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Farmers & Merchants Bancorp, Inc. Reports Record 2020 Fourth-Quarter and Full-Year Financial Results

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Farmers & Merchants Bancorp, Inc.
·27 min read
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ARCHBOLD, Ohio, Feb. 10, 2021 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2020 fourth quarter and twelve months ended December 31, 2020.

2020 Fourth Quarter Financial Highlights Include (on a year-over-year basis unless noted):

  • Net income increased 43.5% to a quarterly record of $6.8 million

  • Earnings increased 39.5% to a quarterly record of $0.60 per basic and diluted share

  • Net interest income after provision for loan losses increased 12.1% to $14.1 million, which included a $1.3 million increase in the provision for loan losses as a result of the COVID-19 crisis

  • Noninterest income increased 88.5% to $5.6 million, primarily due to strong residential mortgage demand

  • A gain on the settlement of a bank-owned life insurance contract (“BOLI”) and interest and fees associated with the Paycheck Protection Program (“PPP”) benefited 2020 fourth quarter after-tax income by $0.4 million and $1.0 million, respectively

  • Efficiency ratio, adjusted for BOLI and PPP benefits, was 56.49%, compared to 63.67%

  • Return on average assets adjusted for BOLI and PPP benefits, was 1.14%, compared to 1.18%

  • Loans 30 days past due to total loans, excluding COVID related loans, was only 0.29%

  • Net charge-offs to average loans were 0.02%, compared to 0.03%

2020 Full-Year Financial Highlights Include (on a year-over-year basis unless noted):

  • Total loans increased 6.9% to $1.303 billion, and included $36.2 million of PPP loans

  • Total assets increased 18.8% to a record $1.910 billion

  • Total assets managed increased to a record $2.6 billion

  • Deposits increased 23.9% to a record $1.596 billion

  • Net interest income after provision for loan losses increased 0.7% to $52.8 million, which included a $5.8 million increase in the provision for loan losses as a result of the COVID-19 crisis

  • Net income increased 9.2% to an annual record of $20.1 million

  • Earnings increased 8.4% to an annual record of $1.80 per basic and diluted share

  • Book value per share increased 7.6% to $22.25 per share

  • Tangible book value per share increased 7.4% to $17.19 per share

  • 2020 cash dividend increased 8.2% to $0.66 per share

2020 Operating Highlights Include:

  • Created operation hubs to protect the health and safety of the Company’s employees, customers, and communities throughout the COVID-19 pandemic

  • Approved $87.8 million in PPP loans, helping nearly 950 small businesses protect over 12,400 jobs

  • Donated over $167,000 to local organizations during 2020, a nearly 20% increase from 2019

  • Opened new loan production offices in Muncie, IN, Oxford, OH and West Bloomfield, MI

  • Completed construction on a new full-service office in FT. Wayne, IN, which is expected to open in Q1 2021

  • Announced the acquisition of Ossian Financial Services, Inc., which operates two full-service bank offices in Northeast Indiana and had approximately $122.0 million in assets at September 30, 2020

  • Purchased the assets and clients of Adams County Financial Resources, a registered investment advisory firm located in Geneva, IN, with approximately $83.0 million of assets under management at November 30, 2020

  • Announced an office realignment program that will consolidate three offices in Ohio and one office in Indiana

  • Added talent to both the Company’s senior leadership team and Board of Directors

  • Continued to invest in expanding the Company’s digital resources and infrastructure

“Across the board 2020 was a record year for F&M, despite the challenges associated with the COVID-19 pandemic. Our record results speak to the dedication of our 354 associates throughout our Ohio, Indiana, and Michigan markets and our daily commitment to provide our communities with superior and individual financial services,” stated Lars B. Eller, President and Chief Executive Officer. “In addition, our record performance demonstrates the success of our 2019 strategic plan that is focused on growing earnings and creating long-term value for our shareholders.”

“As we look forward to 2021, I am excited to complete the Ossian acquisition, which we believe will be completed during the second quarter. In addition, we plan to finish integrating Adams County Financial Resources during the first quarter, as well as implementing our office realignment strategy, investing in new offices in compelling markets, and expanding our digital offerings throughout 2021. We expect to incur an estimated $2.5 million of one-time expenses associated with these initiatives in 2021. Once fully integrated, we believe the combination of reduced operating expenses and the contribution of additional sources of revenue will provide an approximately $2.1 million benefit to income in 2022 and beyond as we further increase our scale, diversify our revenues, improve our cost structure, and better serve our customers. Over the past two years, we have gained valuable experience integrating prior acquisitions, while we have focused on expanding our leadership team and investing in our infrastructure to support our rapid growth. I look forward to updating our shareholders on the progress we are making throughout 2021,” continued Mr. Eller.

Income Statement
Net income for the 2020 fourth quarter ended December 31, 2020, was $6.8 million, compared to $4.7 million for the same period last year. Net income per basic and diluted share for the 2020 fourth quarter was $0.60, compared to $0.43 for the same period last year. Net income for the 2020 twelve-month period ended December 31, 2020, was $20.1 million, compared to $18.4 million for the same period last year. Net income per basic and diluted share for the 2020 twelve months was $1.80, compared to $1.66 for the same period last year.

Mr. Eller continued, “Our provision for loan losses increased from $1.1 million for the twelve months ended December 31, 2019, to $7.0 million for the twelve months ended December 31, 2020, as we prudently increased our allowance of loan losses primarily associated with the expected economic impacts caused by the COVID-19 crisis. The increase in our provision for loans losses was successfully offset by higher interest income, successful reductions in our cost of funds, interest and fees earned from the Paycheck Protection Program, a gain on the settlement of a BOLI contract, a 42.0% or $5.0 million year-over-year increase in noninterest income, and controlled noninterest expenses. 2020 was our sixth consecutive year of record earnings, while achieving our lowest efficiency ratio in 16 years.”

Deposits
At December 31, 2020, total deposits were $1.596 billion, an increase of 23.9% from December 31, 2019, and an increase of 5.1% from September 30, 2020. The significant organic deposit growth being experienced is a result of continued strength in expanding relationships with new and existing customers, and the benefits of PPP activity. In addition, we continue to see growing customer preferences to more stable and secure saving instruments as deposits have increased since the COVID-19 crisis began.

Loan Portfolio and Asset Quality
Total loans, net at December 31, 2020, increased 6.9% to $1.303 billion, compared to $1.219 billion at December 31, 2019. The year-over-year improvement resulted primarily from the contribution of strong organic loan growth. During 2020, the Company processed $51.6 million of PPP loan forgiveness and principal payments received and at December 31, 2020, there were $36.2 million of PPP loans included in F&M’s loan portfolio.

Mr. Eller continued, “Despite the challenges created by the COVID-19 crisis, we continue to grow our loan portfolio with high quality customers, reflecting the personal financial services and value we provide our local communities and the recent contribution of our newly opened loan production offices in Muncie, IN, Oxford, OH, and West Bloomfield, MI.”

Mr. Eller continued: “Our loan portfolio remains resilient as loans 30 days past due to total loans, excluding COVID related loans, was only 0.29% as of December 31, 2020. In addition, at year-end there were only five loans totaling $3.6 million of interest only and full deferrals out of 190 loans that had modification of terms due to the COVID-19 crisis during the year. These 190 loans had an overall loan outstanding at year-end of $120 million. Given the uncertainty surrounding the COVID-19 crisis and the continued impacts the pandemic is having on the global economy, we are proactively monitoring our portfolio’s performance and our approach to risk remains prudent. As a result, we have increased our allowance for loan and lease losses by 89.2% over the past 12 months. Our allowance for loan and lease losses to total loans, adjusted for our PPP balances, is now over 1.20% and includes the $1.7 million credit mark associated with the 2019 Bank of Geneva acquisition.”

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $9.4 million or 0.72% of total loans at December 31, 2020, compared to $3.4 million, or 0.28% at December 31, 2019. The year-over-year increase in nonperforming loans is primarily due to the impacts of the COVID-19 crisis, as well as the accounting treatment for nonaccrual loans associated with a $5.2 million real-estate secured relationship.

The Bank had 190 loans that received either deferment payments or interest only payments due to the COVID-19 crisis. As of December 31, 2020, there were only five modifications left representing a total of $3.6 million. Of those remaining there were no outstanding full payment deferment loans. Three loans are interest only in the entertainment sector with $1.2 million in total balances with all scheduled for original repayment terms to begin by early April 2021. One office building with a $2.3 million balance with interest only payments will return to payments in May 2021. One restaurant with a $13,000 balance received an interest only modification in December 2020 with payments to resume in March 2021.

F&M’s agriculture portfolio continues to perform well, with a 0.59% past due balance at December 31, 2020. F&M is optimistic trends will remain positive as a result of strong global demand for agricultural products and a favorable commodity price environment expected during 2021. At December 31, 2020, F&M’s $94.4 million agriculture portfolio consisted primarily of row crop and livestock production, with almost no dairy exposure. Agriculture customers are proven farmers with strong balance sheets and 95% of row crop producers utilize crop insurance to mitigate weather and production risks. At December 31, 2020, approximately 24% of F&M’s agriculture portfolio was within the livestock sector, and approximately 69% of this exposure is to customers that support production but do not have direct livestock ownership. In addition, approximately 40% of F&M’s livestock exposure is for loans with balances under $750,000 and of the borrowers with direct livestock ownership, approximately 55% are not dependent on the income from livestock to manage their debt payments. Of the $71.5 million of agricultural real estate loans originated in 2020, F&M sold approximately 45% in the secondary market at a premium of $1.2 million, while servicing and maintaining the relationship of these accounts.

Mr. Eller concluded: “As our record financial and operating results demonstrate, we successfully responded to the unprecedented challenges of the COVID-19 crisis, while remaining focused on executing our growth-oriented strategic plan. I am very proud of our performance during 2020 and the hard work of all F&M’s associates. Although F&M’s scale has increased, we remain committed to nurturing lasting and personal relationships within our communities throughout the near-term economic challenges and future periods of prosperity.”

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 8.2% to $249.2 million at December 31, 2020, from $230.3 million at December 31, 2019. At December 31, 2020, the Company had a Tier 1 leverage ratio of 10.46%, compared to 11.52% at September 30, 2019.

Tangible stockholders’ equity increased to $192.5 million at December 31, 2020, compared to $178.3 million at December 31, 2019. The largest change to intangible stockholders’ equity was an increase in accumulated comprehensive income, which increased from $1.098 million as of December 31, 2019, to $5.697 million as of December 31, 2020. On a per share basis, tangible stockholders’ equity at December 31, 2020, was $17.19 per share, compared to $16.01 per share at December 31, 2019.

For the twelve months ended December 31, 2020, the Company has declared cash dividends of $0.66 per share, which is an 8.2% increase over the 2019 twelve-month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 26 consecutive years. For the twelve months ended December 31, 2020, the dividend payout ratio was 35.76% compared to 36.59% for the same period last year.

Company Contact:

Investor and Media Contact:

Lars B. Eller

Andrew M. Berger

President and Chief Executive Officer

Managing Director

Farmers & Merchants Bancorp, Inc.

SM Berger & Company, Inc.

(419) 446-2501

(216) 464-6400

leller@fm.bank

andrew@smberger.com

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 through its 30 offices. Our locations are in Fulton, Defiance, Hancock, Henry, Lucas, Williams, and Wood counties in Northwest Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, and Steuben counties.

Safe harbor statement
Farmers & Merchants Bancorp, Inc. (“F&M”) wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995. Statements by F&M, including management’s expectations and comments, may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Exchange Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties inherent in general and local banking conditions, competitive factors specific to markets in which F&M and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions, capital market conditions, or the effects of the COVID-19 pandemic, and its impacts on our credit quality and business operations, as well as its impact on general economic and financial market conditions. F&M assumes no responsibility to update this information. For more details, please refer to F&M’s SEC filing, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such filings can be viewed at the SEC’s website, www.sec.gov or through F&M’s website www.fm.bank.

Non-GAAP Financial Measures
This press release includes disclosure of financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers & Merchants Bancorp, Inc. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers & Merchants Bancorp, Inc.’s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial measures is included within this press release.

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME

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

Three Months Ended

Twelve Months Ended

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

Interest Income

Loans, including fees

$

17,061

$

16,181

$

16,192

$

15,883

$

15,608

$

65,317

$

62,213

Debt securities:

U.S. Treasury and government agencies

695

761

767

1,146

840

3,369

3,341

Municipalities

295

279

243

262

225

1,079

837

Dividends

35

36

26

45

60

142

293

Federal funds sold

5

4

5

6

97

20

416

Other.

48

32

40

122

319

242

1,206

Total interest income

18,139

17,293

17,273

17,464

17,149

70,169

68,306

Interest Expense

Deposits

1,619

1,864

2,254

2,901

3,336

8,638

12,942

Federal funds purchased and securities sold

under agreements to repurchase

170

174

187

244

207

775

734

Borrowed funds

226

231

257

266

270

980

1,083

Total interest expense

2,015

2,269

2,698

3,411

3,813

10,393

14,759

Net Interest Income - Before Provision for Loan Losses

16,124

15,024

14,575

14,053

13,336

59,776

53,547

Provision for Loan Losses

1,995

1,987

1,569

1,430

728

6,981

1,138

Net Interest Income After Provision For Loan Losses

14,129

13,037

13,006

12,623

12,608

52,795

52,409

Noninterest Income

Customer service fees

2,750

2,299

2,258

1,586

1,732

8,893

6,726

Other service charges and fees

980

879

704

1,039

1,132

3,602

4,443

Net gain on sale of loans

1,894

1,537

364

227

119

4,022

677

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

-

-

-

270

-

270

(26

)

Total noninterest income

5,624

4,715

3,326

3,122

2,983

16,787

11,820

Noninterest Expense

Salaries and wages

5,068

5,102

4,095

4,223

4,029

18,488

16,329

Employee benefits

1,140

1,566

1,218

1,677

1,410

5,601

5,558

Net occupancy expense

585

558

564

564

406

2,271

2,317

Furniture and equipment

760

875

750

758

596

3,143

2,775

Data processing

428

490

408

442

396

1,768

2,553

Franchise taxes

241

368

369

368

246

1,346

981

ATM expense

456

444

376

414

434

1,690

1,715

Advertising

353

411

265

303

340

1,332

1,569

Net (gain) loss on sale of other assets owned

20

(7

)

(7

)

1

16

7

81

FDIC assessment

223

194

144

72

(11

)

633

183

Mortgage servicing rights amortization

247

296

356

132

158

1,031

487

Consulting fees

407

205

217

139

264

968

668

Other general and administrative

1,358

1,553

1,612

1,575

1,455

6,098

6,251

Total noninterest expense

11,286

12,055

10,367

10,668

9,739

44,376

41,467

Income Before Income Taxes

8,467

5,697

5,965

5,077

5,852

25,206

22,762

Income Taxes

1,691

1,287

1,161

972

1,129

5,111

4,360

Net Income

6,776

4,410

4,804

4,105

4,723

20,095

18,402

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

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

(207

)

639

661

4,998

(472

)

6,091

5,179

Reclassification adjustment for realized (gain) loss on sale of available-for-sale securities

-

-

-

(270

)

-

(270

)

26

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

(207

)

639

661

4,728

(472

)

5,821

5,205

Tax expense (benefit)

(44

)

134

139

993

(99

)

1,222

1,093

Other comprehensive income (loss)

(163

)

505

522

3,735

(373

)

4,599

4,112

Comprehensive Income

$

6,613

$

4,915

$

5,326

$

7,840

$

4,350

$

24,694

$

22,514

Basic and Diluted Earnings Per Share

$

0.60

$

0.40

$

0.43

$

0.37

$

0.43

$

1.80

$

1.66

Dividends Declared

$

0.17

$

0.17

$

0.16

$

0.16

$

0.16

$

0.66

$

0.61


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

(Unaudited)

(Unaudited)

(Unaudited)

Assets

Cash and due from banks

$

98,279

$

46,395

$

54,336

$

49,844

$

50,137

Federal funds sold

77,427

41,358

31,105

40,993

1,159

Total cash and cash equivalents

175,706

87,753

85,441

90,837

51,296

Interest-bearing time deposits

4,653

4,657

4,636

4,869

4,309

Securities - available-for-sale

307,812

259,041

236,292

204,121

222,293

Other securities, at cost

5,939

5,827

5,810

5,810

5,810

Loans held for sale

7,740

7,621

11,445

2,153

4,248

Loans, net

1,289,318

1,351,979

1,334,790

1,239,108

1,211,771

Premises and equipment

27,063

26,776

26,049

26,120

26,351

Goodwill

47,340

47,340

47,340

47,340

47,340

Mortgage servicing rights

3,320

3,027

2,740

2,672

2,629

Other real estate owned

71

206

135

185

214

Bank owned life insurance

25,208

15,501

15,399

15,313

15,235

Other assets

15,374

16,872

14,370

16,597

15,834

Total Assets

$

1,909,544

$

1,826,600

$

1,784,447

$

1,655,125

$

1,607,330

Liabilities and Stockholders' Equity

Liabilities

Deposits

Noninterest-bearing

$

351,147

$

330,845

$

336,027

$

261,786

$

265,156

Interest-bearing

NOW accounts

542,317

534,792

504,846

463,734

423,655

Savings

455,145

392,059

374,871

341,256

322,973

Time

247,553

261,177

261,631

281,931

276,563

Total deposits

1,596,162

1,518,873

1,477,375

1,348,707

1,288,347

Federal Funds Purchased and

securities sold under agreements to repurchase

30,239

29,859

30,949

30,585

48,073

Federal Home Loan Bank (FHLB) advances

17,861

17,724

19,087

24,788

24,806

Dividend payable

1,889

1,882

1,768

1,768

1,768

Accrued expenses and other liabilities

14,233

14,841

14,971

12,820

14,078

Total liabilities

1,660,384

1,583,179

1,544,150

1,418,668

1,377,072

Commitments and Contingencies

Stockholders' Equity

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

and outstanding 12,230,000 shares 12/31/20 and 12/31/19

81,804

81,577

82,134

81,844

81,535

Treasury stock - 1,032,456 shares 12/31/20, 1,093,065 shares 12/31/19

(11,932

)

(12,397

)

(12,668

)

(12,636

)

(12,456

)

Retained earnings

173,591

168,381

165,476

162,416

160,081

Accumulated other comprehensive income

5,697

5,860

5,355

4,833

1,098

Total stockholders' equity

249,160

243,421

240,297

236,457

230,258

Total Liabilities and Stockholders' Equity

$

1,909,544

$

1,826,600

$

1,784,447

$

1,655,125

$

1,607,330


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

SELECT FINANCIAL DATA

For the Three Months Ended

For the Twelve Months Ended

Selected financial data

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

Return on average assets

1.43

%

0.98

%

1.10

%

1.02

%

1.18

%

1.14

%

1.23

%

Return on average equity

11.04

%

7.28

%

8.07

%

7.06

%

8.26

%

8.38

%

8.26

%

Yield on earning assets

4.09

%

4.04

%

4.25

%

4.66

%

4.63

%

4.25

%

4.85

%

Cost of interest bearing liabilities

0.64

%

0.74

%

0.91

%

1.22

%

1.40

%

0.87

%

1.42

%

Net interest spread

3.45

%

3.30

%

3.34

%

3.44

%

3.23

%

3.38

%

3.43

%

Net interest margin

3.63

%

3.51

%

3.59

%

3.75

%

3.60

%

3.62

%

3.80

%

Efficiency

52.20

%

62.11

%

57.91

%

63.09

%

63.67

%

58.17

%

63.42

%

Dividend payout ratio

27.77

%

42.66

%

36.80

%

43.07

%

43.34

%

35.76

%

36.59

%

Tangible book value per share (1)

$

17.19

$

16.78

$

16.33

$

16.26

$

16.01

Tier 1 capital to average assets

10.46

%

10.65

%

10.70

%

11.56

%

11.52

%

Average Shares Outstanding

11,177,765

11,142,797

11,129,341

11,134,870

11,137,004

11,146,270

11,113,810

Loans

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

(Dollar amounts in thousands)

Commercial real estate

$

588,825

$

595,146

$

589,382

$

570,217

$

551,309

Agricultural real estate

189,159

192,883

194,606

194,383

199,105

Consumer real estate

175,588

175,963

174,069

174,731

165,349

Commercial and industrial

189,246

238,175

223,842

143,261

135,631

Agricultural

94,358

103,330

107,458

109,584

111,820

Consumer

52,540

53,320

50,108

49,022

49,237

Other

15,757

9,030

9,714

8,336

8,314

Less: Net deferred loan fees and costs

(2,483

)

(3,985

)

(4,456

)

(1,893

)

(1,766

)

Total loans,net

$

1,302,990

$

1,363,862

$

1,344,723

$

1,247,641

$

1,218,999

Asset quality data

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

(Dollar amounts in thousands)

Nonaccrual loans

$

9,404

$

7,870

$

8,473

$

3,344

$

3,400

Troubled debt restructuring

$

6,514

$

7,028

$

7,034

$

1,934

$

956

90 day past due and accruing

$

-

$

-

$

-

$

-

$

-

Nonperforming loans

$

9,404

$

7,870

$

8,473

$

3,344

$

3,400

Other real estate owned

$

71

$

206

$

135

$

185

$

214

Nonperforming assets

$

9,475

$

8,076

$

8,608

$

3,529

$

3,614

(Dollar amounts in thousands)

Allowance for loan and lease losses

$

13,672

$

11,883

$

10,538

$

8,533

$

7,228

Allowance for loan and lease losses/total loans

1.05

%

0.87

%

0.78

%

0.68

%

0.59

%

Net charge-offs:

Quarter-to-date

$

205

$

37

$

169

$

125

$

295

Year-to-date

$

537

$

331

$

294

$

125

$

685

Net charge-offs to average loans

Quarter-to-date

0.02

%

0.00

%

0.01

%

0.01

%

0.03

%

Year-to-date

0.04

%

0.03

%

0.02

%

0.01

%

0.06

%

Nonperforming loans/total loans

0.72

%

0.58

%

0.63

%

0.27

%

0.28

%

Allowance for loan and lease losses/nonperforming loans

177.96

%

151.01

%

117.24

%

256.66

%

187.17

%

(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, 2020

December 31, 2019

Interest Earning Assets:

Average Balance

Interest/Dividends

Annualized
Yield/Rate

Average Balance

Interest/Dividends

Annualized
Yield/Rate

Loans

$

1,336,538

$

17,061

5.11

%

$

1,174,748

$

15,608

5.32

%

Taxable Investment Securities

250,601

916

1.46

%

165,745

975

2.35

%

Tax-exempt Investment Securities

23,216

109

2.38

%

31,831

150

2.39

%

Fed Funds Sold & Other

169,116

53

0.13

%

114,278

416

1.46

%

Total Interest Earning Assets

1,779,471

$

18,139

4.09

%

1,486,602

$

17,149

4.63

%

Nonearning Assets

112,177

111,367

Total Assets

$

1,891,648

$

1,597,969

Interest Bearing Liabilities:

Savings Deposits

$

967,355

$

705

0.29

%

758,594

1,746

0.92

%

Other Time Deposits

253,023

914

1.44

%

275,406

1,590

2.31

%

Other Borrowed Money

17,775

226

5.09

%

24,715

270

4.37

%

Fed Funds Purchased & Securities

Sold under Agreement to Repurch.

30,100

170

2.26

%

30,464

207

2.72

%

Total Interest Bearing Liabilities

$

1,268,253

$

2,015

0.64

%

$

1,089,179

$

3,813

1.40

%

Noninterest bearing Liabilities

377,791

280,027

Stockholders Equity

$

245,604

$

228,763

Net Interest Income and interest rate spread

$

16,124

3.45

%

$

13,336

3.23

%

Net Interest Margin

3.63

%

3.60

%

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, 2020

December 31, 2019

Interest Earning Assets:

Average Balance

Interest/Dividends

Annualized
Yield/Rate

Average Balance

Interest/Dividends

Annualized
Yield/Rate

Loans

$

1,313,675

$

65,317

4.98

%

$

1,129,231

$

62,213

5.51

%

Taxable Investment Securities

219,044

4,136

1.89

%

163,777

3,832

2.34

%

Tax-exempt Investment Securities

24,958

454

2.30

%

33,112

639

2.44

%

Fed Funds Sold & Other

99,304

262

0.26

%

86,971

1,622

1.86

%

Total Interest Earning Assets

1,656,981

$

70,169

4.25

%

1,413,091

$

68,306

4.85

%

Nonearning Assets

113,303

86,119

Total Assets

$

1,770,284

$

1,499,210

Interest Bearing Liabilities:

Savings Deposits

$

879,669

$

3,942

0.45

%

$

720,879

$

7,323

1.02

%

Other Time Deposits

264,827

4,696

1.77

%

265,046

5,619

2.12

%

Other Borrowed Money

21,245

980

4.61

%

25,538

1,083

4.24

%

Fed Funds Purchased & Securities

Sold under Agreement to Repurch.

32,363

775

2.39

%

29,859

734

2.46

%

Total Interest Bearing Liabilities

$

1,198,104

$

10,393

0.87

%

$

1,041,322

$

14,759

1.42

%

Noninterest bearing Liabilities

332,482

235,010

Stockholders Equity

$

239,698

$

222,878

Net Interest Income and interest rate spread

$

59,776

3.38

%

$

53,547

3.43

%

Net Interest Margin

3.62

%

3.80

%

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.

NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Non-GAAP Earnings Per Share

(in thousands of dollars, expect per share data)

Non-GAAP Three Months Ended

Non-GAAP Twelve Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

December 31,

2020

2020

2020

2020

2019

2020

2019

Net income

$

6,776

$

4,410

$

4,804

$

4,105

$

4,723

$

20,095

$

18,402

Less: Accelerated net fee income for forgiveness of PPP loans

(1,211

)

-

-

-

-

(1,211

)

-

Less: Gain on settlement of bank owned life insurance

(430

)

-

-

-

-

(430

)

-

Tax effect

254

-

-

-

-

254

-

Adjusted net income

5,389

4,410

4,804

4,105

4,723

18,708

18,402

Less: distributed earnings allocated to participating securities

(16

)

(15

)

(13

)

(13

)

(14

)

(57

)

(51

)

Less: undistributed earnings allocated to participating securities

(37

)

(19

)

(22

)

(18

)

(24

)

(96

)

(87

)

Net earnings available to common shareholders

$

5,389

$

4,376

$

4,769

$

4,074

$

4,685

$

18,555

$

18,264

Weighted average common shares outstanding including participating securities

11,177,765

11,142,797

11,129,341

11,134,870

11,137,004

11,146,270

11,113,810

Less: average unvested restricted shares

(89,150

)

(83,257

)

(80,062

)

(84,732

)

(88,711

)

(84,879

)

(83,369

)

Weighted average common shares outstanding

11,088,615

11,059,540

11,049,279

11,050,138

11,048,293

11,061,391

11,030,441

Basic earnings and diluted per share

$

0.48

$

0.40

$

0.43

$

0.37

$

0.43

$

1.68

$

1.66

Three Months

Twelve Months

December 31,

December 31,

December 31,

December 31,

Reconciliation of Efficiency Ratio

2020

2020

2020

2020

Non-GAAP

Actual

Non-GAAP

Actual

Net interest income (+)

14,785

15,996

58,565

59,776

Noninterest Income (+)

5,194

5,624

16,357

16,787

Gain on Security Sale (-)

-

-

270

270

Operating Expenses (/)

11,286

11,286

44,376

44,376

Efficiency Ratio

56.49

%

52.20

%

59.44

%

58.17

%

Three Months

Twelve Months

December 31,

December 31,

December 31,

December 31,

2020

2020

2020

2020

Reconciliation of Return on Average Assets

Non-GAAP

Actual

Non-GAAP

Actual

Net income

$

6,776

$

6,776

$

20,095

$

20,095

Less: Accelerated net fee income for forgiveness of PPP loans

(1,211

)

-

(1,211

)

-

Less: Gain on settlement of bank owned life insurance

(430

)

-

(430

)

-

Tax effect

254

-

254

-

Adjusted net income

5,389

6,776

18,708

20,095

Average Assets

1,891,648

1,891,648

1,770,284

1,770,284

ROA

1.14

%

1.43

%

1.06

%

1.14

%