Farmers & Merchants Bancorp, Inc. Reports 2023 First Quarter Financial Results
ARCHBOLD, Ohio, April 19, 2023 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2023 first quarter ended March 31, 2023.
*2023 First Quarter Financial Highlights Include *(on a year-over-year basis unless noted):
· Net interest income before provision for credit losses increased 9.6% to $21.7 million
· Adopted CECL accounting standards, which led to a one-time adjustment to equity of $3.4 million, net of tax
· Net income of $6.5 million, compared to $8.1 million
· Earnings were $0.47 per basic and diluted share, compared to $0.62 per basic and diluted share
· Total loans increased 24.7% to a record $2.447 billion
· Organic loan growth of 19.4%, excluding PPP loans and the Peoples-Sidney Financial Corporation acquisition
· Total assets increased 14.3% to a record $3.07 billion, and up 1.8% from December 31, 2022
· Deposits increased 11.5% to a record $2.51 billion, and up 1.8% from December 31, 2022
· Uninsured deposits to total deposits of approximately 18% at March 31, 2023
· Strong asset quality continues as nonperforming loans declined 10.1% to $7.7 million, or 0.32% of total loans
· Net charge-offs to average loans were 0.00%
· Allowance for credit losses, with the accretable yield adjustment from recent acquisitions, of 319.22% of nonperforming loans
Lars B. Eller, President and Chief Executive Officer, stated, “F&M’s increased scale, strong balance sheet, and highly profitable financial model supports our growth initiatives, while providing us with the flexibility to invest across our business and return capital to shareholders. Despite increased economic volatility, we remain focused on executing our new three-year strategic growth plan and I am pleased with the progress we are making. During the quarter, we successfully completed the integration of the October 2022 acquisition of the Peoples-Sidney Financial Corporation. We implemented CECL accounting standards, which maintained our allowance, even as non-performing loans declined 10.1% over the past 12 months. In the first quarter, we completed the conversion of our credit card sale with new cards issued and the scorecard rewards carried over to the new provider. In addition, we completed the first phase of our previously announced investments, preparing to open three new offices in the second quarter as well as enhancing our training, commercial and deposit operations, customer care center, and risk and compliance teams and capabilities. Finally, we added a new, highly experienced lending team in our Fort Wayne region to lead our growth within this compelling market.”
Mr. Eller continued, “We grew total deposits by $44.3 million over the past three months, despite extremely high competition for deposits. Competition for deposits has also significantly increased our cost of interest-bearing liabilities. Interest expense on deposits increased over five times from $1.4 million in the 2022 first quarter to $8.2 million, compared to an 11.5% increase in total deposits over this period. Despite these trends, net interest income before provision for credit losses increased 9.6% to a first quarter record as a result of strong loan growth and higher yields on loans.”
“Profitability was impacted by several strategic one-time expenses that we incurred during the 2023 first quarter including $541,000 of total charges related to the conversion of our credit card platform. In addition, we sold $21.6 million of investments and recognized a loss of $891,000 during the quarter, which temporarily reduced ROA by 9 basis points and ROE by 93 basis points. We expect this opportunistic sale to contribute to earnings going forward and earn a payback in approximately eight months. Offsetting these actions was significant growth in income from agriculture servicing rights, which were recognized at a value of $1.5 million during the first quarter. Overall, first quarter profitability was in line with our expectations. We expect the actions taken in the first quarter will enhance profitability going forward and we remain focused on investing in our growth initiatives, controlling operating expenses, and managing our cost of funds,” continued Mr. Eller.
*Income Statement*
Net income for the 2023 first quarter ended March 31, 2023, was $6.5 million, compared to $8.1 million for the same period last year. Net income per basic and diluted share for the 2023 first quarter was $0.47, compared to $0.62 for the same period last year.
*Deposits*
At March 31, 2023, total deposits were a record $2.513 billion, an increase of 11.5% from March 31, 2022, and an increase of 1.8% from December 31, 2022. The Company’s cost of interest-bearing liabilities increased to 1.85% for the quarter ended March 31, 2023, compared to 0.45% for the quarter ended March 31, 2022, and 1.32% for the quarter ended December 31, 2022.
At March 31, 2023, F&M’s average deposit account had an average balance of $25,544. In addition, uninsured deposits to total deposits were approximately 18% for the quarter ended March 31, 2023.
*Loan Portfolio and Asset Quality*
Total loans, net at March 31, 2023, increased 24.5%, or by $476.6 million to a record $2.422 billion, compared to $1.945 billion at March 31, 2022, and up 3.7% from $2.336 billion at December 31, 2022. The year-over-year improvement resulted primarily from the contribution of continued strong organic loan growth and the completion of the Peoples acquisition. Not including the Peoples acquisition, total net loans increased 19.1% organically, or by $371.9 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 $7.7 million, or 0.32% of total loans at March 31, 2023, compared to $8.6 million, or 0.44% of total loans at March 31, 2022. Loans past due were 0.52% of the loan portfolio at March 31, 2023, which included one large farm loan that was paid off after the quarter ended and another loan that is expected to be refinanced through another bank in the 2023 second quarter. Past due loans adjusted for these two credits as a percent of the loan portfolio would have been 0.13% at March 31, 2023. CRE loans represented 50.1% of the Company’s total loan portfolio at March 31, 2023.
F&M maintains a well-balanced, diverse and high performing CRE portfolio, which included the following categories at March 31, 2023:*CRE Category*
*Dollar *
*Balance*
*Percent of
RE Portfolio*^*(*)*
*Percent of Total
Loan Portfolio*^*(*)*
Multi Family $204,510 16.7% 8.4%
Retail $217,447 17.7% 8.9%
Industrial $174,296 14.2% 7.1%
Hotels $151,562 12.4% 6.2%
Office $96,087 7.8% 3.9%
Gas Stations $59,239 4.8% 2.4%
Senior Living $41,407 3.4% 1.7%
Food Service $32,788 2.7% 1.3%
Other $247,979 20.2% 10.1%
Total CRE $1,225,315 100.0% 50.1%
* Numbers have been rounded
On January 1, 2023, F&M adopted ASU 2016-13 - Measurement of Credit Losses on Financial Instruments and implemented the current expected credit losses (“CECL”) accounting standards. As a result, the Company recorded the one-time adjustment from equity into the allowance for credit losses and unfunded commitment liability in the amount of $4.3 million, or $3.4 million, net of tax. The adoption of CECL did not have a material impact on the Bank’s regulatory capital ratios.
At March 31, 2023, the Company’s allowance for credit losses to nonperforming loans was 319.22%, compared to 198.29% at March 31, 2022. As a result of F&M’s recent acquisitions, the Company has an accretable yield adjustment of $5.8 million, which further enhances F&M’s allowance at March 31, 2023. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.24% at March 31, 2023, compared to 1.22% at March 31, 2022.
Mr. Eller concluded, “We expect to make approximately $7 million of annual strategic investments during 2023 across our business. These investments combined with a higher cost of funds are expected to temporarily impact profitability in 2023. We believe earnings growth will reaccelerate in 2024 as we benefit from the investments and strategies we are pursuing. I am encouraged by the progress we are making and the dedication of our team members, as we remain focused on supporting the financial needs of our Ohio, Indiana and Michigan communities.”
*Stockholders’ Equity and Dividends*
Total stockholders’ equity increased 6.7% to $305.8 million at March 31, 2023, from $286.5 million at March 31, 2022. At March 31, 2023, the Company had a Tier 1 leverage ratio of 8.36%, compared to 8.51% at March 31, 2022.
Based on a regulatory basis, tangible stockholders’ equity increased to $244.2 million at March 31, 2023, compared to $221.6 million at March 31, 2022. On a per share basis, regulatory tangible stockholders’ equity at March 31, 2023, was $17.92 per share, compared to $16.96 per share at March 31, 2022. A non-GAAP reconciliation is provided as a table in this press release.
For the 2023 first quarter, the company declared cash dividends of $0.21 per share, which is a 10.5% increase over the 2022 first quarter declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 28 consecutive years. For the 2023 first quarter, the dividend payout ratio was 43.79% compared to 30.64% 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 Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Shelby, Williams, and Wood counties in Western Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, Steuben and Wells counties, and we have Loan Production Offices in West Bloomfield, Michigan; Muncie, Indiana; and Bryan and Oxford, 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.
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
(Unaudited) (in thousands of dollars, except per share data) *Three Months Ended * March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
*Interest Income*
Loans, including fees $ 29,703 $ 27,302 $ 24,119 $ 22,388 $ 20,455
Debt securities:
U.S. Treasury and government agencies 1,068 1,118 1,049 1,035 1,023
Municipalities 408 420 373 322 300
Dividends 123 126 93 57 42
Federal funds sold 21 2 - 9 10
Other. 479 524 213 100 69
Total interest income 31,802 29,492 25,847 23,911 21,899
*Interest Expense*
Deposits 8,151 4,978 2,166 1,379 1,360
Federal funds purchased and securities sold
under agreements to repurchase 405 463 416 166 152
Borrowed funds 1,280 1,209 398 218 335
Subordinated notes 284 285 284 284 269
Total interest expense 10,120 6,935 3,264 2,047 2,116
*Net Interest Income - Before Provision for Credit Losses* * 21,682 22,557 22,583 21,864 19,783
*Provision for Credit Losses* * 817 755 1,637 1,628 580
*Net Interest Income After Provision for Credit Losses** 20,865 21,802 20,946 20,236 19,203
*Noninterest Income*
Customer service fees 2,447 2,862 2,300 2,148 2,648
Other service charges and fees 2,554 1,115 1,105 1,008 998
Net gain on sale of loans 67 165 327 164 697
Net loss on sale of available-for-sale securities (891 ) - - - -
Total noninterest income 4,177 4,142 3,732 3,320 4,343
*Noninterest Expense*
Salaries and wages 6,657 6,353 5,479 5,366 5,502
Employee benefits 2,165 1,911 1,392 1,546 2,054
Net occupancy expense 856 753 693 522 598
Furniture and equipment 1,252 1,096 1,047 1,008 1,056
Data processing 726 1,917 781 654 604
Franchise taxes 366 (45 ) 254 757 418
ATM expense 623 561 580 544 532
Advertising 514 531 578 300 237
Net (gain) loss on sale of other assets owned - 12 - (266 ) (5 )
FDIC assessment 306 250 271 270 114
Mortgage servicing rights amortization 159 110 (50 ) 59 26
Consulting fees 230 637 254 233 178
Other general and administrative 3,139 2,964 2,192 2,242 2,179
Total noninterest expense 16,993 17,050 13,471 13,235 13,493
*Income Before Income Taxes* 8,049 8,894 11,207 10,321 10,053
*Income Taxes* 1,583 1,706 2,253 2,050 1,951
*Net Income* 6,466 7,188 8,954 8,271 8,102
*Other Comprehensive Income (Loss) (Net of Tax):*
Net unrealized gain (loss) on available-for-sale securities 9,812 (628 ) (8,197 ) (14,602 ) (20,939 )
Reclassification adjustment for realized loss on sale of available-for-sale securities (891 ) - - - -
Net unrealized gain (loss) on available-for-sale securities 8,921 (628 ) (8,197 ) (14,602 ) (20,939 )
Tax expense (benefit) 1,874 (132 ) (1,721 ) (3,067 ) (4,397 )
Other comprehensive income (loss) 7,047 (496 ) (6,476 ) (11,535 ) (16,542 )
*Comprehensive Income (Loss)* $ 13,513 $ 6,692 $ 2,478 $ (3,264 ) $ (8,440 )
*Basic Earnings Per Share* $ 0.47 $ 0.53 $ 0.68 $ 0.63 $ 0.62
*Diluted Earnings Per Share* $ 0.47 $ 0.53 $ 0.68 $ 0.63 $ 0.62
Dividends Declared $ 0.2100 $ 0.2100 $ 0.2100 $ 0.2025 $ 0.1900
*ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method.
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands of dollars, except share data) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
*Assets*
Cash and due from banks $ 62,780 $ 83,085 $ 69,680 $ 69,955 $ 94,118
Federal funds sold 1,545 1,324 990 1,484 45,404 Total cash and cash equivalents 64,325 84,409 70,670 71,439 139,522
Interest-bearing time deposits 4,435 4,442 5,187 6,684 8,677
Securities - available-for-sale 372,975 390,789 395,485 399,687 413,996
Other securities, at cost 11,543 9,799 8,227 8,735 8,568
Loans held for sale 951 827 2,182 4,230 6,060
Loans, net 2,422,018 2,336,074 2,122,626 2,016,394 1,945,449
Premises and equipment 28,679 28,381 26,484 26,492 26,653
Construction in progress 1,565 278 - - -
Goodwill 86,358 86,358 80,434 80,434 80,434
Mortgage servicing rights 4,985 3,549 3,583 3,426 3,336
Other real estate owned - - - - -
Bank owned life insurance 33,269 33,073 28,051 27,874 27,715
Other assets 38,972 37,372 40,831 29,321 25,735
*Total Assets* $ 3,070,075 $ 3,015,351 $ 2,783,760 $ 2,674,716 $ 2,686,145 *Liabilities and Stockholders' Equity*
*Liabilities*
Deposits Noninterest-bearing $ 520,145 $ 532,794 $ 506,928 $ 503,395 $ 497,249 Interest-bearing NOW accounts 800,230 750,887 705,888 678,552 681,975 Savings 590,854 627,203 607,375 617,850 626,787 Time 601,939 557,980 462,845 424,249 447,586 Total deposits 2,513,168 2,468,864 2,283,036 2,224,046 2,253,597
Federal funds purchased and
securities sold under agreements to repurchase 30,496 54,206 55,802 71,944 31,680
Federal Home Loan Bank (FHLB) advances 164,327 127,485 102,147 42,635 22,656
Other borrowings - 10,000 10,000 - 40,000
Subordinated notes, net of unamortized issuance costs 34,615 34,586 34,557 34,528 34,499
Dividend payable 2,831 2,832 2,727 2,626 2,462
Accrued expenses and other liabilities 18,881 19,238 14,913 18,064 14,773 Total liabilities 2,764,318 2,717,211 2,503,182 2,393,843 2,399,667
*Commitments and Contingencies*
*Stockholders' Equity*
Common stock - No par value 20,000,000 shares authorized; issued and
outstanding 14,564,425 shares 3/31/23 and 12/31/22 135,241 135,497 121,811 123,145 122,886
Treasury stock - 934,303 shares 3/31/23, 956,003 shares 12/31/22 (11,310 ) (11,573 ) (11,547 ) (11,822 ) (11,739 )
Retained earnings 213,012 212,449 208,051 200,811 195,057
Accumulated other comprehensive loss (31,186 ) (38,233 ) (37,737 ) (31,261 ) (19,726 ) Total stockholders' equity 305,757 298,140 280,578 280,873 286,478
*Total Liabilities and Stockholders' Equity* $ 3,070,075 $ 3,015,351 $ 2,783,760 $ 2,674,716 $ 2,686,145
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA *For the Three Months Ended*
*Selected financial data* March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
Return on average assets 0.84% 0.96% 1.31% 1.23% 1.21%
Return on average equity 8.59% 10.00% 12.53% 11.66% 11.00%
Yield on earning assets 4.41% 4.18% 4.00% 3.79% 3.47%
Cost of interest bearing liabilities 1.85% 1.32% 0.68% 0.44% 0.45%
Net interest spread 2.56% 2.86% 3.32% 3.35% 3.02%
Net interest margin 3.01% 3.20% 3.49% 3.47% 3.14%
Efficiency 63.53% 50.46% 51.19% 50.17% 55.44%
Dividend payout ratio 43.79% 39.39% 30.45% 30.02% 30.64%
Tangible book value per share (1) $ 17.92 $ 17.69 $ 17.86 $ 17.43 $ 16.96
Tier 1 leverage ratio 8.36% 8.39% 9.11% 8.75% 8.51%
Average shares outstanding 13,615,655 13,606,876 13,083,145 13,065,975 13,066,272
*Loans* March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
(Dollar amounts in thousands)
Commercial real estate $ 1,225,315 $ 1,152,603 $ 1,063,661 $ 979,176 $ 910,839
Agricultural real estate 227,897 220,819 205,089 199,972 196,223
Consumer real estate 502,974 494,423 416,001 410,450 410,120
Commercial and industrial 241,598 242,360 229,388 232,975 216,918
Agricultural 131,467 128,733 128,615 127,143 140,709
Consumer 89,588 89,147 70,602 55,411 57,521
Other 29,316 29,818 30,662 31,243 31,573
Less: Net deferred loan fees and costs (1,503 ) (1,516 ) (1,402 ) (1,552 ) (1,683 )
Total loans,net $ 2,446,652 $ 2,356,387 $ 2,142,616 $ 2,034,818 $ 1,962,220
*Asset quality data* March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
(Dollar amounts in thousands)
Nonaccrual loans $ 7,717 $ 4,689 $ 5,470 $ 5,247 $ 8,581
Troubled debt restructuring $ 3,516 $ 3,645 $ 3,978 $ 2,748 $ 7,268
90 day past due and accruing $ - $ - $ - $ - $ -
Nonperforming loans $ 7,717 $ 4,689 $ 5,470 $ 5,247 $ 8,581
Other real estate owned $ - $ - $ - $ - $ -
Nonperforming assets $ 7,717 $ 4,689 $ 5,470 $ 5,247 $ 8,581
Allowance for credit losses(2) $ 24,507 $ 20,313 $ 19,990 $ 18,424 $ 16,771
Accretable yield adjustment 5,754 6,427 5,959 6,724 7,201
Adjusted credit losses with accretable yield included(2) 30,261 $ 26,740 $ 25,949 $ 25,148 $ 23,972
Allowance for credit losses/total loans(2) $ 1.00% 0.86% 0.93% 0.91% 0.85%
Adjusted credit losses with accretable yield/total loans(2) $ 1.24% 1.13% 1.21% 1.24% 1.22%
Net charge-offs:
Quarter-to-date 60 $ 431 $ 71 $ (25 ) $ 51
Year-to-date 60 $ 529 $ 97 $ 26 $ 51
Net charge-offs to average loans 0.28%
Quarter-to-date 0.00% 0.02% 0.00% 0.00% 0.00%
Year-to-date 0.00% 0.03% 0.00% 0.00% 0.00%
Nonperforming loans/total loans 0.32% 0.20% 0.26% 0.26% 0.44%
Allowance for credit losses/nonperforming loans(2) 319.22% 273.67% 365.44% 351.44% 198.29%
(1) Tangible Equity = Stockholder Equity less goodwill, other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities) plus CECL adjustment
(2) ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method.
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* *March 31, 2023* *March 31, 2022*
Interest Earning Assets: Average Balance Interest/Dividends Annualized
Yield/Rate Average Balance Interest/Dividends Annualized
Yield/Rate
Loans $ 2,397,061 $ 29,703 4.96 % $ 1,907,478 $ 20,455 4.29 %
Taxable investment securities 397,480 1,499 1.51 % 429,899 1,295 1.20 %
Tax-exempt investment securities 26,352 100 1.92 % 18,587 70 1.91 %
Fed funds sold & other 68,557 500 2.92 % 167,319 79 0.19 %
Total Interest Earning Assets 2,889,450 $ 31,802 4.41 % 2,523,283 $ 21,899 3.47 %
Nonearning Assets 180,259 165,064
Total Assets $ 3,069,709 $ 2,688,347
Interest Bearing Liabilities:
Savings deposits $ 1,400,769 $ 4,943 1.41 % $ 1,293,099 $ 588 0.18 %
Other time deposits 579,409 3,208 2.21 % 459,854 772 0.67 %
Other borrowed money 132,494 1,280 3.86 % 63,364 335 2.11 %
Fed funds purchased & securities
sold under agreement to repurch. 38,853 405 4.17 % 29,104 152 2.09 %
Subordinated notes 34,596 284 3.28 % 34,480 269 3.12 %
Total Interest Bearing Liabilities $ 2,186,121 $ 10,120 1.85 % $ 1,879,901 $ 2,116 0.45 %
Noninterest Bearing Liabilities 582,345 513,745
Stockholders' Equity $ 301,243 $ 294,701
Net Interest Income and Interest Rate Spread $ 21,682 2.56 % $ 19,783 3.02 %
Net Interest Margin 3.01 % 3.14 %
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
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 March 31, 2023* *For the Three Months Ended March 31, 2022* As Reported Excluding Acc/Amort Difference As Reported Excluding Acc/Amort Difference $ Yield $ Yield $ Yield $ Yield $ Yield $ Yield
Loans 29,703 4.96 % 29,036 4.85 % 667 0.11 % 20,455 4.29 % 20,081 4.12 % 374 0.17 %
Taxable investment securities 1,499 1.51 % 1,499 1.51 % - 0.00 % 1,295 1.20 % 1,295 1.20 % - 0.00 %
Tax-exempt investment securities 100 1.92 % 100 1.92 % - 0.00 % 70 1.91 % 70 1.91 % - 0.00 %
Fed funds sold & other 500 2.92 % 500 2.92 % - 0.00 % 79 0.19 % 79 0.19 % - 0.00 %
* Total Interest Earning Assets* 31,802 4.41 % 31,135 4.31 % 667 0.10 % 21,899 3.47 % 21,525 3.42 % 374 0.05 %
Savings deposits 4,943 1.41 % 4,943 1.41 % - 0.00 % 588 0.18 % 588 0.18 % - 0.00 %
Other time deposits 3,208 2.21 % 3,667 2.53 % (459 ) -0.32 % 772 0.67 % 1,391 1.21 % (619 ) -0.54 %
Other borrowed money 1,280 3.86 % 1,298 3.92 % (18 ) -0.06 % 335 2.11 % 356 2.25 % (21 ) -0.14 %
Federal funds purchased and
securities sold under agreement to
repurchase 405 4.17 % 405 4.17 % - 0.00 % 152 2.09 % 152 2.09 % - 0.00 %
Subordinated notes 284 3.28 % 284 3.28 % - 0.00 % 269 3.12 % 269 3.12 % - 0.00 %
* Total Interest Bearing Liabilities* 10,120 1.85 % 10,597 1.94 % (477 ) -0.09 % 2,116 0.45 % 2,756 0.59 % (640 ) -0.14 %
Interest/Dividend income/yield 31,802 4.41 % 31,135 4.31 % 667 0.10 % 21,899 3.47 % 21,525 3.42 % 374 0.05 %
Interest Expense / yield 10,120 1.85 % 10,597 1.94 % (477 ) -0.09 % 2,116 0.45 % 2,756 0.59 % (640 ) -0.14 %
Net Interest Spread 21,682 2.56 % 20,538 2.37 % 1,144 0.19 % 19,783 3.02 % 18,769 2.83 % 1,014 0.19 %
Net Interest Margin 3.01 % 2.85 % 0.16 % 3.14 % 2.98 % 0.16 %
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME
(in thousands of dollars) Three Months Ended
Non-GAAP Reconciliation of Net Income March 31, 2023 March 31, 2022 (Unaudited)
Net income as reported $ 6,466 $ 8,102
Acquisition expenses 96 145
Tax effect on acquisition expenses (19 ) (30 )
Net income excluding acquisition expenses and tax effect $ 6,543 $ 8,217
Weighted average common shares outstanding including participating securities 13,615,655 13,066,272
Basic and diluted earnings per share $ 0.48 $ 0.63
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 March 31, 2023 March 31, 2022 March 31, 2023 March 31, 2022
Shares Outstanding 13,630,122 13,066,083 13,630,122 13,066,083
Tangible Equity
Equity $ 305,757 $ 286,478 $ 305,757 $ 286,478
Goodwill 86,358 80,434 86,358 80,434
Other Intangible 8,882 4,203 8,882 4,203
Comprehensive Loss Adjustment* - - 31,186 19,726
CECL Adjustment** - - 2,528 -
Tangible Equity $ 210,517 $ 201,841 $ 244,231 $ 221,566
Shares Outstanding 13,630 13,066 13,630 13,066
Tangible Book Equity per Share *$* * 15.44* *$* * 15.45* *$* * 17.92* *$* * 16.96* Actual Average Regulatory Average Year to Date Year to Date March 31, 2023 March 31, 2022 March 31, 2023 March 31, 2022
Net Income $ 6,466 $ 8,102 $ 6,466 $ 8,102
Acquisition Costs - Tax Adjusted 77 115 77 115
Average Shares Outstanding 13,206,713 11,664,852 13,206,713 11,664,852
Average Tangible Equity
Average Equity $ 301,243 $ 294,701 $ 301,243 $ 294,701
Average Goodwill 86,358 80,434 86,358 80,434
Average Other Intangible 9,167 4,356 9,167 4,356
Average Comprehensive Loss Adjustment* - - 36,764 8,155
Average CECL Adjustment** - - 2,528
Average Tangible Equity $ 205,718 $ 209,911 $ 245,010 $ 218,066
Average Shares Outstanding 13,616 13,066 13,616 13,066
Average Tangible Book Equity per Share *$* * 15.11* *$* * 16.07* *$* * 17.99* *$* * 16.69*
Return on Average Tangible Equity *12.57* *%* *15.44* *%* *10.56* *%* *14.86* *%*
Return on Average Tangible Equity w/o Acquisition *12.72* *%* *15.66* *%* *10.68* *%* *15.07* *%*
*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.
*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