EX-99 2 fmao-ex99_6.htm EX-99 fmao-ex99_6.htm

Exhibit 99

 

Post Office Box 216

307 North Defiance Street

Archbold, Ohio 43502

NEWS RELEASE

 

Company Contact:

Investor and Media Contact:

Marty Filogamo

Senior Vice President – Marketing Manager

Farmers & Merchants Bancorp, Inc.

(419) 445-3501 ext. 15435

mfilogamo@fm.bank

Andrew M. Berger

Managing Director

SM Berger & Company, Inc.

(216) 464-6400

andrew@smberger.com

 

Farmers & Merchants Bancorp, Inc. Reports

2018 Third-Quarter and Year-to-Date Financial Results

 

ARCHBOLD, OHIO, October 18, 2018, Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2018 third quarter and year-to-date September 30, 2018.

 

2018 Third Quarter Financial Highlights Include (on a year-over-year basis unless noted):

 

62 consecutive quarters of profitability

 

Total loans increased 5.5% to $838,698,000

 

Net interest income after provision for loan losses increased 9.2% to $9,941,000

 

Net income increased 20.3% to $3,875,000

 

Earnings per basic and diluted share increased 20.0% to $0.42

 

Return on average assets was 1.40%, up from 1.20%

 

Return on average equity was 11.19%, up from 9.76%

 

“2018 is shaping up to be a historic year for F&M as we continue to execute our growth initiatives and achieve strong financial results, while investing in our future,” stated Paul S. Siebenmorgen, President and Chief Executive Officer. “Throughout the year, our organic growth initiatives have focused on expanding our reach in newer markets and I am pleased with the success we have achieved so far.  F&M ended the quarter with record total loans, which increased 5.5% over the past 12 months.  In addition, we continue to convert offices into our new layout and will have upgraded two F&M offices by the end of 2018.  The investments in F&M’s physical locations, as well as in our digital and mobile banking platforms, are improving F&M’s customer experience and making it more efficient and convenient for our customers to interact with the Bank.  Finally, I am excited with the August 2018 announcement of the Limberlost Bancshares merger, which quickly expands F&M’s footprint in Indiana.  The merger brings together two well-performing banks that have a similar culture and focus on community banking values. We expect the merger to close at year end or in early first quarter 2019 and look forward to updating our shareholders, customers, communities, and associates on our progress.”  

 

Income Statement

Net income for the 2018 third quarter ended September 30, 2018, was $3,875,000, or $0.42 per basic and diluted share compared to $3,222,000, or $0.35 per basic and diluted share for the same period last year. The 20.3% improvement in net income for the 2018 third quarter was primarily due to a 9.2% increase in net interest income after provision for loan losses, partially offset by a 10.5% increase in noninterest expense.  Net income for the 2018 nine months was $11,756,000, or $1.27 per basic and diluted share compared to $9,284,000, or $1.01 per basic and diluted share for the nine months of 2017. As a result of the Tax Cuts and Job Act, the Bank’s tax rate was lowered which benefitted earnings.

 


Loan Portfolio and Asset Quality

Total loans at September 30, 2018, increased 5.5% to $838,698,000, compared to $795,205,000 at September 30, 2017, and up 1.9% from $823,024,000 at December 31, 2017.  The year-over-year improvement resulted primarily from an 5.8% increase in commercial real estate loans, a 19.0% increase in agricultural loans, a 15.6% increase in consumer loans, and an 7.8% increase in agricultural real estate.

 

The company’s provision for loan losses for the 2018 third quarter was $47,000, compared to $99,000 for the 2017 third quarter. Year-to-date, the provision for loan losses was $219,000, compared to $197,000 for the same period last year.

 

F&M’s loan quality remains strong as the allowance for loan losses to nonperforming loans was 1,399.6% at September 30, 2018, compared to 397.4% at September 30, 2017. Net charge-offs for the third quarter ended September 30, 2018, were $81,000, or 0.01% of average loans, compared to $87,000 or 0.01% of average loans, at September 30, 2017. Year-to-date, net charge-offs were $332,000, or 0.04% of average loans outstanding, compared to $111,000, or 0.01% of average loans outstanding for the same period last year. 

 

Stockholders’ Equity and Dividends

Tangible stockholders’ equity increased to $134,903,000 at September 30, 2018, compared to $129,667,000 at December 31, 2017, and $128,278,000 at September 30, 2017.  On a per share basis, tangible stockholders’ equity at September 30, 2018, was $14.53, compared with $13.99 at December 31, 2017, and $13.84 at September 30, 2017. The increase in tangible stockholders’ equity is the result of growth in retained earnings due to increased profitability. At September 30, 2018, the company had a Tier 1 leverage ratio of 12.63%, compared to 12.02% at September 30, 2017. 

 

For the 2018 third quarter, the company declared cash dividends of $0.14 per share, which represents a dividend payout ratio of 33.2% compared to 37.0% for the same period last year.

 

Mr. Siebenmorgen concluded, “Our pipeline of new loans remains strong and we continue to experience stable economic trends throughout our Western Ohio and Eastern Indiana communities.  In addition, F&M’s asset quality is excellent as nonperforming loans fell to 0.06% of total loans and nonperforming assets have declined 48.8% over the past 12 months, compared to the 1.6% growth in total assets we have experienced over this period.  2018’s third quarter results demonstrate F&M is well positioned to achieve another strong year of growth and improved profitability.”  

 

About Farmers & Merchants State Bank:

The Farmers & Merchants State Bank is a local independent community bank that has been serving Northwest Ohio and Northeast Indiana since 1897. The Farmers & Merchants State Bank provides commercial banking, retail banking and other financial services through its 25 offices. Our locations are in Fulton, Defiance, Hancock, Henry, Lucas, Williams, and Wood counties in Northwest Ohio. In Northeast Indiana, we have offices located in DeKalb, Allen and Steuben counties.

 

Safe harbor statement

Farmers & Merchants Bancorp, Inc. ("F&M") wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995. Statements by F&M, including management's expectations and comments, may not be based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties inherent in general and local banking conditions, competitive factors specific to markets in which F&M and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions or capital market conditions. F&M assumes no responsibility to update this information. For more details, please refer to F&M's SEC filing, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such filings can be viewed at the SEC's website, www.sec.gov.


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME (Unaudited)

(in thousands of dollars, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

 

September 30, 2018

 

 

September 30, 2017

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

10,725

 

 

$

9,547

 

 

$

31,348

 

 

$

27,367

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury and government agencies

 

 

613

 

 

 

605

 

 

 

1,848

 

 

 

1,870

 

Municipalities

 

 

275

 

 

 

290

 

 

 

845

 

 

 

905

 

Dividends

 

 

56

 

 

 

49

 

 

 

164

 

 

 

135

 

Federal funds sold and other

 

 

84

 

 

 

44

 

 

 

221

 

 

 

103

 

Total interest income

 

 

11,753

 

 

 

10,535

 

 

 

34,426

 

 

 

30,380

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

1,611

 

 

 

1,161

 

 

 

4,319

 

 

 

3,289

 

Federal funds purchased and securities sold under

   agreements to repurchase

 

 

134

 

 

 

135

 

 

 

376

 

 

 

366

 

Borrowed funds

 

 

20

 

 

 

37

 

 

 

60

 

 

 

110

 

Total interest expense

 

 

1,765

 

 

 

1,333

 

 

 

4,755

 

 

 

3,765

 

Net Interest Income - Before Provision for Loan Losses

 

 

9,988

 

 

 

9,202

 

 

 

29,671

 

 

 

26,615

 

Provision for Loan Losses

 

 

47

 

 

 

99

 

 

 

219

 

 

 

197

 

Net Interest Income After Provision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For Loan Losses

 

 

9,941

 

 

 

9,103

 

 

 

29,452

 

 

 

26,418

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

 

1,392

 

 

 

1,320

 

 

 

4,323

 

 

 

4,131

 

Other service charges and fees

 

 

1,097

 

 

 

1,134

 

 

 

3,149

 

 

 

3,214

 

Net gain on sale of loans

 

 

184

 

 

 

181

 

 

 

617

 

 

 

600

 

Net gain on sale of available-for-sale securities

 

 

10

 

 

 

-

 

 

 

10

 

 

 

47

 

Total noninterest income

 

 

2,683

 

 

 

2,635

 

 

 

8,099

 

 

 

7,992

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and wages

 

 

3,391

 

 

 

3,236

 

 

 

9,926

 

 

 

9,374

 

Employee benefits

 

 

1,029

 

 

 

943

 

 

 

3,013

 

 

 

2,648

 

Net occupancy expense

 

 

478

 

 

 

434

 

 

 

1,306

 

 

 

1,221

 

Furniture and equipment

 

 

588

 

 

 

493

 

 

 

1,660

 

 

 

1,456

 

Data processing

 

 

364

 

 

 

300

 

 

 

1,000

 

 

 

919

 

Franchise taxes

 

 

243

 

 

 

226

 

 

 

710

 

 

 

676

 

ATM expense

 

 

327

 

 

 

256

 

 

 

972

 

 

 

853

 

Advertising

 

 

236

 

 

 

181

 

 

 

669

 

 

 

548

 

Net loss on sale of other assets owned

 

 

1

 

 

 

13

 

 

 

17

 

 

 

27

 

FDIC assessment

 

 

81

 

 

 

82

 

 

 

249

 

 

 

247

 

Mortgage servicing rights amortization

 

 

84

 

 

 

85

 

 

 

264

 

 

 

266

 

Other general and administrative

 

 

1,304

 

 

 

1,108

 

 

 

3,618

 

 

 

3,291

 

Total noninterest expense

 

 

8,126

 

 

 

7,357

 

 

 

23,404

 

 

 

21,526

 

Income Before Income Taxes

 

 

4,498

 

 

 

4,381

 

 

 

14,147

 

 

 

12,884

 

Income Taxes

 

 

623

 

 

 

1,159

 

 

 

2,391

 

 

 

3,600

 

Net Income

 

 

3,875

 

 

 

3,222

 

 

 

11,756

 

 

 

9,284

 

Other Comprehensive Income (Loss) (Net of Tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on available-for-sale securities

 

 

(617

)

 

 

(472

)

 

 

(3,432

)

 

 

1,984

 

Reclassification adjustment for gain on sale of

   available-for-sale securities

 

 

(10

)

 

 

-

 

 

 

(10

)

 

 

(47

)

Net unrealized gain (loss) on available-for-sale securities

 

 

(627

)

 

 

(472

)

 

 

(3,442

)

 

 

1,937

 

Tax expense (benefit)

 

 

(132

)

 

 

(160

)

 

 

(723

)

 

 

659

 

Other comprehensive income (loss)

 

 

(495

)

 

 

(312

)

 

 

(2,719

)

 

 

1,278

 

Comprehensive Income

 

$

3,380

 

 

$

2,910

 

 

$

9,037

 

 

$

10,562

 

Basic and Diluted Earnings Per Share

 

$

0.42

 

 

$

0.35

 

 

$

1.27

 

 

$

1.01

 

Dividends Declared

 

$

0.14

 

 

$

0.13

 

 

$

0.41

 

 

$

0.37

 


FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

(in thousands of dollars)

 

 

 

September 30, 2018

 

 

December 31, 2017

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

28,782

 

 

$

33,480

 

Federal funds sold

 

 

939

 

 

 

987

 

Total cash and cash equivalents

 

 

29,721

 

 

 

34,467

 

 

 

 

 

 

 

 

 

 

Interest-bearing time deposits

 

 

4,019

 

 

 

4,018

 

Securities - available-for-sale

 

 

183,075

 

 

 

196,398

 

Other securities, at cost

 

 

3,717

 

 

 

3,717

 

Loans held for sale

 

 

1,679

 

 

 

1,221

 

Loans, net

 

 

831,943

 

 

 

816,156

 

Premises and equipment

 

 

22,117

 

 

 

21,726

 

Goodwill

 

 

4,074

 

 

 

4,074

 

Mortgage servicing rights

 

 

2,373

 

 

 

2,299

 

Other real estate owned

 

 

717

 

 

 

674

 

Bank owned life insurance

 

 

14,799

 

 

 

14,523

 

Other assets

 

 

9,778

 

 

 

7,736

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

1,108,012

 

 

$

1,107,009

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

197,088

 

 

$

199,114

 

Interest-bearing

 

 

 

 

 

 

 

 

NOW accounts

 

 

314,873

 

 

 

298,711

 

Savings

 

 

230,306

 

 

 

233,949

 

Time

 

 

186,592

 

 

 

187,566

 

Total deposits

 

 

928,859

 

 

 

919,340

 

 

 

 

 

 

 

 

 

 

Federal Funds Purchased and securities sold under agreements to repurchase

 

 

27,026

 

 

 

39,495

 

Federal Home Loan Bank (FHLB) advances

 

 

5,000

 

 

 

5,000

 

Dividend payable

 

 

1,287

 

 

 

1,193

 

Accrued expenses and other liabilities

 

 

6,493

 

 

 

7,844

 

Total liabilities

 

 

968,665

 

 

 

972,872

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

Common stock - No par value 20,000,000 shares authorized; issued

   and outstanding 10,400,000 shares 9/30/18 and 12/31/17

 

 

10,589

 

 

 

11,546

 

Treasury stock - 1,114,739 shares 9/30/18, 1,134,120 shares 12/31/17

 

 

(12,409

)

 

 

(12,160

)

Retained earnings

 

 

146,072

 

 

 

136,577

 

Accumulated other comprehensive loss

 

 

(4,905

)

 

 

(1,826

)

Total stockholders' equity

 

 

139,347

 

 

 

134,137

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$

1,108,012

 

 

$

1,107,009

 

 


 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30

 

 

September 30

 

Selected financial data

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Return on average assets

 

 

1.40

%

 

 

1.20

%

 

 

1.41

%

 

 

1.16

%

Return on average equity

 

 

11.19

%

 

 

9.76

%

 

 

11.49

%

 

 

9.57

%

Yield on earning assets

 

 

4.52

%

 

 

4.24

%

 

 

4.41

%

 

 

4.12

%

Cost of interest bearing liabilities

 

 

0.92

%

 

 

0.72

%

 

 

0.83

%

 

 

0.68

%

Net interest spread

 

 

3.60

%

 

 

3.52

%

 

 

3.58

%

 

 

3.44

%

Net interest margin

 

 

3.85

%

 

 

3.71

%

 

 

3.80

%

 

 

3.61

%

Efficiency

 

 

63.86

%

 

 

61.41

%

 

 

61.66

%

 

 

61.49

%

Dividend payout ratio

 

 

33.21

%

 

 

37.03

%

 

 

32.02

%

 

 

36.51

%

Tangible book value per share(1)

 

$

14.53

 

 

$

13.84

 

 

 

 

 

 

 

 

 

Tier 1 capital to average assets

 

 

12.63

%

 

 

12.02

%

 

 

 

 

 

 

 

 

 

 

 

September 30

 

 

 

 

 

Loans

 

2018

 

 

2017

 

 

 

 

 

(Dollar amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

417,217

 

 

$

394,481

 

 

 

 

 

Agricultural real estate

 

 

68,548

 

 

 

63,603

 

 

 

 

 

Consumer real estate

 

 

83,134

 

 

 

84,283

 

 

 

 

 

Commercial and industrial

 

 

119,536

 

 

 

124,078

 

 

 

 

 

Agricultural

 

 

103,624

 

 

 

87,095

 

 

 

 

 

Consumer

 

 

41,444

 

 

 

35,843

 

 

 

 

 

Industrial development bonds

 

 

6,005

 

 

 

6,555

 

 

 

 

 

Less: Net deferred loan fees and costs

 

 

(810

)

 

 

(733

)

 

 

 

 

Total loans

 

$

838,698

 

 

$

795,205

 

 

 

 

 

 

 

 

September 30

 

 

 

 

 

Asset quality data

 

2018

 

 

2017

 

 

 

 

 

(Dollar amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

483

 

 

$

1,729

 

 

 

 

 

Troubled debt restructuring

 

$

205

 

 

$

679

 

 

 

 

 

90 day past due and accruing

 

$

 

 

$

 

 

 

 

 

Nonperforming loans

 

$

483

 

 

$

1,729

 

 

 

 

 

Other real estate owned

 

$

717

 

 

$

615

 

 

 

 

 

Non-performing assets

 

$

1,200

 

 

$

2,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollar amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan and lease losses

 

$

6,755

 

 

$

6,870

 

 

 

 

 

Allowance for loan and lease losses/total loans

 

 

0.81

%

 

 

0.86

%

 

 

 

 

Net charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

Quarter-to-date

 

$

81

 

 

$

87

 

 

 

 

 

Year-to-date

 

$

332

 

 

$

111

 

 

 

 

 

Net charge-offs to average loans

 

 

 

 

 

 

 

 

 

 

 

 

Quarter-to-date

 

 

0.01

%

 

 

0.01

%

 

 

 

 

Year-to-date

 

 

0.04

%

 

 

0.01

%

 

 

 

 

Non-performing loans/total loans

 

 

0.06

%

 

 

0.22

%

 

 

 

 

Allowance for loan and lease losses/nonperforming loans

 

 

1399.58

%

 

 

397.35

%