Farmers & Merchants Bancorp, Inc. Reports Record 2022 First Quarter Financial Results

Rhea-AI Summary

Farmers & Merchants Bancorp (Nasdaq: FMAO) reported a robust 65.0% increase in net income for Q1 2022, reaching $8.1 million, and earnings per share rose to $0.62, up 40.9% year-over-year. Total loans surged 46.3% to $1.962 billion, while total assets climbed 34.8% to $2.686 billion. Deposits grew by 33.8% at $2.254 billion. The efficiency ratio improved to 55.44%, and the company maintained net charge-offs at 0.00% for four consecutive quarters. FMAO declared a dividend of $0.19 per share, marking an 11.8% increase, reflecting consistent shareholder returns.

Positive

• Net income increased 65.0% to $8.1 million.
• Earnings per share rose 40.9% to $0.62.
• Total loans up 46.3% to a record $1.962 billion.
• Total assets increased 34.8% to $2.686 billion.
• Deposits grew by 33.8% to $2.254 billion.
• Efficiency ratio improved to 55.44%.

Negative

• Average shares outstanding increased 16.7% due to acquisitions, impacting tangible book value per share.

ARCHBOLD, Ohio, April 20, 2022 (GLOBE NEWSWIRE) --  Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2022 first quarter ended March 31, 2022.

2022 First Quarter Financial Highlights Include (on a year-over-year basis unless noted):

• Net income increased 65.0% to a quarterly record of $8.1 million, from $4.9 million
• Earnings increased 40.9% to $0.62 per basic and diluted share, from $0.44 per basic and diluted share
• Average shares outstanding increased 16.7% as a result of the Perpetual Federal Savings Bank Acquisition
• Total loans increased 46.3% to a record $1.962 billion, and included $463,000 of PPP loans
• Organic loan growth of 22.0%, excluding PPP loans and loan balances at time of acquisitions
• Total loans increased 5.6% from $1.857 billion at December 31, 2021
• Total assets increased 34.8% to a record $2.686 billion, and up 1.8% from December 31, 2021
• Deposits increased 33.8% to a record $2.254 billion, and up 2.7% from December 31, 2021
• Net charge-offs to average loans were 0.00%, the fourth consecutive quarter at or below 0.00%
• Return on average equity increased to 11.00% from 7.87%
• Return on average tangible equity increased to 14.86% from 10.10% on a year-over-year basis
  

Lars B. Eller, President and Chief Executive Officer, stated, “F&M achieved record financial results for the first quarter, as our business benefits from 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. Organic loan growth increased 22.0% on a year-over-year basis and loans are up 5.6% from December 31, 2021. In fact, this is our third consecutive quarter of year-over-year organic loan growth over 10.0%. While we expect our growth rate to normalize in 2022, positive momentum across our business remains strong and we believe we are well positioned to grow our balance sheet and earnings throughout 2022.”

Income Statement

Net income for the 2022 first quarter ended March 31, 2022, was $8.1 million, compared to $4.9 million for the same period last year. Net income per basic and diluted share for the 2022 first quarter was $0.62, compared to $0.44 for the same period last year.

Mr. Eller continued, “Profitability is benefitting from our larger scale, strong asset quality, and prudent expense management. Our efficiency ratio improved to 55.44% during the 2022 first quarter, compared to 62.57% at March 31, 2021, and 58.76% at December 31, 2021. Strong profitability also drove higher returns, and ROAA, ROAE, and ROATCE all expanded on a year-over-year and sequential basis.”

Deposits
At March 31, 2022, total deposits were $2.254 billion, an increase of 33.8% from March 31, 2021, and an increase of 2.7% from December 31, 2021. 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 0.45% for the quarter ended March 31, 2022, compared to 0.53% for the quarter ended March 31, 2021, and 0.51% for the quarter ended December 31, 2021.

Loan Portfolio and Asset Quality
Total loans, net at March 31, 2022, increased 46.3%, or by $620.5 million to $1.962 billion, compared to $1.342 billion at March 31, 2021, and up 5.6% from $1.857 billion at December 31, 2021. The year-over-year improvement resulted primarily from the contribution of continued strong organic loan growth and the completion of both the Perpetual Federal Savings Bank, Inc. and Ossian Financial Services, Inc. acquisitions.

Loans increased 22.0% organically from the same period a year ago when not including the Perpetual and Ossian acquisitions, and the impact of PPP loans. During the 2022 first quarter, the Company processed $2.4 million of PPP loan forgiveness and principal payments received, resulting in a total of $463,000 of PPP loans within F&M’s loan portfolio at March 31, 2022.

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $8.6 million, or 0.44% of total loans at March 31, 2022, compared to $8.1 million, or 0.61% at March 31, 2021. The $500,000 year-over-year increase in nonperforming loans was primarily a result of 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.

Mr. Eller continued, “Despite the significant loan growth we have recently experienced, we have remained focused on controlling risk. Nonperforming assets have increased 3.5% over the past 12 months, despite a 46.3% increase in our loan portfolio over this period. As a result, nonperforming assets to total assets were 0.32% at March 31, 2022, compared to 0.42% at March 31, 2021. In addition, we continue to prudently fund our allowance for loan and lease losses which has increased 16.3% on a year-over-year basis. At March 31, 2022, our allowance for loan and lease losses to nonperforming loans was 198.29%, compared to 177.24% at March 31, 2021.”  

“Our record first quarter financial results reflect the power of our strategic growth plan, the value we provide our local communities, and the hard work and dedication of our team members. While uncertainty has expanded across the global economy and interest rates have started increasing, I believe 2022 will be another record year of earnings growth and value creation for our shareholders, customers, employees, and communities,” concluded Mr. Eller.

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 16.1% to $286.5 million at March 31, 2022, from $246.8 million at March 31, 2021. At March 31, 2022, the Company had a Tier 1 leverage ratio of 8.51%, compared to 10.39% at March 31, 2021.

Tangible stockholders’ equity increased to $221.6 million at March 31, 2022, compared to $195.9 million at March 31, 2021. On a per share basis, tangible stockholders’ equity at March 31, 2022, was $16.96 per share, compared to $17.50 per share at March 31, 2021. The 3.1% year-over-year decline in tangible book value per 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.

For the 2022 first quarter, the company declared cash dividends of $0.19 per share, which is an 11.8% increase over the 2021 first quarter 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 2022 first quarter, the dividend payout ratio was 30.64% compared to 38.48% 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
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.

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
(Unaudited) (in thousands of dollars, except per share data)
			Three Months Ended
			March 31, 2022				December 31, 2021				September 30, 2021			June 30, 2021			March 31, 2021
Interest Income
Loans, including fees			$	20,455			$	21,008			$	18,766		$	16,259		$	15,612
Debt securities:
U.S. Treasury and government agencies				1,023				964				924			857			751
Municipalities				300				289				284			289			308
Dividends				42				49				44			31			50
Federal funds sold				10				10				10			6			5
Other.				69				103				94			88			39
Total interest income				21,899				22,423				20,122			17,530			16,765
Interest Expense
Deposits				1,360				1,581				1,221			1,276			1,340
Federal funds purchased and securities sold
under agreements to repurchase				152				155				165			163			166
Borrowed funds				335				361				87			115			222
Subordinated notes				269				291				199			-			-
Total interest expense				2,116				2,388				1,672			1,554			1,728
Net Interest Income - Before Provision for Loan Losses				19,783				20,035				18,450			15,976			15,037
Provision for Loan Losses				580				444				659			641			1,700
Net Interest Income After Provision For Loan Losses				19,203				19,591				17,791			15,335			13,337
Noninterest Income
Customer service fees				2,648				2,417				2,242			2,198			2,814
Other service charges and fees				998				1,026				1,010			874			838
Net gain on sale of loans				697				1,074				822			955			1,046
Net gain on sale of available-for-sale securities				-				-				-			-			293
Total noninterest income				4,343				4,517				4,074			4,027			4,991
Noninterest Expense
Salaries and wages				5,502				5,761				5,442			4,591			4,390
Employee benefits				2,054				1,792				1,621			1,915			1,994
Net occupancy expense				598				532				529			546			577
Furniture and equipment				1,056				782				903			848			791
Data processing				604				1,020				1,548			428			505
Franchise taxes				418				361				372			294			446
ATM expense				532				478				460			459			449
Advertising				237				431				439			331			235
Net (gain) loss on sale of other assets owned				(5	)			13				219			227			(25	)
FDIC assessment				114				265				296			276			236
Mortgage servicing rights amortization				26				266				285			524			505
Consulting fees				178				761				256			394			223
Other general and administrative				2,179				1,964				1,951			2,227			2,033
Total noninterest expense				13,493				14,426				14,321			13,060			12,359
Income Before Income Taxes				10,053				9,682				7,544			6,302			5,969
Income Taxes				1,951				1,999				1,624			1,319			1,060
Net Income				8,102				7,683				5,920			4,983			4,909
Other Comprehensive Income (Loss) (Net of Tax):
Net unrealized gain (loss) on available-for-sale securities				(20,939	)			(5,170	)			173			786			(6,737	)
Reclassification adjustment for realized gain on sale of available-for-sale securities				-				-				-			-			(293	)
Net unrealized gain (loss) on available-for-sale securities				(20,939	)			(5,170	)			173			786			(7,030	)
Tax expense (benefit)				(4,397	)			(1,085	)			36			165			(1,476	)
Other comprehensive income (loss)				(16,542	)			(4,085	)			137			621			(5,554	)
Comprehensive Income			$	(8,440	)		$	3,598			$	6,057		$	5,604		$	(645	)
Basic and Diluted Earnings Per Share			$	0.62			$	0.59			$	0.53		$	0.44		$	0.44
Dividends Declared			$	0.19			$	0.19			$	0.18		$	0.17		$	0.17

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands of dollars, except share data)
			March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
			(Unaudited)								(Unaudited)				(Unaudited)				(Unaudited)
Assets
Cash and due from banks			$	94,118			$	135,485			$	112,875			$	93,636			$	118,139
Federal funds sold				45,404				45,338				45,203				57,483				57,361
	Total cash and cash equivalents			139,522				180,823				158,078				151,119				175,500
Interest-bearing time deposits				8,677				10,913				14,622				18,597				4,405
Securities - available-for-sale				413,996				429,931				426,717				407,500				352,974
Other securities, at cost				8,568				8,162				4,905				6,419				5,939
Loans held for sale				6,060				7,714				3,735				8,041				7,511
Loans, net				1,945,449				1,841,177				1,479,864				1,443,336				1,327,254
Premises and equipment				26,653				26,913				26,476				26,915				26,703
Goodwill				80,434				80,434				55,214				56,066				47,340
Mortgage servicing rights				3,336				3,157				3,097				3,146				3,444
Other real estate owned				-				159				167				198				148
Bank owned life insurance				27,715				27,558				27,397				27,218				25,347
Other assets				25,735				21,359				18,711				18,310				16,720
Total Assets			$	2,686,145			$	2,638,300			$	2,218,983			$	2,166,865			$	1,993,285
	Liabilities and Stockholders' Equity
Liabilities
Deposits
	Noninterest-bearing		$	497,249			$	473,689			$	438,076			$	443,863			$	384,558
	Interest-bearing
	NOW accounts			681,975				650,466				646,237				652,078				605,533
	Savings			626,787				597,828				529,532				501,687				451,043
	Time			447,586				471,479				252,383				256,445				242,717
	Total deposits			2,253,597				2,193,462				1,866,228				1,854,073				1,683,851
Federal funds purchased and
securities sold under agreements to repurchase				31,680				29,268				29,601				29,882				30,072
Federal Home Loan Bank (FHLB) advances				22,656				24,065				17,868				17,868				17,840
Other borrowings				40,000				40,000				-				-				-
Subordinated notes, net of unamortized issuance costs				34,499				34,471				34,441				-				-
Dividend payable				2,462				2,461				2,002				1,888				1,889
Accrued expenses and other liabilities				14,773				17,406				14,097				12,569				12,805
	Total liabilities			2,399,667				2,341,133				1,964,237				1,916,280				1,746,457
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value 20,000,000 shares authorized; issued and
outstanding 14,063,999 shares 3/31/22 and 12/31/21				122,886				122,674				81,382				82,259				82,030
Treasury stock - 997,916 shares 3/31/22, 997,766 shares 12/31/21				(11,739	)			(11,724	)			(11,718	)			(12,172	)			(11,962	)
Retained earnings				195,057				189,401				184,181				179,734				176,617
Accumulated other comprehensive income (loss)				(19,726	)			(3,184	)			901				764				143
	Total stockholders' equity			286,478				297,167				254,746				250,585				246,828
Total Liabilities and Stockholders' Equity			$	2,686,145			$	2,638,300			$	2,218,983			$	2,166,865			$	1,993,285

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA
			For the Three Months Ended
Selected financial data		March 31, 2022					December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Return on average assets			1.21	%	1.10	%		1.17	%			1.12	%			0.90	%			1.01	%
Return on average equity			11.00	%	7.54	%		10.94	%			9.32	%			8.00	%			7.87	%
Yield on earning assets			3.47	%	4.74	%		3.59	%			3.85	%			3.53	%			3.71	%
Cost of interest bearing liabilities			0.45	%	1.55	%		0.51	%			0.45	%			0.44	%			0.53	%
Net interest spread			3.02	%	3.19	%		3.08	%			3.40	%			3.09	%			3.18	%
Net interest margin			3.14	%	3.60	%		3.21	%			3.53	%			3.21	%			3.33	%
Efficiency			55.44	%	65.86	%		58.76	%			63.50	%			64.98	%			62.57	%
Dividend payout ratio			30.64	%	38.67	%		32.03	%			33.81	%			37.89	%			38.48	%
Tangible book value per share (1)		$	16.96		15.68		$	16.49			$	17.33			$	16.94			$	17.50
Tier 1 capital to average assets			8.51	%	11.45	%		8.47	%			9.45	%			8.78	%			10.39	%
Average Shares Outstanding			13,066,272					13,046,299				11,209,732				11,191,043				11,197,012
Loans		March 31, 2022					December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
(Dollar amounts in thousands)
Commercial real estate		$	910,839		502,137		$	848,477			$	728,852			$	691,122			$	618,754
Agricultural real estate			196,223		200,791			198,343				179,374				189,742				179,945
Consumer real estate			410,120		159,074			395,873				202,454				194,715				175,675
Commercial and industrial			216,918		130,150			208,270				194,767				216,609				202,958
Agricultural			140,709		110,270			118,368				105,580				100,756				100,022
Consumer			57,521		49,552			57,737				55,521				56,427				54,445
Other			31,573		8,167			32,089				31,096				13,549				14,088
Less: Net deferred loan fees and costs			(1,683	)				(1,738	)			(2,082	)			(4,497	)			(4,208	)
Total loans,net		$	1,962,220				$	1,857,419			$	1,495,562			$	1,458,423			$	1,341,679
Asset quality data		March 31, 2022					December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
(Dollar amounts in thousands)
Nonaccrual loans		$	8,581		3,275		$	8,076			$	6,248			$	7,031			$	8,139
Troubled debt restructuring		$	7,268		1,051		$	7,614			$	6,035			$	5,492			$	5,774
90 day past due and accruing		$	-		-		$	-			$	-			$	-			$	-
Nonperforming loans		$	8,581		3,275		$	8,076			$	6,248			$	7,031			$	8,139
Other real estate owned		$	-		351		$	159			$	167			$	198			$	148
Nonperforming assets		$	8,581		3,626		$	8,235			$	6,415			$	7,229			$	8,287
(Dollar amounts in thousands)
Allowance for loan and lease losses		$	16,771		6,759		$	16,242			$	15,698			$	15,087			$	14,425
Allowance for loan and lease losses/total loans			0.85	%	0.58	%		0.87	%			1.05	%			1.03	%			1.08	%
Net charge-offs:
Quarter-to-date		$	51		171		$	(101	)		$	48			$	(21	)		$	947
Year-to-date		$	51		426		$	874			$	974			$	926			$	947
Net charge-offs to average loans
Quarter-to-date			0.00	%	0.02	%		-0.01	%			0.00	%			0.00	%			0.07	%
Year-to-date			0.00	%	0.04	%		0.06	%			0.07	%			0.07	%			0.07	%
Nonperforming loans/total loans			0.44	%	0.28	%		0.43	%			0.42	%			0.48	%			0.61	%
Allowance for loan and lease losses/nonperforming loans			198.29	%	173.25	%		201.11	%			251.26	%			214.58	%			177.24	%
(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
		March 31, 2022									March 31, 2021
Interest Earning Assets:		Average Balance			Interest/Dividends			Annualized Yield/Rate			Average Balance			Interest/Dividends			Annualized Yield/Rate
Loans		$	1,907,478		$	20,455		4.29	%		$	1,328,571		$	15,612		4.70	%
Taxable investment securities			429,899			1,295		1.20	%			324,536			1,009		1.24	%
Tax-exempt investment securities			18,587			70		1.91	%			20,375			100		2.49	%
Fed funds sold & other			167,319			79		0.19	%			136,663			44		0.13	%
Total Interest Earning Assets			2,523,283		$	21,899		3.47	%			1,810,145		$	16,765		3.71	%
Nonearning Assets			165,064									126,579
Total Assets		$	2,688,347								$	1,936,724
Interest Bearing Liabilities:
Savings deposits		$	1,293,099		$	588		0.18	%		$	1,014,392		$	574		0.23	%
Other time deposits			459,854			772		0.67	%			242,033			766		1.27	%
Other borrowed money			63,364			335		2.11	%			17,848			222		4.98	%
Fed funds purchased & securities
sold under agreement to repurch.			29,104			152		2.09	%			30,210			166		2.20	%
Subordinated notes			34,480			269		3.12	%			-			-		0.00	%
Total Interest Bearing Liabilities		$	1,879,901		$	2,116		0.45	%		$	1,304,483		$	1,728		0.53	%
Noninterest Bearing Liabilities			513,745									382,640
Stockholders' Equity		$	294,701								$	249,601
Net Interest Income and Interest Rate Spread					$	19,783		3.02	%					$	15,037		3.18	%
Net Interest Margin								3.14	%								3.33	%
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

 

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

 

FAQ

What were the Q1 2022 earnings for Farmers & Merchants Bancorp (FMAO)?

Farmers & Merchants Bancorp reported earnings of $8.1 million for Q1 2022.

How much did FMAO's earnings per share increase in Q1 2022?

Earnings per share for FMAO increased 40.9% to $0.62 in Q1 2022.

What is the total loan growth reported by FMAO for Q1 2022?

Total loans increased 46.3% to $1.962 billion in Q1 2022.

What was the total asset value for Farmers & Merchants Bancorp at the end of Q1 2022?

Total assets reached $2.686 billion at the end of Q1 2022.

How much did FMAO declare in dividends for Q1 2022?

FMAO declared cash dividends of $0.19 per share for Q1 2022, an 11.8% increase from the previous year.