Farmers & Merchants Bancorp, Inc. Reports 2021 Third-Quarter and Year-to-Date Financial Results

ARCHBOLD, Ohio, Oct. 20, 2021 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2021 third quarter and year-to-date September 30, 2021.

2021 Third Quarter Financial Highlights Include
(compared to the 2020 third quarter period unless noted):

• Net income increased 34.2% to $5.9 million
• Earnings increased 32.5% to $0.53 per basic and diluted share
• Adjusted net income, excluding one-time tax adjusted acquisition expenses, increased 60.8% to $7.1 million
• Adjusted earnings increased 57.5% to $0.63 per basic and diluted share
• Net interest income, after provision for loan losses, increased by 36.5% to a quarterly record of $17.8 million
• Net interest margin increased slightly to 3.53%, from 3.51% for the same period last year
• Third quarter after-tax income benefited from $1.98 million of accelerated fees associated with the Paycheck Protection Program (“PPP”) compared to $329.4 thousand in same quarter 2020.
• Loans have increased 13.6% organically year-to-date, not including recent acquisitions or PPP loans
• Third quarter net charge-offs to average loans were 0.00% for the second consecutive quarter
• Adjusted return on average tangible equity increased to 10.94% from 9.68% on a year over year basis
• Increased the regular quarterly cash dividend payment by 5.9% to $0.18 per share, representing the 27^th consecutive annual dividend increase
• Completed a $35.0 million subordinated note offering, increasing F&M’s Total Risk Based Capital Ratio to 15.57%
• Added two new strong Board members to Farmers & Merchants’ Board of Directors representing our expansion into the Detroit and Urbana markets
• F&M’s fourth annual Charity Golf Classic raised over $32,000 in support for its local communities

“2021 is shaping up to be a transformative year as we focus on bringing our individualized, local, and comprehensive financial products and services to more customers across Ohio, Indiana, and Michigan,” stated Lars B. Eller, President and Chief Executive Officer. “We are well on our way to becoming a $3.0 billion asset bank, and when including Perpetual’s assets, we will have almost $2.6 billion in total assets. Our success is a testament to our strategic growth plan, the value we provide our local communities, and the commitment of F&M’s team members.”

On October 1, 2021, F&M successfully closed the acquisition of Perpetual Federal Savings Bank, Inc. (“PFSB”). PFSB is F&M’s third acquisition within the last twelve months and immediately enhances the Company’s growing franchise within compelling Ohio markets including Urbana, Columbus, Dayton, Springfield, Piqua, Tipp City, Troy, and Sidney. The integration and system conversions were completed on October 18, 2021, and PFSB’s financial metrics will be included in F&M’s fourth-quarter results.

Mr. Eller continued, “These three acquisitions, combined with our Michigan LPO and expansion plans have increased our presence in Indiana, Michigan, and Ohio, while diversifying our revenue streams and immediately contributing to earnings. I am proud of our team’s ability to quickly complete and successfully integrate these acquisitions. In addition, we have simultaneously been growing organically and I am encouraged by the 8.3% organic loan growth F&M produced during the quarter which is evidence of our talented local lenders, and the success of our recently opened offices and LPOs.”

Income Statement
Net income for the 2021 third quarter ended September 30, 2021, was $5.9 million, compared to $4.4 million for the same period last year. Net income per basic and diluted share for the 2021 third quarter was $0.53, compared to $0.40 for the same period last year. Net income for the 2021 nine months ended September 30, 2021, was $15.8 million, compared to $13.3 million for the same period last year. Net income per basic and diluted share for the 2021 nine months was $1.41, compared to $1.20 for the same period last year.

Adjusted net income, excluding one-time tax adjusted acquisition expenses, was $7.1 million, or $0.63 per share for the 2021 third quarter, compared to $4.4 million, or $0.40 per share for the 2020 third quarter. Adjusted net income was $18.2 million, or $1.62 per share for the 2021 nine months, compared to $13.3 million, or $1.20 per share for the 2020 nine months. Included in the financial table section of this press release is a non-GAAP reconciliation.

Mr. Eller continued, “We ended the quarter with record quarterly net income and earnings per share, when adjusted for one-time acquisition expenses. Adjusted ROACE was 9.78%, compared to 7.28% for the same period last year, while adjusted ROA was 1.17% during the 2021 third quarter, and 1.11% year-to-date. In addition, the Bank has had 16 consecutive months with an operating efficiency ratio in the 50% range when removing affiliate and acquisition expenses. Our strong third-quarter financial results and profitability reflect the benefits of our larger scale, diverse revenue streams, strong asset quality, and prudent expense management, and we believe earnings growth will accelerate in the coming quarters.”

Deposits
At September 30, 2021, total deposits were $1.87 billion, an increase of 22.9% from September 30, 2020, and an increase of 16.9% from December 31, 2020. The significant organic deposit growth being experienced is a result of continued strength in expanding relationships with new and existing customers, and the completion of the Ossian Financial Services, Inc. acquisition. In addition, we continue to see growing customer preferences to more stable and secure saving instruments as deposits have increased since the COVID-19 crisis began.

Loan Portfolio and Asset Quality
Total net loans, at September 30, 2021, increased 48.2%, or by $656.8 million to $2.02 billion, compared to $1.36 billion at September 30, 2020, and up 55.1% from $1.30 billion at December 31, 2020. The year-over-year improvement resulted primarily from the contribution of continued organic loan growth and the completion of the Ossian Financial Services, Inc. acquisition. Not including the Ossian acquisition and PPP, loans increased 12.6% organically from the same period a year ago. In addition, during the 2021 third quarter, the Company processed $37.3 million of PPP loan forgiveness and principal payments received, resulting in a total of $9.8 million of PPP loans within F&M’s loan portfolio at September 30, 2021.

Mr. Eller continued, “At September 30, 2021, there were only two loans totaling $3.4 million of COVID-related payment modifications, all of which are interest-only modifications and secured by real estate. This compares to 190 loans representing a balance of $165 million in deferrals at the peak last year. Overall asset quality continues to improve. We ended the third quarter with no charge-offs, and the lowest level of nonperforming assets in five quarters. As economic activity stabilizes, and F&M’s loan performance improves better than pre-pandemic levels, we expect contributions to our allowance for loan losses will also stabilize and align with loan growth in future periods.”

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $6.2 million, or 0.42% of total loans at September 30, 2021, compared to $7.9 million, or 0.58% at September 30, 2020.

“We remain focused on operational excellence, investments in technology, supporting our communities, and ensuring a best-in-class experience for our customers. I am pleased with the Board’s decision to increase our quarterly dividend because of our strong year-to-date financial results and positive outlook. Across F&M, we are working hard to execute our strategic growth plan, and create lasting value for our customers, employees, and shareholders,” concluded Mr. Eller.

Stockholders’ Equity and Dividends
Total stockholders’ equity increased 4.7% to $254.7 million at September 30, 2021, from $243.4 million at September 30, 2020. At September 30, 2021, the Company had a Tier 1 leverage ratio of 9.45%, compared to 10.65% at September 30, 2020.

In August 2021, F&M completed a $35.0 million private placement of 3.25% fixed-to-floating rate subordinated notes due July 30, 2031 (the “Notes”) to various accredited investors (the “Offering”). The Notes are intended to qualify as Tier 2 capital for regulatory purposes. The Company intends to use the net proceeds from the Offering for general corporate purposes, including financing acquisitions and organic growth.

Tangible stockholders’ equity increased to $194.6 million at September 30, 2021, compared to $187.2 million at September 30, 2020. On a per share basis, tangible stockholders’ equity at September 30, 2021, was $17.33 per share, compared to $16.78 per share at September 30, 2020.

For the nine months ended September 30, 2021, the Company has declared cash dividends of $0.52 per share, which is a 6.1% increase over the 2020 nine-month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for over 27 consecutive years. For the three months ended September 30, 2021, the dividend payout ratio was 33.81% compared to 42.66% for the same period last year.

About Farmers & Merchants State Bank:
The Farmers & Merchants State Bank is a local independent community bank that has been serving Northwest Ohio and Northeast Indiana since 1897. The Farmers & Merchants State Bank provides commercial banking, retail banking and other financial services. Our locations are in Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Williams, and Wood counties in Western Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, Steuben and Wells counties, and we have a Loan Production Office in West Bloomfield, Michigan.

Safe harbor statement
Private Securities Litigation Reform Act of 1995. Statements by F&M, including management’s expectations and comments, may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Exchange Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties inherent in general and local banking conditions, competitive factors specific to markets in which F&M and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions, capital market conditions, or the effects of the COVID-19 pandemic, and its impacts on our credit quality and business operations, as well as its impact on general economic and financial market conditions. F&M assumes no responsibility to update this information. For more details, please refer to F&M’s SEC filing, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. Such filings can be viewed at the SEC’s website, www.sec.gov or through F&M’s website www.fm.bank.

Non-GAAP Financial Measures
This press release includes disclosure of financial measures not prepared in accordance with generally accepted accounting principles in the United States (GAAP). A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed by GAAP. Farmers & Merchants Bancorp, Inc. believes that these non-GAAP financial measures provide both management and investors a more complete understanding of the underlying operational results and trends and Farmers & Merchants Bancorp, Inc.’s marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial measures is included within this press release.

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
(Unaudited) (in thousands of dollars, except per share data)
		Three Months Ended																				Nine Months Ended
		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				September 30, 2021				September 30, 2020
Interest Income
Loans, including fees		$	18,766			$	16,259			$	15,612			$	17,061			$	16,181			$	50,637			$	48,256
Debt securities:
U.S. Treasury and government agencies			924				857				751				695				761				2,532				2,674
Municipalities			284				289				308				295				279				881				784
Dividends			44				31				50				35				36				125				107
Federal funds sold			10				6				5				5				4				21				15
Other.			94				88				39				48				32				221				194
Total interest income			20,122				17,530				16,765				18,139				17,293				54,417				52,030
Interest Expense
Deposits			1,221				1,276				1,340				1,619				1,864				3,837				7,019
Federal funds purchased and securities sold under agreements to repurchase			165				163				166				170				174				494				605
Borrowed funds			87				115				222				226				231				424				754
Subordinated notes			199				-				-				-				-				199				-
Total interest expense			1,672				1,554				1,728				2,015				2,269				4,954				8,378
Net Interest Income - Before Provision for Loan Losses			18,450				15,976				15,037				16,124				15,024				49,463				43,652
Provision for Loan Losses			659				641				1,700				1,995				1,987				3,000				4,986
Net Interest Income After Provision For Loan Losses			17,791				15,335				13,337				14,129				13,037				46,463				38,666
Noninterest Income
Customer service fees			2,242				2,198				2,814				2,750				2,299				7,254				6,143
Other service charges and fees			1,010				874				838				980				879				2,722				2,622
Net gain on sale of loans			822				955				1,046				1,894				1,537				2,823				2,128
Net gain on sale of available-for-sale securities			-				-				293				-				-				293				270
Total noninterest income			4,074				4,027				4,991				5,624				4,715				13,092				11,163
Noninterest Expense
Salaries and wages			5,442				4,591				4,390				5,068				5,102				14,423				13,420
Employee benefits			1,621				1,915				1,994				1,140				1,566				5,530				4,461
Net occupancy expense			529				546				577				585				558				1,652				1,686
Furniture and equipment			903				848				791				760				875				2,542				2,383
Data processing			1,548				428				505				428				490				2,481				1,340
Franchise taxes			372				294				446				241				368				1,112				1,105
ATM expense			460				459				449				456				444				1,368				1,234
Advertising			439				331				235				353				411				1,005				979
Net (gain) loss on sale of other assets owned			219				227				(25	)			20				(7	)			421				(13	)
FDIC assessment			296				276				236				223				194				808				410
Mortgage servicing rights amortization			285				524				505				247				296				1,314				784
Consulting fees			256				394				223				407				205				873				561
Other general and administrative			1,951				2,227				2,033				1,358				1,553				6,211				4,740
Total noninterest expense			14,321				13,060				12,359				11,286				12,055				39,740				33,090
Income Before Income Taxes			7,544				6,302				5,969				8,467				5,697				19,815				16,739
Income Taxes			1,624				1,319				1,060				1,691				1,287				4,003				3,420
Net Income			5,920				4,983				4,909				6,776				4,410				15,812				13,319
Other Comprehensive Income (Loss) (Net of Tax):
Net unrealized gain (loss) on available-for-sale securities			173				786				(6,737	)			(207	)			639				(5,778	)			6,298
Reclassification adjustment for realized gain on sale of available-for-sale securities			-				-				(293	)			-				-				(293	)			(270	)
Net unrealized gain (loss) on available-for-sale securities			173				786				(7,030	)			(207	)			639				(6,071	)			6,028
Tax expense (benefit)			36				165				(1,476	)			(44	)			134				(1,275	)			1,266
Other comprehensive income (loss)			137				621				(5,554	)			(163	)			505				(4,796	)			4,762
Comprehensive Income (Loss)		$	6,057			$	5,604			$	(645	)		$	6,613			$	4,915			$	11,016			$	18,081
Basic and Diluted Earnings Per Share		$	0.53			$	0.44			$	0.44			$	0.60			$	0.40			$	1.41			$	1.20
Dividends Declared		$	0.18			$	0.17			$	0.17			$	0.17			$	0.17			$	0.52			$	0.49

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands of dollars, except share data)
		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
		(Unaudited)				(Unaudited)				(Unaudited)								(Unaudited)
Assets
Cash and due from banks		$	112,875			$	93,636			$	118,139			$	98,279			$	46,395
Federal funds sold			45,203				57,483				57,361				77,427				41,358
Total cash and cash equivalents			158,078				151,119				175,500				175,706				87,753
Interest-bearing time deposits			14,622				18,597				4,405				4,653				4,657
Securities - available-for-sale			426,717				407,500				352,974				307,812				259,041
Other securities, at cost			4,905				6,419				5,939				5,939				5,827
Loans held for sale			3,735				8,041				7,511				8,391				7,621
Loans, net			1,479,864				1,443,336				1,327,254				1,288,667				1,351,979
Premises and equipment			26,476				26,915				26,703				27,063				26,776
Goodwill			55,214				56,066				47,340				47,340				47,340
Mortgage servicing rights			3,097				3,146				3,444				3,320				3,027
Other real estate owned			167				198				148				71				206
Bank owned life insurance			27,397				27,218				25,347				25,208				15,501
Other assets			18,711				18,310				16,720				15,374				16,872
Total Assets		$	2,218,983			$	2,166,865			$	1,993,285			$	1,909,544			$	1,826,600
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing		$	438,076			$	443,863			$	384,558			$	351,147			$	330,845
Interest-bearing
NOW accounts			646,237				652,078				605,533				542,317				534,792
Savings			529,532				501,687				451,043				455,145				392,059
Time			252,383				256,445				242,717				247,553				261,177
Total deposits			1,866,228				1,854,073				1,683,851				1,596,162				1,518,873
Federal funds purchased and securities sold under agreements to repurchase			29,601				29,882				30,072				30,239				29,859
Federal Home Loan Bank (FHLB) advances			17,868				17,868				17,840				17,861				17,724
Subordinated notes, net of unamortized issuance costs			34,441				-				-				-				-
Dividend payable			2,002				1,888				1,889				1,889				1,882
Accrued expenses and other liabilities			14,097				12,569				12,805				14,233				14,841
Total liabilities			1,964,237				1,916,280				1,746,457				1,660,384				1,583,179
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value 20,000,000 shares authorized; issued and outstanding 12,230,000 shares 9/30/21 and 12/31/20			81,382				82,259				82,030				81,804				81,577
Treasury stock - 997,680 shares 9/30/21, 1,032,456 shares 12/31/20			(11,718	)			(12,172	)			(11,962	)			(11,932	)			(12,397	)
Retained earnings			184,181				179,734				176,617				173,591				168,381
Accumulated other comprehensive income			901				764				143				5,697				5,860
Total stockholders' equity			254,746				250,585				246,828				249,160				243,421
Total Liabilities and Stockholders' Equity		$	2,218,983			$	2,166,865			$	1,993,285			$	1,909,544			$	1,826,600

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA
			For the Three Months Ended																			For the Nine Months Ended
Selected financial data		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				September 30, 2021			September 30, 2020
Return on average assets			1.12	%			0.90	%			1.01	%			1.43	%			0.98	%		1.00	%		1.03	%
Return on average equity			9.32	%			8.00	%			7.87	%			11.04	%			7.28	%		8.40	%		7.45	%
Yield on earning assets			3.85	%			3.53	%			3.71	%			4.09	%			4.04	%		3.70	%		4.30	%
Cost of interest bearing liabilities			0.45	%			0.44	%			0.53	%			0.64	%			0.74	%		0.47	%		0.95	%
Net interest spread			3.40	%			3.09	%			3.18	%			3.45	%			3.30	%		3.23	%		3.35	%
Net interest margin			3.53	%			3.21	%			3.33	%			3.63	%			3.51	%		3.36	%		3.61	%
Efficiency			63.50	%			64.98	%			62.57	%			52.20	%			62.11	%		63.70	%		61.05	%
Dividend payout ratio			33.81	%			37.89	%			38.48	%			27.77	%			42.66	%		36.55	%		40.68	%
Tangible book value per share (1)		$	17.33			$	16.94			$	17.50			$	17.19			$	16.78
Tier 1 capital to average assets			9.45	%			8.78	%			10.39	%			10.46	%			10.65	%
Average Shares Outstanding			11,209,732				11,191,043				11,197,012				11,177,765				11,142,797			11,199,309			11,135,695
Loans		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
(Dollar amounts in thousands)
Commercial real estate		$	728,852			$	691,122			$	618,754			$	588,825			$	595,146
Agricultural real estate			170,374				189,742				179,945				189,159				192,883
Consumer real estate			202,454				194,715				175,675				175,588				175,963
Commercial and industrial			728,852				216,609				202,958				189,246				238,175
Agricultural			105,580				100,756				100,022				94,358				103,330
Consumer			55,521				56,427				54,445				52,540				53,320
Other			31,096				13,549				14,088				15,757				9,030
Less: Net deferred loan fees and costs			(2,082	)			(4,497	)			(4,208	)			(2,483	)			(3,985	)
Total loans, net		$	2,020,647			$	1,458,423			$	1,341,679			$	1,302,990			$	1,363,862
Asset quality data		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
(Dollar amounts in thousands)
Nonaccrual loans		$	6,248			$	7,031			$	8,139			$	9,404			$	7,870
Troubled debt restructuring		$	6,035			$	5,492			$	5,774			$	6,514			$	7,028
90 day past due and accruing		$	-			$	-			$	-			$	-			$	-
Nonperforming loans		$	6,248			$	7,031			$	8,139			$	9,404			$	7,870
Other real estate owned		$	167			$	198			$	148			$	71			$	206
Nonperforming assets		$	6,415			$	7,229			$	8,287			$	9,475			$	8,076
(Dollar amounts in thousands)
Allowance for loan and lease losses		$	15,698			$	15,087			$	14,425			$	13,672			$	11,883
Allowance for loan and lease losses/total loans			1.05	%			1.03	%			1.08	%			1.05	%			0.87	%
Net charge-offs (recoveries):
Quarter-to-date		$	48			$	(21	)		$	947			$	205			$	37
Year-to-date		$	974			$	926			$	947			$	537			$	331
Net charge-offs to average loans
Quarter-to-date			0.00	%			0.00	%			0.07	%			0.02	%			0.00	%
Year-to-date			0.07	%			0.07	%			0.07	%			0.04	%			0.03	%
Nonperforming loans/total loans			0.42	%			0.48	%			0.61	%			0.72	%			0.58	%
Allowance for loan and lease losses/nonperforming loans			251.26	%			214.58	%			177.24	%			177.96	%			151.01	%
(1) Tangible Equity = Stockholder Equity less goodwill and other intangibles (core deposit intangible, mortgage servicing rights and unrealized gain/loss on securities)

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
(in thousands of dollars, except percentages)
		For the Three Months Ended									For the Three Months Ended
		September 30, 2021									September 30, 2020
Interest Earning Assets:		Average Balance			Interest/Dividends			Annualized Yield/Rate			Average Balance			Interest/Dividends			Annualized Yield/Rate
Loans		$	1,490,988		$	18,766		5.04	%		$	1,359,156		$	16,181		4.76	%
Taxable investment securities			398,060			1,177		1.18	%			245,274			968		1.58	%
Tax-exempt investment securities			17,293			75		2.20	%			26,032			108		2.10	%
Fed funds sold & other			187,398			104		0.22	%			83,760			36		0.17	%
Total Interest Earning Assets			2,093,739		$	20,122		3.85	%			1,714,222		$	17,293		4.04	%
Nonearning Assets			126,157									93,778
Total Assets		$	2,219,896								$	1,808,000
Interest Bearing Liabilities:
Savings deposits		$	1,181,103		$	560		0.19	%		$	915,367		$	798		0.35	%
Other time deposits			252,966			661		1.05	%			258,809			1,066		1.65	%
Other borrowed money			17,868			87		1.95	%			18,920			231		4.88	%
Fed funds purchased & securities sold under agreement to repurchase			29,729			165		2.22	%			30,100			174		2.31	%
Subordinated notes			23,807			199		3.34	%			-			-		0.00	%
Total Interest Bearing Liabilities		$	1,505,473		$	1,672		0.45	%		$	1,223,196		$	2,269		0.74	%
Noninterest bearing Liabilities			460,249									342,388
Stockholders Equity		$	254,174								$	242,416
Net Interest Income and Interest Rate Spread					$	18,450		3.40	%					$	15,024		3.30	%
Net Interest Margin								3.53	%								3.51	%
Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts
		For the Nine Months Ended									For the Nine Months Ended
		September 30, 2021									September 30, 2020
Interest Earning Assets:		Average Balance			Interest/Dividends			Annualized Yield/Rate			Average Balance			Interest/Dividends			Annualized Yield/Rate
Loans		$	1,413,625		$	50,637		4.78	%		$	1,305,998		$	48,256		4.93	%
Taxable investment securities			363,284			3,286		1.21	%			208,499			3,220		2.06	%
Tax-exempt investment securities			18,387			252		2.31	%			25,564			345		2.28	%
Fed funds sold & other			171,015			242		0.19	%			75,917			209		0.37	%
Total Interest Earning Assets			1,966,311		$	54,417		3.70	%			1,615,978		$	52,030		4.30	%
Nonearning Assets			134,108									109,564
Total Assets		$	2,100,419								$	1,725,542
Interest Bearing Liabilities:
Savings deposits		$	1,106,674		$	1,700		0.20	%		$	849,748		$	3,237		0.51	%
Other time deposits			248,426			2,137		1.15	%			268,762			3,782		1.88	%
Other borrowed money			17,859			424		3.17	%			22,401			754		4.49	%
Fed funds purchased & securities sold under agreement to repurchase			29,973			494		2.20	%			33,118			605		2.44	%
Subordinated notes			8,023			199		3.31	%			-			-		0.00	%
Total Interest Bearing Liabilities		$	1,410,955		$	4,954		0.47	%		$	1,174,029		$	8,378		0.95	%
Noninterest bearing Liabilities			438,518									313,224
Stockholders Equity		$	250,946								$	238,289
Net Interest Income and Interest Rate Spread					$	49,463		3.23	%					$	43,652		3.35	%
Net Interest Margin								3.36	%								3.61	%
Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
Non-GAAP Allowance for Loan Losses, excluding PPP Loans
(in thousands of dollars, except percentages)
		September 30, 2021
Allowance for Loan Losses		$	15,698
Credit Mark			2,348
Total Credit Mark and Allowance for Loan Losses			18,046
Loans		$	1,495,562
Adjustments
PPP Loans			(9,806	)
Loans excluding PPP Loans		$	1,485,756
Allowance for Loan Losses			1.05	%
Effect of Credit Mark			0.15	%
Effect of PPP Loans			0.01	%
Allowance for Loan Losses, excluding PPP Loans			1.21	%

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME
		(in thousands of dollars)								(in thousands of dollars)
		Three Months Ended								Nine Months Ended
Non-GAAP Reconciliation of Net Income		September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020
		(Unaudited)								(Unaudited)
Net income as reported		$	5,920			$	4,410			$	15,812			$	13,319
Net income from Ossian State Bank prior to acquisition			-				-				269				-
Acquisition expenses from F&M and Ossian			1,441				-				2,689				-
Tax effect on net income and acquisition expenses			(268	)			-				(563	)			-
Net income excluding acquisition expenses		$	7,093			$	4,410			$	18,207			$	13,319

Company Contact:	Investor and Media Contact:
Lars B. Eller President and Chief Executive Officer Farmers & Merchants Bancorp, Inc. (419) 446-2501 leller@fm.bank	Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com