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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT Pursuant

to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) April 22, 2021

 

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 April 21, 2021, Farmers & Merchants Bancorp, Inc. issued a press release (the “Release”) announcing its results of operations for the quarter ended March 31, 2021.  The Release inadvertently misstated the aggregate amount of Paycheck Protection Program (“PPP”) loan forgiveness applications processed during the first quarter and the resulting PPP loan balances as of quarter end.  

No financial results reported in the Release were impacted by this inadvertent misstatement, and it otherwise had no material impact on any other disclosures contained in the Release. However, management determined that a corrective filing was warranted, given the significant governmental, investor and community interest in the PPP.

A copy of the form of the press release, as corrected, is furnished herewith as Exhibit 99.  A new Allowance Reconciliation table is also included.

ITEM 7.01.Regulation FD

On April 21, 2021, Farmers & Merchants Bancorp, Inc. issued a press release (the “Release”) announcing its results of operations for the quarter ended March 31, 2021.  The Release inadvertently misstated the aggregate amount of Paycheck Protection Program (“PPP”) loan forgiveness applications processed during the first quarter and the resulting PPP loan balances as of quarter end.  

No financial results reported in the Release were impacted by this inadvertent misstatement, and it otherwise had no material impact on any other disclosures contained in the Release. However, management determined that a corrective filing was warranted, given the significant governmental, investor and community interest in the PPP.

A copy of the form of the press release, as corrected, is furnished herewith as Exhibit 99.  A new Allowance Reconciliation table is also included.

ITEM 9.01.Financial Statements and Exhibits

(d)

Exhibits.

 

Exhibit Number	Exhibit
99	Corrected Company Press Release dated April 21, 2021

 

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: April 22, 2021		/s/ Lars B. Eller
		Lars B. Eller
		President and Chief Executive Officer
		/s/ Barbara J. Britenriker
		Barbara J. Britenriker
		Executive Vice President and Chief Financial Officer

 

Exhibit 99

 

 

 

Farmers & Merchants Bancorp, Inc. Reports Record

2021 First Quarter Financial Results

 

ARCHBOLD, OHIO, April 21, 2021, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2021 first quarter ended March 31, 2021.

 

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

 

“2021 is off to a strong start as our markets emerge from the COVID-19 crisis and we continue to focus on providing local services and leading financial products to our retail, commercial, and agriculture customers.  As a result, we are gaining market share and benefitting from robust growth in loans, deposits, and noninterest income, which have helped us successfully offset higher provision for loan losses and operating expenses during the 2021 first quarter,” stated Lars B. Eller, President and Chief Executive Officer. “I am grateful to our team members who continue to work diligently and support the financial needs of our local customers and communities.”  

 

“The acquisition of Ossian Financial Services is expected to close in the coming weeks, and we are well positioned to quickly integrate Ossian into F&M’s platform.  Once completed, we expect the acquisition will add approximately $122 million in assets to F&M and will begin contributing to earnings in 2021.  In addition, we expect to see the benefit to noninterest expense of our office realignment strategy over the next several quarters, and we will use a portion of the savings to reinvest in expanding our digital and online offerings.”  

 

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Income Statement

Net income for the 2021 first quarter ended March 31, 2021, was $4.9 million, compared to $4.1 million for the same period last year. Earnings per basic and diluted share for the 2021 first quarter was $0.44, compared to $0.37 for the same period last year.

 

Higher provision for loan losses and operating expenses were successfully offset by increased interest income, successful reductions in cost of funds, interest and fees earned from the Paycheck Protection Program, and a 59.9% or $1.9 million year-over-year increase in noninterest income. Increases in Customer Service Fees and Gain on sales of both 1-4 family mortgage loans and fixed rate agricultural loans were the biggest contributors in noninterest income.   F&M’s provision for loan losses increased from $1.4 million for the three months ended March 31, 2020, to $1.7 million for the three months ended March 31, 2021, as the Company prudently increased its allowance of loan losses primarily associated with continued economic uncertainty caused by the COVID-19 crisis.   In addition, noninterest expense increased by $1.7 million, due to higher operating expenses supporting a 20% larger Company in asset size and servicing a larger footprint. It also included a one-time expense of $0.3 million related to the Company’s pension.

 

Deposits

At March 31, 2021, total deposits were $1.684 billion, an increase of 24.8% from March 31, 2020, and an increase of 5.5% from December 31, 2020.  The significant organic deposit growth being experienced is a result of continued strength in expanding relationships with new and existing customers, and the benefits of PPP activity. In addition, we continue to see growing customer preferences to more stable and secure saving instruments as deposits have increased since the COVID-19 crisis began.

 

Loan Portfolio and Asset Quality

Total loans, net at March 31, 2021, increased 7.5% or by $94.0 million to $1.342 billion, compared to $1.248 billion at March 31, 2020, and up from $1.303 billion at December 31, 2020. The year-over-year improvement resulted primarily from the contribution of continued strong organic loan growth.  In addition, during the 2021 first quarter, the Company processed $27.5 million of PPP loan forgiveness and principal payments received and originated $43.5   million of new PPP loans, resulting in a total of $51.8 million of PPP loans within F&M’s loan portfolio.  

 

Mr. Eller continued, “Since the start of the crisis, we strengthened our relationships by increasing the amount of financial relief, assistance, and advice we are providing customers. During the first quarter, we processed more than 1,200 new PPP loans, and throughout the PPP process, we have helped our small business customers protect more than 18,000 jobs within our markets.”

 

“Our local relationships continue to produce strong organic growth, and loans not including PPP loans, increased nearly 2.3% during the 2021 first quarter.  We are experiencing organic loan growth across our Ohio, Indiana, and Michigan markets, due to our recently opened LPOs and our strong, experienced, and local lenders.  Our agriculture portfolios are also demonstrating compelling growth and strong asset performance as farmers benefit from robust market dynamics.”

 

Mr. Eller continued: “At March 31, 2021 there were only five commercial and agricultural real estate loans totaling $10.4 million of COVID-related payment modifications, all of which are interest-only modifications and secured by real estate.  This compares to 190 loans representing a balance of $165 million in deferrals at the peak last year.  Given the uncertainty surrounding the COVID-19 crisis, we continue to fund our allowance for loan and lease losses, which increased by 69.0% over the past 12 months. Our allowance for loan and lease losses to total loans, adjusted for our PPP balances, is now over 1.23% and includes the $1.5 million credit mark associated with the 2019 Bank of Geneva acquisition.”  

 

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors.  Nonperforming loans were $8.1 million, or 0.61% of total loans at March 31, 2021, compared to $3.3 million, or 0.27% at March 31, 2020.  The year-over-year increase in nonperforming loans is primarily due to the impacts of the COVID-19 crisis.  

 

Mr. Eller concluded: “2021 is expected to be a transformative year for F&M.  Throughout the year, we will focus on executing our strategic plan, completing and integrating the Ossian acquisition, integrating last year’s acquisition of Adams County Financial Resources, achieving the benefits from our office realignment program, and driving strong organic growth by supporting our local communities.  I am proud of our continued strong performance and excited to update shareholders in the coming quarters on the progress we are making.”

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Stockholders’ Equity and Dividends

Total stockholders’ equity increased 4.4% to $246.8 million at March 31, 2021, from $236.5 million at March 31, 2020. At March 31, 2021, the Company had a Tier 1 leverage ratio of 10.39%, compared to 11.56% at March 31, 2020.

 

Tangible stockholders’ equity increased to $195.9 million at March 31, 2021, compared to $180.9 million at March 31, 2020. On a per share basis, tangible stockholders’ equity at March 31, 2021, was $17.50 per share, compared to $16.26 per share at March 31, 2020.

 

For the 2021 first quarter, the company declared cash dividends of $0.17 per share, which is a 6.3% increase over the 2020 first quarter declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 26 consecutive years. For the 2021 first quarter, the dividend payout ratio was 38.48% compared to 43.07% for the same period last year.

 

About Farmers & Merchants State Bank:  

The Farmers & Merchants State Bank is a local independent community bank that has been serving Northwest Ohio and Northeast Indiana since 1897.  The Farmers & Merchants State Bank provides commercial banking, retail banking and other financial services. Our locations are in Fulton, Defiance, Hancock, Henry, Lucas, Williams, and Wood counties in Northwest Ohio.  In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, 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 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)

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

 

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES

(in thousands of dollars, except percentages)

 

 

 

 

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FARMERS & MERCHANTS BANCORP, INC

ALLOWANCE RECONCILIATION

(in thousands of dollars, except percentages)