false000079296600007929662023-07-262023-07-26

 

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) July 26, 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. ☐

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ITEM 2.02. Results of Operation and Financial Condition

On July 26, 2023, Farmers & Merchants Bancorp, Inc. issued a press release (the “Release”) announcing its earnings for the three and six months ended June 30, 2023. 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 July 26, 2023

 

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: July 26, 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

 

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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

2023 Second-Quarter and Year-to-Date Financial Results

 

ARCHBOLD, OHIO, July 26, 2023, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) the holding company of F&M Bank, today reported financial results for the 2023 second quarter and year-to-date June 30, 2023.

2023 Second Quarter Financial and Operating Highlights (on a year-over-year basis unless noted):

 

Lars B. Eller, President and Chief Executive Officer, stated, “Our second quarter results demonstrate the power of F&M’s operating platform as we ended the quarter with strong capital levels, robust asset quality, and record loans and assets. These trends provide us with the flexibility to navigate a challenging banking landscape, while supporting our communities, investing in our multi-year strategic growth plan, and returning capital back to our shareholders. Most importantly, our longstanding financial success and operating growth reflects the continued commitment, experience, and hard work of our team members across our Ohio, Indiana, and Michigan markets.”

“I am pleased to report that we continue to make meaningful progress investing in our business to support our growth, enhance our operations, and execute against our recently developed three-year strategic growth plan. During the second quarter we unveiled our new branding and forward-looking logo, which was the culmination of a multi-year brand exploration process. All updates to office signage are expected to be completed by September 2023. In addition, we relocated our Auburn, Indiana office and opened new offices in downtown Toledo, Ohio, and Oxford, Ohio. Construction

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began on our new regional facility in Fort Wayne, and we added a highly experienced lending team in our Fort Wayne region, which will greatly expand our commitment to Eastern Indiana. We also broke ground on our first full-service office in Birmingham, Michigan following our hugely successful loan production office in Southeast Michigan. Finally, we launched new deposit products to enhance our offerings to current and prospective customers,” continued Mr. Eller.

 

Income Statement

Net income for the 2023 second quarter ended June 30, 2023, was $6.0 million, compared to $8.3 million for the same period last year. Net income per basic and diluted share for the 2023 second quarter was $0.44, compared to $0.63 for the same period last year. Net income for the 2023 first half ended June 30, 2023, was $12.5 million, compared to $16.4 million for the same period last year. Net income per basic and diluted share for the 2023 first half was $0.92, compared to $1.25 for the same period last year.

Mr. Eller commented: “F&M is not immune from the rapid rise in the Federal Funds Rate and the impact this has had on cost of funds and the competition for deposits it has created over the past 12 months. As a result, our cost of interest-bearing liabilities has increased by over 430% to 2.35% at June 30, 2023. In addition, year-to-date profitability has been impacted by several strategic one-time expenses including the conversion of our credit card platform, an opportunistic sale of investments, and the investments we are making in our infrastructure. Despite these near-term impacts, we believe we are well positioned for net income growth to re-accelerate in 2024 and beyond, as we benefit from continued strong asset quality, the contribution of our growth initiatives, and controlled operating expenses,” continued Mr. Eller.

Deposits

At June 30, 2023, total deposits were $2.47 billion, an increase of 11.0% from June 30, 2022. The Company’s cost of interest-bearing liabilities was 2.35% for the quarter ended June 30, 2023, compared to 0.44% for the quarter ended June 30, 2022, and 1.32% for the quarter ended December 31, 2022.

At June 30, 2023, F&M’s average deposit account had an average balance of $25,009. In addition, uninsured deposits to total deposits were approximately 18% for the quarter ended June 30, 2023, compared to approximately 21% at December 31, 2022.

Loan Portfolio and Asset Quality

Total loans, net at June 30, 2023, increased 23.6%, or by $481.0 million to a record $2.52 billion, compared to $2.03 billion at June 30, 2022, and up from $2.36 billion at December 31, 2022. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of the Peoples acquisition. Not including the Peoples acquisition, total net loans increased 18.5% organically, or by $376.3 million from the same period a year ago.

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $6.3 million, or 0.25% of total loans at June 30, 2023, compared to $5.2 million, or 0.26% of total loans at June 30, 2022. During the second quarter, one large farm loan that was paid off and another loan that was refinanced through another bank, and second quarter 2023 nonperforming loans improved by $1.4 million, or 18.4% over the past three months.

F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 50.9% of the Company’s total loan portfolio at June 30, 2023. In addition, F&M’s commercial real estate office credit exposure represented 5.0% of the Company's total loan portfolio at June 30, 2023, with a weighted average loan-to-value of approximately 64% and an average loan of $845,000.

 

 

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F&M’s CRE portfolio included the following categories at June 30, 2023:

CRE Category		Dollar Balance		Percent of CRE Portfolio(*)		Percent of Total Loan Portfolio(*)
Multi Family		$244,883		19.1%		9.7%
Retail		$218,624		17.1%		8.7%
Industrial		$216,605		16.9%		8.6%
Hotels		$135,511		10.6%		5.4%
Office		$125,039		9.8%		5.0%
Gas Stations		$59,922		4.7%		2.4%
Food Service		$43,585		3.4%		1.7%
Mixed Use		$42,425		3.3%		1.7%
Senior Living		$36,238		2.8%		1.4%
Other		$158,069		12.3%		6.3%
Total CRE		$1,225,315		100.0%		50.1%

* Numbers have been rounded

At June 30, 2023, the Company’s allowance for credit losses to nonperforming loans was 395.71%, compared to 351.44% at June 30, 2022. The allowance to total loans was 0.99% at June 30, 2023, compared to 0.91% at June 30, 2022. As a result of F&M’s recent acquisitions, the Company had an accretable yield adjustment of $5.2 million at June 30, 2023, which further enhances F&M’s allowance, compared to $6.7 million at June 30, 2022. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.20% at June 30, 2023, compared to 1.24% at June 30, 2022.

Mr. Eller concluded, “I am proud of our team’s performance throughout the first half of 2023. The progress we are making serving our communities, and investing in our growth initiatives is encouraging. While 2023 is expected to be a transitional year, we believe we are well positioned to emerge from this period with increased market share and higher profitability. We also continue to focus on returning capital back to shareholders through our longstanding cash dividend program, which has increased on an annual basis for 28 consecutive years.”

Stockholders’ Equity and Dividends

Total stockholders’ equity increased 8.5% to $304.7 million at June 30, 2023, from $280.9 million at June 30, 2022. At June 30, 2023, the Company had a Tier 1 leverage ratio of 9.85%, compared to 8.75% at June 30, 2022.

Based on a regulatory basis, tangible stockholders’ equity increased to $248.3 million at June 30, 2023, compared to $227.7 million at June 30, 2022. On a per share basis, regulatory tangible stockholders’ equity at June 30, 2023, was $18.21 per share, compared to $17.43 per share at June 30, 2022.

For the six months ended June 30, 2023, the Company has declared cash dividends of $0.42 per share, which is a 7.0% increase over the 2022 six-month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for over 28 consecutive years and has grown its dividend by over 160% since 2007. For the six months ended June 30, 2023, the dividend payout ratio was 45.44% compared to 30.08% for the same period last year.

 

 

 

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About Farmers & Merchants Bancorp, Inc.:

Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) is the holding company of F&M Bank, a local independent community bank that has been serving its communities since 1897. F&M Bank provides commercial banking, retail banking and other financial services. Our locations are in Butler, Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Shelby, Williams, and Wood counties in Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, Steuben and Wells counties, and we have Loan Production Offices in West Bloomfield, Michigan; Muncie, Indiana; and Bryan, Ohio.

Safe Harbor Statement

Farmers & Merchants Bancorp, Inc. (“F&M”) wishes to take advantage of the Safe Harbor provisions included in the

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

Non-GAAP Financial Measures

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

 

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME

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

 

		Three Months Ended																				Six Months Ended
		June  30, 2023				March  31, 2023				December  31, 2022				September  30, 2022				June 30, 2022				June  30, 2023				June  30, 2022
Interest Income
Loans, including fees		$	31,365			$	29,703			$	27,302			$	24,119			$	22,388			$	61,068			$	42,843
Debt securities:
U.S. Treasury and    government    agencies			1,030				1,068				1,118				1,049				1,035				2,098				2,058
Municipalities			401				408				420				373				322				809				622
Dividends			148				123				126				93				57				271				99
Federal funds sold			9				21				2				-				9				30				19
Other			424				479				524				213				100				903				169
Total interest income			33,377				31,802				29,492				25,847				23,911				65,179				45,810
Interest Expense
Deposits			10,434				8,151				4,978				2,166				1,379				18,585				2,739
Federal funds purchased    and securities sold    under agreement to    repurchase			427				405				463				416				166				832				318
Borrowed funds			2,113				1,280				1,209				398				218				3,393				553
Subordinated notes			285				284				285				284				284				569				553
Total interest    expense			13,259				10,120				6,935				3,264				2,047				23,379				4,163
Net Interest Income -    Before Provision for    Credit Losses*			20,118				21,682				22,557				22,583				21,864				41,800				41,647
Provision for Credit    Losses - Loans*			143				817				755				1,637				1,628				960				2,208
Provision for Credit    Losses - Off Balance    Sheet Credit Exposures*			(129	)			62				-				-				-				(67	)			-
Net Interest Income    After Provision for    Credit Losses*			20,104				20,803				21,802				20,946				20,236				40,907				39,439
Noninterest Income
Customer service fees			2,361				2,447				2,862				2,300				2,148				4,808				4,796
Other service charges    and fees			1,803				2,554				1,115				1,105				1,008				4,357				2,006
Net gain on sale of loans			108				67				165				327				164				175				861
Net loss on sale of    available-for-sale    securities			-				(891	)			-				-				-				(891	)			-
Total noninterest    income			4,272				4,177				4,142				3,732				3,320				8,449				7,663

 

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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			6,500				6,657				6,353				5,479				5,366				13,157				10,868
Employee benefits			2,071				2,165				1,911				1,392				1,546				4,236				3,600
Net occupancy expense			840				856				753				693				522				1,696				1,120
Furniture and equipment			1,211				1,252				1,096				1,047				1,008				2,463				2,064
Data processing			796				726				1,917				781				654				1,522				1,258
Franchise taxes			379				366				(45	)			254				757				745				1,175
ATM expense			683				623				561				580				544				1,306				1,076
Advertising			830				514				531				578				300				1,344				537
Net (gain) loss on sale    of other assets owned			-				-				12				-				(266	)			-				(271	)
FDIC assessment			496				306				250				271				270				802				384
Mortgage servicing    rights amortization - net			164				159				110				(50	)			59				323				85
Consulting fees			231				230				637				254				233				461				411
Other general and    administrative			2,643				3,077				2,964				2,192				2,242				5,720				4,421
Total noninterest    expense			16,844				16,931				17,050				13,471				13,235				33,775				26,728
Income Before Income    Taxes			7,532				8,049				8,894				11,207				10,321				15,581				20,374
Income Taxes			1,531				1,583				1,706				2,253				2,050				3,114				4,001
Net Income			6,001				6,466				7,188				8,954				8,271				12,467				16,373
Other Comprehensive    Income (Loss) (Net of    Tax):
Net unrealized gain (loss)    on available-for-sale    securities			(5,996	)			8,030				(628	)			(8,197	)			(14,602	)			2,034				(35,541	)
Reclassification    adjustment for realized    loss on sale of    available-for-sale    securities			-				891				-				-				-				891				-
Net unrealized gain (loss)    on available-for-sale    for-sale securities			(5,996	)			8,921				(628	)			(8,197	)			(14,602	)			2,925				(35,541	)
Tax expense (benefit)			(1,260	)			1,874				(132	)			(1,721	)			(3,067	)			614				(7,464	)
Other comprehensive    income (loss)			(4,736	)			7,047				(496	)			(6,476	)			(11,535	)			2,311				(28,077	)
Comprehensive Income    (Loss)		$	1,265			$	13,513			$	6,692			$	2,478			$	(3,264	)		$	14,778			$	(11,704	)
Basic Earnings    Per Share		$	0.44			$	0.47			$	0.53			$	0.68			$	0.63			$	0.92			$	1.25
Diluted Earnings    Per Share		$	0.44			$	0.47			$	0.53			$	0.68			$	0.63			$	0.92			$	1.25
Dividends Declared		$	0.2100			$	0.2100			$	0.2100			$	0.2100			$	0.2025			$	0.4200			$	0.3925
(2) ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss        method.

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

		June  30, 2023				March  31, 2023				December  31, 2022				September  30, 2022				June 30, 2022
		(Unaudited)				(Unaudited)								(Unaudited)				(Unaudited)
Assets
Cash and due from banks		$	69,760			$	62,780			$	83,085			$	69,680			$	69,955
Federal funds sold			1,433				1,545				1,324				990				1,484
Total cash and cash equivalents			71,193				64,325				84,409				70,670				71,439
Interest-bearing time deposits			3,485				4,435				4,442				5,187				6,684
Securities - available-for-sale			363,225				372,975				390,789				395,485				399,687
Other securities, at cost			17,535				11,543				9,799				8,227				8,735
Loans held for sale			1,459				951				827				2,182				4,230
Loans, net			2,490,883				2,422,018				2,336,074				2,122,626				2,016,394
Premises and equipment			30,398				28,679				28,381				26,484				26,492
Construction in progress			2,290				1,565				278				-				-
Goodwill			86,358				86,358				86,358				80,434				80,434
Loan servicing rights			5,635				4,985				3,549				3,583				3,426
Bank owned life insurance			33,470				33,269				33,073				28,051				27,874
Other assets			41,512				38,972				37,372				40,831				29,321
Total Assets		$	3,147,443			$	3,070,075			$	3,015,351			$	2,783,760			$	2,674,716
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing		$	488,678			$	520,145			$	532,794			$	506,928			$	503,395
Interest-bearing
NOW accounts			770,113				800,230				750,887				705,888				678,552
Savings			581,192				590,854				627,203				607,375				617,850
Time			628,757				601,939				557,980				462,845				424,249
Total deposits			2,468,740				2,513,168				2,468,864				2,283,036				2,224,046
Federal funds purchased and securities    sold under agreements to repurchase			51,567				30,496				54,206				55,802				71,944
Federal Home Loan Bank (FHLB)    advances			266,818				164,327				127,485				102,147				42,635
Other borrowings			-				-				10,000				10,000				-
Subordinated notes, net of unamortized    issuance costs			34,644				34,615				34,586				34,557				34,528
Dividend payable			2,834				2,831				2,832				2,727				2,626
Accrued expenses and other liabilities			18,177				18,881				19,238				14,913				18,064
Total liabilities			2,842,780				2,764,318				2,717,211				2,503,182				2,393,843
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value 20,000,000    shares authorized; issued and outstanding    14,564,425 shares 6/30/23 and 12/31/22			135,647				135,241				135,497				121,811				123,145
Treasury stock - 929,513 shares 6/30/23    and 956,003 shares 12/31/22			(11,298	)			(11,310	)			(11,573	)			(11,547	)			(11,822	)
Retained earnings			216,236				213,012				212,449				208,051				200,811
Accumulated other comprehensive    loss			(35,922	)			(31,186	)			(38,233	)			(37,737	)			(31,261	)
Total stockholders' equity			304,663				305,757				298,140				280,578				280,873
Total Liabilities and Stockholders' Equity		$	3,147,443			$	3,070,075			$	3,015,351			$	2,783,760			$	2,674,716

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

 

		For the Three Months Ended																									For the Six Months Ended
Selected financial data		June 30, 2023					March 31, 2023					December 31, 2022					September  30, 2022					June 30, 2022					June 30, 2023				June 30, 2022
Return on average assets				0.77	%				0.84	%				0.96	%				1.31	%				1.23	%			0.81	%			1.22	%
Return on average equity				7.84	%				8.59	%				10.00	%				12.53	%				11.66	%			8.21	%			11.32	%
Yield on earning assets				4.53	%				4.41	%				4.18	%				4.00	%				3.79	%			4.47	%			3.63	%
Cost of interest bearing   liabilities				2.35	%				1.85	%				1.32	%				0.68	%				0.44	%			2.10	%			0.44	%
Net interest spread				2.18	%				2.56	%				2.86	%				3.32	%				3.35	%			2.37	%			3.19	%
Net interest margin				2.73	%				3.01	%				3.20	%				3.49	%				3.47	%			2.87	%			3.30	%
Efficiency				69.06	%				63.53	%				50.46	%				51.19	%				50.17	%			66.04	%			57.90	%
Dividend payout ratio				47.22	%				43.79	%				39.39	%				30.45	%				30.02	%			45.44	%			30.08	%
Tangible book value    per share (1)		$		18.21			$		17.92			$		17.69			$		17.86			$		17.43
Tier 1 leverage ratio				9.85	%				8.36	%				8.39	%				9.11	%				8.75	%
Average shares outstanding				13,632,440					13,615,655					13,606,876					13,083,145					13,065,975				13,624,094				13,066,123
(1)  Tangible Equity = Stockholder Equity less goodwill, other intangibles (core deposit intangible, mortgage servicing rights
and unrealized gain/loss on securities) plus CECL adjustment

 

Loans		June  30, 2023					March  31, 2023					December  31, 2022					September  30, 2022					June 30, 2022
(Dollar amounts in thousands)
Commercial real estate		$		1,280,902			$		1,225,315			$		1,152,603			$		1,063,661			$		979,176
Agricultural real estate				230,837					227,897					220,819					205,089					199,972
Consumer real estate				506,866					502,974					494,423					416,001					410,450
Commercial and industrial				253,444					241,598					242,360					229,388					232,975
Agricultural				128,344					131,467					128,733					128,615					127,143
Consumer				88,312					89,588					89,147					70,602					55,411
Other				28,996					29,316					29,818					30,662					31,243
Less: Net deferred loan fees       and costs				(1,908	)				(1,503	)				(1,516	)				(1,402	)				(1,552	)
Total loans, net		$		2,515,793			$		2,446,652			$		2,356,387			$		2,142,616			$		2,034,818

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA (continued)

 

Asset quality data		June 30, 2023					March 31, 2023					December 31, 2022					September  30, 2022					June 30, 2022
(Dollar amounts in thousands)
Nonaccrual loans		$		6,295			$		7,717			$		4,689			$		5,470			$		5,247
Troubled debt restructuring		$		-			$		-			$		3,645			$		3,978			$		2,748
90 day past due and accruing		$		-			$		-			$		-			$		-			$		-
Nonperforming loans		$		6,295			$		7,717			$		4,689			$		5,470			$		5,247
Other real estate owned		$		-			$		-			$		-			$		-			$		-
Nonperforming assets		$		6,295			$		7,717			$		4,689			$		5,470			$		5,247
Allowance for credit losses(2)		$		24,910			$		24,507			$		20,313			$		19,990			$		18,424
Accretable yield adjustment				5,209					5,754					6,427					5,959					6,724
Adjusted credit losses with    accretable yield included(2)		$		30,119			$		30,261			$		26,740			$		25,949			$		25,148
Allowance for credit losses/    total loans(2)				0.99	%				1.00	%				0.86	%				0.93	%				0.91	%
Adjusted credit losses with    accretable yield/total loans(2)				1.20	%				1.24	%				1.13	%				1.21	%				1.24	%
Net charge-offs:
Quarter-to-date		$		(133	)		$		60			$		431			$		71			$		(25	)
Year-to-date		$		(73	)		$		60			$		529			$		97			$		26
Net charge-offs to average loans
Quarter-to-date				-0.01	%				0.00	%				0.02	%				0.00	%				0.00	%
Year-to-date				0.00	%				0.00	%				0.03	%				0.00	%				0.00	%
Nonperforming loans/total loans				0.25	%				0.32	%				0.20	%				0.26	%				0.26	%
Allowance for credit losses/    nonperforming loans(2)				395.71	%				319.22	%				273.67	%				365.44	%				351.44	%
(2) ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss        method.

 

 

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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
		June 30, 2023												June 30, 2022
Interest Earning Assets:		Average Balance				Interest/ Dividends				Annualized Yield/Rate				Average Balance				Interest/ Dividends				Annualized Yield/Rate
Loans		$	2,476,795			$	31,365				5.07	%		$	1,999,357			$	22,388				4.48	%
Taxable investment securities			399,257				1,486				1.49	%			422,482				1,344				1.27	%
Tax-exempt investment securities			24,259				93				1.94	%			21,649				70				1.64	%
Fed funds sold & other			49,160				433				3.52	%			81,091				109				0.54	%
Total Interest Earning Assets			2,949,471			$	33,377				4.53	%			2,524,579			$	23,911				3.79	%
Nonearning Assets			169,599												161,031
Total Assets		$	3,119,070											$	2,685,610
Interest Bearing Liabilities:
Savings deposits		$	1,356,798			$	6,238				1.84	%		$	1,312,444			$	777				0.24	%
Other time deposits			612,929				4,196				2.74	%			435,091				602				0.55	%
Other borrowed money			215,884				2,113				3.92	%			39,172				218				2.23	%
Fed funds purchased & securities
sold under agreement to repurchase			39,966				427				4.27	%			35,260				166				1.88	%
Subordinated notes			34,625				285				3.29	%			34,509				284				3.29	%
Total Interest Bearing Liabilities		$	2,260,202			$	13,259				2.35	%		$	1,856,476			$	2,047				0.44	%
Noninterest Bearing Liabilities			552,867												545,439
Stockholders' Equity		$	306,001											$	283,695
Net Interest Income and    Interest Rate Spread						$	20,118				2.18	%						$	21,864				3.35	%
Net Interest Margin											2.73	%											3.47	%
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

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES

(in thousands of dollars, except percentages)
 

		For the Six Months Ended												For the Six Months Ended
		June 30, 2023												June 30, 2022
Interest Earning Assets:		Average Balance				Interest/ Dividends				Annualized Yield/Rate				Average Balance				Interest/ Dividends				Annualized Yield/Rate
Loans		$	2,437,148			$	61,068				5.01	%		$	1,953,671			$	42,843				4.39	%
Taxable investment securities			398,383				2,985				1.50	%			426,189				2,639				1.24	%
Tax-exempt investment securities			25,303				193				1.93	%			20,119				140				1.76	%
Fed funds sold & other			58,853				933				3.17	%			124,050				188				0.30	%
Total Interest Earning Assets			2,919,687			$	65,179				4.47	%			2,524,029			$	45,810				3.63	%
Nonearning Assets			174,702												162,949
Total Assets		$	3,094,389											$	2,686,978
Interest Bearing Liabilities:
Savings deposits		$	1,378,518			$	11,181				1.62	%		$	1,302,005			$	1,365				0.21	%
Other time deposits			596,168				7,404				2.48	%			447,471				1,374				0.61	%
Other borrowed money			174,171				3,393				3.90	%			51,180				553				2.16	%
Fed funds purchased & securities
sold under agreement to repurchase			39,409				832				4.22	%			32,182				318				1.98	%
Subordinated notes			34,610				569				3.29	%			34,495				553				3.21	%
Total Interest Bearing Liabilities		$	2,222,876			$	23,379				2.10	%		$	1,867,333			$	4,163				0.44	%
Noninterest Bearing Liabilities			567,878												530,478
Stockholders' Equity		$	303,635											$	289,167
Net Interest Income and    Interest Rate Spread						$	41,800				2.37	%						$	41,647				3.19	%
Net Interest Margin											2.87	%											3.30	%
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

 

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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)

 

		For the Three Months Ended																								For the Three Months Ended
		June 30, 2023																								June 30, 2022
		As Reported							Excluding Accretion/Amortization									Difference								As Reported							Excluding Accretion/Amortization									Difference
		$				Yield				$				Yield				$				Yield				$				Yield				$				Yield				$				Yield
Interest Earning Assets:
Loans		$	31,365				5.07	%		$	30,697				4.96	%		$	668				0.11	%		$	22,388				4.48	%		$	21,986				4.40	%		$	402				0.08	%
Taxable investment securities			1,486				1.49	%			1,486				1.49	%			-				0.00	%			1,344				1.27	%			1,344				1.27	%			-				0.00	%
Tax-exempt investment securities			93				1.94	%			93				1.94	%			-				0.00	%			70				1.64	%			70				1.64	%			-				0.00	%
Fed funds sold & other			433				3.52	%			433				3.52	%			-				0.00	%			109				0.54	%			109				0.54	%			-				0.00	%
Total Interest Earning Assets			33,377				4.53	%			32,709				4.44	%			668				0.09	%			23,911				3.79	%			23,509				3.73	%			402				0.06	%
Interest Bearing Liabilities:
Savings deposits		$	6,238				1.84	%		$	6,238				1.84	%		$	-				0.00	%		$	777				0.24	%		$	777				0.24	%		$	-				0.00	%
Other time deposits			4,196				2.74	%			4,291				2.80	%			(95	)			-0.06	%			602				0.55	%			1,222				1.12	%			(620	)			-0.57	%
Other borrowed money			2,113				3.92	%			2,130				3.95	%			(17	)			-0.03	%			218				2.23	%			239				2.44	%			(21	)			-0.21	%
Fed funds purchased and securities
sold under agreement to repurchase			427				4.27	%			427				4.27	%			-				0.00	%			166				1.88	%			166				1.88	%			-				0.00	%
Subordinated notes			285				3.29	%			285				3.29	%			-				0.00	%			284				3.29	%			284				3.29	%			-				0.00	%
Total Interest Bearing Liabilities			13,259				2.35	%			13,371				2.37	%			(112	)			-0.02	%			2,047				0.44	%			2,688				0.58	%			(641	)			-0.14	%
Interest/Dividend income/yield			33,377				4.53	%			32,709				4.44	%			668				0.09	%			23,911				3.79	%			23,509				3.73	%			402				0.06	%
Interest Expense / yield			13,259				2.35	%			13,371				2.37	%			(112	)			-0.02	%			2,047				0.44	%			2,688				0.58	%			(641	)			-0.14	%
Net Interest Spread			20,118				2.18	%			19,338				2.07	%			780				0.11	%			21,864				3.35	%			20,821				3.15	%			1,043				0.20	%
Net Interest Margin							2.73	%							2.63	%							0.10	%							3.47	%							3.30	%							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

 

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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)

 

		For the Six Months Ended																								For the Six Months Ended
		June 30, 2023																								June 30, 2022
		As Reported							Excluding Accretion/Amortization									Difference								As Reported							Excluding Accretion/Amortization									Difference
		$				Yield				$				Yield				$				Yield				$				Yield				$				Yield				$				Yield
Interest Earning Assets:
Loans		$	61,068				5.01	%		$	59,733				4.90	%		$	1,335				0.11	%		$	42,843				4.39	%		$	42,067				4.31	%		$	776				0.08	%
Taxable investment securities			2,985				1.50	%			2,985				1.50	%			-				0.00	%			2,639				1.24	%			2,639				1.24	%			-				0.00	%
Tax-exempt investment securities			193				1.93	%			193				1.93	%			-				0.00	%			140				1.76	%			140				1.76	%			-				0.00	%
Fed funds sold & other			933				3.17	%			933				3.17	%			-				0.00	%			188				0.30	%			188				0.30	%			-				0.00	%
Total Interest Earning Assets			65,179				4.47	%			63,844				4.38	%			1,335				0.09	%			45,810				3.63	%			45,034				3.57	%			776				0.06	%
Interest Bearing Liabilities:
Savings deposits		$	11,181				1.62	%		$	11,181				1.62	%		$	-				0.00	%		$	1,365				0.21	%		$	1,365				0.21	%		$	-				0.00	%
Other time deposits			7,404				2.48	%			7,958				2.67	%			(554	)			-0.19	%			1,374				0.61	%			2,613				1.17	%			(1,239	)			-0.56	%
Other borrowed money			3,393				3.90	%			3,428				3.94	%			(35	)			-0.04	%			553				2.16	%			595				2.33	%			(42	)			-0.17	%
Fed funds purchased and securities
sold under agreement to repurchase			832				4.22	%			832				4.22	%			-				0.00	%			318				1.98	%			318				1.98	%			-				0.00	%
Subordinated notes			569				3.29	%			569				3.29	%			-				0.00	%			553				3.21	%			553				3.21	%			-				0.00	%
Total Interest Bearing Liabilities			23,379				2.10	%			23,968				2.16	%			(589	)			-0.06	%			4,163				0.44	%			5,444				0.58	%			(1,281	)			-0.14	%
Interest/Dividend income/yield			65,179				4.47	%			63,844				4.38	%			1,335				0.09	%			45,810				3.63	%			45,034				3.57	%			776				0.06	%
Interest Expense / yield			23,379				2.10	%			23,968				2.16	%			(589	)			-0.06	%			4,163				0.44	%			5,444				0.58	%			(1,281	)			-0.14	%
Net Interest Spread			41,800				2.37	%			39,876				2.22	%			1,924				0.15	%			41,647				3.19	%			39,590				2.99	%			2,057				0.20	%
Net Interest Margin							2.87	%							2.74	%							0.13	%							3.30	%							3.14	%							0.16	%
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

 

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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									Twelve Months Ended
		June 30, 2023				June 30, 2022					June 30, 2023				June 30, 2022
		(Unaudited)									(Unaudited)
Net income as reported		$	6,001			$	8,271				$	12,467			$	16,373
Acquisition expenses			88				-					184				145
Tax effect on acquisition expenses			(18	)			-					(37	)			(30	)
Net income excluding acquisition expenses and tax effect		$	6,071			$	8,271					12,614				16,488
Weighted average common shares outstanding    including participating securities			13,632,440				13,065,975					13,624,094				13,066,123
Basic and diluted earnings per share		$	0.45			$	0.63				$	0.93			$	1.26

 

 

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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
		June 30, 2023				June 30, 2022					June 30, 2023				June 30, 2022
Shares Outstanding			13,634,912				13,065,825					13,634,912				13,065,825
Tangible Equity
Equity		$	304,663			$	280,872				$	304,663			$	280,872
Goodwill			86,358				80,434					86,358				80,434
Other Intangible			8,437				3,974					8,437				3,974
Comprehensive Loss Adjustment*			-				-					35,922				31,261
CECL Adjustment**			-				-					2,528				-
Tangible Equity		$	209,868			$	196,464				$	248,318			$	227,725
Shares Outstanding			13,635				13,066					13,635				13,066
Tangible Book Equity per Share		$	15.39			$	15.04				$	18.21			$	17.43
		Actual Average									Regulatory Average
		Year to Date									Year to Date
		June 30, 2023				June 30, 2022					June 30, 2023				June 30, 2022
Net Income		$	12,467			$	16,373				$	12,467			$	16,373
Acquisition Costs - Tax Adjusted			147				115					147				115
Average Shares Outstanding			13,624,094				13,066,123					13,624,094				13,066,123
Average Tangible Equity
Average Equity		$	303,635			$	289,167				$	303,635			$	289,167
Average Goodwill			86,358				80,434					86,358				80,434
Average Other Intangible			8,942				4,235					8,942				4,235
Average Comprehensive Loss Adjustment*			-				-					34,921				16,893
Average CECL Adjustment**			-				-					2,528
Average Tangible Equity		$	208,336			$	204,498				$	245,784			$	221,391
Average Shares Outstanding			13,624				13,066					13,624				13,066
Average Tangible Book Equity per Share		$	15.29			$	15.65				$	18.04			$	16.94
Return on Average Tangible Equity			11.97	%			16.01	%				10.14	%			14.79	%
Return on Average Tangible Equity w/o Acquisition			12.11	%			16.12	%				10.26	%			14.89	%
*The Bank has adopted the Accumulated Other Comprehensive Income (AOCI) opt out election which removed AOCI from the calculation of tangible equity for regulatory purposes.
**ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method and the Bank has elected to spread the capital adjustment over three years. The first year permits 75% of the capital adjustment to be removed from the calculation of tangible equity for regulatory purposes.

 

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