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 29^th 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 $ 34,493 5.41 % $ 33,769 5.29 % $ 724 0.12 % 27,302 4.75 % 26,628 4.63 % $ 674 0.12 %
Taxable investment securities 1,660 1.72 % 1,660 1.72 % - 0.00 % 1,556 1.47 % 1,556 1.47 % - 0.00 %
Tax-exempt investment securities 89 1.87 % 89 1.87 % - 0.00 % 108 1.92 % 108 1.92 % - 0.00 %
Fed funds sold & other 2,028 5.69 % 2,028 5.69 % - 0.00 % 526 2.81 % 526 2.81 % - 0.00 %
* Total Interest Earning Assets* 38,270 4.93 % 37,546 4.84 % 724 0.09 % 29,492 4.18 % 28,818 4.08 % 674 0.10 %
Interest Bearing Liabilities:
Savings deposits $ 8,570 2.46 % $ 8,570 2.46 % $ - 0.00 % 3,427 0.98 % 3,427 0.98 % $ - 0.00 %
Other time deposits 6,445 3.68 % 6,381 3.64 % 64 0.04 % 1,551 1.28 % 2,010 1.66 % (459 ) -0.38 %
Other borrowed money 2,742 4.12 % 2,760 4.15 % (18 ) -0.03 % 1,209 3.58 % 1,227 3.64 % (18 ) -0.06 %
Federal funds purchased and securities sold under agreement to repurchase 293 4.08 % 293 4.08 % - 0.00 % 463 3.46 % 463 3.46 % - 0.00 %
Subordinated notes 285 3.29 % 285 3.29 % - 0.00 % 285 3.30 % 285 3.30 % - 0.00 %
* Total Interest Bearing Liabilities* 18,335 3.02 % 18,289 3.02 % 46 0.00 % 6,935 1.32 % 7,412 1.41 % (477 ) -0.09 %
Interest/Dividend income/yield 38,270 4.93 % 37,546 4.84 % 724 0.09 % 29,492 4.18 % 28,818 4.08 % 674 0.10 %
Interest Expense / yield 18,335 3.02 % 18,289 3.02 % 46 0.00 % 6,935 1.32 % 7,412 1.41 % (477 ) -0.09 %
Net Interest Spread 19,935 1.91 % 19,257 1.82 % 678 0.09 % 22,557 2.86 % 21,406 2.67 % 1,151 0.19 %
Net Interest Margin 2.57 % 2.48 % 0.09 % 3.20 % 3.03 % 0.17 % *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 $ 129,344 5.19 % $ 126,133 5.06 % $ 3,211 0.13 % 94,264 4.55 % 92,132 4.45 % $ 2,132 0.10 %
Taxable investment securities 6,204 1.57 % 6,204 1.57 % - 0.00 % 5,621 1.32 % 5,621 1.32 % - 0.00 %
Tax-exempt investment securities 366 1.88 % 366 1.88 % - 0.00 % 337 1.82 % 337 1.82 % - 0.00 %
Fed funds sold & other 3,894 4.58 % 3,894 4.58 % - 0.00 % 927 0.97 % 927 0.97 % - 0.00 %
* Total Interest Earning Assets* 139,808 4.67 % 136,597 4.57 % 3,211 0.10 % 101,149 3.87 % 99,017 3.79 % 2,132 0.08 %
Interest Bearing Liabilities:
Savings deposits $ 27,424 1.99 % $ 27,424 1.99 % $ - 0.00 % 6,378 0.48 % 6,378 0.48 % $ - 0.00 %
Other time deposits 19,499 3.04 % 19,839 3.10 % (340 ) -0.06 % 3,505 0.78 % 5,822 1.29 % (2,317 ) -0.51 %
Other borrowed money 8,876 4.03 % 8,947 4.06 % (71 ) -0.03 % 2,160 2.90 % 2,241 3.01 % (81 ) -0.11 %
Federal funds purchased and securities sold under agreement to repurchase 1,474 4.16 % 1,474 4.16 % - 0.00 % 1,197 2.64 % 1,197 2.64 % - 0.00 %
Subordinated notes 1,138 3.29 % 1,138 3.29 % - 0.00 % 1,122 3.25 % 1,122 3.25 % - 0.00 %
* Total Interest Bearing Liabilities* 58,411 2.53 % 58,822 2.55 % (411 ) -0.02 % 14,362 0.74 % 16,760 0.86 % (2,398 ) -0.12 %
Interest/Dividend income/yield 139,808 4.67 % 136,597 4.57 % 3,211 0.10 % 101,149 3.87 % 99,017 3.79 % 2,132 0.08 %
Interest Expense / yield 58,411 2.53 % 58,822 2.55 % (411 ) -0.02 % 14,362 0.74 % 16,760 0.86 % (2,398 ) -0.12 %
Net Interest Spread 81,397 2.14 % 77,775 2.02 % 3,622 0.12 % 86,787 3.13 % 82,257 2.93 % 4,530 0.20 %
Net Interest Margin 2.72 % 2.60 % 0.12 % 3.32 % 3.15 % 0.17 %
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 Value* Year to Date Year to Date December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022
Shares Outstanding 13,664,641 13,608,422 13,664,641 13,608,422
Tangible Equity Equity $ 316,543 $ 298,140 $ 316,543 $ 298,140 Goodwill 86,358 86,358 86,358 86,358 Other Intangible 7,548 9,327 7,548 9,327
Comprehensive Loss Adjustment* - - 29,012 38,233
CECL Adjustment** - - 2,528 -
Tangible Equity $ 222,637 $ 202,455 $ 254,177 $ 240,688
Shares Outstanding 13,665 13,608 13,665 13,608
Tangible Book Equity per Share *$* * 16.29* *$* * 14.88* *$* * 18.60* *$* * 17.69* Actual Average Regulatory Average Year to Date Year to Date December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022
Net Income $ 22,787 $ 32,515 $ 22,787 $ 32,515
Acquisition Costs - Tax Adjusted 166 2,066 166 2,066
Average Shares Outstanding 13,641,336 13,206,713 13,641,336 13,206,713
Average Tangible Equity Average Equity $ 305,481 $ 287,868 $ 305,481 $ 287,868 Average Goodwill 86,358 80,164 86,358 80,164 Average Other Intangible 8,494 4,997 8,494 4,997
Average Comprehensive Loss Adjustment* - - 36,443 26,393
Average CECL Adjustment** - - 2,528 -
Average Tangible Equity $ 210,629 $ 202,707 $ 249,600 $ 229,100
Average Shares Outstanding 13,641 13,207 13,641 13,207
Average Tangible Book Equity per Share *$* * 15.44* *$* * 15.35* *$* * 18.30* *$* * 17.35*
Return on Average Tangible Equity *10.82* *%* *16.04* *%* *9.13* *%* *14.19* *%*
Return on Average Tangible Equity w/o Acquisition *10.90* *%* *17.06* *%* *9.20* *%* *15.09* *%*
*The Bank has adopted the Accumulated Other Comprehensive Income (AOCI) opt out election which removed AOCI from the calculation of tangible equity for regulatory purposes.
**ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method and the Bank has elected to spread the Capital adjustment over three years. The first year permits 75% of the capital adjustment to be removed from the calculation of tangible equity for regulatory purposes.