Farmers & Merchants Bancorp, Inc. Reports 2023 Second-Quarter and Year-to-Date Financial Results

Farmers & Merchants Bancorp, Inc.

ARCHBOLD, Ohio, July 26, 2023 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) the holding company of F&M Bank, today reported financial results for the 2023 second quarter and year-to-date June 30, 2023.

2023 Second Quarter Financial and Operating Highlights (on a year-over-year basis unless noted):

• 81 consecutive quarters of profitability

• Net income was $6.0 million, or $0.44 per basic and diluted share

• Stockholders’ equity increased 8.5% to $304.7 million

• Regulatory tangible book value per share increased 4.5% to $18.21 per share

• Organic loan growth of 18.5%, excluding PPP loans and the Peoples-Sidney Financial Corporation acquisition

• Total loans were a record of $2.52 billion and increased 6.8% from $2.36 billion at December 31, 2022

• Total assets increased 17.7% to a record $3.15 billion

• Deposits increased 11.0% to $2.50 billion

• Uninsured deposits to total deposits of approximately 18% at June 30, 2023

• Strong asset quality continues as nonperforming loans were 0.25% of total loans

• Net charge-offs to average loans were -0.01%

• Allowance for credit losses was 395.71% of nonperforming loans

• Tier 1 leverage ratio increased to 9.85% from 8.75% last year

• Strategic investments to support long-term growth continue as F&M has unveiled new branding and logo, opened two new offices, launched new deposit products, and started construction on a new regional headquarters in Fort Wayne, Indiana and the first full-service office in Michigan

Lars B. Eller, President and Chief Executive Officer, stated, “Our second quarter results demonstrate the power of F&M’s operating platform as we ended the quarter with strong capital levels, robust asset quality, and record loans and assets. These trends provide us with the flexibility to navigate a challenging banking landscape, while supporting our communities, investing in our multi-year strategic growth plan, and returning capital back to our shareholders. Most importantly, our longstanding financial success and operating growth reflects the continued commitment, experience, and hard work of our team members across our Ohio, Indiana, and Michigan markets.”

“I am pleased to report that we continue to make meaningful progress investing in our business to support our growth, enhance our operations, and execute against our recently developed three-year strategic growth plan. During the second quarter we unveiled our new branding and forward-looking logo, which was the culmination of a multi-year brand exploration process. All updates to office signage are expected to be completed by September 2023. In addition, we relocated our Auburn, Indiana office and opened new offices in downtown Toledo, Ohio, and Oxford, Ohio. Construction began on our new regional facility in Fort Wayne, and we added a highly experienced lending team in our Fort Wayne region, which will greatly expand our commitment to Eastern Indiana. We also broke ground on our first full-service office in Birmingham, Michigan following our hugely successful loan production office in Southeast Michigan. Finally, we launched new deposit products to enhance our offerings to current and prospective customers,” continued Mr. Eller.

Income Statement
Net income for the 2023 second quarter ended June 30, 2023, was $6.0 million, compared to $8.3 million for the same period last year. Net income per basic and diluted share for the 2023 second quarter was $0.44, compared to $0.63 for the same period last year. Net income for the 2023 first half ended June 30, 2023, was $12.5 million, compared to $16.4 million for the same period last year. Net income per basic and diluted share for the 2023 first half was $0.92, compared to $1.25 for the same period last year.

Mr. Eller commented: “F&M is not immune from the rapid rise in the Federal Funds Rate and the impact this has had on cost of funds and the competition for deposits it has created over the past 12 months. As a result, our cost of interest-bearing liabilities has increased by over 430% to 2.35% at June 30, 2023. In addition, year-to-date profitability has been impacted by several strategic one-time expenses including the conversion of our credit card platform, an opportunistic sale of investments, and the investments we are making in our infrastructure. Despite these near-term impacts, we believe we are well positioned for net income growth to re-accelerate in 2024 and beyond, as we benefit from continued strong asset quality, the contribution of our growth initiatives, and controlled operating expenses,” continued Mr. Eller.

Deposits
At June 30, 2023, total deposits were $2.47 billion, an increase of 11.0% from June 30, 2022. The Company’s cost of interest-bearing liabilities was 2.35% for the quarter ended June 30, 2023, compared to 0.44% for the quarter ended June 30, 2022, and 1.32% for the quarter ended December 31, 2022.

At June 30, 2023, F&M’s average deposit account had an average balance of $25,009. In addition, uninsured deposits to total deposits were approximately 18% for the quarter ended June 30, 2023, compared to approximately 21% at December 31, 2022.

Loan Portfolio and Asset Quality
Total loans, net at June 30, 2023, increased 23.6%, or by $481.0 million to a record $2.52 billion, compared to $2.03 billion at June 30, 2022, and up from $2.36 billion at December 31, 2022. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of the Peoples acquisition. Not including the Peoples acquisition, total net loans increased 18.5% organically, or by $376.3 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 $6.3 million, or 0.25% of total loans at June 30, 2023, compared to $5.2 million, or 0.26% of total loans at June 30, 2022. During the second quarter, one large farm loan that was paid off and another loan that was refinanced through another bank, and second quarter 2023 nonperforming loans improved by $1.4 million, or 18.4% over the past three months.

F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 50.9% of the Company’s total loan portfolio at June 30, 2023. In addition, F&M’s commercial real estate office credit exposure represented 5.0% of the Company's total loan portfolio at June 30, 2023, with a weighted average loan-to-value of approximately 64% and an average loan of $845,000.

F&M’s CRE portfolio included the following categories at June 30, 2023:

CRE Category		Dollar Balance			Percent of CRE Portfolio(*)		Percent of Total Loan Portfolio(*)
Multi Family		$244,883			19.1%		9.7%
Retail		$218,624			17.1%		8.7%
Industrial		$216,605			16.9%		8.6%
Hotels		$135,511			10.6%		5.4%
Office		$125,039			9.8%		5.0%
Gas Stations		$59,922			4.7%		2.4%
Food Service		$43,585			3.4%		1.7%
Mixed Use		$42,425			3.3%		1.7%
Senior Living		$36,238			2.8%		1.4%
Other		$158,069			12.3%		6.3%
Total CRE		$1,225,315			100.0%		50.1%
* Numbers have been rounded

At June 30, 2023, the Company’s allowance for credit losses to nonperforming loans was 395.71%, compared to 351.44% at June 30, 2022. The allowance to total loans was 0.99% at June 30, 2023, compared to 0.91% at June 30, 2022. As a result of F&M’s recent acquisitions, the Company had an accretable yield adjustment of $5.2 million at June 30, 2023, which further enhances F&M’s allowance, compared to $6.7 million at June 30, 2022. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.20% at June 30, 2023, compared to 1.24% at June 30, 2022.

Mr. Eller concluded, “I am proud of our team’s performance throughout the first half of 2023. The progress we are making serving our communities, and investing in our growth initiatives is encouraging. While 2023 is expected to be a transitional year, we believe we are well positioned to emerge from this period with increased market share and higher profitability. We also continue to focus on returning capital back to shareholders through our longstanding cash dividend program, which has increased on an annual basis for 28 consecutive years.”

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 8.5% to $304.7 million at June 30, 2023, from $280.9 million at June 30, 2022. At June 30, 2023, the Company had a Tier 1 leverage ratio of 9.85%, compared to 8.75% at June 30, 2022.

Based on a regulatory basis, tangible stockholders’ equity increased to $248.3 million at June 30, 2023, compared to $227.7 million at June 30, 2022. On a per share basis, regulatory tangible stockholders’ equity at June 30, 2023, was $18.21 per share, compared to $17.43 per share at June 30, 2022.

For the six months ended June 30, 2023, the Company has declared cash dividends of $0.42 per share, which is a 7.0% increase over the 2022 six-month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for over 28 consecutive years and has grown its dividend by over 160% since 2007. For the six months ended June 30, 2023, the dividend payout ratio was 45.44% compared to 30.08% for the same period last year.

About Farmers & Merchants Bancorp, Inc.:
Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) is the holding company of F&M Bank, a local independent community bank that has been serving its communities since 1897. F&M Bank provides commercial banking, retail banking and other financial services. Our locations are in Butler, Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Shelby, Williams, and Wood counties in 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, 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																				Six Months Ended
	June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022				June 30, 2023				June 30, 2022
Interest Income
Loans, including fees	$	31,365			$	29,703			$	27,302			$	24,119			$	22,388			$	61,068			$	42,843
Debt securities:
U.S. Treasury and government agencies		1,030				1,068				1,118				1,049				1,035				2,098				2,058
Municipalities		401				408				420				373				322				809				622
Dividends		148				123				126				93				57				271				99
Federal funds sold		9				21				2				-				9				30				19
Other		424				479				524				213				100				903				169
Total interest income		33,377				31,802				29,492				25,847				23,911				65,179				45,810
Interest Expense
Deposits		10,434				8,151				4,978				2,166				1,379				18,585				2,739
Federal funds purchased and securities sold
under agreements to repurchase		427				405				463				416				166				832				318
Borrowed funds		2,113				1,280				1,209				398				218				3,393				553
Subordinated notes		285				284				285				284				284				569				553
Total interest expense		13,259				10,120				6,935				3,264				2,047				23,379				4,163
Net Interest Income - Before Provision for Credit Losses*		20,118				21,682				22,557				22,583				21,864				41,800				41,647
Provision for Credit Losses - Loans*		143				817				755				1,637				1,628				960				2,208
Provision for Credit Losses - Off Balance Sheet Credit Exposures*		(129	)			62				-				-				-				(67	)			-
Net Interest Income After Provision for Credit Losses*		20,104				20,803				21,802				20,946				20,236				40,907				39,439
Noninterest Income
Customer service fees		2,361				2,447				2,862				2,300				2,148				4,808				4,796
Other service charges and fees		1,803				2,554				1,115				1,105				1,008				4,357				2,006
Net gain on sale of loans		108				67				165				327				164				175				861
Net loss on sale of available-for-sale securities		-				(891	)			-				-				-				(891	)			-
Total noninterest income		4,272				4,177				4,142				3,732				3,320				8,449				7,663
Noninterest Expense
Salaries and wages		6,500				6,657				6,353				5,479				5,366				13,157				10,868
Employee benefits		2,071				2,165				1,911				1,392				1,546				4,236				3,600
Net occupancy expense		840				856				753				693				522				1,696				1,120
Furniture and equipment		1,211				1,252				1,096				1,047				1,008				2,463				2,064
Data processing		796				726				1,917				781				654				1,522				1,258
Franchise taxes		379				366				(45	)			254				757				745				1,175
ATM expense		683				623				561				580				544				1,306				1,076
Advertising		830				514				531				578				300				1,344				537
Net (gain) loss on sale of other assets owned		-				-				12				-				(266	)			-				(271	)
FDIC assessment		496				306				250				271				270				802				384
Mortgage servicing rights amortization - net		164				159				110				(50	)			59				323				85
Consulting fees		231				230				637				254				233				461				411
Other general and administrative		2,643				3,077				2,964				2,192				2,242				5,720				4,421
Total noninterest expense		16,844				16,931				17,050				13,471				13,235				33,775				26,728
Income Before Income Taxes		7,532				8,049				8,894				11,207				10,321				15,581				20,374
Income Taxes		1,531				1,583				1,706				2,253				2,050				3,114				4,001
Net Income		6,001				6,466				7,188				8,954				8,271				12,467				16,373
Other Comprehensive Income (Loss) (Net of Tax):
Net unrealized gain (loss) on available-for-sale securities		(5,996	)			8,030				(628	)			(8,197	)			(14,602	)			2,034				(35,541	)
Reclassification adjustment for realized loss on sale of available-for-sale securities		-				891				-				-				-				891				-
Net unrealized gain (loss) on available-for-sale securities		(5,996	)			8,921				(628	)			(8,197	)			(14,602	)			2,925				(35,541	)
Tax expense (benefit)		(1,260	)			1,874				(132	)			(1,721	)			(3,067	)			614				(7,464	)
Other comprehensive income (loss)		(4,736	)			7,047				(496	)			(6,476	)			(11,535	)			2,311				(28,077	)
Comprehensive Income (Loss)	$	1,265			$	13,513			$	6,692			$	2,478			$	(3,264	)		$	14,778			$	(11,704	)
Basic Earnings Per Share	$	0.44			$	0.47			$	0.53			$	0.68			$	0.63			$	0.92			$	1.25
Diluted Earnings Per Share	$	0.44			$	0.47			$	0.53			$	0.68			$	0.63			$	0.92			$	1.25
Dividends Declared	$	0.2100			$	0.2100			$	0.2100			$	0.2100			$	0.2025			$	0.4200			$	0.3925
*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)
	June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022
	(Unaudited)				(Unaudited)								(Unaudited)				(Unaudited)
Assets
Cash and due from banks	$	69,760			$	62,780			$	83,085			$	69,680			$	69,955
Federal funds sold		1,433				1,545				1,324				990				1,484
Total cash and cash equivalents		71,193				64,325				84,409				70,670				71,439
Interest-bearing time deposits		3,485				4,435				4,442				5,187				6,684
Securities - available-for-sale		363,225				372,975				390,789				395,485				399,687
Other securities, at cost		17,535				11,543				9,799				8,227				8,735
Loans held for sale		1,459				951				827				2,182				4,230
Loans, net		2,490,883				2,422,018				2,336,074				2,122,626				2,016,394
Premises and equipment		30,398				28,679				28,381				26,484				26,492
Construction in progress		2,290				1,565				278				-				-
Goodwill		86,358				86,358				86,358				80,434				80,434
Loan servicing rights		5,635				4,985				3,549				3,583				3,426
Bank owned life insurance		33,470				33,269				33,073				28,051				27,874
Other assets		41,512				38,972				37,372				40,831				29,321
Total Assets	$	3,147,443			$	3,070,075			$	3,015,351			$	2,783,760			$	2,674,716
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing	$	488,678			$	520,145			$	532,794			$	506,928			$	503,395
Interest-bearing
NOW accounts		770,113				800,230				750,887				705,888				678,552
Savings		581,192				590,854				627,203				607,375				617,850
Time		628,757				601,939				557,980				462,845				424,249
Total deposits		2,468,740				2,513,168				2,468,864				2,283,036				2,224,046
Federal funds purchased and securities
sold under agreements to repurchase		51,567				30,496				54,206				55,802				71,944
Federal Home Loan Bank (FHLB) advances		266,818				164,327				127,485				102,147				42,635
Other borrowings		-				-				10,000				10,000				-
Subordinated notes, net of unamortized issuance costs		34,644				34,615				34,586				34,557				34,528
Dividend payable		2,834				2,831				2,832				2,727				2,626
Accrued expenses and other liabilities		18,177				18,881				19,238				14,913				18,064
Total liabilities		2,842,780				2,764,318				2,717,211				2,503,182				2,393,843
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value 20,000,000 shares authorized; issued and
outstanding 14,564,425 shares 6/30/23 and 12/31/22		135,647				135,241				135,497				121,811				123,145
Treasury stock - 929,513 shares 6/30/23 and 956,003 shares 12/31/22		(11,298	)			(11,310	)			(11,573	)			(11,547	)			(11,822	)
Retained earnings		216,236				213,012				212,449				208,051				200,811
Accumulated other comprehensive loss		(35,922	)			(31,186	)			(38,233	)			(37,737	)			(31,261	)
Total stockholders' equity		304,663				305,757				298,140				280,578				280,873
Total Liabilities and Stockholders' Equity	$	3,147,443			$	3,070,075			$	3,015,351			$	2,783,760			$	2,674,716

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA
			For the Three Months Ended																			For the Six Months Ended
Selected financial data		June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022				June 30, 2023				June 30, 2022
Return on average assets			0.77	%			0.84	%			0.96	%			1.31	%			1.23	%			0.81	%			1.22	%
Return on average equity			7.84	%			8.59	%			10.00	%			12.53	%			11.66	%			8.21	%			11.32	%
Yield on earning assets			4.53	%			4.41	%			4.18	%			4.00	%			3.79	%			4.47	%			3.63	%
Cost of interest bearing liabilities			2.35	%			1.85	%			1.32	%			0.68	%			0.44	%			2.10	%			0.44	%
Net interest spread			2.18	%			2.56	%			2.86	%			3.32	%			3.35	%			2.37	%			3.19	%
Net interest margin			2.73	%			3.01	%			3.20	%			3.49	%			3.47	%			2.87	%			3.30	%
Efficiency			69.06	%			63.53	%			50.46	%			51.19	%			50.17	%			66.04	%			57.90	%
Dividend payout ratio			47.22	%			43.79	%			39.39	%			30.45	%			30.02	%			45.44	%			30.08	%
Tangible book value per share (1)		$	18.21			$	17.92			$	17.69			$	17.86			$	17.43
Tier 1 leverage ratio			9.85	%			8.36	%			8.39	%			9.11	%			8.75	%
Average shares outstanding			13,632,440				13,615,655				13,606,876				13,083,145				13,065,975				13,624,094				13,066,123
Loans		June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022
(Dollar amounts in thousands)
Commercial real estate		$	1,280,902			$	1,225,315			$	1,152,603			$	1,063,661			$	979,176
Agricultural real estate			230,837				227,897				220,819				205,089				199,972
Consumer real estate			506,866				502,974				494,423				416,001				410,450
Commercial and industrial			253,444				241,598				242,360				229,388				232,975
Agricultural			128,344				131,467				128,733				128,615				127,143
Consumer			88,312				89,588				89,147				70,602				55,411
Other			28,996				29,316				29,818				30,662				31,243
Less: Net deferred loan fees and costs			(1,908	)			(1,503	)			(1,516	)			(1,402	)			(1,552	)
Total loans,net		$	2,515,793			$	2,446,652			$	2,356,387			$	2,142,616			$	2,034,818
Asset quality data		June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022
(Dollar amounts in thousands)
Nonaccrual loans		$	6,295			$	7,717			$	4,689			$	5,470			$	5,247
Troubled debt restructuring		$	-			$	-			$	3,645			$	3,978			$	2,748
90 day past due and accruing		$	-			$	-			$	-			$	-			$	-
Nonperforming loans		$	6,295			$	7,717			$	4,689			$	5,470			$	5,247
Other real estate owned		$	-			$	-			$	-			$	-			$	-
Nonperforming assets		$	6,295			$	7,717			$	4,689			$	5,470			$	5,247
Allowance for credit losses(2)		$	24,910			$	24,507			$	20,313			$	19,990			$	18,424
Accretable yield adjustment			5,209				5,754				6,427				5,959				6,724
Adjusted credit losses with accretable yield included(2)		$	30,119			$	30,261			$	26,740			$	25,949			$	25,148
Allowance for credit losses/total loans(2)			0.99	%			1.00	%			0.86	%			0.93	%			0.91	%
Adjusted credit losses with accretable yield/total loans(2)			1.20	%			1.24	%			1.13	%			1.21	%			1.24	%
Net charge-offs:
Quarter-to-date		$	(133	)		$	60			$	431			$	71			$	(25	)
Year-to-date		$	(73	)		$	60			$	529			$	97			$	26
Net charge-offs to average loans					0.28			%
Quarter-to-date			-0.01	%			0.00	%			0.02	%			0.00	%			0.00	%
Year-to-date			-0.00	%			0.00	%			0.03	%			0.00	%			0.00	%
Nonperforming loans/total loans			0.25	%			0.32	%			0.20	%			0.26	%			0.26	%
Allowance for credit losses/nonperforming loans(2)			395.71	%			319.22	%			273.67	%			365.44	%			351.44	%
(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
	June 30, 2023												June 30, 2022
Interest Earning Assets:	Average Balance				Interest/Dividends				Annualized Yield/Rate				Average Balance				Interest/Dividends				Annualized Yield/Rate
Loans	$	2,476,795			$	31,365				5.07	%		$	1,999,357			$	22,388				4.48	%
Taxable investment securities		399,257				1,486				1.49	%			422,482				1,344				1.27	%
Tax-exempt investment securities		24,259				93				1.94	%			21,649				70				1.64	%
Fed funds sold & other		49,160				433				3.52	%			81,091				109				0.54	%
Total Interest Earning Assets		2,949,471			$	33,377				4.53	%			2,524,579			$	23,911				3.79	%
Nonearning Assets		169,599												161,031
Total Assets	$	3,119,070											$	2,685,610
Interest Bearing Liabilities:
Savings deposits	$	1,356,798			$	6,238				1.84	%		$	1,312,444			$	777				0.24	%
Other time deposits		612,929				4,196				2.74	%			435,091				602				0.55	%
Other borrowed money		215,884				2,113				3.92	%			39,172				218				2.23	%
Fed funds purchased & securities
sold under agreement to repurch.		39,966				427				4.27	%			35,260				166				1.88	%
Subordinated notes		34,625				285				3.29	%			34,509				284				3.29	%
Total Interest Bearing Liabilities	$	2,260,202			$	13,259				2.35	%		$	1,856,476			$	2,047				0.44	%
Noninterest Bearing Liabilities		552,867												545,439
Stockholders' Equity	$	306,001											$	283,695
Net Interest Income and Interest Rate Spread					$	20,118				2.18	%						$	21,864				3.35	%
Net Interest Margin										2.73	%											3.47	%
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 Six Months Ended												For the Six Months Ended
	June 30, 2023												June 30, 2022
Interest Earning Assets:	Average Balance				Interest/Dividends				Annualized Yield/Rate				Average Balance				Interest/Dividends				Annualized Yield/Rate
Loans	$	2,437,148			$	61,068				5.01	%		$	1,953,671			$	42,843				4.39	%
Taxable investment securities		398,383				2,985				1.50	%			426,189				2,639				1.24	%
Tax-exempt investment securities		25,303				193				1.93	%			20,119				140				1.76	%
Fed funds sold & other		58,853				933				3.17	%			124,050				188				0.30	%
Total Interest Earning Assets		2,919,687			$	65,179				4.47	%			2,524,029			$	45,810				3.63	%
Nonearning Assets		174,702												162,949
Total Assets	$	3,094,389											$	2,686,978
Interest Bearing Liabilities:
Savings deposits	$	1,378,518			$	11,181				1.62	%		$	1,302,005			$	1,365				0.21	%
Other time deposits		596,168				7,404				2.48	%			447,471				1,374				0.61	%
Other borrowed money		174,171				3,393				3.90	%			51,180				553				2.16	%
Fed funds purchased & securities
sold under agreement to repurch.		39,409				832				4.22	%			32,182				318				1.98	%
Subordinated notes		34,610				569				3.29	%			34,495				553				3.21	%
Total Interest Bearing Liabilities	$	2,222,876			$	23,379				2.10	%		$	1,867,333			$	4,163				0.44	%
Noninterest Bearing Liabilities		567,878												530,478
Stockholders' Equity	$	303,635											$	289,167
Net Interest Income and Interest Rate Spread					$	41,800				2.37	%						$	41,647				3.19	%
Net Interest Margin										2.87	%											3.30	%
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 June 30, 2023																For the Three Months Ended June 30, 2022
	As Reported					Excluding Acc/Amort					Difference						As Reported					Excluding Acc/Amort					Difference
	$		Yield			$		Yield			$			Yield			$		Yield			$		Yield			$			Yield
Interest Earning Assets:
Loans	$	31,365	5.07	%		$	30,697	4.96	%		$	668		0.11	%		$	22,388	4.48	%		$	21,986	4.40	%		$	402		0.08	%
Taxable investment securities		1,486	1.49	%			1,486	1.49	%			-		0.00	%			1,344	1.27	%			1,344	1.27	%			-		0.00	%
Tax-exempt investment securities		93	1.94	%			93	1.94	%			-		0.00	%			70	1.64	%			70	1.64	%			-		0.00	%
Fed funds sold & other		433	3.52	%			433	3.52	%			-		0.00	%			109	0.54	%			109	0.54	%			-		0.00	%
Total Interest Earning Assets		33,377	4.53	%			32,709	4.44	%			668		0.09	%			23,911	3.79	%			23,509	3.73	%			402		0.06	%
Interest Bearing Liabilities:
Savings deposits	$	6,238	1.84	%		$	6,238	1.84	%		$	-		0.00	%		$	777	0.24	%		$	777	0.24	%		$	-		0.00	%
Other time deposits		4,196	2.74	%			4,291	2.80	%			(95	)	-0.06	%			602	0.55	%			1,222	1.12	%			(620	)	-0.57	%
Other borrowed money		2,113	3.92	%			2,130	3.95	%			(17	)	-0.03	%			218	2.23	%			239	2.44	%			(21	)	-0.21	%
Federal funds purchased and
securties sold under agreement to
repurchase		427	4.27	%			427	4.27	%			-		0.00	%			166	1.88	%			166	1.88	%			-		0.00	%
Subordinated notes		285	3.29	%			285	3.29	%			-		0.00	%			284	3.29	%			284	3.29	%			-		0.00	%
Total Interest Bearing Liabilities		13,259	2.35	%			13,371	2.37	%			(112	)	-0.02	%			2,047	0.44	%			2,688	0.58	%			(641	)	-0.14	%
Interest/Dividend income/yield		33,377	4.53	%			32,709	4.44	%			668		0.09	%			23,911	3.79	%			23,509	3.73	%			402		0.06	%
Interest Expense / yield		13,259	2.35	%			13,371	2.37	%			(112	)	-0.02	%			2,047	0.44	%			2,688	0.58	%			(641	)	-0.14	%
Net Interest Spread		20,118	2.18	%			19,338	2.07	%			780		0.11	%			21,864	3.35	%			20,821	3.15	%			1,043		0.20	%
Net Interest Margin			2.73	%				2.63	%					0.10	%				3.47	%				3.30	%					0.17	%
	For the Six Months Ended June 30, 2023																For the Six Months Ended June 30, 2022
	As Reported					Excluding Acc/Amort					Difference						As Reported					Excluding Acc/Amort					Difference
	$		Yield			$		Yield			$			Yield			$		Yield			$		Yield			$			Yield
Interest Earning Assets:
Loans	$	61,068	5.01	%		$	59,733	4.90	%		$	1,335		0.11	%		$	42,843	4.39	%		$	42,067	4.31	%		$	776		0.08	%
Taxable investment securities		2,985	1.50	%			2,985	1.50	%			-		0.00	%			2,639	1.24	%			2,639	1.24	%			-		0.00	%
Tax-exempt investment securities		193	1.93	%			193	1.93	%			-		0.00	%			140	1.76	%			140	1.76	%			-		0.00	%
Fed funds sold & other		933	3.17	%			933	3.17	%			-		0.00	%			188	0.30	%			188	0.30	%			-		0.00	%
Total Interest Earning Assets		65,179	4.47	%			63,844	4.38	%			1,335		0.09	%			45,810	3.63	%			45,034	3.57	%			776		0.06	%
Interest Bearing Liabilities:
Savings deposits	$	11,181	1.62	%		$	11,181	1.62	%		$	-		0.00	%		$	1,365	0.21	%		$	1,365	0.21	%		$	-		0.00	%
Other time deposits		7,404	2.48	%			7,958	2.67	%			(554	)	-0.19	%			1,374	0.61	%			2,613	1.17	%			(1,239	)	-0.56	%
Other borrowed money		3,393	3.90	%			3,428	3.94	%			(35	)	-0.04	%			553	2.16	%			595	2.33	%			(42	)	-0.17	%
Federal funds purchased and
securties sold under agreement to
repurchase		832	4.22	%			832	4.22	%			-		0.00	%			318	1.98	%			318	1.98	%			-		0.00	%
Subordinated notes		569	3.29	%			569	3.29	%			-		0.00	%			553	3.21	%			553	3.21	%			-		0.00	%
Total Interest Bearing Liabilities		23,379	2.10	%			23,968	2.16	%			(589	)	-0.06	%			4,163	0.44	%			5,444	0.58	%			(1,281	)	-0.14	%
Interest/Dividend income/yield		65,179	4.47	%			63,844	4.38	%			1,335		0.09	%			45,810	3.63	%			45,034	3.57	%			776		0.06	%
Interest Expense / yield		23,379	2.10	%			23,968	2.16	%			(589	)	-0.06	%			4,163	0.44	%			5,444	0.58	%			(1,281	)	-0.14	%
Net Interest Spread		41,800	2.37	%			39,876	2.22	%			1,924		0.15	%			41,647	3.19	%			39,590	2.99	%			2,057		0.20	%
Net Interest Margin			2.87	%				2.74	%					0.13	%				3.30	%				3.14	%					0.16	%

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME
		(in thousands of dollars)								(in thousands of dollars)
		Three Months Ended								Six Months Ended
Non-GAAP Reconciliation of Net Income		June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
		(Unaudited)								(Unaudited)
Net income as reported		$	6,001			$	8,271			$	12,467			$	16,373
Acquisition expenses			88				-				184				145
Tax effect on acquisition expenses			(18	)			-				(37	)			(30	)
Net income excluding acquisition expenses and tax effect		$	6,071			$	8,271			$	12,614			$	16,488
Weighted average common shares outstanding including participating securities			13,632,440				13,065,975				13,624,094				13,066,123
Basic and diluted earnings per share		$	0.45			$	0.63			$	0.93			$	1.26

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
	June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Shares Outstanding		13,634,912				13,065,825				13,634,912				13,065,825
Tangible Equity
Equity	$	304,663			$	280,872			$	304,663			$	280,872
Goodwill		86,358				80,434				86,358				80,434
Other Intangible		8,437				3,974				8,437				3,974
Comprehensive Loss Adjustment*		-				-				35,922				31,261
CECL Adjustment**		-				-				2,528				-
Tangible Equity	$	209,868			$	196,464			$	248,318			$	227,725
Shares Outstanding		13,635				13,066				13,635				13,066
Tangible Book Equity per Share	$	15.39			$	15.04			$	18.21			$	17.43
	Actual Average								Regulatory Average
	Year to Date								Year to Date
	June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Net Income	$	12,467			$	16,373			$	12,467			$	16,373
Acquisition Costs - Tax Adjusted		147				115				147				115
Average Shares Outstanding		13,624,094				13,066,123				13,624,094				13,066,123
Average Tangible Equity
Average Equity	$	303,635			$	289,167			$	303,635			$	289,167
Average Goodwill		86,358				80,434				86,358				80,434
Average Other Intangible		8,942				4,235				8,942				4,235
Average Comprehensive Loss Adjustment*		-				-				34,921				16,893
Average CECL Adjustment**		-				-				2,528
Average Tangible Equity	$	208,336			$	204,498			$	245,784			$	221,391
Average Shares Outstanding		13,624				13,066				13,624				13,066
Average Tangible Book Equity per Share	$	15.29			$	15.65			$	18.04			$	16.94
Return on Average Tangible Equity		11.97	%			16.01	%			10.14	%			14.79	%
Return on Average Tangible Equity w/o Acquisition		12.11	%			16.12	%			10.26	%			14.89	%
*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