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Farmers & Merchants Bancorp, Inc. Reports Record 2021 Fourth-Quarter and Full-Year Financial Results

·24 min read
Farmers & Merchants Bancorp, Inc.
Farmers & Merchants Bancorp, Inc.

ARCHBOLD, Ohio, Feb. 14, 2022 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2021 fourth quarter and twelve months ended December 31, 2021.

2021 Fourth Quarter Financial Highlights Include (on a year-over-year basis unless noted):

  • Net income increased 13.4% to a quarterly record of $7.7 million, or $0.59 per basic and diluted share

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

  • Adjusted net income, excluding one-time tax adjusted acquisition expenses, increased 27.8% to $8.7 million

  • Adjusted earnings, excluding one-time tax adjusted acquisition expenses, increased 10.0% to $0.66 per basic and diluted share

  • Net interest income after provision for loan losses increased 38.7% to a quarterly record of $19.6 million

  • Fourth quarter after-tax income benefited from $0.3 million of accelerated fees associated with the Paycheck Protection Program (“PPP”) compared to $1.2 million in the 2020 fourth quarter

  • Net charge-offs to average loans were -0.01%, the third consecutive quarter at or below 0.00%

  • Adjusted return on average tangible equity, excluding one-time tax adjusted acquisition expenses, increased to 13.09% from 10.89% on a year-over-year basis

  • Increased the regular quarterly cash dividend payment by 11.8% to $0.19 per share

2021 Full-Year Financial Highlights Include (on a year-over-year basis unless noted):

  • Total loans increased 42.8% to $1.842 billion, and included $2.9 million of PPP loans

  • Total loans increased by 15.9% organically and without PPP loans

  • Total assets increased 38.2% to a record $2.638 billion

  • Deposits increased 37.4% to a record $2.193 billion

  • Net interest income after provision for loan losses increased 25.1% to $66.1 million

  • Net income increased 16.9% to an annual record of $23.5 million

  • Earnings increased 11.7% to an annual record of $2.01 per basic and diluted share

  • Adjusted net income, excluding one-time tax adjusted acquisition expenses, increased 32.5% to $26.6 million

  • Adjusted earnings, excluding one-time tax adjusted acquisition expenses, increased 26.7% to $2.28 per basic and diluted share

  • F&M raised its quarterly dividend payment two times during 2021, and the 2021 annual cash dividend increased 7.6% to $0.71 per share, representing the 27th consecutive annual dividend increase

  • Provided a record $435,000 of charitable donations to support organizations throughout Indiana and Ohio

“2021 is the seventh consecutive year F&M has produced record financial results, including record annual net income, earnings per share, loans, and dividends. I am proud of our track record of earnings growth, strong asset quality, and returns to shareholders, which reflects the successful execution of our strategic growth plan, the dedication and hard work of our 387 team members, and the valuable financial services we provide our local communities. Despite our recent success, we remain focused on becoming a $3.0 billion asset bank. We believe 2022 will be a transformative year for F&M as we benefit from the three acquisitions we completed over the past 12 months, our 2021 office realignment initiative, and our recently opened offices and LPOs,” stated Lars B. Eller, President and Chief Executive Officer.

Mr. Eller continued, “As we execute against our strategic growth plan, we remain rooted in our communities and continue to focus on creating value for our shareholders, associates, and the markets in which we operate. During 2021, F&M’s Board of Directors approved two increases to our regular quarterly dividend payment, which was up 7.6% over the prior year. In fact, according to data from S&P Global Market Intelligence, of the nearly 800 publicly traded banks, F&M has the 11th longest track record of consecutive dividend increases. For the year, we also increased wages demonstrating our commitment to our associates, and ensuring we continue to attract and retain fantastic team members. Finally, I am extremely proud of our continued commitment to our local communities. For 2021, our support to organizations within our markets increased 23.9% to a record $435,000.”

Income Statement
Net income for the 2021 fourth quarter ended December 31, 2021, was $7.7 million, compared to $6.8 million for the same period last year. Net income per basic and diluted share for the 2021 fourth quarter was $0.59, compared to $0.60 for the same period last year. The $0.01 decline in net income per basic and diluted share was due to a 16.7% year-over-year increase in the average shares outstanding as a result of the Perpetual Federal Savings Bank acquisition. Net income for the 2021 twelve-month period ended December 31, 2021, was $23.5 million, compared to $20.1 million for the same period last year. Net income per basic and diluted share for the 2021 twelve months was $2.01, compared to $1.80 for the same period last year.

Adjusted net income for the 2021 fourth quarter was $8.7 million, or $0.66 per diluted share, compared to $6.8 million, or $0.60 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, 2021, was $26.6 million, or $2.28 per diluted share, compared to $20.1 million, or $1.80 per diluted share in the prior year.

Mr. Eller continued, “The Bank has had 19 consecutive months with an operating efficiency ratio in the 50% range when removing affiliate and acquisition expenses. We believe earnings growth will accelerate throughout 2022 as our strong financial results benefit from our larger scale, strong asset quality, and prudent expense management.”

Deposits
At December 31, 2021, total deposits were $2.193 billion, an increase of 37.4% from December 31, 2020, and an increase of 17.5% from September 30, 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 improved to 0.48% for the year ended December 31, 2021, compared to 0.87% for the year ended December 31, 2020.

Loan Portfolio and Asset Quality
Total loans, net at December 31, 2021, increased 42.6% to $1.857 billion, compared to $1.303 billion at December 31, 2020. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of both the Perpetual Federal Savings Bank, Inc. and Ossian Financial Services, Inc. acquisitions. Loans increased 15.9% organically from the same period a year ago when not including the Perpetual and Ossian acquisitions, and the impact of PPP loans. During the 2021 fourth quarter and full year, the Company processed $6.9 million and $84.5 million, respectively, of PPP loan forgiveness and principal payments received, resulting in a total of $2.9 million of PPP loans within F&M’s loan portfolio at December 31, 2021. Under the second round of PPP, F&M funded $51.2 million of PPP loans, protecting over 18,000 jobs.

Mr. Eller continued, “Our organic loan growth of 15.9% reflects the value of our community oriented financial services. In addition, loan growth is benefitting from our recently opened office in Fort Wayne, Indiana, and new LPOs in Ohio, Indiana, and Michigan, as well as the contributions of our highly talented loan officers. I believe our nimble, local and supportive lending culture is well positioned to serve commercial and retail customers throughout our growing footprint and I’m excited by our growth opportunities in 2022 and beyond.”

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $8.1 million or 0.43% of total loans at December 31, 2021, compared to $9.4 million, or 0.72% at December 31, 2020. The year-over-year decrease in nonperforming loans occurred despite the addition of $385.1 million of loans associated with the Perpetual and Ossian acquisitions, reflecting strong asset quality at F&M as well as its recently acquired banks.

At December 31, 2021, there were no COVID-related payment modifications outstanding compared to 190 loans representing a balance of $165 million in deferrals at the peak in 2020.

“As we look to 2022, I am encouraged by the positive momentum underway across our business. Our 2022 financial results are expected to reflect the full benefits of the Perpetual Federal Savings Bank, Inc., and Ossian Financial Services, Inc. acquisitions, the Adams County Financial Resources asset purchase, our new Fort Wayne office, our three new LPOs, and the completion of our office realignment program. I am extremely proud of our record financial and operating results in 2021, and I am excited by the opportunities we have in 2022 and beyond to create additional value for our shareholders, customers, employees, and communities,” concluded Mr. Eller.

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 19.3% to $297.2 million at December 31, 2021, from $249.2 million at December 31, 2020. At December 31, 2021, the Company had a Tier 1 leverage ratio of 10.05%, compared to 11.20% at December 31, 2020.

Tangible stockholders’ equity increased to $215.5 million at December 31, 2021, compared to $192.5 million at December 31, 2020. On a per share basis, tangible stockholders’ equity at December 31, 2021, was $16.49 per share, compared to $17.19 per share at December 31, 2020.

For the twelve months ended December 31, 2021, the Company declared cash dividends of $0.71 per share, which is a 7.6% increase over the 2020 twelve-month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 27 consecutive years. For the twelve months ended December 31, 2021, the dividend payout ratio was 35.08% compared to 36.36% 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, 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 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

Twelve Months Ended

December 31,
2021

September 30,
2021

June 30,
2021

March 31,
2021

December 31,
2020

December 31,
2021

December 31,
2020

Interest Income

Loans, including fees

$

21,008

$

18,766

$

16,259

$

15,612

$

17,061

$

71,645

$

65,317

Debt securities:

U.S. Treasury and government agencies

964

924

857

751

695

3,496

3,369

Municipalities

289

284

289

308

295

1,170

1,079

Dividends

49

44

31

50

35

174

142

Federal funds sold

10

10

6

5

5

31

20

Other.

103

94

88

39

48

324

242

Total interest income

22,423

20,122

17,530

16,765

18,139

76,840

70,169

Interest Expense

Deposits

1,581

1,221

1,276

1,340

1,619

5,418

8,638

Federal funds purchased and securities sold

under agreements to repurchase

155

165

163

166

170

649

775

Borrowed funds

361

87

115

222

226

785

980

Subordinated notes

291

199

-

-

-

490

-

Total interest expense

2,388

1,672

1,554

1,728

2,015

7,342

10,393

Net Interest Income - Before Provision for Loan Losses

20,035

18,450

15,976

15,037

16,124

69,498

59,776

Provision for Loan Losses

444

659

641

1,700

1,995

3,444

6,981

Net Interest Income After Provision For Loan Losses

19,591

17,791

15,335

13,337

14,129

66,054

52,795

Noninterest Income

Customer service fees

2,417

2,242

2,198

2,814

2,750

9,671

8,893

Other service charges and fees

1,026

1,010

874

838

980

3,748

3,602

Net gain on sale of loans

1,074

822

955

1,046

1,894

3,897

4,022

Net gain on sale of available-for-sale securities

-

-

-

293

-

293

270

Total noninterest income

4,517

4,074

4,027

4,991

5,624

17,609

16,787

Noninterest Expense

Salaries and wages

5,761

5,442

4,591

4,390

5,068

20,184

18,488

Employee benefits

1,792

1,621

1,915

1,994

1,140

7,322

5,601

Net occupancy expense

532

529

546

577

585

2,184

2,271

Furniture and equipment

782

903

848

791

760

3,324

3,143

Data processing

1,020

1,548

428

505

428

3,501

1,768

Franchise taxes

361

372

294

446

241

1,473

1,346

ATM expense

478

460

459

449

456

1,846

1,690

Advertising

431

439

331

235

353

1,436

1,332

Net (gain) loss on sale of other assets owned

13

219

227

(25

)

20

434

7

FDIC assessment

265

296

276

236

223

1,073

633

Mortgage servicing rights amortization

266

285

524

505

247

1,580

1,031

Consulting fees

761

256

394

223

407

1,634

968

Other general and administrative

1,964

1,951

2,227

2,033

1,358

8,175

6,098

Total noninterest expense

14,426

14,321

13,060

12,359

11,286

54,166

44,376

Income Before Income Taxes

9,682

7,544

6,302

5,969

8,467

29,497

25,206

Income Taxes

1,999

1,624

1,319

1,060

1,691

6,002

5,111

Net Income

7,683

5,920

4,983

4,909

6,776

23,495

20,095

Other Comprehensive Income (Loss) (Net of Tax):

Net unrealized gain (loss) on available-for-sale securities

(5,170

)

173

786

(6,737

)

(207

)

(10,948

)

6,091

Reclassification adjustment for realized gain on sale of available-for-sale securities

-

-

-

(293

)

-

(293

)

(270

)

Net unrealized gain (loss) on available-for-sale securities

(5,170

)

173

786

(7,030

)

(207

)

(11,241

)

5,821

Tax expense (benefit)

(1,085

)

36

165

(1,476

)

(44

)

(2,360

)

1,222

Other comprehensive income (loss)

(4,085

)

137

621

(5,554

)

(163

)

(8,881

)

4,599

Comprehensive Income

$

3,598

$

6,057

$

5,604

$

(645

)

$

6,613

$

14,614

$

24,694

Basic and Diluted Earnings Per Share

$

0.59

$

0.53

$

0.44

$

0.44

$

0.60

$

2.01

$

1.80

Dividends Declared

$

0.19

$

0.18

$

0.17

$

0.17

$

0.17

$

0.71

$

0.66


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

(Unaudited)

(Unaudited)

(Unaudited)

Assets

Cash and due from banks

$

135,485

$

112,875

$

93,636

$

118,139

$

98,279

Federal funds sold

45,338

45,203

57,483

57,361

77,427

Total cash and cash equivalents

180,823

158,078

151,119

175,500

175,706

Interest-bearing time deposits

10,913

14,622

18,597

4,405

4,653

Securities - available-for-sale

429,931

426,717

407,500

352,974

307,812

Other securities, at cost

8,162

4,905

6,419

5,939

5,939

Loans held for sale

7,714

3,735

8,041

7,511

7,740

Loans, net

1,841,177

1,479,864

1,443,336

1,327,254

1,289,318

Premises and equipment

26,913

26,476

26,915

26,703

27,063

Goodwill

80,434

55,214

56,066

47,340

47,340

Mortgage servicing rights

3,157

3,097

3,146

3,444

3,320

Other real estate owned

159

167

198

148

71

Bank owned life insurance

27,558

27,397

27,218

25,347

25,208

Other assets

21,359

18,711

18,310

16,720

15,374

Total Assets

$

2,638,300

$

2,218,983

$

2,166,865

$

1,993,285

$

1,909,544

Liabilities and Stockholders' Equity

Liabilities

Deposits

Noninterest-bearing

$

473,689

$

438,076

$

443,863

$

384,558

$

351,147

Interest-bearing

NOW accounts

650,466

646,237

652,078

605,533

542,317

Savings

597,828

529,532

501,687

451,043

455,145

Time

471,479

252,383

256,445

242,717

247,553

Total deposits

2,193,462

1,866,228

1,854,073

1,683,851

1,596,162

Federal funds purchased and

securities sold under agreements to repurchase

29,268

29,601

29,882

30,072

30,239

Federal Home Loan Bank (FHLB) advances

24,065

17,868

17,868

17,840

17,861

Other borrowings

40,000

-

-

-

-

Subordinated notes, net of unamortized issuance costs

34,471

34,441

-

-

-

Dividend payable

2,461

2,002

1,888

1,889

1,889

Accrued expenses and other liabilities

17,406

14,097

12,569

12,805

14,233

Total liabilities

2,341,133

1,964,237

1,916,280

1,746,457

1,660,384

Commitments and Contingencies

Stockholders' Equity

Common stock - No par value 20,000,000 shares authorized; issued and

outstanding 14,063,999 shares 12/31/21 and 12,230,000 shares 12/31/20

122,674

81,382

82,259

82,030

81,804

Treasury stock - 997,766 shares 12/31/21, 1,032,456 shares 12/31/20

(11,724

)

(11,718

)

(12,172

)

(11,962

)

(11,932

)

Retained earnings

189,401

184,181

179,734

176,617

173,591

Accumulated other comprehensive income (loss)

(3,184

)

901

764

143

5,697

Total stockholders' equity

297,167

254,746

250,585

246,828

249,160

Total Liabilities and Stockholders' Equity

$

2,638,300

$

2,218,983

$

2,166,865

$

1,993,285

$

1,909,544


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

For the Three Months Ended

For the Three Months Ended

Selected financial data

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

December 31, 2021

December 31, 2020

Return on average assets

1.17

%

1.12

%

0.90

%

1.01

%

1.43

%

1.05

%

1.14

%

Return on average equity

10.94

%

9.32

%

8.00

%

7.87

%

11.04

%

9.09

%

8.38

%

Yield on earning assets

3.59

%

3.85

%

3.53

%

3.71

%

4.09

%

3.66

%

4.25

%

Cost of interest bearing liabilities

0.51

%

0.45

%

0.44

%

0.53

%

0.64

%

0.48

%

0.87

%

Net interest spread

3.08

%

3.40

%

3.09

%

3.18

%

3.45

%

3.18

%

3.38

%

Net interest margin

3.21

%

3.53

%

3.21

%

3.33

%

3.63

%

3.31

%

3.62

%

Efficiency

58.76

%

63.50

%

64.98

%

62.57

%

52.20

%

62.39

%

58.17

%

Dividend payout ratio

32.03

%

33.81

%

37.89

%

38.48

%

27.77

%

35.08

%

36.36

%

Tangible book value per share (1)

$

16.49

$

17.33

$

16.94

$

17.50

$

17.19

Tier 1 capital to average assets

8.47

%

9.45

%

8.78

%

10.39

%

10.46

%

10.05

%

11.20

%

Average Shares Outstanding

13,046,299

11,209,732

11,191,043

11,197,012

11,177,765

11,664,852

11,146,270

Loans

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

(Dollar amounts in thousands)

Commercial real estate

$

848,477

$

728,852

$

691,122

$

618,754

$

588,825

Agricultural real estate

198,343

179,374

189,742

179,945

189,159

Consumer real estate

395,873

202,454

194,715

175,675

175,588

Commercial and industrial

208,270

194,767

216,609

202,958

189,246

Agricultural

118,368

105,580

100,756

100,022

94,358

Consumer

57,737

55,521

56,427

54,445

52,540

Other

32,089

31,096

13,549

14,088

15,757

Less: Net deferred loan fees and costs

(1,738

)

(2,082

)

(4,497

)

(4,208

)

(2,483

)

Total loans,net

$

1,857,419

$

1,495,562

$

1,458,423

$

1,341,679

$

1,302,990

Asset quality data

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

(Dollar amounts in thousands)

Nonaccrual loans

$

8,076

$

6,248

$

7,031

$

8,139

$

9,404

Troubled debt restructuring

$

7,614

$

6,035

$

5,492

$

5,774

$

6,514

90 day past due and accruing

$

-

$

-

$

-

$

-

$

-

Nonperforming loans

$

8,076

$

6,248

$

7,031

$

8,139

$

9,404

Other real estate owned

$

159

$

167

$

198

$

148

$

71

Nonperforming assets

$

8,235

$

6,415

$

7,229

$

8,287

$

9,475

(Dollar amounts in thousands)

Allowance for loan and lease losses

$

16,242

$

15,698

$

15,087

$

14,425

$

13,672

Allowance for loan and lease losses/total loans

0.87

%

1.05

%

1.03

%

1.08

%

1.05

%

Net charge-offs:

Quarter-to-date

$

(101

)

$

48

$

(21

)

$

947

$

205

Year-to-date

$

874

$

974

$

926

$

947

$

537

Net charge-offs to average loans

Quarter-to-date

-0.01

%

0.00

%

0.00

%

0.07

%

0.02

%

Year-to-date

0.06

%

0.07

%

0.07

%

0.07

%

0.04

%

Nonperforming loans/total loans

0.43

%

0.42

%

0.48

%

0.61

%

0.72

%

Allowance for loan and lease losses/nonperforming loans

201.11

%

251.26

%

214.58

%

177.24

%

145.47

%

(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, 2021

December 31, 2020

Interest Earning Assets:

Average Balance

Interest/Dividends

Annualized
Yield/Rate

Average Balance

Interest/Dividends

Annualized
Yield/Rate

Loans

$

1,843,942

$

21,008

4.56

%

$

1,336,538

$

17,061

5.11

%

Taxable investment securities

421,676

1,228

1.16

%

250,601

916

1.46

%

Tax-exempt investment securities

18,303

74

2.05

%

23,216

109

2.38

%

Fed funds sold & other

218,481

113

0.21

%

169,116

53

0.13

%

Total Interest Earning Assets

2,502,402

$

22,423

3.59

%

1,779,471

$

18,139

4.09

%

Nonearning Assets

125,930

112,177

Total Assets

$

2,628,332

$

1,891,648

Interest Bearing Liabilities:

Savings deposits

$

1,262,214

$

767

0.24

%

$

967,355

$

705

0.29

%

Other time deposits

481,119

814

0.68

%

253,023

914

1.44

%

Other borrowed money

64,008

361

2.26

%

17,775

226

5.09

%

Fed funds purchased & securities

sold under agreement to repurch.

29,403

155

2.11

%

30,100

170

2.26

%

Subordinated notes

34,451

291

3.38

%

-

-

0.00

%

Total Interest Bearing Liabilities

$

1,871,195

$

2,388

0.51

%

$

1,268,253

$

2,015

0.64

%

Noninterest Bearing Liabilities

476,122

377,791

Stockholders' Equity

$

281,015

$

245,604

Net Interest Income and Interest Rate Spread

$

20,035

3.08

%

$

16,124

3.45

%

Net Interest Margin

3.21

%

3.63

%

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, 2021

December 31, 2020

Interest Earning Assets:

Average Balance

Interest/Dividends

Annualized
Yield/Rate

Average Balance

Interest/Dividends

Annualized
Yield/Rate

Loans

$

1,522,088

$

71,645

4.71

%

$

1,313,675

$

65,317

4.98

%

Taxable investment securities

377,887

4,514

1.19

%

219,044

4,136

1.89

%

Tax-exempt investment securities

18,365

326

2.25

%

24,958

454

2.30

%

Fed funds sold & other

187,003

355

0.19

%

99,304

262

0.26

%

Total Interest Earning Assets

2,105,343

$

76,840

3.66

%

1,656,981

$

70,169

4.25

%

Nonearning Assets

124,649

113,303

Total Assets

$

2,229,992

$

1,770,284

Interest Bearing Liabilities:

Savings deposits

$

1,145,636

$

2,467

0.22

%

$

879,669

$

3,942

0.45

%

Other time deposits

306,600

2,951

0.96

%

264,827

4,696

1.77

%

Other borrowed money

29,479

785

2.66

%

21,245

980

4.61

%

Fed funds purchased & securities

sold under agreement to repurch.

29,831

649

2.18

%

32,363

775

2.39

%

Subordinated notes

14,777

490

3.32

%

-

-

0.00

%

Total Interest Bearing Liabilities

$

1,526,323

$

7,342

0.48

%

$

1,198,104

$

10,393

0.87

%

Noninterest Bearing Liabilities

445,144

332,482

Stockholders' Equity

$

258,525

$

239,698

Net Interest Income and Interest Rate Spread

$

69,498

3.18

%

$

59,776

3.38

%

Net Interest Margin

3.31

%

3.62

%

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

NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Non-GAAP Earnings Per Share

(in thousands of dollars, expect per share data)

Three Months

Twelve. Months

December 31,

December 31,

2021

2021

Net income as reported

$

7,683

$

23,495

Acquisition expenses

1,192

3,859

Tax effect

(216

)

(728

)

Adjusted net income

$

8,659

$

26,626

Less: distributed earnings allocated to participating securities

(20

)

(70

)

Less: undistributed earnings allocated to participating securities

(54

)

(146

)

Net earnings available to common shareholders

$

8,585

$

26,410

Weighted average common shares outstanding including participating securities

13,046,299

11,664,852

Less: average unvested restricted shares

(111,131

)

(94,634

)

Weighted average common shares outstanding

12,935,168

11,570,218

Basic earnings and diluted per share

$

0.66

$

2.28

Twelve Months

December 31,

December 31,

2021

2021

Reconciliation of Efficiency Ratio

Non-GAAP

Actual

Net interest income (+)

65,757

69,498

Noninterest income (+)

17,609

17,609

Gain on security sale (-)

293

293

Operating expenses (/)

50,307

54,166

Efficiency Ratio

60.56

%

62.39

%

Twelve Months

December 31,

December 31,

2021

2021

Reconciliation of Return on Average Assets

Non-GAAP

Actual

Net income

$

23,495

$

23,495

Less: accelerated net fee income for forgiveness of PPP loans

(3,741

)

-

Acquisition expenses

3,859

-

Tax effect

58

-

Adjusted net income

$

23,671

$

23,495

Average Assets

$

2,229,992

$

2,229,992

Return on Average Assets

1.06

%

1.05

%

Twelve Months

December 31,

December 31,

2021

2021

Reconciliation of Return on Average Tangible Equity

Non-GAAP

Actual

Net income

$

23,495

$

23,495

Acquisition expenses

3,859

-

Tax effect

(728

)

-

Adjusted net income

$

26,626

$

23,495

Average Tangible Equity

$

203,450

$

203,450

Return on Average Tangible Equity

13.09

%

11.55

%


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