Shareholders' Equity

9 Months Ended

Sep. 30, 2022

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 6—Shareholders’ Equity

The Company and the Bank are subject to various regulatory capital adequacy guidelines as outlined under Part 324 of the FDIC Rules and Regulations. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Company and the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The Company believes that it is currently in compliance with all of these capital requirements and that they will not result in any restrictions on the Company’s business activity.

Management believes that the Bank meets the requirements to be categorized as “well capitalized” under the FDIC regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables.

The Company’s and Bank’s actual and required capital amounts and ratios are as follows: 

	September 30, 2022
	Actual					Minimum to be Categorized as “Adequately Capitalized”					Minimum to be Categorized as “Well Capitalized”
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Farmers & Merchants Bancorp
CET1 capital to risk-weighted assets	$	482,053		11.82	%	$	183,537		4.50	%		N/A		N/A
Tier 1 capital to risk-weighted assets		492,053		12.06	%		244,716		6.00	%		N/A		N/A
Risk-based capital to risk-weighted assets		543,218		13.32	%		326,288		8.00	%		N/A		N/A
Tier 1 leverage capital ratio		492,053		9.12	%		215,702		4.00	%		N/A		N/A
Farmers & Merchants Bank
CET1 capital to risk-weighted assets	$	491,237		12.04	%	$	183,531		4.50	%	$	265,101		6.50	%
Tier 1 capital to risk-weighted assets		491,237		12.04	%		244,708		6.00	%		326,278		8.00	%
Risk-based capital to risk-weighted assets		542,400		13.30	%		326,278		8.00	%		407,847		10.00	%
Tier 1 leverage capital ratio		491,237		9.12	%		215,498		4.00	%		269,372		5.00	%

	December 31, 2021
	Actual					Minimum to be Categorized as “Adequately Capitalized”					Minimum to be Categorized as “Well Capitalized”
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Farmers & Merchants Bancorp
CET1 capital to risk-weighted assets	$	450,687		11.68	%	$	173,674		4.50	%		N/A		N/A
Tier 1 capital to risk-weighted assets		460,687		11.94	%		231,566		6.00	%		N/A		N/A
Risk-based capital to risk-weighted assets		509,091		13.19	%		308,755		8.00	%		N/A		N/A
Tier 1 leverage capital ratio		460,687		8.92	%		206,606		4.00	%		N/A		N/A
Farmers & Merchants Bank
CET1 capital to risk-weighted assets	$	459,813		11.91	%	$	173,664		4.50	%	$	250,847		6.50	%
Tier 1 capital to risk-weighted assets		459,813		11.91	%		231,551		6.00	%		308,735		8.00	%
Risk-based capital to risk-weighted assets		508,215		13.17	%		308,735		8.00	%		385,919		10.00	%
Tier 1 leverage capital ratio		459,813		8.91	%		206,426		4.00	%		258,033		5.00	%

Basic and diluted earnings per common share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period.

Earnings per common share have been computed based on the following:

	Three Months Ended September 30,
(Dollars in thousands, except share and per share amounts)	2022		2021
Numerator
Net income	$	19,536	$	17,502
Denominator
Weighted average number of common shares outstanding		775,109		789,646
Weighted average number of dilutive shares outstanding		775,109		789,646
Basic earnings per common share	$	25.20	$	22.16
Diluted earnings per common share	$	25.20	$	22.16

	Nine Months Ended September 30,
(Dollars in thousands, except share and per share amounts)	2022		2021
Numerator
Net income	$	55,037	$	50,368
Denominator
Weighted average number of common shares outstanding		780,988		789,646
Weighted average number of dilutive shares outstanding		780,988		789,646
Basic earnings per common share	$	70.47	$	63.79
Diluted earnings per common share	$	70.47	$	63.79

On November 15, 2021, the Board of Directors reauthorized the Company’s share repurchase program for up to $20.0 million of the Company’s common stock (“Repurchase Plan”), representing approximately 4% of outstanding shareholders’ equity. Repurchases by the Company under the Repurchase Plan may be made from time to time through open market purchases, trading plans established in accordance with SEC rules, privately negotiated transactions, or by other means.

During the first nine months of 2022 the Company repurchased 18,824 shares under the Repurchase Plan, for a total of $17.9 million.