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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT Pursuant

to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 14, 2022

 

Farmers & Merchants Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

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

 

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

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

N/A

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

 

 

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

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

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

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

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

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

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

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

Emerging growth company  ☐

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

 

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ITEM 2.02.Results of Operation and Financial Condition

On February 14, 2022, Farmers & Merchants Bancorp, Inc. issued a press release (the “Release”) announcing its earnings for the three and twelve months ended December 31, 2021.  A copy of the press release is attached hereto as Exhibit 99 and is incorporated by reference herein.

ITEM 9.01.Financial Statements and Exhibits

(d)

Exhibits.

 

Exhibit Number	Exhibit
99	Company Press Release dated February 14, 2022

 

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

 

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto authorized.

 

	FARMERS & MERCHANTS BANCORP, INC.
		(Registrant)
Dated: February 14, 2022		/s/ Lars B. Eller
		Lars B. Eller
		President and Chief Executive Officer
		/s/ Barbara J. Britenriker
		Barbara J. Britenriker
		Executive Vice President and Chief Financial Officer

 

Exhibit 99

 

 

Farmers & Merchants Bancorp, Inc. Reports

Record 2021 Fourth-Quarter and Full-Year Financial Results

 

ARCHBOLD, OHIO, February 14, 2022, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2021 fourth quarter and twelve months ended December 31, 2021.

 

2021 Fourth Quarter Financial Highlights Include (on a year-over-year basis unless noted):

 

2021 Full-Year Financial Highlights Include (on a year-over-year basis unless noted):

 

“2021 is the seventh consecutive year F&M has produced record financial results, including record annual net income, earnings per share, loans, and dividends.  I am proud of our track record of earnings growth, strong asset quality, and returns to shareholders, which reflects the successful execution of our strategic growth plan, the dedication and hard work of our 387 team members, and the valuable financial services we provide our local communities.  Despite our recent success, we remain focused on becoming a $3.0 billion asset bank.  We believe 2022 will be a transformative

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year for F&M as we benefit from the three acquisitions we completed over the past 12 months, our 2021 office realignment initiative, and our recently opened offices and LPOs,” stated Lars B. Eller, President and Chief Executive Officer.  

 

Mr. Eller continued, “As we execute against our strategic growth plan, we remain rooted in our communities and continue to focus on creating value for our shareholders, associates, and the markets in which we operate.  During 2021, F&M’s Board of Directors approved two increases to our regular quarterly dividend payment, which was up 7.6% over the prior year.  In fact, according to data from S&P Global Market Intelligence, of the nearly 800 publicly traded banks, F&M has the 11^th longest track record of consecutive dividend increases.  For the year, we also increased wages demonstrating our commitment to our associates, and ensuring we continue to attract and retain fantastic team members.  Finally, I am extremely proud of our continued commitment to our local communities.  For 2021, our support to organizations within our markets increased 23.9% to a record $435,000.”

 

Income Statement

Net income for the 2021 fourth quarter ended December 31, 2021, was $7.7 million, compared to $6.8 million for the same period last year.  Net income per basic and diluted share for the 2021 fourth quarter was $0.59, compared to $0.60 for the same period last year.  The $0.01 decline in net income per basic and diluted 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.  Net income for the 2021 twelve-month period ended December 31, 2021, was $23.5 million, compared to $20.1 million for the same period last year.  Net income per basic and diluted share for the 2021 twelve months was $2.01, compared to $1.80 for the same period last year.  

 

Adjusted net income for the 2021 fourth quarter was $8.7 million, or $0.66 per diluted share, compared to $6.8 million, or $0.60 per diluted share in the prior year quarter. Adjusted net income accounts for the impact of one-time acquisition expenses.  Adjusted net income for the year ended December 31, 2021, was $26.6 million, or $2.28 per diluted share, compared to $20.1 million, or $1.80 per diluted share in the prior year.

 

Mr. Eller continued, “The Bank has had 19 consecutive months with an operating efficiency ratio in the 50% range when removing affiliate and acquisition expenses.  We believe earnings growth will accelerate throughout 2022 as our strong financial results benefit from our larger scale, strong asset quality, and prudent expense management.”  

 

Deposits

At December 31, 2021, total deposits were $2.193 billion, an increase of 37.4% from December 31, 2020, and an increase of 17.5% from September 30, 2021.  In addition, 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 0.48% for the year ended December 31, 2021, compared to 0.87% for the year ended December 31, 2020.

 

Loan Portfolio and Asset Quality

Total loans, net at December 31, 2021, increased 42.6% to $1.857 billion, compared to $1.303 billion at December 31, 2020.  The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of both the Perpetual Federal Savings Bank, Inc. and Ossian Financial Services, Inc. acquisitions.  Loans increased 15.9% organically from the same period a year ago when not including the Perpetual and Ossian acquisitions, and the impact of PPP loans.  During the 2021 fourth quarter and full year, the Company processed $6.9 million and $84.5 million, respectively, of PPP loan forgiveness and principal payments received, resulting in a total of $2.9 million of PPP loans within F&M’s loan portfolio at December 31, 2021.  Under the second round of PPP, F&M funded $51.2 million of PPP loans, protecting over 18,000 jobs.  

 

Mr. Eller continued, “Our organic loan growth of 15.9% reflects the value of our community oriented financial services.  In addition, loan growth is benefitting from our recently opened office in Fort Wayne, Indiana, and new LPOs in Ohio, Indiana, and Michigan, as well as the contributions of our highly talented loan officers.  I believe our nimble, local and supportive lending culture is well positioned to serve commercial and retail customers throughout our growing footprint and I’m excited by our growth opportunities in 2022 and beyond.”    

 

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors.  Nonperforming loans were $8.1 million or 0.43% of total loans at December 31, 2021, compared to $9.4 million, or 0.72% at December 31, 2020.  The year-over-year decrease in nonperforming loans occurred despite the addition of $385.1

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million of loans associated with the Perpetual and Ossian acquisitions, reflecting strong asset quality at F&M as well as its recently acquired banks.

 

At December 31, 2021, there were no COVID-related payment modifications outstanding compared to 190 loans representing a balance of $165 million in deferrals at the peak in 2020.  

 

“As we look to 2022, I am encouraged by the positive momentum underway across our business.  Our 2022 financial results are expected to reflect the full benefits of 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.  I am extremely proud of our record financial and operating results in 2021, and I am excited by the opportunities we have in 2022 and beyond to create additional value for our shareholders, customers, employees, and communities,” concluded Mr. Eller.

 

Stockholders’ Equity and Dividends

Total stockholders’ equity increased 19.3% to $297.2 million at December 31, 2021, from $249.2 million at December 31, 2020. At December 31, 2021, the Company had a Tier 1 leverage ratio of 10.05%, compared to 11.20% at December 31, 2020.

 

Tangible stockholders’ equity increased to $215.5 million at December 31, 2021, compared to $192.5 million at December 31, 2020.  On a per share basis, tangible stockholders’ equity at December 31, 2021, was $16.49 per share, compared to $17.19 per share at December 31, 2020.

 

For the twelve months ended December 31, 2021, the Company declared cash dividends of $0.71 per share, which is a 7.6% increase over the 2020 twelve-month 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 twelve months ended December 31, 2021, the dividend payout ratio was 35.08% compared to 36.36% 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

Private Securities Litigation Reform Act of 1995. Statements by F&M, including management’s expectations and comments, may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Exchange Act of 1934, as amended.  Actual results could vary materially depending on risks and uncertainties inherent in general and local banking conditions, competitive factors specific to markets in which F&M and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions, capital market conditions, or the effects of the COVID-19 pandemic, and its impacts on our credit quality and business operations, as well as its impact on general economic and financial market conditions. F&M assumes no responsibility to update this information.  For more details, please refer to F&M’s SEC filing, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such filings can be viewed at the SEC’s website, www.sec.gov or through F&M’s website www.fm.bank.

 

Non-GAAP Financial Measures  

This press release includes disclosure of financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP).  A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers & Merchants Bancorp, Inc. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers & Merchants Bancorp, Inc.’s marketplace performance.  The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP.  A reconciliation of GAAP to non-GAAP financial measures is included within this press release.

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MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME

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

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

 

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA (continued)

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES

(in thousands of dollars, except percentages)

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES (continued)

(in thousands of dollars, except percentages)

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

 

 

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (continued)