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 4, 2016
Farmers & Merchants Bancorp, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Ohio | 000-14492 | 34-1469491 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer 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)
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)) |
| ITEM 2.02. | Results of Operation and Financial Condition |
On February 4, 2016, Farmers & Merchants Bancorp, Inc. issued a press release announcing its earnings for the year ended December 31, 2015. A copy of the press release is attached hereto as Exhibit 99 and is incorporated herein by reference.
| ITEM 9.01. | Financial Statements and Exhibits |
(d) Exhibits.
The following exhibit is filed with or incorporated by reference into this Current Report on Form 8-K:
| Exhibit |
Exhibit | |
| 99 | Company Press release dated February 4, 2016. | |
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 4, 2016 | /s/ Paul S. Siebenmorgen | |||||
| Paul S. Siebenmorgen | ||||||
| President & Chief Executive Officer | ||||||
| /s/ Barbara J. Britenriker | ||||||
| Barbara J. Britenriker | ||||||
| Executive Vice President & Chief Financial Officer | ||||||
Exhibit Index
| Exhibit |
Description of Exhibit | |
| 99 | Company Press Release dated February 4, 2016 | |
Exhibit 99
Company Press Release dated February 4, 2016
|
|
NEWS RELEASE | |
| Post Office Box 216
307 North Defiance Street
Archbold, Ohio 43502 |
||
| Company Contact: | Investor and Media Contact: | |||
| Marty Filogamo Senior Vice President – Marketing Manager Farmers & Merchants Bancorp, Inc. (419) 445-3501 ext. 15435 mfilogamo@fm-bank.com. |
Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com |
SECTION 1
SECTION 2 FARMERS & MERCHANTS BANCORP, INC. REPORTS
SECTION 3 2015 FOURTH-QUARTER AND FULL-YEAR FINANCIAL RESULTS
ARCHBOLD, OHIO, February 4, 2016 Farmers & Merchants Bancorp, Inc. (OTCQX: FMAO) today reported financial results for the 2015 fourth quarter and twelve months ended December 31, 2015.
2015 Fourth Quarter Financial Highlights Include (on a year-over-year basis unless noted):
| • | 51 consecutive quarters of profitability |
| • | Total loans increased 8.0% from 2015 third quarter |
| • | Net interest income after provision for loan losses increased 2.0% to $7,725,000 |
| • | Net income increased 4.2% to $2,772,000 |
| • | Earnings per basic and diluted shares increased 5.3% to $0.60 |
| • | Noninterest income improved 4.6% to $2,705,000 |
| • | Construction of Ft. Wayne, Indiana branch is on track for a 2016 spring opening |
2015 Full-Year Financial Highlights Include:
| • | Total loans increased 10.3% to a record $685,878,000 |
| • | Net income increased 7.2% to a record $10,340,000 |
| • | Earnings per basic and diluted shares increased 7.7% to a record $2.24 |
| • | Noninterest income improved 5.9% to $10,788,000 |
| • | Return on average assets of 1.08%, up from 1.02% |
| • | Return on average equity of 8.80%, up from 8.72% |
| • | Tangible book value per share increased 5.4% |
Paul S. Siebenmorgen, President and Chief Executive Officer, stated, “We achieved many operating and financial milestones during 2015, which include record earnings, loans, and assets. These solid financial results are possible because of the strong support of our loyal customers, local communities, dedicated employees, and shareholders. I am pleased we were able to share our success with our shareholders, and during 2015 we paid $3,943,000 in dividend payments as well as repurchasing 30,685 shares of our common stock. On January 15, 2016 F&M’s Board of Directors authorized the repurchase of up to 200,000 shares of our common stock, reflecting the confidence management and the Board have in our
future. We continue to methodically add F&M offices to grow our presence in locations that share our community banking values. Most recently, we added our Sylvania office, which opened during the second half of 2014 and exceeded our expectations, while contributing to profits in 2015. The Company continues to focus on expansion and our next office in Ft. Wayne, Indiana is under construction and on schedule for a 2016 spring opening. We are excited to expand our footprint to this compelling market. As a note, we expect the office will be a slight drag on earnings during 2016 as a result of start-up costs, but we are optimistic this will be a temporary impact, and expect the office will contribute significantly to earnings as it matures.”
Income Statement
Net income for the 2015 fourth quarter ended December 31, 2015 was $2,772,000, or $0.60 per basic and diluted share compared to $2,661,000, or $0.57 per basic and diluted share for the same period last year. The 4.2% improvement in net income for the 2015 fourth quarter was primarily due to a 2.0% increase in net interest income after provision for loan losses, and a 4.6% increase in noninterest income, partially offset by a 3.5% increase in noninterest expense.
Net income for the 2015 twelve months was $10,340,000, or $2.24 per basic and diluted share compared to $9,646,000, or $2.08 per basic and diluted share for the twelve months ended December 31, 2014. The 7.7% improvement in net income for 2015 was primarily due to a 3.1% increase in net interest income after provision for loan losses, and a 5.9% increase in noninterest income, which was partially offset by a 3.4% increase in noninterest expense.
Loan Portfolio and Asset Quality
Total loans at December 31, 2015 were $685,878,000, compared to $621,926,000 at December 31, 2014, and $635,239,000 at September 30, 2015. Total loans for the 2015 fourth quarter compared with the same period last year increased 10.3%, and were up 8.0% from the 2015 third quarter. The year-over-year improvement resulted primarily from a 19.5% increase in commercial real estate loans, a 10.8% increase in agricultural loans, and a 15.0% increase in agricultural real estate loans, offset by a 9.6% reduction in consumer real estate loans.
Asset quality remains strong as the company’s provision for loan losses for the 2015 fourth quarter was $85,000, compared to $37,000 for the 2014 fourth quarter. The provision for loan losses for 2015 was $625,000, a 47.5% reduction from 2014. The allowance for loan losses to nonperforming loans was 293.8% at December 31, 2015, compared to 346.3% at December 31, 2014. Net charge-offs for the year ended December 31, 2015 were $473,000, or 0.08% of total loans, compared to $480,000 or 0.08% of total loans, at December 31, 2014.
Stockholders’ Equity and Dividends
Tangible stockholders’ equity increased to $114,960,000 as of December 31, 2015, compared to $109,034,000 at December 31, 2014. On a per share basis, tangible stockholders’ equity at December 31, 2015 was $24.92 compared with $23.56 at December 31, 2014. The increase in tangible stockholders’ equity is the result of growth in retained earnings due to increased profitability. At December 31, 2015, the company had a Tier 1 leverage ratio of 11.91%, up from 11.70% at December 31, 2014.
For 2015, the company declared cash dividends of $0.87 per share, which is a 3.6% increase over 2014’s dividend payment. For 2015, the dividend payout ratio was 38.5% compared to 40.0% for the same period last year.
Mr. Siebenmorgen concluded, “On the backdrop of improving local economies, our loan portfolio grew significantly in the fourth quarter. This growth was driven by strong demand for commercial real estate and commercial and industrial loans. I am pleased that our loan to deposit ratio was 88.1% at December 31, 2015 compared to 80.8% last year, and 65.0% in 2012. Not only are we utilizing our deposit base
more effectively, but we are also realigning our strategy to provide value to our depositors while building revenue or decreasing costs to the Bank. The goal of all these strategies is to improve the overall profitability of the bank, and I am encouraged by the progress we made in 2015 as we experienced improvements in both return on average assets and return on average equity. We ended 2015 with favorable momentum, and we are optimistic this will continue throughout 2016.”
About Farmer & 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 through its 22 offices, with expansion underway in the greater Ft. Wayne, Indiana market. Our locations are in Fulton, Defiance, Henry, Lucas, Williams, and Wood counties in northwest Ohio. In Northeast Indiana we have offices located in DeKalb and Steuben counties.
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 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 or capital 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.
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
(Unaudited; 000’s Omitted, Except Per Share Data)
| Condensed Consolidated Statement of Income & Comprehensive Income | ||||||||||||||||
| (in thousands of dollars, except per share data) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Interest Income |
||||||||||||||||
| Loans, including fees |
$ | 7,695 | $ | 7,308 | $ | 29,293 | $ | 28,070 | ||||||||
| Debt securities: |
||||||||||||||||
| U.S. Treasury and government agencies |
615 | 689 | 2,434 | 3,171 | ||||||||||||
| Municipalities |
378 | 478 | 1,739 | 2,037 | ||||||||||||
| Dividends |
37 | 37 | 148 | 156 | ||||||||||||
| Federal funds sold |
1 | 3 | 8 | 7 | ||||||||||||
| Other |
7 | 4 | 28 | 12 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total interest income |
8,733 | 8,519 | 33,650 | 33,453 | ||||||||||||
| Interest Expense |
||||||||||||||||
| Deposits |
823 | 843 | 3,269 | 3,458 | ||||||||||||
| Federal funds purchased and securities sold under agreements to repurchase |
99 | 64 | 317 | 254 | ||||||||||||
| Borrowed funds |
1 | — | 1 | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total interest expense |
923 | 907 | 3,587 | 3,716 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net Interest Income - Before provision for loan losses |
7,810 | 7,612 | 30,063 | 29,737 | ||||||||||||
| Provision for Loan Losses |
85 | 37 | 625 | 1,191 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net Interest Income After Provision For Loan Losses |
7,725 | 7,575 | 29,438 | 28,546 | ||||||||||||
| Noninterest Income |
||||||||||||||||
| Customer service fees |
1,676 | 1,383 | 5,847 | 5,224 | ||||||||||||
| Other service charges and fees |
827 | 1,052 | 3,790 | 3,819 | ||||||||||||
| Net gain on sale of loans |
169 | 150 | 700 | 647 | ||||||||||||
| Net gain on sale of available-for-sale securities |
33 | — | 451 | 494 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total noninterest income |
2,705 | 2,585 | 10,788 | 10,184 | ||||||||||||
| Noninterest Expense |
||||||||||||||||
| Salaries and Wages |
2,824 | 2,657 | 10,907 | 10,186 | ||||||||||||
| Employee benefits |
1,000 | 832 | 3,555 | 3,324 | ||||||||||||
| Net occupancy expense |
340 | 265 | 1,352 | 1,107 | ||||||||||||
| Furniture and equipment |
305 | 309 | 1,629 | 1,541 | ||||||||||||
| Data processing |
333 | 307 | 1,300 | 1,250 | ||||||||||||
| Franchise taxes |
186 | 195 | 746 | 781 | ||||||||||||
| Net loss on sale of other assets owned |
4 | 4 | 47 | 157 | ||||||||||||
| FDIC Assessment |
121 | 115 | 485 | 503 | ||||||||||||
| Mortgage servicing rights amortization |
98 | 86 | 374 | 344 | ||||||||||||
| Other general and administrative |
1,398 | 1,615 | 5,672 | 6,020 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total noninterest expense |
6,609 | 6,385 | 26,067 | 25,213 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income Before Income Taxes |
3,821 | 3,775 | 14,159 | 13,517 | ||||||||||||
| Income Taxes |
1,049 | 1,114 | 3,819 | 3,871 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net Income |
2,772 | 2,661 | 10,340 | 9,646 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other Comprehensive Income (Loss)(Net of Tax): |
||||||||||||||||
| Net unrealized gain (loss) on available-for-sale securities |
(1,016 | ) | 712 | 100 | 1,158 | |||||||||||
| Reclassification adjustment for gain on sale of available-for-sale securities |
(33 | ) | — | (451 | ) | (494 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net unrealized gain (loss) on available-for-sale securities |
(1,049 | ) | 712 | (351 | ) | 664 | ||||||||||
| Tax effect |
(356 | ) | 242 | (119 | ) | 226 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other Comprehensive Income (Loss) |
(693 | ) | 470 | (232 | ) | 438 | ||||||||||
| Comprehensive Income |
$ | 2,079 | $ | 3,131 | $ | 10,108 | $ | 10,084 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings Per Share - Basic and Diluted |
$ | 0.60 | $ | 0.57 | $ | 2.24 | $ | 2.08 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted Average Shares Outstanding |
4,621,122 | 4,627,338 | 4,617,058 | 4,628,178 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Dividends Declared |
$ | 0.22 | $ | 0.21 | $ | 0.87 | $ | 0.84 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2015 AND 2014
(000’S OMITTED EXCEPT PER SHARE DATA)
| 2015 | 2014 | |||||||
| Assets | ||||||||
| Assets |
||||||||
| Cash and due from banks |
$ | 21,333 | $ | 22,246 | ||||
| Federal Funds Sold |
685 | 2,049 | ||||||
|
|
|
|
|
|||||
| Total cash and cash equivalents |
22,018 | 24,295 | ||||||
| Securities - available for sale |
235,115 | 248,492 | ||||||
| Other Securities, at cost |
3,717 | 3,717 | ||||||
| Loans, net |
679,821 | 616,021 | ||||||
| Premises and equipment |
20,587 | 20,300 | ||||||
| Goodwill |
4,074 | 4,074 | ||||||
| Mortgage Servicing Rights |
2,056 | 2,023 | ||||||
| Other Real Estate Owned |
1,175 | 1,094 | ||||||
| Other assets |
20,505 | 21,197 | ||||||
|
|
|
|
|
|||||
| Total Assets |
$ | 989,068 | $ | 941,213 | ||||
|
|
|
|
|
|||||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities |
||||||||
| Deposits |
||||||||
| Noninterest-bearing |
$ | 171,112 | $ | 164,009 | ||||
| Interest-bearing |
||||||||
| NOW accounts |
190,890 | 179,862 | ||||||
| Savings |
225,052 | 223,189 | ||||||
| Time |
184,285 | 195,500 | ||||||
|
|
|
|
|
|||||
| Total deposits |
771,339 | 762,560 | ||||||
| Federal Funds purchased and Securities sold under agreement to repurchase |
78,815 | 55,962 | ||||||
| Federal Home Loan Bank (FHLB) Advances |
10,000 | — | ||||||
| Dividend payable |
1,007 | 965 | ||||||
| Accrued expenses and other liabilities |
7,810 | 7,233 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
868,971 | 826,720 | ||||||
|
|
|
|
|
|||||
| Commitments and Contingencies |
||||||||
| Stockholders’ Equity |
||||||||
| Common stock - No par value - 6,500,000 shares authorized; 5,200,000 shares issued & outstanding |
12,086 | 12,222 | ||||||
| Treasury Stock - 587,466 shares 2015, 572,662 shares 2014 |
(12,389 | ) | (11,928 | ) | ||||
| Retained earnings |
120,188 | 113,755 | ||||||
| Accumulated other comprehensive income |
212 | 444 | ||||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
120,097 | 114,493 | ||||||
|
|
|
|
|
|||||
| Total Liabilities and Stockholders’ Equity |
$ | 989,068 | $ | 941,213 | ||||
|
|
|
|
|
|||||
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| Selected financial data |
2015 | 2014 | 2015 | 2014 | ||||||||||||
| Return on average assets |
1.14 | % | 1.14 | % | 1.08 | % | 1.02 | % | ||||||||
| Return on average equity |
9.26 | % | 9.40 | % | 8.80 | % | 8.72 | % | ||||||||
| Yield on earning assets |
3.90 | % | 3.94 | % | 3.90 | % | 4.07 | % | ||||||||
| Cost of interest bearing liabilities |
0.49 | % | 0.50 | % | 0.54 | % | 0.55 | % | ||||||||
| Net interest spread |
3.41 | % | 3.44 | % | 3.35 | % | 3.52 | % | ||||||||
| Net interest margin |
3.49 | % | 3.52 | % | 3.49 | % | 3.63 | % | ||||||||
| Efficiency |
62.72 | % | 62.28 | % | ||||||||||||
| December 31, | ||||||||||||||||
| 2015 | 2014 | |||||||||||||||
| Tier 1 capital to average assets |
11.91 | % | 11.70 | % | ||||||||||||
| Tangible book value per share |
$ | 24.92 | $ | 23.56 | ||||||||||||
| Dividend payout ratio |
38.54 | % | 40.04 | % | ||||||||||||
| December 31, | ||||||||||||||||
| Loans |
2015 | 2014 | ||||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
| Consumer real estate |
$ | 88,189 | $ | 97,550 | ||||||||||||
| Agricultural real estate |
58,525 | 50,895 | ||||||||||||||
| Agricultural |
82,654 | 74,611 | ||||||||||||||
| Commerical real estate |
322,762 | 270,188 | ||||||||||||||
| Commercial and industrial |
100,125 | 100,126 | ||||||||||||||
| Consumer |
27,770 | 24,277 | ||||||||||||||
| Industrial development bonds |
6,491 | 4,698 | ||||||||||||||
| Less: Net deferred loan fees and costs |
(638 | ) | (419 | ) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Total loans |
685,878 | 621,926 | ||||||||||||||
| Less: Allowance for loan losses |
(6,057 | ) | (5,905 | ) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Loans - Net |
$ | 679,821 | $ | 616,021 | ||||||||||||
|
|
|
|
|
|||||||||||||
| December 31, | ||||||||||||||||
| Asset quality data |
2015 | 2014 | ||||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
| Non-accrual loans |
$ | 2,041 | $ | 1,705 | ||||||||||||
| Troubled debt restructuring |
$ | 1,239 | $ | 810 | ||||||||||||
| 90 day past due and accruing |
$ | — | $ | — | ||||||||||||
| Nonperforming loans |
$ | 2,062 | $ | 1,705 | ||||||||||||
| Other real estate owned |
$ | 1,175 | $ | 1,094 | ||||||||||||
| Nonperforming assets |
$ | 3,237 | $ | 2,799 | ||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
| Allowance for loan and lease losses |
$ | 6,057 | $ | 5,905 | ||||||||||||
| Allowance for loan and lease losses/total loans |
0.88 | % | 0.95 | % | ||||||||||||
| Net charge-offs: |
||||||||||||||||
| Quarter-to-date |
$ | 193 | $ | 48 | ||||||||||||
| Year-to-date |
$ | 473 | $ | 480 | ||||||||||||
| Net charge-offs to average loans |
||||||||||||||||
| Quarter-to-date |
0.03 | % | 0.01 | % | ||||||||||||
| Year-to-date |
0.08 | % | 0.08 | % | ||||||||||||
| Nonperforming loans/total loans |
0.30 | % | 0.27 | % | ||||||||||||
| Allowance for loan and lease losses/nonperforming loans |
293.75 | % | 346.30 | % | ||||||||||||