0000792966false00007929662023-02-082023-02-08

 

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 8, 2023

 

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. ☐

---

ITEM 2.02. Results of Operation and Financial Condition

On February 8, 2023, Farmers & Merchants Bancorp, Inc. issued a press release (the “Release”) announcing its earnings for the three and twelve months ended December 31, 2022. 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 8, 2023

 

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

 

---

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 8, 2023		/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

Post Office Box 216 307 North Defiance Street Archbold, Ohio 43502	NEWS RELEASE

 

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

 

Farmers & Merchants Bancorp, Inc. Reports

Record 2022 Full-Year Financial Results

 

ARCHBOLD, OHIO, February 8, 2023, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2022 fourth quarter and twelve months ended December 31, 2022.

 

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

 

2022 Full-Year Financial Highlights Include (on a year-over-year basis unless noted):

 

---

Lars B. Eller, President and Chief Executive Officer, stated, “2022 was a historic year for F&M as we celebrated our 125th year anniversary, achieved record financial results, completed the fifth acquisition in the past three years, and continued to invest in our community banking platform. We experienced strong organic loan growth across our Ohio, Indiana and Michigan markets during 2022 as loans increased organically by $397.0 million, or 21.4% on a year-over-year basis. Robust loan growth, combined with our recent acquisitions, excellent asset quality, and stable net interest margin, drove a 24.4% increase in annual net interest income after the provision for loan losses. These outstanding trends and our focus on prudently controlling operating expenses offset a $2.1 million decline in annual noninterest income and helped F&M achieve another year of record net income and earnings per share. I am proud of our record financial results for 2022, which enabled us to increase our annual cash dividend by 14.4%. This reflects the 28th consecutive year F&M has increased its annual cash dividend and our long-standing commitment to create value for our shareholders.”

 

Mr. Eller continued, “I am also pleased to announce that F&M ended the year with total assets of over $3.0 billion for the first time in our history as we successfully achieved the goals of our previous multi-year strategic growth plan. In fact, since 2019 total assets have increased 87.6%, while GAAP net income has increased 76.7%. This performance is a direct result of the financial services we provide our Ohio, Indiana, and Michigan communities, the successful acquisitions we have completed and the hard work of our committed and experienced team members. During 2022, we continued to expand our team by promoting over 45 employees and hiring over 150 new employees. We also added capabilities by adding a new Regional Vice President to lead our Northern Indiana region and hiring F&M’s first ever Chief Risk Officer. Our 2022 financial and operating results reflect the success of our growth initiatives and the powerful franchise we are creating.”

 

Income Statement

Net income for the 2022 fourth quarter ended December 31, 2022, was $7.2 million, compared to $7.7 million for the same period last year. Net income per basic and diluted share for the 2022 fourth quarter was $0.53, compared to $0.59 for the same period last year. Net income for the 2022 twelve-month period ended December 31, 2022, was $32.5 million, compared to $23.5 million for the same period last year. Net income per basic and diluted share for the 2022 twelve months was $2.46, compared to $2.01 for the same period last year.

 

Adjusted net income for the 2022 fourth quarter was $8.8 million, or $0.65 per diluted share, compared to $8.7 million, or $0.66 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, 2022, was $34.6 million, or $2.62 per diluted share, compared to $26.6 million, or $2.28 per diluted share in the prior year.

 

Profitability for the 2022 fourth quarter and full year benefitted from F&M’s larger scale, strong asset quality, and prudent expense management. The Company’s efficiency ratio improved to 50.46% during the 2022 fourth quarter, and 55.95% for the 2022 twelve-month period. Strong profitability also drove higher annual returns, and ROAA, ROAE, and ROATCE all expanded on a year-over-year basis when adjusted for one-time, tax adjusted acquisition expenses.

 

Deposits

At December 31, 2022, total deposits were $2.47 billion, an increase of 12.6% from December 31, 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 was 1.32% for the quarter ended December 31, 2022, compared to 0.51% for the quarter ended December 31, 2021. For the 2022 twelve-month period, F&M’s cost of interest-bearing liabilities was 0.74%, compared to 0.48% for the 2021 twelve-month period.

 

Loan Portfolio and Asset Quality

Total net loans, at December 31, 2022, increased 26.9% to $2.356 billion, compared to $1.857 billion at December 31, 2021. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of the Peoples acquisitions. Not including the Peoples acquisition and PPP loans, total net loans increased 21.4% organically, or by $397.0 million from the same period a year ago. Additionally, there were only $7,000 of PPP loans within F&M’s loan portfolio at December 31, 2022.

 

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $4.7 million, or 0.20% of total loans at December 31, 2022, compared to $8.1 million, or 0.43% at December

---

31, 2021. Due to loan growth, F&M continues to prudently fund its allowance for loan and lease losses which has increased 25.1% on a year-over-year basis.

 

At December 31, 2022, the Company’s allowance for loan and lease losses to nonperforming loans was 273.67%, compared to 201.11% at December 31, 2021. As a result of F&M’s recent acquisitions, the Company has a total gross credit mark of $6.4 million, which further enhances F&M’s allowance at December 31, 2022. Including the total gross credit mark, F&M’s allowance for loan and lease losses to total loans was 1.13% at December 31, 2022.

 

Mr. Eller concluded, “We believe F&M remains well positioned for an increasingly challenging economic cycle as our asset quality is strong, and we continue to be well capitalized. This will allow us to continue to focus on serving our local communities, while investing in our infrastructure and pursuing long-term expansion opportunities under the new three-year strategic growth plan we finalized in the fourth quarter of 2022. As a result, we plan to make approximately $7 million of strategic investments during 2023 across our business. This includes new offices in Ohio, Indiana, and Michigan, and additions to our team, as well as investments in our IT infrastructure, loan operations, and credit and payments group. While we expect investments to temporarily impact the level of profitability we are accustomed to, these investments are necessary to support our long-term growth initiatives and maintain F&M’s high level of services as we drive sustainable growth and value creation. I look forward to updating shareholders on the progress we are making throughout 2023.”

 

Stockholders’ Equity and Dividends

Total stockholders’ equity increased to $298.1 million at December 31, 2022, from $297.2 million at December 31, 2021. At December 31, 2022, the Company had a Tier 1 leverage ratio of 8.39%, compared to 8.47% at December 31, 2021.

 

Based on a regulatory basis, tangible stockholders’ equity increased to $240.7 million at December 31, 2022, compared to $215.5 million at December 31, 2021. On a per share basis, tangible stockholders’ equity at December 31, 2022, was $17.69 per share, compared to $16.49 per share at December 31, 2021. A non-GAAP reconciliation is provided as a table in this press release.

 

For the twelve months ended December 31, 2022, the Company declared cash dividends of $0.8125 per share, which is a 14.4% increase over the 2021 twelve-month declared cash dividend payment of $0.71 per share. Dividends declared for the 2022 twelve months included a special one-time cash dividend of $0.0125 to honor F&M’s 125thanniversary, and a 10.5% year-over-year increase for the 2022 fourth quarter dividend payment to $0.21 per share. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 28 consecutive years. For the twelve months ended December 31, 2022, the dividend payout ratio was 33.06% compared to 35.08% 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, Shelby, 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 a Loan Production Offices in West Bloomfield, Michigan; Muncie, Indiana; and Bryan 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. 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																				Twelve Months Ended
		December  31, 2022				September  30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				December  31, 2022				December 31, 2021
Interest Income
Loans, including fees		$	27,302			$	24,119			$	22,388			$	20,455			$	21,008			$	94,264			$	71,645
Debt securities:
U.S. Treasury and    government    agencies			1,118				1,049				1,035				1,023				964				4,225				3,496
Municipalities			420				373				322				300				289				1,415				1,170
Dividends			126				93				57				42				49				318				174
Federal funds sold			2				-				9				10				10				21				31
Other			524				213				100				69				103				906				324
Total interest income			29,492				25,847				23,911				21,899				22,423				101,149				76,840
Interest Expense
Deposits			4,978				2,166				1,379				1,360				1,581				9,883				5,418
Federal funds purchased    and securities sold    under agreement to    repurchase			463				416				166				152				155				1,197				649
Borrowed funds			1,209				398				218				335				361				2,160				785
Subordinated notes			285				284				284				269				291				1,122				490
Total interest    expense			6,935				3,264				2,047				2,116				2,388				14,362				7,342
Net Interest Income -    Before Provision for    Loan Losses			22,557				22,583				21,864				19,783				20,035				86,787				69,498
Provision for Loan    Losses			755				1,637				1,628				580				444				4,600				3,444
Net Interest Income    After Provision for    Loan Losses			21,802				20,946				20,236				19,203				19,591				82,187				66,054
Noninterest Income
Customer service fees			2,862				2,300				2,148				2,648				2,417				9,958				9,671
Other service charges    and fees			1,115				1,105				1,008				998				1,026				4,226				3,748
Net gain on sale of loans			165				327				164				697				1,074				1,353				3,897
Net gain on sale of    available-for-sale    securities			-				-				-				-				-				-				293
Total noninterest    income			4,142				3,732				3,320				4,343				4,517				15,537				17,609

 

---

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME (continued)

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

 

Noninterest Expense
Salaries and wages			6,353				5,479				5,366				5,502				5,761				22,700				20,184
Employee benefits			1,911				1,392				1,546				2,054				1,792				6,903				7,322
Net occupancy expense			753				693				522				598				532				2,566				2,184
Furniture and equipment			1,096				1,047				1,008				1,056				782				4,207				3,324
Data processing			1,917				781				654				604				1,020				3,956				3,501
Franchise taxes			(45	)			254				757				418				361				1,384				1,473
ATM expense			561				580				544				532				478				2,217				1,846
Advertising			531				578				300				237				431				1,646				1,436
Net (gain) loss on sale    of other assets owned			12				-				(266	)			(5	)			13				(259	)			434
FDIC assessment			250				271				270				114				265				905				1,073
Mortgage servicing    rights amortization			110				(50	)			59				26				266				145				1,580
Consulting fees			637				254				233				178				761				1,302				1,634
Other general and    administrative			2,964				2,192				2,242				2,179				1,964				9,577				8,175
Total noninterest    expense			17,050				13,471				13,235				13,493				14,426				57,249				54,166
Income Before Income    Taxes			8,894				11,207				10,321				10,053				9,682				40,475				29,497
Income Taxes			1,706				2,253				2,050				1,951				1,999				7,960				6,002
Net Income			7,188				8,954				8,271				8,102				7,683				32,515				23,495
Other Comprehensive    Income (Loss) (Net of    Tax):
Net unrealized loss on    available-for-sale    securities			(628	)			(8,197	)			(14,602	)			(20,939	)			(5,170	)			(44,366	)			(10,948	)
Reclassification    adjustment for realized    gain on sale of    available-for-sale    securities			-				-				-				-				-				-				(293	)
Net unrealized loss on    available-for-sale    for-sale securities			(628	)			(8,197	)			(14,602	)			(20,939	)			(5,170	)			(44,366	)			(11,241	)
Tax benefit			(132	)			(1,721	)			(3,067	)			(4,397	)			(1,085	)			(9,317	)			(2,360	)
Other comprehensive    loss			(496	)			(6,476	)			(11,535	)			(16,542	)			(4,085	)			(35,049	)			(8,881	)
Comprehensive Income    (Loss)		$	6,692			$	2,478			$	(3,264	)		$	(8,440	)		$	3,598			$	(2,534	)		$	14,614
Basic Earnings    Per Share		$	0.53			$	0.68			$	0.63			$	0.62			$	0.59			$	2.46			$	2.01
Diluted Earnings    Per Share		$	0.53			$	0.68			$	0.63			$	0.62			$	0.59			$	2.46			$	2.01
Dividends Declared		$	0.2100			$	0.2100			$	0.2025			$	0.1900			$	0.1900			$	0.8125			$	0.7100

 

---

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

---

		December  31, 2022				September  30, 2022				June 30, 2022				March 31, 2022				December 31, 2021
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Assets
Cash and due from banks		$	83,085			$	69,680			$	69,955			$	94,118			$	135,485
Federal funds sold			1,324				990				1,484				45,404				45,338
Total cash and cash equivalents			84,409				70,670				71,439				139,522				180,823
Interest-bearing time deposits			4,442				5,187				6,684				8,677				10,913
Securities - available-for-sale			390,789				395,485				399,687				413,996				429,931
Other securities, at cost			9,799				8,227				8,735				8,568				8,162
Loans held for sale			827				2,182				4,230				6,060				7,714
Loans, net			2,336,074				2,122,626				2,016,394				1,945,449				1,841,177
Premises and equipment			28,381				26,484				26,492				26,653				26,913
Construction in progress			278				-				-				-				-
Goodwill			86,358				80,434				80,434				80,434				80,434
Mortgage servicing rights			3,549				3,583				3,426				3,336				3,157
Other real estate owned			-				-				-				-				159
Bank owned life insurance			33,073				28,051				27,874				27,715				27,558
Other assets			37,372				40,831				29,321				25,735				21,359
Total Assets		$	3,015,351			$	2,783,760			$	2,674,716			$	2,686,145			$	2,638,300
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing		$	532,794			$	506,928			$	503,395			$	497,249			$	473,689
Interest-bearing
NOW accounts			750,887				705,888				678,552				681,975				650,466
Savings			627,203				607,375				617,850				626,787				597,828
Time			557,980				462,845				424,249				447,586				471,479
Total deposits			2,468,864				2,283,036				2,224,046				2,253,597				2,193,462
Federal funds purchased and securities    sold under agreements to repurchase			54,206				55,802				71,944				31,680				29,268
Federal Home Loan Bank (FHLB)    advances			127,485				102,147				42,635				22,656				24,065
Other borrowings			10,000				10,000				-				40,000				40,000
Subordinated notes, net of unamortized    issuance costs			34,586				34,557				34,528				34,499				34,471
Dividend payable			2,832				2,727				2,626				2,462				2,461
Accrued expenses and other liabilities			19,238				14,913				18,064				14,773				17,406
Total liabilities			2,717,211				2,503,182				2,393,843				2,399,667				2,341,133
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value 20,000,000    shares authorized; issued and outstanding    14,564,425 shares 12/31/22 and 14,063,999    shares 12/31/21			135,497				121,811				123,145				122,886				122,674
Treasury stock - 956,003 shares 12/31/22    and 997,766 shares 12/31/21			(11,573	)			(11,547	)			(11,822	)			(11,739	)			(11,724	)
Retained earnings			212,449				208,051				200,811				195,057				189,401
Accumulated other comprehensive    loss			(38,233	)			(37,737	)			(31,261	)			(19,726	)			(3,184	)
Total stockholders' equity			298,140				280,578				280,873				286,478				297,167
Total Liabilities and Stockholders' Equity		$	3,015,351			$	2,783,760			$	2,674,716			$	2,686,145			$	2,638,300

 

---

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

 

		For the Three Months Ended																									For the Twelve Months Ended
Selected financial data		December 31, 2022					September  30, 2022					June 30, 2022					March 31, 2022					December 31, 2021					December 31, 2022				December 31, 2021
Return on average assets				0.96	%				1.31	%				1.23	%				1.21	%				1.17	%			1.17	%			1.05	%
Return on average equity				10.00	%				12.53	%				11.66	%				11.00	%				10.94	%			11.30	%			9.09	%
Yield on earning assets				4.18	%				4.00	%				3.79	%				3.47	%				3.59	%			3.87	%			3.66	%
Cost of interest bearing   liabilities				1.32	%				0.68	%				0.44	%				0.45	%				0.51	%			0.74	%			0.48	%
Net interest spread				2.86	%				3.32	%				3.35	%				3.02	%				3.08	%			3.13	%			3.18	%
Net interest margin				3.20	%				3.49	%				3.47	%				3.14	%				3.21	%			3.32	%			3.31	%
Efficiency				50.46	%				51.19	%				50.17	%				55.44	%				58.76	%			55.95	%			62.39	%
Dividend payout ratio				39.39	%				30.45	%				30.02	%				30.64	%				32.03	%			33.06	%			35.08	%
Tangible book value    per share (1)		$		17.69			$		17.86			$		17.43			$		16.96			$		16.49
Tier 1 capital to    average assets				8.39	%				9.11	%				8.75	%				8.51	%				8.47	%
Average Shares Outstanding				13,606,876					13,083,145					13,065,975					13,066,272					13,046,299				13,206,713				11,664,852
(1) Tangible Equity = Stockholder Equity less goodwill and other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities)

 

Loans		December  31, 2022					September  30, 2022					June 30, 2022					March 31, 2022					December 31, 2021
(Dollar amounts in thousands)
Commercial real estate		$		1,152,603			$		1,063,661			$		979,176			$		910,839			$		848,477
Agricultural real estate				220,819					205,089					199,972					196,223					198,343
Consumer real estate				494,423					416,001					410,450					410,120					395,873
Commercial and industrial				242,360					229,388					232,975					216,918					208,270
Agricultural				128,733					128,615					127,143					140,709					118,368
Consumer				89,147					70,602					55,411					57,521					57,737
Other				29,818					30,662					31,243					31,573					32,089
Less: Net deferred loan fees       and costs				(1,516	)				(1,402	)				(1,552	)				(1,683	)				(1,738	)
Total loans, net		$		2,356,387			$		2,142,616			$		2,034,818			$		1,962,220			$		1,857,419

 

 

---

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA (continued)

 

Asset quality data		December 31, 2022					September  30, 2022					June 30, 2022					March 31, 2022					December 31, 2021
(Dollar amounts in thousands)
Nonaccrual loans		$		4,689			$		5,470			$		5,247			$		8,581			$		8,076
Troubled debt restructuring		$		3,645			$		3,978			$		2,748			$		7,268			$		7,614
90 day past due and accruing		$		-			$		-			$		-			$		-			$		-
Nonperforming loans		$		4,689			$		5,470			$		5,247			$		8,581			$		8,076
Other real estate owned		$		-			$		-			$		-			$		-			$		159
Nonperforming assets		$		4,689			$		5,470			$		5,247			$		8,581			$		8,235
Allowance for loan and lease losses    (ALLL)		$		20,313			$		19,990			$		18,424			$		16,771			$		16,242
Total credit mark				6,427					5,959					6,724					7,201					7,616
Adjusted ALLL with credit mark    included		$		26,740			$		25,949			$		25,148			$		23,972			$		23,858
Allowance for loan and lease    losses/total loans				0.86	%				0.93	%				0.91	%				0.85	%				0.87	%
Adjusted ALLL with credit mark/total    loans				1.13	%				1.21	%				1.24	%				1.22	%				1.28	%
Net charge-offs:
Quarter-to-date		$		431			$		71			$		(25	)		$		51			$		(101	)
Year-to-date		$		529			$		97			$		26			$		51			$		874
Net charge-offs to average loans
Quarter-to-date				0.02	%				0.00	%				0.00	%				0.00	%				-0.01	%
Year-to-date				0.03	%				0.00	%				0.00	%				0.00	%				0.06	%
Nonperforming loans/total loans				0.20	%				0.26	%				0.26	%				0.44	%				0.43	%
Allowance for loan and lease    losses/nonperforming loans				273.67	%				365.44	%				351.44	%				198.29	%				201.11	%

 

 

---

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
		December 31, 2022												December 31, 2021
Interest Earning Assets:		Average Balance				Interest/ Dividends				Annualized Yield/Rate				Average Balance				Interest/ Dividends				Annualized Yield/Rate
Loans		$	2,301,204			$	27,302				4.75	%		$	1,843,942			$	21,008				4.56	%
Taxable investment securities			422,247				1,556				1.47	%			421,676				1,228				1.16	%
Tax-exempt investment securities			28,522				108				1.92	%			18,303				74				2.05	%
Fed funds sold & other			74,876				526				2.81	%			218,481				113				0.21	%
Total Interest Earning Assets			2,826,849			$	29,492				4.18	%			2,502,402			$	22,423				3.59	%
Nonearning Assets			173,048												125,930
Total Assets		$	2,999,897											$	2,628,332
Interest Bearing Liabilities:
Savings deposits		$	1,394,663			$	3,427				0.98	%		$	1,262,214			$	767				0.24	%
Other time deposits			485,461				1,551				1.28	%			481,119				814				0.68	%
Other borrowed money			135,013				1,209				3.58	%			64,008				361				2.26	%
Fed funds purchased & securities
sold under agreement to repurchase			53,506				463				3.46	%			29,403				155				2.11	%
Subordinated notes			34,567				285				3.30	%			34,451				291				3.38	%
Total Interest Bearing Liabilities		$	2,103,210			$	6,935				1.32	%		$	1,871,195			$	2,388				0.51	%
Noninterest Bearing Liabilities			609,253												476,122
Stockholders' Equity		$	287,434											$	281,015
Net Interest Income and    Interest Rate Spread						$	22,557				2.86	%						$	20,035				3.08	%
Net Interest Margin											3.20	%											3.21	%
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 (continued)

(in thousands of dollars, except percentages)

 

		For the Twelve Months Ended												For the Twelve Months Ended
		December 31, 2022												December 31, 2021
Interest Earning Assets:		Average Balance				Interest/ Dividends				Annualized Yield/Rate				Average Balance				Interest/ Dividends				Annualized Yield/Rate
Loans		$	2,073,737			$	94,264				4.55	%		$	1,522,088			$	71,645				4.71	%
Taxable investment securities			424,229				5,621				1.32	%			377,887				4,514				1.19	%
Tax-exempt investment securities			23,472				337				1.82	%			18,365				326				2.25	%
Fed funds sold & other			95,301				927				0.97	%			187,003				355				0.19	%
Total Interest Earning Assets			2,616,739			$	101,149				3.87	%			2,105,343			$	76,840				3.66	%
Nonearning Assets			158,361												124,649
Total Assets		$	2,775,100											$	2,229,992
Interest Bearing Liabilities:
Savings deposits		$	1,335,271			$	6,378				0.48	%		$	1,145,636			$	2,467				0.22	%
Other time deposits			451,013				3,505				0.78	%			306,600				2,951				0.96	%
Other borrowed money			74,379				2,160				2.90	%			29,479				785				2.66	%
Fed funds purchased & securities
sold under agreement to repurchase			45,314				1,197				2.64	%			29,831				649				2.18	%
Subordinated notes			34,524				1,122				3.25	%			14,777				490				3.32	%
Total Interest Bearing Liabilities		$	1,940,501			$	14,362				0.74	%		$	1,526,323			$	7,342				0.48	%
Noninterest Bearing Liabilities			546,731												445,144
Stockholders' Equity		$	287,868											$	258,525
Net Interest Income and    Interest Rate Spread						$	86,787				3.13	%						$	69,498				3.18	%
Net Interest Margin											3.32	%											3.31	%
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 (continued)

(in thousands of dollars, except percentages)

 

		For the Three Months Ended																								For the Three Months Ended
		December 31, 2022																								December 31, 2021
		As Reported							Excluding Accretion/Amortization									Difference								As Reported							Excluding Accretion/Amortization									Difference
		$				Yield				$				Yield				$				Yield				$				Yield				$				Yield				$				Yield
Interest Earning Assets:
Loans		$	27,302				4.75	%			26,628				4.63	%			674				0.12	%		$	21,008				4.56	%		$	20,585				4.47	%			423				0.09	%
Taxable investment securities			1,556				1.47	%			1,556				1.47	%			-				0.00	%			1,228				1.16	%			1,228				1.16	%			-				0.00	%
Tax-exempt investment securities			108				1.92	%			108				1.92	%			-				0.00	%			74				2.05	%			74				2.05	%			-				0.00	%
Fed funds sold & other			526				2.81	%			526				2.81	%			-				0.00	%			113				0.21	%			113				0.21	%			-				0.00	%
Total Interest Earning Assets			29,492				4.18	%			28,818				4.08	%			674				0.10	%			22,423				3.59	%			22,000				3.52	%			423				0.07	%
Interest Bearing Liabilities:
Savings deposits		$	3,427				0.98	%		$	3,427				0.98	%			-				0.00	%		$	767				0.24	%		$	767				0.24	%			-				0.00	%
Other time deposits			1,551				1.28	%			2,010				1.66	%			(459	)			-0.38	%			814				0.68	%			1,431				0.68	%			(617	)			0.00	%
Other borrowed money			1,209				3.58	%			1,227				3.64	%			(18	)			-0.06	%			361				2.26	%			381				2.26	%			(20	)			0.00	%
Fed funds purchased & securities
sold under agreement to repurchase			463				3.46	%			463				3.46	%			-				0.00	%			155				2.11	%			155				2.11	%			-				0.00	%
Subordinated notes			285				3.30	%			285				3.30	%			-				0.00	%			291				3.38	%			291				3.38	%			-				0.00	%
Total Interest Bearing Liabilities			6,935				1.32	%			7,412				1.41	%			(477	)			-0.09	%			2,388				0.51	%			3,025				0.65	%			(637	)			-0.14	%
Interest/Dividend income/yield			29,492				4.18	%			28,818				4.08	%			674				0.10	%			22,423				3.59	%			22,000				3.52	%			423				0.07	%
Interest Expense / yield			6,935				1.32	%			7,412				1.41	%			(477	)			-0.09	%			2,388				0.51	%			3,025				0.65	%			(637	)			-0.14	%
Net Interest Spread			22,557				2.86	%			21,406				2.67	%			1,151				0.19	%			20,035				3.08	%			18,975				2.87	%			1,060				0.21	%
Net Interest Margin							3.20	%							3.03	%							0.17	%							3.21	%							3.04	%							0.17	%
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 (continued)

(in thousands of dollars, except percentages)

 

		For the Twelve Months Ended																								For the Twelve Months Ended
		December 31, 2022																								December 31, 2022
		As Reported							Excluding Accretion/Amortization									Difference								As Reported							Excluding Accretion/Amortization									Difference
		$				Yield				$				Yield				$				Yield				$				Yield				$				Yield				$				Yield
Interest Earning Assets:
Loans		$	94,264				4.55	%		$	92,132				4.45	%			2,132				0.10	%		$	71,645				4.71	%		$	70,986				4.67	%			659				0.04	%
Taxable investment securities			5,621				1.32	%			5,621				1.32	%			-				0.00	%			4,514				1.19	%			4,514				1.19	%			-				0.00	%
Tax-exempt investment securities			337				1.82	%			337				1.82	%			-				0.00	%			326				2.25	%			326				2.25	%			-				0.00	%
Fed funds sold & other			927				0.97	%			927				0.97	%			-				0.00	%			355				0.19	%			355				0.19	%			-				0.00	%
Total Interest Earning Assets			101,149				3.87	%			99,017				3.79	%			2,132				0.08	%			76,840				3.66	%			76,181				3.63	%			659				0.03	%
Interest Bearing Liabilities:
Savings deposits		$	6,378				0.48	%		$	6,378				0.48	%			-				0.00	%		$	2,467				0.22	%		$	2,467				0.22	%			-				0.00	%
Other time deposits			3,505				0.78	%			5,822				1.29	%			(2,317	)			-0.51	%			2,951				0.96	%			3,588				1.17	%			(637	)			-0.21	%
Other borrowed money			2,160				2.90	%			2,241				3.01	%			(81	)			-0.11	%			785				2.66	%			641				2.17	%			144				0.49	%
Fed funds purchased & securities
sold under agreement to repurchase			1,197				2.64	%			1,197				2.64	%			-				0.00	%			649				2.18	%			649				2.18	%			-				0.00	%
Subordinated notes			1,122				3.25	%			1,122				3.25	%			-				0.00	%			490				3.32	%			490				3.32	%			-				0.00	%
Total Interest Bearing Liabilities			14,362				0.74	%			16,760				0.86	%			(2,398	)			-0.12	%			7,342				0.48	%			7,835				0.51	%			(493	)			-0.03	%
Interest/Dividend income/yield			101,149				3.87	%			99,017				3.79	%			2,132				0.08	%			76,840				3.66	%			76,181				3.63	%			659				0.03	%
Interest Expense / yield			14,362				0.74	%			16,760				0.86	%			(2,398	)			-0.12	%			7,342				0.48	%			7,835				0.51	%			(493	)			-0.03	%
Net Interest Spread			86,787				3.13	%			82,257				2.93	%			4,530				0.20	%			69,498				3.18	%			68,346				3.12	%			1,152				0.06	%
Net Interest Margin							3.32	%							3.15	%							0.17	%							3.31	%							3.25	%							0.06	%
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

NON-GAAP RECONCILIATION OF NET INCOME

 

		(in thousands of dollars)									(in thousands of dollars)
Non-GAAP Reconciliation of Net Income		Three Months Ended									Nine Months Ended
		December 31, 2022				December 31, 2021					December 31, 2022				December 31, 2021
		(Unaudited)									(Unaudited)
Net income as reported		$	7,188			$	7,683				$	32,515			$	23,495
Acquisition expenses			2,019				1,192					2,511				3,859
Tax effect on acquisition expenses			(386	)			(216	)				(445	)			(728	)
Net income excluding acquisition expenses and tax effect			8,821				8,659					34,581				26,626
Weighted average common shares outstanding    including participating securities			13,606,876				13,046,299					13,206,713				11,664,852
Basic and diluted earnings per share		$	0.65			$	0.66				$	2.62			$	2.28

 

 

 

---

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
		December 31, 2022				December 31, 2021					December 31, 2022				December 31, 2021
Shares Outstanding			13,608,422				13,066,233					13,608,422				13,066,233
Tangible Equity
Equity		$	298,140			$	297,167				$	298,140			$	297,167
Goodwill			86,358				80,434					86,358				80,434
Other Intangible			9,327				4,433					9,327				4,433
Comprehensive Adjustment*			-				-					38,233				3,184
Tangible Equity		$	202,455			$	212,300				$	240,689			$	215,484
Shares Outstanding			13,608				13,066					13,608				13,066
Tangible Book Equity per Share		$	14.88			$	16.25				$	17.69			$	16.49
		Actual Average									Regulatory Average
		Year to Date									Year to Date
		December 31, 2022				December 31, 2021					December 31, 2022				December 31, 2021
Net Income		$	32,515			$	23,495				$	32,515			$	23,495
Acquisition Costs - Tax Adjusted			2,066				3,131					2,066				3,131
Average Shares Outstanding			13,206,713				11,664,852					13,206,713				11,664,852
Average Tangible Equity
Average Equity		$	287,868			$	258,525				$	287,868			$	258,525
Average Goodwill			80,164				49,790					80,164				49,790
Average Other Intangible			4,997				4,005					4,997				4,005
Average Comprehensive Adjustment*			-				-					26,393				(1,280	)
Average Tangible Equity		$	202,707			$	204,730				$	229,100			$	203,450
Average Shares Outstanding			13,207				11,665					13,207				11,665
Average Tangible Book Equity per Share		$	15.35			$	17.55				$	17.35			$	17.44
Return on Average Tangible Equity			16.04	%			11.48	%				14.19	%			11.55	%
Return on Average Tangible Equity w/o Acquisition			17.06	%			13.01	%				15.09	%			13.09	%
*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.

 

---