• Farmers & Merchants Bancorp, Inc. Reports 2023 Third-Quarter and Year-to-Date Financial Results

    Source: Nasdaq GlobeNewswire / 26 Oct 2023 16:30:01   America/New_York

    ARCHBOLD, Ohio, Oct. 26, 2023 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2023 third quarter and year-to-date September 30, 2023.

    2023 Third Quarter Financial and Operating Highlights (on a year-over-year basis unless noted):

    • 82 consecutive quarters of profitability
    • Net income was $4.8 million, or $0.35 per basic and diluted share
    • Stockholders’ equity increased 8.1% to $303.2 million
    • Regulatory tangible book value per share increased 2.8% to $18.36 per share
    • Total loans were a record of $2.53 billion and increased 7.2% from $2.36 billion at December 31, 2022
    • Total assets increased 16.2% to a record $3.23 billion
    • Deposits increased 4.3% to a record $2.58 billion
    • Asset quality remains strong as nonperforming loans were 0.89% of total loans
    • Net charge-offs to average loans were 0.00%
    • Allowance for credit losses was 112.61% of nonperforming loans
    • Tier 1 leverage ratio decreased to 8.02% from 9.11% last year
    • Strategic investments to support long-term growth continue as F&M has opened new offices, unveiled new branding and a new logo, launched new deposit products, and implemented new features across its website and online banking platform

    Lars B. Eller, President and Chief Executive Officer, stated, “Throughout 2023, we have been focused on executing against our strategic growth plan, while simultaneously navigating a challenging banking environment. I am pleased with the progress we are making as F&M opened two full-service offices in Oxford and Toledo, Ohio last quarter and since the end of the third quarter, the Bank has opened additional offices in Fort Wayne, Indiana and Birmingham, Michigan. We have also recently launched a new shared services group formation, invested in new internal audit and marketing capabilities, and restructured our HR department.”

    Mr. Eller continued, “With most of the planned investments behind us, we are focused on scaling our new offices by expanding relationships within these new and existing markets. Early indications are encouraging and reflect F&M’s strong team of local bankers. As a result of our efforts across our new and existing offices, third-quarter deposits increased 4.3% from the second quarter to a record $2.58 billion, which included a 3.3% increase in non-interest-bearing deposits. We expect future deposit growth over the next quarters as our growth strategies accelerate and we benefit from new checking accounts that have been opened since the start of the year.”

    Income Statement
    Net income for the 2023 third quarter ended September 30, 2023, was $4.8 million, compared to $9.0 million for the same period last year. Net income per basic and diluted share for the 2023 third quarter was $0.35, compared to $0.68 for the same period last year. Net income for the 2023 nine months ended September 30, 2023, was $17.2 million, compared to $25.3 million for the same period last year. Net income per basic and diluted share for the 2023 nine months was $1.26, compared to $1.94 for the same period last year.

    “The rapid rise in the Federal Funds Rate continued to impact our cost of funds and increase the competition for deposits. As a result, our cost of interest-bearing liabilities has increased to 2.82% at September 30, 2023, from 0.68% at September 30, 2022. Our loan portfolio has also lagged in capturing sufficient yield to match the higher cost of funds mainly due to the timing to reprice our commercial real estate adjustable-rate mortgages. 13.3% of the loan portfolio will be subject to repricing next quarter with 22.3% subject to repricing in the next twelve months. These trends during the third quarter caused a 12.9% year-over-year decline in net interest income and impacted overall profitability. As we navigate a challenging rate environment over the near term, we continue to believe we are well positioned for net income growth to re-accelerate in 2024 and beyond, as we benefit from continued strong asset quality, and the contribution of our growth initiatives,” continued Mr. Eller.

    Deposits
    At September 30, 2023, total deposits were $2.58 billion, an increase of 12.8% from September 30, 2022, and an increase of 4.3% from December 31, 2022. The Company’s cost of interest-bearing liabilities was 2.82% for the quarter ended September 30, 2023, compared to 0.68% for the quarter ended September 30, 2022, and 1.32% for the quarter ended December 31, 2022.

    At September 30, 2023, F&M’s average deposit account had an average balance of $25,426. In addition, uninsured deposits to total deposits were approximately 9.1% for the quarter ended September 30, 2023, and the percentage of uninsured by the FDIC was 18.84%.  

    Loan Portfolio and Asset Quality
    Total loans, net at September 30, 2023, increased 18.1%, or by $3.87 million to $2.53 billion, compared to $2.14 billion at September 30, 2022, and up 7.2% from $2.36 billion at December 31, 2022. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of the Peoples acquisition. Not including the Peoples acquisition, total net loans increased 13.2% organically, or by $282.8 million from the same period a year ago.

    F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $22.4 million, or 0.89% of total loans at September 30, 2023, compared to $5.5 million, or 0.26% at September 30, 2022. At September 30, 2023, nonperforming loans increased by $16.2 million from June 30, 2023, which was primarily due to one agricultural relationship where the Bank is well collateralized and does not foresee a loss.

    F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 51.6% of the Company’s total loan portfolio at September 30, 2023. In addition, F&M’s commercial real estate office credit exposure represented 5.1% of the Company's total loan portfolio at September 30, 2023, with a weighted average loan-to-value of approximately 64% and an average loan of $870,000.

    F&M’s CRE portfolio included the following categories at September 30, 2023:


    CRE Category    		 Dollar
    Balance    		 
    Percent of CRE Portfolio(*)    		 
    Percent of Total Loan Portfolio(*)
    Multi-family $        241,804 18.5% 9.5%
    Industrial $        228,644 17.5% 9.0%
    Retail $        212,383 16.3% 8.4%
    Hotels $        133,579 10.2% 5.3%
    Office $        129,619 9.9% 5.1%
    Gas Stations $        61,484 4.7% 2.4%
    Food Service $        49,578 3.8% 2.0%
    Mixed Use $        39,842 3.1% 1.6%
    Senior Living $        35,788 2.7% 1.4%
    Other $        171,387 13.1% 6.8%
    Total CRE $        1,304,118 100.0% 51.4%

    * Numbers have been rounded

    At September 30, 2023, the Company’s allowance for credit losses to nonperforming loans was 112.61%, compared to 365.44% at September 30, 2022. The allowance to total loans was 1.00% at September 30, 2023, compared to 0.93% at September 30, 2022. As a result of F&M’s recent acquisitions, the Company had an accretable yield adjustment of $4.6 million at September 30, 2023, which further enhances F&M’s allowance, compared to $6.0 million at September 30, 2022. Including the accretable yield adjustment, F&M’s allowance for credit losses to total loans was 1.18% at September 30, 2023, compared to 1.21% at September 30, 2022.

    Mr. Eller concluded, “At September 30, 2023, we saw nonperforming loans increase to 0.89% primarily due to one agricultural relationship where the Bank is well collateralized and does not foresee a loss. As we work through this credit, we are closely monitoring our loan portfolio for signs of stress, but overall, we expect our conservative credit culture and pricing will allow us to maintain excellent asset quality throughout various economic cycles. In addition, at September 30, 2023, we had the lowest level of loans over 30 days past due this year.   While we continue to believe 2023 will be a transitional year, we believe we are well positioned to emerge from this period with increased market share and higher profitability and I look forward to reporting on our success in the coming quarters. Our financial performance ratios reflect the pressure on the net interest margin and the cost of the strategic investments we have made. We are cognizant of the short-term expense and are confident it will enable long-term gains.”

    Stockholders’ Equity and Dividends
    Total stockholders’ equity increased 8.1% to $303.2 million at September 30, 2023, from $280.6 million at September 30, 2022. At September 30, 2023, the Company had a Tier 1 leverage ratio of 8.02%, compared to 9.11% at September 30, 2022.

    Based on a regulatory basis, tangible stockholders’ equity increased to $250.9 million at September 30, 2023, compared to $234.1 million at September 30, 2022. On a per share basis, tangible stockholders’ equity at September 30, 2023, was $18.36 per share, compared to $17.86 per share at September 30, 2022.

    For the nine months ended September 30, 2023, the Company has declared cash dividends of $0.63 per share, which is a 4.6% increase over the same period last year. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for over 28 consecutive years. For the nine months ended September 30, 2023, the dividend payout ratio was 60.07% compared to 30.45% 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 F&M has Loan Production Offices in West Bloomfield, Michigan; Muncie, Indiana; 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.

    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


    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES 
    CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME 
    (Unaudited) (in thousands of dollars, except per share data) 
      
       Three Months Ended  Nine Months Ended 
       September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 September 30, 2023 September 30, 2022 
    Interest Income                
    Loans, including fees  $33,783  $31,365  $29,703  $27,302  $24,119  $94,851  $66,962  
    Debt securities:                
    U.S. Treasury and government agencies   1,005   1,030   1,068   1,118   1,049   3,103   3,107  
    Municipalities   392   401   408   420   373   1,201   995  
    Dividends   246   148   123   126   93   517   192  
    Federal funds sold   6   9   21   2   -   36   19  
    Other   927   424   479   524   213   1,830   382  
    Total interest income   36,359   33,377   31,802   29,492   25,847   101,538   71,657  
    Interest Expense                
    Deposits   13,323   10,434   8,151   4,978   2,166   31,908   4,905  
    Federal funds purchased and securities sold                
    under agreements to repurchase   349   427   405   463   416   1,181   734  
    Borrowed funds   2,741   2,113   1,280   1,209   398   6,134   951  
    Subordinated notes   284   285   284   285   284   853   837  
    Total interest expense   16,697   13,259   10,120   6,935   3,264   40,076   7,427  
    Net Interest Income - Before Provision for Credit Losses*   19,662   20,118   21,682   22,557   22,583   61,462   64,230  
    Provision for Credit Losses - Loans*    460   143   817   755   1,637   1,420   3,845  
    Provision for Credit Losses - Off Balance Sheet Credit Exposures*  (76)  (129)  62   -   -   (143)  -  
    Net Interest Income After Provision for Credit Losses*  19,278   20,104   20,803   21,802   20,946   60,185   60,385  
    Noninterest Income                
    Customer service fees   2,208   2,361   2,447   2,862   2,300   7,016   7,096  
    Other service charges and fees   1,162   1,803   2,554   1,115   1,105   5,519   3,111  
    Net gain on sale of loans   294   108   67   165   327   469   1,188  
    Net loss on sale of available-for-sale securities   -   -   (891)                                     -                                    - (891)  -  
    Total noninterest income   3,664   4,272   4,177   4,142   3,732   12,113   11,395  
    Noninterest Expense                
    Salaries and wages   6,777   6,500   6,657   6,353   5,479   19,934   16,347  
    Employee benefits   2,066   2,071   2,165   1,911   1,392   6,302   4,992  
    Net occupancy expense   950   840   856   753   693   2,646   1,813  
    Furniture and equipment   1,189   1,211   1,252   1,096   1,047   3,652   3,111  
    Data processing   840   796   726   1,917   781   2,362   2,039  
    Franchise taxes   434   379   366   (45)  254   1,179   1,429  
    ATM expense   640   683   623   561   580   1,946   1,656  
    Advertising   865   830   514   531   578   2,209   1,115  
    Net (gain) loss on sale of other assets owned   49   -   -   12                                    - 49   (271) 
    FDIC assessment   586   496   306   250   271   1,388   655  
    Mortgage servicing rights amortization - net   106   164   159   110   (50)  429   35  
    Consulting fees   179   231   230   637   254   640   665  
    Other general and administrative   2,363   2,643   3,077   2,964   2,192   8,083   6,613  
    Total noninterest expense   17,044   16,844   16,931   17,050   13,471   50,819   40,199  
    Income Before Income Taxes   5,898   7,532   8,049   8,894   11,207   21,479   31,581  
    Income Taxes   1,121   1,531   1,583   1,706   2,253   4,235   6,254  
    Net Income   4,777   6,001   6,466   7,188   8,954   17,244   25,327  
    Other Comprehensive Income (Loss) (Net of Tax):                
    Net unrealized gain (loss) on available-for-sale securities  (4,514)  (5,996)  8,030   (628)  (8,197)  (2,480)  (43,738) 
    Reclassification adjustment for realized loss on sale of available-for-sale securities   -   -   891   -   -   891   -  
    Net unrealized gain (loss) on available-for-sale securities  (4,514)  (5,996)  8,921   (628)  (8,197)  (1,589)  (43,738) 
    Tax expense (benefit)   (947)  (1,260)  1,874   (132)  (1,721)  (333)  (9,185) 
    Other comprehensive income (loss)   (3,567)  (4,736)  7,047   (496)  (6,476)  (1,256)  (34,553) 
    Comprehensive Income (Loss)  $1,210  $1,265  $13,513  $6,692  $2,478  $15,988  $(9,226) 
    Basic Earnings Per Share  $0.35  $0.44  $0.47  $0.53  $0.68  $1.26  $1.94  
    Diluted Earnings Per Share  $0.35  $0.44  $0.47  $0.53  $0.68  $1.26  $1.94  
    Dividends Declared  $0.2100  $0.2100  $0.2100  $0.2100  $0.2100  $0.6300  $0.6025  
                     
    *ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method.         


    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited) (in thousands of dollars, except share data)
     
       September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022
       (Unaudited) (Unaudited) (Unaudited)   (Unaudited)
    Assets           
              Cash and due from banks $151,711  $69,760  $62,780  $83,085  $69,680 
              Federal funds sold  1,471   1,433   1,545   1,324   990 
     Total cash and cash equivalents  153,182   71,193   64,325   84,409   70,670 
                
              Interest-bearing time deposits  2,989   3,485   4,435   4,442   5,187 
              Securities - available-for-sale  348,255   363,225   372,975   390,789   395,485 
              Other securities, at cost  16,995   17,535   11,543   9,799   8,227 
              Loans held for sale  1,039   1,459   951   827   2,182 
              Loans, net  2,504,329   2,490,883   2,422,018   2,336,074   2,122,626 
              Premises and equipment  31,723   30,398   28,679   28,381   26,484 
              Construction in progress  3,044   2,290   1,565   278                                    -
              Goodwill  86,358   86,358   86,358   86,358   80,434 
              Loan servicing rights  5,687   5,635   4,985   3,549   3,583 
              Bank owned life insurance  33,691   33,470   33,269   33,073   28,051 
              Other assets  47,388   41,512   38,972   37,372   40,831 
                
    Total Assets $3,234,680  $3,147,443  $3,070,075  $3,015,351  $2,783,760 
                
     Liabilities and Stockholders' Equity          
    Liabilities          
              Deposits          
     Noninterest-bearing $505,358  $488,678  $520,145  $532,794  $506,928 
     Interest-bearing          
          NOW accounts  778,133   770,113   800,230   750,887   705,888 
          Savings  591,344   581,192   590,854   627,203   607,375 
          Time  700,445   628,757   601,939   557,980   462,845 
     Total deposits  2,575,280   2,468,740   2,513,168   2,468,864   2,283,036 
                
              Federal funds purchased and securities          
                   sold under agreements to repurchase  30,527   51,567   30,496   54,206   55,802 
              Federal Home Loan Bank (FHLB) advances  266,286   266,818   164,327   127,485   102,147 
              Other borrowings  -   -   -   10,000   10,000 
              Subordinated notes, net of unamortized issuance costs  34,673   34,644   34,615   34,586   34,557 
              Dividend payable  2,838   2,834   2,831   2,832   2,727 
              Accrued expenses and other liabilities  21,892   18,177   18,881   19,238   14,913 
     Total liabilities  2,931,496   2,842,780   2,764,318   2,717,211   2,503,182 
                
    Commitments and Contingencies          
                
    Stockholders' Equity          
              Common stock - No par value 20,000,000 shares authorized; issued and        
                  outstanding 14,564,425 shares 9/30/23 and 12/31/22  135,171   135,647   135,241   135,497   121,811 
              Treasury stock - 898,843 shares 9/30/23 and 956,003 shares 12/31/22 (11,008)  (11,298)  (11,310)  (11,573)  (11,547)
              Retained earnings  218,510   216,236   213,012   212,449   208,051 
              Accumulated other comprehensive loss  (39,489)  (35,922)  (31,186)  (38,233)  (37,737)
                      Total stockholders' equity  303,184   304,663   305,757   298,140   280,578 
                
    Total Liabilities and Stockholders' Equity $3,234,680  $3,147,443  $3,070,075  $3,015,351  $2,783,760 
                


    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    SELECT FINANCIAL DATA
                         
       For the Three Months EndedFor the Nine Months Ended
    Selected financial data September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 September 30, 2023 September 30, 2022
    Return on average assets  0.59%  0.77%  0.84%  0.96%  1.31% 0.73%  1.25%
    Return on average equity  6.26%  7.84%  8.59%  10.00%  12.53% 7.52%  11.72%
    Yield on earning assets  4.79%  4.53%  4.41%  4.18%  4.00% 4.57%  3.76%
    Cost of interest bearing liabilities  2.82%  2.35%  1.85%  1.32%  0.68% 2.35%  0.53%
    Net interest spread  1.97%  2.18%  2.56%  2.86%  3.32% 2.22%  3.23%
    Net interest margin  2.59%  2.73%  3.01%  3.20%  3.49% 2.77%  3.37%
    Efficiency  73.07%  69.06%  63.53%  50.46%  51.19% 68.24%  53.16%
    Dividend payout ratio  60.07%  47.22%  43.79%  39.39%  30.45% 49.50%  40.58%
    Tangible book value per share (1) $18.36  $18.21  $17.92  $17.69  $17.86      
    Tier 1 leverage ratio  8.02%  9.85%  8.36%  8.39%  9.11%     
    Average shares outstanding  13,650,823   13,632,440   13,615,655   13,606,876   13,083,145  13,633,101   13,071,859 
                         
    Loans September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022     
    (Dollar amounts in thousands)                    
    Commercial real estate $1,304,118  $1,280,902  $1,225,315  $1,152,603  $1,063,661      
    Agricultural real estate  225,672   230,837   227,897   220,819   205,089      
    Consumer real estate  512,973   506,866   502,974   494,423   416,001      
    Commercial and industrial  250,891   253,444   241,598   242,360   229,388      
    Agricultural  123,735   128,344   131,467   128,733   128,615      
    Consumer  83,024   88,312   89,588   89,147   70,602      
    Other  31,083   28,996   29,316   29,818   30,662      
      Less: Net deferred loan fees and costs  (1,890)  (1,908)  (1,503)  (1,516)  (1,402)     
    Total loans,net $2,529,606  $2,515,793  $2,446,652  $2,356,387  $2,142,616      
                         
                         
    Asset quality data September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022     
    (Dollar amounts in thousands)                    
    Nonaccrual loans $22,447  $6,295  $7,717  $4,689  $5,470      
    90 day past due and accruing $-  $-  $-  $-  $-      
    Nonperforming loans $22,447  $6,295  $7,717  $4,689  $5,470      
    Other real estate owned $-  $-  $-  $-  $-      
    Nonperforming assets $22,447  $6,295  $7,717  $4,689  $5,470      
                         
                         
    Allowance for credit losses (2) $25,277  $24,910  $24,507  $20,313  $19,990      
    Accretable yield adjustment  4,565   5,209   5,754   6,427   5,959      
    Adjusted credit losses with accretable yield included (2) $29,842  $30,119  $30,261  $26,740  $25,949      
    Allowance for credit losses/total loans (2)  1.00%  0.99%  1.00%  0.86%  0.93%     
    Adjusted credit losses with accretable yield/total loans (2) 1.18%  1.20%  1.24%  1.13%  1.21%     
    Net charge-offs:                    
       Quarter-to-date $93  $(133) $60  $431  $71      
       Year-to-date $97  $(73) $60  $529  $97      
    Net charge-offs to average loans                    
       Quarter-to-date  0.00%  -0.01%  0.00%  0.02%  0.00%     
       Year-to-date  0.00%  -0.00%  0.00%  0.03%  0.00%     
    Nonperforming loans/total loans  0.89%  0.25%  0.32%  0.20%  0.26%     
    Allowance for credit losses/nonperforming loans (2)  112.61%  395.71%  319.22%  273.67%  365.44%     
                         
    (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) ASU 2016-13 adopted during the first quarter of 2023; therefore, prior period's provision amount reflects the incurred loss method.         
                         


    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
    (in thousands of dollars, except percentages)
               
                 
      For the Three Months Ended For the Three Months Ended
      September 30, 2023 September 30, 2022
    Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate
    Loans $2,536,885 $33,783 5.33% $2,082,486 $24,119 4.63%
    Taxable investment securities  393,910  1,559 1.58%  422,250  1,426 1.35%
    Tax-exempt investment securities  23,986  84 1.77%  25,169  89 1.79%
    Fed funds sold & other  85,515  933 4.36%  58,266  213 1.46%
    Total Interest Earning Assets  3,040,296 $36,359 4.79%  2,588,171 $25,847 4.00%
                 
    Nonearning Assets  180,193      150,044    
                 
    Total Assets $3,220,489     $2,738,215    
                 
    Interest Bearing Liabilities:            
    Savings deposits $1,367,168 $7,673 2.24% $1,328,344 $1,586 0.48%
    Other time deposits  667,880  5,650 3.38%  423,668  580 0.55%
    Other borrowed money  266,467  2,741 4.11%  60,455  398 2.63%
    Fed funds purchased & securities            
      sold under agreement to repurch.  34,128  349 4.09%  63,388  416 2.63%
    Subordinated notes  34,654  284 3.28%  34,538  284 3.29%
    Total Interest Bearing Liabilities $2,370,297 $16,697 2.82% $1,910,393 $3,264 0.68%
                 
    Noninterest Bearing Liabilities  544,801      542,077    
                 
    Stockholders' Equity $305,391     $285,745    
                 
    Net Interest Income and Interest Rate Spread   $19,662 1.97%   $22,583 3.32%
                 
    Net Interest Margin     2.59%     3.49%
                 
        Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts  
                 
                 
      For the Nine Months Ended For the Nine Months Ended
      September 30, 2023 September 30, 2022
    Interest Earning Assets: Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/Rate
    Loans $2,470,770 $94,851 5.12% $1,997,081 $66,962 4.47%
    Taxable investment securities  396,917  4,544 1.53%  424,882  4,065 1.28%
    Tax-exempt investment securities  24,865  277 1.88%  21,794  229 1.77%
    Fed funds sold & other  67,869  1,866 3.67%  101,922  401 0.52%
    Total Interest Earning Assets  2,960,421 $101,538 4.57%  2,545,679 $71,657 3.76%
                 
    Nonearning Assets  176,568      158,378    
                 
    Total Assets $3,136,989     $2,704,057    
                 
    Interest Bearing Liabilities:            
    Savings deposits $1,373,110 $18,854 1.83% $1,315,793 $2,951 0.30%
    Other time deposits  620,071  13,054 2.81%  439,534  1,954 0.59%
    Other borrowed money  204,927  6,134 3.99%  54,184  951 2.34%
    Fed funds purchased & securities            
      sold under agreement to repurch.  37,649  1,181 4.18%  42,584  734 2.30%
    Subordinated notes  34,625  853 3.28%  34,509  837 3.23%
    Total Interest Bearing Liabilities $2,270,382 $40,076 2.35% $1,886,604 $7,427 0.53%
                 
    Noninterest Bearing Liabilities  561,001      529,439    
                 
    Stockholders' Equity $305,606     $288,014    
                 
    Net Interest Income and Interest Rate Spread   $61,462 2.22%   $64,230 3.23%
                 
    Net Interest Margin     2.77%     3.37%
                 
        Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts  
                 


    FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
    NON-GAAP RECONCILIATION OF TANGIBLE BOOK VALUE
             
             
      Actual End of Period Regulatory End of Period
    Non-GAAP Reconciliation of Tangible Book ValueYear to Date Year to Date
      September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
             
    Shares Outstanding  13,665,582   13,107,500   13,665,582   13,107,500 
             
    Tangible Equity        
      Equity $303,184  $280,578  $303,184  $280,578 
      Goodwill  86,358   80,434   86,358   80,434 
      Other Intangible  7,992   3,744   7,992   3,744 
    Comprehensive Loss Adjustment*  -   -   39,489   37,737 
    CECL Adjustment**  -   -   2,528   - 
    Tangible Equity $208,834  $196,400  $250,851  $234,137 
    Shares Outstanding  13,666   13,108   13,666   13,108 
    Tangible Book Equity per Share $ 15.28  $ 14.98  $ 18.36  $ 17.86 
             
             
      Actual Average Regulatory Average
      Year to Date Year to Date
      September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
             
    Net Income $17,244  $25,327  $17,244  $25,327 
    Acquisition Costs - Tax Adjusted  147   463   147   463 
             
    Average Shares Outstanding  13,633,101   13,071,859   13,633,101   13,071,859 
             
    Average Tangible Equity        
      Average Equity $305,606  $288,014  $305,606  $288,014 
      Average Goodwill  86,358   80,434   86,358   80,434 
      Average Other Intangible  8,717   4,119   8,717   4,119 
    Average Comprehensive Loss Adjustment*  -   -   35,497   21,181 
    Average CECL Adjustment**  -   -   2,528   - 
    Average Tangible Equity $210,531  $203,461  $248,556  $224,642 
    Average Shares Outstanding  13,633   13,072   13,633   13,072 
    Average Tangible Book Equity per Share $ 15.44  $ 15.56  $ 18.23  $ 17.19 
             
    Return on Average Tangible Equity  10.92%  16.60%  9.25%  15.03%
    Return on Average Tangible Equity w/o Acquisition 11.01%  16.90%  9.33%  15.31%
             
             
    *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; therefore, prior period's provision amount reflects the incurred loss method and
    the Bank has elected to spread the Capital adjustment over three years. The first year permits 75% of the capital adjustment to be removed
    from the calculation of tangible equity for regulatory purposes.      


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