• Farmers & Merchants Bancorp, Inc. Reports 2023 First Quarter Financial Results

    المصدر: Nasdaq GlobeNewswire / 19 أبريل 2023 16:30:01   America/New_York

    ARCHBOLD, Ohio, April 19, 2023 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2023 first quarter ended March 31, 2023.

    2023 First Quarter Financial Highlights Include (on a year-over-year basis unless noted):

    • Net interest income before provision for credit losses increased 9.6% to $21.7 million
    • Adopted CECL accounting standards, which led to a one-time adjustment to equity of $3.4 million, net of tax
    • Net income of $6.5 million, compared to $8.1 million
    • Earnings were $0.47 per basic and diluted share, compared to $0.62 per basic and diluted share
    • Total loans increased 24.7% to a record $2.447 billion
    • Organic loan growth of 19.4%, excluding PPP loans and the Peoples-Sidney Financial Corporation acquisition
    • Total assets increased 14.3% to a record $3.07 billion, and up 1.8% from December 31, 2022
    • Deposits increased 11.5% to a record $2.51 billion, and up 1.8% from December 31, 2022
    • Uninsured deposits to total deposits of approximately 18% at March 31, 2023
    • Strong asset quality continues as nonperforming loans declined 10.1% to $7.7 million, or 0.32% of total loans
    • Net charge-offs to average loans were 0.00%
    • Allowance for credit losses, with the accretable yield adjustment from recent acquisitions, of 319.22% of nonperforming loans

    Lars B. Eller, President and Chief Executive Officer, stated, “F&M’s increased scale, strong balance sheet, and highly profitable financial model supports our growth initiatives, while providing us with the flexibility to invest across our business and return capital to shareholders. Despite increased economic volatility, we remain focused on executing our new three-year strategic growth plan and I am pleased with the progress we are making. During the quarter, we successfully completed the integration of the October 2022 acquisition of the Peoples-Sidney Financial Corporation. We implemented CECL accounting standards, which maintained our allowance, even as non-performing loans declined 10.1% over the past 12 months. In the first quarter, we completed the conversion of our credit card sale with new cards issued and the scorecard rewards carried over to the new provider. In addition, we completed the first phase of our previously announced investments, preparing to open three new offices in the second quarter as well as enhancing our training, commercial and deposit operations, customer care center, and risk and compliance teams and capabilities. Finally, we added a new, highly experienced lending team in our Fort Wayne region to lead our growth within this compelling market.”

    Mr. Eller continued, “We grew total deposits by $44.3 million over the past three months, despite extremely high competition for deposits. Competition for deposits has also significantly increased our cost of interest-bearing liabilities. Interest expense on deposits increased over five times from $1.4 million in the 2022 first quarter to $8.2 million, compared to an 11.5% increase in total deposits over this period. Despite these trends, net interest income before provision for credit losses increased 9.6% to a first quarter record as a result of strong loan growth and higher yields on loans.”

    “Profitability was impacted by several strategic one-time expenses that we incurred during the 2023 first quarter including $541,000 of total charges related to the conversion of our credit card platform. In addition, we sold $21.6 million of investments and recognized a loss of $891,000 during the quarter, which temporarily reduced ROA by 9 basis points and ROE by 93 basis points. We expect this opportunistic sale to contribute to earnings going forward and earn a payback in approximately eight months. Offsetting these actions was significant growth in income from agriculture servicing rights, which were recognized at a value of $1.5 million during the first quarter. Overall, first quarter profitability was in line with our expectations. We expect the actions taken in the first quarter will enhance profitability going forward and we remain focused on investing in our growth initiatives, controlling operating expenses, and managing our cost of funds,” continued Mr. Eller.

    Income Statement

    Net income for the 2023 first quarter ended March 31, 2023, was $6.5 million, compared to $8.1 million for the same period last year. Net income per basic and diluted share for the 2023 first quarter was $0.47, compared to $0.62 for the same period last year.

    Deposits
    At March 31, 2023, total deposits were a record $2.513 billion, an increase of 11.5% from March 31, 2022, and an increase of 1.8% from December 31, 2022. The Company’s cost of interest-bearing liabilities increased to 1.85% for the quarter ended March 31, 2023, compared to 0.45% for the quarter ended March 31, 2022, and 1.32% for the quarter ended December 31, 2022.

    At March 31, 2023, F&M’s average deposit account had an average balance of $25,544. In addition, uninsured deposits to total deposits were approximately 18% for the quarter ended March 31, 2023.

    Loan Portfolio and Asset Quality
    Total loans, net at March 31, 2023, increased 24.5%, or by $476.6 million to a record $2.422 billion, compared to $1.945 billion at March 31, 2022, and up 3.7% from $2.336 billion at December 31, 2022. The year-over-year improvement resulted primarily from the contribution of continued strong organic loan growth and the completion of the Peoples acquisition. Not including the Peoples acquisition, total net loans increased 19.1% organically, or by $371.9 million from the same period a year ago.

    F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $7.7 million, or 0.32% of total loans at March 31, 2023, compared to $8.6 million, or 0.44% of total loans at March 31, 2022. Loans past due were 0.52% of the loan portfolio at March 31, 2023, which included one large farm loan that was paid off after the quarter ended and another loan that is expected to be refinanced through another bank in the 2023 second quarter. Past due loans adjusted for these two credits as a percent of the loan portfolio would have been 0.13% at March 31, 2023. CRE loans represented 50.1% of the Company’s total loan portfolio at March 31, 2023.

    F&M maintains a well-balanced, diverse and high performing CRE portfolio, which included the following categories at March 31, 2023:





    CRE Category    		 

    Dollar
    Balance    		 

    Percent of
    RE Portfolio    (*)    		 

    Percent of Total
    Loan Portfolio    (*)
    Multi Family $204,510 16.7% 8.4%
    Retail $217,447 17.7% 8.9%
    Industrial $174,296 14.2% 7.1%
    Hotels $151,562 12.4% 6.2%
    Office $96,087 7.8% 3.9%
    Gas Stations $59,239 4.8% 2.4%
    Senior Living $41,407 3.4% 1.7%
    Food Service $32,788 2.7% 1.3%
    Other $247,979 20.2% 10.1%
    Total CRE $1,225,315 100.0% 50.1%

       * Numbers have been rounded

    On January 1, 2023, F&M adopted ASU 2016-13 - Measurement of Credit Losses on Financial Instruments and implemented the current expected credit losses (“CECL”) accounting standards. As a result, the Company recorded the one-time adjustment from equity into the allowance for credit losses and unfunded commitment liability in the amount of $4.3 million, or $3.4 million, net of tax. The adoption of CECL did not have a material impact on the Bank’s regulatory capital ratios.

    At March 31, 2023, the Company’s allowance for credit losses to nonperforming loans was 319.22%, compared to 198.29% at March 31, 2022. As a result of F&M’s recent acquisitions, the Company has an accretable yield adjustment of $5.8 million, which further enhances F&M’s allowance at March 31, 2023. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.24% at March 31, 2023, compared to 1.22% at March 31, 2022.

    Mr. Eller concluded, “We expect to make approximately $7 million of annual strategic investments during 2023 across our business. These investments combined with a higher cost of funds are expected to temporarily impact profitability in 2023. We believe earnings growth will reaccelerate in 2024 as we benefit from the investments and strategies we are pursuing. I am encouraged by the progress we are making and the dedication of our team members, as we remain focused on supporting the financial needs of our Ohio, Indiana and Michigan communities.”

    Stockholders’ Equity and Dividends
    Total stockholders’ equity increased 6.7% to $305.8 million at March 31, 2023, from $286.5 million at March 31, 2022. At March 31, 2023, the Company had a Tier 1 leverage ratio of 8.36%, compared to 8.51% at March 31, 2022.

    Based on a regulatory basis, tangible stockholders’ equity increased to $244.2 million at March 31, 2023, compared to $221.6 million at March 31, 2022. On a per share basis, regulatory tangible stockholders’ equity at March 31, 2023, was $17.92 per share, compared to $16.96 per share at March 31, 2022. A non-GAAP reconciliation is provided as a table in this press release.

    For the 2023 first quarter, the company declared cash dividends of $0.21 per share, which is a 10.5% increase over the 2022 first quarter declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 28 consecutive years. For the 2023 first quarter, the dividend payout ratio was 43.79% compared to 30.64% 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 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  
       March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 
    Interest Income            
    Loans, including fees  $29,703  $27,302  $24,119  $22,388  $20,455  
    Debt securities:            
    U.S. Treasury and government agencies   1,068   1,118   1,049   1,035   1,023  
    Municipalities   408   420   373   322   300  
    Dividends   123   126   93   57   42  
    Federal funds sold   21   2   -   9   10  
    Other.   479   524   213   100   69  
    Total interest income   31,802   29,492   25,847   23,911   21,899  
    Interest Expense            
    Deposits   8,151   4,978   2,166   1,379   1,360  
    Federal funds purchased and securities sold            
    under agreements to repurchase   405   463   416   166   152  
    Borrowed funds   1,280   1,209   398   218   335  
    Subordinated notes   284   285   284   284   269  
    Total interest expense   10,120   6,935   3,264   2,047   2,116  
    Net Interest Income - Before Provision for Credit Losses*   21,682   22,557   22,583   21,864   19,783  
    Provision for Credit Losses*    817   755   1,637   1,628   580  
    Net Interest Income After Provision for Credit Losses*  20,865   21,802   20,946   20,236   19,203  
    Noninterest Income            
    Customer service fees   2,447   2,862   2,300   2,148   2,648  
    Other service charges and fees   2,554   1,115   1,105   1,008   998  
    Net gain on sale of loans   67   165   327   164   697  
    Net loss on sale of available-for-sale securities   (891)  -   - - -
    Total noninterest income   4,177   4,142   3,732   3,320   4,343  
    Noninterest Expense            
    Salaries and wages   6,657   6,353   5,479   5,366   5,502  
    Employee benefits   2,165   1,911   1,392   1,546   2,054  
    Net occupancy expense   856   753   693   522   598  
    Furniture and equipment   1,252   1,096   1,047   1,008   1,056  
    Data processing   726   1,917   781   654   604  
    Franchise taxes   366   (45)  254   757   418  
    ATM expense   623   561   580   544   532  
    Advertising   514   531   578   300   237  
    Net (gain) loss on sale of other assets owned   -   12   - (266)  (5) 
    FDIC assessment   306   250   271   270   114  
    Mortgage servicing rights amortization   159   110   (50)  59   26  
    Consulting fees   230   637   254   233   178  
    Other general and administrative   3,139   2,964   2,192   2,242   2,179  
    Total noninterest expense   16,993   17,050   13,471   13,235   13,493  
    Income Before Income Taxes   8,049   8,894   11,207   10,321   10,053  
    Income Taxes   1,583   1,706   2,253   2,050   1,951  
    Net Income   6,466   7,188   8,954   8,271   8,102  
    Other Comprehensive Income (Loss) (Net of Tax):            
    Net unrealized gain (loss) on available-for-sale securities  9,812   (628)  (8,197)  (14,602)  (20,939) 
    Reclassification adjustment for realized loss on sale of available-for-sale securities   (891)  -   -   -   -  
    Net unrealized gain (loss) on available-for-sale securities  8,921   (628)  (8,197)  (14,602)  (20,939) 
    Tax expense (benefit)   1,874   (132)  (1,721)  (3,067)  (4,397) 
    Other comprehensive income (loss)   7,047   (496)  (6,476)  (11,535)  (16,542) 
    Comprehensive Income (Loss)  $13,513  $6,692  $2,478  $(3,264) $(8,440) 
    Basic Earnings Per Share  $0.47  $0.53  $0.68  $0.63  $0.62  
    Diluted Earnings Per Share  $0.47  $0.53  $0.68  $0.63  $0.62  
    Dividends Declared  $0.2100  $0.2100  $0.2100  $0.2025  $0.1900  
                 
    *ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method.     


    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES 
    CONDENSED CONSOLIDATED BALANCE SHEETS 
    (Unaudited) (in thousands of dollars, except share data) 
      
       March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022  
       (Unaudited)   (Unaudited) (Unaudited) (Unaudited)  
    Assets             
    Cash and due from banks $62,780  $83,085  $69,680  $69,955  $94,118   
    Federal funds sold  1,545   1,324   990   1,484   45,404   
     Total cash and cash equivalents  64,325   84,409   70,670   71,439   139,522   
                  
    Interest-bearing time deposits  4,435   4,442   5,187   6,684   8,677   
    Securities - available-for-sale  372,975   390,789   395,485   399,687   413,996   
    Other securities, at cost  11,543   9,799   8,227   8,735   8,568   
    Loans held for sale  951   827   2,182   4,230   6,060   
    Loans, net  2,422,018   2,336,074   2,122,626   2,016,394   1,945,449   
    Premises and equipment  28,679   28,381   26,484   26,492   26,653   
    Construction in progress  1,565   278   - - - 
    Goodwill  86,358   86,358   80,434   80,434   80,434   
    Mortgage servicing rights  4,985   3,549   3,583   3,426   3,336   
    Other real estate owned  -   -   - - - 
    Bank owned life insurance  33,269   33,073   28,051   27,874   27,715   
    Other assets  38,972   37,372   40,831   29,321   25,735   
                  
    Total Assets $3,070,075  $3,015,351  $2,783,760  $2,674,716  $2,686,145   
                  
     Liabilities and Stockholders' Equity            
    Liabilities            
    Deposits            
     Noninterest-bearing $520,145  $532,794  $506,928  $503,395  $497,249   
     Interest-bearing            
     NOW accounts  800,230   750,887   705,888   678,552   681,975   
     Savings  590,854   627,203   607,375   617,850   626,787   
     Time  601,939   557,980   462,845   424,249   447,586   
     Total deposits  2,513,168   2,468,864   2,283,036   2,224,046   2,253,597   
                  
    Federal funds purchased and            
    securities sold under agreements to repurchase  30,496   54,206   55,802   71,944   31,680   
    Federal Home Loan Bank (FHLB) advances  164,327   127,485   102,147   42,635   22,656   
    Other borrowings  -   10,000   10,000   - 40,000   
    Subordinated notes, net of unamortized issuance costs  34,615   34,586   34,557   34,528   34,499   
    Dividend payable  2,831   2,832   2,727   2,626   2,462   
    Accrued expenses and other liabilities  18,881   19,238   14,913   18,064   14,773   
     Total liabilities  2,764,318   2,717,211   2,503,182   2,393,843   2,399,667   
                  
    Commitments and Contingencies            
                  
    Stockholders' Equity            
    Common stock - No par value 20,000,000 shares authorized; issued and          
    outstanding 14,564,425 shares 3/31/23 and 12/31/22  135,241   135,497   121,811   123,145   122,886   
    Treasury stock - 934,303 shares 3/31/23, 956,003 shares 12/31/22  (11,310)  (11,573)  (11,547)  (11,822)  (11,739)  
    Retained earnings  213,012   212,449   208,051   200,811   195,057   
    Accumulated other comprehensive loss  (31,186)  (38,233)  (37,737)  (31,261)  (19,726)  
     Total stockholders' equity  305,757   298,140   280,578   280,873   286,478   
                  
    Total Liabilities and Stockholders' Equity $3,070,075  $3,015,351  $2,783,760  $2,674,716  $2,686,145   


    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES 
    SELECT FINANCIAL DATA 
                     
       For the Three Months Ended 
    Selected financial data March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 
    Return on average assets  0.84%   0.96%   1.31%   1.23%   1.21%  
    Return on average equity  8.59%   10.00%   12.53%   11.66%   11.00%  
    Yield on earning assets  4.41%   4.18%   4.00%   3.79%   3.47%  
    Cost of interest bearing liabilities  1.85%   1.32%   0.68%   0.44%   0.45%  
    Net interest spread  2.56%   2.86%   3.32%   3.35%   3.02%  
    Net interest margin  3.01%   3.20%   3.49%   3.47%   3.14%  
    Efficiency  63.53%   50.46%   51.19%   50.17%   55.44%  
    Dividend payout ratio  43.79%   39.39%   30.45%   30.02%   30.64%  
    Tangible book value per share (1) $17.92  $17.69  $17.86  $17.43  $16.96  
    Tier 1 leverage ratio  8.36%   8.39%   9.11%   8.75%   8.51%  
    Average shares outstanding  13,615,655   13,606,876   13,083,145   13,065,975   13,066,272  
                     
    Loans March 31, 2023  December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 
    (Dollar amounts in thousands)                
    Commercial real estate $1,225,315  $1,152,603  $1,063,661  $979,176  $910,839  
    Agricultural real estate  227,897   220,819   205,089   199,972   196,223  
    Consumer real estate  502,974   494,423   416,001   410,450   410,120  
    Commercial and industrial  241,598   242,360   229,388   232,975   216,918  
    Agricultural  131,467   128,733   128,615   127,143   140,709  
    Consumer  89,588   89,147   70,602   55,411   57,521  
    Other  29,316   29,818   30,662   31,243   31,573  
    Less: Net deferred loan fees and costs  (1,503)  (1,516)  (1,402)  (1,552)  (1,683) 
    Total loans,net $2,446,652  $2,356,387  $2,142,616  $2,034,818  $1,962,220  
                     
                     
    Asset quality data March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 
    (Dollar amounts in thousands)                
    Nonaccrual loans $7,717  $4,689  $5,470  $5,247  $8,581  
    Troubled debt restructuring $3,516  $3,645  $3,978  $2,748  $7,268  
    90 day past due and accruing $-  $-  $-  $-  $-  
    Nonperforming loans $7,717  $4,689  $5,470  $5,247  $8,581  
    Other real estate owned $-  $-  $-  $-  $-  
    Nonperforming assets $7,717  $4,689  $5,470  $5,247  $8,581  
                     
                     
    Allowance for credit losses(2) $24,507  $20,313  $19,990  $18,424  $16,771  
    Accretable yield adjustment  5,754   6,427   5,959   6,724   7,201  
    Adjusted credit losses with accretable yield included(2)  30,261  $26,740  $25,949  $25,148  $23,972  
    Allowance for credit losses/total loans(2) $1.00%   0.86%   0.93%   0.91%   0.85%  
    Adjusted credit losses with accretable yield/total loans(2) $1.24%   1.13%   1.21%   1.24%   1.22%  
    Net charge-offs:                
    Quarter-to-date  60  $431  $71  $(25) $51  
    Year-to-date  60  $529  $97  $26  $51  
    Net charge-offs to average loans   0.28%           
    Quarter-to-date  0.00%   0.02%   0.00%   0.00%   0.00%  
    Year-to-date  0.00%   0.03%   0.00%   0.00%   0.00%  
    Nonperforming loans/total loans  0.32%   0.20%   0.26%   0.26%   0.44%  
    Allowance for credit losses/nonperforming loans(2)  319.22%   273.67%   365.44%   351.44%   198.29%  
                     
    (1) Tangible Equity = Stockholder Equity less goodwill, other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities) plus CECL adjustment
    (2) ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method.     


    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES 
    AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES 
    (in thousands of dollars, except percentages) 
                
                  
      For the Three Months Ended For the Three Months Ended 
      March 31, 2023 March 31, 2022 
    Interest Earning Assets: Average Balance Interest/Dividends Annualized
    Yield/Rate    		 Average Balance Interest/Dividends Annualized
    Yield/Rate    		 
    Loans $2,397,061 $29,703 4.96% $1,907,478 $20,455 4.29% 
    Taxable investment securities  397,480  1,499 1.51%  429,899  1,295 1.20% 
    Tax-exempt investment securities  26,352  100 1.92%  18,587  70 1.91% 
    Fed funds sold & other  68,557  500 2.92%  167,319  79 0.19% 
    Total Interest Earning Assets  2,889,450 $31,802 4.41%  2,523,283 $21,899 3.47% 
                  
    Nonearning Assets  180,259      165,064     
                  
    Total Assets $3,069,709     $2,688,347     
                  
    Interest Bearing Liabilities:             
    Savings deposits $1,400,769 $4,943 1.41% $1,293,099 $588 0.18% 
    Other time deposits  579,409  3,208 2.21%  459,854  772 0.67% 
    Other borrowed money  132,494  1,280 3.86%  63,364  335 2.11% 
    Fed funds purchased & securities             
    sold under agreement to repurch.  38,853  405 4.17%  29,104  152 2.09% 
    Subordinated notes  34,596  284 3.28%  34,480  269 3.12% 
    Total Interest Bearing Liabilities $2,186,121 $10,120 1.85% $1,879,901 $2,116 0.45% 
                  
    Noninterest Bearing Liabilities  582,345      513,745     
                  
    Stockholders' Equity $301,243     $294,701     
                  
    Net Interest Income and Interest Rate Spread   $21,682 2.56%   $19,783 3.02% 
                  
    Net Interest Margin     3.01%     3.14% 
                  
    Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts   


    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
    (in thousands of dollars, except percentages)
                      
     For the Three Months Ended March 31, 2023 For the Three Months Ended March 31, 2022
     As Reported Excluding Acc/AmortDifference As Reported Excluding Acc/AmortDifference
     $Yield $Yield $Yield $Yield $Yield $Yield
    Loans29,7034.96% 29,0364.85% 667 0.11% 20,4554.29% 20,0814.12% 374 0.17%
    Taxable investment securities1,4991.51% 1,4991.51% - 0.00% 1,2951.20% 1,2951.20% - 0.00%
    Tax-exempt investment securities1001.92% 1001.92% - 0.00% 701.91% 701.91% - 0.00%
    Fed funds sold & other5002.92% 5002.92% - 0.00% 790.19% 790.19% - 0.00%
        Total Interest Earning Assets31,8024.41% 31,1354.31% 667 0.10% 21,8993.47% 21,5253.42% 374 0.05%
                      
    Savings deposits4,9431.41% 4,9431.41% - 0.00% 5880.18% 5880.18% - 0.00%
    Other time deposits3,2082.21% 3,6672.53% (459)-0.32% 7720.67% 1,3911.21% (619)-0.54%
    Other borrowed money1,2803.86% 1,2983.92% (18)-0.06% 3352.11% 3562.25% (21)-0.14%
    Federal funds purchased and                 
    securities sold under agreement to                 
    repurchase4054.17% 4054.17% - 0.00% 1522.09% 1522.09% - 0.00%
    Subordinated notes2843.28% 2843.28% - 0.00% 2693.12% 2693.12% - 0.00%
       Total Interest Bearing Liabilities10,1201.85% 10,5971.94% (477)-0.09% 2,1160.45% 2,7560.59% (640)-0.14%
                      
    Interest/Dividend income/yield31,8024.41% 31,1354.31% 667 0.10% 21,8993.47% 21,5253.42% 374 0.05%
    Interest Expense / yield10,1201.85% 10,5971.94% (477)-0.09% 2,1160.45% 2,7560.59% (640)-0.14%
    Net Interest Spread21,6822.56% 20,5382.37% 1,144 0.19% 19,7833.02% 18,7692.83% 1,014 0.19%
    Net Interest Margin 3.01%  2.85%  0.16%  3.14%  2.98%  0.16%


    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    NON-GAAP RECONCILIATION OF NET INCOME
    (in thousands of dollars)     
         
       
      Three Months Ended
    Non-GAAP Reconciliation of Net Income March 31, 2023 March 31, 2022
      (Unaudited)
    Net income as reported $6,466  $8,102 
    Acquisition expenses  96   145 
    Tax effect on acquisition expenses  (19)  (30)
    Net income excluding acquisition expenses and tax effect $6,543  $8,217 
         
    Weighted average common shares outstanding including participating securities  13,615,655   13,066,272 
         
    Basic and diluted earnings per share $0.48  $0.63 


    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 ValueYear to Date Year to Date 
      March 31, 2023 March 31, 2022 March 31, 2023 March 31, 2022 
              
    Shares Outstanding  13,630,122   13,066,083   13,630,122   13,066,083  
              
    Tangible Equity         
    Equity $305,757  $286,478  $305,757  $286,478  
    Goodwill  86,358   80,434   86,358   80,434  
    Other Intangible  8,882   4,203   8,882   4,203  
    Comprehensive Loss Adjustment*  -   -   31,186   19,726  
    CECL Adjustment**  -   -   2,528   -  
    Tangible Equity $210,517  $201,841  $244,231  $221,566  
    Shares Outstanding  13,630   13,066   13,630   13,066  
    Tangible Book Equity per Share $ 15.44  $ 15.45  $ 17.92  $ 16.96  
              
              
      Actual Average Regulatory Average 
      Year to Date Year to Date 
      March 31, 2023 March 31, 2022 March 31, 2023 March 31, 2022 
              
    Net Income $6,466  $8,102  $6,466  $8,102  
    Acquisition Costs - Tax Adjusted  77   115   77   115  
              
    Average Shares Outstanding  13,206,713   11,664,852   13,206,713   11,664,852  
              
    Average Tangible Equity         
    Average Equity $301,243  $294,701  $301,243  $294,701  
    Average Goodwill  86,358   80,434   86,358   80,434  
    Average Other Intangible  9,167   4,356   9,167   4,356  
    Average Comprehensive Loss Adjustment*  -   -   36,764   8,155  
    Average CECL Adjustment**  -   -   2,528    
    Average Tangible Equity $205,718  $209,911  $245,010  $218,066  
    Average Shares Outstanding  13,616   13,066   13,616   13,066  
    Average Tangible Book Equity per Share $ 15.11  $ 16.07  $ 17.99  $ 16.69  
              
    Return on Average Tangible Equity  12.57%  15.44%  10.56%  14.86% 
    Return on Average Tangible Equity w/o Acquisition 12.72%  15.66%  10.68%  15.07% 
              
              
    *The Bank has adopted the Accumulated Other Comprehensive Income (AOCI) opt out election which removed AOCI 
    from the calculation of tangible equity for regulatory purposes.       
    **ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method and
    the Bank has elected to spread the Capital adjustment over three years. The first year permits 75% of the capital adjustment to be removed
    from the calculation of tangible equity for regulatory purposes.       


    Company Contact:Investor and Media Contact:
    Lars B. Eller
    President and Chief Executive Officer Farmers & Merchants Bancorp, Inc.
    (419) 446-2501
    leller@fm.bank    		Andrew M. Berger
    Managing Director
    SM Berger & Company, Inc.
    (216) 464-6400
    andrew@smberger.com

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