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Farmers & Merchants Bancorp, Inc. Reports 2024 Second-Quarter and Year-to-Date Financial Results
Source: Nasdaq GlobeNewswire / 01 Aug 2024 15:30:01 America/Chicago
ARCHBOLD, Ohio, Aug. 01, 2024 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2024 second quarter and year-to-date ended June 30, 2024.
2024 Second Quarter Financial and Operating Highlights (on a year-over-year basis unless noted):
- 85 consecutive quarters of profitability
- Net income was $5.7 million, or $0.42 per basic and diluted share
- Proceeds from collateral sales of $6.4 million were received from an agricultural based relationship. The proceeds enabled paydowns and payoffs on nonaccrual loans during the second quarter that included $5.3 million in principal paydown, and $1.0+ million pre-tax benefit to interest and fee income
- Net interest income after provision for credit losses increased 6.8% from December 31, 2023, primarily due to a stabilizing net interest margin, solid asset quality and the collection of a nonaccrual loan
- Net interest margin, adjusted for the collection of a nonaccrual loan, improved 2 basis points from the 2024 first quarter
- Total loans increased 1.75% to $2.56 billion at June 30, 2024
- Total cash and cash equivalents increased by $121.9 million, or 171% to $193.1 million
- Total assets increased 5.6% to a record $3.32 billion
- Deposits increased 7.0% to a record $2.64 billion
- F&M joins OHIO HOMEBUYER PLUS Saver program, helping perspective Ohio home buyers save for a home purchase over the next five years by offering a higher than market interest rate to qualified depositors
- Stockholders’ equity increased 5.9% to a record $322.7 million
- Asset quality at historically strong levels with nonperforming loans of only $2.5 million at June 30, 2024, compared to $19.4 million at March 31, 2024 and $6.3 million at June 30, 2023
- Allowance for credit losses was 1,016% of nonperforming loans
Lars B. Eller, President and Chief Executive Officer, stated, “Our second quarter results reflect the talent of our associates, as we continue to work hard to drive operating improvements at F&M, serve our local Ohio, Indiana, and Michigan communities, and position F&M for long-term success. As a result, F&M produced its 85th consecutive quarter of profitability, ended the quarter with a historically low level of nonperforming loans, and we are on pace to pay a record amount of dividends per share in 2024.”
Mr. Eller continued, “As expected, profitability and asset quality benefited during the second quarter from a refinance and paydown on a $16.2 million agricultural based relationship that was in nonaccrual status. Even without this added benefit, core levels of profitability, including our net interest margin, improved over the past three months as we remain focused on maintaining excellent underwriting standards, managing our cost of funds, and controlling operating expenses. In addition, I am encouraged by the year-over-year and sequential improvement in our efficiency ratio as we continue to pursue opportunities that manage operating costs and expand productivity.”
Income Statement
Net income for the 2024 second quarter ended June 30, 2024, was $5.7 million, compared to $6.0 million for the same period last year. Net income per basic and diluted share for the 2024 second quarter was $0.42, compared to $0.44 for the same period last year. Net income for the 2024 first half ended June 30, 2024, was $11.0 million, compared to $12.5 million for the same period last year. Net income per basic and diluted share for the 2024 first half was $0.81, compared to $0.92 for the same period last year.“I am pleased with the progress we are making in a difficult operating environment managing our cost of funds, loan pricing, deposit growth and overall net interest margin. Since the December 31, 2023 quarter, our yield on earning assets has increased by 29 basis points, compared to a 16 basis point increase in our cost of interest bearing liabilities. In fact, over the past three consecutive quarters, our yield on earning assets has outpaced our cost of interest bearing liabilities. We expect this trend will continue as more of our loan portfolio reprices in 2024. In addition, with expected flat loan growth in 2024, we continue to enhance liquidity levels and at June 30, 2024, we had $193.1 million in cash and cash equivalents, compared to $71.2 million at June 30, 2023. We also continue to make progress growing deposits with a prudent focus on managing the interest rates on deposit accounts. On a year-over-year basis, total deposits increased 7.0% to a record $2.64 billion,” continued Mr. Eller.
Deposits
At June 30, 2024, total deposits were $2.64 billion, an increase of 7.0% from June 30, 2023. The Company’s cost of interest-bearing liabilities was 3.18% for the quarter ended June 30, 2024, compared to 2.35% for the quarter ended June 30, 2023, and 3.02% for the 2023 fourth quarter ended December 31, 2023.Loan Portfolio and Asset Quality
Mr. Eller concluded, “Our asset quality remains at historically strong levels, with only $2.5 million of nonperforming assets, compared to total assets of $3.32 billion at June 30, 2024. With nonperforming assets at unprecedented low levels, we expect trends to normalize in the coming quarters, especially as economic uncertainty remains elevated. In addition, we are starting to see some early signs of stress within our consumer lending and home loan portfolios, as higher insurance premiums and larger property taxes compound inflationary trends that have impacted consumers over the past several years. We continue to proactively monitor our loan portfolio for any signs of stress, including engaging independent third parties to review our loan portfolio. Overall, F&M is in a strong financial and operating position that we believe is well positioned to create lasting value for our communities, customers, team members, and shareholders.”Total loans, net at June 30, 2024, increased 1.75%, or by $43.9 million to $2.56 billion, compared to $2.52 billion at June 30, 2023. The year-over-year improvement resulted from the contribution of continued organic loan growth.
F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $2.5 million, or 0.10% of total loans at June 30, 2024, compared to $6.3 million, or 0.25% of total loans at June 30, 2023, and $22.4 million, or 0.87% at December 31, 2023. As expected, one large relationship in nonaccrual status last quarter was made current in the second quarter, resulting in a $5.3 million paydown in principal on the relationship, with another $3.8 million in principal balances expected to be retired in the third quarter.
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, 2024. In addition, F&M’s commercial real estate office credit exposure represented 5.3% of the Company's total loan portfolio at June 30, 2024, with a weighted average loan-to-value of approximately 63.1% and an average loan of approximately $900,000.
F&M’s CRE portfolio included the following categories at June 30, 2024:
CRE Category Dollar
BalancePercent of CRE Portfolio(*) Percent of Total Loan Portfolio(*) Industrial $ 261,436 20.1% 10.2% Multi-family $ 225,638 17.3% 8.8% Retail $ 221,011 17.0% 8.6% Hotels $ 144,548 11.1% 5.6% Office $ 135,607 10.4% 5.3% Gas Stations $ 63,077 4.8% 2.5% Food Service $ 45,976 3.5% 1.8% Development $ 34,757 2.7% 1.4% Senior Living $ 30,050 2.3% 1.2% Auto Dealers $ 25,025 1.9% 1.0% Other $ 116,473 8.9% 4.5% Total CRE $ 1,303,598 100.0% 50.9% * Numbers have been rounded
At June 30, 2024, the Company’s allowance for credit losses to nonperforming loans was 1,016%, compared to 395.71% at June 30, 2023, and 111.95% at December 31, 2023. The allowance to total loans was 0.99% at June 30, 2024, compared to 0.99% at June 30, 2023. Including accretable yield adjustments, associated with the Company’s recent acquisitions, F&M’s allowance for credit losses to total loans was 1.10% at June 30, 2024, compared to 1.20% at June 30, 2023.
Stockholders’ Equity and Dividends
Total stockholders’ equity increased 5.9% to $322.7 million at June 30, 2024, from $304.7 million at June 30, 2023. At June 30, 2024, the Company had a Tier 1 leverage ratio of 8.02%, compared to 9.85% at June 30, 2023.Based on a regulatory basis, tangible stockholders’ equity increased to $259.9 million at June 30, 2024, compared to $248.3 million at June 30, 2023. On a per share basis, tangible stockholders’ equity at June 30, 2024, was $19.00 per share, compared to $18.21 per share at June 30, 2023.
For the six months ended June 30, 2024, the Company has declared cash dividends of $0.44 per share, which is a 4.8% increase over the same period last year. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 29 consecutive years. For the six months ended June 30, 2024, the dividend payout ratio was 53.89% compared to 45.44% for the same period last year.
About Farmers & Merchants State Bank:
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. The Michigan footprint includes Oakland County, and we have Loan Production Offices in West Bloomfield, Michigan; Muncie, Indiana; and Perrysburg 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, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 June 30, 2024 June 30, 2023 Interest Income Loans, including fees $ 36,593 $ 35,200 $ 34,493 $ 33,783 $ 31,365 $ 71,793 $ 61,068 Debt securities: U.S. Treasury and government agencies 1,148 1,045 987 1,005 1,030 2,193 2,098 Municipalities 389 394 397 392 401 783 809 Dividends 327 333 365 246 148 660 271 Federal funds sold 7 7 8 6 9 14 30 Other 2,702 1,675 2,020 927 424 4,377 903 Total interest income 41,166 38,654 38,270 36,359 33,377 79,820 65,179 Interest Expense Deposits 16,488 15,279 15,015 13,323 10,434 31,767 18,585 Federal funds purchased and securities sold under agreements to repurchase 276 284 293 349 427 560 832 Borrowed funds 2,742 2,689 2,742 2,741 2,113 5,431 3,393 Subordinated notes 285 284 285 284 285 569 569 Total interest expense 19,791 18,536 18,335 16,697 13,259 38,327 23,379 Net Interest Income - Before Provision for Credit Losses 21,375 20,118 19,935 19,662 20,118 41,493 41,800 Provision for Credit Losses - Loans 605 (289 ) 278 460 143 316 960 Provision for Credit Losses - Off Balance Sheet Credit Exposures (18 ) (266 ) 189 (76 ) (129 ) (284 ) (67 ) Net Interest Income After Provision for Credit Losses 20,788 20,673 19,468 19,278 20,104 41,461 40,907 Noninterest Income Customer service fees 189 598 415 248 369 787 669 Other service charges and fees 1,085 1,057 1,090 1,133 1,092 2,142 2,120 Interchange income 1,330 1,429 1,310 1,266 1,323 2,759 2,742 Loan servicing income 513 539 666 502 1,179 1,052 3,237 Net gain on sale of loans 314 107 230 294 108 421 175 Increase in cash surrender value of bank owned life insurance 236 216 216 221 201 452 397 Net loss on sale of available-for-sale securities - - - - - - (891 ) Total noninterest income 3,667 3,946 3,927 3,664 4,272 7,613 8,449 Noninterest Expense Salaries and wages 7,589 7,846 6,981 6,777 6,500 15,435 13,157 Employee benefits 2,112 2,171 1,218 2,066 2,071 4,283 4,236 Net occupancy expense 999 1,027 1,187 950 840 2,026 1,696 Furniture and equipment 1,407 1,353 1,370 1,189 1,211 2,760 2,463 Data processing 448 500 785 840 796 948 1,522 Franchise taxes 265 555 308 434 379 820 745 ATM expense 397 473 665 640 683 870 1,306 Advertising 519 530 397 865 830 1,049 1,344 Net (gain) loss on sale of other assets owned (49 ) - 86 49 - (49 ) - FDIC assessment 507 580 594 586 496 1,087 802 Servicing rights amortization - net 187 168 182 106 164 355 323 Loan expense 251 229 246 241 233 480 568 Consulting fees 198 186 192 179 231 384 461 Professional fees 527 445 331 358 325 972 741 Intangible asset amortization 444 445 446 445 444 889 889 Other general and administrative 1,495 1,333 1,532 1,319 1,641 2,828 3,522 Total noninterest expense 17,296 17,841 16,520 17,044 16,844 35,137 33,775 Income Before Income Taxes 7,159 6,778 6,875 5,898 7,532 13,937 15,581 Income Taxes 1,477 1,419 1,332 1,121 1,531 2,896 3,114 Net Income 5,682 5,359 5,543 4,777 6,001 11,041 12,467 Other Comprehensive Income (Loss) (Net of Tax): Net unrealized gain (loss) on available-for-sale securities 2,531 (1,995 ) 13,261 (4,514 ) (5,996 ) 536 2,034 Reclassification adjustment for realized loss on sale of available-for-sale securities - - - - - - 891 Net unrealized gain (loss) on available-for-sale securities 2,531 (1,995 ) 13,261 (4,514 ) (5,996 ) 536 2,925 Tax expense (benefit) 531 (418 ) 2,784 (947 ) (1,260 ) 113 614 Other comprehensive income (loss) 2,000 (1,577 ) 10,477 (3,567 ) (4,736 ) 423 2,311 Comprehensive Income $ 7,682 $ 3,782 $ 16,020 $ 1,210 $ 1,265 $ 11,464 $ 14,778 Basic Earnings Per Share $ 0.42 $ 0.39 $ 0.41 $ 0.35 $ 0.44 $ 0.81 $ 0.92 Diluted Earnings Per Share $ 0.42 $ 0.39 $ 0.41 $ 0.35 $ 0.44 $ 0.81 $ 0.92 Dividends Declared $ 0.22 $ 0.22 $ 0.22 $ 0.21 $ 0.21 $ 0.44 $ 0.42 FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of dollars, except share data) June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Assets Cash and due from banks $ 191,785 $ 186,541 $ 140,917 $ 151,711 $ 69,760 Federal funds sold 1,283 1,241 1,284 1,471 1,433 Total cash and cash equivalents 193,068 187,782 142,201 153,182 71,193 Interest-bearing time deposits 3,221 2,735 2,740 2,989 3,485 Securities - available-for-sale 365,209 347,516 358,478 348,255 363,225 Other securities, at cost 14,721 14,744 17,138 16,995 17,535 Loans held for sale 1,628 2,410 1,576 1,039 1,459 Loans, net of allowance for credit losses of $25,270 6/30/24 and $25,024 12/31/23 2,534,468 2,516,687 2,556,167 2,504,329 2,490,883 Premises and equipment 34,507 35,007 35,790 31,723 30,398 Construction in progress 38 9 8 3,044 2,290 Goodwill 86,358 86,358 86,358 86,358 86,358 Loan servicing rights 5,504 5,555 5,648 5,687 5,635 Bank owned life insurance 34,359 34,123 33,907 33,691 33,470 Other assets 49,552 54,628 43,218 47,388 41,512 Total Assets $ 3,322,633 $ 3,287,554 $ 3,283,229 $ 3,234,680 $ 3,147,443 Liabilities and Stockholders' Equity Liabilities Deposits Noninterest-bearing $ 479,069 $ 510,731 $ 528,465 $ 505,358 $ 488,678 Interest-bearing NOW accounts 821,145 829,236 816,790 778,133 770,113 Savings 673,284 635,430 599,191 591,344 581,192 Time 667,592 645,985 663,017 700,445 628,757 Total deposits 2,641,090 2,621,382 2,607,463 2,575,280 2,468,740 Federal funds purchased and securities sold under agreements to repurchase 27,218 28,218 28,218 30,527 51,567 Federal Home Loan Bank (FHLB) advances 266,102 256,628 265,750 266,286 266,818 Subordinated notes, net of unamortized issuance costs 34,759 34,731 34,702 34,673 34,644 Dividend payable 2,975 2,975 2,974 2,838 2,834 Accrued expenses and other liabilities 27,825 25,930 27,579 21,892 18,177 Total liabilities 2,999,969 2,969,864 2,966,686 2,931,496 2,842,780 Commitments and Contingencies Stockholders' Equity Common stock - No par value 20,000,000 shares authorized; issued and outstanding 14,564,425 shares 6/30/24 and 12/31/23 135,829 135,482 135,515 135,171 135,647 Treasury stock - 884,481 shares 6/30/24 and 899,784 shares 12/31/23 (11,006 ) (10,851 ) (11,040 ) (11,008 ) (11,298 ) Retained earnings 226,430 223,648 221,080 218,510 216,236 Accumulated other comprehensive loss (28,589 ) (30,589 ) (29,012 ) (39,489 ) (35,922 ) Total stockholders' equity 322,664 317,690 316,543 303,184 304,663 Total Liabilities and Stockholders' Equity $ 3,322,633 $ 3,287,554 $ 3,283,229 $ 3,234,680 $ 3,147,443 FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES SELECT FINANCIAL DATA For the Three Months Ended For the Six Months Ended Selected financial data June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 June 30, 2024 June 30, 2023 Return on average assets 0.69 % 0.66 % 0.67 % 0.59 % 0.77 % 0.67 % 0.81 % Return on average equity 7.13 % 6.76 % 7.27 % 6.26 % 7.84 % 6.94 % 8.21 % Yield on earning assets 5.22 % 5.00 % 4.93 % 4.79 % 4.53 % 5.11 % 4.47 % Cost of interest bearing liabilities 3.18 % 3.06 % 3.02 % 2.82 % 2.35 % 3.12 % 2.10 % Net interest spread 2.04 % 1.94 % 1.91 % 1.97 % 2.18 % 1.99 % 2.37 % Net interest margin 2.71 % 2.60 % 2.57 % 2.59 % 2.73 % 2.66 % 2.87 % Efficiency 69.03 % 74.08 % 69.23 % 73.07 % 69.06 % 71.50 % 66.04 % Dividend payout ratio 52.35 % 55.52 % 54.23 % 60.07 % 47.22 % 53.89 % 45.44 % Tangible book value per share (1) $ 19.00 $ 18.75 $ 18.60 $ 18.36 $ 18.21 Tier 1 leverage ratio 8.02 % 8.40 % 8.20 % 8.02 % 9.85 % Average shares outstanding 13,681,501 13,671,166 13,665,773 13,650,823 13,632,440 13,676,333 13,624,094 Loans June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 (Dollar amounts in thousands) Commercial real estate $ 1,303,598 $ 1,304,400 $ 1,337,766 $ 1,304,118 $ 1,280,902 Agricultural real estate 222,558 227,455 223,791 225,672 230,837 Consumer real estate 525,902 525,178 521,895 512,973 506,866 Commercial and industrial 268,426 256,051 254,935 250,891 253,444 Agricultural 142,909 127,670 132,560 123,735 128,344 Consumer 70,918 74,819 79,591 83,024 88,312 Other 26,449 26,776 30,136 31,083 28,996 Less: Net deferred loan fees, costs and other (2) (1,022 ) (982 ) 517 (1,890 ) (1,908 ) Total loans,net $ 2,559,738 $ 2,541,367 $ 2,581,191 $ 2,529,606 $ 2,515,793 Asset quality data June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 (Dollar amounts in thousands) Nonaccrual loans $ 2,487 $ 19,391 $ 22,353 $ 22,447 $ 6,295 90 day past due and accruing $ - $ - $ - $ - $ - Nonperforming loans $ 2,487 $ 19,391 $ 22,353 $ 22,447 $ 6,295 Other real estate owned $ - $ - $ - $ - $ - Nonperforming assets $ 2,487 $ 19,391 $ 22,353 $ 22,447 $ 6,295 Allowance for credit losses $ 25,270 $ 24,680 $ 25,024 $ 25,277 $ 24,910 Allowance for unfunded 1,928 1,946 2,212 2,023 2,099 Total Allowance for Credit Losses $ 27,198 $ 26,626 $ 27,236 $ 27,300 $ 27,009 Allowance for credit losses/total loans 0.99 % 0.97 % 0.97 % 1.00 % 0.99 % Adjusted credit losses with accretable yield/total loans 1.10 % 1.11 % 1.13 % 1.18 % 1.20 % Net charge-offs: Quarter-to-date $ 15 $ 55 $ 454 $ 93 $ (133 ) Year-to-date $ 70 $ 55 $ 551 $ 97 $ (73 ) Net charge-offs to average loans Quarter-to-date 0.00 % 0.00 % 0.02 % 0.00 % -0.01 % Year-to-date 0.00 % 0.00 % 0.02 % 0.00 % -0.00 % Nonperforming loans/total loans 0.10 % 0.76 % 0.87 % 0.89 % 0.25 % Allowance for credit losses/nonperforming loans 1016.08 % 127.28 % 111.95 % 112.61 % 395.71 % NPA coverage ratio 1016.08 % 127.28 % 111.95 % 112.61 % 395.71 % (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) Includes carrying value adjustments of $612 thousand as of June 30, 2024, $969 thousand as of March 31, 2024 and $2.7 million as of December 31, 2023 related to interest rate swaps associated with fixed rate loans 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, 2024 June 30, 2023 Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate Loans $ 2,556,417 $ 36,593 5.73 % $ 2,476,795 $ 31,365 5.07 % Taxable investment securities 391,439 1,782 1.82 % 399,257 1,486 1.49 % Tax-exempt investment securities 20,907 82 1.99 % 24,259 93 1.94 % Fed funds sold & other 187,682 2,709 5.77 % 49,160 433 3.52 % Total Interest Earning Assets 3,156,445 $ 41,166 5.22 % 2,949,471 $ 33,377 4.53 % Nonearning Assets 156,239 169,599 Total Assets $ 3,312,684 $ 3,119,070 Interest Bearing Liabilities: Savings deposits $ 1,492,831 $ 10,193 2.73 % $ 1,356,798 $ 6,238 1.84 % Other time deposits 668,583 6,295 3.77 % 612,929 4,196 2.74 % Other borrowed money 265,229 2,742 4.14 % 215,884 2,113 3.92 % Fed funds purchased & securities sold under agreement to repurch. 27,721 276 3.98 % 39,966 427 4.27 % Subordinated notes 34,740 285 3.28 % 34,625 285 3.29 % Total Interest Bearing Liabilities $ 2,489,104 $ 19,791 3.18 % $ 2,260,202 $ 13,259 2.35 % Noninterest Bearing Liabilities 504,821 552,867 Stockholders' Equity $ 318,759 $ 306,001 Net Interest Income and Interest Rate Spread $ 21,375 2.04 % $ 20,118 2.18 % Net Interest Margin 2.71 % 2.73 % 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, 2024 June 30, 2023 Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate Loans $ 2,566,765 $ 71,793 5.60 % $ 2,437,148 $ 61,068 5.01 % Taxable investment securities 388,225 3,468 1.79 % 398,383 2,985 1.50 % Tax-exempt investment securities 21,196 168 2.01 % 25,303 193 1.93 % Fed funds sold & other 149,035 4,391 5.89 % 58,853 933 3.17 % Total Interest Earning Assets 3,125,221 $ 79,820 5.11 % 2,919,687 $ 65,179 4.47 % Nonearning Assets 157,510 174,702 Total Assets $ 3,282,731 $ 3,094,389 Interest Bearing Liabilities: Savings deposits $ 1,467,669 $ 19,600 2.67 % $ 1,378,518 $ 11,181 1.62 % Other time deposits 659,581 12,167 3.69 % 596,168 7,404 2.48 % Other borrowed money 264,217 5,431 4.11 % 174,171 3,393 3.90 % Fed funds purchased & securities sold under agreement to repurch. 28,089 560 3.99 % 39,409 832 4.22 % Subordinated notes 34,726 569 3.28 % 34,610 569 3.29 % Total Interest Bearing Liabilities $ 2,454,282 $ 38,327 3.12 % $ 2,222,876 $ 23,379 2.10 % Noninterest Bearing Liabilities 510,453 567,878 Stockholders' Equity $ 317,996 $ 303,635 Net Interest Income and Interest Rate Spread $ 41,493 1.99 % $ 41,800 2.37 % Net Interest Margin 2.66 % 2.87 % 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, 2024 For the Three Months Ended June 30, 2023 As Reported Excluding Acc/Amort Difference As Reported Excluding Acc/Amort Difference $ Yield $ Yield $ Yield $ Yield $ Yield $ Yield Interest Earning Assets: Loans $ 36,593 5.73 % $ 35,914 5.62 % $ 679 0.11 % $ 31,365 5.07 % $ 30,697 4.96 % $ 668 0.11 % Taxable investment securities 1,782 1.82 % 1,782 1.82 % - 0.00 % 1,486 1.49 % 1,486 1.49 % - 0.00 % Tax-exempt investment securities 82 1.99 % 82 1.99 % - 0.00 % 93 1.94 % 93 1.94 % - 0.00 % Fed funds sold & other 2,709 5.77 % 2,709 5.77 % - 0.00 % 433 3.52 % 433 3.52 % - 0.00 % Total Interest Earning Assets 41,166 5.22 % 40,487 5.13 % 679 0.09 % 33,377 4.53 % 32,709 4.44 % 668 0.09 % Interest Bearing Liabilities: Savings deposits $ 10,193 2.73 % $ 10,193 2.73 % $ - 0.00 % $ 6,238 1.84 % $ 6,238 1.84 % $ - 0.00 % Other time deposits 6,295 3.77 % 6,295 3.77 % - 0.00 % 4,196 2.74 % 4,291 2.80 % (95 ) -0.06 % Other borrowed money 2,742 4.14 % 2,747 4.14 % (5 ) 0.00 % 2,113 3.92 % 2,130 3.95 % (17 ) -0.03 % Federal funds purchased and securities sold under agreement to repurchase 276 3.98 % 276 3.98 % - 0.00 % 427 4.27 % 427 4.27 % - 0.00 % Subordinated notes 285 3.28 % 285 3.28 % - 0.00 % 285 3.29 % 285 3.29 % - 0.00 % Total Interest Bearing Liabilities 19,791 3.18 % 19,796 3.18 % (5 ) 0.00 % 13,259 2.35 % 13,371 2.37 % (112 ) -0.02 % Interest/Dividend income/yield 41,166 5.22 % 40,487 5.13 % 679 0.09 % 33,377 4.53 % 32,709 4.44 % 668 0.09 % Interest Expense / yield 19,791 3.18 % 19,796 3.18 % (5 ) 0.00 % 13,259 2.35 % 13,371 2.37 % (112 ) -0.02 % Net Interest Spread 21,375 2.04 % 20,691 1.95 % 684 0.09 % 20,118 2.18 % 19,338 2.07 % 780 0.11 % Net Interest Margin 2.71 % 2.62 % 0.09 % 2.73 % 2.63 % 0.10 % For the Six Months Ended June 30, 2024 For the Six Months Ended June 30, 2023 As Reported Excluding Acc/Amort Difference As Reported Excluding Acc/Amort Difference $ Yield $ Yield $ Yield $ Yield $ Yield $ Yield Interest Earning Assets: Loans $ 71,793 5.60 % $ 70,439 5.49 % $ 1,354 0.11 % $ 61,068 5.01 % $ 59,733 4.90 % $ 1,335 0.11 % Taxable investment securities 3,468 1.79 % 3,468 1.79 % - 0.00 % 2,985 1.50 % 2,985 1.50 % - 0.00 % Tax-exempt investment securities 168 2.01 % 168 2.01 % - 0.00 % 193 1.93 % 193 1.93 % - 0.00 % Fed funds sold & other 4,391 5.89 % 4,391 5.89 % - 0.00 % 933 3.17 % 933 3.17 % - 0.00 % Total Interest Earning Assets 79,820 5.11 % 78,466 5.03 % 1,354 0.08 % 65,179 4.47 % 63,844 4.38 % 1,335 0.09 % Interest Bearing Liabilities: Savings deposits $ 19,600 2.67 % $ 19,600 2.67 % $ - 0.00 % $ 11,181 1.62 % $ 11,181 1.62 % $ - 0.00 % Other time deposits 12,167 3.69 % 12,167 3.69 % - 0.00 % 7,404 2.48 % 7,958 2.67 % (554 ) -0.19 % Other borrowed money 5,431 4.11 % 5,454 4.13 % (23 ) -0.02 % 3,393 3.90 % 3,428 3.94 % (35 ) -0.04 % Federal funds purchased and securities sold under agreement to repurchase 560 3.99 % 560 3.99 % - 0.00 % 832 4.22 % 832 4.22 % - 0.00 % Subordinated notes 569 3.28 % 569 3.28 % - 0.00 % 569 3.29 % 569 3.29 % - 0.00 % Total Interest Bearing Liabilities 38,327 3.12 % 38,350 3.13 % (23 ) -0.01 % 23,379 2.10 % 23,968 2.16 % (589 ) -0.06 % Interest/Dividend income/yield 79,820 5.11 % 78,466 5.03 % 1,354 0.08 % 65,179 4.47 % 63,844 4.38 % 1,335 0.09 % Interest Expense / yield 38,327 3.12 % 38,350 3.13 % (23 ) -0.01 % 23,379 2.10 % 23,968 2.16 % (589 ) -0.06 % Net Interest Spread 41,493 1.99 % 40,116 1.90 % 1,377 0.09 % 41,800 2.37 % 39,876 2.22 % 1,924 0.15 % Net Interest Margin 2.66 % 2.57 % 0.09 % 2.87 % 2.74 % 0.13 % 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, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Shares Outstanding 13,679,944 13,634,912 13,679,944 13,634,912 Tangible Equity Equity $ 322,664 $ 304,663 $ 322,664 $ 304,663 Goodwill 86,358 86,358 86,358 86,358 Other Intangible 6,658 8,437 6,658 8,437 Comprehensive Loss Adjustment* - - 28,589 35,922 CECL Adjustment** - - 1,685 2,528 Tangible Equity $ 229,648 $ 209,868 $ 259,922 $ 248,318 Shares Outstanding 13,680 13,635 13,680 13,635 Tangible Book Equity per Share $ 16.79 $ 15.39 $ 19.00 $ 18.21 Actual Average Regulatory Average Year to Date Year to Date June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Net Income $ 11,041 $ 12,467 $ 11,041 $ 12,467 Acquisition Costs - Tax Adjusted - 147 - 147 Average Shares Outstanding 13,676,333 13,624,094 13,676,333 13,624,094 Average Tangible Equity Average Equity $ 317,996 $ 303,635 $ 317,996 $ 303,635 Average Goodwill 86,358 86,358 86,358 86,358 Average Other Intangible 7,167 8,942 7,167 8,942 Average Comprehensive Loss Adjustment* - - 31,346 34,921 Average CECL Adjustment** - - 1,685 2,528 Average Tangible Equity $ 224,471 $ 208,335 $ 257,502 $ 245,784 Average Shares Outstanding 13,676 13,624 13,676 13,624 Average Tangible Book Equity per Share $ 16.41 $ 15.29 $ 18.83 $ 18.04 Return on Average Tangible Equity 9.84 % 11.97 % 8.58 % 10.14 % Return on Average Tangible Equity w/o Acquisition 9.84 % 12.11 % 8.58 % 10.26 % *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. The Bank has elected to spread the capital adjustment over three years. The first year permits 75% of the capital adjustment and the second year permits 50% 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.bankAndrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
andrew@smberger.com