8-K
FARMERS & MERCHANTS BANCORP INC (FMAO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 14, 2022
Farmers & Merchants Bancorp, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Ohio | 001-38084 | 34-1469491 |
|---|---|---|
| (State or Other Jurisdiction | (Commission | (IRS Employer |
| of Incorporation) | File Number) | Identification No.) |
| 307 North Defiance Street, Archbold, Ohio | 43502 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant's Telephone Number, including Area Code (419) 446-2501
N/A
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of Each Exchange |
|---|---|---|
| Common Stock, No Par Value | FMAO | NASDAQ Capital Market |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17-CFR 240.13e-4(c)) |
| --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02.Results of Operation and Financial Condition
On February 14, 2022, Farmers & Merchants Bancorp, Inc. issued a press release (the “Release”) announcing its earnings for the three and twelve months ended December 31, 2021. A copy of the press release is attached hereto as Exhibit 99 and is incorporated by reference herein.
ITEM 9.01.Financial Statements and Exhibits
| (d) | Exhibits. |
|---|---|
| Exhibit<br><br><br>Number | Exhibit |
| --- | --- |
| 99 | Company Press Release dated February 14, 2022 |
| 104 | The Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| --- | --- |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto authorized.
| FARMERS & MERCHANTS BANCORP, INC. | ||
|---|---|---|
| (Registrant) | ||
| Dated: February 14, 2022 | /s/ Lars B. Eller | |
| Lars B. Eller | ||
| President and Chief Executive Officer | ||
| /s/ Barbara J. Britenriker | ||
| Barbara J. Britenriker | ||
| Executive Vice President and Chief Financial Officer |
fmao-ex99_6.htm
Exhibit 99
 <br><br><br>Post Office Box 216<br><br><br>307 North Defiance Street<br><br><br>Archbold, Ohio 43502 |
NEWS RELEASE |
|---|---|
| Company Contact: | Investor and Media Contact: |
| --- | --- |
| Lars B. Eller<br><br><br>President and Chief Executive Officer<br><br><br>Farmers & Merchants Bancorp, Inc.<br><br><br>(419) 446-2501<br><br><br>leller@fm.bank | Andrew M. Berger<br><br><br>Managing Director<br><br><br>SM Berger & Company, Inc.<br><br><br>(216) 464-6400<br><br><br>andrew@smberger.com |
Farmers & Merchants Bancorp, Inc. Reports
Record 2021 Fourth-Quarter and Full-Year Financial Results
ARCHBOLD, OHIO, February 14, 2022, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2021 fourth quarter and twelve months ended December 31, 2021.
2021 Fourth Quarter Financial Highlights Include (on a year-over-year basis unless noted):
| • | Net income increased 13.4% to a quarterly record of $7.7 million, or $0.59 per basic and diluted share |
|---|---|
| • | Average shares outstanding increased 16.7% as a result of the Perpetual Federal Savings Bank Acquisition |
| --- | --- |
| • | Adjusted net income, excluding one-time tax adjusted acquisition expenses, increased 27.8% to $8.7 million |
| --- | --- |
| • | Adjusted earnings, excluding one-time tax adjusted acquisition expenses, increased 10.0% to $0.66 per basic and diluted share |
| --- | --- |
| • | Net interest income after provision for loan losses increased 38.7% to a quarterly record of $19.6 million |
| --- | --- |
| • | Fourth quarter after-tax income benefited from $0.3 million of accelerated fees associated with the Paycheck Protection Program (“PPP”) compared to $1.2 million in the 2020 fourth quarter |
| --- | --- |
| • | Net charge-offs to average loans were -0.01%, the third consecutive quarter at or below 0.00% |
| --- | --- |
| • | Adjusted return on average tangible equity, excluding one-time tax adjusted acquisition expenses, increased to 13.09% from 10.89% on a year-over-year basis |
| --- | --- |
| • | Increased the regular quarterly cash dividend payment by 11.8% to $0.19 per share |
| --- | --- |
2021 Full-Year Financial Highlights Include (on a year-over-year basis unless noted):
| • | Total loans increased 42.8% to $1.842 billion, and included $2.9 million of PPP loans |
|---|---|
| • | Total loans increased by 15.9% organically and without PPP loans |
| --- | --- |
| • | Total assets increased 38.2% to a record $2.638 billion |
| --- | --- |
| • | Deposits increased 37.4% to a record $2.193 billion |
| --- | --- |
| • | Net interest income after provision for loan losses increased 25.1% to $66.1 million |
| --- | --- |
| • | Net income increased 16.9% to an annual record of $23.5 million |
| --- | --- |
| • | Earnings increased 11.7% to an annual record of $2.01 per basic and diluted share |
| --- | --- |
| • | Adjusted net income, excluding one-time tax adjusted acquisition expenses, increased 32.5% to $26.6 million |
| --- | --- |
| • | Adjusted earnings, excluding one-time tax adjusted acquisition expenses, increased 26.7% to $2.28 per basic and diluted share |
| --- | --- |
| • | F&M raised its quarterly dividend payment two times during 2021, and the 2021 annual cash dividend increased 7.6% to $0.71 per share, representing the 27^th^ consecutive annual dividend increase |
| --- | --- |
| • | Provided a record $435,000 of charitable donations to support organizations throughout Indiana and Ohio |
| --- | --- |
“2021 is the seventh consecutive year F&M has produced record financial results, including record annual net income, earnings per share, loans, and dividends. I am proud of our track record of earnings growth, strong asset quality, and returns to shareholders, which reflects the successful execution of our strategic growth plan, the dedication and hard work of our 387 team members, and the valuable financial services we provide our local communities. Despite our recent success, we remain focused on becoming a $3.0 billion asset bank. We believe 2022 will be a transformative
year for F&M as we benefit from the three acquisitions we completed over the past 12 months, our 2021 office realignment initiative, and our recently opened offices and LPOs,” stated Lars B. Eller, President and Chief Executive Officer.
Mr. Eller continued, “As we execute against our strategic growth plan, we remain rooted in our communities and continue to focus on creating value for our shareholders, associates, and the markets in which we operate. During 2021, F&M’s Board of Directors approved two increases to our regular quarterly dividend payment, which was up 7.6% over the prior year. In fact, according to data from S&P Global Market Intelligence, of the nearly 800 publicly traded banks, F&M has the 11^th^ longest track record of consecutive dividend increases. For the year, we also increased wages demonstrating our commitment to our associates, and ensuring we continue to attract and retain fantastic team members. Finally, I am extremely proud of our continued commitment to our local communities. For 2021, our support to organizations within our markets increased 23.9% to a record $435,000.”
Income Statement
Net income for the 2021 fourth quarter ended December 31, 2021, was $7.7 million, compared to $6.8 million for the same period last year. Net income per basic and diluted share for the 2021 fourth quarter was $0.59, compared to $0.60 for the same period last year. The $0.01 decline in net income per basic and diluted share was due to a 16.7% year-over-year increase in the average shares outstanding as a result of the Perpetual Federal Savings Bank acquisition. Net income for the 2021 twelve-month period ended December 31, 2021, was $23.5 million, compared to $20.1 million for the same period last year. Net income per basic and diluted share for the 2021 twelve months was $2.01, compared to $1.80 for the same period last year.
Adjusted net income for the 2021 fourth quarter was $8.7 million, or $0.66 per diluted share, compared to $6.8 million, or $0.60 per diluted share in the prior year quarter. Adjusted net income accounts for the impact of one-time acquisition expenses. Adjusted net income for the year ended December 31, 2021, was $26.6 million, or $2.28 per diluted share, compared to $20.1 million, or $1.80 per diluted share in the prior year.
Mr. Eller continued, “The Bank has had 19 consecutive months with an operating efficiency ratio in the 50% range when removing affiliate and acquisition expenses. We believe earnings growth will accelerate throughout 2022 as our strong financial results benefit from our larger scale, strong asset quality, and prudent expense management.”
Deposits
At December 31, 2021, total deposits were $2.193 billion, an increase of 37.4% from December 31, 2020, and an increase of 17.5% from September 30, 2021. In addition, F&M continues to see growing customer preferences to more stable and secure saving instruments as deposits have increased since the COVID-19 crisis began. The Company’s cost of interest-bearing liabilities improved to 0.48% for the year ended December 31, 2021, compared to 0.87% for the year ended December 31, 2020.
Loan Portfolio and Asset Quality
Total loans, net at December 31, 2021, increased 42.6% to $1.857 billion, compared to $1.303 billion at December 31, 2020. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of both the Perpetual Federal Savings Bank, Inc. and Ossian Financial Services, Inc. acquisitions. Loans increased 15.9% organically from the same period a year ago when not including the Perpetual and Ossian acquisitions, and the impact of PPP loans. During the 2021 fourth quarter and full year, the Company processed $6.9 million and $84.5 million, respectively, of PPP loan forgiveness and principal payments received, resulting in a total of $2.9 million of PPP loans within F&M’s loan portfolio at December 31, 2021. Under the second round of PPP, F&M funded $51.2 million of PPP loans, protecting over 18,000 jobs.
Mr. Eller continued, “Our organic loan growth of 15.9% reflects the value of our community oriented financial services. In addition, loan growth is benefitting from our recently opened office in Fort Wayne, Indiana, and new LPOs in Ohio, Indiana, and Michigan, as well as the contributions of our highly talented loan officers. I believe our nimble, local and supportive lending culture is well positioned to serve commercial and retail customers throughout our growing footprint and I’m excited by our growth opportunities in 2022 and beyond.”
F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $8.1 million or 0.43% of total loans at December 31, 2021, compared to $9.4 million, or 0.72% at December 31, 2020. The year-over-year decrease in nonperforming loans occurred despite the addition of $385.1
million of loans associated with the Perpetual and Ossian acquisitions, reflecting strong asset quality at F&M as well as its recently acquired banks.
At December 31, 2021, there were no COVID-related payment modifications outstanding compared to 190 loans representing a balance of $165 million in deferrals at the peak in 2020.
“As we look to 2022, I am encouraged by the positive momentum underway across our business. Our 2022 financial results are expected to reflect the full benefits of the Perpetual Federal Savings Bank, Inc., and Ossian Financial Services, Inc. acquisitions, the Adams County Financial Resources asset purchase, our new Fort Wayne office, our three new LPOs, and the completion of our office realignment program. I am extremely proud of our record financial and operating results in 2021, and I am excited by the opportunities we have in 2022 and beyond to create additional value for our shareholders, customers, employees, and communities,” concluded Mr. Eller.
Stockholders’ Equity and Dividends
Total stockholders’ equity increased 19.3% to $297.2 million at December 31, 2021, from $249.2 million at December 31, 2020. At December 31, 2021, the Company had a Tier 1 leverage ratio of 10.05%, compared to 11.20% at December 31, 2020.
Tangible stockholders’ equity increased to $215.5 million at December 31, 2021, compared to $192.5 million at December 31, 2020. On a per share basis, tangible stockholders’ equity at December 31, 2021, was $16.49 per share, compared to $17.19 per share at December 31, 2020.
For the twelve months ended December 31, 2021, the Company declared cash dividends of $0.71 per share, which is a 7.6% increase over the 2020 twelve-month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 27 consecutive years. For the twelve months ended December 31, 2021, the dividend payout ratio was 35.08% compared to 36.36% for the same period last year.
About Farmers & Merchants State Bank:
The Farmers & Merchants State Bank is a local independent community bank that has been serving Northwest Ohio and Northeast Indiana since 1897. The Farmers & Merchants State Bank provides commercial banking, retail banking and other financial services. Our locations are in Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Williams, and Wood counties in Western Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, Steuben and Wells counties, and we have Loan Production Offices in West Bloomfield, Michigan; Muncie, Indiana; and Oxford, Ohio.
Safe harbor statement
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.
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, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | |||||||||||||
| Interest Income | |||||||||||||||||||
| Loans, including fees | $ | 21,008 | $ | 18,766 | $ | 16,259 | $ | 15,612 | $ | 17,061 | $ | 71,645 | $ | 65,317 | |||||
| Debt securities: | |||||||||||||||||||
| U.S. Treasury and<br><br><br>government<br><br><br>agencies | 964 | 924 | 857 | 751 | 695 | 3,496 | 3,369 | ||||||||||||
| Municipalities | 289 | 284 | 289 | 308 | 295 | 1,170 | 1,079 | ||||||||||||
| Dividends | 49 | 44 | 31 | 50 | 35 | 174 | 142 | ||||||||||||
| Federal funds sold | 10 | 10 | 6 | 5 | 5 | 31 | 20 | ||||||||||||
| Other | 103 | 94 | 88 | 39 | 48 | 324 | 242 | ||||||||||||
| Total interest income | 22,423 | 20,122 | 17,530 | 16,765 | 18,139 | 76,840 | 70,169 | ||||||||||||
| Interest Expense | |||||||||||||||||||
| Deposits | 1,581 | 1,221 | 1,276 | 1,340 | 1,619 | 5,418 | 8,638 | ||||||||||||
| Federal funds purchased<br><br><br>and securities sold<br><br><br>under agreement to<br><br><br>repurchase | 155 | 165 | 163 | 166 | 170 | 649 | 775 | ||||||||||||
| Borrowed funds | 361 | 87 | 115 | 222 | 226 | 785 | 980 | ||||||||||||
| Subordinated notes | 291 | 199 | - | - | - | 490 | - | ||||||||||||
| Total interest<br><br><br>expense | 2,388 | 1,672 | 1,554 | 1,728 | 2,015 | 7,342 | 10,393 | ||||||||||||
| Net Interest Income -<br><br><br>Before Provision for<br><br><br>Loan Losses | 20,035 | 18,450 | 15,976 | 15,037 | 16,124 | 69,498 | 59,776 | ||||||||||||
| Provision for Loan Losses | 444 | 659 | 641 | 1,700 | 1,995 | 3,444 | 6,981 | ||||||||||||
| Net Interest Income After<br><br><br>Provision For Loan<br><br><br>Losses | 19,591 | 17,791 | 15,335 | 13,337 | 14,129 | 66,054 | 52,795 | ||||||||||||
| Noninterest Income | |||||||||||||||||||
| Customer service fees | 2,417 | 2,242 | 2,198 | 2,814 | 2,750 | 9,671 | 8,893 | ||||||||||||
| Other service charges<br><br><br>and fees | 1,026 | 1,010 | 874 | 838 | 980 | 3,748 | 3,602 | ||||||||||||
| Net gain on sale of loans | 1,074 | 822 | 955 | 1,046 | 1,894 | 3,897 | 4,022 | ||||||||||||
| Net gain on sale of<br><br><br>available-for-sale<br><br><br>securities | - | - | - | 293 | - | 293 | 270 | ||||||||||||
| Total noninterest<br><br><br>income | 4,517 | 4,074 | 4,027 | 4,991 | 5,624 | 17,609 | 16,787 | ||||||||||||
| Noninterest Expense | |||||||||||||||||||
| Salaries and wages | 5,761 | 5,442 | 4,591 | 4,390 | 5,068 | 20,184 | 18,488 | ||||||||||||
| Employee benefits | 1,792 | 1,621 | 1,915 | 1,994 | 1,140 | 7,322 | 5,601 | ||||||||||||
| Net occupancy expense | 532 | 529 | 546 | 577 | 585 | 2,184 | 2,271 | ||||||||||||
| Furniture and equipment | 782 | 903 | 848 | 791 | 760 | 3,324 | 3,143 | ||||||||||||
| Data processing | 1,020 | 1,548 | 428 | 505 | 428 | 3,501 | 1,768 | ||||||||||||
| Franchise taxes | 361 | 372 | 294 | 446 | 241 | 1,473 | 1,346 | ||||||||||||
| ATM expense | 478 | 460 | 459 | 449 | 456 | 1,846 | 1,690 | ||||||||||||
| Advertising | 431 | 439 | 331 | 235 | 353 | 1,436 | 1,332 | ||||||||||||
| Net (gain) loss on sale<br><br><br>of other assets owned | 13 | 219 | 227 | (25 | ) | 20 | 434 | 7 | |||||||||||
| FDIC assessment | 265 | 296 | 276 | 236 | 223 | 1,073 | 633 | ||||||||||||
| Mortgage servicing<br><br><br>rights amortization | 266 | 285 | 524 | 505 | 247 | 1,580 | 1,031 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Consulting fees | 761 | 256 | 394 | 223 | 407 | 1,634 | 968 | ||||||||||||
| Other general and<br><br><br>administrative | 1,964 | 1,951 | 2,227 | 2,033 | 1,358 | 8,175 | 6,098 | ||||||||||||
| Total noninterest<br><br><br>expense | 14,426 | 14,321 | 13,060 | 12,359 | 11,286 | 54,166 | 44,376 | ||||||||||||
| Income Before Income<br><br><br>Taxes | 9,682 | 7,544 | 6,302 | 5,969 | 8,467 | 29,497 | 25,206 | ||||||||||||
| Income Taxes | 1,999 | 1,624 | 1,319 | 1,060 | 1,691 | 6,002 | 5,111 | ||||||||||||
| Net Income | 7,683 | 5,920 | 4,983 | 4,909 | 6,776 | 23,495 | 20,095 | ||||||||||||
| Other Comprehensive<br><br><br>Income (Loss) (Net of<br><br><br>Tax): | |||||||||||||||||||
| Net unrealized gain<br><br><br>(loss) on available-<br><br><br>for-sale securities | (5,170 | ) | 173 | 786 | (6,737 | ) | (207 | ) | (10,948 | ) | 6,091 | ||||||||
| Reclassification<br><br><br>adjustment for realized<br><br><br>gain on sale of<br><br><br>available-for-sale<br><br><br>securities | - | - | - | (293 | ) | - | (293 | ) | (270 | ) | |||||||||
| Net unrealized gain<br><br><br>(loss) on available-<br><br><br>for-sale securities | (5,170 | ) | 173 | 786 | (7,030 | ) | (207 | ) | (11,241 | ) | 5,821 | ||||||||
| Tax expense (benefit) | (1,085 | ) | 36 | 165 | (1,476 | ) | (44 | ) | (2,360 | ) | 1,222 | ||||||||
| Other comprehensive<br><br><br>income (loss) | (4,085 | ) | 137 | 621 | (5,554 | ) | (163 | ) | (8,881 | ) | 4,599 | ||||||||
| Comprehensive Income (Loss) | $ | 3,598 | $ | 6,057 | $ | 5,604 | $ | (645 | ) | $ | 6,613 | $ | 14,614 | $ | 24,694 | ||||
| Basic and Diluted<br><br><br>Earnings Per Share | $ | 0.59 | $ | 0.53 | $ | 0.44 | $ | 0.44 | $ | 0.60 | $ | 2.01 | $ | 1.80 | |||||
| Dividends Declared | $ | 0.19 | $ | 0.18 | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.71 | $ | 0.66 |
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands of dollars, except share data)
| December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Assets | |||||||||||||||
| Cash and due from banks | $ | 135,485 | $ | 112,875 | $ | 93,636 | $ | 118,139 | $ | 98,279 | |||||
| Federal funds sold | 45,338 | 45,203 | 57,483 | 57,361 | 77,427 | ||||||||||
| Total cash and cash equivalents | 180,823 | 158,078 | 151,119 | 175,500 | 175,706 | ||||||||||
| Interest-bearing time deposits | 10,913 | 14,622 | 18,597 | 4,405 | 4,653 | ||||||||||
| Securities - available-for-sale | 429,931 | 426,717 | 407,500 | 352,974 | 307,812 | ||||||||||
| Other securities, at cost | 8,162 | 4,905 | 6,419 | 5,939 | 5,939 | ||||||||||
| Loans held for sale | 7,714 | 3,735 | 8,041 | 7,511 | 7,740 | ||||||||||
| Loans, net | 1,841,177 | 1,479,864 | 1,443,336 | 1,327,254 | 1,289,318 | ||||||||||
| Premises and equipment | 26,913 | 26,476 | 26,915 | 26,703 | 27,063 | ||||||||||
| Goodwill | 80,434 | 55,214 | 56,066 | 47,340 | 47,340 | ||||||||||
| Mortgage servicing rights | 3,157 | 3,097 | 3,146 | 3,444 | 3,320 | ||||||||||
| Other real estate owned | 159 | 167 | 198 | 148 | 71 | ||||||||||
| Bank owned life insurance | 27,558 | 27,397 | 27,218 | 25,347 | 25,208 | ||||||||||
| Other assets | 21,359 | 18,711 | 18,310 | 16,720 | 15,374 | ||||||||||
| Total Assets | $ | 2,638,300 | $ | 2,218,983 | $ | 2,166,865 | $ | 1,993,285 | $ | 1,909,544 | |||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Liabilities | |||||||||||||||
| Deposits | |||||||||||||||
| Noninterest-bearing | $ | 473,689 | $ | 438,076 | $ | 443,863 | $ | 384,558 | $ | 351,147 | |||||
| Interest-bearing | |||||||||||||||
| NOW accounts | 650,466 | 646,237 | 652,078 | 605,533 | 542,317 | ||||||||||
| Savings | 597,828 | 529,532 | 501,687 | 451,043 | 455,145 | ||||||||||
| Time | 471,479 | 252,383 | 256,445 | 242,717 | 247,553 | ||||||||||
| Total deposits | 2,193,462 | 1,866,228 | 1,854,073 | 1,683,851 | 1,596,162 | ||||||||||
| Federal funds purchased and securities<br><br><br>sold under agreements to repurchase | 29,268 | 29,601 | 29,882 | 30,072 | 30,239 | ||||||||||
| Federal Home Loan Bank (FHLB)<br><br><br>advances | 24,065 | 17,868 | 17,868 | 17,840 | 17,861 | ||||||||||
| Other borrowings | 40,000 | - | - | - | - | ||||||||||
| Subordinated notes, net of unamortized<br><br><br>issuance costs | 34,471 | 34,441 | - | - | - | ||||||||||
| Dividend payable | 2,461 | 2,002 | 1,888 | 1,889 | 1,889 | ||||||||||
| Accrued expenses and other liabilities | 17,406 | 14,097 | 12,569 | 12,805 | 14,233 | ||||||||||
| Total liabilities | 2,341,133 | 1,964,237 | 1,916,280 | 1,746,457 | 1,660,384 | ||||||||||
| Commitments and Contingencies | |||||||||||||||
| Stockholders' Equity | |||||||||||||||
| Common stock - No par value 20,000,000<br><br><br>shares authorized; issued and outstanding<br><br><br>14,063,999 shares 12/31/21 and 12,230,000<br><br><br>shares 12/31/20 | 122,674 | 81,382 | 82,259 | 82,030 | 81,804 | ||||||||||
| Treasury stock - 997,766 shares 12/31/21,<br><br><br>1,032,456 shares 12/31/20 | (11,724 | ) | (11,718 | ) | (12,172 | ) | (11,962 | ) | (11,932 | ) | |||||
| Retained earnings | 189,401 | 184,181 | 179,734 | 176,617 | 173,591 | ||||||||||
| Accumulated other comprehensive<br><br><br>income (loss) | (3,184 | ) | 901 | 764 | 143 | 5,697 | |||||||||
| Total stockholders' equity | 297,167 | 254,746 | 250,585 | 246,828 | 249,160 | ||||||||||
| Total Liabilities and Stockholders' Equity | $ | 2,638,300 | $ | 2,218,983 | $ | 2,166,865 | $ | 1,993,285 | $ | 1,909,544 |
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA
| For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected financial data | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2021 | ||||||||||||||
| Return on average assets | 1.17 | % | 1.12 | % | 0.90 | % | 1.01 | % | 1.43 | % | 1.05 | % | 1.14 | % | |||||||
| Return on average equity | 10.94 | % | 9.32 | % | 8.00 | % | 7.87 | % | 11.04 | % | 9.09 | % | 8.38 | % | |||||||
| Yield on earning assets | 3.59 | % | 3.85 | % | 3.53 | % | 3.71 | % | 4.09 | % | 3.66 | % | 4.25 | % | |||||||
| Cost of interest bearing<br><br><br>liabilities | 0.51 | % | 0.45 | % | 0.44 | % | 0.53 | % | 0.64 | % | 0.48 | % | 0.87 | % | |||||||
| Net interest spread | 3.08 | % | 3.40 | % | 3.09 | % | 3.18 | % | 3.45 | % | 3.18 | % | 3.38 | % | |||||||
| Net interest margin | 3.21 | % | 3.53 | % | 3.21 | % | 3.33 | % | 3.63 | % | 3.31 | % | 3.62 | % | |||||||
| Efficiency | 58.76 | % | 63.50 | % | 64.98 | % | 62.57 | % | 52.20 | % | 62.39 | % | 58.17 | % | |||||||
| Dividend payout ratio | 32.03 | % | 33.81 | % | 37.89 | % | 38.48 | % | 27.77 | % | 35.08 | % | 36.36 | % | |||||||
| Tangible book value<br><br><br>per share (1) | $ | 16.49 | $ | 17.33 | $ | 16.94 | $ | 17.50 | $ | 17.19 | |||||||||||
| Tier 1 capital to<br><br><br>average assets | 8.47 | % | 9.45 | % | 8.78 | % | 10.39 | % | 10.46 | % | 10.05 | % | 11.20 | % | |||||||
| Average Shares Outstanding | 13,046,299 | 11,209,732 | 11,191,043 | 11,197,012 | 11,177,765 | 11,664,852 | 11,146,270 | ||||||||||||||
| (1) Tangible Equity = Stockholder Equity less goodwill and other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities) | |||||||||||||||||||||
| Loans | December 31, 2021 | September 30, 2021 | March 31, 2021 | March 31, 2021 | December 31, 2020 | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| (Dollar amounts in thousands) | |||||||||||||||||||||
| Commercial real estate | $ | 848,477 | $ | 728,852 | $ | 691,122 | $ | 618,754 | $ | 588,825 | |||||||||||
| Agricultural real estate | 198,343 | 179,374 | 189,742 | 179,945 | 189,159 | ||||||||||||||||
| Consumer real estate | 395,873 | 202,454 | 194,715 | 175,675 | 175,588 | ||||||||||||||||
| Commercial and industrial | 208,270 | 194,767 | 216,609 | 202,958 | 189,246 | ||||||||||||||||
| Agricultural | 118,368 | 105,580 | 100,756 | 100,022 | 94,358 | ||||||||||||||||
| Consumer | 57,737 | 55,521 | 56,427 | 54,445 | 52,540 | ||||||||||||||||
| Other | 32,089 | 31,096 | 13,549 | 14,088 | 15,757 | ||||||||||||||||
| Less: Net deferred loan fees<br><br><br>and costs | (1,738 | ) | (2,082 | ) | (4,497 | ) | (4,208 | ) | (2,483 | ) | |||||||||||
| Total loans, net | $ | 1,857,419 | $ | 1,495,562 | $ | 1,458,423 | $ | 1,341,679 | $ | 1,302,990 |
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA (continued)
| Asset quality data | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollar amounts in thousands) | |||||||||||||||
| Nonaccrual loans | $ | 8,076 | $ | 6,248 | $ | 7,031 | $ | 8,139 | $ | 9,404 | |||||
| Troubled debt restructuring | $ | 7,614 | $ | 6,035 | $ | 5,492 | $ | 5,774 | $ | 6,514 | |||||
| 90 day past due and accruing | $ | - | $ | - | $ | - | $ | - | $ | - | |||||
| Nonperforming loans | $ | 8,076 | $ | 6,248 | $ | 7,031 | $ | 8,139 | $ | 9,404 | |||||
| Other real estate owned | $ | 159 | $ | 167 | $ | 198 | $ | 148 | $ | 71 | |||||
| Nonperforming assets | $ | 8,235 | $ | 6,415 | $ | 7,229 | $ | 8,287 | $ | 9,475 | |||||
| (Dollar amounts in thousands) | |||||||||||||||
| Allowance for loan and lease losses | $ | 16,242 | $ | 15,698 | $ | 15,087 | $ | 14,425 | $ | 13,672 | |||||
| Allowance for loan and lease<br><br><br>losses/total loans | 0.87 | % | 1.05 | % | 1.03 | % | 1.08 | % | 1.05 | % | |||||
| Net charge-offs: | |||||||||||||||
| Quarter-to-date | $ | (101 | ) | $ | 48 | $ | (21 | ) | $ | 947 | $ | 205 | |||
| Year-to-date | $ | 874 | $ | 974 | $ | 926 | $ | 947 | $ | 537 | |||||
| Net charge-offs to average loans | |||||||||||||||
| Quarter-to-date | -0.01 | % | 0.00 | % | 0.00 | % | 0.07 | % | 0.02 | % | |||||
| Year-to-date | 0.06 | % | 0.07 | % | 0.07 | % | 0.07 | % | 0.04 | % | |||||
| Nonperforming loans/total loans | 0.43 | % | 0.42 | % | 0.48 | % | 0.61 | % | 0.72 | % | |||||
| Allowance for loan and lease<br><br><br>losses/nonperforming loans | 201.11 | % | 251.26 | % | 214.58 | % | 177.24 | % | 145.47 | % |
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, 2021 | December 31, 2020 | |||||||||||||
| Interest Earning Assets: | Average<br><br><br>Balance | Interest/<br><br><br>Dividends | Annualized<br><br><br>Yield/Rate | Average<br><br><br>Balance | Interest/<br><br><br>Dividends | Annualized<br><br><br>Yield/Rate | ||||||||
| Loans | $ | 1,843,942 | $ | 21,008 | 4.56 | % | $ | 1,336,538 | $ | 17,061 | 5.11 | % | ||
| Taxable investment securities | 421,676 | 1,228 | 1.16 | % | 250,601 | 916 | 1.46 | % | ||||||
| Tax-exempt investment securities | 18,303 | 74 | 2.05 | % | 23,216 | 109 | 2.38 | % | ||||||
| Fed funds sold & other | 218,481 | 113 | 0.21 | % | 169,116 | 53 | 0.13 | % | ||||||
| Total Interest Earning Assets | 2,502,402 | $ | 22,423 | 3.59 | % | 1,779,471 | $ | 18,139 | 4.09 | % | ||||
| Nonearning Assets | 125,930 | 112,177 | ||||||||||||
| Total Assets | $ | 2,628,332 | $ | 1,891,648 | ||||||||||
| Interest Bearing Liabilities: | ||||||||||||||
| Savings deposits | $ | 1,262,214 | $ | 767 | 0.24 | % | $ | 967,355 | $ | 705 | 0.29 | % | ||
| Other time deposits | 481,119 | 814 | 0.68 | % | 253,023 | 914 | 1.44 | % | ||||||
| Other borrowed money | 64,008 | 361 | 2.26 | % | 17,775 | 226 | 5.09 | % | ||||||
| Fed funds purchased & securities | ||||||||||||||
| sold under agreement to repurchase | 29,403 | 155 | 2.11 | % | 30,100 | 170 | 2.26 | % | ||||||
| Subordinated notes | 34,451 | 291 | 3.38 | % | - | - | 0.00 | % | ||||||
| Total Interest Bearing Liabilities | $ | 1,871,195 | $ | 2,388 | 0.51 | % | $ | 1,268,253 | $ | 2,015 | 0.64 | % | ||
| Noninterest Bearing Liabilities | 476,122 | 377,791 | ||||||||||||
| Stockholders' Equity | $ | 281,015 | $ | 245,604 | ||||||||||
| Net Interest Income and<br><br><br>Interest Rate Spread | $ | 20,035 | 3.08 | % | $ | 16,124 | 3.45 | % | ||||||
| Net Interest Margin | 3.21 | % | 3.63 | % | ||||||||||
| 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 (continued)
(in thousands of dollars, except percentages)
| For the Twelve Months Ended | For the Twelve Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2021 | December 31, 2020 | |||||||||||||
| Interest Earning Assets: | Average<br><br><br>Balance | Interest/<br><br><br>Dividends | Annualized<br><br><br>Yield/Rate | Average<br><br><br>Balance | Interest/<br><br><br>Dividends | Annualized<br><br><br>Yield/Rate | ||||||||
| Loans | $ | 1,522,088 | $ | 71,645 | 4.71 | % | $ | 1,313,675 | $ | 65,317 | 4.98 | % | ||
| Taxable investment securities | 377,887 | 4,514 | 1.19 | % | 219,044 | 4,136 | 1.89 | % | ||||||
| Tax-exempt investment securities | 18,365 | 326 | 2.25 | % | 24,958 | 454 | 2.30 | % | ||||||
| Fed funds sold & other | 187,003 | 355 | 0.19 | % | 99,304 | 262 | 0.26 | % | ||||||
| Total Interest Earning Assets | 2,105,343 | $ | 76,840 | 3.66 | % | 1,656,981 | $ | 70,169 | 4.25 | % | ||||
| Nonearning Assets | 124,649 | 113,303 | ||||||||||||
| Total Assets | $ | 2,229,992 | $ | 1,770,284 | ||||||||||
| Interest Bearing Liabilities: | ||||||||||||||
| Savings deposits | $ | 1,145,636 | $ | 2,467 | 0.22 | % | $ | 879,669 | $ | 3,942 | 0.45 | % | ||
| Other time deposits | 306,600 | 2,951 | 0.96 | % | 264,827 | 4,696 | 1.77 | % | ||||||
| Other borrowed money | 29,479 | 785 | 2.66 | % | 21,245 | 980 | 4.61 | % | ||||||
| Fed funds purchased & securities | ||||||||||||||
| sold under agreement to repurchase | 29,831 | 649 | 2.18 | % | 32,363 | 775 | 2.39 | % | ||||||
| Subordinated notes | 14,777 | 490 | 3.32 | % | - | - | 0.00 | % | ||||||
| Total Interest Bearing Liabilities | $ | 1,526,323 | $ | 7,342 | 0.48 | % | $ | 1,198,104 | $ | 10,393 | 0.87 | % | ||
| Noninterest Bearing Liabilities | 445,144 | 332,482 | ||||||||||||
| Stockholders' Equity | $ | 258,525 | $ | 239,698 | ||||||||||
| Net Interest Income and<br><br><br>Interest Rate Spread | $ | 69,498 | 3.18 | % | $ | 59,776 | 3.38 | % | ||||||
| Net Interest Margin | 3.31 | % | 3.62 | % | ||||||||||
| 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
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
| Non-GAAP Earnings Per Share | ||||||
|---|---|---|---|---|---|---|
| (in thousands of dollars, expect per share data) | Three Months | Twelve Months | ||||
| December 31, 2021 | December 31, 2021 | |||||
| Net income as reported | $ | 7,683 | $ | 23,495 | ||
| Acquisition expenses | 1,192 | 3,859 | ||||
| Tax effect | (216 | ) | (728 | ) | ||
| Adjusted net income | 8,659 | 26,626 | ||||
| Less: distributed earnings allocated to<br><br><br>participating securities | (20 | ) | (70 | ) | ||
| Less: undistributed earnings allocated to<br><br><br>participating securities | (54 | ) | (146 | ) | ||
| Net earnings available to common<br><br><br>shareholders | $ | 8,585 | $ | 26,410 | ||
| Weighted average common shares<br><br><br>outstanding including participating<br><br><br>securities | 13,046,299 | 11,664,852 | ||||
| Less: average unvested restricted shares | (111,131 | ) | (94,634 | ) | ||
| Weighted average common shares<br><br><br>outstanding | 12,935,168 | 11,570,218 | ||||
| Basic earnings and diluted per share | $ | 0.66 | $ | 2.28 | ||
| Twelve Months | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| December 31, 2021 | December 31, 2021 | |||||
| Reconciliation of Efficiency Ratio | Non-GAAP | Actual | ||||
| Net interest income (+) | 65,757 | 69,498 | ||||
| Noninterest income (+) | 17,609 | 17,609 | ||||
| Gain on security sale (-) | 293 | 293 | ||||
| Operating expenses (/) | 50,307 | 54,166 | ||||
| Efficiency Ratio | 60.56 | % | 62.39 | % | ||
| Twelve Months | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| December 31, 2021 | December 31, 2021 | |||||
| Reconciliation of Return on Average Assets | Non-GAAP | Actual | ||||
| Net income | $ | 23,495 | $ | 23,495 | ||
| Less: accelerated net fee income for forgiveness<br><br><br>of PPP loans | (3,741 | ) | - | |||
| Acquisition expenses | 3,859 | - | ||||
| Tax effect | 58 | - | ||||
| Adjusted net income | $ | 23,671 | $ | 23,495 | ||
| Average Assets | $ | 2,229,992 | $ | 2,229,992 | ||
| Return on Average Assets | 1.06 | % | 1.05 | % |
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (continued)
| Twelve Months | ||||||
|---|---|---|---|---|---|---|
| December 31, 2021 | December 31, 2021 | |||||
| Reconciliation of Return on Average Tangible Equity | Non-GAAP | Actual | ||||
| Net income | $ | 23,495 | $ | 23,495 | ||
| Acquisition expenses | 3,859 | - | ||||
| Tax effect | (728 | ) | - | |||
| Adjusted net income | $ | 26,626 | $ | 23,495 | ||
| Average Tangible Equity | $ | 203,450 | $ | 203,450 | ||
| Return on Average Tangible Equity | 13.09 | % | 11.55 | % |