0000792966false00007929662023-10-262023-10-26

 

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) October 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 October 26, 2023, Farmers & Merchants Bancorp, Inc. issued a press release (the “Release”) announcing its earnings for the three and nine months ended September 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 October 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: October 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 Third-Quarter and Year-to-Date Financial Results

 

ARCHBOLD, OHIO, October 26, 2023, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2023 third quarter and year-to-date September 30, 2023.

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

 

Lars B. Eller, President and Chief Executive Officer, stated, “Throughout 2023, we have been focused on executing against our strategic growth plan, while simultaneously navigating a challenging banking environment. I am pleased with the progress we are making as F&M opened two full-service offices in Oxford and Toledo, Ohio last quarter and since the end of the third quarter, the Bank has opened additional offices in Fort Wayne, Indiana and Birmingham, Michigan. We have also recently launched a new shared services group formation, invested in new internal audit and marketing capabilities, and restructured our HR department.”

Mr. Eller continued, “With most of the planned investments behind us, we are focused on scaling our new offices by expanding relationships within these new and existing markets. Early indications are encouraging and reflect F&M’s strong team of local bankers. As a result of our efforts across our new and existing offices, third-quarter deposits increased 4.3% from the second quarter to a record $2.58 billion, which included a 3.3% increase in non-interest-bearing deposits. We expect future deposit growth over the next quarters as our growth strategies accelerate and we benefit from new checking accounts that have been opened since the start of the year.”

 

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Income Statement

Net income for the 2023 third quarter ended September 30, 2023, was $4.8 million, compared to $9.0 million for the same period last year. Net income per basic and diluted share for the 2023 third quarter was $0.35, compared to $0.68 for the same period last year. Net income for the 2023 nine months ended September 30, 2023, was $17.2 million, compared to $25.3 million for the same period last year. Net income per basic and diluted share for the 2023 nine months was $1.26, compared to $1.94 for the same period last year.

“The rapid rise in the Federal Funds Rate continued to impact our cost of funds and increase the competition for deposits. As a result, our cost of interest-bearing liabilities has increased to 2.82% at September 30, 2023, from 0.68% at September 30, 2022. Our loan portfolio has also lagged in capturing sufficient yield to match the higher cost of funds mainly due to the timing to reprice our commercial real estate adjustable-rate mortgages. 13.3% of the loan portfolio will be subject to repricing next quarter with 22.3% subject to repricing in the next twelve months. These trends during the third quarter caused a 12.9% year-over-year decline in net interest income and impacted overall profitability. As we navigate a challenging rate environment over the near term, we continue to believe we are well positioned for net income growth to re-accelerate in 2024 and beyond, as we benefit from continued strong asset quality, and the contribution of our growth initiatives,” continued Mr. Eller.

Deposits

At September 30, 2023, total deposits were $2.58 billion, an increase of 12.8% from September 30, 2022, and an increase of 4.3% from December 31, 2022. The Company’s cost of interest-bearing liabilities was 2.82% for the quarter ended September 30, 2023, compared to 0.68% for the quarter ended September 30, 2022, and 1.32% for the quarter ended December 31, 2022.

At September 30, 2023, F&M’s average deposit account had an average balance of $25,426. In addition, uninsured deposits to total deposits were approximately 9.1% for the quarter ended September 30, 2023, and the percentage of uninsured by the FDIC was 18.84%.

Loan Portfolio and Asset Quality

Total loans, net at September 30, 2023, increased 18.1%, or by $3.87 million to $2.53 billion, compared to $2.14 billion at September 30, 2022, and up 7.2% 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 13.2% organically, or by $282.8 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 $22.4 million, or 0.89% of total loans at September 30, 2023, compared to $5.5 million, or 0.26% at September 30, 2022. At September 30, 2023, nonperforming loans increased by $16.2 million from June 30, 2023, which was primarily due to one agricultural relationship where the Bank is well collateralized and does not foresee a loss.

F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 51.6% of the Company’s total loan portfolio at September 30, 2023. In addition, F&M’s commercial real estate office credit exposure represented 5.1% of the Company's total loan portfolio at September 30, 2023, with a weighted average loan-to-value of approximately 64% and an average loan of $870,000.

 

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

CRE Category		Dollar Balance		Percent of CRE Portfolio(*)		Percent of Total Loan Portfolio(*)
Multi-family		$ 241,804		18.5%		9.5%
Industrial		$ 228,644		17.5%		9.0%
Retail		$ 212,383		16.3%		8.4%
Hotels		$ 133,579		10.2%		5.3%
Office		$ 129,619		9.9%		5.1%
Gas Stations		$ 61,484		4.7%		2.4%
Food Service		$ 49,578		3.8%		2.0%
Mixed Use		$ 39,842		3.1%		1.6%
Senior Living		$ 35,788		2.7%		1.4%
Other		$ 171,387		13.1%		6.8%
Total CRE		$ 1,304,118		100.0%		51.4%

* Numbers have been rounded

At September 30, 2023, the Company’s allowance for credit losses to nonperforming loans was 112.61%, compared to 365.44% at September 30, 2022. The allowance to total loans was 1.00% at September 30, 2023, compared to 0.93% at September 30, 2022. As a result of F&M’s recent acquisitions, the Company had an accretable yield adjustment of $4.6 million at September 30, 2023, which further enhances F&M’s allowance, compared to $6.0 million at September 30, 2022. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.18% at September 30, 2023, compared to 1.21% at September 30, 2022.

Mr. Eller concluded, “At September 30, 2023, we saw nonperforming loans increase to 0.89% primarily due to one agricultural relationship where the Bank is well collateralized and does not foresee a loss. As we work through this credit, we are closely monitoring our loan portfolio for signs of stress, but overall, we expect our conservative credit culture and pricing will allow us to maintain excellent asset quality throughout various economic cycles. In addition, at September 30, 2023, we had the lowest level of loans over 30 days past due this year. While we continue to believe 2023 will be a transitional year, we believe we are well positioned to emerge from this period with increased market share and higher profitability and I look forward to reporting on our success in the coming quarters. Our financial performance ratios reflect the pressure on the net interest margin and the cost of the strategic investments we have made. We are cognizant of the short-term expense and are confident it will enable long-term gains.”

 

Stockholders’ Equity and Dividends

Total stockholders’ equity increased 8.1% to $303.2 million at September 30, 2023, from $280.6 million at September 30, 2022. At September 30, 2023, the Company had a Tier 1 leverage ratio of 8.02%, compared to 9.11% at September 30, 2022.

Based on a regulatory basis, tangible stockholders’ equity increased to $250.9 million at September 30, 2023, compared to $234.1 million at September 30, 2022. On a per share basis, tangible stockholders’ equity at September 30, 2023, was $18.36 per share, compared to $17.86 per share at September 30, 2022.

For the nine months ended September 30, 2023, the Company has declared cash dividends of $0.63 per share, which is a 4.6% increase over the same period last year. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for over 28 consecutive years. For the nine months ended September 30, 2023, the dividend payout ratio was 60.07% compared to 30.45% for the same period last year.

 

 

 

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About Farmers & Merchants State Bank:

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. The Michigan footprint includes Oakland County, and F&M has 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																				Nine Months Ended
		September  30, 2023				June  30, 2023				March  31, 2023				December  31, 2022				September  30, 2022				September  30, 2023				September  30, 2022
Interest Income
Loans, including fees		$	33,783			$	31,365			$	29,703			$	27,302			$	24,119			$	94,851			$	66,962
Debt securities:
U.S. Treasury and    government    agencies			1,005				1,030				1,068				1,118				1,049				3,103				3,107
Municipalities			392				401				408				420				373				1,201				995
Dividends			246				148				123				126				93				517				192
Federal funds sold			6				9				21				2				-				36				19
Other			927				424				479				524				213				1,830				382
Total interest income			36,359				33,377				31,802				29,492				25,847				101,538				71,657
Interest Expense
Deposits			13,323				10,434				8,151				4,978				2,166				31,908				4,905
Federal funds purchased    and securities sold    under agreement to    repurchase			349				427				405				463				416				1,181				734
Borrowed funds			2,741				2,113				1,280				1,209				398				6,134				951
Subordinated notes			284				285				284				285				284				853				837
Total interest    expense			16,697				13,259				10,120				6,935				3,264				40,076				7,427
Net Interest Income -    Before Provision for    Credit Losses*			19,662				20,118				21,682				22,557				22,583				61,462				64,230
Provision for Credit    Losses - Loans*			460				143				817				755				1,637				1,420				3,845
Provision for Credit    Losses - Off Balance    Sheet Credit Exposures*			(76	)			(129	)			62				-				-				(143	)			-
Net Interest Income    After Provision for    Credit Losses*			19,278				20,104				20,803				21,802				20,946				60,185				60,385
Noninterest Income
Customer service fees			2,208				2,361				2,447				2,862				2,300				7,016				7,096
Other service charges    and fees			1,162				1,803				2,554				1,115				1,105				5,519				3,111
Net gain on sale of loans			294				108				67				165				327				469				1,188
Net loss on sale of    available-for-sale    securities			-				-				(891	)			-				-				(891	)			-
Total noninterest    income			3,664				4,272				4,177				4,142				3,732				12,113				11,395

 

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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			6,777				6,500				6,657				6,353				5,479				19,934				16,347
Employee benefits			2,066				2,071				2,165				1,911				1,392				6,302				4,992
Net occupancy expense			950				840				856				753				693				2,646				1,813
Furniture and equipment			1,189				1,211				1,252				1,096				1,047				3,652				3,111
Data processing			840				796				726				1,917				781				2,362				2,039
Franchise taxes			434				379				366				(45	)			254				1,179				1,429
ATM expense			640				683				623				561				580				1,946				1,656
Advertising			865				830				514				531				578				2,209				1,115
Net (gain) loss on sale    of other assets owned			49				-				-				12				-				49				(271	)
FDIC assessment			586				496				306				250				271				1,388				655
Mortgage servicing    rights amortization - net			106				164				159				110				(50	)			429				35
Consulting fees			179				231				230				637				254				640				665
Other general and    administrative			2,363				2,643				3,077				2,964				2,192				8,083				6,613
Total noninterest    expense			17,044				16,844				16,931				17,050				13,471				50,819				40,199
Income Before Income    Taxes			5,898				7,532				8,049				8,894				11,207				21,479				31,581
Income Taxes			1,121				1,531				1,583				1,706				2,253				4,235				6,254
Net Income			4,777				6,001				6,466				7,188				8,954				17,244				25,327
Other Comprehensive    Income (Loss) (Net of    Tax):
Net unrealized gain (loss)    on available-for-sale    securities			(4,514	)			(5,996	)			8,030				(628	)			(8,197	)			(2,480	)			(43,738	)
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			(4,514	)			(5,996	)			8,921				(628	)			(8,197	)			(1,589	)			(43,738	)
Tax expense (benefit)			(947	)			(1,260	)			1,874				(132	)			(1,721	)			(333	)			(9,185	)
Other comprehensive    income (loss)			(3,567	)			(4,736	)			7,047				(496	)			(6,476	)			(1,256	)			(34,553	)
Comprehensive Income    (Loss)		$	1,210			$	1,265			$	13,513			$	6,692			$	2,478			$	15,988			$	(9,226	)
Basic Earnings    Per Share		$	0.35			$	0.44			$	0.47			$	0.53			$	0.68			$	1.26			$	1.94
Diluted Earnings    Per Share		$	0.35			$	0.44			$	0.47			$	0.53			$	0.68			$	1.26			$	1.94
Dividends Declared		$	0.2100			$	0.2100			$	0.2100			$	0.2100			$	0.2100			$	0.6300			$	0.6025
(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)

 

		September  30, 2023				June  30, 2023				March  31, 2023				December  31, 2022				September  30, 2022
		(Unaudited)				(Unaudited)				(Unaudited)								(Unaudited)
Assets
Cash and due from banks		$	151,711			$	69,760			$	62,780			$	83,085			$	69,680
Federal funds sold			1,471				1,433				1,545				1,324				990
Total cash and cash equivalents			153,182				71,193				64,325				84,409				70,670
Interest-bearing time deposits			2,989				3,485				4,435				4,442				5,187
Securities - available-for-sale			348,255				363,225				372,975				390,789				395,485
Other securities, at cost			16,995				17,535				11,543				9,799				8,227
Loans held for sale			1,039				1,459				951				827				2,182
Loans, net			2,504,329				2,490,883				2,422,018				2,336,074				2,122,626
Premises and equipment			31,723				30,398				28,679				28,381				26,484
Construction in progress			3,044				2,290				1,565				278				-
Goodwill			86,358				86,358				86,358				86,358				80,434
Loan servicing rights			5,687				5,635				4,985				3,549				3,583
Bank owned life insurance			33,691				33,470				33,269				33,073				28,051
Other assets			47,388				41,512				38,972				37,372				40,831
Total Assets		$	3,234,680			$	3,147,443			$	3,070,075			$	3,015,351			$	2,783,760
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing		$	505,358			$	488,678			$	520,145			$	532,794			$	506,928
Interest-bearing
NOW accounts			778,133				770,113				800,230				750,887				705,888
Savings			591,344				581,192				590,854				627,203				607,375
Time			700,445				628,757				601,939				557,980				462,845
Total deposits			2,575,280				2,468,740				2,513,168				2,468,864				2,283,036
Federal funds purchased and securities    sold under agreements to repurchase			30,527				51,567				30,496				54,206				55,802
Federal Home Loan Bank (FHLB)    advances			266,286				266,818				164,327				127,485				102,147
Other borrowings			-				-				-				10,000				10,000
Subordinated notes, net of unamortized    issuance costs			34,673				34,644				34,615				34,586				34,557
Dividend payable			2,838				2,834				2,831				2,832				2,727
Accrued expenses and other liabilities			21,892				18,177				18,881				19,238				14,913
Total liabilities			2,931,496				2,842,780				2,764,318				2,717,211				2,503,182
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value 20,000,000    shares authorized; issued and outstanding    14,564,425 shares 9/30/23 and 12/31/22			135,171				135,647				135,241				135,497				121,811
Treasury stock - 898,843 shares 9/30/23    and 956,003 shares 12/31/22			(11,008	)			(11,298	)			(11,310	)			(11,573	)			(11,547	)
Retained earnings			218,510				216,236				213,012				212,449				208,051
Accumulated other comprehensive    loss			(39,489	)			(35,922	)			(31,186	)			(38,233	)			(37,737	)
Total stockholders' equity			303,184				304,663				305,757				298,140				280,578
Total Liabilities and Stockholders' Equity		$	3,234,680			$	3,147,443			$	3,070,075			$	3,015,351			$	2,783,760

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

 

		For the Three Months Ended																									For the Nine Months Ended
Selected financial data		September 30, 2023					June 30, 2023					March 31, 2023					December 31, 2022					September  30, 2022					September 30, 2023				September 30, 2022
Return on average assets				0.59	%				0.77	%				0.84	%				0.96	%				1.31	%			0.73	%			1.25	%
Return on average equity				6.26	%				7.84	%				8.59	%				10.00	%				12.53	%			7.52	%			11.72	%
Yield on earning assets				4.79	%				4.53	%				4.41	%				4.18	%				4.00	%			4.57	%			3.76	%
Cost of interest bearing   liabilities				2.82	%				2.35	%				1.85	%				1.32	%				0.68	%			2.35	%			0.53	%
Net interest spread				1.97	%				2.18	%				2.56	%				2.86	%				3.32	%			2.22	%			3.23	%
Net interest margin				2.59	%				2.73	%				3.01	%				3.20	%				3.49	%			2.77	%			3.37	%
Efficiency				73.07	%				69.06	%				63.53	%				50.46	%				51.19	%			68.24	%			53.16	%
Dividend payout ratio				60.07	%				47.22	%				43.79	%				39.39	%				30.45	%			49.50	%			40.58	%
Tangible book value    per share (1)		$		18.36			$		18.21			$		17.92			$		17.69			$		17.86
Tier 1 leverage ratio				8.02	%				9.85	%				8.36	%				8.39	%				9.11	%
Average shares outstanding				13,650,823					13,632,440					13,615,655					13,606,876					13,083,145				13,633,101				13,071,859
(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		September  30, 2023					June  30, 2023					March  31, 2023					December  31, 2022					September  30, 2022
(Dollar amounts in thousands)
Commercial real estate		$		1,304,118			$		1,280,902			$		1,225,315			$		1,152,603			$		1,063,661
Agricultural real estate				225,672					230,837					227,897					220,819					205,089
Consumer real estate				512,973					506,866					502,974					494,423					416,001
Commercial and industrial				250,891					253,444					241,598					242,360					229,388
Agricultural				123,735					128,344					131,467					128,733					128,615
Consumer				83,024					88,312					89,588					89,147					70,602
Other				31,083					28,996					29,316					29,818					30,662
Less: Net deferred loan fees       and costs				(1,890	)				(1,908	)				(1,503	)				(1,516	)				(1,402	)
Total loans, net		$		2,529,606			$		2,515,793			$		2,446,652			$		2,356,387			$		2,142,616

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA (continued)

 

Asset quality data		September 30, 2023					June 30, 2023					March 31, 2023					December 31, 2022					September  30, 2022
(Dollar amounts in thousands)
Nonaccrual loans		$		22,447			$		6,295			$		7,717			$		4,689			$		5,470
90 day past due and accruing		$		-			$		-			$		-			$		-			$		-
Nonperforming loans		$		22,447			$		6,295			$		7,717			$		4,689			$		5,470
Other real estate owned		$		-			$		-			$		-			$		-			$		-
Nonperforming assets		$		22,447			$		6,295			$		7,717			$		4,689			$		5,470
Allowance for credit losses(2)		$		25,277			$		24,910			$		24,507			$		20,313			$		19,990
Accretable yield adjustment				4,565					5,209					5,754					6,427					5,959
Adjusted credit losses with    accretable yield included(2)		$		29,842			$		30,119			$		30,261			$		26,740			$		25,949
Allowance for credit losses/    total loans(2)				1.00	%				0.99	%				1.00	%				0.86	%				0.93	%
Adjusted credit losses with    accretable yield/total loans(2)				1.18	%				1.20	%				1.24	%				1.13	%				1.21	%
Net charge-offs:
Quarter-to-date		$		93			$		(133	)		$		60			$		431			$		71
Year-to-date		$		97			$		(73	)		$		60			$		529			$		97
Net charge-offs to average loans
Quarter-to-date				0.00	%				-0.01	%				0.00	%				0.02	%				0.00	%
Year-to-date				0.00	%				0.00	%				0.00	%				0.03	%				0.00	%
Nonperforming loans/total loans				0.89	%				0.25	%				0.32	%				0.20	%				0.26	%
Allowance for credit losses/    nonperforming loans(2)				112.61	%				395.71	%				319.22	%				273.67	%				365.44	%
(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
		September 30, 2023												September 30, 2022
Interest Earning Assets:		Average Balance				Interest/ Dividends				Annualized Yield/Rate				Average Balance				Interest/ Dividends				Annualized Yield/Rate
Loans		$	2,536,885			$	33,783				5.33	%		$	2,082,486			$	24,119				4.63	%
Taxable investment securities			393,910				1,559				1.58	%			422,250				1,426				1.35	%
Tax-exempt investment securities			23,986				84				1.77	%			25,169				89				1.79	%
Fed funds sold & other			85,515				933				4.36	%			58,266				213				1.46	%
Total Interest Earning Assets			3,040,296			$	36,359				4.79	%			2,588,171			$	25,847				4.00	%
Nonearning Assets			180,193												150,044
Total Assets		$	3,220,489											$	2,738,215
Interest Bearing Liabilities:
Savings deposits		$	1,367,168			$	7,673				2.24	%		$	1,328,344			$	1,586				0.48	%
Other time deposits			667,880				5,650				3.38	%			423,668				580				0.55	%
Other borrowed money			266,467				2,741				4.11	%			60,455				398				2.63	%
Fed funds purchased & securities
sold under agreement to repurchase			34,128				349				4.09	%			63,388				416				2.63	%
Subordinated notes			34,654				284				3.28	%			34,538				284				3.29	%
Total Interest Bearing Liabilities		$	2,370,297			$	16,697				2.82	%		$	1,910,393			$	3,264				0.68	%
Noninterest Bearing Liabilities			544,801												542,077
Stockholders' Equity		$	305,391											$	285,745
Net Interest Income and    Interest Rate Spread						$	19,662				1.97	%						$	22,583				3.32	%
Net Interest Margin											2.59	%											3.49	%
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 Nine Months Ended												For the Nine Months Ended
		September 30, 2023												September 30, 2022
Interest Earning Assets:		Average Balance				Interest/ Dividends				Annualized Yield/Rate				Average Balance				Interest/ Dividends				Annualized Yield/Rate
Loans		$	2,470,770			$	94,851				5.12	%		$	1,997,081			$	66,962				4.47	%
Taxable investment securities			396,917				4,544				1.53	%			424,882				4,065				1.28	%
Tax-exempt investment securities			24,865				277				1.88	%			21,794				229				1.77	%
Fed funds sold & other			67,869				1,866				3.67	%			101,922				401				0.52	%
Total Interest Earning Assets			2,960,421			$	101,538				4.57	%			2,545,679			$	71,657				3.76	%
Nonearning Assets			176,568												158,378
Total Assets		$	3,136,989											$	2,704,057
Interest Bearing Liabilities:
Savings deposits		$	1,373,110			$	18,854				1.83	%		$	1,315,793			$	2,951				0.30	%
Other time deposits			620,071				13,054				2.81	%			439,534				1,954				0.59	%
Other borrowed money			204,927				6,134				3.99	%			54,184				951				2.34	%
Fed funds purchased & securities
sold under agreement to repurchase			37,649				1,181				4.18	%			42,584				734				2.30	%
Subordinated notes			34,625				853				3.28	%			34,509				837				3.23	%
Total Interest Bearing Liabilities		$	2,270,382			$	40,076				2.35	%		$	1,886,604			$	7,427				0.53	%
Noninterest Bearing Liabilities			561,001												529,439
Stockholders' Equity		$	305,606											$	288,014
Net Interest Income and    Interest Rate Spread						$	61,462				2.22	%						$	64,230				3.23	%
Net Interest Margin											2.77	%											3.37	%
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
		September 30, 2023																								September 30, 2022
		As Reported							Excluding Accretion/Amortization									Difference								As Reported							Excluding Accretion/Amortization									Difference
		$				Yield				$				Yield				$				Yield				$				Yield				$				Yield				$				Yield
Interest Earning Assets:
Loans		$	33,783				5.33	%		$	32,631				5.15	%		$	1,152				0.18	%		$	24,119				4.63	%		$	23,437				4.50	%		$	682				0.13	%
Taxable investment securities			1,559				1.58	%			1,559				1.58	%			-				0.00	%			1,426				1.35	%			1,426				1.35	%			-				0.00	%
Tax-exempt investment securities			84				1.77	%			84				1.77	%			-				0.00	%			89				1.79	%			89				1.79	%			-				0.00	%
Fed funds sold & other			933				4.36	%			933				4.36	%			-				0.00	%			213				1.46	%			213				1.46	%			-				0.00	%
Total Interest Earning Assets			36,359				4.79	%			35,207				4.64	%			1,152				0.15	%			25,847				4.00	%			25,165				3.89	%			682				0.11	%
Interest Bearing Liabilities:
Savings deposits		$	7,673				2.24	%		$	7,673				2.24	%		$	-				0.00	%		$	1,586				0.48	%		$	1,586				0.48	%		$	-				0.00	%
Other time deposits			5,650				3.38	%			5,500				3.29	%			150				0.09	%			580				0.55	%			1,199				1.13	%			(619	)			-0.58	%
Other borrowed money			2,741				4.11	%			2,759				4.14	%			(18	)			-0.03	%			398				2.63	%			419				2.77	%			(21	)			-0.14	%
Fed funds purchased and securities
sold under agreement to repurchase			349				4.09	%			349				4.09	%			-				0.00	%			416				2.63	%			416				2.63	%			-				0.00	%
Subordinated notes			284				3.28	%			284				3.28	%			-				0.00	%			284				3.29	%			284				3.29	%			-				0.00	%
Total Interest Bearing Liabilities			16,697				2.82	%			16,565				2.80	%			132				0.02	%			3,264				0.68	%			3,904				0.81	%			(640	)			-0.13	%
Interest/Dividend income/yield			36,359				4.79	%			35,207				4.64	%			1,152				0.15	%			25,847				4.00	%			25,165				3.89	%			682				0.11	%
Interest Expense / yield			16,697				2.82	%			16,565				2.80	%			132				0.02	%			3,264				0.68	%			3,904				0.81	%			(640	)			-0.13	%
Net Interest Spread			19,662				1.97	%			18,642				1.84	%			1,020				0.13	%			22,583				3.32	%			21,261				3.08	%			1,322				0.24	%
Net Interest Margin							2.59	%							2.46	%							0.13	%							3.49	%							3.29	%							0.20	%
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 Nine Months Ended																								For the Nine Months Ended
		September 30, 2023																								September 30, 2022
		As Reported							Excluding Accretion/Amortization									Difference								As Reported							Excluding Accretion/Amortization									Difference
		$				Yield				$				Yield				$				Yield				$				Yield				$				Yield				$				Yield
Interest Earning Assets:
Loans		$	94,851				5.12	%		$	92,364				4.99	%		$	2,487				0.13	%		$	66,962				4.47	%		$	65,504				4.38	%		$	1,458				0.09	%
Taxable investment securities			4,544				1.53	%			4,544				1.53	%			-				0.00	%			4,065				1.28	%			4,065				1.28	%			-				0.00	%
Tax-exempt investment securities			277				1.88	%			277				1.88	%			-				0.00	%			229				1.77	%			229				1.77	%			-				0.00	%
Fed funds sold & other			1,866				3.67	%			1,866				3.67	%			-				0.00	%			401				0.52	%			401				0.52	%			-				0.00	%
Total Interest Earning Assets			101,538				4.57	%			99,051				4.47	%			2,487				0.10	%			71,657				3.76	%			70,199				3.68	%			1,458				0.08	%
Interest Bearing Liabilities:
Savings deposits		$	18,854				1.83	%		$	18,854				1.83	%		$	-				0.00	%		$	2,951				0.30	%		$	2,951				0.30	%		$	-				0.00	%
Other time deposits			13,054				2.81	%			13,458				2.89	%			(404	)			-0.08	%			1,954				0.59	%			3,812				1.16	%			(1,858	)			-0.57	%
Other borrowed money			6,134				3.99	%			6,187				4.03	%			(53	)			-0.04	%			951				2.34	%			1,014				2.50	%			(63	)			-0.16	%
Fed funds purchased and securities
sold under agreement to repurchase			1,181				4.18	%			1,181				4.18	%			-				0.00	%			734				2.30	%			734				2.30	%			-				0.00	%
Subordinated notes			853				3.28	%			853				3.28	%			-				0.00	%			837				3.23	%			837				3.23	%			-				0.00	%
Total Interest Bearing Liabilities			40,076				2.35	%			40,533				2.38	%			(457	)			-0.03	%			7,427				0.53	%			9,348				0.66	%			(1,921	)			-0.13	%
Interest/Dividend income/yield			101,538				4.57	%			99,051				4.47	%			2,487				0.10	%			71,657				3.76	%			70,199				3.68	%			1,458				0.08	%
Interest Expense / yield			40,076				2.35	%			40,533				2.38	%			(457	)			-0.03	%			7,427				0.53	%			9,348				0.66	%			(1,921	)			-0.13	%
Net Interest Spread			61,462				2.22	%			58,518				2.09	%			2,944				0.13	%			64,230				3.23	%			60,851				3.02	%			3,379				0.21	%
Net Interest Margin							2.77	%							2.64	%							0.13	%							3.37	%							3.19	%							0.18	%
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									Nine Months Ended
		September 30, 2023				September 30, 2022					September 30, 2023				September 30, 2022
		(Unaudited)									(Unaudited)
Net income as reported		$	4,777			$	8,954				$	17,244			$	25,327
Acquisition expenses			-				319					184				530
Tax effect on acquisition expenses			-				25					(37	)			(67	)
Net income excluding acquisition expenses and tax effect		$	4,777			$	9,298					17,391				25,790
Weighted average common shares outstanding    including participating securities			13,650,823				13,083,145					13,633,101				13,071,859
Basic and diluted earnings per share		$	0.35			$	0.71				$	1.28			$	1.97

 

 

 

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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
		September 30, 2023				September 30, 2022					September 30, 2023				September 30, 2022
Shares Outstanding			13,665,582				13,107,500					13,665,582				13,107,500
Tangible Equity
Equity		$	303,184			$	280,578				$	303,184			$	280,578
Goodwill			86,358				80,434					86,358				80,434
Other Intangible			7,992				3,744					7,992				3,744
Comprehensive Loss Adjustment*			-				-					39,489				37,737
CECL Adjustment**			-				-					2,528				-
Tangible Equity		$	208,834			$	196,400				$	250,851			$	234,137
Shares Outstanding			13,666				13,108					13,666				13,108
Tangible Book Equity per Share		$	15.28			$	14.98				$	18.36			$	17.86
		Actual Average									Regulatory Average
		Year to Date									Year to Date
		September 30, 2023				September 30, 2022					September 30, 2023				September 30, 2022
Net Income		$	17,244			$	25,327				$	17,244			$	25,327
Acquisition Costs - Tax Adjusted			147				463					147				463
Average Shares Outstanding			13,633,101				13,071,859					13,633,101				13,071,859
Average Tangible Equity
Average Equity		$	305,606			$	288,014				$	305,606			$	288,014
Average Goodwill			86,358				80,434					86,358				80,434
Average Other Intangible			8,717				4,119					8,717				4,119
Average Comprehensive Loss Adjustment*			-				-					35,497				21,181
Average CECL Adjustment**			-				-					2,528
Average Tangible Equity		$	210,531			$	203,461				$	248,556			$	224,642
Average Shares Outstanding			13,633				13,072					13,633				13,072
Average Tangible Book Equity per Share		$	15.44			$	15.56				$	18.23			$	17.19
Return on Average Tangible Equity			10.92	%			16.60	%				9.25	%			15.03	%
Return on Average Tangible Equity w/o Acquisition			11.01	%			16.90	%				9.33	%			15.31	%
*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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