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Farmers & Merchants Bancorp, Inc. Reports 2023 Fourth-Quarter and Full-Year Financial Results

ARCHBOLD, Ohio, Feb. 13, 2024 (GLOBE NEWSWIRE) -- 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):

  • 83 consecutive quarters of profitability
  • Net income was $5.5 million, or $0.41 per basic and diluted share
  • Asset quality remains strong as nonperforming loans were 0.87% of total loans
  • Net charge-offs to average loans were 0.03%
  • Allowance for credit losses was 111.95% of nonperforming loans
  • Tier 1 leverage ratio was 8.20%
  • Opened first bank office in Michigan and new regional headquarters in Fort Wayne, Indiana
  • Added Ian D. Boyce to the Board of Directors of both the Company and the Bank
  • Realigned organizational structure to support future growth and drive profitability
  • Dividend raised 4.8% year-over-year, representing the 29th consecutive annual increase in the Company’s regular dividend payment since 1994

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

  • Total loans were a record of $2.58 billion and increased 9.5% from $2.36 billion at December 31, 2022
  • Total assets increased 8.9% to a record $3.28 billion
  • Deposits increased to 5.6% to a record $2.61 billion
  • Stockholders’ equity increased 6.2% to a record $316.5 million
  • Net interest income after provision for credit losses decreased 3.1% to $79.7 million
  • Net income was $22.8 million, or $1.67 per basic and diluted share
  • Return on average tangible equity was 12.17%
  • Opened a total of four new bank offices including new offices in Ohio, Indiana and Michigan
  • Successfully launched new forward-looking logo and brand-name
  • Provided a record $802,000 of charitable donations to support organizations throughout Ohio and Indiana

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.”

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.

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 19.0% 9.8%
Multi-family $        232,776 17.4% 9.0%
Retail $        218,580 16.3% 8.5%
Office $        137,573 10.3% 5.3%
Hotels $        127,646 9.6% 4.9%
Gas Stations $        63,151 4.7% 2.4%
Food Service $        50,990 3.8% 2.0%
Senior Living $        32,290 2.4% 1.3%
Auto Dealers $        29,714 2.2% 1.2%
Development $        28,045 2.1% 1.1%
Other $        163,318 12.2% 6.3%
Total CRE $        1,337,766 100.0% 51.8%
* 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.

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.

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. 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 agreements 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 
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 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.        
              


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 
           


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 
                    
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 and 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     
                    
                    
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%    
                    
(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) Includes carrying value adjustments of $2.7 million as of December 31, 2023 related to interest rate swaps associated with fixed rate loans       
(3) 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
  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 repurch.  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  
             
             
  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 repurch.  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  
             


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 December 31, 2023 For the Three Months Ended December 31, 2022
 As Reported Excluding
Acc/Amort
 Difference As Reported Excluding
Acc/Amort
 Difference
 $Yield $Yield $Yield $Yield $Yield $Yield
Interest Earning Assets:                 
Loans$34,4935.41% $33,7695.29% $724 0.12% 27,3024.75% 26,6284.63% $674 0.12%
Taxable investment securities 1,6601.72%  1,6601.72%  - 0.00% 1,5561.47% 1,5561.47%  - 0.00%
Tax-exempt investment securities 891.87%  891.87%  - 0.00% 1081.92% 1081.92%  - 0.00%
Fed funds sold & other 2,0285.69%  2,0285.69%  - 0.00% 5262.81% 5262.81%  - 0.00%
    Total Interest Earning Assets 38,2704.93%  37,5464.84%  724 0.09% 29,4924.18% 28,8184.08%  674 0.10%
                  
Interest Bearing Liabilities:                 
Savings deposits$8,5702.46% $8,5702.46% $- 0.00% 3,4270.98% 3,4270.98% $- 0.00%
Other time deposits 6,4453.68%  6,3813.64%  64 0.04% 1,5511.28% 2,0101.66%  (459)-0.38%
Other borrowed money 2,7424.12%  2,7604.15%  (18)-0.03% 1,2093.58% 1,2273.64%  (18)-0.06%
Federal funds purchased and                 
   securities sold under agreement to                 
   repurchase 2934.08%  2934.08%  - 0.00% 4633.46% 4633.46%  - 0.00%
Subordinated notes 2853.29%  2853.29%  - 0.00% 2853.30% 2853.30%  - 0.00%
   Total Interest Bearing Liabilities 18,3353.02%  18,2893.02%  46 0.00% 6,9351.32% 7,4121.41%  (477)-0.09%
                  
Interest/Dividend income/yield 38,2704.93%  37,5464.84%  724 0.09% 29,4924.18% 28,8184.08%  674 0.10%
Interest Expense / yield 18,3353.02%  18,2893.02%  46 0.00% 6,9351.32% 7,4121.41%  (477)-0.09%
Net Interest Spread 19,9351.91%  19,2571.82%  678 0.09% 22,5572.86% 21,4062.67%  1,151 0.19%
Net Interest Margin 2.57%  2.48%  0.09%  3.20%  3.03%  0.17%
                  
                  
 For the Twelve Months Ended December 31, 2023 For the Twelve Months Ended December 31, 2022
 As Reported Excluding
Acc/Amort
 Difference As Reported Excluding
Acc/Amort
 Difference
 $Yield $Yield $Yield $Yield $Yield $Yield
Interest Earning Assets:                 
Loans$129,3445.19% $126,1335.06% $3,211 0.13% 94,2644.55% 92,1324.45% $2,132 0.10%
Taxable investment securities 6,2041.57%  6,2041.57%  - 0.00% 5,6211.32% 5,6211.32%  - 0.00%
Tax-exempt investment securities 3661.88%  3661.88%  - 0.00% 3371.82% 3371.82%  - 0.00%
Fed funds sold & other 3,8944.58%  3,8944.58%  - 0.00% 9270.97% 9270.97%  - 0.00%
    Total Interest Earning Assets 139,8084.67%  136,5974.57%  3,211 0.10% 101,1493.87% 99,0173.79%  2,132 0.08%
                  
Interest Bearing Liabilities:                 
Savings deposits$27,4241.99% $27,4241.99% $- 0.00% 6,3780.48% 6,3780.48% $- 0.00%
Other time deposits 19,4993.04%  19,8393.10%  (340)-0.06% 3,5050.78% 5,8221.29%  (2,317)-0.51%
Other borrowed money 8,8764.03%  8,9474.06%  (71)-0.03% 2,1602.90% 2,2413.01%  (81)-0.11%
Federal funds purchased and                 
   securities sold under agreement to                 
   repurchase 1,4744.16%  1,4744.16%  - 0.00% 1,1972.64% 1,1972.64%  - 0.00%
Subordinated notes 1,1383.29%  1,1383.29%  - 0.00% 1,1223.25% 1,1223.25%  - 0.00%
   Total Interest Bearing Liabilities 58,4112.53%  58,8222.55%  (411)-0.02% 14,3620.74% 16,7600.86%  (2,398)-0.12%
                  
Interest/Dividend income/yield 139,8084.67%  136,5974.57%  3,211 0.10% 101,1493.87% 99,0173.79%  2,132 0.08%
Interest Expense / yield 58,4112.53%  58,8222.55%  (411)-0.02% 14,3620.74% 16,7600.86%  (2,398)-0.12%
Net Interest Spread 81,3972.14%  77,7752.02%  3,622 0.12% 86,7873.13% 82,2572.93%  4,530 0.20%
Net Interest Margin 2.72%  2.60%  0.12%  3.32%  3.15%  0.17%
                  


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME
(in thousands of dollars, except share data)
         
  Three Months Ended Twelve Months Ended
Non-GAAP Reconciliation of Net Income 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 
         


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 ValueYear 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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