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

    Source: Nasdaq GlobeNewswire / 14 Feb 2022 16:30:01   America/New_York

    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 agencies964  924 857 751  695   3,496  3,369 
    Municipalities289  284 289 308  295   1,170  1,079 
    Dividends49  44 31 50  35   174  142 
    Federal funds sold10  10 6 5  5   31  20 
    Other.103  94 88 39  48   324  242 
    Total interest income22,423  20,122 17,530 16,765  18,139   76,840  70,169 
    Interest Expense                   
    Deposits1,581  1,221 1,276 1,340  1,619   5,418  8,638 
    Federal funds purchased and securities sold                   
    under agreements to repurchase155  165 163 166  170   649  775 
    Borrowed funds361  87 115 222  226   785  980 
    Subordinated notes291  199 - -  -   490  - 
    Total interest expense2,388  1,672 1,554 1,728  2,015   7,342  10,393 
    Net Interest Income - Before Provision for Loan Losses20,035  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 Losses19,591  17,791 15,335 13,337  14,129   66,054  52,795 
    Noninterest Income                   
    Customer service fees2,417  2,242 2,198 2,814  2,750   9,671  8,893 
    Other service charges and fees1,026  1,010 874 838  980   3,748  3,602 
    Net gain on sale of loans1,074  822 955 1,046  1,894   3,897  4,022 
    Net gain on sale of available-for-sale securities-  - - 293  -   293  270 
    Total noninterest income4,517  4,074 4,027 4,991  5,624   17,609  16,787 
    Noninterest Expense                   
    Salaries and wages5,761  5,442 4,591 4,390  5,068   20,184  18,488 
    Employee benefits1,792  1,621 1,915 1,994  1,140   7,322  5,601 
    Net occupancy expense532  529 546 577  585   2,184  2,271 
    Furniture and equipment782  903 848 791  760   3,324  3,143 
    Data processing1,020  1,548 428 505  428   3,501  1,768 
    Franchise taxes361  372 294 446  241   1,473  1,346 
    ATM expense478  460 459 449  456   1,846  1,690 
    Advertising431  439 331 235  353   1,436  1,332 
    Net (gain) loss on sale of other assets owned13  219 227 (25) 20   434  7 
    FDIC assessment265  296 276 236  223   1,073  633 
    Mortgage servicing rights amortization266  285 524 505  247   1,580  1,031 
    Consulting fees761  256 394 223  407   1,634  968 
    Other general and administrative1,964  1,951 2,227 2,033  1,358   8,175  6,098 
    Total noninterest expense14,426  14,321 13,060 12,359  11,286   54,166  44,376 
    Income Before Income Taxes9,682  7,544 6,302 5,969  8,467   29,497  25,206 
    Income Taxes1,999  1,624 1,319 1,060  1,691   6,002  5,111 
    Net Income7,683  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 sold45,338  45,203  57,483  57,361  77,427 
    Total cash and cash equivalents180,823  158,078  151,119  175,500  175,706 
                   
    Interest-bearing time deposits10,913  14,622  18,597  4,405  4,653 
    Securities - available-for-sale429,931  426,717  407,500  352,974  307,812 
    Other securities, at cost8,162  4,905  6,419  5,939  5,939 
    Loans held for sale7,714  3,735  8,041  7,511  7,740 
    Loans, net1,841,177  1,479,864  1,443,336  1,327,254  1,289,318 
    Premises and equipment26,913  26,476  26,915  26,703  27,063 
    Goodwill80,434  55,214  56,066  47,340  47,340 
    Mortgage servicing rights3,157  3,097  3,146  3,444  3,320 
    Other real estate owned159  167  198  148  71 
    Bank owned life insurance27,558  27,397  27,218  25,347  25,208 
    Other assets21,359  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 accounts650,466  646,237  652,078  605,533  542,317 
    Savings597,828  529,532  501,687  451,043  455,145 
    Time471,479  252,383  256,445  242,717  247,553 
    Total deposits2,193,462  1,866,228  1,854,073  1,683,851  1,596,162 
                   
    Federal funds purchased and              
    securities sold under agreements to repurchase29,268  29,601  29,882  30,072  30,239 
    Federal Home Loan Bank (FHLB) advances24,065  17,868  17,868  17,840  17,861 
    Other borrowings40,000  -  -  -  - 
    Subordinated notes, net of unamortized issuance costs34,471  34,441  -  -  - 
    Dividend payable2,461  2,002  1,888  1,889  1,889 
    Accrued expenses and other liabilities17,406  14,097  12,569  12,805  14,233 
    Total liabilities2,341,133  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 12/31/20122,674  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 earnings189,401  184,181  179,734  176,617  173,591 
    Accumulated other comprehensive income (loss)(3,184) 901  764  143  5,697 
    Total stockholders' equity297,167  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 securities421,676 1,228 1.16% 250,601 916 1.46%
    Tax-exempt investment securities18,303 74 2.05% 23,216 109 2.38%
    Fed funds sold & other218,481 113 0.21% 169,116 53 0.13%
    Total Interest Earning Assets2,502,402 $22,423 3.59% 1,779,471 $18,139 4.09%
                  
    Nonearning Assets125,930      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 deposits481,119 814 0.68% 253,023 914 1.44%
    Other borrowed money64,008 361 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 notes34,451 291 3.38% - - 0.00%
    Total Interest Bearing Liabilities$1,871,195 $2,388 0.51% $1,268,253 $2,015 0.64%
                  
    Noninterest Bearing Liabilities476,122      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 securities377,887 4,514 1.19% 219,044 4,136 1.89%
    Tax-exempt investment securities18,365 326 2.25% 24,958 454 2.30%
    Fed funds sold & other187,003 355 0.19% 99,304 262 0.26%
    Total Interest Earning Assets2,105,343 $76,840 3.66% 1,656,981 $70,169 4.25%
                  
    Nonearning Assets124,649      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 deposits306,600 2,951 0.96% 264,827 4,696 1.77%
    Other borrowed money29,479 785 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 notes14,777 490 3.32% - - 0.00%
    Total Interest Bearing Liabilities$1,526,323 $7,342 0.48% $1,198,104 $10,393 0.87%
                  
    Noninterest Bearing Liabilities445,144      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

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