|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
None
|
Not Applicable
|
Not Applicable
|
Large accelerated filer ☐
|
|
Non-accelerated filer ☐
|
Smaller reporting company
|
Emerging growth company
|
PART I
|
Page
|
|
3
|
||
Item 1.
|
4
|
|
Item 1A.
|
21
|
|
Item 1B.
|
35
|
|
Item 2.
|
35
|
|
Item 3.
|
35
|
|
Item 4.
|
35
|
|
PART II
|
||
Item 5.
|
36
|
|
Item 6.
|
40
|
|
Item 7.
|
40 | |
Item 7A.
|
66
|
|
Item 8.
|
69
|
|
Item 9.
|
122 |
|
Item 9A.
|
122
|
|
Item 9B.
|
124
|
|
Item 9C.
|
124
|
|
PART III
|
||
Item 10.
|
125
|
|
Item 11.
|
125
|
|
Item 12.
|
125 |
|
Item 13.
|
125
|
|
Item 14.
|
126
|
|
PART IV
|
||
Item 15.
|
126
|
|
Item 16.
|
127
|
|
128
|
Item 1. |
Business
|
• |
The Sacramento MSA (Sacramento County Only), with branches in Sacramento, Elk Grove, Galt and Walnut Grove. This county had a Population of 1.6 million and a Per Capita Income of approximately $36,152. The MSA includes significant
employment in the following sectors: government, education & health trade, and transportation & utilities. Unemployment was at 3.5%.
|
• |
The Stockton-Lodi MSA, with branches in Lodi, Linden, Stockton, Lockeford and Manteca. This MSA had a Population of 0.79 million and a Per Capita Income of approximately $30,628. The MSA includes significant employment in the following
sectors: trade, transportation & utilities, government, and education & health services. Unemployment was at 5.2%.
|
• |
The Vallejo-Fairfield MSA (Rio Vista Only, census tract 2535.01 & 2535.02), with a branch in Rio Vista. This census tract had a Population of approximately 10,000 and a Per Capita Income of approximately $44,012. The city includes
significant employment in the following industries: agriculture, manufacturing, tourism and other services. Unemployment was at 3.6%.
|
• |
The Modesto MSA, with branches in Modesto, Riverbank and Turlock. This MSA had a Population of 0.55 million and a Per Capita Income of approximately $29,195. The MSA includes significant employment in the following sectors: trade,
transportation & utilities, educational & health services, and government. Unemployment was at 5.3%.
|
• |
The Merced MSA, with branches in Hilmar and Merced. This MSA had a Population of 0.29 million and a Per Capita Income of approximately $24,521. The MSA includes significant employment in the following sectors: government, trade,
transportation & utilities, and farming. Unemployment was at 7.4%.
|
• |
The Oakland-Hayward-Berkeley MSA, with branches in Concord, Walnut Creek, and Oakland. This MSA had a Population of 2.8 million and a Per Capita Income of approximately $53,736. The MSA includes significant employment in the following
sectors: professional & business services, educational & health services, trade, and transportation & utilities. Unemployment was at 2.8%.
|
• |
The Napa MSA, with a branch in Napa. This MSA had a Population of 0.14 million and a Per Capita Income of approximately $49,641. The MSA includes significant employment in the following sectors: manufacturing, leisure &
hospitality, trade, and educational & health services. Unemployment was at 3.0%.
|
|
F&M Bank
|
All Banks
|
F&M Bank
|
|||||||||
County
|
Deposits
|
Deposits
|
Deposit Share
|
|||||||||
(Dollars in thousands)
|
||||||||||||
San Joaquin
|
$
|
2,142,903
|
$
|
16,146,195
|
13.27
|
%
|
||||||
Merced
|
295,062
|
3,478,972
|
8.48
|
%
|
||||||||
Stanislaus
|
1,040,376
|
12,326,338
|
8.44
|
%
|
||||||||
Solano
|
204,523
|
7,100,485
|
2.88
|
%
|
||||||||
Sacramento
|
669,990
|
50,151,517
|
1.34
|
%
|
||||||||
Contra Costa
|
398,741
|
66,591,080
|
0.60
|
%
|
||||||||
Napa
|
22,563
|
6,050,434
|
0.37
|
%
|
||||||||
Alameda
|
817
|
72,077,695
|
0.00
|
%
|
||||||||
Total
|
$
|
4,774,975
|
$
|
233,922,716
|
2.04
|
%
|
• |
creating a Financial Stability Oversight Council tasked with identifying and monitoring systemic risks in the financial system;
|
• |
creating the Consumer Financial Protection Bureau (“CFPB”), which is responsible for implementing, examining and enforcing compliance with federal consumer financial protection laws;
|
• |
requiring the FDIC to make its capital requirements for insured depository institutions countercyclical, so that capital requirements increase in times of economic expansion and decrease in times of economic contraction;
|
• |
imposing more stringent capital requirements on bank holding companies and subjecting certain activities, including interstate mergers and acquisitions, to heightened capital conditions;
|
• |
changing the assessment base for federal deposit insurance from the amount of the insured deposits held by the depository institution to the depository institution’s average total consolidated assets less tangible equity, eliminating
the ceiling on the size of the FDIC’s Deposit Insurance Fund and increasing the floor on the size of the FDIC’s Deposit Insurance Fund;
|
• |
eliminating all remaining restrictions on interstate banking by authorizing state banks to establish de novo banking offices in any state that would permit a bank chartered in that state to open a banking office at that location;
|
• |
repealing the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts; and
|
• |
in the so-called “Volcker Rule,” subject to numerous exceptions, prohibiting depository institutions and affiliates from certain investments in, and sponsorship of, hedge funds and private equity funds and from engaging in proprietary
trading.
|
• |
4.0% Tier 1 leverage ratio;
|
• |
4.5% CET1 to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%;
|
• |
6.0% Tier 1 capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum Tier 1 capital ratio of at least 8.5%; and
|
• |
8.0% total capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum total capital ratio of at least 10.5%.
|
• |
consistent with the Basel I risk-based capital rules, assigning exposures secured by single-family residential properties to either a 50% risk weight for first-lien mortgages that meet prudent underwriting standards or a 100% risk
weight category for all other mortgages;
|
• |
providing for a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable (set at 0% under the Basel I risk-based capital rules);
|
• |
assigning a 150% risk weight to all exposures that are nonaccrual or 90 days or more past due (set at 100% under the Basel I risk-based capital rules), except for those secured by single-family residential properties, which will be
assigned a 100% risk weight, consistent with the Basel I risk-based capital rules;
|
• |
applying a 150% risk weight instead of a 100% risk weight for certain high volatility commercial real estate acquisition, development and construction loans; and
|
• |
applying a 250% risk weight to the portion of mortgage servicing rights and deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks that are not deducted from CET1 capital
(set at 100% under the Basel I risk-based capital rules).
|
|
Minimum to be
Categorized as
"Well
Capitalized"
|
Minimum to be
Categorized as
"Adequately
Capitalized"
|
Under-
capitalized
|
Significantly
Under-
capitalized
|
Critically
Under-
capitalized
|
|||||||||||||||
Risk-based capital to risk-weighted assets
|
10.00
|
%+
|
8.00
|
%+
|
< 8.00%
|
< 6.00%
|
N/A
|
|||||||||||||
Tier 1 capital to risk-weighted assets
|
8.00
|
%+
|
6.00
|
%+
|
< 6.00%
|
< 4.00%
|
N/A
|
|||||||||||||
CET1 capital to risk-weighted assets
|
6.50
|
%+
|
4.50
|
%+
|
< 4.50%
|
< 3.00%
|
N/A
|
|||||||||||||
Tier 1 leverage capital ratio
|
5.00
|
%+
|
4.00
|
%+
|
< 4.00%
|
< 3.00%
|
N/A
|
|||||||||||||
Tangible equity to assets
|
N/A
|
N/A
|
N/A
|
N/A
|
< 2.00%
|
|||||||||||||||
Supplemental leverage ratio
|
N/A
|
3.00
|
%+
|
< 3.00%
|
N/A
|
N/A
|
• |
control of any other bank or bank holding company or all or substantially all the assets thereof; or
|
• |
more than 5% of the voting shares of a bank or bank holding company which is not already a subsidiary.
|
Item 1A. |
Risk Factors
|
Item 1B. |
Unresolved Staff Comments
|
Item 2. |
Properties
|
Item 3. |
Legal Proceedings
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
Year Ended December 31, 2022
|
|||||||||||||||
|
High
|
Low
|
Close
|
Dividend Declared
|
||||||||||||
First quarter
|
$
|
960
|
$
|
913
|
$
|
950
|
$
|
-
|
||||||||
Second quarter
|
960
|
914
|
927
|
7.85
|
||||||||||||
Third quarter
|
975
|
922
|
956
|
-
|
||||||||||||
Fourth quarter
|
1,088
|
952
|
1,050
|
8.30
|
Year Ended December 31, 2021
|
||||||||||||||||
High
|
Low
|
Close
|
Dividend Declared
|
|||||||||||||
First quarter
|
$
|
788
|
$
|
731
|
$
|
778
|
$
|
-
|
||||||||
Second quarter
|
925
|
773
|
862
|
7.50
|
||||||||||||
Third quarter
|
920
|
862
|
897
|
-
|
||||||||||||
Fourth quarter
|
1,156
|
897
|
960
|
7.80
|
Period
|
Total number
of shares
purchased
|
Average price
paid per share
|
Total number of shares
purchased as part of
publicly announced
plans or programs
|
Maximum number (or
approximate dollar
value) of shares that
may yet purchased
under the plans or
programs
(In thousands) (1)
|
||||||||||||
Total 1st Quarter 2022
|
4,500
|
$
|
945.00
|
4,500
|
$
|
15,748
|
||||||||||
Total 2nd Quarter 2022
|
7,956
|
954.32
|
7,956
|
8,155
|
||||||||||||
Total 3rd Quarter 2022
|
6,368
|
951.68
|
6,368
|
2,095
|
||||||||||||
October 1, 2022 to October 31, 2022
|
1,465
|
$
|
962.22
|
1,465
|
$
|
685
|
||||||||||
November 1, 2022 to November 30, 2022
|
709
|
973.47
|
709
|
19,995
|
||||||||||||
December 1, 2022 to December 31, 2022
|
311
|
979.84
|
311
|
19,690
|
||||||||||||
Total 4th Quarter 2022
|
2,485
|
$
|
967.64
|
2,485
|
$
|
19,690
|
||||||||||
Total 2022
|
21,309
|
$
|
953.12
|
21,309
|
$
|
19,690
|
||||||||||
Item 6. |
Reserved
|
Item 7. |
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
◾ |
changes in general economic conditions, either nationally, in California, or in our local markets;
|
◾ |
inflation, changes in interest rates, securities market volatility and monetary fluctuations;
|
◾ |
increases in competitive pressures among financial institutions and businesses offering similar products and services;
|
◾ |
the future impact of the COVID-19 virus;
|
◾ |
higher defaults in our loan portfolio than we expect;
|
◾ |
changes in management’s estimate of the adequacy of the allowance for credit losses;
|
◾ |
risks associated with our growth and expansion strategy and related costs;
|
◾ |
increased lending risks associated with our high concentration of real estate loans;
|
◾ |
legislative or regulatory changes or changes in accounting principles, policies or guidelines;
|
◾ |
technological changes;
|
◾ |
failure to raise the debt limit on U.S. debt;
|
◾ |
regulatory or judicial proceedings; and
|
◾ |
other factors and risks including those described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.
|
|
Years Ended December 31
|
|||||||||||
(Dollars in thousands, except per share data)
|
2022
|
2021
|
2020
|
|||||||||
Selected Income Statement Information:
|
||||||||||||
Interest income
|
$
|
198,413
|
$
|
165,268
|
$
|
159,294
|
||||||
Interest expense
|
4,840
|
4,332
|
9,491
|
|||||||||
Net interest income
|
193,573
|
160,936
|
149,803
|
|||||||||
Provision for credit losses
|
6,450
|
1,910
|
4,500
|
|||||||||
Net interest income after provision for credit losses
|
187,123
|
159,026
|
145,303
|
|||||||||
Non-interest income
|
6,178
|
21,056
|
15,054
|
|||||||||
Non-interest expense
|
93,560
|
91,761
|
82,406
|
|||||||||
Income before income tax expense
|
99,741
|
88,321
|
77,951
|
|||||||||
Income tax expense
|
24,651
|
21,985
|
19,217
|
|||||||||
Net income
|
$
|
75,090
|
$
|
66,336
|
$
|
58,734
|
||||||
Selected financial ratios:
|
||||||||||||
Basic and diluted earnings per share
|
$
|
96.55
|
$
|
84.01
|
$
|
74.03
|
||||||
Cash dividends per common share
|
16.15
|
15.30
|
14.75
|
|||||||||
Dividend ratio
|
16.73
|
%
|
18.21
|
%
|
19.92
|
%
|
||||||
Net interest margin
|
3.80
|
%
|
3.46
|
%
|
3.88
|
%
|
||||||
Non-interest income to average assets
|
0.12
|
%
|
0.43
|
%
|
0.37
|
%
|
||||||
Non-interest expense to average assets
|
1.75
|
%
|
1.87
|
%
|
2.00
|
%
|
||||||
Efficiency ratio
|
46.84
|
%
|
50.42
|
%
|
49.99
|
%
|
||||||
Return on average assets
|
1.41
|
%
|
1.35
|
%
|
1.43
|
%
|
||||||
Return on average equity
|
16.04
|
%
|
15.00
|
%
|
14.60
|
%
|
||||||
Net charge-offs (recoveries) to average loans
|
0.01
|
%
|
(0.01
|
%)
|
0.02
|
%
|
As of December 31,
|
||||||||||||
(Dollars in thousands, except per share data)
|
2022
|
2021
|
2020
|
|||||||||
Selected Balance Sheet Information:
|
||||||||||||
Cash and cash equivalents
|
$
|
588,257
|
$
|
715,460
|
$
|
383,837
|
||||||
Investment securities
|
997,817
|
1,007,506
|
876,665
|
|||||||||
Gross loans held for investment
|
3,512,361
|
3,237,177
|
3,099,592
|
|||||||||
Total assets
|
5,327,399
|
5,177,720
|
4,550,453
|
|||||||||
Total deposits
|
4,759,269
|
4,640,152
|
4,060,267
|
|||||||||
Shareholders' equity
|
485,308
|
463,136
|
423,665
|
|||||||||
Average Balances:
|
||||||||||||
Average earning assets
|
5,091,684
|
4,656,337
|
3,861,070
|
|||||||||
Average assets
|
5,341,901
|
4,913,999
|
4,112,537
|
|||||||||
Average shareholders' equity
|
468,001
|
442,246
|
402,329
|
|||||||||
Selected financial ratios:
|
||||||||||||
Book value per share
|
$
|
631.63
|
$
|
586.51
|
$
|
536.53
|
||||||
Tangible book value per share
|
$
|
613.42
|
$
|
568.04
|
$
|
517.28
|
||||||
Allowance for credit losses to total loans
|
1.90
|
%
|
1.88
|
%
|
1.89
|
%
|
||||||
Non-performing assets to total assets
|
0.03
|
%
|
0.03
|
%
|
0.03
|
%
|
||||||
Loans held for investment to deposits
|
73.80
|
%
|
69.76
|
%
|
76.34
|
%
|
||||||
Capital ratios:
|
||||||||||||
Tier 1 leverage capital
|
9.36
|
%
|
8.92
|
%
|
9.13
|
%
|
||||||
Total risk-based capital
|
13.06
|
%
|
13.19
|
%
|
12.59
|
%
|
||||||
Average equity to average assets
|
8.76
|
%
|
9.00
|
%
|
9.78
|
%
|
||||||
Tangible common equity to tangible assets
|
8.87
|
%
|
8.69
|
%
|
9.01
|
%
|
|
Year ended December 31,
|
|||||||||||||||||||||||
|
2022
|
2021
|
||||||||||||||||||||||
(Dollars in thousands)
|
Average Balance
|
Interest
Income / Expense
|
Average
Yield /
Rate
|
Average Balance
|
Interest
Income / Expense
|
Average
Yield /
Rate
|
||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Interest earnings deposits in other banks and federal
funds sold
|
$
|
704,082
|
$
|
12,102
|
1.72
|
%
|
$
|
666,167
|
$
|
902
|
0.14
|
%
|
||||||||||||
Investment securities:(1)
|
||||||||||||||||||||||||
Taxable securities
|
1,044,954
|
19,678
|
1.88
|
%
|
838,710
|
14,646
|
1.75
|
%
|
||||||||||||||||
Non-taxable securities(2)
|
48,168
|
1,569
|
3.26
|
%
|
52,384
|
1,648
|
3.15
|
%
|
||||||||||||||||
Total investment securities
|
1,093,122
|
21,247
|
1.94
|
%
|
891,094
|
16,294
|
1.83
|
%
|
||||||||||||||||
Loans:(3)
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
1,202,548
|
58,966
|
4.90
|
%
|
1,037,554
|
53,298
|
5.14
|
%
|
||||||||||||||||
Agricultural
|
705,222
|
35,010
|
4.96
|
%
|
641,086
|
29,544
|
4.61
|
%
|
||||||||||||||||
Residential and home equity
|
369,619
|
14,551
|
3.94
|
%
|
339,345
|
12,717
|
3.75
|
%
|
||||||||||||||||
Construction
|
182,523
|
9,788
|
5.36
|
%
|
182,722
|
7,965
|
4.36
|
%
|
||||||||||||||||
Total real estate
|
2,459,912
|
118,315
|
4.81
|
%
|
2,200,707
|
103,524
|
4.70
|
%
|
||||||||||||||||
Commercial & industrial
|
440,510
|
22,452
|
5.10
|
%
|
373,497
|
16,935
|
4.53
|
%
|
||||||||||||||||
Agricultural
|
262,461
|
14,084
|
5.37
|
%
|
233,544
|
10,385
|
4.45
|
%
|
||||||||||||||||
Commercial leases
|
94,040
|
5,702
|
6.06
|
%
|
98,056
|
5,485
|
5.59
|
%
|
||||||||||||||||
Consumer and other
|
22,008
|
3,469
|
15.76
|
%
|
178,535
|
10,879
|
6.09
|
%
|
||||||||||||||||
Total loans and leases
|
3,278,931
|
164,022
|
5.00
|
%
|
3,084,339
|
147,208
|
4.77
|
%
|
||||||||||||||||
Non-marketable securities
|
15,549
|
1,042
|
6.70
|
%
|
14,737
|
864
|
5.86
|
%
|
||||||||||||||||
Total interest earning assets
|
5,091,684
|
198,413
|
3.90
|
%
|
4,656,337
|
165,268
|
3.55
|
%
|
||||||||||||||||
Allowance for credit losses
|
(62,588
|
)
|
(60,059
|
)
|
||||||||||||||||||||
Non-interest earning assets
|
312,805
|
317,721
|
||||||||||||||||||||||
Total average assets
|
$
|
5,341,901
|
$
|
4,913,999
|
||||||||||||||||||||
|
||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||||||||||||||||||
Interest bearing deposits:
|
||||||||||||||||||||||||
Demand
|
$
|
1,120,198
|
1,497
|
0.13
|
%
|
$
|
1,024,009
|
1,128
|
0.11
|
%
|
||||||||||||||
Savings and money market accounts
|
1,542,310
|
1,981
|
0.13
|
%
|
1,352,258
|
1,458
|
0.11
|
%
|
||||||||||||||||
Certificates of deposit greater than $250,000
|
157,623
|
460
|
0.29
|
%
|
170,040
|
701
|
0.41
|
%
|
||||||||||||||||
Certificates of deposit less than $250,000
|
215,044
|
411
|
0.19
|
%
|
235,746
|
730
|
0.31
|
%
|
||||||||||||||||
Total interest bearing deposits
|
3,035,175
|
4,349
|
0.14
|
%
|
2,782,053
|
4,017
|
0.14
|
%
|
||||||||||||||||
Short-term borrowings
|
1
|
-
|
0.00
|
%
|
1
|
-
|
0.00
|
%
|
||||||||||||||||
Subordinated debentures
|
10,310
|
491
|
4.76
|
%
|
10,310
|
315
|
3.06
|
%
|
||||||||||||||||
Total interest bearing liabilities
|
3,045,486
|
4,840
|
0.16
|
%
|
2,792,364
|
4,332
|
0.16
|
%
|
||||||||||||||||
Non-interest bearing deposits
|
1,751,797
|
1,610,611
|
||||||||||||||||||||||
Total funding
|
4,797,283
|
4,840
|
0.10
|
%
|
4,402,975
|
4,332
|
0.10
|
%
|
||||||||||||||||
Other non-interest bearing liabilities
|
76,617
|
68,778
|
||||||||||||||||||||||
Shareholders' equity
|
468,001
|
442,246
|
||||||||||||||||||||||
Total average liabilities and shareholders' equity
|
$
|
5,341,901
|
$
|
4,913,999
|
||||||||||||||||||||
Net interest income
|
$
|
193,573
|
$
|
160,936
|
||||||||||||||||||||
Interest rate spread
|
3.74
|
%
|
3.39
|
%
|
||||||||||||||||||||
Net interest margin(4)
|
3.80
|
%
|
3.46
|
%
|
||||||||||||||||||||
|
(1) |
Excludes average unrealized (losses) gains of ($24.5) million and $3.4 million for the years ended December 31, 2022, and 2021, respectively, which are included in non-interest earning assets.
|
(2) |
The average yield does not include the federal tax benefits at an assumed effective yield of 26% related to income earned on tax-exempt municipal securities totaling $415,000 and $436,000 for the years ended December 31, 2022, and
2021, respectively.
|
(3) |
Loan interest income includes loan fees of $11.6 million and $17.0 million for the years ended December 31, 2022 and 2021, respectively.
|
(4) |
Net interest margin is computed by dividing net interest income by average interest earning assets.
|
Year Ended December 31, 2022
compared with 2021
|
||||||||||||
Increase (Decrease) Due to:
|
||||||||||||
(Dollars in thousands)
|
Volume
|
Rate
|
Net
|
|||||||||
Interest income:
|
||||||||||||
Interest earnings deposits in other banks and federal funds sold
|
$
|
54
|
$
|
11,146
|
$
|
11,200
|
||||||
Investment securities:
|
||||||||||||
Taxable securities
|
3,816
|
1,216
|
5,032
|
|||||||||
Non-taxable securities
|
(136
|
)
|
57
|
(79
|
)
|
|||||||
Total investment securities
|
3,680
|
1,273
|
4,953
|
|||||||||
Loans:
|
||||||||||||
Real estate:
|
||||||||||||
Commercial
|
7,805
|
(2,137
|
)
|
5,668
|
||||||||
Agricultural
|
3,081
|
2,385
|
5,466
|
|||||||||
Residential and home equity
|
1,168
|
666
|
1,834
|
|||||||||
Construction
|
(9
|
)
|
1,832
|
1,823
|
||||||||
Total real estate
|
12,045
|
2,746
|
14,791
|
|||||||||
Commercial & industrial
|
3,261
|
2,256
|
5,517
|
|||||||||
Agricultural
|
1,385
|
2,314
|
3,699
|
|||||||||
Commercial leases
|
(231
|
)
|
448
|
217
|
||||||||
Consumer and other(1)
|
(14,475
|
)
|
7,065
|
(7,410
|
)
|
|||||||
Total loans and leases
|
1,986
|
14,828
|
16,814
|
|||||||||
Non-marketable securities
|
49
|
129
|
178
|
|||||||||
Total interest income
|
5,769
|
27,376
|
33,145
|
|||||||||
|
||||||||||||
Interest expense:
|
||||||||||||
Interest bearing deposits:
|
||||||||||||
Demand
|
113
|
256
|
369
|
|||||||||
Savings and money market accounts
|
222
|
301
|
523
|
|||||||||
Certificates of deposit greater than $250,000
|
(48
|
)
|
(193
|
)
|
(241
|
)
|
||||||
Certificates of deposit less than $250,000
|
(60
|
)
|
(259
|
)
|
(319
|
)
|
||||||
Total interest bearing deposits
|
227
|
105
|
332
|
|||||||||
Subordinated debentures
|
8
|
168
|
176
|
|||||||||
Total interest expense
|
235
|
273
|
508
|
|||||||||
Net interest income
|
$
|
5,534
|
$
|
27,103
|
$
|
32,637
|
|
Years Ended
December 31 |
|||||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
$ Better / (Worse)
|
% Better / (Worse)
|
||||||||||||
Selected Income Statement Information:
|
||||||||||||||||
Interest income
|
$
|
198,413
|
$
|
165,268
|
$
|
33,145
|
20.06
|
%
|
||||||||
Interest expense
|
4,840
|
4,332
|
(508
|
)
|
-11.73
|
%
|
||||||||||
Net interest income
|
193,573
|
160,936
|
32,637
|
20.28
|
%
|
|||||||||||
Provision for credit losses
|
6,450
|
1,910
|
(4,540
|
)
|
-237.70
|
%
|
||||||||||
Net interest income after provision for credit losses
|
187,123
|
159,026
|
28,097
|
17.67
|
%
|
|||||||||||
Non-interest income
|
6,178
|
21,056
|
(14,878
|
)
|
-70.66
|
%
|
||||||||||
Non-interest expense
|
93,560
|
91,761
|
(1,799
|
)
|
-1.96
|
%
|
||||||||||
Income before income tax expense
|
99,741
|
88,321
|
11,420
|
12.93
|
%
|
|||||||||||
Income tax expense
|
24,651
|
21,985
|
(2,666
|
)
|
-12.13
|
%
|
||||||||||
Net income
|
$
|
75,090
|
$
|
66,336
|
$
|
8,754
|
13.20
|
%
|
|
As of December 31,
|
|||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Available-for-Sale Securities
|
||||||||
U.S. Treasury notes
|
$
|
4,964
|
$
|
10,089
|
||||
U.S. Government-sponsored securities
|
4,427
|
6,374
|
||||||
Mortgage-backed securities(1)
|
132,528
|
251,120
|
||||||
Collateralized mortgage obligations(1)
|
1,054
|
2,436
|
||||||
Corporate securities
|
9,581
|
-
|
||||||
Other
|
310
|
435
|
||||||
Total available-for-sale securities
|
$
|
152,864
|
$
|
270,454
|
|
As of December 31,
|
|||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Held-to-Maturity Securities
|
||||||||
Mortgage-backed securities(1)
|
$
|
702,858
|
$
|
596,775
|
||||
Collateralized mortgage obligations(1)
|
80,186
|
73,781
|
||||||
Municipal securities(2)
|
61,909
|
66,496
|
||||||
Total held-to-maturity securities
|
$
|
844,953
|
$
|
737,052
|
Investment Securities
|
As of December 31, 2022
|
|||||||||||||||||||||||||||||||||||||||
|
Within One Year
|
After One but
Within Five Years
|
After Five but
Within Ten Years
|
After Ten Years
|
Total
|
|||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
||||||||||||||||||||||||||||||
Debt securities available-for-sale
|
||||||||||||||||||||||||||||||||||||||||
U.S. Treasury notes
|
$
|
4,964
|
2.37
|
%
|
$
|
-
|
0.00
|
%
|
$
|
-
|
0.00
|
%
|
$
|
-
|
0.00
|
%
|
$
|
4,964
|
2.37
|
%
|
||||||||||||||||||||
U.S. Government-sponsored securities
|
3
|
2.17
|
%
|
53
|
2.29
|
%
|
380
|
4.52
|
%
|
3,991
|
4.52
|
%
|
4,427
|
4.29
|
%
|
|||||||||||||||||||||||||
Mortgage-backed securities(1)
|
13
|
2.82
|
%
|
16,460
|
2.31
|
%
|
15,156
|
2.41
|
%
|
100,899
|
1.82
|
%
|
132,528
|
1.95
|
%
|
|||||||||||||||||||||||||
Collateralized mortgage obligations(1)
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
1,054
|
2.35
|
%
|
1,054
|
2.35
|
%
|
|||||||||||||||||||||||||
Corporate securities
|
-
|
0.00
|
%
|
9,581
|
3.13
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
9,581
|
3.13
|
%
|
|||||||||||||||||||||||||
Other
|
310
|
4.60
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
310
|
4.60
|
%
|
|||||||||||||||||||||||||
Total debt securities available-for-sale
|
$
|
5,290
|
2.50
|
%
|
$
|
26,094
|
2.61
|
%
|
$
|
15,536
|
2.46
|
%
|
$
|
105,944
|
1.93
|
%
|
$
|
152,864
|
2.11
|
%
|
|
As of December 31, 2022
|
|||||||||||||||||||||||||||||||||||||||
Within One Year
|
After One but
Within Five Years
|
After Five but
Within Ten Years
|
After Ten Years
|
Total
|
||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
||||||||||||||||||||||||||||||
Securities held-to-maturity
|
||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities(1)
|
$
|
-
|
0.00
|
%
|
$
|
-
|
0.00
|
%
|
$
|
18,197
|
1.22
|
%
|
$
|
684,661
|
1.90
|
%
|
$
|
702,858
|
1.88
|
%
|
||||||||||||||||||||
Collateralized mortgage obligations(1)
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
80,186
|
1.80
|
%
|
80,186
|
1.80
|
%
|
|||||||||||||||||||||||||
Municipal securities
|
883
|
5.92
|
%
|
8,058
|
3.98
|
%
|
15,670
|
3.70
|
%
|
37,691
|
4.83
|
%
|
62,302
|
4.45
|
%
|
|||||||||||||||||||||||||
Total securities held-to-maturity
|
$
|
883
|
5.92
|
%
|
$
|
8,058
|
3.98
|
%
|
$
|
33,867
|
2.37
|
%
|
$
|
802,538
|
2.03
|
%
|
$
|
845,346
|
2.07
|
%
|
Investment Securities
|
As of December 31, 2021
|
|||||||||||||||||||||||||||||||||||||||
Within One Year
|
After One but
Within Five Years
|
After Five but
Within Ten Years
|
After Ten Years
|
Total
|
||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
||||||||||||||||||||||||||||||
Securities available-for-sale
|
||||||||||||||||||||||||||||||||||||||||
U.S. Treasury notes
|
$
|
5,028
|
2.33
|
%
|
$
|
5,061
|
2.38
|
%
|
$
|
-
|
0.00
|
%
|
$
|
-
|
0.00
|
%
|
$
|
10,089
|
2.36
|
%
|
||||||||||||||||||||
U.S. Government-sponsored securities
|
2
|
1.80
|
%
|
148
|
2.29
|
%
|
512
|
1.55
|
%
|
5,712
|
1.26
|
%
|
6,374
|
1.30
|
%
|
|||||||||||||||||||||||||
Mortgage-backed securities(1)
|
13
|
1.50
|
%
|
21,155
|
2.36
|
%
|
50,554
|
2.36
|
%
|
179,398
|
1.61
|
%
|
251,120
|
1.83
|
%
|
|||||||||||||||||||||||||
Collateralized mortgage obligations(1)
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
2,436
|
2.30
|
%
|
2,436
|
2.30
|
%
|
|||||||||||||||||||||||||
Other
|
435
|
3.31
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
435
|
3.31
|
%
|
|||||||||||||||||||||||||
Total securities available-for-sale
|
$
|
5,478
|
2.41
|
%
|
$
|
26,364
|
2.36
|
%
|
$
|
51,066
|
2.35
|
%
|
$
|
187,546
|
1.61
|
%
|
$
|
270,454
|
1.84
|
%
|
|
As of December 31, 2021
|
|||||||||||||||||||||||||||||||||||||||
Within One Year
|
After One but
Within Five Years
|
After Five but
Within Ten Years
|
After Ten Years
|
Total
|
||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
Amount
|
Yield
|
||||||||||||||||||||||||||||||
Securities held-to-maturity
|
||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities(1)
|
$
|
-
|
0.00
|
%
|
$
|
-
|
0.00
|
%
|
$
|
10,641
|
0.41
|
%
|
$
|
586,134
|
1.72
|
%
|
$
|
596,775
|
1.70
|
%
|
||||||||||||||||||||
Collateralized mortgage obligations(1)
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
73,781
|
1.71
|
%
|
73,781
|
1.71
|
%
|
|||||||||||||||||||||||||
Municipal securities
|
308
|
1.10
|
%
|
8,487
|
2.19
|
%
|
18,433
|
3.42
|
%
|
39,268
|
4.52
|
%
|
66,496
|
3.90
|
%
|
|||||||||||||||||||||||||
Total securities held-to-maturity
|
$
|
308
|
1.10
|
%
|
$
|
8,487
|
2.19
|
%
|
$
|
29,074
|
2.32
|
%
|
$
|
699,183
|
1.88
|
%
|
$
|
737,052
|
1.90
|
%
|
|
December 31,
|
|||||||||||||||
|
2022
|
2021
|
||||||||||||||
(Dollars in thousands)
|
Dollars
|
Percent of Total
|
Dollars
|
Percent of Total
|
||||||||||||
Gross Loans and Leases
|
||||||||||||||||
Real estate:
|
||||||||||||||||
Commercial
|
$
|
1,328,691
|
37.73
|
%
|
$
|
1,167,516
|
35.95
|
%
|
||||||||
Agricultural
|
726,938
|
20.64
|
%
|
672,830
|
20.72
|
%
|
||||||||||
Residential and home equity
|
387,753
|
11.01
|
%
|
350,581
|
10.79
|
%
|
||||||||||
Construction
|
166,538
|
4.73
|
%
|
177,163
|
5.45
|
%
|
||||||||||
Total real estate
|
2,609,920
|
74.11
|
%
|
2,368,090
|
72.91
|
%
|
||||||||||
Commercial & industrial
|
478,758
|
13.59
|
%
|
427,799
|
13.17
|
%
|
||||||||||
Agricultural
|
314,525
|
8.93
|
%
|
276,684
|
8.52
|
%
|
||||||||||
Commercial leases
|
112,629
|
3.20
|
%
|
96,971
|
2.99
|
%
|
||||||||||
Consumer and other(1)
|
5,886
|
0.17
|
%
|
78,367
|
2.41
|
%
|
||||||||||
Total gross loans and leases
|
$
|
3,521,718
|
100.00
|
%
|
$
|
3,247,911
|
100.00
|
%
|
|
Loan Contractual Maturity
|
|||||||||||||||||||
(Dollars in thousands)
|
One Year or Less
|
After One
But Within Five Years
|
After Five
But Within Fifteen Years
|
After Fifteen Years
|
Total
|
|||||||||||||||
Gross loan and leases:
|
||||||||||||||||||||
Real estate:
|
||||||||||||||||||||
Commercial
|
$
|
61,340
|
$
|
326,671
|
$
|
889,041
|
$
|
51,639
|
$
|
1,328,691
|
||||||||||
Agricultural
|
26,588
|
172,766
|
452,249
|
75,335
|
726,938
|
|||||||||||||||
Residential and home equity
|
384
|
4,143
|
117,421
|
265,805
|
387,753
|
|||||||||||||||
Construction
|
94,238
|
72,300
|
-
|
-
|
166,538
|
|||||||||||||||
Total real estate
|
182,550
|
575,880
|
1,458,711
|
392,779
|
2,609,920
|
|||||||||||||||
Commercial & industrial
|
216,019
|
181,520
|
75,093
|
6,126
|
478,758
|
|||||||||||||||
Agricultural
|
197,010
|
98,898
|
18,617
|
-
|
314,525
|
|||||||||||||||
Commercial leases
|
45,503
|
61,377
|
5,749
|
-
|
112,629
|
|||||||||||||||
Consumer and other
|
753
|
3,989
|
1,144
|
-
|
5,886
|
|||||||||||||||
Total gross loans and leases
|
$
|
641,835
|
$
|
921,664
|
$
|
1,559,314
|
$
|
398,905
|
$
|
3,521,718
|
||||||||||
Rate Structure for Loans
|
||||||||||||||||||||
Fixed Rate
|
$
|
116,749
|
$
|
475,248
|
$
|
1,158,859
|
$
|
255,628
|
$
|
2,006,484
|
||||||||||
Adjustable Rate
|
525,086
|
446,416
|
400,455
|
143,277
|
1,515,234
|
|||||||||||||||
Total gross loans and leases
|
$
|
641,835
|
$
|
921,664
|
$
|
1,559,314
|
$
|
398,905
|
$
|
3,521,718
|
|
December 31,
|
|||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Non-performing assets:
|
||||||||
Non-accrual loans and leases, not TDRs
|
||||||||
Real estate:
|
||||||||
Commercial
|
$
|
403
|
$
|
-
|
||||
Agricultural
|
-
|
18
|
||||||
Residential and home equity
|
-
|
-
|
||||||
Construction
|
168
|
-
|
||||||
Total real estate
|
571
|
18
|
||||||
Commercial & industrial
|
-
|
-
|
||||||
Agricultural
|
-
|
-
|
||||||
Commercial leases
|
-
|
-
|
||||||
Consumer and other
|
-
|
-
|
||||||
Subtotal
|
571
|
18
|
||||||
Non-accrual loans and leases, are TDRs
|
||||||||
Real estate:
|
||||||||
Commercial
|
-
|
-
|
||||||
Agricultural
|
-
|
-
|
||||||
Residential and home equity
|
-
|
-
|
||||||
Construction
|
-
|
-
|
||||||
Total real estate
|
-
|
-
|
||||||
Commercial & industrial
|
-
|
-
|
||||||
Agricultural
|
-
|
498
|
||||||
Commercial leases
|
-
|
-
|
||||||
Consumer and other
|
-
|
-
|
||||||
Subtotal
|
-
|
498
|
||||||
Total non-performing loans and leases
|
$
|
571
|
$
|
516
|
||||
Other real estate owned ("OREO")
|
$
|
873
|
$
|
873
|
||||
Total non-performing assets
|
$
|
1,444
|
$
|
1,389
|
||||
Performing TDRs
|
$
|
1,311
|
$
|
1,824
|
||||
Selected ratios:
|
||||||||
Non-performing loans to total loans and leases
|
0.02
|
%
|
0.02
|
%
|
||||
Non-performing assets to total assets
|
0.03
|
%
|
0.03
|
%
|
||||
• |
The State of California experienced drought conditions from 2013 through most of 2016. After 2016, reasonable levels of rain and snow alleviated drought conditions in our primary service area, but the winter of 2020-2021 and 2021-2022
were once again dry (although 2023 has begun with significant levels of rain and snow). Despite this, the availability of water in our primary service area was not an issue for the 2022 growing season. However, the weather patterns over
the past nine years further reinforce the fact that the long-term risks associated with the availability of water are significant.
|
• |
While significant progress has been made in fighting the COVID-19 virus, particularly with the development of vaccines, the effects of COVID-19 are still with us, and it is impossible to predict the ultimate impact on classified and
non-performing loans and leases (see Part I. “Introduction - COVID-19 (Coronavirus) Disclosure”).
|
|
Year Ended December 31,
|
|||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Allowance for credit losses:
|
||||||||
Balance at beginning of year
|
$
|
61,007
|
$
|
58,862
|
||||
Provision / (recapture) for credit losses
|
6,057
|
1,910
|
||||||
Charge-offs:
|
||||||||
Real estate:
|
||||||||
Commercial
|
(170
|
)
|
-
|
|||||
Agricultural
|
-
|
-
|
||||||
Residential and home equity
|
(25
|
)
|
-
|
|||||
Construction
|
-
|
-
|
||||||
Total real estate
|
(195
|
)
|
-
|
|||||
Commercial & industrial
|
(324
|
)
|
-
|
|||||
Agricultural
|
-
|
-
|
||||||
Commercial leases
|
-
|
-
|
||||||
Consumer and other
|
(62
|
)
|
(44
|
)
|
||||
Total charge-offs
|
(581
|
)
|
(44
|
)
|
||||
Recoveries:
|
||||||||
Real estate:
|
||||||||
Commercial
|
-
|
-
|
||||||
Agricultural
|
-
|
-
|
||||||
Residential and home equity
|
131
|
98
|
||||||
Construction
|
-
|
-
|
||||||
Total real estate
|
131
|
98
|
||||||
Commercial & industrial
|
195
|
99
|
||||||
Agricultural
|
53
|
55
|
||||||
Commercial leases
|
-
|
-
|
||||||
Consumer and other
|
23
|
27
|
||||||
Total recoveries
|
402
|
279
|
||||||
Net charge-offs / recoveries
|
(179
|
)
|
235
|
|||||
Balance at end of year
|
$
|
66,885
|
$
|
61,007
|
||||
Selected financial information:
|
||||||||
Gross loans and leases held for investment
|
$
|
3,512,361
|
$
|
3,237,177
|
||||
Average loans and leases
|
3,278,931
|
3,084,339
|
||||||
Non-performing loans and leases
|
571
|
516
|
||||||
Allowance for credit losses to non-performing loans and leases
|
11713.66
|
%
|
11823.06
|
%
|
||||
Net charge-offs / (recoveries) to average loans and leases
|
0.01
|
%
|
(0.01
|
%)
|
||||
Provision for credit losses to average loans and leases
|
0.18
|
%
|
0.06
|
%
|
||||
Allowance for credit losses to loans and leases held for investment
|
1.90
|
%
|
1.88
|
%
|
|
December 31,
|
|||||||||||||||
|
2022
|
2021
|
||||||||||||||
(Dollars in thousands)
|
Dollars
|
Percent of
Each Loan
Type to
Total Loans
|
Dollars
|
Percent of
Each Loan
Type to
Total Loans
|
||||||||||||
Allowance for credit losses:
|
||||||||||||||||
Real estate:
|
||||||||||||||||
Commercial
|
$
|
18,055
|
37.73
|
%
|
$
|
28,536
|
35.95
|
%
|
||||||||
Agricultural
|
14,496
|
20.64
|
%
|
9,613
|
20.72
|
%
|
||||||||||
Residential and home equity
|
7,508
|
11.01
|
%
|
2,847
|
10.79
|
%
|
||||||||||
Construction
|
3,026
|
4.73
|
%
|
1,456
|
5.45
|
%
|
||||||||||
Total real estate
|
43,085
|
74.11
|
%
|
42,452
|
72.91
|
%
|
||||||||||
Commercial & industrial
|
11,503
|
13.59
|
%
|
11,489
|
13.17
|
%
|
||||||||||
Agricultural
|
10,202
|
8.93
|
%
|
5,465
|
8.52
|
%
|
||||||||||
Commercial leases
|
1,924
|
3.20
|
%
|
938
|
2.99
|
%
|
||||||||||
Consumer and other
|
171
|
0.17
|
%
|
663
|
2.41
|
%
|
||||||||||
Total allowance for credit losses
|
$
|
66,885
|
100.00
|
%
|
$
|
61,007
|
100.00
|
%
|
•
|
Demand and interest-bearing transaction accounts totaled $2.88 billion at December 31, 2022, an increase of $36.1 million, or 1.27% from $2.85 billion held at December 31, 2021.
|
•
|
Savings and money market accounts increased $144.1 million, or 10.29%, to $1.54 billion at December 31, 2022 compared with $1.40 billion at December 31, 2021.
|
•
|
Certificates of deposit accounts decreased $61.1 million, or 15.56%, to $331.4 million at December 31, 2022 compared with $392.5 million at December 31, 2021.
|
|
As of December 31,
|
|||||||||||||||||||||||||||||||||||
|
2022
|
2021
|
2020
|
|||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Average Balance
|
Interest Expense
|
Average Rate
|
Average Balance
|
Interest Expense
|
Average Rate
|
Average Balance
|
Interest Expense
|
Average Rate
|
|||||||||||||||||||||||||||
Total deposits:
|
||||||||||||||||||||||||||||||||||||
Interest bearing deposits:
|
||||||||||||||||||||||||||||||||||||
Demand
|
$
|
1,120,198
|
1,497
|
0.13
|
%
|
$
|
1,024,009
|
1,128
|
0.11
|
%
|
$
|
787,306
|
1,618
|
0.21
|
%
|
|||||||||||||||||||||
Savings and money market
|
1,542,310
|
1,981
|
0.13
|
%
|
1,352,258
|
1,458
|
0.11
|
%
|
1,128,623
|
2,724
|
0.24
|
%
|
||||||||||||||||||||||||
Certificates of deposit greater than $250,000
|
157,623
|
460
|
0.29
|
%
|
170,040
|
701
|
0.41
|
%
|
220,952
|
2,535
|
1.15
|
%
|
||||||||||||||||||||||||
Certificates of deposit less than $250,000
|
215,044
|
411
|
0.19
|
%
|
235,746
|
730
|
0.31
|
%
|
268,294
|
2,236
|
0.83
|
%
|
||||||||||||||||||||||||
Total interest bearing deposits
|
3,035,175
|
4,349
|
0.14
|
%
|
2,782,053
|
4,017
|
0.14
|
%
|
2,405,175
|
9,113
|
0.38
|
%
|
||||||||||||||||||||||||
Non-interest bearing deposits
|
1,751,797
|
1,610,611
|
1,232,874
|
|||||||||||||||||||||||||||||||||
Total deposits
|
$
|
4,786,972
|
$
|
4,349
|
0.09
|
%
|
$
|
4,392,664
|
$
|
4,017
|
0.09
|
%
|
$
|
3,638,049
|
$
|
9,113
|
0.25
|
%
|
|
December 31
|
|||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Non-Maturity Deposits greater than $250,000
|
$
|
2,872,754
|
$
|
2,708,576
|
||||
Certificates of deposit greater than $250,000, by maturity:
|
||||||||
Less than 3 months
|
45,078
|
59,591
|
||||||
3 months to 6 months
|
30,426
|
37,182
|
||||||
6 months to 12 months
|
44,189
|
59,945
|
||||||
More than 12 months
|
9,153
|
12,147
|
||||||
Total certificates of deposit greater than $250,000
|
$
|
128,846
|
$
|
168,865
|
||||
Total deposits greater than $250,000
|
$
|
3,001,600
|
$
|
2,877,441
|
|
Minimum to be Categorized
as "Well Capitalized" under
Prompt Corrective Action
Regulations
|
As of
December 31, |
|||||||||
(Dollars in thousands)
|
2022
|
2021
|
|||||||||
Farmers & Merchants Bancorp
|
|||||||||||
CET1 capital to risk-weighted assets
|
N/A
|
11.57
|
%
|
11.68
|
%
|
||||||
Tier 1 capital to risk-weighted assets
|
N/A
|
11.80
|
%
|
11.94
|
%
|
||||||
Risk-based capital to risk-weighted assets
|
N/A
|
13.06
|
%
|
13.19
|
%
|
||||||
Tier 1 leverage capital ratio
|
N/A
|
9.36
|
%
|
8.92
|
%
|
||||||
Farmers & Merchants Bank
|
|||||||||||
CET1 capital to risk-weighted assets
|
6.50%
|
|
11.79
|
%
|
11.91
|
%
|
|||||
Tier 1 capital to risk-weighted assets
|
8.00%
|
|
11.79
|
%
|
11.91
|
%
|
|||||
Risk-based capital to risk-weighted assets
|
10.00%
|
|
13.04
|
%
|
13.17
|
%
|
|||||
Tier 1 leverage capital ratio
|
5.00%
|
|
9.35
|
%
|
8.91
|
%
|
|
Amount of Commitment Expiration per Period
|
|||||||||||||||||||
(Dollars in thousands)
|
Total Committed Amount
|
Less than One Year
|
One to Three Years
|
Three to Five Years
|
After Five Years
|
|||||||||||||||
Off-balance sheet commitments
|
||||||||||||||||||||
Commitments to extend credit
|
$
|
1,141,036
|
$
|
423,956
|
$
|
203,186
|
$
|
476,671
|
$
|
37,223
|
||||||||||
Standby letters of credit
|
17,138
|
10,770
|
4,468
|
1,470
|
430
|
|||||||||||||||
Total off-balance sheet commitments
|
$
|
1,158,174
|
$
|
434,726
|
$
|
207,654
|
$
|
478,141
|
$
|
37,653
|
As of December 31, 2022
|
||||||||||||||||||||
(Dollars in thousands)
|
Total Credit Line Limit
|
Current Credit Line Available
|
Outstanding Amount
|
Remaining Credit Line Available
|
Value of Collateral Pledged
|
|||||||||||||||
Additional liquidity sources:
|
||||||||||||||||||||
Federal Home Loan Bank
|
$
|
757,866
|
$
|
757,866
|
$
|
-
|
$
|
757,866
|
$
|
1,225,175
|
||||||||||
Federal Reserve BIC
|
650,925
|
650,925
|
-
|
650,925
|
883,754
|
|||||||||||||||
FHLB Fed Funds
|
18,000
|
18,000
|
-
|
18,000
|
-
|
|||||||||||||||
US Bank Fed Funds
|
35,000
|
35,000
|
-
|
35,000
|
-
|
|||||||||||||||
PCBB Fed Funds
|
50,000
|
50,000
|
-
|
50,000
|
-
|
|||||||||||||||
Total additional liquidity sources
|
$
|
1,511,791
|
$
|
1,511,791
|
$
|
-
|
$
|
1,511,791
|
$
|
2,108,929
|
Item 7A. |
Quantitative and Qualitative Disclosures about Market Risk
|
Page
|
||
Report of Independent Registered Public Accounting Firm (
Report of Independent Registered Public Accounting Firm (
|
70 | |
Consolidated Financial Statements
|
||
Consolidated Statements of Financial Condition as of December 31, 2022, and 2021
|
74 | |
Consolidated Statements of Income for the three years ended December 31, 2022, 2021 and 2020
|
75 | |
Consolidated Statements of Comprehensive Income for the three years ended December 31, 2022, 2021 and 2020
|
76
|
|
Consolidated Statements of Changes in Shareholders’ Equity for the three years ended December 31, 2022, 2021 and 2020
|
77 | |
Consolidated Statements of Cash Flows for the three years ended December 31, 2022, 2021 and 2020
|
78 | |
Notes to the Consolidated Financial Statements
|
79 |
• |
Obtaining an understanding of the Company’s process for establishing the ACL, including the models selected by management to estimate quantitative components of the ACL and qualitative
adjustments made to the ACL. This includes the process utilized by management to challenge the model results and determine the best estimate of the ACL as of the balance sheet date.
|
• |
Evaluating the design and testing the operating effectiveness of controls relating to the development and approval of the ACL methodology, management’s identification, determination and controls
related to the significant assumptions used in the models, controls around the reliability and accuracy of the data used in the models, analysis of the ACL results and management’s review and approval of the ACL.
|
• |
Determining whether the loan portfolio is segmented by similar risk characteristics by comparing to the Company’s business environment and relevant industry practices.
|
• |
Evaluating the identification and measurement of the qualitative adjustments, including the basis for concluding an adjustment was warranted and compared the adjustments utilized by management to
both internal portfolio metrics and external macroeconomic data to support the adjustments and evaluated the trends in such adjustments. We searched for and evaluated information that corroborates or contradicts management’s
identification and measurement of qualitative factors.
|
• |
Testing the completeness and accuracy of internal loan level data used as the basis for the calculation, including management’s controls.
|
• |
Testing the mathematical accuracy and computation of the ACL.
|
December 31,
|
||||||||
(Dollars in thousands, except share and per share amounts) | 2022 | 2021 | ||||||
ASSETS
|
||||||||
Cash and due from banks
|
$
|
|
$
|
|
||||
Interest bearing deposits with banks
|
|
|
||||||
Total cash and cash equivalents
|
|
|
||||||
Securities available-for-sale, at fair value
|
|
|
||||||
Securities held-to-maturity, fair value $
|
|
|
||||||
Allowance for credit losses - securities
|
( |
) | ||||||
Total investment securities
|
|
|
||||||
Non-marketable securities
|
||||||||
Loans and leases held for investment
|
|
|
||||||
Allowance for credit losses - loans and leases
|
(
|
)
|
(
|
)
|
||||
Loans held for investment, net
|
|
|
||||||
Bank-owned life insurance
|
|
|
||||||
Premises and equipment, net
|
|
|
||||||
Deferred income tax assets
|
||||||||
Accrued interest receivable
|
||||||||
Goodwill
|
||||||||
Other intangibles
|
||||||||
Other real estate owned
|
||||||||
Other assets
|
||||||||
TOTAL ASSETS
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Deposits:
|
||||||||
Non-interest bearing
|
$
|
|
$
|
|
||||
Interest bearing:
|
||||||||
Demand
|
||||||||
Savings and money market
|
||||||||
Certificates of deposit
|
||||||||
Total interest bearing
|
|
|||||||
Total deposits
|
|
|
||||||
Subordinated debentures
|
|
|
||||||
Interest payable and other liabilities
|
||||||||
Total Liabilities
|
|
|
||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Preferred shares,
|
|
|
||||||
Common shares, $
|
||||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive (loss), net of taxes
|
(
|
)
|
(
|
)
|
||||
TOTAL SHAREHOLDERS’ EQUITY
|
|
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
|
$
|
|
Year Ended December 31,
|
||||||||||||
(Dollars in thousands, except share and per share amounts) |
2022
|
2021
|
2020
|
|||||||||
Interest income
|
||||||||||||
Interest and fees on loans and leases
|
$
|
|
$
|
|
$
|
|
||||||
Interest and dividends on securities
|
|
|
|
|||||||||
Interest on deposits with others
|
||||||||||||
Total interest income
|
|
|
|
|||||||||
Interest expense
|
||||||||||||
Deposits
|
|
|
|
|||||||||
Subordinated debentures
|
|
|
|
|||||||||
Total interest expense
|
|
|
|
|||||||||
Net interest income
|
|
|
|
|||||||||
Provision for credit losses
|
|
|
|
|||||||||
Net interest income after provision for credit losses
|
|
|
|
|||||||||
Non-interest income
|
||||||||||||
Card processing
|
||||||||||||
Service charges on deposit accounts
|
|
|
|
|||||||||
Increase in cash surrender value of BOLI
|
|
|
|
|||||||||
Net (loss)/gain on sale of investment securities available-for-sale
|
(
|
)
|
|
|
||||||||
Net gain on deferred compensation benefits
|
|
|
|
|||||||||
Other
|
|
|
|
|||||||||
Total non-interest income
|
|
|
|
|||||||||
Non-interest expense
|
||||||||||||
Salaries and employee benefits
|
|
|
|
|||||||||
Net gain on deferred compensation benefits
|
|
|
|
|||||||||
Occupancy
|
|
|
|
|||||||||
Data Processing
|
||||||||||||
FDIC insurance
|
||||||||||||
Marketing
|
|
|
|
|||||||||
Legal
|
|
|
|
|||||||||
Other
|
|
|
|
|||||||||
Total non-interest expense
|
|
|
|
|||||||||
INCOME BEFORE INCOME TAXES |
|
|
|
|||||||||
Income tax expense
|
|
|
|
|||||||||
NET INCOME
|
$
|
|
$
|
|
$
|
|
||||||
Earnings per common share: |
||||||||||||
Basic
|
$
|
|
$
|
|
$
|
|
||||||
Diluted
|
$ | $ | $ | |||||||||
Weighted average number of common shares
|
||||||||||||
Basic
|
||||||||||||
Diluted
|
Year Ended December 31,
|
||||||||||||
(Dollars in thousands) |
2022
|
2021
|
2020
|
|||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Other comprehensive income
|
||||||||||||
Unrealized holding (losses)/gains on available-for-sale debt securities
|
(
|
)
|
(
|
)
|
|
|||||||
Reclassification adjustment for losses/(gains) on available-for-sale debt securities
|
|
(
|
)
|
(
|
)
|
|||||||
Amortization of unrealized loss on debt securities transferred to held-to-maturity
|
( |
) | ( |
) | ||||||||
Net unrealized holding (losses)/gains on available-for-sale debt securities
|
( |
) | ( |
) | ||||||||
Income tax benefit/(expense)
|
|
|
(
|
)
|
||||||||
Other comprehensive (loss)/income, net of tax
|
(
|
)
|
(
|
)
|
|
|||||||
Total comprehensive income
|
$
|
|
$
|
|
$
|
|
(Dollars in thousands, except share and per share amounts) |
Common
Shares
|
Amount |
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
(Loss)/Income
|
Total
|
||||||||||||||||||
Balance as of January 1, 2020
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||
Net income
|
- |
|
|
|||||||||||||||||||||
Other comprehensive income, net of tax
|
- |
|||||||||||||||||||||||
Cash dividends declared ($
|
- |
(
|
)
|
(
|
)
|
|||||||||||||||||||
Issuance of common stock
|
|
|
|
|||||||||||||||||||||
Repurchase of common stock
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance as of December 31, 2020
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||
Net income
|
- |
|
|
|||||||||||||||||||||
Other comprehensive loss, net of tax
|
- |
( |
) | ( |
) | |||||||||||||||||||
Cash dividends declared ($
|
- |
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balance as of December 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income
|
- |
|
|
|||||||||||||||||||||
Other comprehensive loss, net of tax
|
- |
( |
) | ( |
) | |||||||||||||||||||
Cash dividends declared ($
|
- |
(
|
)
|
(
|
)
|
|||||||||||||||||||
Repurchase of common stock
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance as of December 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Year Ended December 31,
|
||||||||||||
(Dollars in thousands) |
2022
|
2021
|
2020
|
|||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Provision for credit losses
|
|
|
|
|||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Net amortization of securities premiums and discounts
|
|
|
|
|||||||||
Increase in cash surrender value of BOLI
|
( |
) | ( |
) | ( |
) | ||||||
Decrease/(increase) in deferred income taxes, net
|
|
(
|
)
|
(
|
)
|
|||||||
Loss/(gains) on sale of securities available-for-sale
|
|
(
|
)
|
(
|
)
|
|||||||
Net changes in:
|
||||||||||||
Other assets
|
( |
) | ( |
) | ( |
) | ||||||
Other liabilities
|
( |
) | ||||||||||
Net cash provided by operating activities
|
|
|
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Net change in loans held for investment
|
( |
) | ( |
) | ( |
) | ||||||
Purchase of available-for-sale securities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Purchase of held-to-maturity securities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Purchase of non-marketable securities
|
( |
) | ||||||||||
Proceeds from sales, maturities, calls and pay downs of available-for-sale securities
|
|
|
|
|||||||||
Proceeds from maturities, calls and pay downs of held-to-maturity securities
|
|
|
|
|||||||||
Purchase of premises and equipment
|
( |
) |
(
|
)
|
(
|
)
|
||||||
Purchase of other investments
|
( |
) | ( |
) | ( |
) | ||||||
Redemption of other investments
|
||||||||||||
Proceeds from bank-owned life insurance
|
||||||||||||
Proceeds from sale of assets
|
|
|
|
|||||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Net increase in deposits
|
|
|
|
|||||||||
Cash dividends paid
|
( |
) | ( |
) | ( |
) | ||||||
Net cash used in share repurchase of common stock
|
(
|
)
|
|
(
|
)
|
|||||||
Net provided by financing activities
|
|
|
|
|||||||||
Net change in cash and cash equivalents
|
(
|
)
|
|
|
||||||||
Cash and cash equivalents, beginning of year
|
|
|
|
|||||||||
Cash and cash equivalents, end of year
|
$
|
|
$
|
|
$
|
|
||||||
Supplemental disclosures of cash flow information:
|
||||||||||||
Cash paid for interest
|
$ | $ | $ | |||||||||
Income taxes paid
|
$
|
|
$
|
|
$
|
|
||||||
Issuance of common stock
|
$
|
|
$
|
|
$
|
|
||||||
Supplemental disclosures of non-cash transactions:
|
||||||||||||
Investment securities available-for-sale transferred to held-to-maturity
|
$ | $ | $ | |||||||||
Unrealized (losses)/gains on securities available for sale
|
$ |
$ |
$ |
( |
) | |||||||
Lease liabilities arising from obtaining right-of-use assets
|
$
|
|
$
|
|
$
|
|
◾
|
Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.
|
◾
|
Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments.
|
◾
|
Changes in the nature and volume of the portfolio and in the terms of loans.
|
◾
|
Changes in the experience, ability, and depth of lending management and other relevant staff.
|
◾
|
Changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans.
|
◾
|
Changes in the quality of the institution’s loan review system.
|
◾
|
Changes in the value of underlying collateral for collateral-dependent loans.
|
◾
|
The existence and effect of any concentrations of credit, and changes in the level of such concentrations.
|
◾
|
The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio.
|
Building and building improvements
|
|
Leasehold improvements
|
term of lease
|
Furniture and equipment
|
|
Computers, software and equipment
|
|
January-2022
|
||||||||||||
(Dollars in thousands)
|
Reported under ASC
326
|
Reported
Pre-
Adoption
|
Impact of
ASC 326
Adoption
|
|||||||||
Allowance for credit losses:
|
||||||||||||
Real estate:
|
||||||||||||
Commercial
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | |||||
Agricultural
|
(
|
)
|
(
|
)
|
( |
) | ||||||
Residential and home equity
|
(
|
)
|
(
|
)
|
( |
) | ||||||
Construction
|
(
|
)
|
(
|
)
|
( |
) | ||||||
Total real estate
|
(
|
)
|
(
|
)
|
||||||||
Commercial & industrial
|
(
|
)
|
(
|
)
|
||||||||
Agricultural
|
(
|
)
|
(
|
)
|
( |
) | ||||||
Commercial leases
|
(
|
)
|
(
|
)
|
( |
) | ||||||
Consumer and other
|
(
|
)
|
(
|
)
|
||||||||
Total allowance for credit losses on loans
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|
Gross Unrealized
|
|
||||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
As of December 31, 2022 | ||||||||||||||||
U.S. Treasury notes
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
U.S. Government-sponsored securities
|
|
|
|
|
||||||||||||
Mortgage-backed securities(1)
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations(1)
|
|
|
|
|
||||||||||||
Corporate securities
|
||||||||||||||||
Other
|
|
|
|
|
||||||||||||
Total available-for-sale securities
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
Gross Unrealized
|
|
|||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
As of December 31, 2021 | ||||||||||||||||
U.S. Treasury notes
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
U.S. Government-sponsored securities
|
|
|
|
|
||||||||||||
Mortgage-backed securities(1)
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations(1) | ||||||||||||||||
Other
|
|
|
|
|
||||||||||||
Total available-for-sale securities
|
$
|
|
$
|
|
$
|
|
$
|
|
|
Gross Unrealized
|
|||||||||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
Gains
|
Losses
|
Fair Value
|
Allowance
for Credit
Losses
|
|||||||||||||||
As of December 31, 2022
|
||||||||||||||||||||
Municipal securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | |||||||||||
Mortgage-backed securities(1)
|
|
|
|
|
||||||||||||||||
Collateralized mortgage obligations(1)
|
|
|
|
|
||||||||||||||||
Total held-to-maturity securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
|
Gross Unrealized
|
|||||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
As of December 31, 2021
|
||||||||||||||||
Municipal securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Mortgage-backed securities(1)
|
||||||||||||||||
Collateralized mortgage obligations(1)
|
||||||||||||||||
Total held-to-maturity securities
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
As of December 31, 2022
|
||||||||||||||||||||||||
U.S.Treasury notes
|
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
U.S. Government-sponsored securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities(1)
|
|
|
|
|
|
|
||||||||||||||||||
Collateralized mortgage obligations(1)
|
||||||||||||||||||||||||
Corporate securities
|
||||||||||||||||||||||||
Total available-for-sale securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
December 31, 2021
|
||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
(Dollars in thousands)
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
As of December 31, 2021
|
||||||||||||||||||||||||
U.S. Government-sponsored securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Mortgage-backed securities(1)
|
|
|
|
|
|
|
||||||||||||||||||
Total available-for-sale securities
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
||||||||||||||||
(Dollars in thousands)
|
Municipal
securities |
Mortgage-backed
securities
|
Collateralized
mortgage
obligations
|
Total
|
||||||||||||
Allowance for credit losses - securities
|
||||||||||||||||
Beginning Balance
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Provision for credit losses
|
|
|
|
|
||||||||||||
Ending Balance
|
$
|
|
$
|
|
$
|
|
$
|
|
Available-for-Sale
|
Held-to-Maturity
|
|||||||||||||||
(Dollars in thousands) |
Amortized
Cost
|
Fair Value
|
Amortized
Cost
|
Fair Value
|
||||||||||||
Securities
maturing in: |
||||||||||||||||
One year or less
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
After one year through
five years
|
|
|
|
|
||||||||||||
After five years through
ten years
|
|
|
|
|
||||||||||||
After ten years
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
Held-to-Maturity
|
||||||||||||||||
Amortized Cost
|
||||||||||||||||
(Dollars in thousands)
|
AAA/AA/A
|
BBB/BB/B
|
Not Rated
|
Total
|
||||||||||||
December 31, 2022
|
||||||||||||||||
Municipal securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
(Dollars in thousands)
|
Gross Proceeds
|
Gross Gains
|
Gross Losses
|
|||||||||
2022
|
$
|
|
$
|
|
$
|
|
||||||
2021
|
|
|
|
|||||||||
2020
|
|
|
|
December 31,
|
||||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Loans and leases held-for-investment, net
|
||||||||
Real estate:
|
||||||||
Commercial
|
$
|
|
$
|
|
||||
Agricultural
|
|
|
||||||
Residential and home equity
|
|
|
||||||
Construction
|
|
|
||||||
Total real estate
|
|
|
||||||
Commercial & industrial
|
||||||||
Agricultural
|
|
|
||||||
Commercial leases
|
|
|
||||||
Consumer and other(1)
|
|
|
||||||
Total gross loans and leases
|
|
|
||||||
Unearned income
|
(
|
)
|
(
|
)
|
||||
Total net loans and leases
|
|
|
||||||
Allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
Total loans and leases held-for-investment, net
|
$
|
|
$
|
|
|
December 31, 2022
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Current
|
30-89 Days
Past Due
|
90+ Days Past
Due
|
Non-
accrual
|
Total Past
Due
|
Total
|
||||||||||||||||||
Loans and leases held-for-investment, net
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Residential and home equity
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Total real estate
|
|
|
|
|
|
|
||||||||||||||||||
Commercial & industrial
|
|
|
|
|
|
|
||||||||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Commercial leases
|
|
|
|
|
|
|
||||||||||||||||||
Consumer and other
|
|
|
|
|
|
|
||||||||||||||||||
Total loans and leases, net
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
December 31, 2021
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Current
|
30-89 Days
Past Due
|
90+ Days Past
Due
|
Non-
accrual
|
Total Past
Due
|
Total
|
||||||||||||||||||
Loans and leases held-for-investment, net
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Residential and home equity
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Total real estate
|
|
|
|
|
|
|
||||||||||||||||||
Commercial & industrial
|
|
|
|
|
|
|
||||||||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Commercial leases
|
|
|
|
|
|
|
||||||||||||||||||
Consumer and other
|
|
|
|
|
|
|
||||||||||||||||||
Total loans and leases, net
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
December 31,
|
|||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Non-accrual loans and leases:
|
||||||||
Non-accrual loans and leases, not TDRs
|
||||||||
Real estate:
|
||||||||
Commercial
|
$
|
|
$
|
|
||||
Agricultural
|
|
|
||||||
Residential and home equity
|
|
|
||||||
Construction
|
|
|
||||||
Total real estate
|
|
|
||||||
Commercial & industrial
|
|
|
||||||
Agricultural
|
|
|
||||||
Commercial leases
|
|
|
||||||
Consumer and other
|
|
|
||||||
Subtotal
|
|
|
||||||
Non-accrual loans and leases, are TDRs
|
||||||||
Real estate:
|
||||||||
Commercial
|
$
|
|
$
|
|
||||
Agricultural
|
|
|
||||||
Residential and home equity
|
|
|
||||||
Construction
|
|
|
||||||
Total real estate
|
|
|
||||||
Commercial & Industrial
|
|
|
||||||
Agricultural
|
|
|
||||||
Commercial leases
|
|
|
||||||
Consumer and other
|
|
|
||||||
Subtotal
|
|
|
||||||
Total non-accrual loans and leases
|
$
|
|
$
|
|
|
December 31,
|
|||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Troubled debt restructured loans and leases:
|
||||||||
Accruing TDR loans and leases
|
||||||||
Real estate:
|
||||||||
Commercial
|
$ |
|
$ |
|
||||
Agricultural
|
|
|
||||||
Residential and home equity
|
|
|
||||||
Construction
|
|
|||||||
Total real estate
|
|
|
||||||
Commercial & industrial
|
|
|
||||||
Agricultural
|
|
|
||||||
Commercial leases
|
|
|
||||||
Consumer and other
|
|
|
||||||
Subtotal
|
|
|
||||||
Non-accruing TDR loans and leases
|
||||||||
Real estate:
|
||||||||
Commercial
|
$ |
|
$ |
|
||||
Agricultural
|
|
|
||||||
Residential and home equity
|
|
|
||||||
Construction
|
|
|
||||||
Total real estate
|
|
|
||||||
Commercial & industrial
|
|
|
||||||
Agricultural
|
|
|
||||||
Commercial leases
|
|
|
||||||
Consumer and other
|
|
|
||||||
Subtotal
|
|
|
||||||
Total TDR loans and leases
|
$
|
|
$
|
|
Year Ended December 31, 2022
|
||||||||||||||||||||||||
(Dollars in thousands)
|
# of Accruing
TDR
|
$ of Accruing
TDR
|
# of Non-
accruing TDR
|
$ of Non-
accruing TDR
|
# of Total
TDR
|
$ of Total
TDR
|
||||||||||||||||||
Loan and lease TDRs
|
||||||||||||||||||||||||
2022
|
|
$
|
|
|
$
|
|
|
$
|
|
|||||||||||||||
2021
|
|
|
|
|
|
|
||||||||||||||||||
2020
|
|
|
|
|
|
|
||||||||||||||||||
2019
|
|
|
|
|
|
|
||||||||||||||||||
Prior
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
|
$
|
|
|
$
|
|
|
$
|
|
Year Ended December 31, 2021
|
||||||||||||||||||||||||
(Dollars in thousands)
|
# of Accruing
TDR
|
$ of Accruing
TDR
|
# of Non-
accruing TDR
|
$ of Non-
accruing TDR
|
# of Total
TDR
|
$ of Total
TDR
|
||||||||||||||||||
Loan and lease TDRs
|
||||||||||||||||||||||||
2021
|
|
$
|
|
|
$
|
|
|
$
|
|
|||||||||||||||
2020
|
|
|
|
|
|
|
||||||||||||||||||
2019
|
|
|
|
|
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
||||||||||||||||||
Prior
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
|
$
|
|
|
$
|
|
|
$
|
|
|
December 31, 2022
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Pass
|
Special
Mention
|
Sub-
standard
|
Doubtful
|
Total Loans
& Leases
|
Total
Allowance
for Credit
Losses
|
||||||||||||||||||
Loans and leases held for investment, net
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Residential and home equity
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Total real estate
|
|
|
|
|
|
|
||||||||||||||||||
Commercial & industrial
|
|
|
|
|
|
|
||||||||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Commercial leases
|
|
|
|
|
|
|
||||||||||||||||||
Consumer and other
|
|
|
|
|
|
|
||||||||||||||||||
Total loans and leases, net
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
December 31, 2021
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Pass
|
Special
Mention
|
Sub-
standard
|
Doubtful
|
Total Loans
& Leases
|
Total
Allowance
for Loan
Losses
|
||||||||||||||||||
Loans and leases held for investment, net
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Residential and home equity
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Total real estate
|
|
|
|
|
|
|
||||||||||||||||||
Commercial & industrial
|
|
|
|
|
|
|
||||||||||||||||||
Agricultural
|
|
|
|
|
|
|
||||||||||||||||||
Commercial leases
|
|
|
|
|
|
|
||||||||||||||||||
Consumer and other
|
|
|
|
|
|
|
||||||||||||||||||
Total loans and leases, net
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
2020
|
2019
|
2018
|
Prior
|
Revolving
Loans
Amortized
Cost
|
Total
|
||||||||||||||||||||||||
Net loans and leases held for investment
|
||||||||||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||||||||||
Commercial
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Agricultural
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Agricultural
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Agricultural
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Residential and home equity
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Residential and home equity
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Residential and home equity
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Construction
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total construction
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Construction
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Total Real estate
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial & industrial
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Commercial & industrial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial & industrial
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Agricultural
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Agricultural
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Agricultural
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Commercial leases
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Commercial leases
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial leases
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Consumer and other
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Special mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Doubtful
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total Consumer and other
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Consumer and other
|
||||||||||||||||||||||||||||||||
Current-period gross charge-offs
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Total net loans and leases
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31,
|
||||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Balance at beginning of the period
|
$
|
|
$
|
|
||||
New loans or advances during year
|
|
|
||||||
Repayments
|
(
|
)
|
(
|
)
|
||||
Balance at end of period
|
$
|
|
$
|
|
|
Year Ended December 31, 2022
|
|||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial &
Agricultural
R/E
|
Construction
|
Residential &
Home Equity |
Commercial
&
Agricultural
|
Commercial
Leases
|
Consumer
& Other
|
Total
|
|||||||||||||||||||||
Allowance for credit losses:
|
||||||||||||||||||||||||||||
Balance at beginning of year
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Impact of Adopting ASC 326
|
( |
) | ( |
) | ||||||||||||||||||||||||
Provision / (recapture) for credit losses
|
|
(
|
)
|
|
|
|
(
|
)
|
|
|||||||||||||||||||
Charge-offs
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net (charge-offs) / recoveries
|
(
|
)
|
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
Balance at end of year
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
Year Ended December 31, 2021
|
|||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial &
Agricultural
R/E
|
Construction
|
Residential &
Home Equity
|
Commercial
&
Agricultural
|
Commercial
Leases
|
Consumer
& Other
|
Total
|
|||||||||||||||||||||
Allowance for credit losses:
|
||||||||||||||||||||||||||||
Balance at beginning of year
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Provision / (recapture) for credit losses
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|
|||||||||||||||||
Charge-offs
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net (charge-offs) / recoveries
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
Balance at end of year
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
Year Ended December 31, 2020
|
|||||||||||||||||||||||||||
(Dollars in thousands)
|
Commercial &
Agricultural
R/E
|
Construction
|
Residential &
Home Equity
|
Commercial
&
Agricultural
|
Commercial
Leases
|
Consumer
& Other
|
Total
|
|||||||||||||||||||||
Allowance for credit losses:
|
||||||||||||||||||||||||||||
Balance at beginning of year
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Provision / (recapture) for credit losses
|
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
|
||||||||||||||||
Charge-offs
|
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net (charge-offs) / recoveries
|
|
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Balance at end of year
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
||||||||||||
(Dollars in thousands)
|
Real Estate
|
Vehicles and
Equipment
|
Total
|
|||||||||
Collateral dependent loans and leases
|
||||||||||||
Real estate:
|
||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
||||||
Agricultural
|
|
|
|
|||||||||
Residential and home equity
|
|
|
|
|||||||||
Construction
|
|
|
|
|||||||||
Total Real estate
|
|
|
|
|||||||||
Commercial & industrial
|
|
|
|
|||||||||
Agricultural
|
|
|
|
|||||||||
Commercial leases
|
|
|
|
|||||||||
Consumer and other
|
|
|
|
|||||||||
Total gross loans and leases
|
$
|
|
$
|
|
$
|
|
December 31, | ||||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Premises and equipment: |
||||||||
Buildings and land
|
$
|
|
$
|
|
||||
Furniture, fixtures, and equipment
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
Subtotal
|
|
|
||||||
Accumulated depreciation and amortization
|
(
|
)
|
(
|
)
|
||||
Total premises and equipment
|
$
|
|
$
|
|
December 31, |
||||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Certificates of deposit:
|
||||||||
Certificates of deposit less than or equal to $250,000
|
$ | $ | ||||||
Certificates of deposit greater than $250,000
|
||||||||
Total certificates of deposit
|
$ |
$ |
(Dollars in thousands)
|
Amount
|
|||
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027 and beyond
|
|
|||
Total certificates of deposit
|
$
|
|
December 31, 2022 | ||||||||||||||||||||||||
|
Actual
|
Required for Capital Adequacy Purposes
|
Minimum to be Categorized as “Well
Capitalized” Under Prompt Corrective
Action Regulation
|
|||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
Farmers & Merchants Bancorp
|
||||||||||||||||||||||||
CET1 capital to risk-weighted assets
|
$
|
|
|
%
|
$
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||
Tier 1 capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
Risk-based capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
Tier 1 leverage capital ratio
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
|
||||||||||||||||||||||||
Farmers & Merchants Bank
|
||||||||||||||||||||||||
CET1 capital to risk-weighted assets
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||||||
Tier 1 capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
|
|
%
|
|||||||||||||||
Risk-based capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
|
|
%
|
|||||||||||||||
Tier 1 leverage capital ratio
|
|
|
%
|
|
|
%
|
|
|
%
|
|
December 31, 2021
|
|||||||||||||||||||||||
|
Actual
|
Required for Capital Adequacy Purposes
|
Minimum to be Categorized as “Well
Capitalized” Under Prompt Corrective
Action Regulation
|
|||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
Farmers & Merchants Bancorp
|
||||||||||||||||||||||||
CET1 capital to risk-weighted assets
|
$
|
|
|
%
|
$
|
|
|
%
|
|
N/A
|
N/A
|
|||||||||||||
Tier 1 capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
Risk-based capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
Tier 1 leverage capital ratio
|
|
|
%
|
|
|
%
|
N/A
|
N/A
|
||||||||||||||||
|
||||||||||||||||||||||||
Farmers & Merchants Bank
|
||||||||||||||||||||||||
CET1 capital to risk-weighted assets
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||||||
Tier 1 capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
|
|
%
|
|||||||||||||||
Risk-based capital to risk-weighted assets
|
|
|
%
|
|
|
%
|
|
|
%
|
|||||||||||||||
Tier 1 leverage capital ratio
|
|
|
%
|
|
|
%
|
|
|
%
|
Year Ended December 31,
|
||||||||||||
(Dollars in thousands, except share and per share amounts)
|
2022
|
2021
|
2020
|
|||||||||
Numerator
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Denominator
|
||||||||||||
Weighted average number of common shares outstanding
|
|
|
|
|||||||||
Weighted average number of dilutive shares outstanding
|
|
|
|
|||||||||
|
||||||||||||
Basic earnings per common share
|
$
|
|
$
|
|
$
|
|
||||||
Diluted earning per commons share
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
Fair Value Measurements
|
|||||||||||||||||||
(Dollars in thousands)
|
Carrying Amount
|
Level 1
|
Level 2
|
Level 3
|
Total Fair Value
|
|||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Available-for-sale debt securities
|
|
|
|
|
|
|||||||||||||||
Held-to-maturity debt securities
|
|
|
|
|
|
|||||||||||||||
Non-marketable securities
|
|
|
|
|
|
|||||||||||||||
Loans and leases, net
|
|
|
|
|
|
|||||||||||||||
Bank-owned life insurance
|
||||||||||||||||||||
|
||||||||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Total deposits
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Subordinated debentures
|
|
|
|
|
|
December 31, 2021
|
Fair Value Measurements
|
|||||||||||||||||||
(Dollars in thousands)
|
Carrying Amount
|
Level 1
|
Level 2
|
Level 3
|
Total Fair Value
|
|||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Available-for-sale debt securities
|
|
|
|
|
|
|||||||||||||||
Held-to-maturity debt securities
|
|
|
|
|
|
|||||||||||||||
Non-marketable securities
|
|
|
|
|
|
|||||||||||||||
Loans and leases, net
|
|
|
|
|
|
|||||||||||||||
Bank-owned life insurance
|
||||||||||||||||||||
|
||||||||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Total deposits |
$ | $ | $ | $ | $ | |||||||||||||||
Subordinated debentures
|
|
|
|
|
|
December 31, 2022
|
Fair Value Measurements
|
|||||||||||||||||||
(Dollars in thousands)
|
Carrying Amount
|
Level 1
|
Level 2
|
Level 3
|
Total Fair
Value
|
|||||||||||||||
Fair valued on a recurring basis:
|
||||||||||||||||||||
Debt securities available-for-sale
|
||||||||||||||||||||
U.S. Treasury notes
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
U.S. Government-sponsored securities
|
|
|
|
|
|
|||||||||||||||
Mortgage-backed securities
|
||||||||||||||||||||
Collateralized mortgage obligations
|
||||||||||||||||||||
Corporate securities
|
||||||||||||||||||||
Other
|
||||||||||||||||||||
Fair valued on a non-recurring basis:
|
||||||||||||||||||||
Collateral dependent loans
|
$ | $ | $ | $ | $ | |||||||||||||||
Other real estate owned
|
December 31, 2021
|
Fair Value Measurements
|
|||||||||||||||||||
(Dollars in thousands)
|
Carrying Amount
|
Level 1
|
Level 2
|
Level 3
|
Total Fair
Value
|
|||||||||||||||
Fair valued on a recurring basis:
|
||||||||||||||||||||
Debt securities available-for-sale
|
||||||||||||||||||||
U.S. Treasury notes
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
U.S. Government-sponsored securities
|
|
|
|
|
|
|||||||||||||||
Mortgage-backed securities
|
||||||||||||||||||||
Collateralized mortgage obligations
|
||||||||||||||||||||
Other
|
||||||||||||||||||||
|
||||||||||||||||||||
Fair valued on a non-recurring basis:
|
||||||||||||||||||||
Individually evaluated loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Other real estate owned
|
December 31, |
||||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Commitments to extend credit, including
unsecured commitments of $
|
$
|
|
$
|
|
||||
Stand-by letters of credit, including unsecured commitments of $
|
|
|
||||||
Performance guarantees under interest rate swap contracts entered into with our clients and third-parties
|
|
|
|
Year Ended December 31,
|
|||||||
(in thousands except for percent and period data)
|
2022
|
2021
|
||||||
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
|
||||||||
Operating Cash Flow from Operating Leases
|
$
|
|
$
|
|
||||
Weighted-Average Remaining Lease Term - Operating Leases, in Years
|
|
|
||||||
Weighted-Average Discount Rate - Operating Leases
|
|
%
|
|
%
|
(Dollars in thousands)
|
Amount
|
|||
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
||||
2028
and beyond
|
|
|||
Total lease payments
|
|
|||
Discount
|
(
|
)
|
||
Net present value of lease liabilities
|
$
|
|
Year Ended December 31, |
||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
2020
|
|||||||||
Income tax expense / (benefit) | ||||||||||||
Current:
|
||||||||||||
Federal
|
$
|
|
$
|
|
$
|
|
||||||
State
|
|
|
|
|||||||||
Total current expense
|
|
|
|
|||||||||
Deferred:
|
||||||||||||
Federal
|
|
|
(
|
)
|
||||||||
State
|
|
(
|
)
|
(
|
)
|
|||||||
Total current deferred benefit
|
|
(
|
)
|
(
|
)
|
|||||||
Provision for
income tax expense
|
$
|
|
$
|
|
$
|
|
|
Year Ended December 31,
|
|||||||||||||||||||||||
|
2022
|
2021
|
2020
|
|||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
Rate
|
Amount
|
Rate
|
Amount
|
Rate
|
||||||||||||||||||
Effective income tax rate
|
||||||||||||||||||||||||
Federal statutory rate
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||||||
State taxes, net of Federal income tax benefit
|
|
|
%
|
|
|
%
|
|
|
%
|
|||||||||||||||
Low-income housing tax credits
|
(
|
)
|
(
|
%)
|
(
|
)
|
(
|
%)
|
(
|
)
|
(
|
%)
|
||||||||||||
Compensation expense
|
( |
) | ( |
%) | ||||||||||||||||||||
Bank owned life insurance
|
(
|
)
|
(
|
%)
|
(
|
)
|
(
|
%)
|
(
|
)
|
(
|
%)
|
||||||||||||
Tax-exempt interest income
|
(
|
)
|
(
|
%)
|
(
|
)
|
(
|
%)
|
(
|
)
|
(
|
%)
|
||||||||||||
Other, net
|
|
|
%
|
|
|
%
|
(
|
)
|
(
|
%)
|
||||||||||||||
Total provision for income tax expense and effective
tax rate
|
$
|
|
|
%
|
$
|
|
|
%
|
$
|
|
|
%
|
|
December 31,
|
|||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Deferred income tax assets:
|
||||||||
Allowance for credit losses
|
$
|
|
$
|
|
||||
Deferred compensation
|
|
|
||||||
Unrealized losses on debt securities | ||||||||
Accrued liabilities
|
|
|
||||||
State income taxes
|
|
|
||||||
Lease liabilities
|
|
|
||||||
SBA PPP loan fee income
|
|
|
||||||
Acquired net operating losses
|
|
|
||||||
Low-income housing tax investments
|
|
|
||||||
Acquired loans fair valuation
|
|
|
||||||
Acquired OREO fair valuation
|
|
|
||||||
Other
|
|
|
||||||
Total deferred income tax assets
|
|
|
||||||
|
||||||||
Deferred income tax liabilities:
|
||||||||
Commercial leasing
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Premises and equipment
|
(
|
)
|
(
|
)
|
||||
Deferred loan and lease costs | ( |
) | ( |
) | ||||
Right of use leasing asset
|
(
|
)
|
(
|
)
|
||||
Core deposit intangible asset
|
(
|
)
|
(
|
)
|
||||
Accretion on investment securities
|
(
|
)
|
(
|
)
|
||||
FHLB dividends
|
(
|
)
|
(
|
)
|
||||
Prepaid assets |
( |
) | ( |
) | ||||
Other
|
(
|
)
|
(
|
)
|
||||
Total deferred income tax liabilities
|
(
|
)
|
(
|
)
|
||||
Net deferred income tax assets
|
$
|
|
$
|
|
December 31, | ||||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Balance Sheets | ||||||||
Assets
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Investment in subsidiaries
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities and shareholders’ equity | ||||||||
Subordinated debentures
|
$
|
|
$
|
|
||||
Other liabilities
|
|
|
||||||
Shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
Year Ended December 31,
|
||||||||||||
(Dollars in thousands)
|
2022
|
2021
|
2020
|
|||||||||
Statements of Income | ||||||||||||
Dividend and other income from subsidiaries
|
$
|
|
$
|
|
$
|
|
||||||
Interest and dividends
|
|
|
|
|||||||||
Total income
|
||||||||||||
Reimbursement of expenses from subsidiaries
|
||||||||||||
Other expenses
|
||||||||||||
Total expense
|
||||||||||||
Income before income taxes
|
||||||||||||
Income tax benefit
|
|
|
|
|||||||||
Equity in undistributed net income of subsidiaries
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
(Dollars in thousands)
|
Year Ended December 31,
|
|||||||||||
Statements of Cash Flows |
2022
|
2021
|
2020
|
|||||||||
Cash flows from operating activities: | ||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Equity in undistributed net income of the Bank
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Change in other assets and liabilities
|
( |
) | ||||||||||
Net cash provided by operating activities
|
|
|
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Payments for investments in non-qualified retirement plans
|
|
|
(
|
)
|
||||||||
Securities sold or matured
|
||||||||||||
Net cash used in investing activities
|
|
|
(
|
)
|
||||||||
Cash flows from financing activities:
|
||||||||||||
Common stock repurchases
|
(
|
)
|
|
(
|
)
|
|||||||
Issuance of common stock
|
|
|
|
|||||||||
Cash dividends paid
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net used in financing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net change in cash and cash equivalents
|
|
(
|
)
|
|
||||||||
Cash and cash equivalents, beginning of year
|
|
|
|
|||||||||
Cash and cash equivalents, end of year
|
$
|
|
$
|
|
$
|
|
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A. |
Controls and Procedures
|
/s/ Kent A. Steinwert
|
/s/ Stephen W. Haley
|
|
Kent A. Steinwert
|
Stephen W. Haley
|
|
Chairman, President, and Chief Executive Officer
|
Executive Vice President and Chief Financial Officer
|
(1) |
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
(2) |
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and
|
(3) |
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
|
Item 9B. |
Other Information
|
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
|
Item 10. |
Directors, Executive Officers and Corporate Governance
|
Item 11. |
Executive Compensation
|
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13. |
Certain Relationships and Related Transactions, and Director Independence
|
Item 14. |
Principal Accounting Fees and Services
|
Item 15. |
Exhibits
|
(a)
|
The following documents are filed as a part of this Annual Report on Form 10-K:
|
(1)
|
Financial Statements and
|
(2)
|
Financial Statement schedules required to be filed by Item 8 of this Annual Report on Form 10-K.
|
(3)
|
The following exhibits are required by Item 601 of Regulation S-K and are included as part of this Annual Report on Form 10-K:
|
Exhibit
Number
|
Description
|
Amended and Restated Certificate of Incorporation filed on Registrant’s Form 10-K for the year ended December 31, 2022.
|
|
Amended and Restated By-Laws filed on Registrant’s Form 10-K for the year ended December 31, 2022.
|
|
Certificate of Designation for the Series A Junior Participating Preferred Stock (included as Exhibit A to the Rights Agreement between Farmers & Merchants Bancorp and Registrar and Transfer Company,
dated as of August 5, 2008, filed as Exhibit 4.1 below), filed on the Registrant’s Form 10-Q for the quarter ended June 30, 2008, is incorporated herein by reference.
|
|
Rights Agreement between Farmers & Merchants Bancorp and Registrar and Transfer Company, dated as of August 5, 2008, including Form of Right Certificate attached thereto as Exhibit B, filed on the
Registrant’s Form 10-Q for the quarter ended June 30, 2008, is incorporated herein by reference.
|
|
Amendment No. 1 to Rights Agreement between Farmers & Merchants Bancorp and Computershare Trust, N.A., as Rights Agent, dated as of February 18, 2016, incorporated herein
by reference to Exhibit 4.2 of the Registrant’s Form 8-A/A filed on February 19, 2016.
|
|
Description of F&M Bancorp Capital Stock, filed on Registrant’s Form 10-K for the year ended December 31, 2019.
|
|
Amended and Restated Employment Agreement effective August 1, 2019, between Farmers & Merchants Bank of Central California and Kent A. Steinwert, filed on Registrant’s Form 10-Q for the quarter ended
June 30, 2019, is incorporated herein by reference.
|
|
Amended and Restated Employment Agreement effective August 1, 2019, between Farmers & Merchants Bank of Central California and Deborah E. Skinner, filed on Registrant’s Form 10-Q for the quarter ended
June 30, 2019, is incorporated herein by reference.
|
|
Amended and Restated Employment Agreement effective August 1, 2019, between Farmers & Merchants Bank of Central California and Jay J. Colombini, filed on Registrant’s Form 10-Q for the quarter ended
June 30, 2019, is incorporated herein by reference.
|
|
Amended and Restated Employment Agreement effective August 1, 2019, between Farmers & Merchants Bank of Central California and Ryan J. Misasi, filed on Registrant’s Form 10-Q for the quarter ended
June 30, 2019, is incorporated herein by reference.
|
Employment Agreement effective May 1, 2017, between Farmers & Merchants Bank of Central California and David M. Zitterow, filed on the Registrant’s Current Report on Form 8-K dated June 30, 2017, is
incorporated herein by reference.
|
|
Employment Agreement effective August 1, 2022, between Farmers & Merchants Bank of Central California and Kyle Koelbel, filed on the Registrant’s Form 10-Q for the quarter ended September 30, 2022, is
incorporated herein by reference.
|
|
Executive Retirement Plan – Performance Component as amended on November 5, 2010, filed on Registrant’s Form 10-Q for the period ended September 30, 2010, is
incorporated herein by reference.
|
|
Executive Retirement Plan – Retention Component as amended on November 5, 2010, filed on Registrant’s Form 10-Q for the period ended September 30, 2010, is incorporated herein by reference.
|
|
Executive Retirement Plan – Salary Component, amended and restated on November 29, 2014, filed on Registrant’s Form 10-K for the year ended December 31, 2014, is incorporated herein by reference.
|
|
Executive Retirement Plan – Equity Component, amended and restated on November 29, 2014, filed on Registrant’s Form 10-K for the year ended December 31, 2014, is incorporated herein by reference.
|
|
Senior Management Retention Plan, amended and restated on November 29, 2014, filed on Registrant’s Form 10-K for the year ended December 31, 2014, is incorporated herein by reference.
|
|
Subsidiaries of the Registrant, filed on Registrant’s Form 10-K for the year ended December 31, 2003, is incorporated herein by reference.
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
Item 16. |
Form 10-K Summary
|
FARMERS & MERCHANTS BANCORP
|
|
/s/ Kent A. Steinwert
|
|
Kent A. Steinwert
|
|
Director, Chairman, President and Chief Executive Officer
(Principal Executive Officer)
|
FARMERS & MERCHANTS BANCORP
|
|
/s/ Stephen W. Haley
|
|
Stephen W. Haley
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
/s/ Kent A. Steinwert
|
Director, Chairman, President and Chief Executive Officer
|
|
Kent A. Steinwert
|
(Principal Executive Officer)
|
|
/s/ Stephen W. Haley
|
Executive Vice President and Chief Financial Officer
|
|
Stephen W. Haley
|
(Principal Financial and Accounting Officer)
|
|
/s/ Edward Corum, Jr.
|
Director
|
|
Edward Corum, Jr.
|
||
/s/ Stephenson K. Green |
Director
|
|
Stephenson K. Green | ||
/s/ Gary Long |
Director
|
|
Gary Long | ||
/s/ Kevin Sanguinetti
|
Director
|
|
Kevin Sanguinetti
|
||
/s/ Calvin Suess
|
Director
|
|
Calvin Suess
|
||
/s/ Craig James
|
Director
|
|
Craig James
|