Farmers & Merchants Bancorp, Inc. Reports 2025 First-Quarter Financial Results

ARCHBOLD, Ohio, April 28, 2025 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2025 first quarter ended March 31, 2025. 2025 First Quarter Financial and Operating Highlights(at March 31, 2025 and on a year-over-year basis unless noted) 88 consecutive quarters of profitabilityTotal interest income increased 6.1% to $41.0 million, driven by a 19-basis point improvement in the yield on earning assets and a higher average loan balanceTotal loans increased by $40.5 million, or 1.6% to $2.58 billionTotal assets increased by $101.2 million, or 3.1% to $3.39 billionTotal deposits increased by $78.9 million, or 3.0% to $2.70 billionEfficiency ratio improved to 66.79%, compared to 74.08%Pre-tax, pre-provision income increased 49.6% to $9.3 million, from $6.2 millionNet income increased 29.7% to $7.0 million, or $0.51 per basic and diluted shareAsset quality remains at historically strong levels with nonperforming loans of only $4.5 million and net charge-offs to average loans of 0.01%Tier 1 leverage ratio was 8.44% Lars B. Eller, President and Chief Executive Officer, stated, “2025 is off to a solid start, reflecting the positive impacts our strategic priorities are having on our financial performance. Throughout the first quarter we made progress enhancing profitability, controlling growth, driving innovation, and achieving greater operational efficiency. Most importantly, our strong first-quarter results underscore the excellent execution by our team and F&M’s ongoing commitment to delivering local, personalized financial services to our communities in Ohio, Indiana, and Michigan.” Mr. Eller continued, “For the first quarter of 2025 our net interest margin grew 43-basis points year-over year to 3.03% and increased 19-basis points from the fourth quarter of 2024. This growth demonstrates the benefits of continued loan repricing, as well as our disciplined approach to new loan originations and strategic efforts underway to improve our cost of funds. Total revenue – defined by net interest income plus noninterest income – increased 16.7% year-over-year, while noninterest expense rose 5.2%. This favorable spread strengthened our efficiency ratio and drove a 49.6% increase in pre-tax, pre-provision income. As we continue to successfully execute against our 2025 strategic priorities, we expect continued year-over-year growth in net income.” Income StatementNet income for the 2025 first quarter ended March 31, 2025, was $7.0 million, compared to $5.4 million for the same period last year. Net income per basic and diluted share for the 2025 first quarter was $0.51, compared to $0.39 for the same period last year. DepositsAt March 31, 2025, total deposits were $2.70 billion, an increase of 3.0% from March 31, 2024. The Company’s cost of interest-bearing liabilities was 2.76% for the quarter ended March 31, 2025, compared to 3.06% for the quarter ended March 31, 2024. Mr. Eller commented, “We continue to pursue opportunities that optimize our deposit base and grow low-cost checking deposits. As a result, more expensive time-account balances have declined year-over-year by $19.5 million, while total deposits have increased by $78.9 million reflecting growth in lower cost core deposits. These trends have reduced our cost of funds, while improving our loan-to-deposit ratio.” Loan Portfolio and Asset Quality“Offices opened in 2023 continue to add new loans and new deposits at a faster pace than our legacy locations, which we believe demonstrates the need for the local community banking services F&M provides. Overall, we are experiencing stable demand across all of our markets, as a result of the addition of proven bankers to our team, our regional structure, new financial products, and growing commercial relationships. Positive demand trends allow us to control growth, expand our yield on loans, and maintain excellent asset quality. Our credit quality remains strong with nonperforming loans to total loans of just 0.17% at March 31, 2025 – the fourth quarter in a row this metric has remained below 0.20%,” continued Mr. Eller. Total loans, net at March 31, 2025, increased 1.6%, or by $40.5 million to $2.58 billion, compared to $2.54 billion at March 31, 2024. The year-over-year increase was driven primarily by higher agricultural, commercial and industrial, and commercial real estate loans, partially offset primarily by lower consumer, agricultural real estate, and consumer real estate loans. Compared to the quarter ended December 31, 2024, total loans, net at March 31, 2025, increased by 0.8% or $20.0 million. F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $4.5 million, or 0.17% of total loans at March 31, 2025, compared to $19.4 million, or 0.76% of total loans at March 31, 2024, and $3.1 million, or 0.12% at December 31, 2024. F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 51.3% of the Company’s total loan portfolio at March 31, 2025. In addition, F&M’s commercial real estate office credit exposure represented 5.4% of the Company's total loan portfolio at March 31, 2025, with a weighted average loan-to-value of approximately 63% and an average loan of approximately $965,366. F&M’s CRE portfolio included the following categories at March 31, 2025: CRE Category Dollar Balance Percent of CRE Portfolio(*) Percent of Total Loan Portfolio(*) Industrial $281,484 21.2% 10.9%Multi-family 217,903 16.4% 8.4%Retail 213,281 16.1% 8.3%Hotels 157,139 11.8% 6.1%Office 139,069 10.5% 5.4%Gas Stations 70,983 5.3% 2.7%Food Service 52,827 4.0% 2.0%Senior Living 31,400 2.4% 1.2%Development 29,907 2.3% 1.2%Auto Dealers 27,294 2.1% 1.1%Other 104,411 7.9% 4.0%Total CRE $1,325,698 100.0% 51.3% * Numbers have been rounded At March 31, 2025, the Company’s allowance for credit losses to nonperforming loans was 586.38%, compared to 127.28% at March 31, 2024. The allowance to total loans was 1.07% at March 31, 2025, compared to 1.05% at March 31, 2024. Including accretable yield adjustments, associated with the Company’s prior acquisitions, F&M’s allowance for credit losses to total loans was 1.08% at March 31, 2025, compared to 1.11% at March 31, 2024. Mr. Eller concluded, “While the near-term economic environment has become more fluid, we believe F&M is in a strong position because of the platform we have built and the strategies we are pursuing to transform our business in 2025. As a result, we continue to believe 2025 will be another good year for F&M.” Stockholders’ Equity and DividendsTotal stockholders’ equity increased 8.5% to $344.6 million, or $25.12 per share at March 31, 2025, from $317.7 million, or $23.22 per share at March 31, 2024. The Company had a Tier 1 leverage ratio of 8.44%, compared to 8.40% at March 31, 2024. Tangible stockholders’ equity increased to $263.0 million at March 31, 2025, compared to $256.5 million at March 31, 2024. On a per share basis, tangible stockholders’ equity at March 31, 2025, was $19.17 per share, compared to $18.75 per share at March 31, 2024. For the three months ended March 31, 2025, the Company declared cash dividends of $0.22125 per share, representing a 0.6% increase over the same period last year. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 30 consecutive years. For the three months ended March 31, 2025, the dividend payout ratio was 43.10% compared to 55.52% for the same period last year. About Farmers & Merchants State Bank: F&M Bank is 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 Troy, Michigan; Muncie, Indiana; and Perrysburg and Bryan, Ohio. Safe Harbor StatementFarmers & 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 SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME(Unaudited) (in thousands of dollars, except per share data) Three Months Ended March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024Interest Income Loans, including fees$37,072 $36,663 $36,873 $36,593 $35,200 Debt securities: U.S. Treasury and government agencies 2,097 1,882 1,467 1,148 1,045 Municipalities 382 384 387 389 394 Dividends 338 367 334 327 333 Federal funds sold - 24 7 7 7 Other 1,113 2,531 2,833 2,702 1,675 Total interest income 41,002 41,851 41,901 41,166 38,654 Interest Expense Deposits 13,988 15,749 16,947 16,488 15,279 Federal funds purchased and securities sold under agreements to repurchase 271 274 277 276 284 Borrowed funds 2,550 2,713 2,804 2,742 2,689 Subordinated notes 284 285 284 285 284 Total interest expense 17,093 19,021 20,312 19,791 18,536 Net Interest Income - Before Provision for Credit Losses 23,909 22,830 21,589 21,375 20,118 Provision for (Recovery of) Credit Losses - Loans 811 346 282 605 (289)Recovery of Credit Losses - Off Balance Sheet Exposures (260) (120) (267) (18) (266)Net Interest Income After Provision for Credit Losses 23,358 22,604 21,574 20,788 20,673 Noninterest Income Customer service fees 381 237 300 189 598 Other service charges and fees 1,124 1,176 1,155 1,085 1,057 Interchange income 1,421 1,322 1,315 1,330 1,429 Loan servicing income 762 771 710 513 539 Net gain on sale of loans 284 223 215 314 107 Increase in cash surrender value of bank owned life insurance 244 248 265 236 216 Net gain (loss) on sale of other assets owned (54) 22 - 49 - Total noninterest income 4,162 3,999 3,960 3,716 3,946 Noninterest Expense Salaries and wages 7,878 7,020 7,713 7,589 7,846 Employee benefits 2,404 2,148 2,112 2,112 2,171 Net occupancy expense 1,199 1,072 1,054 999 1,027 Furniture and equipment 1,278 1,032 1,472 1,407 1,353 Data processing 557 160 339 448 500 Franchise taxes 397 312 410 265 555 ATM expense 491 328 472 397 473 Advertising 503 498 597 519 530 FDIC assessment 465 505 516 507 580 Servicing rights amortization - net 127 244 219 187 168 Loan expense 228 236 244 251 229 Consulting fees 745 242 251 198 186 Professional fees 559 368 453 527 445 Intangible asset amortization 445 446 445 444 445 Other general and administrative 1,484 1,465 1,128 1,495 1,333 Total noninterest expense 18,760 16,076 17,425 17,345 17,841 Income Before Income Taxes 8,760 10,527 8,109 7,159 6,778 Income Taxes 1,808 2,146 1,593 1,477 1,419 Net Income 6,952 8,381 6,516 5,682 5,359 Other Comprehensive Income (Loss) (Net of Tax): Net unrealized gain (loss) on available-for-sale securities 6,464 (7,403) 11,664 2,531 (1,995)Reclassification adjustment for realized loss on sale of available-for-sale securities - - - - - Net unrealized gain (loss) on available-for-sale securities 6,464 (7,403) 11,664 2,531 (1,995)Tax expense (benefit) 1,358 (1,554) 2,449 531 (418)Other comprehensive income (loss) 5,106 (5,849) 9,215 2,000 (1,577)Comprehensive Income$12,058 $2,532 $15,731 $7,682 $3,782 Basic Earnings Per Share$0.51 $0.61 $0.48 $0.42 $0.39 Diluted Earnings Per Share$0.51 $0.61 $0.48 $0.42 $0.39 Dividends Declared$0.22125 $0.22125 $0.22125 $0.22 $0.22 FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (in thousands of dollars, except share data) March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 (Unaudited) (Unaudited) (Unaudited) (Unaudited)Assets Cash and due from banks$172,612 $174,855 $244,572 $191,785 $186,541 Federal funds sold 425 1,496 932 1,283 1,241 Total cash and cash equivalents 173,037 176,351 245,504 193,068 187,782 Interest-bearing time deposits 1,992 2,482 2,727 3,221 2,735 Securities - available-for-sale 438,568 426,556 404,881 365,209 347,516 Other securities, at cost 14,062 14,400 15,028 14,721 14,744 Loans held for sale 2,331 2,996 1,706 1,628 2,410 Loans, net of allowance for credit losses 2,555,552 2,536,043 2,512,852 2,534,468 2,516,687 Premises and equipment 33,163 33,828 33,779 34,507 35,007 Construction in progress - - 35 38 9 Goodwill 86,358 86,358 86,358 86,358 86,358 Loan servicing rights 5,805 5,656 5,644 5,504 5,555 Bank owned life insurance 35,116 34,872 34,624 34,359 34,123 Other assets 42,802 45,181 46,047 49,552 54,628 Total Assets$3,388,786 $3,364,723 $3,389,185 $3,322,633 $3,287,554 Liabilities and Stockholders' Equity Liabilities Deposits Noninterest-bearing$502,318 $516,904 $481,444 $479,069 $510,731 Interest-bearing NOW accounts 874,881 850,462 865,617 821,145 829,236 Savings 696,635 671,818 661,565 673,284 635,430 Time 626,450 647,581 676,187 667,592 645,985 Total deposits 2,700,284 2,686,765 2,684,813 2,641,090 2,621,382 Federal funds purchased and securities sold under agreements to repurchase 27,258 27,218 27,292 27,218 28,218 Federal Home Loan Bank (FHLB) advances 245,474 246,056 263,081 266,102 256,628 Subordinated notes, net of unamortized issuance costs 34,846 34,818 34,789 34,759 34,731 Dividend payable 2,997 2,996 2,998 2,975 2,975 Accrued expenses and other liabilities 33,326 31,659 40,832 27,825 25,930 Total liabilities 3,044,185 3,029,512 3,053,805 2,999,969 2,969,864 Commitments and Contingencies Stockholders' Equity Common stock - No par value 20,000,000 shares authorized; issued 14,564,425 shares 3/31/25 and 12/31/24; outstanding 13,718,336 shares 3/31/25 and 13,699,536 shares 12/31/24 135,407 135,565 135,193 135,829 135,482 Treasury stock - 846,089 shares 3/31/25 and 864,889 shares 12/31/24 (10,768) (10,985) (10,904) (11,006) (10,851)Retained earnings 240,079 235,854 230,465 226,430 223,648 Accumulated other comprehensive loss (20,117) (25,223) (19,374) (28,589) (30,589)Total stockholders' equity 344,601 335,211 335,380 322,664 317,690 Total Liabilities and Stockholders' Equity$3,388,786 $3,364,723 $3,389,185 $3,322,633 $3,287,554 FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIESSELECT FINANCIAL DATA For the Three Months EndedSelected financial data March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024Return on average assets 0.85% 0.99% 0.78% 0.69% 0.66%Return on average equity 8.31% 10.00% 7.93% 7.13% 6.76%Yield on earning assets 5.19% 5.20% 5.27% 5.22% 5.00%Cost of interest bearing liabilities 2.76% 3.01% 3.21% 3.18% 3.06%Net interest spread 2.43% 2.19% 2.06% 2.04% 1.94%Net interest margin 3.03% 2.84% 2.71% 2.71% 2.60%Efficiency ratio 66.79% 59.82% 67.98% 69.03% 74.08%Dividend payout ratio 43.10% 35.75% 45.99% 52.35% 55.52%Tangible book value per share $17.71 $17.74 $17.72 $16.79 $16.51 Tier 1 leverage ratio 8.44% 8.12% 8.04% 8.02% 8.40%Average shares outstanding 13,706,003 13,699,869 13,687,119 13,681,501 13,671,166 Loans March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024(Dollar amounts in thousands) Commercial real estate $1,325,698 $1,310,811 $1,301,160 $1,303,598 $1,304,400 Agricultural real estate 215,898 216,401 220,328 222,558 227,455 Consumer real estate 523,383 520,114 524,055 525,902 525,178 Commercial and industrial 278,254 275,152 260,732 268,426 256,051 Agricultural 153,607 152,080 137,252 142,909 127,670 Consumer 60,115 63,009 67,394 70,918 74,819 Other 24,985 24,978 25,916 26,449 26,776 Less: Net deferred loan fees, costs and other (1) (36) (676) 1,499 (1,022) (982)Total loans, net $2,581,904 $2,561,869 $2,538,336 $2,559,738 $2,541,367 Asset quality data March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024(Dollar amounts in thousands) Nonaccrual loans $4,494 $3,124 $2,898 $2,487 $19,391 90 day past due and accruing $- $- $- $- $- Nonperforming loans $4,494 $3,124 $2,898 $2,487 $19,391 Other real estate owned $- $- $- $- $- Nonperforming assets $4,494 $3,124 $2,898 $2,487 $19,391 Allowance for credit losses - loans $26,352 $25,826 $25,484 $25,270 $24,680 Allowance for credit losses - off balance sheet credit exposures 1,281 1,541 1,661 1,928 1,946 Total allowance for credit losses $27,633 $27,367 $27,145 $27,198 $26,626 Total allowance for credit losses/total loans 1.07% 1.07% 1.07% 1.06% 1.05%Adjusted credit losses with accretable yield/total loans 1.08% 1.08% 1.10% 1.10% 1.11%Net charge-offs: Quarter-to-date $285 $4 $68 $15 $55 Year-to-date $285 $142 $138 $70 $55 Net charge-offs to average loans Quarter-to-date 0.01% 0.00% 0.00% 0.00% 0.00%Year-to-date 0.01% 0.01% 0.01% 0.00% 0.00%Nonperforming loans/total loans 0.17% 0.12% 0.11% 0.10% 0.76%Allowance for credit losses/nonperforming loans 586.38% 826.70% 879.37% 1016.08% 127.28%NPA coverage ratio 586.38% 826.70% 879.37% 1016.08% 127.28% (1) Includes carrying value adjustments of $1.7 million as of March 31, 2025, $1.1 million as of December 31, 2024, $3.0 million as of September 30, 2024, $612 thousand as of June 30, 2024, and $969 thousand as of March 31, 2024 related to interest rate swaps associated with fixed rate loans FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIESAVERAGE 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, 2025 March 31, 2024Interest Earning Assets:Average Balance Interest/Dividends Annualized Yield/Rate Average Balance Interest/Dividends Annualized Yield/RateLoans$2,578,531 $37,072 5.75% $2,577,114 $35,200 5.46%Taxable investment securities 458,519 2,739 2.39% 384,928 1,686 1.75%Tax-exempt investment securities 18,310 78 2.16% 21,109 86 2.06%Fed funds sold & other 105,770 1,113 4.21% 110,388 1,682 6.09%Total Interest Earning Assets 3,161,130 $41,002 5.19% 3,093,539 $38,654 5.00% Nonearning Assets 166,630 159,240 Total Assets$3,327,760 $3,252,779 Interest Bearing Liabilities: Savings deposits$1,543,665 $8,564 2.22% $1,443,530 $9,407 2.61%Other time deposits 627,498 5,424 3.46% 650,580 5,872 3.61%Other borrowed money 245,734 2,550 4.15% 263,280 2,689 4.09%Fed funds purchased & securities sold under agreement to repurchase 27,480 271 3.94% 28,458 284 3.99%Subordinated notes 34,828 284 3.26% 34,712 284 3.27%Total Interest Bearing Liabilities$2,479,205 $17,093 2.76% $2,420,560 $18,536 3.06% Noninterest Bearing Liabilities 509,190 514,986 Stockholders' Equity$339,365 $317,233 Net Interest Income and Interest Rate Spread $23,909 2.43% $20,118 1.94% Net Interest Margin 3.03% 2.60% Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIESAVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES(in thousands of dollars, except percentages) For the Three Months Ended March 31, 2025 For the Three Months Ended March 31, 2024 As Reported Excluding Acc/AmortDifference As Reported Excluding Acc/AmortDifference $Yield $Yield $Yield $Yield $Yield $YieldInterest Earning Assets: Loans$37,0725.75% $36,4685.66% $6040.09% $35,2005.46% $34,5255.36% $675 0.10%Taxable investment securities 2,7392.39% 2,7392.39% -0.00% 1,6861.75% 1,6861.75% - 0.00%Tax-exempt investment securities 782.16% 782.16% -0.00% 862.06% 862.06% - 0.00%Fed funds sold & other 1,1134.21% 1,1134.21% -0.00% 1,6826.09% 1,6826.09% - 0.00%Total Interest Earning Assets 41,0025.19% 40,3985.11% 6040.08% 38,6545.00% 37,9794.92% 675 0.08% Interest Bearing Liabilities: Savings deposits$8,5642.22% $8,5642.22% $-0.00% $9,4072.61% $9,4072.61% $- 0.00%Other time deposits 5,4243.46% 5,4243.46% -0.00% 5,8723.61% 5,8723.61% - 0.00%Other borrowed money 2,5504.15% 2,5474.15% 30.00% 2,6894.09% 2,7074.11% (18)-0.02%Federal funds purchased and securities sold under agreement to repurchase 2713.94% 2713.94% -0.00% 2843.99% 2843.99% - 0.00%Subordinated notes 2843.26% 2843.26% -0.00% 2843.27% 2843.27% - 0.00%Total Interest Bearing Liabilities 17,0932.76% 17,0902.76% 3-0.00% 18,5363.06% 18,5543.07% (18)-0.01% Interest/Dividend income/yield 41,0025.19% 40,3985.11% 6040.08% 38,6545.00% 37,9794.92% 675 0.08%Interest Expense / yield 17,0932.76% 17,0902.76% 3-0.00% 18,5363.06% 18,5543.07% (18)-0.01%Net Interest Spread 23,9092.43% 23,3082.35% 6010.08% 20,1181.94% 19,4251.85% 693 0.09%Net Interest Margin 3.03% 2.95% 0.08% 2.60% 2.52% 0.08% Company Contact:Investor and Media Contact:Lars B. EllerPresident and Chief Executive Officer Farmers & Merchants Bancorp, Inc.(419) 446-2501 leller@fm.bankAndrew M. BergerManaging DirectorSM Berger & Company, Inc. (216) 464-6400andrew@smberger.com

Farmers & Merchants Bancorp, Inc. Reports 2025 First-Quarter Financial Results

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