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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period March 31, 2024
or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number 001-38084
FARMERS & MERCHANTS BANCORP, INC.
(Exact name of registrant as specified in its charter)
|
|
Ohio |
34-1469491 |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
|
|
307 North Defiance Street, Archbold, Ohio |
43502 |
(Address of principal executive offices) |
(Zip Code) |
(419) 446-2501
Registrant’s telephone number, including area code
(Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
|
|
|
Title of each class |
Trading Symbol(s) |
Name of Each Exchange |
Common Stock, No Par Value |
FMAO |
NASDAQ Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
Large accelerated filer |
|
☐ |
|
Accelerated filer |
|
☒ |
Non-accelerated filer |
|
☐ |
|
Smaller reporting company |
|
☐ |
Emerging growth company |
|
☐ |
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate the number of shares of each of the issuers’ classes of common stock, as of the latest practicable date:
|
|
Common Stock, No Par Value |
13,682,070 |
Class |
Outstanding as of May 3, 2024 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
FARMERS & MERCHANTS BANCORP, INC.
INDEX
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Form 10-Q Items |
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Page |
|
PART I. |
FINANCIAL INFORMATION |
3 |
|
|
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|
|
Item 1. |
Financial Statements (Unaudited) |
3 |
|
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|
|
|
|
Condensed Consolidated Balance Sheets - March 31, 2024 and December 31, 2023 |
3 |
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|
|
|
|
|
Condensed Consolidated Statements of Income - Three Months Ended March 31, 2024 and March 31, 2023 |
4 |
|
|
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|
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) - Three Months Ended March 31, 2024 and March 31, 2023 |
5 |
|
|
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|
|
|
Condensed Consolidated Statements of Changes to Stockholders’ Equity - Three Months Ended March 31, 2024 and March 31, 2023 |
6-7 |
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|
|
|
|
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2024 and March 31, 2023 |
8-9 |
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|
|
|
|
Notes to Condensed Consolidated Financial Statements |
10 |
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|
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
46-65 |
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|
|
Item 3. |
Qualitative and Quantitative Disclosures About Market Risk |
66 |
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|
|
Item 4. |
Controls and Procedures |
67 |
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PART II. |
OTHER INFORMATION |
67 |
|
|
|
|
|
Item 1. |
Legal Proceedings |
67 |
|
|
|
|
|
Item 1A. |
Risk Factors |
67-68 |
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|
|
|
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
69 |
|
|
|
|
|
Item 3. |
Defaults Upon Senior Securities |
69 |
|
|
|
|
|
Item 4. |
Mine Safety Disclosures |
69 |
|
|
|
|
|
Item 5. |
Other Information |
69 |
|
|
|
|
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Item 6. |
Exhibits |
70 |
|
|
|
|
|
Signatures |
|
71 |
|
|
|
|
|
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. (1) |
|
|
101.SCH |
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents. (1) |
|
(1)Pursuant to Rule 406T of Regulation S-T, the interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
PART 1 - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
|
|
(Unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
Cash and due from banks |
|
$ |
186,541 |
|
|
$ |
140,917 |
|
Federal funds sold |
|
|
1,241 |
|
|
|
1,284 |
|
Total cash and cash equivalents |
|
|
187,782 |
|
|
|
142,201 |
|
Interest-bearing time deposits |
|
|
2,735 |
|
|
|
2,740 |
|
Securities - available-for-sale |
|
|
347,516 |
|
|
|
358,478 |
|
Other securities, at cost |
|
|
14,744 |
|
|
|
17,138 |
|
Loans held for sale |
|
|
2,410 |
|
|
|
1,576 |
|
Loans, net of allowance for credit losses of $24,680 and $25,024 |
|
|
2,516,687 |
|
|
|
2,556,167 |
|
Premises and equipment |
|
|
35,007 |
|
|
|
35,790 |
|
Construction in progress |
|
|
9 |
|
|
|
8 |
|
Goodwill |
|
|
86,358 |
|
|
|
86,358 |
|
Loan servicing rights |
|
|
5,555 |
|
|
|
5,648 |
|
Bank owned life insurance |
|
|
34,123 |
|
|
|
33,907 |
|
Other assets |
|
|
54,628 |
|
|
|
43,218 |
|
Total Assets |
|
$ |
3,287,554 |
|
|
$ |
3,283,229 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
Noninterest-bearing |
|
$ |
510,731 |
|
|
$ |
528,465 |
|
Interest-bearing |
|
|
|
|
|
|
NOW accounts |
|
|
829,236 |
|
|
|
816,790 |
|
Savings |
|
|
635,430 |
|
|
|
599,191 |
|
Time |
|
|
645,985 |
|
|
|
663,017 |
|
Total deposits |
|
|
2,621,382 |
|
|
|
2,607,463 |
|
Securities sold under agreements to repurchase |
|
|
28,218 |
|
|
|
28,218 |
|
Federal Home Loan Bank (FHLB) advances |
|
|
256,628 |
|
|
|
265,750 |
|
Subordinated notes, net of unamortized issuance costs |
|
|
34,731 |
|
|
|
34,702 |
|
Dividend payable |
|
|
2,975 |
|
|
|
2,974 |
|
Accrued expenses and other liabilities |
|
|
25,930 |
|
|
|
27,579 |
|
Total liabilities |
|
|
2,969,864 |
|
|
|
2,966,686 |
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
|
Common stock - No par value 20,000,000 shares authorized; issued and outstanding 14,564,425 shares 3/31/24 and 12/31/23 |
|
|
135,482 |
|
|
|
135,515 |
|
Treasury stock - 881,155 shares 3/31/24, 899,784 shares 12/31/23 |
|
|
(10,851 |
) |
|
|
(11,040 |
) |
Retained earnings |
|
|
223,648 |
|
|
|
221,080 |
|
Accumulated other comprehensive loss |
|
|
(30,589 |
) |
|
|
(29,012 |
) |
Total stockholders' equity |
|
|
317,690 |
|
|
|
316,543 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
3,287,554 |
|
|
$ |
3,283,229 |
|
See Notes to Condensed Consolidated Unaudited Financial Statements.
Note: The December 31, 2023, Condensed Consolidated Balance Sheet has been derived from the audited Condensed Consolidated Balance Sheet as of that date.
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
(In Thousands, Except Per Share Data) |
|
|
|
Three Months Ended |
|
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
Interest Income |
|
|
|
|
|
|
Loans, including fees |
|
$ |
35,200 |
|
|
$ |
29,703 |
|
Debt securities: |
|
|
|
|
|
|
U.S. Treasury and government agencies |
|
|
1,045 |
|
|
|
1,068 |
|
Municipalities |
|
|
394 |
|
|
|
408 |
|
Dividends |
|
|
333 |
|
|
|
123 |
|
Federal funds sold |
|
|
7 |
|
|
|
21 |
|
Other |
|
|
1,675 |
|
|
|
479 |
|
Total interest income |
|
|
38,654 |
|
|
|
31,802 |
|
Interest Expense |
|
|
|
|
|
|
Deposits |
|
|
15,279 |
|
|
|
8,151 |
|
Federal funds purchased and securities sold under
agreements to repurchase |
|
|
284 |
|
|
|
405 |
|
Borrowed funds |
|
|
2,689 |
|
|
|
1,280 |
|
Subordinated notes |
|
|
284 |
|
|
|
284 |
|
Total interest expense |
|
|
18,536 |
|
|
|
10,120 |
|
Net Interest Income - Before Provision for Credit Losses |
|
|
20,118 |
|
|
|
21,682 |
|
Provision for Credit Losses - Loans |
|
|
(289 |
) |
|
|
817 |
|
Provision for Credit Losses - Off Balance Sheet Credit
Exposures |
|
|
(266 |
) |
|
|
62 |
|
Net Interest Income After Provision for Credit Losses |
|
|
20,673 |
|
|
|
20,803 |
|
Noninterest Income |
|
|
|
|
|
|
Customer service fees |
|
|
2,782 |
|
|
|
2,447 |
|
Other service charges and fees |
|
|
1,057 |
|
|
|
2,554 |
|
Net gain on sale of loans |
|
|
107 |
|
|
|
67 |
|
Net loss on sale of available-for-sale securities |
|
|
- |
|
|
|
(891 |
) |
Total noninterest income |
|
|
3,946 |
|
|
|
4,177 |
|
Noninterest Expense |
|
|
|
|
|
|
Salaries and wages |
|
|
7,846 |
|
|
|
6,657 |
|
Employee benefits |
|
|
2,171 |
|
|
|
2,165 |
|
Net occupancy expense |
|
|
1,027 |
|
|
|
856 |
|
Furniture and equipment |
|
|
1,353 |
|
|
|
1,252 |
|
Data processing |
|
|
500 |
|
|
|
726 |
|
Franchise taxes |
|
|
555 |
|
|
|
366 |
|
ATM expense |
|
|
473 |
|
|
|
623 |
|
Advertising |
|
|
530 |
|
|
|
514 |
|
FDIC assessment |
|
|
580 |
|
|
|
306 |
|
Servicing rights amortization - net |
|
|
168 |
|
|
|
159 |
|
Consulting fees |
|
|
186 |
|
|
|
230 |
|
Other general and administrative |
|
|
2,452 |
|
|
|
3,077 |
|
Total noninterest expense |
|
|
17,841 |
|
|
|
16,931 |
|
Income Before Income Taxes |
|
|
6,778 |
|
|
|
8,049 |
|
Income Taxes |
|
|
1,419 |
|
|
|
1,583 |
|
Net Income |
|
$ |
5,359 |
|
|
$ |
6,466 |
|
Basic Earnings Per Share |
|
$ |
0.39 |
|
|
$ |
0.47 |
|
Diluted Earnings Per Share |
|
$ |
0.39 |
|
|
$ |
0.47 |
|
Dividends Declared |
|
$ |
0.22 |
|
|
$ |
0.21 |
|
See Notes to Condensed Consolidated Unaudited Financial Statements
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Three Months Ended |
|
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
Net Income |
|
$ |
5,359 |
|
|
$ |
6,466 |
|
Other Comprehensive Income (Loss) (Net of Tax): |
|
|
|
|
|
|
Net unrealized gain (loss) on available-for-sale
securities |
|
|
(1,995 |
) |
|
|
8,030 |
|
Reclassification adjustment for realized loss on sale
of available-for-sale securities |
|
|
- |
|
|
|
891 |
|
Net unrealized gain (loss) on available-for-sale
securities |
|
|
(1,995 |
) |
|
|
8,921 |
|
Tax expense (benefit) |
|
|
(418 |
) |
|
|
1,874 |
|
Other comprehensive income (loss) |
|
|
(1,577 |
) |
|
|
7,047 |
|
Comprehensive Income |
|
$ |
3,782 |
|
|
$ |
13,513 |
|
See Notes to Condensed Consolidated Unaudited Financial Statements
Farmers & Merchants Bancorp, Inc. and Subsidiaries
CONDENSED Consolidated StatementS of Changes TO Stockholders’ Equity
For the THREE Months Ended March 31, 2024
(IN THOUSANDS, Except Per Share Data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Shares of |
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
|
|
Common |
|
|
Common |
|
|
Treasury |
|
|
Retained |
|
|
Comprehensive |
|
|
Stockholders' |
|
|
|
Stock |
|
|
Stock |
|
|
Stock |
|
|
Earnings |
|
|
Loss |
|
|
Equity |
|
Balance - January 1, 2024 |
|
|
13,664,641 |
|
|
$ |
135,515 |
|
|
$ |
(11,040 |
) |
|
$ |
221,080 |
|
|
$ |
(29,012 |
) |
|
$ |
316,543 |
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,359 |
|
|
|
- |
|
|
|
5,359 |
|
Other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,577 |
) |
|
|
(1,577 |
) |
Purchase of treasury stock |
|
|
(4,490 |
) |
|
|
- |
|
|
|
(94 |
) |
|
|
- |
|
|
|
- |
|
|
|
(94 |
) |
Issuance of 23,369 shares of restricted stock
(Net of forfeitures - 250) |
|
|
23,119 |
|
|
|
(467 |
) |
|
|
283 |
|
|
|
184 |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation expense |
|
|
- |
|
|
|
434 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
434 |
|
Cash dividends declared - $0.22 per share |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,975 |
) |
|
|
- |
|
|
|
(2,975 |
) |
Balance - March 31, 2024 |
|
|
13,683,270 |
|
|
$ |
135,482 |
|
|
$ |
(10,851 |
) |
|
$ |
223,648 |
|
|
$ |
(30,589 |
) |
|
$ |
317,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Condensed Consolidated Unaudited Financial Statements
Farmers & Merchants Bancorp, Inc. and Subsidiaries
CONDENSED Consolidated StatementS of Changes TO Stockholders’ Equity
For the THREE months Ended March 31, 2023
(IN THOUSANDS, Except Per Share Data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Shares of |
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
|
|
Common |
|
|
Common |
|
|
Treasury |
|
|
Retained |
|
|
Comprehensive |
|
|
Stockholders' |
|
|
|
Stock |
|
|
Stock |
|
|
Stock |
|
|
Earnings |
|
|
Loss |
|
|
Equity |
|
Balance - January 1, 2023 |
|
|
13,608,422 |
|
|
$ |
135,497 |
|
|
$ |
(11,573 |
) |
|
$ |
212,449 |
|
|
$ |
(38,233 |
) |
|
$ |
298,140 |
|
Cumulative effect of change in accounting principle (ASU
2016-13) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,371 |
) |
|
|
- |
|
|
|
(3,371 |
) |
Balance - January 1, 2023 as adjusted for change in
accounting principle |
|
|
13,608,422 |
|
|
|
135,497 |
|
|
|
(11,573 |
) |
|
|
209,078 |
|
|
|
(38,233 |
) |
|
|
294,769 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,466 |
|
|
|
- |
|
|
|
6,466 |
|
Other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,047 |
|
|
|
7,047 |
|
Issuance of 21,700 shares of restricted stock |
|
|
21,700 |
|
|
|
(562 |
) |
|
|
263 |
|
|
|
299 |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation expense |
|
|
- |
|
|
|
306 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
306 |
|
Cash dividends declared - $0.21 per share |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,831 |
) |
|
|
- |
|
|
|
(2,831 |
) |
Balance - March 31, 2023 |
|
|
13,630,122 |
|
|
$ |
135,241 |
|
|
$ |
(11,310 |
) |
|
$ |
213,012 |
|
|
$ |
(31,186 |
) |
|
$ |
305,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Condensed Consolidated Unaudited Financial Statements
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Three Months Ended |
|
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
Net income |
|
$ |
5,359 |
|
|
$ |
6,466 |
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
|
Depreciation |
|
|
990 |
|
|
|
834 |
|
Amortization of premiums on available-for-sale securities, net |
|
|
321 |
|
|
|
397 |
|
Capitalized additions to servicing rights |
|
|
(75 |
) |
|
|
(1,595 |
) |
Servicing rights amortization and impairment |
|
|
168 |
|
|
|
159 |
|
Amortization of core deposit intangible |
|
|
414 |
|
|
|
414 |
|
Amortization of customer list intangible |
|
|
31 |
|
|
|
31 |
|
Net accretion of fair value adjustments |
|
|
(681 |
) |
|
|
(1,133 |
) |
Amortization of subordinated note issuance costs |
|
|
29 |
|
|
|
29 |
|
Stock-based compensation expense |
|
|
434 |
|
|
|
306 |
|
Provision for credit losses - loans |
|
|
(289 |
) |
|
|
817 |
|
Provision for credit losses - off balance sheet credit exposures |
|
|
(266 |
) |
|
|
62 |
|
Gain on sale of loans held for sale |
|
|
(107 |
) |
|
|
(67 |
) |
Originations of loans held for sale |
|
|
(7,559 |
) |
|
|
(6,534 |
) |
Proceeds from sale of loans held for sale |
|
|
6,832 |
|
|
|
6,477 |
|
Loss on derivatives |
|
|
14 |
|
|
|
- |
|
Loss on sales of securities available-for-sale |
|
|
- |
|
|
|
891 |
|
Increase in cash surrender value of bank owned life insurance |
|
|
(216 |
) |
|
|
(196 |
) |
Change in other assets and other liabilities, net |
|
|
(3,916 |
) |
|
|
(4,283 |
) |
Net cash provided by (used in) operating activities |
|
|
1,483 |
|
|
|
3,075 |
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
Activity in available-for-sale securities: |
|
|
|
|
|
|
Maturities, prepayments and calls |
|
|
3,909 |
|
|
|
3,483 |
|
Sales |
|
|
- |
|
|
|
21,963 |
|
Purchases |
|
|
(316 |
) |
|
|
- |
|
Activity in other securities, at cost: |
|
|
|
|
|
|
Sales |
|
|
- |
|
|
|
399 |
|
Purchases |
|
|
(535 |
) |
|
|
(2,143 |
) |
Proceeds from redemption of FHLB stock |
|
|
548 |
|
|
|
- |
|
Change in interest-bearing time deposits |
|
|
5 |
|
|
|
7 |
|
Additions to premises and equipment |
|
|
(219 |
) |
|
|
(2,431 |
) |
Loan originations and principal collections, net |
|
|
38,960 |
|
|
|
(89,520 |
) |
Net cash provided by (used in) investing activities |
|
|
42,352 |
|
|
|
(68,242 |
) |
Cash Flows from Financing Activities |
|
|
|
|
|
|
Net change in deposits |
|
|
13,919 |
|
|
|
44,764 |
|
Net change in federal funds purchased and securities sold under agreements
to repurchase |
|
|
- |
|
|
|
(23,710 |
) |
Proceeds from FHLB advances |
|
|
- |
|
|
|
129,000 |
|
Repayment of FHLB advances |
|
|
(9,105 |
) |
|
|
(92,140 |
) |
Repayment of other borrowings |
|
|
- |
|
|
|
(10,000 |
) |
Purchase of treasury stock |
|
|
(94 |
) |
|
|
- |
|
Cash dividends paid on common stock |
|
|
(2,974 |
) |
|
|
(2,831 |
) |
Net cash provided by financing activities |
|
|
1,746 |
|
|
|
45,083 |
|
Net Increase (Decrease) in Cash and Cash Equivalents |
|
|
45,581 |
|
|
|
(20,084 |
) |
Cash and Cash Equivalents - Beginning of year |
|
|
142,201 |
|
|
|
84,409 |
|
Cash and Cash Equivalents - End of period |
|
$ |
187,782 |
|
|
$ |
64,325 |
|
|
|
|
|
|
|
|
(continued)
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)
|
|
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
Three Months Ended |
|
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
Supplemental Information |
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
Interest paid |
|
$ |
18,554 |
|
|
$ |
9,272 |
|
Income taxes paid |
|
|
- |
|
|
|
44 |
|
Supplemental noncash disclosures: |
|
|
|
|
|
|
Matured security proceeds not received |
|
|
5,053 |
|
|
|
- |
|
Cash dividends declared not paid |
|
|
2,975 |
|
|
|
2,831 |
|
See Notes to Condensed Consolidated Unaudited Financial Statements
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION AND OTHER
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X; accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that are expected for the year ended December 31, 2024. The condensed consolidated balance sheet of the Company as of December 31, 2023, has been derived from the audited consolidated balance sheet of the Company as of that date. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Farmers & Merchants Bancorp, Inc. (the "Company")'s Annual Report on Form 10-K for the year ended December 31, 2023.
The Company recognizes revenues as they are earned based on contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured. The Company’s principal source of revenue is interest income from loans and investment securities. The Company also earns noninterest income from various banking and financial services offered primarily through Farmers & Merchants State Bank (the "Bank"). Interest income is primarily recognized on an accrual basis according to nondiscretionary formulas written in contracts, such as loan agreements or investment security contracts. The Company also earns noninterest income from various banking and financial services provided to business and consumer clients such as deposit account, debit card, and mortgage banking services. Revenue is recorded for noninterest income based on the contractual terms for the service or transaction performed.
NOTE 2 BUSINESS COMBINATION AND ASSET PURCHASE
On October 1, 2022, the Company acquired Peoples-Sidney Financial Corporation (PPSF), the bank holding company for Peoples Federal Savings and Loan Association, a community bank with three full-service offices in Sidney, Anna and Jackson Center, Ohio, in addition to a separate drive-thru location in Sidney, Ohio. PPSF shareholders had the opportunity to elect to receive either 0.6597 shares of Farmers & Merchants Bancorp, Inc. (FMAO) stock or $24.00 per share in cash for each PPSF share owned, subject to a requirement under the Merger Agreement that the minimum number of PPSF shares exchanged for FMAO shares in the merger was no less than 758,566. Fractional shares of FMAO common stock were not issued in respect of fractional interests arising from the merger but were paid in cash pursuant to the merger agreement. PPSF had 1,167,025 shares outstanding on October 1, 2022. The share price of FMAO stock on October 1, 2022 was $26.87. Total consideration for the acquisition was approximately $23.2 million of which $9.8 million was in cash and $13.4 million in stock. As a result of the acquisition, the Company increased its deposit base in Sidney and the greater Shelby County and reduced transaction costs. The Company has reduced costs through economies of scale.
Under the acquisition method of accounting, the total purchase was allocated to net tangible and intangible assets based on their current estimated fair values on the date of acquisition. Of the total purchase price of $23.2 million, $6.0 million has been allocated to core deposit intangible included in other assets and is being amortized over seven years on a straight line basis. Goodwill of $5.9 million, which resulted from the acquisition, consists largely of the synergies and economies of scale expected from combining the operations of the Company and Peoples Federal Savings and Loan Association. Of that total amount, none of the purchase price is deductible for tax purposes. The following table summarizes the consideration paid for Peoples Federal Savings and Loan Association and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date.
ITEM 1 NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
Fair Value of Consideration Transferred |
|
|
|
|
|
(In Thousands) |
|
Cash |
|
$ |
9,806 |
|
Common Shares |
|
|
13,446 |
|
Treasury stock repurchased (125 shares) |
|
|
(3 |
) |
Total |
|
$ |
23,249 |
|
|
|
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed |
|
|
|
|
|
|
|
Assets |
|
|
|
Cash and cash equivalents |
|
$ |
18,881 |
|
Other securities, at cost |
|
|
1,271 |
|
Loans, net |
|
|
101,755 |
|
Premises and equipment |
|
|
1,906 |
|
Goodwill |
|
|
5,924 |
|
Other assets |
|
|
12,081 |
|
Total Assets Purchased |
|
$ |
141,818 |
|
|
|
|
|
Liabilities |
|
|
|
Deposits |
|
|
|
Noninterest bearing |
|
$ |
7,139 |
|
Interest bearing |
|
|
104,719 |
|
Total deposits |
|
|
111,858 |
|
Federal Home Loan Bank (FHLB) advances |
|
|
896 |
|
Accrued expenses and other liabilities |
|
|
5,815 |
|
Total Liabilities Assumed |
|
$ |
118,569 |
|
The fair value of the assets acquired included loans with a fair value of $101.8 million. The gross principal and contractual interest due under the contracts was $116.1 million of which none was expected to be uncollectible. The loans have a weighted average life of 44.4 months.
The fair value of buildings and land included in premises and equipment was written up $581 thousand with $597 thousand attributable to the buildings and is being amortized over the remaining life of each building. The combined average remaining life of the buildings is 12.8 years.
The fair value for certificates of deposit incorporated a valuation amount of $662 thousand which was amortized over 1.1 years. The fair value of Federal Home Loan Bank (FHLB) advances included a valuation amount of $69 thousand which is being amortized over 5.2 years.