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Farmers & Merchants Bancorp, Inc. Reports Record 2022 Full-Year Financial Results
المصدر: Nasdaq GlobeNewswire / 08 فبراير 2023 07:00:02 America/Chicago
ARCHBOLD, Ohio, Feb. 08, 2023 (GLOBE NEWSWIRE) -- 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 125th anniversary, 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 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 December 31, 2022 December 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 government 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 and securities sold under agreements to 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 expense 6,935 3,264 2,047 2,116 2,388 14,362 7,342 Net Interest Income - Before Provision for Loan Losses 22,557 22,583 21,864 19,783 20,035 86,787 69,498 Provision for Loan Losses 755 1,637 1,628 580 444 4,600 3,444 Net Interest Income After Provision for 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 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 available-for-sale securities - - - - - - 293 Total noninterest income 4,142 3,732 3,320 4,343 4,517 15,537 17,609 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 of other assets owned 12 - (266 ) (5 ) 13 (259 ) 434 FDIC assessment 250 271 270 114 265 905 1,073 Mortgage servicing rights amortization 110 (50 ) 59 26 266 145 1,580 Consulting fees 637 254 233 178 761 1,302 1,634 Other general and administrative 2,964 2,192 2,242 2,179 1,964 9,577 8,175 Total noninterest expense 17,050 13,471 13,235 13,493 14,426 57,249 54,166 Income Before Income 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 Income (Loss) (Net of Tax): Net unrealized loss on available-for-sale securities (628 ) (8,197 ) (14,602 ) (20,939 ) (5,170 ) (44,366 ) (10,948 ) Reclassification adjustment for realized gain on sale of available-for-sale securities - - - - - - (293 ) Net unrealized loss on available-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 loss (496 ) (6,476 ) (11,535 ) (16,542 ) (4,085 ) (35,049 ) (8,881 ) Comprehensive Income (Loss) $ 6,692 $ 2,478 $ (3,264 ) $ (8,440 ) $ 3,598 $ (2,534 ) $ 14,614 Basic Earnings Per Share $ 0.53 $ 0.68 $ 0.63 $ 0.62 $ 0.59 $ 2.46 $ 2.01 Diluted Earnings 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 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 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 sold under agreements to repurchase 54,206 55,802 71,944 31,680 29,268 Federal Home Loan Bank (FHLB) 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 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 shares authorized; issued and outstanding 14,564,425 shares 12/31/22 and 14,063,999 shares 12/31/21 135,497 121,811 123,145 122,886 122,674 Treasury stock - 956,003 shares 12/31/22, 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 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 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 December 31, 2022 December 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 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 per share (1) $ 17.69 $ 17.86 $ 17.43 $ 16.96 $ 16.49 Tier 1 capital to 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 Loans December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 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 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 Asset quality data December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 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 (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 included $ 26,740 $ 25,949 $ 25,148 $ 23,972 $ 23,858 Allowance for loan and lease losses/total loans 0.86 % 0.93 % 0.91 % 0.85 % 0.87 % Adjusted ALLL with credit mark/total 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 losses/nonperforming loans 273.67 % 365.44 % 351.44 % 198.29 % 201.11 % (1) Tangible Equity = Stockholder Equity less goodwill and other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities) 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 Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized 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 repurch. 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 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 For the Twelve Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized 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 repurch. 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 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 (in thousands of dollars, except percentages) QTD December 2022 QTD December 2021 As Reported Excluding Acc/Amort Difference As Reported Excluding Acc/Amort Difference $ Yield $ Yield $ Yield $ Yield $ Yield $ Yield Loans 27,302 4.75 % 26,628 4.63 % 674 0.12 % 21,008 4.56 % 20,585 4.47 % 423 0.09 % Taxable investment securities 1,556 1.47 % 1,556 1.47 % - 0.00 % 1,228 1.16 % 1,228 1.16 % - 0.00 % Tax-exempt investment securities 108 1.92 % 108 1.92 % - 0.00 % 74 2.05 % 74 2.05 % - 0.00 % Fed funds sold & other 526 2.81 % 526 2.81 % - 0.00 % 113 0.21 % 113 0.21 % - 0.00 % Total Interest Earning Assets 29,492 4.18 % 28,818 4.08 % 674 0.10 % 22,423 3.59 % 22,000 3.52 % 423 0.07 % Savings deposits 3,427 0.98 % 3,427 0.98 % - 0.00 % 767 0.24 % 767 0.24 % - 0.00 % Other time deposits 1,551 1.28 % 2,010 1.66 % (459 ) -0.38 % 814 0.68 % 1,431 0.68 % (617 ) 0.00 % Other borrowed money 1,209 3.58 % 1,227 3.64 % (18 ) -0.06 % 361 2.26 % 381 2.26 % (20 ) 0.00 % Federal funds purchased and securities sold under agreement to repurchase 463 3.46 % 463 3.46 % - 0.00 % 155 2.11 % 155 2.11 % - 0.00 % Subordinated notes 285 3.30 % 285 3.30 % - 0.00 % 291 3.38 % 291 3.38 % - 0.00 % Total Interest Bearing Liabilities 6,935 1.32 % 7,412 1.41 % (477 ) -0.09 % 2,388 0.51 % 3,025 0.65 % (637 ) -0.14 % Interest/Dividend income/yield 29,492 4.18 % 28,818 4.08 % 674 0.10 % 22,423 3.59 % 22,000 3.52 % 423 0.07 % Interest Expense / yield 6,935 1.32 % 7,412 1.41 % (477 ) -0.09 % 2,388 0.51 % 3,025 0.65 % (637 ) -0.14 % Net Interest Spread 22,557 2.86 % 21,406 2.67 % 1,151 0.19 % 20,035 3.08 % 18,975 2.87 % 1,060 0.21 % Net Interest Margin 3.20 % 3.03 % 0.17 % 3.21 % 3.04 % 0.17 % YTD December 2022 YTD December 2021 As Reported Excluding Acc/Amort Difference As Reported Excluding Acc/Amort Difference $ Yield $ Yield $ Yield $ Yield $ Yield $ Yield Loans 94,264 4.55 % 92,132 4.45 % 2,132 0.10 % 71,645 4.71 % 70,986 4.67 % 659 0.04 % Taxable investment securities 5,621 1.32 % 5,621 1.32 % - 0.00 % 4,514 1.19 % 4,514 1.19 % - 0.00 % Tax-exempt investment securities 337 1.82 % 337 1.82 % - 0.00 % 326 2.25 % 326 2.25 % - 0.00 % Fed funds sold & other 927 0.97 % 927 0.97 % - 0.00 % 355 0.19 % 355 0.19 % - 0.00 % Total Interest Earning Assets 101,149 3.87 % 99,017 3.79 % 2,132 0.08 % 76,840 3.66 % 76,181 3.63 % 659 0.03 % Savings deposits 6,378 0.48 % 6,378 0.48 % - 0.00 % 2,467 0.22 % 2,467 0.22 % - 0.00 % Other time deposits 3,505 0.78 % 5,822 1.29 % (2,317 ) -0.51 % 2,951 0.96 % 3,588 1.17 % (637 ) -0.21 % Other borrowed money 2,160 2.90 % 2,241 3.01 % (81 ) -0.11 % 785 2.66 % 641 2.17 % 144 0.49 % Federal funds purchased and securities sold under agreement to repurchase 1,197 2.64 % 1,197 2.64 % - 0.00 % 649 2.18 % 649 2.18 % - 0.00 % Subordinated notes 1,122 3.25 % 1,122 3.25 % - 0.00 % 490 3.32 % 490 3.32 % - 0.00 % Total Interest Bearing Liabilities 14,362 0.74 % 16,760 0.86 % (2,398 ) -0.12 % 7,342 0.48 % 7,835 0.51 % (493 ) -0.03 % Interest/Dividend income/yield 101,149 3.87 % 99,017 3.79 % 2,132 0.08 % 76,840 3.66 % 76,181 3.63 % 659 0.03 % Interest Expense / yield 14,362 0.74 % 16,760 0.86 % (2,398 ) -0.12 % 7,342 0.48 % 7,835 0.51 % (493 ) -0.03 % Net Interest Spread 86,787 3.13 % 82,257 2.93 % 4,530 0.20 % 69,498 3.18 % 68,346 3.12 % 1,152 0.06 % Net Interest Margin 3.32 % 3.15 % 0.17 % 3.31 % 3.25 % 0.06 % FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES NON-GAAP RECONCILIATION OF NET INCOME (in thousands of dollars) (in thousands of dollars) Three Months Ended Twelve Months Ended Non-GAAP Reconciliation of Net Income 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 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 $ 240,688 $ 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. Company Contact:
Lars B. Eller
President and Chief Executive Officer
Farmers & Merchants Bancorp, Inc.
(419) 446-2501
leller@fm.bankInvestor and Media Contact:
Andrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
andrew@smberger.com