false000079296600007929662024-02-132024-02-13

 

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 13, 2024

 

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 February 13, 2024, Farmers & Merchants Bancorp, Inc. issued a press release (the “Release”) announcing its earnings for the three and twelve months ended December 31, 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 February 13, 2024

 

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: February 13, 2024		/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 Fourth-Quarter and Full-Year Financial Results

ARCHBOLD, OHIO, February 13, 2024, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2023 fourth quarter and twelve months ended December 31, 2023.

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

 

2023 Full-Year Financial Highlights Include (on a year-over-year basis unless noted):

 

Lars B. Eller, President and Chief Executive Officer, stated, “I am extremely proud of how F&M’s team responded to the challenging operating environment in 2023 as unprecedented rate increases caused significant competition for deposits and elevated our costs of funds. While these trends impacted earnings growth in 2023, we ended the year with record total assets, loans, net, and total deposits, as well as stockholders’ equity. Our ability to grow our balance sheet throughout the year is a testament to the value we provide to our Ohio, Indiana and Michigan communities and the successful execution of our growth-oriented strategic plan.”

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Mr. Eller continued, “As we successfully navigated the challenging macro-landscape in 2023, we simultaneously invested in our business to make sure we had the right platform in place to support F&M’s current and future needs. As a result, throughout 2023 we made calculated investments to expand our office network, enhance our products, add new IT capabilities, refine our corporate organization, and redesign our brand strategy. Highlights include adding offices in new markets including Oxford, OH and Birmingham MI, as well as expanding our local presence by adding a new office in Fort Wayne and a new regional office in downtown Toledo. In addition, our brand refresh to F&M has helped differentiate the Bank in our non-legacy markets, while doubling down on the strength of the F&M brand in our existing markets. During 2023, we also made several organizational changes to our leadership structure and added new back-office capabilities that we believe can support a bank with $4 billion in assets.”

Income Statement

Net income for the 2023 fourth quarter ended December 31, 2023, was $5.5 million, compared to $7.2 million for the same period last year. Net income per basic and diluted share for the 2023 fourth quarter was $0.41, compared to $0.53 for the same period last year. Net income for the 2023 twelve months ended December 31, 2023, was $22.8 million, compared to $32.5 million for the same period last year. Net income per basic and diluted share for the 2023 twelve months was $1.67, compared to $2.46 for the same period last year.

“Throughout 2023, the rapid rise in the Federal Funds Rate impacted our cost of funds and increased the competition for deposits. As a result, our cost of interest-bearing liabilities increased to 2.53% for the year ended December 31, 2023, from 0.74% last year. 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. Approximately 25% of our loan portfolio will be subject to repricing in 2024. A challenging rate environment impacted overall profitability, as net interest income declined year-over-year by 10.7% for the fourth quarter, and by 3.1% for the full year. We are optimistic that the Federal Funds Rate has peaked and with a more stable rate environment expected in 2024, we believe we are well positioned for improved profitability this year,” continued Mr. Eller.

Deposits

At December 31, 2023, total deposits were $2.61 billion, an increase of 5.6% from December 31, 2022. The Company’s cost of interest-bearing liabilities was 3.02% for the quarter ended December 31, 2023, compared to 1.32% for the quarter ended December 31, 2022 and for the 2023 twelve months ended December 31, 2023 was 2.53% compared to 0.74% in the prior year.

Loan Portfolio and Asset Quality

Total loans, net at December 31, 2023, increased 9.5%, or by $224.8 million to $2.58 billion, compared to $2.36 billion at December 31, 2022. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth.

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $22.4 million, or 0.87% of total loans at December 31, 2023, compared to $4.7 million, or 0.20% at December 31, 2022, and $22.4 million, or 0.89% at September 30, 2023. The year-over-year increase in nonperforming loans was primarily due to two agricultural relationships, representing a combined balance of $19.4 million. F&M does not foresee a loss on either loan and expects to receive settlements during the 2024 first and second quarters.

F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 51.8% of the Company’s total loan portfolio at December 31, 2023. In addition, F&M’s commercial real estate office credit exposure represented 5.3% of the Company's total loan portfolio at December 31, 2023, with a weighted average loan-to-value of approximately 63% and an average loan of $888,000.

 

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F&M’s CRE portfolio included the following categories at December 31, 2023:

 

CRE Category		Dollar Balance				Percent of CRE Portfolio(*)		Percent of Total Loan Portfolio(*)
Industrial		$	253,683			19.00%		9.80%
Multi-family		$	232,776			17.40%		9.00%
Retail		$	218,580			16.30%		8.50%
Office		$	137,573			10.30%		5.30%
Hotels		$	127,646			9.60%		4.90%
Gas Stations		$	63,151			4.70%		2.40%
Food Service		$	50,990			3.80%		2.00%
Senior Living		$	32,290			2.40%		1.30%
Auto Dealers		$	29,714			2.20%		1.20%
Development		$	28,045			2.10%		1.10%
Other		$	163,318			12.20%		6.30%
Total CRE		$	1,337,766			100.00%		51.80%

* Numbers have been rounded

At December 31, 2023, the Company’s allowance for credit losses to nonperforming loans was 111.95%, compared to 273.67% at December 31, 2022. The allowance to total loans was 0.97% at December 31, 2023, compared to 0.86% at December 31, 2022. As a result of F&M’s recent acquisitions, the Company had an accretable yield adjustment of $4.0 million at December 31, 2023, which further enhances F&M’s allowance, compared to $6.4 million at December 31, 2022. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.13% at December 31, 2023, compared to 1.13% at December 31, 2022.

Mr. Eller concluded, “Looking to 2024 and beyond, we believe we are well positioned to support a larger and more profitable bank in the future as a result of the investments we made over the past 12 months. With strong asset quality and a more stable rate environment expected in 2024, we are focused on supporting customers across our Ohio, Indiana and Michigan communities and reaccelerating earnings growth.”

 

Stockholders’ Equity and Dividends

Total stockholders’ equity increased 6.2% to $316.5 million at December 31, 2023, from $298.1 million at December 31, 2022. At December 31, 2023, the Company had a Tier 1 leverage ratio of 8.20%, compared to 8.39% at December 31, 2022.

Based on a regulatory basis, tangible stockholders’ equity increased to $253.8 million at December 31, 2023, compared to $240.7 million at December 31, 2022. On a per share basis, tangible stockholders’ equity at December 31, 2023, was $18.60 per share, compared to $17.69 per share at December 31, 2022.

For the twelve months ended December 31, 2023, the Company has declared cash dividends of $0.85 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 29 consecutive years. For the twelve months ended December 31, 2023, the dividend payout ratio was 50.65% compared to 33.06% 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																				Twelve Months Ended
		December  31, 2023				September  30, 2023				June  30, 2023				March  31, 2023				December  31, 2022				December  31, 2023				December  31, 2022
Interest Income
Loans, including fees		$	34,493			$	33,783			$	31,365			$	29,703			$	27,302			$	129,344			$	94,264
Debt securities:
U.S. Treasury and    government    agencies			987				1,005				1,030				1,068				1,118				4,090				4,225
Municipalities			397				392				401				408				420				1,598				1,415
Dividends			365				246				148				123				126				882				318
Federal funds sold			8				6				9				21				2				44				21
Other			2,020				927				424				479				524				3,850				906
Total interest income			38,270				36,359				33,377				31,802				29,492				139,808				101,149
Interest Expense
Deposits			15,015				13,323				10,434				8,151				4,978				46,923				9,883
Federal funds purchased    and securities sold    under agreement to    repurchase			293				349				427				405				463				1,474				1,197
Borrowed funds			2,742				2,741				2,113				1,280				1,209				8,876				2,160
Subordinated notes			285				284				285				284				285				1,138				1,122
Total interest    expense			18,335				16,697				13,259				10,120				6,935				58,411				14,362
Net Interest Income -    Before Provision for    Credit Losses*			19,935				19,662				20,118				21,682				22,557				81,397				86,787
Provision for Credit    Losses - Loans*			278				460				143				817				755				1,698				4,600
Provision for Credit    Losses - Off Balance    Sheet Credit Exposures*			189				(76	)			(129	)			62				-				46				-
Net Interest Income    After Provision for    Credit Losses*			19,468				19,278				20,104				20,803				21,802				79,653				82,187
Noninterest Income
Customer service fees			2,576				2,208				2,361				2,447				2,862				9,592				9,958
Other service charges    and fees			1,121				1,162				1,803				2,554				1,115				6,640				4,226
Net gain on sale of loans			230				294				108				67				165				699				1,353
Net loss on sale of    available-for-sale    securities			-				-				-				(891	)			-				(891	)			-
Total noninterest    income			3,927				3,664				4,272				4,177				4,142				16,040				15,537

 

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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			6,981				6,777				6,500				6,657				6,353				26,915				22,700
Employee benefits			1,218				2,066				2,071				2,165				1,911				7,520				6,903
Net occupancy expense			1,187				950				840				856				753				3,833				2,566
Furniture and equipment			1,370				1,189				1,211				1,252				1,096				5,022				4,207
Data processing			785				840				796				726				1,917				3,147				3,956
Franchise taxes			308				434				379				366				(45	)			1,487				1,384
ATM expense			665				640				683				623				561				2,611				2,217
Advertising			397				865				830				514				531				2,606				1,646
Net (gain) loss on sale    of other assets owned			86				49				-				-				12				135				(259	)
FDIC assessment			594				586				496				306				250				1,982				905
Servicing rights    amortization - net			182				106				164				159				110				611				145
Consulting fees			192				179				231				230				637				832				1,302
Other general and    administrative			2,555				2,363				2,643				3,077				2,964				10,638				9,577
Total noninterest    expense			16,520				17,044				16,844				16,931				17,050				67,339				57,249
Income Before Income    Taxes			6,875				5,898				7,532				8,049				8,894				28,354				40,475
Income Taxes			1,332				1,121				1,531				1,583				1,706				5,567				7,960
Net Income			5,543				4,777				6,001				6,466				7,188				22,787				32,515
Other Comprehensive    Income (Loss) (Net of    Tax):
Net unrealized gain (loss)    on available-for-sale    securities			13,261				(4,514	)			(5,996	)			8,030				(628	)			10,781				(44,366	)
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			13,261				(4,514	)			(5,996	)			8,921				(628	)			11,672				(44,366	)
Tax expense (benefit)			2,784				(947	)			(1,260	)			1,874				(132	)			2,451				(9,317	)
Other comprehensive    income (loss)			10,477				(3,567	)			(4,736	)			7,047				(496	)			9,221				(35,049	)
Comprehensive Income    (Loss)		$	16,020			$	1,210			$	1,265			$	13,513			$	6,692			$	32,008			$	(2,534	)
Basic Earnings    Per Share		$	0.41			$	0.35			$	0.44			$	0.47			$	0.53			$	1.67			$	2.46
Diluted Earnings    Per Share		$	0.41			$	0.35			$	0.44			$	0.47			$	0.53			$	1.67			$	2.46
Dividends Declared		$	0.2200			$	0.2100			$	0.2100			$	0.2100			$	0.2100			$	0.8500			$	0.8125
*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)

 

		December  31, 2023				September  30, 2023				June  30, 2023				March  31, 2023				December  31, 2022
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Assets
Cash and due from banks		$	140,917			$	151,711			$	69,760			$	62,780			$	83,085
Federal funds sold			1,284				1,471				1,433				1,545				1,324
Total cash and cash equivalents			142,201				153,182				71,193				64,325				84,409
Interest-bearing time deposits			2,740				2,989				3,485				4,435				4,442
Securities - available-for-sale			358,478				348,255				363,225				372,975				390,789
Other securities, at cost			17,138				16,995				17,535				11,543				9,799
Loans held for sale			1,576				1,039				1,459				951				827
Loans, net			2,556,167				2,504,329				2,490,883				2,422,018				2,336,074
Premises and equipment			35,790				31,723				30,398				28,679				28,381
Construction in progress			8				3,044				2,290				1,565				278
Goodwill			86,358				86,358				86,358				86,358				86,358
Loan servicing rights			5,648				5,687				5,635				4,985				3,549
Bank owned life insurance			33,907				33,691				33,470				33,269				33,073
Other assets			43,218				47,388				41,512				38,972				37,372
Total Assets		$	3,283,229			$	3,234,680			$	3,147,443			$	3,070,075			$	3,015,351
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing		$	528,465			$	505,358			$	488,678			$	520,145			$	532,794
Interest-bearing
NOW accounts			816,790				778,133				770,113				800,230				750,887
Savings			599,191				591,344				581,192				590,854				627,203
Time			663,017				700,445				628,757				601,939				557,980
Total deposits			2,607,463				2,575,280				2,468,740				2,513,168				2,468,864
Federal funds purchased and securities    sold under agreements to repurchase			28,218				30,527				51,567				30,496				54,206
Federal Home Loan Bank (FHLB)    advances			265,750				266,286				266,818				164,327				127,485
Other borrowings			-				-				-				-				10,000
Subordinated notes, net of unamortized    issuance costs			34,702				34,673				34,644				34,615				34,586
Dividend payable			2,974				2,838				2,834				2,831				2,832
Accrued expenses and other liabilities			27,579				21,892				18,177				18,881				19,238
Total liabilities			2,966,686				2,931,496				2,842,780				2,764,318				2,717,211
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value 20,000,000    shares authorized; issued and outstanding    14,564,425 shares 12/31/23 and 12/31/22			135,515				135,171				135,647				135,241				135,497
Treasury stock - 899,784 shares 12/31/23    and 956,003 shares 12/31/22			(11,040	)			(11,008	)			(11,298	)			(11,310	)			(11,573	)
Retained earnings			221,080				218,510				216,236				213,012				212,449
Accumulated other comprehensive    loss			(29,012	)			(39,489	)			(35,922	)			(31,186	)			(38,233	)
Total stockholders' equity			316,543				303,184				304,663				305,757				298,140
Total Liabilities and Stockholders' Equity		$	3,283,229			$	3,234,680			$	3,147,443			$	3,070,075			$	3,015,351

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

 

		For the Three Months Ended																								For the Twelve Months Ended
Selected financial data		December 31, 2023					September 30, 2023					June 30, 2023					March 31, 2023					December 31, 2022				December 31, 2023				December 31, 2022
Return on average assets				0.67	%				0.59	%				0.77	%				0.84	%				0.96	%		0.71	%			1.17	%
Return on average equity				7.27	%				6.26	%				7.84	%				8.59	%				10.00	%		7.46	%			11.30	%
Yield on earning assets				4.93	%				4.79	%				4.53	%				4.41	%				4.18	%		4.67	%			3.87	%
Cost of interest bearing   liabilities				3.02	%				2.82	%				2.35	%				1.85	%				1.32	%		2.53	%			0.74	%
Net interest spread				1.91	%				1.97	%				2.18	%				2.56	%				2.86	%		2.14	%			3.13	%
Net interest margin				2.57	%				2.59	%				2.73	%				3.01	%				3.20	%		2.72	%			3.32	%
Efficiency				69.23	%				73.07	%				69.06	%				63.53	%				50.46	%		68.48	%			55.95	%
Dividend payout ratio				54.23	%				60.07	%				47.22	%				43.79	%				39.39	%		50.65	%			33.06	%
Tangible book value    per share (1)				18.60			$		18.36			$		18.21			$		17.92					17.69
Tier 1 leverage ratio				8.20	%				8.02	%				9.85	%				8.36	%				8.39	%
Average shares outstanding				13,665,773					13,650,823					13,632,440					13,615,655					13,606,876			13,641,336				13,206,713
(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		December  31, 2023					September  30, 2023					June  30, 2023					March  31, 2023					December  31, 2022
(Dollar amounts in thousands)
Commercial real estate		$		1,337,766			$		1,304,118			$		1,280,902			$		1,225,315			$		1,152,603
Agricultural real estate				223,791					225,672					230,837					227,897					220,819
Consumer real estate				521,895					512,973					506,866					502,974					494,423
Commercial and industrial				254,935					250,891					253,444					241,598					242,360
Agricultural				132,560					123,735					128,344					131,467					128,733
Consumer				79,591					83,024					88,312					89,588					89,147
Other				30,136					31,083					28,996					29,316					29,818
Less: Net deferred loan fees       costs andd other (2)				517					(1,890	)				(1,908	)				(1,503	)				(1,516	)
Total loans, net		$		2,581,191			$		2,529,606			$		2,515,793			$		2,446,652			$		2,356,387
(2) Includes carrying value adjustments of $2.7 million as of December 31, 2023 related to interest rate swaps associated with fixed rate loans

 

 

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FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA (continued)

 

Asset quality data		December 31, 2023					September 30, 2023					June 30, 2023					March 31, 2023					December 31, 2022
(Dollar amounts in thousands)
Nonaccrual loans		$		22,353			$		22,447			$		6,295			$		7,717			$		4,689
90 day past due and accruing		$		-			$		-			$		-			$		-			$		-
Nonperforming loans		$		22,353			$		22,447			$		6,295			$		7,717			$		4,689
Other real estate owned		$		-			$		-			$		-			$		-			$		-
Nonperforming assets		$		22,353			$		22,447			$		6,295			$		7,717			$		4,689
Allowance for credit losses (3)		$		25,024			$		25,277			$		24,910			$		24,507			$		20,313
Accretable yield adjustment				4,018					4,565					5,209					5,754					6,427
Adjusted credit losses with    accretable yield included (3)		$		29,042			$		29,842			$		30,119			$		30,261			$		26,740
Allowance for credit losses/    total loans (3)				0.97	%				1.00	%				0.99	%				1.00	%				0.86	%
Adjusted credit losses with    accretable yield/total loans (3)				1.13	%				1.18	%				1.20	%				1.24	%				1.13	%
Net charge-offs:
Quarter-to-date		$		893			$		93			$		(133	)		$		60			$		431
Year-to-date		$		990			$		97			$		(73	)		$		60			$		529
Net charge-offs to average loans
Quarter-to-date				0.03	%				0.00	%				-0.01	%				0.00	%				0.02	%
Year-to-date				0.04	%				0.00	%				0.00	%				0.00	%				0.03	%
Nonperforming loans/total loans				0.87	%				0.89	%				0.25	%				0.32	%				0.20	%
Allowance for credit losses/    nonperforming loans (3)				111.95	%				112.61	%				395.71	%				319.22	%				273.67	%
NPA coverage ratio				129.92	%				132.94	%				478.46	%				392.13	%				570.27	%
(3) 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
		December 31, 2023												December 31, 2022
Interest Earning Assets:		Average Balance				Interest/ Dividends				Annualized Yield/Rate				Average Balance				Interest/ Dividends				Annualized Yield/Rate
Loans		$	2,553,023			$	34,493				5.41	%		$	2,301,204			$	27,302				4.75	%
Taxable investment securities			386,931				1,660				1.72	%			422,247				1,556				1.47	%
Tax-exempt investment securities			24,145				89				1.87	%			28,522				108				1.92	%
Fed funds sold & other			142,642				2,028				5.69	%			74,876				526				2.81	%
Total Interest Earning Assets			3,106,741			$	38,270				4.93	%			2,826,849			$	29,492				4.18	%
Nonearning Assets			189,202												173,048
Total Assets		$	3,295,943											$	2,999,897
Interest Bearing Liabilities:
Savings deposits		$	1,392,304			$	8,570				2.46	%		$	1,394,663			$	3,427				0.98	%
Other time deposits			701,347				6,445				3.68	%			485,461				1,551				1.28	%
Other borrowed money			265,948				2,742				4.12	%			135,013				1,209				3.58	%
Fed funds purchased & securities
sold under agreement to repurchase			28,739				293				4.08	%			53,506				463				3.46	%
Subordinated notes			34,683				285				3.29	%			34,567				285				3.30	%
Total Interest Bearing Liabilities		$	2,423,021			$	18,335				3.02	%		$	2,103,210			$	6,935				1.32	%
Noninterest Bearing Liabilities			567,813												609,253
Stockholders' Equity		$	305,109											$	287,434
Net Interest Income and    Interest Rate Spread						$	19,935				1.91	%						$	22,557				2.86	%
Net Interest Margin											2.57	%											3.20	%
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

(in thousands of dollars, except percentages)
 

		For the Twelve Months Ended												For the Twelve Months Ended
		December 31, 2023												December 31, 2022
Interest Earning Assets:		Average Balance				Interest/ Dividends				Annualized Yield/Rate				Average Balance				Interest/ Dividends				Annualized Yield/Rate
Loans		$	2,491,502			$	129,344				5.19	%		$	2,073,737			$	94,264				4.55	%
Taxable investment securities			394,424				6,204				1.57	%			424,229				5,621				1.32	%
Tax-exempt investment securities			24,686				366				1.88	%			23,472				337				1.82	%
Fed funds sold & other			85,018				3,894				4.58	%			95,301				927				0.97	%
Total Interest Earning Assets			2,995,630			$	139,808				4.67	%			2,616,739			$	101,149				3.87	%
Nonearning Assets			197,726												158,361
Total Assets		$	3,193,356											$	2,775,100
Interest Bearing Liabilities:
Savings deposits		$	1,376,318			$	27,424				1.99	%		$	1,335,271			$	6,378				0.48	%
Other time deposits			640,390				19,499				3.04	%			451,013				3,505				0.78	%
Other borrowed money			220,175				8,876				4.03	%			74,379				2,160				2.90	%
Fed funds purchased & securities
sold under agreement to repurchase			35,421				1,474				4.16	%			45,314				1,197				2.64	%
Subordinated notes			34,640				1,138				3.29	%			34,524				1,122				3.25	%
Total Interest Bearing Liabilities		$	2,306,944			$	58,411				2.53	%		$	1,940,501			$	14,362				0.74	%
Noninterest Bearing Liabilities			580,931												546,731
Stockholders' Equity		$	305,481											$	287,868
Net Interest Income and    Interest Rate Spread						$	81,397				2.14	%						$	86,787				3.13	%
Net Interest Margin											2.72	%											3.32	%
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
		December 31, 2023																								December 31, 2022
		As Reported							Excluding Accretion/Amortization									Difference								As Reported							Excluding Accretion/Amortization									Difference
		$				Yield				$				Yield				$				Yield				$				Yield				$				Yield				$				Yield
Interest Earning Assets:
Loans		$	34,493				5.41	%		$	33,769				5.29	%		$	724				0.12	%		$	27,302				4.75	%		$	26,628				4.63	%		$	674				0.12	%
Taxable investment securities			1,660				1.72	%			1,660				1.72	%			-				0.00	%			1,556				1.47	%			1,556				1.47	%			-				0.00	%
Tax-exempt investment securities			89				1.87	%			89				1.87	%			-				0.00	%			108				1.92	%			108				1.92	%			-				0.00	%
Fed funds sold & other			2,028				5.69	%			2,028				5.69	%			-				0.00	%			526				2.81	%			526				2.81	%			-				0.00	%
Total Interest Earning Assets			38,270				4.93	%			37,546				4.84	%			724				0.09	%			29,492				4.18	%			28,818				4.08	%			674				0.10	%
Interest Bearing Liabilities:
Savings deposits		$	8,570				2.46	%		$	8,570				2.46	%		$	-				0.00	%		$	3,427				0.98	%		$	3,427				0.98	%		$	-				0.00	%
Other time deposits			6,445				3.68	%			6,381				3.64	%			64				0.04	%			1,551				1.28	%			2,010				1.66	%			(459	)			-0.38	%
Other borrowed money			2,742				4.12	%			2,760				4.15	%			(18	)			-0.03	%			1,209				3.58	%			1,227				3.64	%			(18	)			-0.06	%
Fed funds purchased and securities
sold under agreement to repurchase			293				4.08	%			293				4.08	%			-				0.00	%			463				3.46	%			463				3.46	%			-				0.00	%
Subordinated notes			285				3.29	%			285				3.29	%			-				0.00	%			285				3.30	%			285				3.30	%			-				0.00	%
Total Interest Bearing Liabilities			18,335				3.02	%			18,289				3.02	%			46				0.00	%			6,935				1.32	%			7,412				1.41	%			(477	)			-0.09	%
Interest/Dividend income/yield			38,270				4.93	%			37,546				4.84	%			724				0.09	%			29,492				4.18	%			28,818				4.08	%			674				0.10	%
Interest Expense / yield			18,335				3.02	%			18,289				3.02	%			46				0.00	%			6,935				1.32	%			7,412				1.41	%			(477	)			-0.09	%
Net Interest Spread			19,935				1.91	%			19,257				1.82	%			678				0.09	%			22,557				2.86	%			21,406				2.67	%			1,151				0.19	%
Net Interest Margin							2.57	%							2.48	%							0.09	%							3.20	%							3.03	%							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 Twelve Months Ended																								For the Twelve Months Ended
		December 31, 2023																								December 31, 2022
		As Reported							Excluding Accretion/Amortization									Difference								As Reported							Excluding Accretion/Amortization									Difference
		$				Yield				$				Yield				$				Yield				$				Yield				$				Yield				$				Yield
Interest Earning Assets:
Loans		$	129,344				5.19	%		$	126,133				5.06	%		$	3,211				0.13	%		$	94,264				4.55	%		$	92,132				4.45	%		$	2,132				0.10	%
Taxable investment securities			6,204				1.57	%			6,204				1.57	%			-				0.00	%			5,621				1.32	%			5,621				1.32	%			-				0.00	%
Tax-exempt investment securities			366				1.88	%			366				1.88	%			-				0.00	%			337				1.82	%			337				1.82	%			-				0.00	%
Fed funds sold & other			3,894				4.58	%			3,894				4.58	%			-				0.00	%			927				0.97	%			927				0.97	%			-				0.00	%
Total Interest Earning Assets			139,808				4.67	%			136,597				4.57	%			3,211				0.10	%			101,149				3.87	%			99,017				3.79	%			2,132				0.08	%
Interest Bearing Liabilities:
Savings deposits		$	27,424				1.99	%		$	27,424				1.99	%		$	-				0.00	%		$	6,378				0.48	%		$	6,378				0.48	%		$	-				0.00	%
Other time deposits			19,499				3.04	%			19,839				3.10	%			(340	)			-0.06	%			3,505				0.78	%			5,822				1.29	%			(2,317	)			-0.51	%
Other borrowed money			8,876				4.03	%			8,947				4.06	%			(71	)			-0.03	%			2,160				2.90	%			2,241				3.01	%			(81	)			-0.11	%
Fed funds purchased and securities
sold under agreement to repurchase			1,474				4.16	%			1,474				4.16	%			-				0.00	%			1,197				2.64	%			1,197				2.64	%			-				0.00	%
Subordinated notes			1,138				3.29	%			1,138				3.29	%			-				0.00	%			1,122				3.25	%			1,122				3.25	%			-				0.00	%
Total Interest Bearing Liabilities			58,411				2.53	%			58,822				2.55	%			(411	)			-0.02	%			14,362				0.74	%			16,760				0.86	%			(2,398	)			-0.12	%
Interest/Dividend income/yield			139,808				4.67	%			136,597				4.57	%			3,211				0.10	%			101,149				3.87	%			99,017				3.79	%			2,132				0.08	%
Interest Expense / yield			58,411				2.53	%			58,822				2.55	%			(411	)			-0.02	%			14,362				0.74	%			16,760				0.86	%			(2,398	)			-0.12	%
Net Interest Spread			81,397				2.14	%			77,775				2.02	%			3,622				0.12	%			86,787				3.13	%			82,257				2.93	%			4,530				0.20	%
Net Interest Margin							2.72	%							2.60	%							0.12	%							3.32	%							3.15	%							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

NON-GAAP RECONCILIATION OF NET INCOME

(in thousands of dollars, except share data)

 

Non-GAAP Reconciliation of Net Income		Three Months Ended									Twelve Months Ended
		December 31, 2023				December 31, 2022					December 31, 2023				December 31, 2022
		(Unaudited)									(Unaudited)
Net income as reported		$	5,543			$	7,188				$	22,787			$	32,515
Acquisition expenses			24				2,019					208				2,511
Tax effect on acquisition expenses			(5	)			(386	)				(42	)			(455	)
Net income excluding acquisition expenses and    tax effect		$	5,562			$	8,821					22,953				34,571
Weighted average common shares outstanding    including participating securities			13,665,773				13,606,876					13,641,336				13,206,713
Basic and diluted earnings per share		$	0.41			$	0.65				$	1.68			$	2.62

 

 

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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
		December 31, 2023				December 31, 2022					December 31, 2023				December 31, 2022
Shares Outstanding			13,664,641				13,608,422					13,664,641				13,608,422
Tangible Equity
Equity		$	316,543			$	298,140				$	316,543			$	298,140
Goodwill			86,358				86,358					86,358				86,358
Other Intangible			7,548				9,327					7,548				9,327
Comprehensive Loss Adjustment*			-				-					29,012				38,233
CECL Adjustment**			-				-					2,528				-
Tangible Equity		$	222,637			$	202,455				$	254,177			$	240,688
Shares Outstanding			13,665				13,608					13,665				13,608
Tangible Book Equity per Share		$	16.29			$	14.88				$	18.60			$	17.69
		Actual Average									Regulatory Average
		Year to Date									Year to Date
		December 31, 2023				December 31, 2022					December 31, 2023				December 31, 2022
Net Income		$	22,787			$	32,515				$	22,787			$	32,515
Acquisition Costs - Tax Adjusted			166				2,066					166				2,066
Average Shares Outstanding			13,641,336				13,206,713					13,641,336				13,206,713
Average Tangible Equity
Average Equity		$	305,481			$	287,868				$	305,481			$	287,868
Average Goodwill			86,358				80,164					86,358				80,164
Average Other Intangible			8,494				4,997					8,494				4,997
Average Comprehensive Loss Adjustment*			-				-					36,443				26,393
Average CECL Adjustment**			-				-					2,528				-
Average Tangible Equity		$	210,629			$	202,707				$	249,600			$	229,100
Average Shares Outstanding			13,641				13,207					13,641				13,207
Average Tangible Book Equity per Share		$	15.44			$	15.35				$	18.30			$	17.35
Return on Average Tangible Equity			10.82	%			16.04	%				9.13	%			14.19	%
Return on Average Tangible Equity w/o Acquisition			10.90	%			17.06	%				9.20	%			15.09	%
*The Bank has adopted the Accumulated Other Comprehensive Income (AOCI) opt out election which removed AOCI from the calculation of tangible equity for regulatory purposes.
**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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