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) July 22, 2020

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))
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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 July 22, 2020, Farmers & Merchants Bancorp, Inc. issued a press release announcing its earnings for the three and six months ended June 30, 2020.  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 July 22, 2020

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: July 22, 2020		/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><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

2020 Second-Quarter and Year-to-Date Financial Results

Strong Operating Performance Supports Communities, while Driving Loan and Deposit Growth

ARCHBOLD, OHIO, July 22, 2020, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2020 second quarter and year-to-date June 30, 2020.

2020 Second Quarter Financial and Operating Highlights Include (on a year-over-year basis unless noted):

•	Net income was $4.8 million, and included a $1.4 million increase in the provision for loan losses as a result of the COVID-19 crisis
•	Noninterest income increased 11.6% to $3.3 million
---	---
•	Strong organic growth drove a 23.1% increase in net total loans and a 18.9% increase in total deposits
---	---
•	Approved 947 PPP applications for $87.0 million during the second quarter
---	---
•	Year-to-date, net charge-offs to average loans was 0.02%, compared to 0.02% for the same period last year
---	---
•	Return on average assets was 1.10%, compared to 1.63% for the same period last year (last year’s second quarter included a one-time $1.4 million tax adjusted recovery benefit)
---	---
•	F&M remains well capitalized under regulatory guidelines with a Tier 1 capital to average assets of 10.70%
---	---
•	F&M continues investing in its strategic growth plan and, during the quarter, added new leadership talent and opened two new loan production offices in Muncie, IN and Oxford, OH
---	---

“Through the course of the COVID-19 pandemic, the health and safety of our customers, employees and communities has remained our highest priority.  On June 15, 2020, all F&M offices reopened to provide customers with full lobby access, while operating with new safety procedures to do our part in limiting the spread of the coronavirus,” stated Lars B. Eller, President and Chief Executive Officer.

“F&M is dedicated to helping our communities through supportive financial relief programs.  The high level of interest-only modifications compared to payment deferrals is encouraging and demonstrates the strong asset quality and lending relationships we had prior to the crisis.  Specifically, we have only received $32.5 million of payment deferrals and $124.0 million of loans have entered into interest-only modifications as of June 30, 2020.  Combined deferrals and interest-only modifications represent only 11.7% of our net total loans at the end of the second quarter.  F&M has no exposure to the energy sector, while our exposure to industries most likely impacted by the pandemic remains limited. Loans in the restaurant, hospitality (hotel) and entertainment industries represent 8.63% of our total loan portfolio at June 30, 2020.  In addition, our total past due balance remains low and was $6.2 million, or 0.46% of net total loans at June 30, 2020.”

Mr. Eller continued, “Through our Paycheck Protection Program efforts, 947 loans to small business customers have been approved by the Small Business Administration for total consideration of nearly $87 million. The success of this program has helped F&M provide the necessary financial resources to many small business customers who employ over 12,400 people. I am extremely grateful to all our employees for their hard work and dedication as we support our local communities through the COVID-19 crisis.”

Income Statement

Net income for the 2020 second quarter ended June 30, 2020, was $4.8 million, compared to $6.2 million for the same period last year.  Net income for the 2019 second quarter included $31,000 of one-time acquisition related expenses and a $1.4 million tax-adjusted benefit from recoveries.  Net income per basic and diluted share for the 2020 second quarter was $0.43, compared to $0.56 for the same period last year.  One-time acquisition related expenses had no impact on earnings per basic and diluted share for the 2019 second quarter, while the benefit from recoveries enhanced earnings per basic and diluted share by $0.14 for the 2019 second quarter.

Net income for the 2020 first half ended June 30, 2020, was $8.9 million, compared to $9.4 million for the same period last year.  Net income for the 2019 first half included $1.2 million of one-time acquisition related expenses and a $1.4 million tax-adjusted benefit from recoveries.  Net income per basic and diluted share for the 2020 first half was $0.80, compared to $0.85 for the same period last year.  2019 first half earnings included $0.09 per basic and diluted share of one-time acquisition related expenses and a $0.14 per basic and diluted share benefit from recoveries.

Mr. Eller continued, “We are working hard to diversify our sources of income, while controlling expenses and reducing our cost of funds to help offset the March 2020 Federal Reserve emergency rate cuts.  Noninterest income increased 11.6% to $3.3 million in the second quarter, the highest quarterly amount in nearly eight years, primarily due to higher home loans originated during the quarter.  Our cost of interest-bearing liabilities was 0.91% for the 2020 second quarter, a 49-basis point reduction from 1.40% at December 31, 2019.  Meanwhile, we continue to control expenses and our efficiency ratio for the six months ended June 30, 2020 was 60.43%, compared to 64.09% for the same period last year.”

Deposits

At June 30, 2020, total deposits were $1.477 billion, an increase of 18.9% from June 30, 2019. The significant organic deposit growth being experienced is a result of continued strength in expanding relationships with new and existing customers, and the benefits of PPP activity. In addition, we continue to see growing customer preferences to more stable and secure saving instruments as deposits have increased since the COVID-19 crisis began.

Loan Portfolio and Asset Quality

Total loans, net at June 30, 2020, increased 23.1% or by $250.3 million to $1.335 billion, compared to $1.084 billion at June 30, 2019, and up 10.2% from $1.212 billion at December 31, 2019. The year-over-year improvement resulted primarily from the contribution of strong organic loan growth and $87.0 million of PPP loans originated during the 2020 second quarter.

Mr. Eller continued, “We continue preparing for a potential economic downturn in the future and have stress tested nearly all the loans in our portfolio.  In addition, for the 2020 six-months ended June 30, 2020, our provision for loan losses was $2.8 million higher than the same period last year as we proactively increased the allowance for loan and lease losses.  While we increase our reserves, our asset quality remains strong and is in line with pre-crisis levels.  This is a testament to our strong leadership team and long history of prudent credit practices.  We remain conservative in our approach to risk and disciplined in pricing, which combined with F&M’s financial position and capital levels, provide us with the right resources and platform to navigate this challenging period.”

Focused on Operational Excellence

“Across our organization we are focused on operational excellence aimed at responding to the current economic environment, while pursuing our long-term strategic growth initiatives.  During the second quarter, we accelerated investments in our digital infrastructure to support our employee’s ability to work from home and to make it easier for our customers to engage with the bank electronically.  We also recently hired Shalini Singhal as our new Chief Information Officer.  Shalini is a proven CIO who will lead our digital efforts, and I am excited by the motivated and experienced leadership team we are assembling.  In addition, we opened two new loan production offices in Muncie, IN and Oxford, OH, and broke ground on a new full-service office in Ft. Wayne.”

“The COVID-19 pandemic continues to have an unprecedented impact on the country and our thoughts go out to anyone who has been impacted by the virus.  At F&M we remain committed to building strong relationships with our communities and helping our customers navigate the challenges associated with the COVID-19 crisis.  We are all in this together and F&M is focused on providing support for you and us,” concluded Mr. Eller.

Stockholders’ Equity and Dividends

Total stockholders’ equity increased 7.3% to $240.3 million at June 30, 2020, from $224.0 million at June 30, 2019. At June 30, 2020, the company had a Tier 1 leverage ratio of 10.70%, compared to 11.77% at June 30, 2019.

Tangible stockholders’ equity increased to $181.7 million at June 30, 2020, compared to $172.0 million at June 30, 2019. On a per share basis, tangible stockholders’ equity at June 30, 2020, was $16.33 per share, compared to $15.49 per share at June 30, 2019.

For the six months ended June 30, 2020, the Company has declared cash dividends of $0.32 per share, which is a 6.7% increase over the 2019 six month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for over 20 consecutive years. For the six months ended June 30, 2020, the dividend payout ratio was 39.69% compared to 32.26% 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 through its 30 offices. Our locations are in Fulton, Defiance, Hancock, Henry, Lucas, Williams, and Wood counties in Northwest Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, and Steuben counties.

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.

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME

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

	Three Months Ended												Six Months Ended
	June <br>30, 2020			March <br>31, 2020		December<br>31, 2019			September<br>30, 2019		June <br>30, 2019		June <br>30, 2020			June <br>30, 2019
Interest Income
Loans, including fees	$	16,192		$	15,883	$	15,608		$	15,202	$	16,723	$	32,075		$	31,403
Debt securities:
U.S. Treasury and<br><br><br>government<br><br><br>agencies		767			1,146		840			972		816		1,913			1,529
Municipalities		243			262		225			190		211		505			422
Dividends		26			45		60			69		76		71			164
Federal funds sold		5			6		97			120		162		11			199
Other		40			122		319			459		295		162			428
Total interest income		17,273			17,464		17,149			17,012		18,283		34,737			34,145
Interest Expense
Deposits		2,254			2,901		3,336			3,654		3,339		5,155			5,952
Federal funds purchased<br><br><br>and securities sold<br><br><br>under agreement to<br><br><br>repurchase		187			244		207			201		141		431			326
Borrowed funds		257			266		270			257		269		523			556
Total interest<br><br><br>expense		2,698			3,411		3,813			4,112		3,749		6,109			6,834
Net Interest Income -<br><br><br>Before Provision for<br><br><br>Loan Losses		14,575			14,053		13,336			12,900		14,534		28,628			27,311
Provision for Loan Losses		1,569			1,430		728			247		133		2,999			163
Net Interest Income After<br><br><br>Provision For Loan<br><br><br>Losses		13,006			12,623		12,608			12,653		14,401		25,629			27,148
Noninterest Income
Customer service fees		2,258			1,586		1,732			1,722		1,694		3,844			3,272
Other service charges<br><br><br>and fees		704			1,039		1,132			1,179		1,091		1,743			2,132
Net gain on sale of loans		364			227		119			260		196		591			298
Net gain (loss) on sale<br><br><br>of available-for-sale<br><br><br>securities		-			270		-			-		-		270			(26	)
Total noninterest<br><br><br>income		3,326			3,122		2,983			3,161		2,981		6,448			5,676
Noninterest Expense
Salaries and wages		4,043			4,223		4,029			4,158		3,830		8,314			8,142
Employee benefits		1,218			1,677		1,410			1,331		1,223		2,895			2,817
Net occupancy expense		564			564		406			630		614		1,128			1,281
Furniture and equipment		750			758		596			720		763		1,508			1,459
Data processing		408			442		396			482		376		850			1,675
Franchise taxes		369			368		246			248		229		737			487
ATM expense		376			414		434			416		418		790			865
Advertising		265			303		340			587		382		568			642
Net (gain) loss on sale<br><br><br>of other assets owned		(7	)		1		16			22		28		(6	)		43
FDIC assessment		144			72		(11	)		-		98		216			194
Mortgage servicing<br><br><br>rights amortization		356			132		158			149		105		488			180
Consulting fees		217			139		264			196		95		356			208
Other general and<br><br><br>administrative		1,691			1,602		1,482			1,667		1,551		3,245			3,230
Total noninterest<br><br><br>expense		10,394		10,695			9,766			10,606		9,712		21,089			21,223
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Income Before Income<br><br><br>Taxes		5,938		5,050			5,825			5,208		7,670		10,988			11,601
Income Taxes		1,134		945			1,102			933		1,490		2,079			2,197
Net Income		4,804		4,105			4,723			4,275		6,180		8,909			9,404
Other Comprehensive<br><br><br>Income (Loss) (Net of<br><br><br>Tax):
Net unrealized gain<br><br><br>(loss) on available-for-<br><br><br>sale securities		661		4,998			(472	)		841		3,061		5,659			4,810
Reclassification<br><br><br>adjustment for realized<br><br><br>(gain) loss on sale of<br><br><br>available-for-sale<br><br><br>securities		-		(270	)		-			-		-		(270	)		26
Net unrealized gain<br><br><br>(loss) on available-for-<br><br><br>sale securities		661		4,728			(472	)		841		3,061		5,389			4,836
Tax expense (benefit)		139		993			(99	)		176		643		1,132			1,016
Other comprehensive<br><br><br>income (loss)		522		3,735			(373	)		665		2,418		4,257			3,820
Comprehensive Income	$	5,326	$	7,840		$	4,350		$	4,940	$	8,598	$	13,166		$	13,224
Basic and Diluted<br><br><br>Earnings Per Share	$	0.43	$	0.37		$	0.43		$	0.38	$	0.56	$	0.80		$	0.85
Dividends Declared	$	0.16	$	0.16		$	0.16		$	0.15	$	0.15	$	0.32		$	0.30

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June <br>30, 2020			March <br>31, 2020			December<br>31, 2019			September<br>30, 2019			June <br>30, 2019
	(Unaudited)			(Unaudited)						(Unaudited)			(Unaudited)
Assets
Cash and due from banks	$	54,336		$	49,844		$	50,137		$	103,188		$	108,085
Federal funds sold		31,105			40,993			1,159			11,404			15,193
Total cash and cash equivalents		85,441			90,837			51,296			114,592			123,278
Interest-bearing time deposits		4,636			4,869			4,309			4,554			4,509
Securities - available-for-sale		236,292			204,121			222,293			190,465			204,415
Other securities, at cost		5,810			5,810			5,810			5,789			5,789
Loans held for sale		11,445			2,153			4,248			606			1,909
Loans, net		1,334,790			1,239,108			1,211,771			1,151,937			1,084,448
Premises and equipment		26,049			26,120			26,351			25,990			26,013
Goodwill		47,340			47,340			47,340			47,340			47,340
Mortgage servicing rights		2,740			2,672			2,629			2,556			2,465
Other real estate owned		135			185			214			351			329
Bank owned life insurance		15,399			15,313			15,235			15,151			15,050
Other assets		14,370			16,597			15,834			15,549			15,002
Total Assets	$	1,784,447		$	1,655,125		$	1,607,330		$	1,574,880		$	1,530,547
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing	$	336,027		$	261,786		$	265,156		$	261,719		$	242,510
Interest-bearing
NOW accounts		504,846			463,734			423,655			430,646			430,505
Savings		374,871			341,256			322,973			310,667			293,179
Time		261,631			281,931			276,563			274,996			276,153
Total deposits		1,477,375			1,348,707			1,288,347			1,278,028			1,242,347
Federal Funds Purchased and securities<br><br><br>sold under agreements to repurchase		30,949			30,585			48,073			30,056			27,102
Federal Home Loan Bank (FHLB)<br><br><br>advances		19,087			24,888			24,806			24,669			24,532
Dividend payable		1,768			1,768			1,768			1,657			1,654
Accrued expenses and other liabilities		14,971			12,820			14,078			13,062			10,865
Total liabilities		1,544,150			1,418,768			1,377,072			1,347,472			1,306,500
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value 20,000,000<br><br><br>shares authorized; issued and outstanding<br><br><br>12,230,000 shares 6/30/20 and 12/31/19		82,134			81,844			81,535			81,264			81,955
Treasury stock - 1,100,975 shares 6/30/20,<br><br><br>1,093,065 shares 12/31/19		(12,668	)		(12,636	)		(12,456	)		(12,453	)		(12,707	)
Retained earnings		165,476			162,416			160,081			157,126			153,993
Accumulated other comprehensive<br><br><br>income		5,355			4,833			1,098			1,471			806
Total stockholders' equity		240,297			236,457			230,258			227,408			224,047
Total Liabilities and Stockholders' Equity	$	1,784,447		$	1,655,225		$	1,607,330		$	1,574,880		$	1,530,547

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

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

	For the Three Months Ended															For the Six Months Ended
Selected financial data	June <br>30, 2020			March <br>31, 2020			December<br>31, 2019			September<br>30, 2019			June <br>30, 2019			June <br>30, 2020			June <br>30, 2019
Return on average assets		1.10	%		1.02	%		1.18	%		1.10	%		1.63	%		1.06	%		1.33	%
Return on average equity		8.07	%		7.06	%		8.26	%		7.54	%		11.21	%		7.57	%		8.63	%
Yield on earning assets		4.25	%		4.66	%		4.63	%		4.74	%		5.25	%		4.44	%		5.03	%
Cost of interest bearing<br><br><br>liabilities		0.91	%		1.22	%		1.40	%		1.55	%		1.45	%		1.06	%		1.36	%
Net interest spread		3.34	%		3.44	%		3.23	%		3.19	%		3.80	%		3.38	%		3.57	%
Net interest margin		3.59	%		3.75	%		3.60	%		3.60	%		4.18	%		3.67	%		3.78	%
Efficiency		57.91	%		63.09	%		63.67	%		65.86	%		56.00	%		60.43	%		64.09	%
Dividend payout ratio		36.80	%		43.07	%		43.34	%		38.67	%		26.78	%		39.69	%		32.26	%
Tangible book value<br><br><br>per share (1)	$	16.33		$	16.26		$	16.01		$	15.45		$	15.49
Tier 1 capital to<br><br><br>average assets		10.70	%		11.56	%		11.52	%		11.45	%		11.77	%
(1)Tangible Equity = Stockholder Equity less goodwill and other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities)
Loans	June <br>30, 2020			March <br>31, 2020			December <br>31, 2019			September<br>30, 2019			June <br>30, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Dollar amounts in thousands)
Commercial real estate	$	589,382		$	570,217		$	551,309		$	502,137		$	443,257
Agricultural real estate		194,606			194,383			199,105			200,791			193,768
Consumer real estate		174,069			174,731			165,349			159,074			159,540
Commercial and industrial		223,842			143,261			135,631			130,150			125,609
Agricultural		107,458			109,584			111,820			110,270			113,755
Consumer		50,108			49,022			49,237			49,552			48,952
Other		9,714			8,336			8,314			8,167			7,341
Less: Net deferred loan fees<br><br><br>and costs		(4,456	)		(1,893	)		(1,766	)		(1,445	)		(1,091	)
Total loans, net	$	1,344,723		$	1,247,641		$	1,218,999		$	1,158,696		$	1,091,131
Asset quality data	June <br>30, 2020			March <br>31, 2020			December<br>31, 2019			September<br>30, 2019			June <br>30, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Dollar amounts in thousands)
Nonaccrual loans	$	8,473		$	3,344		$	3,400		$	3,275		$	1,328
Troubled debt restructuring	$	7,034		$	1,934		$	956		$	1,051		$	981
90 day past due and accruing	$	-		$	-		$	-		$	-		$	-
Nonperforming loans	$	8,473		$	3,344		$	3,400		$	3,275		$	1,328
Other real estate owned	$	135		$	185		$	214		$	351		$	329
Non-performing assets	$	8,608		$	3,529		$	3,614		$	3,626		$	1,657
(Dollar amounts in thousands)
Allowance for loan and lease losses	$	10,538		$	8,533		$	7,228		$	6,759		$	6,964
Allowance for loan and lease<br><br><br>losses/total loans		0.78	%		0.68	%		0.59	%		0.58	%		0.64	%
Net charge-offs:
Quarter-to-date	$	169		$	125		$	295		$	171		$	86
Year-to-date	$	294		$	125		$	685		$	426		$	255
Net charge-offs to average loans
Quarter-to-date		0.01	%		0.01	%		0.03	%		0.02	%		0.01	%
Year-to-date		0.02	%		0.01	%		0.06	%		0.04	%		0.02	%
Non-performing loans/total loans		0.63	%		0.27	%		0.28	%		0.28	%		0.12	%
Allowance for loan and lease<br><br><br>losses/nonperforming loans		117.24	%		256.66	%		187.17	%		173.25	%		375.51	%

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES

(in thousands of dollars, except percentages)

	For the Three Months Ended							For the Three Months Ended
	June 30, 2020							June 30, 2019
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	$	1,321,405	$	16,192		4.90	%	$	1,107,271	$	16,723		6.04	%
Taxable Investment Securities		189,977		931		1.96	%		169,776		933		2.20	%
Tax-exempt Investment Securities		21,915		105		2.43	%		33,622		170		2.56	%
Fed Funds Sold & Other		93,041		45		0.19	%		87,248		457		2.10	%
Total Interest Earning Assets		1,626,338	$	17,273		4.25	%		1,397,917	$	18,283		5.25	%
Nonearning Assets		125,730							115,082
Total Assets	$	1,752,068						$	1,512,999
Interest Bearing Liabilities:
Savings Deposits	$	859,644	$	954		0.44	%	$	718,731	$	2,006		1.12	%
Other Time Deposits		269,897		1,300		1.93	%		265,113		1,333		2.01	%
Other Borrowed Money		23,496		257		4.38	%		24,668		269		4.36	%
Fed Funds Purchased & Securities
Sold under Agreement to Repurchase		30,300		187		2.47	%		26,231		141		2.15	%
Total Interest Bearing Liabilities	$	1,183,337	$	2,698		0.91	%	$	1,034,743	$	3,749		1.45	%
Noninterest bearing Liabilities		330,611							257,765
Stockholders Equity	$	238,120						$	220,491
Net Interest Income and<br><br><br>interest rate spread			$	14,575		3.34	%			$	14,534		3.80	%
Net Interest Margin						3.59	%						4.17	%
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

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES

(in thousands of dollars, except percentages)

	For the Six Months Ended							For the Six Months Ended
	June 30, 2020							June 30, 2019
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	$	1,279,127	$	32,075		5.02	%	$	1,107,649	$	31,403		5.67	%
Taxable Investment Securities		190,067		2,252		2.37	%		160,830		1,775		2.21	%
Tax-exempt Investment Securities		25,374		237		2.36	%		34,067		340		2.53	%
Fed Funds Sold & Other		71,927		173		0.48	%		59,526		627		2.11	%
Total Interest Earning Assets		1,566,495	$	34,737		4.44	%		1,362,072	$	34,145		5.03	%
Nonearning Assets		117,818							59,609
Total Assets	$	1,684,313						$	1,421,681
Interest Bearing Liabilities:
Savings Deposits	$	816,610	$	2,439		0.60	%	$	695,302	$	3,533		1.02	%
Other Time Deposits		273,738		2,716		1.98	%		253,991		2,419		1.90	%
Other Borrowed Money		24,141		523		4.33	%		26,424		556		4.21	%
Fed Funds Purchased & Securities
Sold under Agreement to Repurchase		34,627		431		2.49	%		30,012		326		2.17	%
Total Interest Bearing Liabilities	$	1,149,116	$	6,109		1.06	%	$	1,005,729	$	6,834		1.36	%
Noninterest bearing Liabilities		299,859							198,042
Stockholders Equity	$	235,338						$	217,910
Net Interest Income and<br><br><br>interest rate spread			$	28,628		3.38	%			$	27,311		3.67	%
Net Interest Margin						3.67	%						4.03	%
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