8-K

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 8, 2023

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 8, 2023, Farmers & Merchants Bancorp, Inc. issued a press release (the “Release”) announcing its earnings for the three and twelve months ended December 31, 2022. 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>Number	Exhibit
99	Company Press Release dated February 8, 2023
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 8, 2023		/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

EX-99

Exhibit 99

<br><br>Post Office Box 216<br><br>307 North Defiance Street<br><br>Archbold, Ohio 43502	NEWS RELEASE
Company Contact:	Investor and Media Contact:
---	---
Lars B. Eller<br><br>President and Chief Executive Officer<br><br>Farmers & Merchants Bancorp, Inc.<br><br>(419) 446-2501<br><br>leller@fm.bank	Andrew M. Berger<br><br>Managing Director<br><br>SM Berger & Company, Inc.<br><br>(216) 464-6400<br><br>andrew@smberger.com

Farmers & Merchants Bancorp, Inc. Reports

Record 2022 Full-Year Financial Results

ARCHBOLD, OHIO, February 8, 2023, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2022 fourth quarter and twelve months ended December 31, 2022.

2022 Fourth Quarter Financial Highlights Include (on a year-over-year basis unless noted):

• Net income was $7.2 million compared to $7.7 million for the same period last year

• Earnings were $0.53 per basic and diluted share, compared to $0.59 per basic and diluted share

• Adjusted net income, excluding one-time tax adjusted acquisition expenses, was $8.8 million, compared to $8.7 million

• Adjusted earnings, excluding one-time tax adjusted acquisition expenses, were $0.65 per basic and diluted share, compared to $0.66 per basic and diluted share

• Efficiency rate improved to 50.46% for the 2022 fourth quarter

• Strong asset quality continues as nonperforming loans declined 41.9% to $4.7 million, or 0.20% of total loans

• Net charge-offs to average loans were 0.02%

• Allowance for loan and lease losses, adjusted for credit marks from recent acquisitions, of 570.3% of nonperforming loans

2022 Full-Year Financial Highlights Include (on a year-over-year basis unless noted):

• Total loans increased 26.9% to a record $2.36 billion

• Organic loan growth of 21.4%, excluding PPP loans and loan balances at time of the Peoples-Sidney Financial Corporation acquisition

• Total assets increased 39.2% to a record $3.02 billion

• Deposits increased to 12.6% to $2.47 billion

• Net interest income after provision for loan losses increased 24.4% to $82.2 million

• Net income increased 38.4% to an annual record of $32.5 million

• Earnings increased 22.4% to an annual record of $2.46 per basic and diluted share

• Adjusted net income, excluding one-time tax adjusted acquisition expenses, increased 29.9% to $34.6 million

• Adjusted earnings, excluding one-time tax adjusted acquisition expenses, increased 14.9% to $2.62 per basic and diluted share

• Efficiency rate improved to 55.95% for the 2022 full year

• Adjusted return on average tangible equity, excluding one-time tax adjusted acquisition expenses, increased to 17.06% from 13.01% on a year-over-year basis

• Annual dividend payment increased 14.4% to $0.8125 per share, which included a $0.0125 special dividend in honor of the Company’s 125th year anniversary

• Provided a record $642,000 of charitable donations to support organizations throughout Indiana and Ohio

Lars B. Eller, President and Chief Executive Officer, stated, “2022 was a historic year for F&M as we celebrated our 125th year anniversary, achieved record financial results, completed the fifth acquisition in the past three years, and continued to invest in our community banking platform. We experienced strong organic loan growth across our Ohio, Indiana and Michigan markets during 2022 as loans increased organically by $397.0 million, or 21.4% on a year-over-year basis. Robust loan growth, combined with our recent acquisitions, excellent asset quality, and stable net interest margin, drove a 24.4% increase in annual net interest income after the provision for loan losses. These outstanding trends and our focus on prudently controlling operating expenses offset a $2.1 million decline in annual noninterest income and helped F&M achieve another year of record net income and earnings per share. I am proud of our record financial results for 2022, which enabled us to increase our annual cash dividend by 14.4%. This reflects the 28th consecutive year F&M has increased its annual cash dividend and our long-standing commitment to create value for our shareholders.”

Mr. Eller continued, “I am also pleased to announce that F&M ended the year with total assets of over $3.0 billion for the first time in our history as we successfully achieved the goals of our previous multi-year strategic growth plan. In fact, since 2019 total assets have increased 87.6%, while GAAP net income has increased 76.7%. This performance is a direct result of the financial services we provide our Ohio, Indiana, and Michigan communities, the successful acquisitions we have completed and the hard work of our committed and experienced team members. During 2022, we continued to expand our team by promoting over 45 employees and hiring over 150 new employees. We also added capabilities by adding a new Regional Vice President to lead our Northern Indiana region and hiring F&M’s first ever Chief Risk Officer. Our 2022 financial and operating results reflect the success of our growth initiatives and the powerful franchise we are creating.”

Income Statement

Net income for the 2022 fourth quarter ended December 31, 2022, was $7.2 million, compared to $7.7 million for the same period last year. Net income per basic and diluted share for the 2022 fourth quarter was $0.53, compared to $0.59 for the same period last year. Net income for the 2022 twelve-month period ended December 31, 2022, was $32.5 million, compared to $23.5 million for the same period last year. Net income per basic and diluted share for the 2022 twelve months was $2.46, compared to $2.01 for the same period last year.

Adjusted net income for the 2022 fourth quarter was $8.8 million, or $0.65 per diluted share, compared to $8.7 million, or $0.66 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, 2022, was $34.6 million, or $2.62 per diluted share, compared to $26.6 million, or $2.28 per diluted share in the prior year.

Profitability for the 2022 fourth quarter and full year benefitted from F&M’s larger scale, strong asset quality, and prudent expense management. The Company’s efficiency ratio improved to 50.46% during the 2022 fourth quarter, and 55.95% for the 2022 twelve-month period. Strong profitability also drove higher annual returns, and ROAA, ROAE, and ROATCE all expanded on a year-over-year basis when adjusted for one-time, tax adjusted acquisition expenses.

Deposits

At December 31, 2022, total deposits were $2.47 billion, an increase of 12.6% from December 31, 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 was 1.32% for the quarter ended December 31, 2022, compared to 0.51% for the quarter ended December 31, 2021. For the 2022 twelve-month period, F&M’s cost of interest-bearing liabilities was 0.74%, compared to 0.48% for the 2021 twelve-month period.

Loan Portfolio and Asset Quality

Total net loans, at December 31, 2022, increased 26.9% to $2.356 billion, compared to $1.857 billion at December 31, 2021. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of the Peoples acquisitions. Not including the Peoples acquisition and PPP loans, total net loans increased 21.4% organically, or by $397.0 million from the same period a year ago. Additionally, there were only $7,000 of PPP loans within F&M’s loan portfolio at December 31, 2022.

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $4.7 million, or 0.20% of total loans at December 31, 2022, compared to $8.1 million, or 0.43% at December

31, 2021. Due to loan growth, F&M continues to prudently fund its allowance for loan and lease losses which has increased 25.1% on a year-over-year basis.

At December 31, 2022, the Company’s allowance for loan and lease losses to nonperforming loans was 273.67%, compared to 201.11% at December 31, 2021. As a result of F&M’s recent acquisitions, the Company has a total gross credit mark of $6.4 million, which further enhances F&M’s allowance at December 31, 2022. Including the total gross credit mark, F&M’s allowance for loan and lease losses to total loans was 1.13% at December 31, 2022.

Mr. Eller concluded, “We believe F&M remains well positioned for an increasingly challenging economic cycle as our asset quality is strong, and we continue to be well capitalized. This will allow us to continue to focus on serving our local communities, while investing in our infrastructure and pursuing long-term expansion opportunities under the new three-year strategic growth plan we finalized in the fourth quarter of 2022. As a result, we plan to make approximately $7 million of strategic investments during 2023 across our business. This includes new offices in Ohio, Indiana, and Michigan, and additions to our team, as well as investments in our IT infrastructure, loan operations, and credit and payments group. While we expect investments to temporarily impact the level of profitability we are accustomed to, these investments are necessary to support our long-term growth initiatives and maintain F&M’s high level of services as we drive sustainable growth and value creation. I look forward to updating shareholders on the progress we are making throughout 2023.”

Stockholders’ Equity and Dividends

Total stockholders’ equity increased to $298.1 million at December 31, 2022, from $297.2 million at December 31, 2021. At December 31, 2022, the Company had a Tier 1 leverage ratio of 8.39%, compared to 8.47% at December 31, 2021.

Based on a regulatory basis, tangible stockholders’ equity increased to $240.7 million at December 31, 2022, compared to $215.5 million at December 31, 2021. On a per share basis, tangible stockholders’ equity at December 31, 2022, was $17.69 per share, compared to $16.49 per share at December 31, 2021. A non-GAAP reconciliation is provided as a table in this press release.

For the twelve months ended December 31, 2022, the Company declared cash dividends of $0.8125 per share, which is a 14.4% increase over the 2021 twelve-month declared cash dividend payment of $0.71 per share. Dividends declared for the 2022 twelve months included a special one-time cash dividend of $0.0125 to honor F&M’s 125thanniversary, and a 10.5% year-over-year increase for the 2022 fourth quarter dividend payment to $0.21 per share. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 28 consecutive years. For the twelve months ended December 31, 2022, the dividend payout ratio was 33.06% compared to 35.08% 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, Shelby, 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 a Loan Production Offices in West Bloomfield, Michigan; Muncie, Indiana; and Bryan and Oxford, Ohio.

Safe Harbor Statement

Farmers & Merchants Bancorp, Inc. (“F&M”) wishes to take advantage of the Safe Harbor provisions included in the

Private Securities Litigation Reform Act of 1995. Statements by F&M, including management’s expectations and comments, may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Exchange Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties inherent in general and local banking conditions, competitive factors specific to markets in which F&M and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions, capital market conditions, or the effects of the COVID-19 pandemic, and its impacts on our credit quality and business operations, as well as its impact on general economic and financial market conditions. F&M assumes no responsibility to update this information. For more details, please refer to F&M’s SEC filing, including its most

recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such filings can be viewed at the SEC’s website, www.sec.gov or through F&M’s website www.fm.bank.

Non-GAAP Financial Measures

This press release includes disclosure of financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers & Merchants Bancorp, Inc. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers & Merchants Bancorp, Inc.’s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial measures is included within this press release.

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME

(Unaudited) (in thousands of dollars, except per share data)

	Three Months Ended										Twelve Months Ended
	December<br> 31, 2022		September<br> 30, 2022		June<br>30, 2022		March<br>31, 2022		December<br>31, 2021		December<br> 31, 2022		December<br>31, 2021
Interest Income
Loans, including fees	$	27,302	$	24,119	$	22,388	$	20,455	$	21,008	$	94,264	$	71,645
Debt securities:
U.S. Treasury and <br>   government <br>   agencies		1,118		1,049		1,035		1,023		964		4,225		3,496
Municipalities		420		373		322		300		289		1,415		1,170
Dividends		126		93		57		42		49		318		174
Federal funds sold		2		-		9		10		10		21		31
Other		524		213		100		69		103		906		324
Total interest income		29,492		25,847		23,911		21,899		22,423		101,149		76,840
Interest Expense
Deposits		4,978		2,166		1,379		1,360		1,581		9,883		5,418
Federal funds purchased <br>   and securities sold <br>   under agreement to <br>   repurchase		463		416		166		152		155		1,197		649
Borrowed funds		1,209		398		218		335		361		2,160		785
Subordinated notes		285		284		284		269		291		1,122		490
Total interest <br>   expense		6,935		3,264		2,047		2,116		2,388		14,362		7,342
Net Interest Income - <br>   Before Provision for <br>   Loan Losses		22,557		22,583		21,864		19,783		20,035		86,787		69,498
Provision for Loan <br>   Losses		755		1,637		1,628		580		444		4,600		3,444
Net Interest Income <br>   After Provision for <br>   Loan Losses		21,802		20,946		20,236		19,203		19,591		82,187		66,054
Noninterest Income
Customer service fees		2,862		2,300		2,148		2,648		2,417		9,958		9,671
Other service charges<br>   and fees		1,115		1,105		1,008		998		1,026		4,226		3,748
Net gain on sale of loans		165		327		164		697		1,074		1,353		3,897
Net gain on sale of <br>   available-for-sale <br>   securities		-		-		-		-		-		-		293
Total noninterest <br>   income		4,142		3,732		3,320		4,343		4,517		15,537		17,609

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME (continued)

(Unaudited) (in thousands of dollars, except per share data)

Noninterest Expense
Salaries and wages		6,353			5,479			5,366			5,502			5,761			22,700			20,184
Employee benefits		1,911			1,392			1,546			2,054			1,792			6,903			7,322
Net occupancy expense		753			693			522			598			532			2,566			2,184
Furniture and equipment		1,096			1,047			1,008			1,056			782			4,207			3,324
Data processing		1,917			781			654			604			1,020			3,956			3,501
Franchise taxes		(45	)		254			757			418			361			1,384			1,473
ATM expense		561			580			544			532			478			2,217			1,846
Advertising		531			578			300			237			431			1,646			1,436
Net (gain) loss on sale <br>   of other assets owned		12			-			(266	)		(5	)		13			(259	)		434
FDIC assessment		250			271			270			114			265			905			1,073
Mortgage servicing <br>   rights amortization		110			(50	)		59			26			266			145			1,580
Consulting fees		637			254			233			178			761			1,302			1,634
Other general and <br>   administrative		2,964			2,192			2,242			2,179			1,964			9,577			8,175
Total noninterest <br>   expense		17,050			13,471			13,235			13,493			14,426			57,249			54,166
Income Before Income<br>   Taxes		8,894			11,207			10,321			10,053			9,682			40,475			29,497
Income Taxes		1,706			2,253			2,050			1,951			1,999			7,960			6,002
Net Income		7,188			8,954			8,271			8,102			7,683			32,515			23,495
Other Comprehensive <br>   Income (Loss) (Net of <br>   Tax):
Net unrealized loss on <br>   available-for-sale<br>   securities		(628	)		(8,197	)		(14,602	)		(20,939	)		(5,170	)		(44,366	)		(10,948	)
Reclassification <br>   adjustment for realized <br>   gain on sale of <br>   available-for-sale <br>   securities		-			-			-			-			-			-			(293	)
Net unrealized loss on <br>   available-for-sale<br>   for-sale securities		(628	)		(8,197	)		(14,602	)		(20,939	)		(5,170	)		(44,366	)		(11,241	)
Tax benefit		(132	)		(1,721	)		(3,067	)		(4,397	)		(1,085	)		(9,317	)		(2,360	)
Other comprehensive<br>   loss		(496	)		(6,476	)		(11,535	)		(16,542	)		(4,085	)		(35,049	)		(8,881	)
Comprehensive Income <br>   (Loss)	$	6,692		$	2,478		$	(3,264	)	$	(8,440	)	$	3,598		$	(2,534	)	$	14,614
Basic Earnings <br>   Per Share	$	0.53		$	0.68		$	0.63		$	0.62		$	0.59		$	2.46		$	2.01
Diluted Earnings<br>   Per Share	$	0.53		$	0.68		$	0.63		$	0.62		$	0.59		$	2.46		$	2.01
Dividends Declared	$	0.2100		$	0.2100		$	0.2025		$	0.1900		$	0.1900		$	0.8125		$	0.7100

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (in thousands of dollars, except share data)

	December<br> 31, 2022			September<br> 30, 2022			June<br>30, 2022			March<br>31, 2022			December<br>31, 2021
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Assets
Cash and due from banks	$	83,085		$	69,680		$	69,955		$	94,118		$	135,485
Federal funds sold		1,324			990			1,484			45,404			45,338
Total cash and cash equivalents		84,409			70,670			71,439			139,522			180,823
Interest-bearing time deposits		4,442			5,187			6,684			8,677			10,913
Securities - available-for-sale		390,789			395,485			399,687			413,996			429,931
Other securities, at cost		9,799			8,227			8,735			8,568			8,162
Loans held for sale		827			2,182			4,230			6,060			7,714
Loans, net		2,336,074			2,122,626			2,016,394			1,945,449			1,841,177
Premises and equipment		28,381			26,484			26,492			26,653			26,913
Construction in progress		278			-			-			-			-
Goodwill		86,358			80,434			80,434			80,434			80,434
Mortgage servicing rights		3,549			3,583			3,426			3,336			3,157
Other real estate owned		-			-			-			-			159
Bank owned life insurance		33,073			28,051			27,874			27,715			27,558
Other assets		37,372			40,831			29,321			25,735			21,359
Total Assets	$	3,015,351		$	2,783,760		$	2,674,716		$	2,686,145		$	2,638,300
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing	$	532,794		$	506,928		$	503,395		$	497,249		$	473,689
Interest-bearing
NOW accounts		750,887			705,888			678,552			681,975			650,466
Savings		627,203			607,375			617,850			626,787			597,828
Time		557,980			462,845			424,249			447,586			471,479
Total deposits		2,468,864			2,283,036			2,224,046			2,253,597			2,193,462
Federal funds purchased and securities <br>   sold under agreements to repurchase		54,206			55,802			71,944			31,680			29,268
Federal Home Loan Bank (FHLB) <br>   advances		127,485			102,147			42,635			22,656			24,065
Other borrowings		10,000			10,000			-			40,000			40,000
Subordinated notes, net of unamortized<br>   issuance costs		34,586			34,557			34,528			34,499			34,471
Dividend payable		2,832			2,727			2,626			2,462			2,461
Accrued expenses and other liabilities		19,238			14,913			18,064			14,773			17,406
Total liabilities		2,717,211			2,503,182			2,393,843			2,399,667			2,341,133
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value 20,000,000 <br>   shares authorized; issued and outstanding <br>   14,564,425 shares 12/31/22 and 14,063,999 <br>   shares 12/31/21		135,497			121,811			123,145			122,886			122,674
Treasury stock - 956,003 shares 12/31/22 <br>   and 997,766 shares 12/31/21		(11,573	)		(11,547	)		(11,822	)		(11,739	)		(11,724	)
Retained earnings		212,449			208,051			200,811			195,057			189,401
Accumulated other comprehensive <br>   loss		(38,233	)		(37,737	)		(31,261	)		(19,726	)		(3,184	)
Total stockholders' equity		298,140			280,578			280,873			286,478			297,167
Total Liabilities and Stockholders' Equity	$	3,015,351		$	2,783,760		$	2,674,716		$	2,686,145		$	2,638,300

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

	For the Three Months Ended															For the Twelve Months Ended
Selected financial data	December<br>31, 2022			September<br> 30, 2022			June<br>30, 2022			March<br>31, 2022			December<br>31, 2021			December<br>31, 2022			December<br>31, 2021
Return on average assets		0.96	%		1.31	%		1.23	%		1.21	%		1.17	%		1.17	%		1.05	%
Return on average equity		10.00	%		12.53	%		11.66	%		11.00	%		10.94	%		11.30	%		9.09	%
Yield on earning assets		4.18	%		4.00	%		3.79	%		3.47	%		3.59	%		3.87	%		3.66	%
Cost of interest bearing <br>  liabilities		1.32	%		0.68	%		0.44	%		0.45	%		0.51	%		0.74	%		0.48	%
Net interest spread		2.86	%		3.32	%		3.35	%		3.02	%		3.08	%		3.13	%		3.18	%
Net interest margin		3.20	%		3.49	%		3.47	%		3.14	%		3.21	%		3.32	%		3.31	%
Efficiency		50.46	%		51.19	%		50.17	%		55.44	%		58.76	%		55.95	%		62.39	%
Dividend payout ratio		39.39	%		30.45	%		30.02	%		30.64	%		32.03	%		33.06	%		35.08	%
Tangible book value <br>   per share (1)	$	17.69		$	17.86		$	17.43		$	16.96		$	16.49
Tier 1 capital to <br>   average assets		8.39	%		9.11	%		8.75	%		8.51	%		8.47	%
Average Shares Outstanding		13,606,876			13,083,145			13,065,975			13,066,272			13,046,299			13,206,713			11,664,852
(1) Tangible Equity = Stockholder Equity less goodwill and other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities)
Loans	December<br> 31, 2022			September<br> 30, 2022			June<br>30, 2022			March<br>31, 2022			December<br>31, 2021
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Dollar amounts in thousands)
Commercial real estate	$	1,152,603		$	1,063,661		$	979,176		$	910,839		$	848,477
Agricultural real estate		220,819			205,089			199,972			196,223			198,343
Consumer real estate		494,423			416,001			410,450			410,120			395,873
Commercial and industrial		242,360			229,388			232,975			216,918			208,270
Agricultural		128,733			128,615			127,143			140,709			118,368
Consumer		89,147			70,602			55,411			57,521			57,737
Other		29,818			30,662			31,243			31,573			32,089
Less: Net deferred loan fees <br>      and costs		(1,516	)		(1,402	)		(1,552	)		(1,683	)		(1,738	)
Total loans, net	$	2,356,387		$	2,142,616		$	2,034,818		$	1,962,220		$	1,857,419

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA (continued)

Asset quality data	December<br>31, 2022			September<br> 30, 2022			June<br>30, 2022			March<br>31, 2022			December<br>31, 2021
(Dollar amounts in thousands)
Nonaccrual loans	$	4,689		$	5,470		$	5,247		$	8,581		$	8,076
Troubled debt restructuring	$	3,645		$	3,978		$	2,748		$	7,268		$	7,614
90 day past due and accruing	$	-		$	-		$	-		$	-		$	-
Nonperforming loans	$	4,689		$	5,470		$	5,247		$	8,581		$	8,076
Other real estate owned	$	-		$	-		$	-		$	-		$	159
Nonperforming assets	$	4,689		$	5,470		$	5,247		$	8,581		$	8,235
Allowance for loan and lease losses <br>   (ALLL)	$	20,313		$	19,990		$	18,424		$	16,771		$	16,242
Total credit mark		6,427			5,959			6,724			7,201			7,616
Adjusted ALLL with credit mark <br>   included	$	26,740		$	25,949		$	25,148		$	23,972		$	23,858
Allowance for loan and lease<br>   losses/total loans		0.86	%		0.93	%		0.91	%		0.85	%		0.87	%
Adjusted ALLL with credit mark/total <br>   loans		1.13	%		1.21	%		1.24	%		1.22	%		1.28	%
Net charge-offs:
Quarter-to-date	$	431		$	71		$	(25	)	$	51		$	(101	)
Year-to-date	$	529		$	97		$	26		$	51		$	874
Net charge-offs to average loans
Quarter-to-date		0.02	%		0.00	%		0.00	%		0.00	%		-0.01	%
Year-to-date		0.03	%		0.00	%		0.00	%		0.00	%		0.06	%
Nonperforming loans/total loans		0.20	%		0.26	%		0.26	%		0.44	%		0.43	%
Allowance for loan and lease <br>   losses/nonperforming loans		273.67	%		365.44	%		351.44	%		198.29	%		201.11	%

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, 2022							December 31, 2021
Interest Earning Assets:	Average <br>Balance		Interest/<br>Dividends		Annualized<br>Yield/Rate			Average <br>Balance		Interest/<br>Dividends		Annualized<br>Yield/Rate
Loans	$	2,301,204	$	27,302		4.75	%	$	1,843,942	$	21,008		4.56	%
Taxable investment securities		422,247		1,556		1.47	%		421,676		1,228		1.16	%
Tax-exempt investment securities		28,522		108		1.92	%		18,303		74		2.05	%
Fed funds sold & other		74,876		526		2.81	%		218,481		113		0.21	%
Total Interest Earning Assets		2,826,849	$	29,492		4.18	%		2,502,402	$	22,423		3.59	%
Nonearning Assets		173,048							125,930
Total Assets	$	2,999,897						$	2,628,332
Interest Bearing Liabilities:
Savings deposits	$	1,394,663	$	3,427		0.98	%	$	1,262,214	$	767		0.24	%
Other time deposits		485,461		1,551		1.28	%		481,119		814		0.68	%
Other borrowed money		135,013		1,209		3.58	%		64,008		361		2.26	%
Fed funds purchased & securities
sold under agreement to repurchase		53,506		463		3.46	%		29,403		155		2.11	%
Subordinated notes		34,567		285		3.30	%		34,451		291		3.38	%
Total Interest Bearing Liabilities	$	2,103,210	$	6,935		1.32	%	$	1,871,195	$	2,388		0.51	%
Noninterest Bearing Liabilities		609,253							476,122
Stockholders' Equity	$	287,434						$	281,015
Net Interest Income and <br>   Interest Rate Spread			$	22,557		2.86	%			$	20,035		3.08	%
Net Interest Margin						3.20	%						3.21	%
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, 2022							December 31, 2021
Interest Earning Assets:	Average <br>Balance		Interest/<br>Dividends		Annualized<br>Yield/Rate			Average <br>Balance		Interest/<br>Dividends		Annualized<br>Yield/Rate
Loans	$	2,073,737	$	94,264		4.55	%	$	1,522,088	$	71,645		4.71	%
Taxable investment securities		424,229		5,621		1.32	%		377,887		4,514		1.19	%
Tax-exempt investment securities		23,472		337		1.82	%		18,365		326		2.25	%
Fed funds sold & other		95,301		927		0.97	%		187,003		355		0.19	%
Total Interest Earning Assets		2,616,739	$	101,149		3.87	%		2,105,343	$	76,840		3.66	%
Nonearning Assets		158,361							124,649
Total Assets	$	2,775,100						$	2,229,992
Interest Bearing Liabilities:
Savings deposits	$	1,335,271	$	6,378		0.48	%	$	1,145,636	$	2,467		0.22	%
Other time deposits		451,013		3,505		0.78	%		306,600		2,951		0.96	%
Other borrowed money		74,379		2,160		2.90	%		29,479		785		2.66	%
Fed funds purchased & securities
sold under agreement to repurchase		45,314		1,197		2.64	%		29,831		649		2.18	%
Subordinated notes		34,524		1,122		3.25	%		14,777		490		3.32	%
Total Interest Bearing Liabilities	$	1,940,501	$	14,362		0.74	%	$	1,526,323	$	7,342		0.48	%
Noninterest Bearing Liabilities		546,731							445,144
Stockholders' Equity	$	287,868						$	258,525
Net Interest Income and <br>   Interest Rate Spread			$	86,787		3.13	%			$	69,498		3.18	%
Net Interest Margin						3.32	%						3.31	%
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 Three Months Ended														For the Three Months Ended
	December 31, 2022														December 31, 2021
	As Reported				Excluding Accretion/Amortization					Difference					As Reported				Excluding Accretion/Amortization					Difference
		Yield					Yield					Yield				Yield					Yield					Yield
Interest Earning Assets:
Loans			4.75	%				4.63	%				0.12	%			4.56	%				4.47	%				0.09	%
Taxable investment securities			1.47	%				1.47	%				0.00	%			1.16	%				1.16	%				0.00	%
Tax-exempt investment securities			1.92	%				1.92	%				0.00	%			2.05	%				2.05	%				0.00	%
Fed funds sold & other			2.81	%				2.81	%				0.00	%			0.21	%				0.21	%				0.00	%
Total Interest Earning Assets			4.18	%				4.08	%				0.10	%			3.59	%				3.52	%				0.07	%
Interest Bearing Liabilities:
Savings deposits			0.98	%				0.98	%				0.00	%			0.24	%				0.24	%				0.00	%
Other time deposits			1.28	%				1.66	%		)		-0.38	%			0.68	%				0.68	%		)		0.00	%
Other borrowed money			3.58	%				3.64	%		)		-0.06	%			2.26	%				2.26	%		)		0.00	%
Fed funds purchased & securities
sold under agreement to repurchase			3.46	%				3.46	%				0.00	%			2.11	%				2.11	%				0.00	%
Subordinated notes			3.30	%				3.30	%				0.00	%			3.38	%				3.38	%				0.00	%
Total Interest Bearing Liabilities			1.32	%				1.41	%		)		-0.09	%			0.51	%				0.65	%		)		-0.14	%
Interest/Dividend income/yield			4.18	%				4.08	%				0.10	%			3.59	%				3.52	%				0.07	%
Interest Expense / yield			1.32	%				1.41	%		)		-0.09	%			0.51	%				0.65	%		)		-0.14	%
Net Interest Spread			2.86	%				2.67	%				0.19	%			3.08	%				2.87	%				0.21	%
Net Interest Margin			3.20	%				3.03	%				0.17	%			3.21	%				3.04	%				0.17	%
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

All values are in US Dollars.

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, 2022														December 31, 2022
	As Reported				Excluding Accretion/Amortization					Difference					As Reported				Excluding Accretion/Amortization					Difference
		Yield					Yield					Yield				Yield					Yield					Yield
Interest Earning Assets:
Loans			4.55	%				4.45	%				0.10	%			4.71	%				4.67	%				0.04	%
Taxable investment securities			1.32	%				1.32	%				0.00	%			1.19	%				1.19	%				0.00	%
Tax-exempt investment securities			1.82	%				1.82	%				0.00	%			2.25	%				2.25	%				0.00	%
Fed funds sold & other			0.97	%				0.97	%				0.00	%			0.19	%				0.19	%				0.00	%
Total Interest Earning Assets			3.87	%				3.79	%				0.08	%			3.66	%				3.63	%				0.03	%
Interest Bearing Liabilities:
Savings deposits			0.48	%				0.48	%				0.00	%			0.22	%				0.22	%				0.00	%
Other time deposits			0.78	%				1.29	%		)		-0.51	%			0.96	%				1.17	%		)		-0.21	%
Other borrowed money			2.90	%				3.01	%		)		-0.11	%			2.66	%				2.17	%				0.49	%
Fed funds purchased & securities
sold under agreement to repurchase			2.64	%				2.64	%				0.00	%			2.18	%				2.18	%				0.00	%
Subordinated notes			3.25	%				3.25	%				0.00	%			3.32	%				3.32	%				0.00	%
Total Interest Bearing Liabilities			0.74	%				0.86	%		)		-0.12	%			0.48	%				0.51	%		)		-0.03	%
Interest/Dividend income/yield			3.87	%				3.79	%				0.08	%			3.66	%				3.63	%				0.03	%
Interest Expense / yield			0.74	%				0.86	%		)		-0.12	%			0.48	%				0.51	%		)		-0.03	%
Net Interest Spread			3.13	%				2.93	%				0.20	%			3.18	%				3.12	%				0.06	%
Net Interest Margin			3.32	%				3.15	%				0.17	%			3.31	%				3.25	%				0.06	%
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

All values are in US Dollars.

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATION OF NET INCOME

	(in thousands of dollars)						(in thousands of dollars)
Non-GAAP Reconciliation of Net Income	Three Months Ended						Nine Months Ended
	December 31, 2022			December 31, 2021			December 31, 2022			December 31, 2021
	(Unaudited)						(Unaudited)
Net income as reported	$	7,188		$	7,683		$	32,515		$	23,495
Acquisition expenses		2,019			1,192			2,511			3,859
Tax effect on acquisition expenses		(386	)		(216	)		(445	)		(728	)
Net income excluding acquisition expenses and tax effect		8,821			8,659			34,581			26,626
Weighted average common shares outstanding<br>   including participating securities		13,606,876			13,046,299			13,206,713			11,664,852
Basic and diluted earnings per share	$	0.65		$	0.66		$	2.62		$	2.28

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, 2022			December 31, 2021			December 31, 2022			December 31, 2021
Shares Outstanding		13,608,422			13,066,233			13,608,422			13,066,233
Tangible Equity
Equity	$	298,140		$	297,167		$	298,140		$	297,167
Goodwill		86,358			80,434			86,358			80,434
Other Intangible		9,327			4,433			9,327			4,433
Comprehensive Adjustment*		-			-			38,233			3,184
Tangible Equity	$	202,455		$	212,300		$	240,689		$	215,484
Shares Outstanding		13,608			13,066			13,608			13,066
Tangible Book Equity per Share	$	14.88		$	16.25		$	17.69		$	16.49
	Actual Average						Regulatory Average
	Year to Date						Year to Date
	December 31, 2022			December 31, 2021			December 31, 2022			December 31, 2021
Net Income	$	32,515		$	23,495		$	32,515		$	23,495
Acquisition Costs - Tax Adjusted		2,066			3,131			2,066			3,131
Average Shares Outstanding		13,206,713			11,664,852			13,206,713			11,664,852
Average Tangible Equity
Average Equity	$	287,868		$	258,525		$	287,868		$	258,525
Average Goodwill		80,164			49,790			80,164			49,790
Average Other Intangible		4,997			4,005			4,997			4,005
Average Comprehensive Adjustment*		-			-			26,393			(1,280	)
Average Tangible Equity	$	202,707		$	204,730		$	229,100		$	203,450
Average Shares Outstanding		13,207			11,665			13,207			11,665
Average Tangible Book Equity per Share	$	15.35		$	17.55		$	17.35		$	17.44
Return on Average Tangible Equity		16.04	%		11.48	%		14.19	%		11.55	%
Return on Average Tangible Equity w/o Acquisition		17.06	%		13.01	%		15.09	%		13.09	%
*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.