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Farmers & Merchants Bancorp, Inc. Reports 2023 Second-Quarter and Year-to-Date Financial Results
来源: Nasdaq GlobeNewswire / 26 7月 2023 15:05:37 America/Chicago
ARCHBOLD, Ohio, July 26, 2023 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) the holding company of F&M Bank, today reported financial results for the 2023 second quarter and year-to-date June 30, 2023.
2023 Second Quarter Financial and Operating Highlights (on a year-over-year basis unless noted):
- 81 consecutive quarters of profitability
- Net income was $6.0 million, or $0.44 per basic and diluted share
- Stockholders’ equity increased 8.5% to $304.7 million
- Regulatory tangible book value per share increased 4.5% to $18.21 per share
- Organic loan growth of 18.5%, excluding PPP loans and the Peoples-Sidney Financial Corporation acquisition
- Total loans were a record of $2.52 billion and increased 6.8% from $2.36 billion at December 31, 2022
- Total assets increased 17.7% to a record $3.15 billion
- Deposits increased 11.0% to $2.50 billion
- Uninsured deposits to total deposits of approximately 18% at June 30, 2023
- Strong asset quality continues as nonperforming loans were 0.25% of total loans
- Net charge-offs to average loans were -0.01%
- Allowance for credit losses was 395.71% of nonperforming loans
- Tier 1 leverage ratio increased to 9.85% from 8.75% last year
- Strategic investments to support long-term growth continue as F&M has unveiled new branding and logo, opened two new offices, launched new deposit products, and started construction on a new regional headquarters in Fort Wayne, Indiana and the first full-service office in Michigan
Lars B. Eller, President and Chief Executive Officer, stated, “Our second quarter results demonstrate the power of F&M’s operating platform as we ended the quarter with strong capital levels, robust asset quality, and record loans and assets. These trends provide us with the flexibility to navigate a challenging banking landscape, while supporting our communities, investing in our multi-year strategic growth plan, and returning capital back to our shareholders. Most importantly, our longstanding financial success and operating growth reflects the continued commitment, experience, and hard work of our team members across our Ohio, Indiana, and Michigan markets.”
“I am pleased to report that we continue to make meaningful progress investing in our business to support our growth, enhance our operations, and execute against our recently developed three-year strategic growth plan. During the second quarter we unveiled our new branding and forward-looking logo, which was the culmination of a multi-year brand exploration process. All updates to office signage are expected to be completed by September 2023. In addition, we relocated our Auburn, Indiana office and opened new offices in downtown Toledo, Ohio, and Oxford, Ohio. Construction began on our new regional facility in Fort Wayne, and we added a highly experienced lending team in our Fort Wayne region, which will greatly expand our commitment to Eastern Indiana. We also broke ground on our first full-service office in Birmingham, Michigan following our hugely successful loan production office in Southeast Michigan. Finally, we launched new deposit products to enhance our offerings to current and prospective customers,” continued Mr. Eller.
Income Statement
Net income for the 2023 second quarter ended June 30, 2023, was $6.0 million, compared to $8.3 million for the same period last year. Net income per basic and diluted share for the 2023 second quarter was $0.44, compared to $0.63 for the same period last year. Net income for the 2023 first half ended June 30, 2023, was $12.5 million, compared to $16.4 million for the same period last year. Net income per basic and diluted share for the 2023 first half was $0.92, compared to $1.25 for the same period last year.Mr. Eller commented: “F&M is not immune from the rapid rise in the Federal Funds Rate and the impact this has had on cost of funds and the competition for deposits it has created over the past 12 months. As a result, our cost of interest-bearing liabilities has increased by over 430% to 2.35% at June 30, 2023. In addition, year-to-date profitability has been impacted by several strategic one-time expenses including the conversion of our credit card platform, an opportunistic sale of investments, and the investments we are making in our infrastructure. Despite these near-term impacts, we believe we are well positioned for net income growth to re-accelerate in 2024 and beyond, as we benefit from continued strong asset quality, the contribution of our growth initiatives, and controlled operating expenses,” continued Mr. Eller.
Deposits
At June 30, 2023, total deposits were $2.47 billion, an increase of 11.0% from June 30, 2022. The Company’s cost of interest-bearing liabilities was 2.35% for the quarter ended June 30, 2023, compared to 0.44% for the quarter ended June 30, 2022, and 1.32% for the quarter ended December 31, 2022.At June 30, 2023, F&M’s average deposit account had an average balance of $25,009. In addition, uninsured deposits to total deposits were approximately 18% for the quarter ended June 30, 2023, compared to approximately 21% at December 31, 2022.
Loan Portfolio and Asset Quality
Total loans, net at June 30, 2023, increased 23.6%, or by $481.0 million to a record $2.52 billion, compared to $2.03 billion at June 30, 2022, and up from $2.36 billion at December 31, 2022. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of the Peoples acquisition. Not including the Peoples acquisition, total net loans increased 18.5% organically, or by $376.3 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 $6.3 million, or 0.25% of total loans at June 30, 2023, compared to $5.2 million, or 0.26% of total loans at June 30, 2022. During the second quarter, one large farm loan that was paid off and another loan that was refinanced through another bank, and second quarter 2023 nonperforming loans improved by $1.4 million, or 18.4% over the past three months.
F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 50.9% of the Company’s total loan portfolio at June 30, 2023. In addition, F&M’s commercial real estate office credit exposure represented 5.0% of the Company's total loan portfolio at June 30, 2023, with a weighted average loan-to-value of approximately 64% and an average loan of $845,000.
F&M’s CRE portfolio included the following categories at June 30, 2023:
CRE Category
Dollar
Balance
Percent of CRE Portfolio(*)
Percent of Total Loan Portfolio(*)Multi Family $244,883 19.1% 9.7% Retail $218,624 17.1% 8.7% Industrial $216,605 16.9% 8.6% Hotels $135,511 10.6% 5.4% Office $125,039 9.8% 5.0% Gas Stations $59,922 4.7% 2.4% Food Service $43,585 3.4% 1.7% Mixed Use $42,425 3.3% 1.7% Senior Living $36,238 2.8% 1.4% Other $158,069 12.3% 6.3% Total CRE $1,225,315 100.0% 50.1% * Numbers have been rounded
At June 30, 2023, the Company’s allowance for credit losses to nonperforming loans was 395.71%, compared to 351.44% at June 30, 2022. The allowance to total loans was 0.99% at June 30, 2023, compared to 0.91% at June 30, 2022. As a result of F&M’s recent acquisitions, the Company had an accretable yield adjustment of $5.2 million at June 30, 2023, which further enhances F&M’s allowance, compared to $6.7 million at June 30, 2022. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.20% at June 30, 2023, compared to 1.24% at June 30, 2022.Mr. Eller concluded, “I am proud of our team’s performance throughout the first half of 2023. The progress we are making serving our communities, and investing in our growth initiatives is encouraging. While 2023 is expected to be a transitional year, we believe we are well positioned to emerge from this period with increased market share and higher profitability. We also continue to focus on returning capital back to shareholders through our longstanding cash dividend program, which has increased on an annual basis for 28 consecutive years.”
Stockholders’ Equity and Dividends
Total stockholders’ equity increased 8.5% to $304.7 million at June 30, 2023, from $280.9 million at June 30, 2022. At June 30, 2023, the Company had a Tier 1 leverage ratio of 9.85%, compared to 8.75% at June 30, 2022.Based on a regulatory basis, tangible stockholders’ equity increased to $248.3 million at June 30, 2023, compared to $227.7 million at June 30, 2022. On a per share basis, regulatory tangible stockholders’ equity at June 30, 2023, was $18.21 per share, compared to $17.43 per share at June 30, 2022.
For the six months ended June 30, 2023, the Company has declared cash dividends of $0.42 per share, which is a 7.0% increase over the 2022 six-month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for over 28 consecutive years and has grown its dividend by over 160% since 2007. For the six months ended June 30, 2023, the dividend payout ratio was 45.44% compared to 30.08% for the same period last year.
About Farmers & Merchants Bancorp, Inc.:
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, and we have 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.
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME (Unaudited) (in thousands of dollars, except per share data) Three Months Ended Six Months Ended June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022June 30,
2023June 30,
2022Interest Income Loans, including fees $ 31,365 $ 29,703 $ 27,302 $ 24,119 $ 22,388 $ 61,068 $ 42,843 Debt securities: U.S. Treasury and government agencies 1,030 1,068 1,118 1,049 1,035 2,098 2,058 Municipalities 401 408 420 373 322 809 622 Dividends 148 123 126 93 57 271 99 Federal funds sold 9 21 2 - 9 30 19 Other 424 479 524 213 100 903 169 Total interest income 33,377 31,802 29,492 25,847 23,911 65,179 45,810 Interest Expense Deposits 10,434 8,151 4,978 2,166 1,379 18,585 2,739 Federal funds purchased and securities sold under agreements to repurchase 427 405 463 416 166 832 318 Borrowed funds 2,113 1,280 1,209 398 218 3,393 553 Subordinated notes 285 284 285 284 284 569 553 Total interest expense 13,259 10,120 6,935 3,264 2,047 23,379 4,163 Net Interest Income - Before Provision for Credit Losses* 20,118 21,682 22,557 22,583 21,864 41,800 41,647 Provision for Credit Losses - Loans* 143 817 755 1,637 1,628 960 2,208 Provision for Credit Losses - Off Balance Sheet Credit Exposures* (129 ) 62 - - - (67 ) - Net Interest Income After Provision for Credit Losses* 20,104 20,803 21,802 20,946 20,236 40,907 39,439 Noninterest Income Customer service fees 2,361 2,447 2,862 2,300 2,148 4,808 4,796 Other service charges and fees 1,803 2,554 1,115 1,105 1,008 4,357 2,006 Net gain on sale of loans 108 67 165 327 164 175 861 Net loss on sale of available-for-sale securities - (891 ) - - - (891 ) - Total noninterest income 4,272 4,177 4,142 3,732 3,320 8,449 7,663 Noninterest Expense Salaries and wages 6,500 6,657 6,353 5,479 5,366 13,157 10,868 Employee benefits 2,071 2,165 1,911 1,392 1,546 4,236 3,600 Net occupancy expense 840 856 753 693 522 1,696 1,120 Furniture and equipment 1,211 1,252 1,096 1,047 1,008 2,463 2,064 Data processing 796 726 1,917 781 654 1,522 1,258 Franchise taxes 379 366 (45 ) 254 757 745 1,175 ATM expense 683 623 561 580 544 1,306 1,076 Advertising 830 514 531 578 300 1,344 537 Net (gain) loss on sale of other assets owned - - 12 - (266 ) - (271 ) FDIC assessment 496 306 250 271 270 802 384 Mortgage servicing rights amortization - net 164 159 110 (50 ) 59 323 85 Consulting fees 231 230 637 254 233 461 411 Other general and administrative 2,643 3,077 2,964 2,192 2,242 5,720 4,421 Total noninterest expense 16,844 16,931 17,050 13,471 13,235 33,775 26,728 Income Before Income Taxes 7,532 8,049 8,894 11,207 10,321 15,581 20,374 Income Taxes 1,531 1,583 1,706 2,253 2,050 3,114 4,001 Net Income 6,001 6,466 7,188 8,954 8,271 12,467 16,373 Other Comprehensive Income (Loss) (Net of Tax): Net unrealized gain (loss) on available-for-sale securities (5,996 ) 8,030 (628 ) (8,197 ) (14,602 ) 2,034 (35,541 ) Reclassification adjustment for realized loss on sale of available-for-sale securities - 891 - - - 891 - Net unrealized gain (loss) on available-for-sale securities (5,996 ) 8,921 (628 ) (8,197 ) (14,602 ) 2,925 (35,541 ) Tax expense (benefit) (1,260 ) 1,874 (132 ) (1,721 ) (3,067 ) 614 (7,464 ) Other comprehensive income (loss) (4,736 ) 7,047 (496 ) (6,476 ) (11,535 ) 2,311 (28,077 ) Comprehensive Income (Loss) $ 1,265 $ 13,513 $ 6,692 $ 2,478 $ (3,264 ) $ 14,778 $ (11,704 ) Basic Earnings Per Share $ 0.44 $ 0.47 $ 0.53 $ 0.68 $ 0.63 $ 0.92 $ 1.25 Diluted Earnings Per Share $ 0.44 $ 0.47 $ 0.53 $ 0.68 $ 0.63 $ 0.92 $ 1.25 Dividends Declared $ 0.2100 $ 0.2100 $ 0.2100 $ 0.2100 $ 0.2025 $ 0.4200 $ 0.3925 *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) June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022(Unaudited) (Unaudited) (Unaudited) (Unaudited) Assets Cash and due from banks $ 69,760 $ 62,780 $ 83,085 $ 69,680 $ 69,955 Federal funds sold 1,433 1,545 1,324 990 1,484 Total cash and cash equivalents 71,193 64,325 84,409 70,670 71,439 Interest-bearing time deposits 3,485 4,435 4,442 5,187 6,684 Securities - available-for-sale 363,225 372,975 390,789 395,485 399,687 Other securities, at cost 17,535 11,543 9,799 8,227 8,735 Loans held for sale 1,459 951 827 2,182 4,230 Loans, net 2,490,883 2,422,018 2,336,074 2,122,626 2,016,394 Premises and equipment 30,398 28,679 28,381 26,484 26,492 Construction in progress 2,290 1,565 278 - - Goodwill 86,358 86,358 86,358 80,434 80,434 Loan servicing rights 5,635 4,985 3,549 3,583 3,426 Bank owned life insurance 33,470 33,269 33,073 28,051 27,874 Other assets 41,512 38,972 37,372 40,831 29,321 Total Assets $ 3,147,443 $ 3,070,075 $ 3,015,351 $ 2,783,760 $ 2,674,716 Liabilities and Stockholders' Equity Liabilities Deposits Noninterest-bearing $ 488,678 $ 520,145 $ 532,794 $ 506,928 $ 503,395 Interest-bearing NOW accounts 770,113 800,230 750,887 705,888 678,552 Savings 581,192 590,854 627,203 607,375 617,850 Time 628,757 601,939 557,980 462,845 424,249 Total deposits 2,468,740 2,513,168 2,468,864 2,283,036 2,224,046 Federal funds purchased and securities sold under agreements to repurchase 51,567 30,496 54,206 55,802 71,944 Federal Home Loan Bank (FHLB) advances 266,818 164,327 127,485 102,147 42,635 Other borrowings - - 10,000 10,000 - Subordinated notes, net of unamortized issuance costs 34,644 34,615 34,586 34,557 34,528 Dividend payable 2,834 2,831 2,832 2,727 2,626 Accrued expenses and other liabilities 18,177 18,881 19,238 14,913 18,064 Total liabilities 2,842,780 2,764,318 2,717,211 2,503,182 2,393,843 Commitments and Contingencies Stockholders' Equity Common stock - No par value 20,000,000 shares authorized; issued and outstanding 14,564,425 shares 6/30/23 and 12/31/22 135,647 135,241 135,497 121,811 123,145 Treasury stock - 929,513 shares 6/30/23 and 956,003 shares 12/31/22 (11,298 ) (11,310 ) (11,573 ) (11,547 ) (11,822 ) Retained earnings 216,236 213,012 212,449 208,051 200,811 Accumulated other comprehensive loss (35,922 ) (31,186 ) (38,233 ) (37,737 ) (31,261 ) Total stockholders' equity 304,663 305,757 298,140 280,578 280,873 Total Liabilities and Stockholders' Equity $ 3,147,443 $ 3,070,075 $ 3,015,351 $ 2,783,760 $ 2,674,716
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES SELECT FINANCIAL DATA For the Three Months Ended For the Six Months Ended Selected financial data June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022June 30,
2023June 30,
2022Return on average assets 0.77 % 0.84 % 0.96 % 1.31 % 1.23 % 0.81 % 1.22 % Return on average equity 7.84 % 8.59 % 10.00 % 12.53 % 11.66 % 8.21 % 11.32 % Yield on earning assets 4.53 % 4.41 % 4.18 % 4.00 % 3.79 % 4.47 % 3.63 % Cost of interest bearing liabilities 2.35 % 1.85 % 1.32 % 0.68 % 0.44 % 2.10 % 0.44 % Net interest spread 2.18 % 2.56 % 2.86 % 3.32 % 3.35 % 2.37 % 3.19 % Net interest margin 2.73 % 3.01 % 3.20 % 3.49 % 3.47 % 2.87 % 3.30 % Efficiency 69.06 % 63.53 % 50.46 % 51.19 % 50.17 % 66.04 % 57.90 % Dividend payout ratio 47.22 % 43.79 % 39.39 % 30.45 % 30.02 % 45.44 % 30.08 % Tangible book value per share (1) $ 18.21 $ 17.92 $ 17.69 $ 17.86 $ 17.43 Tier 1 leverage ratio 9.85 % 8.36 % 8.39 % 9.11 % 8.75 % Average shares outstanding 13,632,440 13,615,655 13,606,876 13,083,145 13,065,975 13,624,094 13,066,123 Loans June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 (Dollar amounts in thousands) Commercial real estate $ 1,280,902 $ 1,225,315 $ 1,152,603 $ 1,063,661 $ 979,176 Agricultural real estate 230,837 227,897 220,819 205,089 199,972 Consumer real estate 506,866 502,974 494,423 416,001 410,450 Commercial and industrial 253,444 241,598 242,360 229,388 232,975 Agricultural 128,344 131,467 128,733 128,615 127,143 Consumer 88,312 89,588 89,147 70,602 55,411 Other 28,996 29,316 29,818 30,662 31,243 Less: Net deferred loan fees and costs (1,908 ) (1,503 ) (1,516 ) (1,402 ) (1,552 ) Total loans,net $ 2,515,793 $ 2,446,652 $ 2,356,387 $ 2,142,616 $ 2,034,818 Asset quality data June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 (Dollar amounts in thousands) Nonaccrual loans $ 6,295 $ 7,717 $ 4,689 $ 5,470 $ 5,247 Troubled debt restructuring $ - $ - $ 3,645 $ 3,978 $ 2,748 90 day past due and accruing $ - $ - $ - $ - $ - Nonperforming loans $ 6,295 $ 7,717 $ 4,689 $ 5,470 $ 5,247 Other real estate owned $ - $ - $ - $ - $ - Nonperforming assets $ 6,295 $ 7,717 $ 4,689 $ 5,470 $ 5,247 Allowance for credit losses(2) $ 24,910 $ 24,507 $ 20,313 $ 19,990 $ 18,424 Accretable yield adjustment 5,209 5,754 6,427 5,959 6,724 Adjusted credit losses with accretable yield included(2) $ 30,119 $ 30,261 $ 26,740 $ 25,949 $ 25,148 Allowance for credit losses/total loans(2) 0.99 % 1.00 % 0.86 % 0.93 % 0.91 % Adjusted credit losses with accretable yield/total loans(2) 1.20 % 1.24 % 1.13 % 1.21 % 1.24 % Net charge-offs: Quarter-to-date $ (133 ) $ 60 $ 431 $ 71 $ (25 ) Year-to-date $ (73 ) $ 60 $ 529 $ 97 $ 26 Net charge-offs to average loans 0.28 % Quarter-to-date -0.01 % 0.00 % 0.02 % 0.00 % 0.00 % Year-to-date -0.00 % 0.00 % 0.03 % 0.00 % 0.00 % Nonperforming loans/total loans 0.25 % 0.32 % 0.20 % 0.26 % 0.26 % Allowance for credit losses/nonperforming loans(2) 395.71 % 319.22 % 273.67 % 365.44 % 351.44 % (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 June 30, 2023 June 30, 2022 Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate Loans $ 2,476,795 $ 31,365 5.07 % $ 1,999,357 $ 22,388 4.48 % Taxable investment securities 399,257 1,486 1.49 % 422,482 1,344 1.27 % Tax-exempt investment securities 24,259 93 1.94 % 21,649 70 1.64 % Fed funds sold & other 49,160 433 3.52 % 81,091 109 0.54 % Total Interest Earning Assets 2,949,471 $ 33,377 4.53 % 2,524,579 $ 23,911 3.79 % Nonearning Assets 169,599 161,031 Total Assets $ 3,119,070 $ 2,685,610 Interest Bearing Liabilities: Savings deposits $ 1,356,798 $ 6,238 1.84 % $ 1,312,444 $ 777 0.24 % Other time deposits 612,929 4,196 2.74 % 435,091 602 0.55 % Other borrowed money 215,884 2,113 3.92 % 39,172 218 2.23 % Fed funds purchased & securities sold under agreement to repurch. 39,966 427 4.27 % 35,260 166 1.88 % Subordinated notes 34,625 285 3.29 % 34,509 284 3.29 % Total Interest Bearing Liabilities $ 2,260,202 $ 13,259 2.35 % $ 1,856,476 $ 2,047 0.44 % Noninterest Bearing Liabilities 552,867 545,439 Stockholders' Equity $ 306,001 $ 283,695 Net Interest Income and Interest Rate Spread $ 20,118 2.18 % $ 21,864 3.35 % Net Interest Margin 2.73 % 3.47 % 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 Six Months Ended For the Six Months Ended June 30, 2023 June 30, 2022 Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate Loans $ 2,437,148 $ 61,068 5.01 % $ 1,953,671 $ 42,843 4.39 % Taxable investment securities 398,383 2,985 1.50 % 426,189 2,639 1.24 % Tax-exempt investment securities 25,303 193 1.93 % 20,119 140 1.76 % Fed funds sold & other 58,853 933 3.17 % 124,050 188 0.30 % Total Interest Earning Assets 2,919,687 $ 65,179 4.47 % 2,524,029 $ 45,810 3.63 % Nonearning Assets 174,702 162,949 Total Assets $ 3,094,389 $ 2,686,978 Interest Bearing Liabilities: Savings deposits $ 1,378,518 $ 11,181 1.62 % $ 1,302,005 $ 1,365 0.21 % Other time deposits 596,168 7,404 2.48 % 447,471 1,374 0.61 % Other borrowed money 174,171 3,393 3.90 % 51,180 553 2.16 % Fed funds purchased & securities sold under agreement to repurch. 39,409 832 4.22 % 32,182 318 1.98 % Subordinated notes 34,610 569 3.29 % 34,495 553 3.21 % Total Interest Bearing Liabilities $ 2,222,876 $ 23,379 2.10 % $ 1,867,333 $ 4,163 0.44 % Noninterest Bearing Liabilities 567,878 530,478 Stockholders' Equity $ 303,635 $ 289,167 Net Interest Income and Interest Rate Spread $ 41,800 2.37 % $ 41,647 3.19 % Net Interest Margin 2.87 % 3.30 % 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 June 30, 2023 For the Three Months Ended June 30, 2022 As Reported Excluding Acc/Amort Difference As Reported Excluding Acc/Amort Difference $ Yield $ Yield $ Yield $ Yield $ Yield $ Yield Interest Earning Assets: Loans $ 31,365 5.07 % $ 30,697 4.96 % $ 668 0.11 % $ 22,388 4.48 % $ 21,986 4.40 % $ 402 0.08 % Taxable investment securities 1,486 1.49 % 1,486 1.49 % - 0.00 % 1,344 1.27 % 1,344 1.27 % - 0.00 % Tax-exempt investment securities 93 1.94 % 93 1.94 % - 0.00 % 70 1.64 % 70 1.64 % - 0.00 % Fed funds sold & other 433 3.52 % 433 3.52 % - 0.00 % 109 0.54 % 109 0.54 % - 0.00 % Total Interest Earning Assets 33,377 4.53 % 32,709 4.44 % 668 0.09 % 23,911 3.79 % 23,509 3.73 % 402 0.06 % Interest Bearing Liabilities: Savings deposits $ 6,238 1.84 % $ 6,238 1.84 % $ - 0.00 % $ 777 0.24 % $ 777 0.24 % $ - 0.00 % Other time deposits 4,196 2.74 % 4,291 2.80 % (95 ) -0.06 % 602 0.55 % 1,222 1.12 % (620 ) -0.57 % Other borrowed money 2,113 3.92 % 2,130 3.95 % (17 ) -0.03 % 218 2.23 % 239 2.44 % (21 ) -0.21 % Federal funds purchased and securties sold under agreement to repurchase 427 4.27 % 427 4.27 % - 0.00 % 166 1.88 % 166 1.88 % - 0.00 % Subordinated notes 285 3.29 % 285 3.29 % - 0.00 % 284 3.29 % 284 3.29 % - 0.00 % Total Interest Bearing Liabilities 13,259 2.35 % 13,371 2.37 % (112 ) -0.02 % 2,047 0.44 % 2,688 0.58 % (641 ) -0.14 % Interest/Dividend income/yield 33,377 4.53 % 32,709 4.44 % 668 0.09 % 23,911 3.79 % 23,509 3.73 % 402 0.06 % Interest Expense / yield 13,259 2.35 % 13,371 2.37 % (112 ) -0.02 % 2,047 0.44 % 2,688 0.58 % (641 ) -0.14 % Net Interest Spread 20,118 2.18 % 19,338 2.07 % 780 0.11 % 21,864 3.35 % 20,821 3.15 % 1,043 0.20 % Net Interest Margin 2.73 % 2.63 % 0.10 % 3.47 % 3.30 % 0.17 % For the Six Months Ended June 30, 2023 For the Six Months Ended June 30, 2022 As Reported Excluding Acc/Amort Difference As Reported Excluding Acc/Amort Difference $ Yield $ Yield $ Yield $ Yield $ Yield $ Yield Interest Earning Assets: Loans $ 61,068 5.01 % $ 59,733 4.90 % $ 1,335 0.11 % $ 42,843 4.39 % $ 42,067 4.31 % $ 776 0.08 % Taxable investment securities 2,985 1.50 % 2,985 1.50 % - 0.00 % 2,639 1.24 % 2,639 1.24 % - 0.00 % Tax-exempt investment securities 193 1.93 % 193 1.93 % - 0.00 % 140 1.76 % 140 1.76 % - 0.00 % Fed funds sold & other 933 3.17 % 933 3.17 % - 0.00 % 188 0.30 % 188 0.30 % - 0.00 % Total Interest Earning Assets 65,179 4.47 % 63,844 4.38 % 1,335 0.09 % 45,810 3.63 % 45,034 3.57 % 776 0.06 % Interest Bearing Liabilities: Savings deposits $ 11,181 1.62 % $ 11,181 1.62 % $ - 0.00 % $ 1,365 0.21 % $ 1,365 0.21 % $ - 0.00 % Other time deposits 7,404 2.48 % 7,958 2.67 % (554 ) -0.19 % 1,374 0.61 % 2,613 1.17 % (1,239 ) -0.56 % Other borrowed money 3,393 3.90 % 3,428 3.94 % (35 ) -0.04 % 553 2.16 % 595 2.33 % (42 ) -0.17 % Federal funds purchased and securties sold under agreement to repurchase 832 4.22 % 832 4.22 % - 0.00 % 318 1.98 % 318 1.98 % - 0.00 % Subordinated notes 569 3.29 % 569 3.29 % - 0.00 % 553 3.21 % 553 3.21 % - 0.00 % Total Interest Bearing Liabilities 23,379 2.10 % 23,968 2.16 % (589 ) -0.06 % 4,163 0.44 % 5,444 0.58 % (1,281 ) -0.14 % Interest/Dividend income/yield 65,179 4.47 % 63,844 4.38 % 1,335 0.09 % 45,810 3.63 % 45,034 3.57 % 776 0.06 % Interest Expense / yield 23,379 2.10 % 23,968 2.16 % (589 ) -0.06 % 4,163 0.44 % 5,444 0.58 % (1,281 ) -0.14 % Net Interest Spread 41,800 2.37 % 39,876 2.22 % 1,924 0.15 % 41,647 3.19 % 39,590 2.99 % 2,057 0.20 % Net Interest Margin 2.87 % 2.74 % 0.13 % 3.30 % 3.14 % 0.16 %
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES NON-GAAP RECONCILIATION OF NET INCOME (in thousands of dollars) (in thousands of dollars) Three Months Ended Six Months Ended Non-GAAP Reconciliation of Net Income June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 (Unaudited) (Unaudited) Net income as reported $ 6,001 $ 8,271 $ 12,467 $ 16,373 Acquisition expenses 88 - 184 145 Tax effect on acquisition expenses (18 ) - (37 ) (30 ) Net income excluding acquisition expenses and tax effect $ 6,071 $ 8,271 $ 12,614 $ 16,488 Weighted average common shares outstanding including participating securities 13,632,440 13,065,975 13,624,094 13,066,123 Basic and diluted earnings per share $ 0.45 $ 0.63 $ 0.93 $ 1.26
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 June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Shares Outstanding 13,634,912 13,065,825 13,634,912 13,065,825 Tangible Equity Equity $ 304,663 $ 280,872 $ 304,663 $ 280,872 Goodwill 86,358 80,434 86,358 80,434 Other Intangible 8,437 3,974 8,437 3,974 Comprehensive Loss Adjustment* - - 35,922 31,261 CECL Adjustment** - - 2,528 - Tangible Equity $ 209,868 $ 196,464 $ 248,318 $ 227,725 Shares Outstanding 13,635 13,066 13,635 13,066 Tangible Book Equity per Share $ 15.39 $ 15.04 $ 18.21 $ 17.43 Actual Average Regulatory Average Year to Date Year to Date June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net Income $ 12,467 $ 16,373 $ 12,467 $ 16,373 Acquisition Costs - Tax Adjusted 147 115 147 115 Average Shares Outstanding 13,624,094 13,066,123 13,624,094 13,066,123 Average Tangible Equity Average Equity $ 303,635 $ 289,167 $ 303,635 $ 289,167 Average Goodwill 86,358 80,434 86,358 80,434 Average Other Intangible 8,942 4,235 8,942 4,235 Average Comprehensive Loss Adjustment* - - 34,921 16,893 Average CECL Adjustment** - - 2,528 Average Tangible Equity $ 208,336 $ 204,498 $ 245,784 $ 221,391 Average Shares Outstanding 13,624 13,066 13,624 13,066 Average Tangible Book Equity per Share $ 15.29 $ 15.65 $ 18.04 $ 16.94 Return on Average Tangible Equity 11.97 % 16.01 % 10.14 % 14.79 % Return on Average Tangible Equity w/o Acquisition 12.11 % 16.12 % 10.26 % 14.89 % *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.bankAndrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
andrew@smberger.com