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) April 24, 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))
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☐	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 April 24, 2020, Farmers & Merchants Bancorp, Inc. issued a press release announcing its earnings for the quarter ended March 31, 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 April 24, 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: April 24, 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 Record

2020 First Quarter Financial Results

F&M is Committed and Well Positioned to Support Communities Throughout COVID-19 Crisis

ARCHBOLD, OHIO, April 24, 2020, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2020 first quarter ended March 31, 2020.

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

•	Net interest income after provision for loan losses was stable at $12.6 million, despite a $1.4 million increase in the first quarter provision for loan losses
•	Noninterest income increased 15.8% to $3.1 million
---	---
•	Strong organic growth drove a 13.5% increase in net total loans and a 13.6% increase in total deposits
---	---
•	Net income increased 27.3% to $4.1 million, or $0.37 per basic and diluted share
---	---
•	Net charge-offs to average loans was 0.01%, compared to 0.02% for the same period last year
---	---
•	Return on average assets was 1.02%, compared to 0.97% for the same period last year (last year’s first quarter included one-time tax adjusted expenses related to the Bank of Geneva acquisition)
---	---
•	F&M remains well capitalized under regulatory guidelines with a tier 1 capital to average assets of 11.56%
---	---

“For over 120 years, F&M has supported its local communities and we are committed to helping our retail, commercial, and agricultural customers through the unprecedented challenges created by the COVID-19 crisis,” stated Lars B. Eller, President and Chief Executive Officer. “While it is too early to understand the economic repercussions of the crisis, F&M’s strong financial and capital position provides us with the flexibility to navigate this period of uncertainty. In addition, our consistent loan and deposit growth over the past five years, demonstrates the strong relationships we have developed throughout our Ohio, Indiana, and Michigan communities. Our team members have rallied behind our customers and communities and I am grateful for all their efforts, hard work, and dedication. We are diligently working to protect our employees and customers, while quickly providing essential financial services, advice and resources to our customers. As a result, the majority of our workforce is either working from home or operating in staggered shifts, while our customers have embraced alternatives to lobby banking including drive-thru, online, digital, and mobile banking. Despite the adjustments we have made to our operations, I am proud to announce F&M has not furloughed any associates and has not reduced pay or salaries to any of our associates.”

“As the crisis has evolved, we have strengthened our relationships by increasing the amount of financial relief, assistance, and advice we are providing customers. Since the onset of the COVID-19 crisis, we have started offering several financial relief programs to our customers including forbearance agreements for home loans, a ‘Skip-a-pay’ program for consumer installment loans, waiving late payment fees, offering interest only payment alternatives for commercial and ag customers, and temporarily reducing account fees by eliminating certain requirements on deposit accounts. In addition, as a community bank, we have the agility to respond to evolving market conditions, while offering quick financial support and decisions to our customers. Through our efforts, almost 500 loans to small business customers have been approved by the Small Business Administration for total consideration of nearly $70

million as a result of the Paycheck Protection Program. The success of this program has helped F&M provide the necessary financial resources to many of our small business customers who employ over 8,000 people.”

Income Statement

Net income for the 2020 first quarter ended March 31, 2020, was $4.1 million, compared to $3.2 million for the same period last year. Earnings per basic and diluted share for the 2020 first quarter was $0.37, compared to $0.29 for the same period last year. The 2019 first quarter earnings included $0.09 per basic and diluted share of one-time acquisition related expenses associated with the Limberlost acquisition.

Mr. Eller continued, “As the Federal Reserve reduced rates during the end of 2019, we adjusted our cost of interest-bearing liabilities. As a result, our net interest margin remained relatively stable and was 3.75% at March 31, 2020, compared to 3.87% for the same period last year and 3.60% at December 31, 2019. Late in the 2020 first quarter, the Federal Reserve announced emergency rate cuts of 50 and 100 basis points in response to the COVID-19 crisis. This resulted in a cost of funds for the month of March of 1.10%, which represents the lowest cost of funds we have had in over a year. We are also proactively controlling noninterest expenses and I am pleased with the continued improvements we have made to our efficiency ratio, despite enhancing our compensation structure during the quarter which resulted in approximately 30% of our associates receiving an increase in their annual salaries.”

“We expect Federal Reserve rate cuts will put pressure on our net interest margin in the coming quarters. Helping offset some of the impact to net interest margin are fees we will receive associated with originating loans through the Paycheck Protection Program. In addition, lower rates have created a surge in the demand for home loans. In fact, at the end of the quarter our pipeline of home loans is three times higher than our previous record. F&M only keeps a portion of the home loans we originate, which helps reduce portfolio risk and generates noninterest income as we resell residential mortgages in the secondary market. Noninterest income during the first quarter increased 15.8% to $3.1 million, compared to the same period last year. We expect second quarter noninterest income to increase significantly as we benefit from fees associated with the high volume of Paycheck Protection Program loans and residential mortgages.”

Deposits

At March 31, 2020, total deposits were $1.349 billion, an increase of 13.6% from March 31, 2019. The significant organic deposit growth we have been experiencing is a result of continued strength in expanding relationships with new and existing customers. In addition, we have recently experienced changing 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 March 31, 2020, increased 13.6% or by $149.2 million to $1.247 billion, compared to $1.098 billion at March 31, 2019, and up from $1.219 billion at December 31, 2019. The year-over-year improvement resulted primarily from the contribution of strong organic loan growth.

Mr. Eller continued, “Throughout our history, we have focused on measured growth, while maintaining a strong financial position and managing the risk of our loan portfolio. During the 2008 – 2009 financial crisis, F&M achieved strong profitability, was well-capitalized, did not participate in TARP, and continued to pay its quarterly cash dividend. We believe the lessons we learned during the 2008 – 2009 financial crisis, combined with the experience of our strong leadership team, board of directors, financial position, and capital levels provide us with the resources and platform to navigate this challenging period.”

“The COVID-19 pandemic combined with the country’s response to the crisis is materially impacting the ability of individuals, businesses and other entities to meet their financial obligations. Fortunately, F&M has no exposure to the energy sector, while our exposure to industries most likely impacted by the pandemic is limited. In fact, loans in the restaurant, hospitality (hotel) and entertainment industries represent 8.67% of our loan portfolio at March 31, 2020. We have only processed a total of $3.4 million of payment deferrals to customers in the restaurant and entertainment industries, while no hotel customers have currently requested payment deferrals reflecting our conservative underwriting standards and the strong balance sheets of our customers. During the first quarter we proactively increased our allowance for loan losses and incurred a $1.4 million provision, which was in addition to a higher provision in the fourth quarter as we completed a comprehensive review of each loan from the Bank of Geneva merger and prudently increased our allowance for the significant loan growth we experienced last year. We are proactively monitoring our loan portfolio and we will make the necessary adjustments to help our customers during this difficult period, while ensuring F&M’s financial strength.”

Mr. Eller concluded: “F&M is vested in our communities and we are here to help as we all navigate the challenges associated with the COVID-19 crisis together. On behalf of the entire leadership team and board of directors, I would like to express our gratitude to our customers and employees. Thank you!”

Stockholders’ Equity and Dividends

Total stockholders’ equity increased 9.0% to $236.5 million at March 31, 2020, from $216.9 million at March 31, 2019. At March 31, 2020, the company had a Tier 1 leverage ratio of 11.56%, compared to 13.07% at March 31, 2019.

Tangible stockholders’ equity increased to $180.9 million at March 31, 2020, compared to $167.1 million at March 31, 2019. On a per share basis, tangible stockholders’ equity at March 31, 2020, was $16.26 per share, compared to $15.05 per share at March 31, 2019.

For the 2020 first quarter, the company declared cash dividends of $0.16 per share, which is a 6.7% increase over the 2019 first quarter 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 2020 first quarter, the dividend payout ratio was 43.07% compared to 42.77% for the same period last year.

About Farmers & Merchants State Bank:

Farmers & Merchants Bancorp, Inc. (“F&M”) (Nasdaq: FMAO), is the holding company for the Farmers & Merchants State Bank, a local independent community bank with $1.7 billion in assets 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
	March 31, 2020		December 31, 2019			September 30, 2019		June 30, 2019		March 31, 2019
Interest Income
Loans, including fees	$	15,883	$	15,608		$	15,202	$	16,723	$	14,680
Debt securities:
U.S. Treasury and<br><br><br>government<br><br><br>agencies		1,146		840			972		816		713
Municipalities		262		225			190		211		211
Dividends		45		60			69		76		88
Federal funds sold		6		97			120		162		37
Other		122		319			459		295		133
Total interest income		17,464		17,149			17,012		18,283		15,862
Interest Expense
Deposits		2,901		3,336			3,654		3,339		2,613
Federal funds purchased<br><br><br>and securities sold<br><br><br>under agreement to<br><br><br>repurchase		244		207			201		141		185
Borrowed funds		266		270			257		269		287
Total interest<br><br><br>expense		3,411		3,813			4,112		3,749		3,085
Net Interest Income -<br><br><br>Before Provision for<br><br><br>Loan Losses		14,053		13,336			12,900		14,534		12,777
Provision for Loan Losses		1,430		728			247		133		30
Net Interest Income After<br><br><br>Provision For Loan<br><br><br>Losses		12,623		12,608			12,653		14,401		12,747
Noninterest Income
Customer service fees		1,586		1,732			1,722		1,694		1,578
Other service charges<br><br><br>and fees		1,039		1,132			1,179		1,091		1,041
Net gain on sale of loans		227		119			260		196		102
Net gain (loss) on sale<br><br><br>of available-for-sale<br><br><br>securities		270		-			-		-		(26	)
Total noninterest<br><br><br>income		3,122		2,983			3,161		2,981		2,695
Noninterest Expense
Salaries and wages		4,223		4,029			4,158		3,830		4,312
Employee benefits		1,677		1,410			1,331		1,223		1,594
Net occupancy expense		564		406			630		614		667
Furniture and equipment		758		596			720		763		696
Data processing		442		396			482		376		1,299
Franchise taxes		368		246			248		229		258
ATM expense		414		434			416		418		447
Advertising		303		340			587		382		260
Net loss on sale<br><br><br>of other assets owned		1		16			22		28		15
FDIC assessment		72		(11	)		-		98		96
Mortgage servicing<br><br><br>rights amortization		132		158			149		105		75
Consulting fees		139		264			196		95		113
Other general and<br><br><br>administrative		1,602		1,482			1,667		1,551		1,679
Total noninterest<br><br><br>expense		10,695			9,766			10,606		9,712		11,511
---	---	---	---	---	---	---	---	---	---	---	---	---
Income Before Income<br><br><br>Taxes		5,050			5,825			5,208		7,670		3,931
Income Taxes		945			1,102			933		1,490		707
Net Income		4,105			4,723			4,275		6,180		3,224
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		4,998			(472	)		841		3,061		1,749
Reclassification<br><br><br>adjustment for (gain)<br><br><br>loss on sale of<br><br><br>available-for-sale<br><br><br>securities		(270	)		-			-		-		26
Net unrealized gain<br><br><br>(loss) on available-for-<br><br><br>sale securities		4,728			(472	)		841		3,061		1,775
Tax expense (benefit)		993			(99	)		176		643		373
Other comprehensive<br><br><br>income (loss)		3,735			(373	)		665		2,418		1,402
Comprehensive Income	$	7,840		$	4,350		$	4,940	$	8,598	$	4,626
Basic and Diluted<br><br><br>Earnings Per Share	$	0.37		$	0.43		$	0.38	$	0.56	$	0.29
Dividends Declared	$	0.16		$	0.16		$	0.15	$	0.15	$	0.15

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
	(Unaudited)						(Unaudited)			(Unaudited)			(Unaudited)
Assets
Cash and due from banks	$	49,844		$	50,137		$	103,188		$	108,085		$	48,740
Federal funds sold		40,993			1,159			11,404			15,193			33,109
Total cash and cash equivalents		90,837			51,296			114,592			123,278			81,849
Interest-bearing time deposits		4,869			4,309			4,554			4,509			4,509
Securities - available-for-sale		204,121			222,293			190,465			204,415			174,682
Other securities, at cost		5,810			5,810			5,789			5,789			5,789
Loans held for sale		2,153			4,248			606			1,909			859
Loans, net		1,239,108			1,211,771			1,151,937			1,084,448			1,091,829
Premises and equipment		26,120			26,351			25,990			26,013			25,205
Goodwill		47,340			47,340			47,340			47,340			47,340
Mortgage servicing rights		2,672			2,629			2,556			2,465			2,397
Other real estate owned		185			214			351			329			510
Bank owned life insurance		15,313			15,235			15,151			15,050			14,963
Other assets		16,597			15,834			15,549			15,002			15,729
Total Assets	$	1,655,125		$	1,607,330		$	1,574,880		$	1,530,547		$	1,465,661
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing	$	261,786		$	265,156		$	261,719		$	242,510		$	236,847
Interest-bearing
NOW accounts		463,734			423,655			430,646			430,505			418,773
Savings		341,256			322,973			310,667			293,179			272,875
Time		281,931			276,563			274,996			276,153			258,929
Total deposits		1,348,707			1,288,347			1,278,028			1,242,347			1,187,424
Federal Funds Purchased and securities<br><br><br>sold under agreements to repurchase		30,585			48,073			30,056			27,102			25,521
Federal Home Loan Bank (FHLB)<br><br><br>advances		24,888			24,806			24,669			24,532			24,682
Dividend payable		1,768			1,768			1,657			1,654			1,654
Accrued expenses and other liabilities		12,820			14,078			13,062			10,865			9,446
Total liabilities		1,418,768			1,377,072			1,347,472			1,306,500			1,248,727
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 3/31/20 and 12/31/19		81,844			81,535			81,264			81,955			81,760
Treasury stock - 1,100,579 shares 3/31/20,<br><br><br>1,093,065 shares 12/31/19		(12,636	)		(12,456	)		(12,453	)		(12,707	)		(12,680	)
Retained earnings		162,416			160,081			157,126			153,993			149,466
Accumulated other comprehensive<br><br><br>income (loss)		4,833			1,098			1,471			806			(1,612	)
Total stockholders' equity		236,457			230,258			227,408			224,047			216,934
Total Liabilities and Stockholders' Equity	$	1,655,225		$	1,607,330		$	1,574,880		$	1,530,547		$	1,465,661

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

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

	For the Three Months Ended
Selected financial data	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
Return on average assets		1.02	%		1.18	%		1.10	%		1.63	%		1.00	%
Return on average equity		7.06	%		8.26	%		7.54	%		11.21	%		7.16	%
Yield on earning assets		4.66	%		4.63	%		4.74	%		5.25	%		4.80	%
Cost of interest bearing<br><br><br>liabilities		1.22	%		1.40	%		1.55	%		1.45	%		1.26	%
Net interest spread		3.44	%		3.23	%		3.19	%		3.80	%		3.54	%
Net interest margin		3.75	%		3.60	%		3.60	%		4.18	%		3.87	%
Efficiency		63.09	%		63.67	%		65.86	%		56.00	%		73.11	%
Dividend payout ratio		43.07	%		43.34	%		38.67	%		26.78	%		42.77	%
Tangible book value<br><br><br>per share (1)	$	16.26		$	16.01		$	15.45		$	15.49		$	14.90
Tier 1 capital to<br><br><br>average assets		11.56	%		11.52	%		11.45	%		11.77	%		13.35	%
(1)  Tangible Equity = Stockholder Equity less goodwill and other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities)
Loans	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Dollar amounts in thousands)
Commercial real estate	$	570,217		$	551,309		$	502,137		$	443,257		$	440,993
Agricultural real estate		194,383			199,105			200,791			193,768			191,752
Consumer real estate		174,731			165,349			159,074			159,540			160,967
Commercial and industrial		143,261			135,631			130,150			125,609			137,949
Agricultural		109,584			111,820			110,270			113,755			112,898
Consumer		49,022			49,237			49,552			48,952			47,647
Other		8,336			8,314			8,167			7,341			7,392
Less: Net deferred loan fees<br><br><br>and costs		(1,893	)		(1,766	)		(1,445	)		(1,091	)		(1,133	)
Total loans, net	$	1,247,641		$	1,218,999		$	1,158,696		$	1,091,131		$	1,098,465
Asset quality data	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Dollar amounts in thousands)
Nonaccrual loans	$	3,344		$	3,400		$	3,275		$	1,328		$	1,188
Troubled debt restructuring	$	1,934		$	956		$	1,051		$	981		$	173
90 day past due and accruing	$	-		$	-		$	-		$	-		$	-
Nonperforming loans	$	3,344		$	3,400		$	3,275		$	1,328		$	1,188
Other real estate owned	$	185		$	214		$	351		$	329		$	510
Non-performing assets	$	3,529		$	3,614		$	3,626		$	1,657		$	1,698
(Dollar amounts in thousands)
Allowance for loan and lease losses	$	8,533		$	7,228		$	6,759		$	6,964		$	6,636
Allowance for loan and lease<br><br><br>losses/total loans		0.68	%		0.59	%		0.58	%		0.64	%		0.60	%
Net charge-offs:
Quarter-to-date	$	125		$	295		$	171		$	86		$	169
Year-to-date	$	125		$	685		$	426		$	255		$	169
Net charge-offs to average loans
Quarter-to-date		0.01	%		0.03	%		0.02	%		0.01	%		0.02	%
Year-to-date		0.01	%		0.06	%		0.04	%		0.02	%		0.02	%
Non-performing loans/total loans		0.27	%		0.28	%		0.28	%		0.12	%		0.11	%
Allowance for loan and lease<br><br><br>losses/nonperforming loans		256.66	%		187.17	%		173.25	%		375.51	%		558.92	%

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
	March 31, 2020							March 31, 2019
Interest Earning Assets:	Average<br><br><br>Balance		Interest/<br><br><br>Dividends		Yield/<br><br><br>Rate			Average<br><br><br>Balance		Interest/<br><br><br>Dividends		Yield/<br><br><br>Rate
Loans	$	1,236,848	$	15,883		5.14	%	$	1,108,031	$	14,680		5.30	%
Taxable Investment Securities		190,158		1,321		2.78	%		151,885		842		2.22	%
Tax-exempt Investment Securities		28,832		132		2.32	%		34,513		170		2.49	%
Fed Funds Sold & Other		46,393		128		1.10	%		31,394		170		2.17	%
Total Interest Earning Assets		1,502,231	$	17,464		4.66	%		1,325,823	$	15,862		4.80	%
Nonearning Assets		114,326							4,540
Total Assets	$	1,616,557						$	1,330,363
Interest Bearing Liabilities:
Savings Deposits	$	773,130	$	1,485		0.77	%	$	671,227	$	1,527		0.91	%
Other Time Deposits		277,579		1,416		2.04	%		243,342		1,086		1.79	%
Other Borrowed Money		24,787		266		4.29	%		29,392		287		3.91	%
Fed Funds Purchased & Securities
Sold under Agreement to Repurch.		38,954		244		2.51	%		33,794		185		2.19	%
Total Interest Bearing Liabilities	$	1,114,450	$	3,411		1.22	%	$	977,755	$	3,085		1.26	%
Noninterest bearing Liabilities		269,550							137,279
Stockholders Equity	$	232,557						$	215,329
Net Interest Income and<br><br><br>interest rate spread			$	14,053		3.44	%			$	12,777		3.54	%
Net Interest Margin						3.75	%						3.87	%
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