Farmers & Merchants Bancorp, Inc. Reports 2023 Third-Quarter and Year-to-Date Financial Results
ARCHBOLD, Ohio, Oct. 26, 2023 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2023 third quarter and year-to-date September 30, 2023.*2023 Third Quarter Financial and Operating Highlights *(on a year-over-year basis unless noted):
· 82 consecutive quarters of profitability
· Net income was $4.8 million, or $0.35 per basic and diluted share
· Stockholders’ equity increased 8.1% to $303.2 million
· Regulatory tangible book value per share increased 2.8% to $18.36 per share
· Total loans were a record of $2.53 billion and increased 7.2% from $2.36 billion at December 31, 2022
· Total assets increased 16.2% to a record $3.23 billion
· Deposits increased 4.3% to a record $2.58 billion
· Asset quality remains strong as nonperforming loans were 0.89% of total loans
· Net charge-offs to average loans were 0.00%
· Allowance for credit losses was 112.61% of nonperforming loans
· Tier 1 leverage ratio decreased to 8.02% from 9.11% last year
· Strategic investments to support long-term growth continue as F&M has opened new offices, unveiled new branding and a new logo, launched new deposit products, and implemented new features across its website and online banking platform
Lars B. Eller, President and Chief Executive Officer, stated, “Throughout 2023, we have been focused on executing against our strategic growth plan, while simultaneously navigating a challenging banking environment. I am pleased with the progress we are making as F&M opened two full-service offices in Oxford and Toledo, Ohio last quarter and since the end of the third quarter, the Bank has opened additional offices in Fort Wayne, Indiana and Birmingham, Michigan. We have also recently launched a new shared services group formation, invested in new internal audit and marketing capabilities, and restructured our HR department.”
Mr. Eller continued, “With most of the planned investments behind us, we are focused on scaling our new offices by expanding relationships within these new and existing markets. Early indications are encouraging and reflect F&M’s strong team of local bankers. As a result of our efforts across our new and existing offices, third-quarter deposits increased 4.3% from the second quarter to a record $2.58 billion, which included a 3.3% increase in non-interest-bearing deposits. We expect future deposit growth over the next quarters as our growth strategies accelerate and we benefit from new checking accounts that have been opened since the start of the year.”
*Income Statement*
Net income for the 2023 third quarter ended September 30, 2023, was $4.8 million, compared to $9.0 million for the same period last year. Net income per basic and diluted share for the 2023 third quarter was $0.35, compared to $0.68 for the same period last year. Net income for the 2023 nine months ended September 30, 2023, was $17.2 million, compared to $25.3 million for the same period last year. Net income per basic and diluted share for the 2023 nine months was $1.26, compared to $1.94 for the same period last year.
“The rapid rise in the Federal Funds Rate continued to impact our cost of funds and increase the competition for deposits. As a result, our cost of interest-bearing liabilities has increased to 2.82% at September 30, 2023, from 0.68% at September 30, 2022. 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. 13.3% of the loan portfolio will be subject to repricing next quarter with 22.3% subject to repricing in the next twelve months. These trends during the third quarter caused a 12.9% year-over-year decline in net interest income and impacted overall profitability. As we navigate a challenging rate environment over the near term, we continue to believe we are well positioned for net income growth to re-accelerate in 2024 and beyond, as we benefit from continued strong asset quality, and the contribution of our growth initiatives,” continued Mr. Eller.
*Deposits*
At September 30, 2023, total deposits were $2.58 billion, an increase of 12.8% from September 30, 2022, and an increase of 4.3% from December 31, 2022. The Company’s cost of interest-bearing liabilities was 2.82% for the quarter ended September 30, 2023, compared to 0.68% for the quarter ended September 30, 2022, and 1.32% for the quarter ended December 31, 2022.
At September 30, 2023, F&M’s average deposit account had an average balance of $25,426. In addition, uninsured deposits to total deposits were approximately 9.1% for the quarter ended September 30, 2023, and the percentage of uninsured by the FDIC was 18.84%.
*Loan Portfolio and Asset Quality*
Total loans, net at September 30, 2023, increased 18.1%, or by $3.87 million to $2.53 billion, compared to $2.14 billion at September 30, 2022, and up 7.2% 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 13.2% organically, or by $282.8 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 $22.4 million, or 0.89% of total loans at September 30, 2023, compared to $5.5 million, or 0.26% at September 30, 2022. At September 30, 2023, nonperforming loans increased by $16.2 million from June 30, 2023, which was primarily due to one agricultural relationship where the Bank is well collateralized and does not foresee a loss.
F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 51.6% of the Company’s total loan portfolio at September 30, 2023. In addition, F&M’s commercial real estate office credit exposure represented 5.1% of the Company's total loan portfolio at September 30, 2023, with a weighted average loan-to-value of approximately 64% and an average loan of $870,000.
F&M’s CRE portfolio included the following categories at September 30, 2023:*CRE Category* *Dollar *
*Balance*
*Percent of CRE Portfolio*^*(*^**)*
*Percent of Total Loan Portfolio*^*(*^**)*
Multi-family $ 241,804 18.5 % 9.5 %
Industrial $ 228,644 17.5 % 9.0 %
Retail $ 212,383 16.3 % 8.4 %
Hotels $ 133,579 10.2 % 5.3 %
Office $ 129,619 9.9 % 5.1 %
Gas Stations $ 61,484 4.7 % 2.4 %
Food Service $ 49,578 3.8 % 2.0 %
Mixed Use $ 39,842 3.1 % 1.6 %
Senior Living $ 35,788 2.7 % 1.4 %
Other $ 171,387 13.1 % 6.8 %
Total CRE $ 1,304,118 100.0 % 51.4 %
* Numbers have been rounded
At September 30, 2023, the Company’s allowance for credit losses to nonperforming loans was 112.61%, compared to 365.44% at September 30, 2022. The allowance to total loans was 1.00% at September 30, 2023, compared to 0.93% at September 30, 2022. As a result of F&M’s recent acquisitions, the Company had an accretable yield adjustment of $4.6 million at September 30, 2023, which further enhances F&M’s allowance, compared to $6.0 million at September 30, 2022. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.18% at September 30, 2023, compared to 1.21% at September 30, 2022.
Mr. Eller concluded, “At September 30, 2023, we saw nonperforming loans increase to 0.89% primarily due to one agricultural relationship where the Bank is well collateralized and does not foresee a loss. As we work through this credit, we are closely monitoring our loan portfolio for signs of stress, but overall, we expect our conservative credit culture and pricing will allow us to maintain excellent asset quality throughout various economic cycles. In addition, at September 30, 2023, we had the lowest level of loans over 30 days past due this year. While we continue to believe 2023 will be a transitional year, we believe we are well positioned to emerge from this period with increased market share and higher profitability and I look forward to reporting on our success in the coming quarters. Our financial performance ratios reflect the pressure on the net interest margin and the cost of the strategic investments we have made. We are cognizant of the short-term expense and are confident it will enable long-term gains.”
*Stockholders’ Equity and Dividends*
Total stockholders’ equity increased 8.1% to $303.2 million at September 30, 2023, from $280.6 million at September 30, 2022. At September 30, 2023, the Company had a Tier 1 leverage ratio of 8.02%, compared to 9.11% at September 30, 2022.
Based on a regulatory basis, tangible stockholders’ equity increased to $250.9 million at September 30, 2023, compared to $234.1 million at September 30, 2022. On a per share basis, tangible stockholders’ equity at September 30, 2023, was $18.36 per share, compared to $17.86 per share at September 30, 2022.
For the nine months ended September 30, 2023, the Company has declared cash dividends of $0.63 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 over 28 consecutive years. For the nine months ended September 30, 2023, the dividend payout ratio was 60.07% compared to 30.45% 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 * *Nine Months Ended* September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 September 30, 2023 September 30, 2022
*Interest Income*
Loans, including fees $ 33,783 $ 31,365 $ 29,703 $ 27,302 $ 24,119 $ 94,851 $ 66,962
Debt securities:
U.S. Treasury and government agencies 1,005 1,030 1,068 1,118 1,049 3,103 3,107
Municipalities 392 401 408 420 373 1,201 995
Dividends 246 148 123 126 93 517 192
Federal funds sold 6 9 21 2 - 36 19
Other 927 424 479 524 213 1,830 382
Total interest income 36,359 33,377 31,802 29,492 25,847 101,538 71,657
*Interest Expense*
Deposits 13,323 10,434 8,151 4,978 2,166 31,908 4,905
Federal funds purchased and securities sold
under agreements to repurchase 349 427 405 463 416 1,181 734
Borrowed funds 2,741 2,113 1,280 1,209 398 6,134 951
Subordinated notes 284 285 284 285 284 853 837
Total interest expense 16,697 13,259 10,120 6,935 3,264 40,076 7,427
*Net Interest Income - Before Provision for Credit Losses* * 19,662 20,118 21,682 22,557 22,583 61,462 64,230
*Provision for Credit Losses - Loans* * 460 143 817 755 1,637 1,420 3,845
*Provision for Credit Losses - Off Balance Sheet Credit Exposures* * (76 ) (129 ) 62 - - (143 ) -
*Net Interest Income After Provision for Credit Losses** 19,278 20,104 20,803 21,802 20,946 60,185 60,385
*Noninterest Income*
Customer service fees 2,208 2,361 2,447 2,862 2,300 7,016 7,096
Other service charges and fees 1,162 1,803 2,554 1,115 1,105 5,519 3,111
Net gain on sale of loans 294 108 67 165 327 469 1,188
Net loss on sale of available-for-sale securities - - (891 ) - - (891 ) -
Total noninterest income 3,664 4,272 4,177 4,142 3,732 12,113 11,395
*Noninterest Expense*
Salaries and wages 6,777 6,500 6,657 6,353 5,479 19,934 16,347
Employee benefits 2,066 2,071 2,165 1,911 1,392 6,302 4,992
Net occupancy expense 950 840 856 753 693 2,646 1,813
Furniture and equipment 1,189 1,211 1,252 1,096 1,047 3,652 3,111
Data processing 840 796 726 1,917 781 2,362 2,039
Franchise taxes 434 379 366 (45 ) 254 1,179 1,429
ATM expense 640 683 623 561 580 1,946 1,656
Advertising 865 830 514 531 578 2,209 1,115
Net (gain) loss on sale of other assets owned 49 - - 12 - 49 (271 )
FDIC assessment 586 496 306 250 271 1,388 655
Mortgage servicing rights amortization - net 106 164 159 110 (50 ) 429 35
Consulting fees 179 231 230 637 254 640 665
Other general and administrative 2,363 2,643 3,077 2,964 2,192 8,083 6,613
Total noninterest expense 17,044 16,844 16,931 17,050 13,471 50,819 40,199
*Income Before Income Taxes* 5,898 7,532 8,049 8,894 11,207 21,479 31,581
*Income Taxes* 1,121 1,531 1,583 1,706 2,253 4,235 6,254
*Net Income* 4,777 6,001 6,466 7,188 8,954 17,244 25,327
*Other Comprehensive Income (Loss) (Net of Tax):*
Net unrealized gain (loss) on available-for-sale securities (4,514 ) (5,996 ) 8,030 (628 ) (8,197 ) (2,480 ) (43,738 )
Reclassification adjustment for realized loss on sale of available-for-sale securities - - 891 - - 891 -
Net unrealized gain (loss) on available-for-sale securities (4,514 ) (5,996 ) 8,921 (628 ) (8,197 ) (1,589 ) (43,738 )
Tax expense (benefit) (947 ) (1,260 ) 1,874 (132 ) (1,721 ) (333 ) (9,185 )
Other comprehensive income (loss) (3,567 ) (4,736 ) 7,047 (496 ) (6,476 ) (1,256 ) (34,553 )
*Comprehensive Income (Loss)* $ 1,210 $ 1,265 $ 13,513 $ 6,692 $ 2,478 $ 15,988 $ (9,226 )
*Basic Earnings Per Share* $ 0.35 $ 0.44 $ 0.47 $ 0.53 $ 0.68 $ 1.26 $ 1.94
*Diluted Earnings Per Share* $ 0.35 $ 0.44 $ 0.47 $ 0.53 $ 0.68 $ 1.26 $ 1.94
*Dividends Declared* $ 0.2100 $ 0.2100 $ 0.2100 $ 0.2100 $ 0.2100 $ 0.6300 $ 0.6025
*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) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
*Assets* Cash and due from banks $ 151,711 $ 69,760 $ 62,780 $ 83,085 $ 69,680 Federal funds sold 1,471 1,433 1,545 1,324 990 Total cash and cash equivalents 153,182 71,193 64,325 84,409 70,670 Interest-bearing time deposits 2,989 3,485 4,435 4,442 5,187 Securities - available-for-sale 348,255 363,225 372,975 390,789 395,485 Other securities, at cost 16,995 17,535 11,543 9,799 8,227 Loans held for sale 1,039 1,459 951 827 2,182 Loans, net 2,504,329 2,490,883 2,422,018 2,336,074 2,122,626 Premises and equipment 31,723 30,398 28,679 28,381 26,484 Construction in progress 3,044 2,290 1,565 278 - Goodwill 86,358 86,358 86,358 86,358 80,434 Loan servicing rights 5,687 5,635 4,985 3,549 3,583 Bank owned life insurance 33,691 33,470 33,269 33,073 28,051 Other assets 47,388 41,512 38,972 37,372 40,831
*Total Assets* $ 3,234,680 $ 3,147,443 $ 3,070,075 $ 3,015,351 $ 2,783,760 *Liabilities and Stockholders' Equity*
*Liabilities* Deposits Noninterest-bearing $ 505,358 $ 488,678 $ 520,145 $ 532,794 $ 506,928 Interest-bearing NOW accounts 778,133 770,113 800,230 750,887 705,888 Savings 591,344 581,192 590,854 627,203 607,375 Time 700,445 628,757 601,939 557,980 462,845 Total deposits 2,575,280 2,468,740 2,513,168 2,468,864 2,283,036 Federal funds purchased and securities sold under agreements to repurchase 30,527 51,567 30,496 54,206 55,802 Federal Home Loan Bank (FHLB) advances 266,286 266,818 164,327 127,485 102,147 Other borrowings - - - 10,000 10,000 Subordinated notes, net of unamortized issuance costs 34,673 34,644 34,615 34,586 34,557 Dividend payable 2,838 2,834 2,831 2,832 2,727 Accrued expenses and other liabilities 21,892 18,177 18,881 19,238 14,913 Total liabilities 2,931,496 2,842,780 2,764,318 2,717,211 2,503,182
*Commitments and Contingencies*
*Stockholders' Equity* Common stock - No par value 20,000,000 shares authorized; issued and outstanding 14,564,425 shares 9/30/23 and 12/31/22 135,171 135,647 135,241 135,497 121,811 Treasury stock - 898,843 shares 9/30/23 and 956,003 shares 12/31/22 (11,008 ) (11,298 ) (11,310 ) (11,573 ) (11,547 ) Retained earnings 218,510 216,236 213,012 212,449 208,051 Accumulated other comprehensive loss (39,489 ) (35,922 ) (31,186 ) (38,233 ) (37,737 ) Total stockholders' equity 303,184 304,663 305,757 298,140 280,578
*Total Liabilities and Stockholders' Equity* $ 3,234,680 $ 3,147,443 $ 3,070,075 $ 3,015,351 $ 2,783,760
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA *For the Three Months Ended* *For the Nine Months Ended*
*Selected financial data* September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 September 30, 2023 September 30, 2022
Return on average assets 0.59 % 0.77 % 0.84 % 0.96 % 1.31 % 0.73 % 1.25 %
Return on average equity 6.26 % 7.84 % 8.59 % 10.00 % 12.53 % 7.52 % 11.72 %
Yield on earning assets 4.79 % 4.53 % 4.41 % 4.18 % 4.00 % 4.57 % 3.76 %
Cost of interest bearing liabilities 2.82 % 2.35 % 1.85 % 1.32 % 0.68 % 2.35 % 0.53 %
Net interest spread 1.97 % 2.18 % 2.56 % 2.86 % 3.32 % 2.22 % 3.23 %
Net interest margin 2.59 % 2.73 % 3.01 % 3.20 % 3.49 % 2.77 % 3.37 %
Efficiency 73.07 % 69.06 % 63.53 % 50.46 % 51.19 % 68.24 % 53.16 %
Dividend payout ratio 60.07 % 47.22 % 43.79 % 39.39 % 30.45 % 49.50 % 40.58 %
Tangible book value per share ^(1) $ 18.36 $ 18.21 $ 17.92 $ 17.69 $ 17.86
Tier 1 leverage ratio 8.02 % 9.85 % 8.36 % 8.39 % 9.11 %
Average shares outstanding 13,650,823 13,632,440 13,615,655 13,606,876 13,083,145 13,633,101 13,071,859
*Loans* September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022
(Dollar amounts in thousands)
Commercial real estate $ 1,304,118 $ 1,280,902 $ 1,225,315 $ 1,152,603 $ 1,063,661
Agricultural real estate 225,672 230,837 227,897 220,819 205,089
Consumer real estate 512,973 506,866 502,974 494,423 416,001
Commercial and industrial 250,891 253,444 241,598 242,360 229,388
Agricultural 123,735 128,344 131,467 128,733 128,615
Consumer 83,024 88,312 89,588 89,147 70,602
Other 31,083 28,996 29,316 29,818 30,662 Less: Net deferred loan fees and costs (1,890 ) (1,908 ) (1,503 ) (1,516 ) (1,402 )
Total loans,net $ 2,529,606 $ 2,515,793 $ 2,446,652 $ 2,356,387 $ 2,142,616
*Asset quality data* September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022
(Dollar amounts in thousands)
Nonaccrual loans $ 22,447 $ 6,295 $ 7,717 $ 4,689 $ 5,470
90 day past due and accruing $ - $ - $ - $ - $ -
Nonperforming loans $ 22,447 $ 6,295 $ 7,717 $ 4,689 $ 5,470
Other real estate owned $ - $ - $ - $ - $ -
Nonperforming assets $ 22,447 $ 6,295 $ 7,717 $ 4,689 $ 5,470
Allowance for credit losses ^(2) $ 25,277 $ 24,910 $ 24,507 $ 20,313 $ 19,990
Accretable yield adjustment 4,565 5,209 5,754 6,427 5,959
Adjusted credit losses with accretable yield included ^(2) $ 29,842 $ 30,119 $ 30,261 $ 26,740 $ 25,949
Allowance for credit losses/total loans ^(2) 1.00 % 0.99 % 1.00 % 0.86 % 0.93 %
Adjusted credit losses with accretable yield/total loans ^(2) 1.18 % 1.20 % 1.24 % 1.13 % 1.21 %
Net charge-offs: Quarter-to-date $ 93 $ (133 ) $ 60 $ 431 $ 71 Year-to-date $ 97 $ (73 ) $ 60 $ 529 $ 97
Net charge-offs to average loans Quarter-to-date 0.00 % -0.01 % 0.00 % 0.02 % 0.00 % Year-to-date 0.00 % -0.00 % 0.00 % 0.03 % 0.00 %
Nonperforming loans/total loans 0.89 % 0.25 % 0.32 % 0.20 % 0.26 %
Allowance for credit losses/nonperforming loans ^(2) 112.61 % 395.71 % 319.22 % 273.67 % 365.44 %
(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* *September 30, 2023* *September 30, 2022*
Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate
Loans $ 2,536,885 $ 33,783 5.33 % $ 2,082,486 $ 24,119 4.63 %
Taxable investment securities 393,910 1,559 1.58 % 422,250 1,426 1.35 %
Tax-exempt investment securities 23,986 84 1.77 % 25,169 89 1.79 %
Fed funds sold & other 85,515 933 4.36 % 58,266 213 1.46 %
Total Interest Earning Assets 3,040,296 $ 36,359 4.79 % 2,588,171 $ 25,847 4.00 %
Nonearning Assets 180,193 150,044
Total Assets $ 3,220,489 $ 2,738,215
Interest Bearing Liabilities:
Savings deposits $ 1,367,168 $ 7,673 2.24 % $ 1,328,344 $ 1,586 0.48 %
Other time deposits 667,880 5,650 3.38 % 423,668 580 0.55 %
Other borrowed money 266,467 2,741 4.11 % 60,455 398 2.63 %
Fed funds purchased & securities sold under agreement to repurch. 34,128 349 4.09 % 63,388 416 2.63 %
Subordinated notes 34,654 284 3.28 % 34,538 284 3.29 %
Total Interest Bearing Liabilities $ 2,370,297 $ 16,697 2.82 % $ 1,910,393 $ 3,264 0.68 %
Noninterest Bearing Liabilities 544,801 542,077
Stockholders' Equity $ 305,391 $ 285,745
Net Interest Income and Interest Rate Spread $ 19,662 1.97 % $ 22,583 3.32 %
Net Interest Margin 2.59 % 3.49 % 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 Nine Months Ended* *For the Nine Months Ended* *September 30, 2023* *September 30, 2022*
Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate
Loans $ 2,470,770 $ 94,851 5.12 % $ 1,997,081 $ 66,962 4.47 %
Taxable investment securities 396,917 4,544 1.53 % 424,882 4,065 1.28 %
Tax-exempt investment securities 24,865 277 1.88 % 21,794 229 1.77 %
Fed funds sold & other 67,869 1,866 3.67 % 101,922 401 0.52 %
Total Interest Earning Assets 2,960,421 $ 101,538 4.57 % 2,545,679 $ 71,657 3.76 %
Nonearning Assets 176,568 158,378
Total Assets $ 3,136,989 $ 2,704,057
Interest Bearing Liabilities:
Savings deposits $ 1,373,110 $ 18,854 1.83 % $ 1,315,793 $ 2,951 0.30 %
Other time deposits 620,071 13,054 2.81 % 439,534 1,954 0.59 %
Other borrowed money 204,927 6,134 3.99 % 54,184 951 2.34 %
Fed funds purchased & securities sold under agreement to repurch. 37,649 1,181 4.18 % 42,584 734 2.30 %
Subordinated notes 34,625 853 3.28 % 34,509 837 3.23 %
Total Interest Bearing Liabilities $ 2,270,382 $ 40,076 2.35 % $ 1,886,604 $ 7,427 0.53 %
Noninterest Bearing Liabilities 561,001 529,439
Stockholders' Equity $ 305,606 $ 288,014
Net Interest Income and Interest Rate Spread $ 61,462 2.22 % $ 64,230 3.23 %
Net Interest Margin 2.77 % 3.37 % 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
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 September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Shares Outstanding 13,665,582 13,107,500 13,665,582 13,107,500
Tangible Equity Equity $ 303,184 $ 280,578 $ 303,184 $ 280,578 Goodwill 86,358 80,434 86,358 80,434 Other Intangible 7,992 3,744 7,992 3,744
Comprehensive Loss Adjustment* - - 39,489 37,737
CECL Adjustment** - - 2,528 -
Tangible Equity $ 208,834 $ 196,400 $ 250,851 $ 234,137
Shares Outstanding 13,666 13,108 13,666 13,108
Tangible Book Equity per Share *$* * 15.28* *$* * 14.98* *$* * 18.36* *$* * 17.86* Actual Average Regulatory Average Year to Date Year to Date September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Net Income $ 17,244 $ 25,327 $ 17,244 $ 25,327
Acquisition Costs - Tax Adjusted 147 463 147 463
Average Shares Outstanding 13,633,101 13,071,859 13,633,101 13,071,859
Average Tangible Equity Average Equity $ 305,606 $ 288,014 $ 305,606 $ 288,014 Average Goodwill 86,358 80,434 86,358 80,434 Average Other Intangible 8,717 4,119 8,717 4,119
Average Comprehensive Loss Adjustment* - - 35,497 21,181
Average CECL Adjustment** - - 2,528 -
Average Tangible Equity $ 210,531 $ 203,461 $ 248,556 $ 224,642
Average Shares Outstanding 13,633 13,072 13,633 13,072
Average Tangible Book Equity per Share *$* * 15.44* *$* * 15.56* *$* * 18.23* *$* * 17.19*
Return on Average Tangible Equity *10.92* *%* *16.60* *%* *9.25* *%* *15.03* *%*
Return on Average Tangible Equity w/o Acquisition *11.01* *%* *16.90* *%* *9.33* *%* *15.31* *%*
*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.