,419   5,939   
          Loans held for sale  6,060   7,714   3,735   8,041   7,511   
          Loans, net  1,945,449   1,841,177   1,479,864   1,443,336   1,327,254   
          Premises and equipment  26,653   26,913   26,476   26,915   26,703   
          Goodwill  80,434   80,434   55,214   56,066   47,340   
          Mortgage servicing rights  3,336   3,157   3,097   3,146   3,444   
          Other real estate owned  -   159   167   198   148   
          Bank owned life insurance  27,715   27,558   27,397   27,218   25,347   
          Other assets  25,735   21,359   18,711   18,310   16,720   
              
Total Assets $2,686,145  $2,638,300  $2,218,983  $2,166,865  $1,993,285   
 Liabilities and Stockholders' Equity            
Liabilities            
          Deposits            
 Noninterest-bearing $497,249  $473,689  $438,076  $443,863  $384,558   
 Interest-bearing            
      NOW accounts  681,975   650,466   646,237   652,078   605,533   
      Savings  626,787   597,828   529,532   501,687   451,043   
      Time  447,586   471,479   252,383   256,445   242,717   
 Total deposits  2,253,597   2,193,462   1,866,228   1,854,073   1,683,851   
              
          Federal funds purchased and            
               securities sold under agreements to repurchase  31,680   29,268   29,601   29,882   30,072   
          Federal Home Loan Bank (FHLB) advances  22,656   24,065   17,868   17,868   17,840   
          Other borrowings  40,000   40,000   -   -   -   
          Subordinated notes, net of unamortized issuance costs  34,499   34,471   34,441   -   -   
          Dividend payable  2,462   2,461   2,002   1,888   1,889   
          Accrued expenses and other liabilities  14,773   17,406   14,097   12,569   12,805   
 Total liabilities  2,399,667   2,341,133   1,964,237   1,916,280   1,746,457   
              
Commitments and Contingencies            
              
Stockholders' Equity            
          Common stock - No par value 20,000,000 shares authorized; issued and          
              outstanding 14,063,999 shares 3/31/22 and 12/31/21  122,886   122,674   81,382   82,259   82,030   
          Treasury stock - 997,916 shares 3/31/22, 997,766 shares 12/31/21  (11,739)  (11,724)  (11,718)  (12,172)  (11,962)  
          Retained earnings  195,057   189,401   184,181   179,734   176,617   
          Accumulated other comprehensive income (loss)  (19,726)  (3,184)  901   764   143   
                  Total stockholders' equity  286,478   297,167   254,746   250,585   246,828   
              
Total Liabilities and Stockholders' Equity $2,686,145  $2,638,300  $2,218,983  $2,166,865  $1,993,285   
              



FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA
                  
   For the Three Months Ended 
Selected financial data March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021  
Return on average assets  1.21%1.10% 1.17%  1.12%  0.90%  1.01%  
Return on average equity  11.00%7.54% 10.94%  9.32%  8.00%  7.87%  
Yield on earning assets  3.47%4.74% 3.59%  3.85%  3.53%  3.71%  
Cost of interest bearing liabilities  0.45%1.55% 0.51%  0.45%  0.44%  0.53%  
Net interest spread  3.02%3.19% 3.08%  3.40%  3.09%  3.18%  
Net interest margin  3.14%3.60% 3.21%  3.53%  3.21%  3.33%  
Efficiency  55.44%65.86% 58.76%  63.50%  64.98%  62.57%  
Dividend payout ratio  30.64%38.67% 32.03%  33.81%  37.89%  38.48%  
Tangible book value per share (1) $16.96 15.68 $16.49  $17.33  $16.94  $17.50   
Tier 1 capital to average assets  8.51%11.45% 8.47%  9.45%  8.78%  10.39%  
Average Shares Outstanding  13,066,272   13,046,299   11,209,732   11,191,043   11,197,012   
           
Loans March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021  
(Dollar amounts in thousands)                 
Commercial real estate $910,839 502,137 $848,477  $728,852  $691,122  $618,754   
Agricultural real estate  196,223 200,791  198,343   179,374   189,742   179,945   
Consumer real estate  410,120 159,074  395,873   202,454   194,715   175,675   
Commercial and industrial  216,918 130,150  208,270   194,767   216,609   202,958   
Agricultural  140,709 110,270  118,368   105,580   100,756   100,022   
Consumer  57,521 49,552  57,737   55,521   56,427   54,445   
Other  31,573 8,167  32,089   31,096   13,549   14,088   
  Less: Net deferred loan fees and costs  (1,683)  (1,738)  (2,082)  (4,497)  (4,208)  
Total loans,net $1,962,220  $1,857,419  $1,495,562  $1,458,423  $1,341,679   
                  
           
Asset quality data March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021  
(Dollar amounts in thousands)                 
Nonaccrual loans $8,581 3,275 $8,076  $6,248  $7,031  $8,139   
Troubled debt restructuring $7,268 1,051 $7,614  $6,035  $5,492  $5,774   
90 day past due and accruing $- - $-  $-  $-  $-   
Nonperforming loans $8,581 3,275 $8,076  $6,248  $7,031  $8,139   
Other real estate owned $- 351 $159  $167  $198  $148   
Nonperforming assets $8,581 3,626 $8,235  $6,415  $7,229  $8,287   
                  
(Dollar amounts in thousands)                 
Allowance for loan and lease losses $16,771 6,759 $16,242  $15,698  $15,087  $14,425   
Allowance for loan and lease losses/total loans  0.85%0.58% 0.87%  1.05%  1.03%  1.08%  
Net charge-offs:                 
   Quarter-to-date $51 171 $(101) $48  $(21) $947   
   Year-to-date $51 426 $874  $974  $926  $947   
Net charge-offs to average loans                 
   Quarter-to-date  0.00%0.02% -0.01%  0.00%  0.00%  0.07%  
   Year-to-date  0.00%0.04% 0.06%  0.07%  0.07%  0.07%  
Nonperforming loans/total loans  0.44%0.28% 0.43%  0.42%  0.48%  0.61%  
Allowance for loan and lease losses/nonperforming loans  198.29%173.25% 201.11%  251.26%  214.58%  177.24%  
                  
(1) Tangible Equity = Stockholder Equity less goodwill and other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities)  
                  



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, 2022 March 31, 2021 
Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate 
Loans $1,907,478 $20,455 4.29% $1,328,571 $15,612 4.70% 
Taxable investment securities  429,899  1,295 1.20%  324,536  1,009 1.24% 
Tax-exempt investment securities  18,587  70 1.91%  20,375  100 2.49% 
Fed funds sold & other  167,319  79 0.19%  136,663  44 0.13% 
Total Interest Earning Assets  2,523,283 $21,899 3.47%  1,810,145 $16,765 3.71% 
              
Nonearning Assets  165,064      126,579     
              
Total Assets $2,688,347     $1,936,724     
              
Interest Bearing Liabilities:             
Savings deposits $1,293,099 $588 0.18% $1,014,392 $574 0.23% 
Other time deposits  459,854  772 0.67%  242,033  766 1.27% 
Other borrowed money  63,364  335 2.11%  17,848  222 4.98% 
Fed funds purchased & securities             
  sold under agreement to repurch.  29,104  152 2.09%  30,210  166 2.20% 
Subordinated notes  34,480  269 3.12%  -  - 0.00% 
Total Interest Bearing Liabilities $1,879,901 $2,116 0.45% $1,304,483 $1,728 0.53% 
              
Noninterest Bearing Liabilities  513,745      382,640     
              
Stockholders' Equity $294,701     $249,601     
              
Net Interest Income and Interest Rate Spread   $19,783 3.02%   $15,037 3.18% 
              
Net Interest Margin     3.14%     3.33% 
              
    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