Farmers & Merchants Bancorp, Inc. Reports 2022 Third-Quarter and Year-to-Date Financial Results

Farmers & Merchants Bancorp, Inc.

ARCHBOLD, Ohio, Oct. 19, 2022 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2022 third quarter and year-to-date September 30, 2022.

2022 Third Quarter Financial Highlights Include
(Compared to the 2021 third quarter period unless noted):

• Net income increased 51.3% to a quarterly record of $9.0 million, from $5.9 million

• Earnings increased 28.3% to $0.68 per basic and diluted share, from $0.53 per basic and diluted share

• Average shares outstanding increased 16.7% as a result of the Perpetual Federal Savings Bank Acquisition

• Efficiency rate improved to 51.19% for the 2022 third quarter, and 53.16% for the 2022 nine months

• Organic loan growth of 21.3%, excluding PPP loans and loan balances at time of acquisitions

• Total loans were a record of $2.143 billion and increased 15.4% from $1.857 billion at December 31, 2021

• Total assets increased 25.5% to a record $2.784 billion

• Deposits increased 22.3% to $2.283 billion

• Strong asset quality continues as nonperforming loans declined 12.5% to $5.5 million, or 0.26% of total loans

• Net charge-offs to average loans were 0.00%, the sixth consecutive quarter at or below 0.00%

• Return on average equity, increased to 12.53% from 9.32%

• Return on average tangible equity, based on regulatory calculations, increased to 15.50% from 12.23% on a year-over-year basis

• 2022 third quarter cash dividend increased by 16.7% year-over-year to $0.21 per share

• Eric Faust named Senior Vice President and Chief Risk Officer of Farmers & Merchants State Bank

• Benét Rupp, Chief Administrative Officer, promoted to Executive Vice President

• Completed the Peoples-Sidney Financial Corporation acquisition on October 1, 2022

Lars B. Eller, President and Chief Executive Officer, stated, “Record third quarter results demonstrate the continued success of our strategic growth plan, the value we provide our local communities, and the power of our financial model. Throughout 2022, we have experienced strong organic loan growth across our Ohio, Indiana and Michigan markets as loans increased organically by $301.4 million, or 21.3% on a year-over-year basis. Robust loan growth, combined with our recent acquisitions, excellent asset quality, and stable net interest margin, have driven a 30.0% increase in net interest income after the provision for loan losses. These outstanding trends and our focus on prudently controlling operating expenses are supporting a powerful financial model as we achieved record quarterly and year-to-date net income and earnings per share.”

Mr. Eller continued, “As we enter the fourth quarter, positive momentum across many areas of our business remains strong and we started the quarter with a robust pipeline of news loans expected to close over the next three months. On October 1, 2022, we completed the Peoples-Sidney Financial Corporation acquisition. Peoples adds slightly over $130 million in total assets to F&M, expands F&M’s community banking franchise into compelling markets throughout Shelby County Ohio, and excluding one-time transaction costs, is expected to be accretive to 2023 earnings by approximately 2.5%. We also continue to pursue opportunities for de novo growth. Expansion plans underway include new full-service offices that are expected to open over the next 12 months in Toledo, Ohio, Fort Wayne, Indiana, and Birmingham, Michigan as well as an office relocation in Auburn, Indiana.”

Income Statement
Net income for the 2022 third quarter ended September 30, 2022, was $9.0 million, compared to $5.9 million for the same period last year. Net income per basic and diluted share for the 2022 third quarter was $0.68, compared to $0.53 for the same period last year. Net income for the 2022 nine months ended September 30, 2022, was $25.3 million, compared to $15.8 million for the same period last year. Net income per basic and diluted share for the 2022 nine months was $1.94, compared to $1.41 for the same period last year.

Noninterest expense for the 2022 third quarter and nine months included approximately $0.5 million and approximately $0.5 million, respectively of one-time expenses associated with the Company’s recent acquisitions. Noninterest expense for the 2021 third quarter and nine months included $1.4 million and $2.7 million, respectively of one-time expenses associated with the Company’s recent acquisitions.

Profitability is benefitting from F&M’s larger scale, strong asset quality, and prudent expense management. The Company’s efficiency ratio improved to 51.19% during the 2022 third quarter, and 53.16% for the 2022 nine-month period. Strong profitability also drove higher returns, and ROAA, ROAE, and ROATCE all expanded on a year-over-year basis.

Deposits
At September 30, 2022, total deposits were $2.283 billion, an increase of 22.3% from September 30, 2021, and an increase of 4.1% from December 31, 2021. 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 0.68% for the quarter ended September 30, 2022, compared to 0.45% for the quarter ended September 30, 2021, and 0.51% for the quarter ended December 31, 2021.

Loan Portfolio and Asset Quality
Total net loans, at September 30, 2022, increased 43.3%, or by $647.1 million to $2.143 billion, compared to $1.496 billion at September 30, 2021, and up 15.4% from $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 Perpetual Federal Savings Bank and Ossian Financial Services acquisitions.

Not including the Ossian acquisition and PPP, loans increased 21.3% organically or by $301.4 million from the same period a year ago. Additionally, there were only $7,000 of PPP loans within F&M’s loan portfolio at September 30, 2022.

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $5.5 million, or 0.26% of total loans at September 30, 2022, compared to $6.2 million, or 0.42% at September 30, 2021. Due to loan growth, F&M continues to prudently fund its allowance for loan and lease losses which has increased 27.3% on a year-over-year basis.

At September 30, 2022, the Company’s allowance for loan and lease losses to nonperforming loans was 365.44%, compared to 251.26% at September 30, 2021. As a result of F&M’s recent acquisitions, the Company has a total gross credit mark of nearly $6.0 million, which further enhances F&M’s allowance at September 30, 2022. Including the total gross credit mark, F&M’s allowance for loan and lease losses to total loans improved to 1.21% at September 30, 2022.

Mr. Eller concluded, “Economic uncertainty continues to increase as a result of more restrictive monetary policies and rapid inflation. We are watching our markets closely and working with our business, retail, and agricultural customers to help them navigate a more fluid economic environment. Overall, F&M is well positioned for changes in the economic cycle as our asset quality remains strong, and we remain well capitalized. In addition, while we anticipate inflation to impact noninterest expenses and competition for deposits to increase our cost of funds in the coming quarters, our efficiency ratio is strong, and our larger scale continues to benefit profitability. As you can see, trends in our business are at record levels, and we believe 2022 will be another record year of earnings and growth for F&M.”

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 10.1% to $280.6 million at September 30, 2022, from $254.7 million at September 30, 2021. At September 30, 2022, the Company had a Tier 1 leverage ratio of 9.11%, compared to 9.45% at September 30, 2021.

Tangible stockholders’ equity on a regulatory basis increased to $234.1 million at September 30, 2022, compared to $194.6 million at September 30, 2021. On a per share basis, tangible stockholders’ equity at September 30, 2022, was $17.86 per share, compared to $17.33 per share at September 30, 2021.

For the nine months ended September 30, 2022, the Company has declared cash dividends of $0.6025 per share, which is a 15.9% increase over the same period last year. Dividends declared for the 2022 nine months included a special one-time cash dividend of $0.0125 to honor F&M’s 125^th anniversary, and a 16.7% year-over-year increase for the 2022 third 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 over 28 consecutive years. For the nine months ended September 30, 2022, the dividend payout ratio was 40.58% compared to 36.55% 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
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																				Nine Months Ended
	September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021				September 30, 2022				September 30, 2021
Interest Income
Loans, including fees	$	24,119			$	22,388			$	20,455			$	21,008			$	18,766			$	66,962			$	50,637
Debt securities:
U.S. Treasury and government agencies		1,049				1,035				1,023				964				924				3,107				2,532
Municipalities		373				322				300				289				284				995				881
Dividends		93				57				42				49				44				192				125
Federal funds sold		-				9				10				10				10				19				21
Other.		213				100				69				103				94				382				221
Total interest income		25,847				23,911				21,899				22,423				20,122				71,657				54,417
Interest Expense
Deposits		2,166				1,379				1,360				1,581				1,221				4,905				3,837
Federal funds purchased and securities sold
under agreements to repurchase		416				166				152				155				165				734				494
Borrowed funds		398				218				335				361				87				951				424
Subordinated notes		284				284				269				291				199				837				199
Total interest expense		3,264				2,047				2,116				2,388				1,672				7,427				4,954
Net Interest Income - Before Provision for Loan Losses		22,583				21,864				19,783				20,035				18,450				64,230				49,463
Provision for Loan Losses		1,637				1,628				580				444				659				3,845				3,000
Net Interest Income After Provision for Loan Losses		20,946				20,236				19,203				19,591				17,791				60,385				46,463
Noninterest Income
Customer service fees		2,300				2,148				2,648				2,417				2,242				7,096				7,254
Other service charges and fees		1,105				1,008				998				1,026				1,010				3,111				2,722
Net gain on sale of loans		327				164				697				1,074				822				1,188				2,823
Net gain on sale of available-for-sale securities		-				-				-				-				-				-				293
Total noninterest income		3,732				3,320				4,343				4,517				4,074				11,395				13,092
Noninterest Expense
Salaries and wages		5,479				5,366				5,502				5,761				5,442				16,347				14,423
Employee benefits		1,392				1,546				2,054				1,792				1,621				4,992				5,530
Net occupancy expense		693				522				598				532				529				1,813				1,652
Furniture and equipment		1,047				1,008				1,056				782				903				3,111				2,542
Data processing		781				654				604				1,020				1,548				2,039				2,481
Franchise taxes		254				757				418				361				372				1,429				1,112
ATM expense		580				544				532				478				460				1,656				1,368
Advertising		578				300				237				431				439				1,115				1,005
Net (gain) loss on sale of other assets owned		-				(266	)			(5	)			13				219				(271	)			421
FDIC assessment		271				270				114				265				296				655				808
Mortgage servicing rights amortization		(50	)			59				26				266				285				35				1,314
Consulting fees		254				233				178				761				256				665				873
Other general and administrative		2,192				2,242				2,179				1,964				1,951				6,613				6,211
Total noninterest expense		13,471				13,235				13,493				14,426				14,321				40,199				39,740
Income Before Income Taxes		11,207				10,321				10,053				9,682				7,544				31,581				19,815
Income Taxes		2,253				2,050				1,951				1,999				1,624				6,254				4,003
Net Income		8,954				8,271				8,102				7,683				5,920				25,327				15,812
Other Comprehensive Income (Loss) (Net of Tax):
Net unrealized gain (loss) on available-for-sale securities		(8,197	)			(14,602	)			(20,939	)			(5,170	)			173				(43,738	)			(5,778	)
Reclassification adjustment for realized gain on sale of available-for-sale securities		-				-				-				-				-				-				(293	)
Net unrealized gain (loss) on available-for-sale securities		(8,197	)			(14,602	)			(20,939	)			(5,170	)			173				(43,738	)			(6,071	)
Tax expense (benefit)		(1,721	)			(3,067	)			(4,397	)			(1,085	)			36				(9,185	)			(1,275	)
Other comprehensive income (loss)		(6,476	)			(11,535	)			(16,542	)			(4,085	)			137				(34,553	)			(4,796	)
Comprehensive Income (Loss)	$	2,478			$	(3,264	)		$	(8,440	)		$	3,598			$	6,057			$	(9,226	)		$	11,016
Basic and Diluted Earnings Per Share	$	0.68			$	0.63			$	0.62			$	0.59			$	0.53			$	1.94			$	1.41
Dividends Declared	$	0.2100			$	0.2025			$	0.1900			$	0.1900			$	0.1800			$	0.6025			$	0.5200

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands of dollars, except share data)
			September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021
			(Unaudited)				(Unaudited)				(Unaudited)								(Unaudited)
Assets
Cash and due from banks			$	69,680			$	69,955			$	94,118			$	135,485			$	112,875
Federal funds sold				990				1,484				45,404				45,338				45,203
	Total cash and cash equivalents			70,670				71,439				139,522				180,823				158,078
Interest-bearing time deposits				5,187				6,684				8,677				10,913				14,622
Securities - available-for-sale				395,485				399,687				413,996				429,931				426,717
Other securities, at cost				8,227				8,735				8,568				8,162				4,905
Loans held for sale				2,182				4,230				6,060				7,714				3,735
Loans, net				2,122,626				2,016,394				1,945,449				1,841,177				1,479,864
Premises and equipment				26,484				26,492				26,653				26,913				26,476
Goodwill				80,434				80,434				80,434				80,434				55,214
Mortgage servicing rights				3,583				3,426				3,336				3,157				3,097
Other real estate owned				-				-				-				159				167
Bank owned life insurance				28,051				27,874				27,715				27,558				27,397
Other assets				40,831				29,321				25,735				21,359				18,711
Total Assets			$	2,783,760			$	2,674,716			$	2,686,145			$	2,638,300			$	2,218,983
	Liabilities and Stockholders' Equity
Liabilities
Deposits
	Noninterest-bearing		$	506,928			$	503,395			$	497,249			$	473,689			$	438,076
	Interest-bearing
	NOW accounts			705,888				678,552				681,975				650,466				646,237
	Savings			607,375				617,850				626,787				597,828				529,532
	Time			462,845				424,249				447,586				471,479				252,383
	Total deposits			2,283,036				2,224,046				2,253,597				2,193,462				1,866,228
Federal funds purchased and
securities sold under agreements to repurchase				55,802				71,944				31,680				29,268				29,601
Federal Home Loan Bank (FHLB) advances				102,147				42,635				22,656				24,065				17,868
Other borrowings				10,000				-				40,000				40,000				-
Subordinated notes, net of unamortized issuance costs				34,557				34,528				34,499				34,471				34,441
Dividend payable				2,727				2,626				2,462				2,461				2,002
Accrued expenses and other liabilities				14,913				18,064				14,773				17,406				14,097
	Total liabilities			2,503,182				2,393,843				2,399,667				2,341,133				1,964,237
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value 20,000,000 shares authorized; issued and
outstanding 14,063,999 shares 9/30/22 and 12/31/21				121,811				123,145				122,886				122,674				81,382
Treasury stock - 956,499 shares 9/30/22, 997,766 shares 12/31/21				(11,547	)			(11,822	)			(11,739	)			(11,724	)			(11,718	)
Retained earnings				208,051				200,811				195,057				189,401				184,181
Accumulated other comprehensive income (loss)				(37,737	)			(31,261	)			(19,726	)			(3,184	)			901
	Total stockholders' equity			280,578				280,873				286,478				297,167				254,746
Total Liabilities and Stockholders' Equity			$	2,783,760			$	2,674,716			$	2,686,145			$	2,638,300			$	2,218,983

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA
			For the Three Months Ended																			For the Nine Months Ended
Selected financial data		September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021				September 30, 2022			September 30, 2021
Return on average assets			1.31	%			1.23	%			1.21	%			1.17	%			1.07	%		1.25	%		1.01	%
Return on average equity			12.53	%			11.66	%			11.00	%			10.94	%			9.32	%		11.72	%		8.40	%
Yield on earning assets			4.00	%			3.79	%			3.47	%			3.59	%			3.85	%		3.76	%		3.70	%
Cost of interest bearing liabilities			0.68	%			0.44	%			0.45	%			0.51	%			0.45	%		0.53	%		0.47	%
Net interest spread			3.32	%			3.35	%			3.02	%			3.08	%			3.40	%		3.23	%		3.23	%
Net interest margin			3.49	%			3.47	%			3.14	%			3.21	%			3.53	%		3.37	%		3.36	%
Efficiency			51.19	%			50.17	%			55.44	%			58.76	%			63.50	%		53.16	%		63.70	%
Dividend payout ratio			30.45	%			30.02	%			30.64	%			32.03	%			33.81	%		40.58	%		36.55	%
Tangible book value per share (1)		$	17.86			$	17.43			$	16.96			$	16.49			$	17.33
Tier 1 capital to average assets			9.11	%			8.75	%			8.51	%			8.47	%			9.45	%
Average Shares Outstanding			13,083,145				13,065,975				13,066,272				13,046,299				11,209,732			13,071,859			11,199,309
Loans		September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021
(Dollar amounts in thousands)
Commercial real estate		$	1,063,661			$	979,176			$	910,839			$	848,477			$	728,852
Agricultural real estate			205,089				199,972				196,223				198,343				179,374
Consumer real estate			416,001				410,450				410,120				395,873				202,454
Commercial and industrial			229,388				232,975				216,918				208,270				194,767
Agricultural			128,615				127,143				140,709				118,368				105,580
Consumer			70,602				55,411				57,521				57,737				55,521
Other			30,662				31,243				31,573				32,089				31,096
Less: Net deferred loan fees and costs			(1,402	)			(1,552	)			(1,683	)			(1,738	)			(2,082	)
Total loans,net		$	2,142,616			$	2,034,818			$	1,962,220			$	1,857,419			$	1,495,562
Asset quality data		September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021				September 30, 2021
(Dollar amounts in thousands)
Nonaccrual loans		$	5,470			$	5,247			$	8,581			$	8,076			$	6,248
Troubled debt restructuring		$	3,978			$	2,748			$	7,268			$	7,614			$	6,035
90 day past due and accruing		$	-			$	-			$	-			$	-			$	-
Nonperforming loans		$	5,470			$	5,247			$	8,581			$	8,076			$	6,248
Other real estate owned		$	-			$	-			$	-			$	159			$	167
Nonperforming assets		$	5,470			$	5,247			$	8,581			$	8,235			$	6,415
Allowance for loan and lease losses (ALLL)		$	19,990			$	18,424			$	16,771			$	16,242			$	15,698
Total Credit Mark			5,959				6,724				7,201				7,616				2,348
Adjusted ALLL with credit mark included		$	25,949			$	25,148			$	23,972			$	23,858			$	18,046
Allowance for loan and lease losses/total loans			0.93	%			0.91	%			0.85	%			0.87	%			1.05	%
Adjusted ALLL with credit mark/total loans			1.21	%			1.24	%			1.22	%			1.28	%			1.21	%
Net charge-offs:
Quarter-to-date		$	71			$	(25	)		$	51			$	(101	)		$	48
Year-to-date		$	97			$	26			$	51			$	874			$	974
Net charge-offs to average loans
Quarter-to-date			0.00	%			0.00	%			0.00	%			-0.01	%			0.00	%
Year-to-date			0.00	%			0.00	%			0.00	%			0.06	%			0.07	%
Nonperforming loans/total loans			0.26	%			0.26	%			0.44	%			0.43	%			0.42	%
Allowance for loan and lease losses/nonperforming loans			365.44	%			351.44	%			198.29	%			201.11	%			251.26	%
(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
		September 30, 2022									September 30, 2021
Interest Earning Assets:		Average Balance			Interest/Dividends			Annualized Yield/Rate			Average Balance			Interest/Dividends			Annualized Yield/Rate
Loans		$	2,082,486		$	24,119		4.63	%		$	1,490,988		$	18,766		5.04	%
Taxable investment securities			422,250			1,426		1.35	%			398,060			1,177		1.18	%
Tax-exempt investment securities			25,169			89		1.79	%			17,293			75		2.20	%
Fed funds sold & other			58,266			213		1.46	%			187,398			104		0.22	%
Total Interest Earning Assets			2,588,171		$	25,847		4.00	%			2,093,739		$	20,122		3.85	%
Nonearning Assets			150,044									127,160
Total Assets		$	2,738,215								$	2,220,899
Interest Bearing Liabilities:
Savings deposits		$	1,328,344		$	1,586		0.48	%		$	1,181,103		$	560		0.19	%
Other time deposits			423,668			580		0.55	%			252,966			661		1.05	%
Other borrowed money			60,455			398		2.63	%			17,868			87		1.95	%
Fed funds purchased & securities
sold under agreement to repurch.			63,388			416		2.63	%			29,729			165		2.22	%
Subordinated notes			34,538			284		3.29	%			23,807			199		3.34	%
Total Interest Bearing Liabilities		$	1,910,393		$	3,264		0.68	%		$	1,505,473		$	1,672		0.45	%
Noninterest Bearing Liabilities			542,077									461,252
Stockholders' Equity		$	285,745								$	254,174
Net Interest Income and Interest Rate Spread					$	22,583		3.32	%					$	18,450		3.40	%
Net Interest Margin								3.49	%								3.53	%
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 Nine Months Ended									For the Nine Months Ended
		September 30, 2022									September 30, 2021
Interest Earning Assets:		Average Balance			Interest/Dividends			Annualized Yield/Rate			Average Balance			Interest/Dividends			Annualized Yield/Rate
Loans		$	1,997,081		$	66,962		4.47	%		$	1,413,625		$	50,637		4.78	%
Taxable investment securities			424,882			4,065		1.28	%			363,284			3,286		1.21	%
Tax-exempt investment securities			21,794			229		1.77	%			18,387			252		2.31	%
Fed funds sold & other			101,922			401		0.52	%			171,015			242		0.19	%
Total Interest Earning Assets			2,545,679		$	71,657		3.76	%			1,966,311		$	54,417		3.70	%
Nonearning Assets			158,378									134,108
Total Assets		$	2,704,057								$	2,100,419
Interest Bearing Liabilities:
Savings deposits		$	1,315,793		$	2,951		0.30	%		$	1,106,674		$	1,700		0.20	%
Other time deposits			439,534			1,954		0.59	%			248,426			2,137		1.15	%
Other borrowed money			54,184			951		2.34	%			17,859			424		3.17	%
Fed funds purchased & securities
sold under agreement to repurch.			42,584			734		2.30	%			29,973			494		2.20	%
Subordinated notes			34,509			837		3.23	%			8,023			199		3.31	%
Total Interest Bearing Liabilities		$	1,886,604		$	7,427		0.53	%		$	1,410,955		$	4,954		0.47	%
Noninterest Bearing Liabilities			529,439									438,518
Stockholders' Equity		$	288,014								$	250,946
Net Interest Income and Interest Rate Spread					$	64,230		3.23	%					$	49,463		3.23	%
Net Interest Margin								3.37	%								3.36	%
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
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
		September 30, 2022				September 30, 2021				September 30, 2022				September 30, 2021
Shares Outstanding			13,107,500				11,232,320				13,107,500				11,232,320
Tangible Equity
Equity		$	280,578			$	254,746			$	280,578			$	254,746
Goodwill			80,434				55,214				80,434				55,214
Other Intangible			3,744				3,994				3,744				3,994
Comprehensive Adjustment*			-				-				37,737				(901	)
Tangible Equity		$	196,400			$	195,538			$	234,137			$	194,637
Shares Outstanding			13,108				11,232				13,108				11,232
Tangible Book Equity per Share		$	14.98			$	17.41			$	17.86			$	17.33
		Actual Average								Regulatory Average
		Year to Date								Year to Date
		September 30, 2022				September 30, 2021				September 30, 2022				September 30, 2021
Net Income		$	25,327			$	15,812			$	25,327			$	15,812
Acquisition Costs - Tax Adjusted			463				2,155				463				2,155
Average Shares Outstanding			13,071,859				11,199,309				13,071,859				11,199,309
Average Tangible Equity
Average Equity		$	288,014			$	250,946			$	288,014			$	250,946
Average Goodwill			80,434				51,884				80,434				51,884
Average Other Intangible			4,119				3,887				4,119				3,887
Average Comprehensive Adjustment*			-				-				21,181				(2,442	)
Average Tangible Equity		$	203,461			$	195,175			$	224,642			$	192,733
Average Shares Outstanding			13,072				11,199				13,072				11,199
Average Tangible Book Equity per Share		$	15.56			$	17.43			$	17.19			$	17.21
Return on Average Tangible Equity			16.60	%			10.80	%			15.03	%			10.94	%
Return on Average Tangible Equity w/o Acquisition			16.90	%			12.27	%			15.31	%			12.43	%
*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:	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