GlobeNewswire Inc | Oct 21, 2020 04:00PM EDT

October 21, 2020

ARCHBOLD, Ohio, Oct. 21, 2020 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) today reported financial results for the 2020 third quarter and year-to-date September 30, 2020.

2020Third Quarter Financial Highlights Include (on a year-over-year basis unless noted):

-- Net interest income after provision for loan losses increased 3.0% to $13.0 million, which included a $1.7 million increase in the provision for loan losses as a result of the COVID-19 crisis -- Noninterest income increased 49.2% to $4.7 million, primarily due to strong residential mortgage demand -- Efficiency ratio improved 375 basis points to 62.11% -- Strong organic growth drove a 17.7% increase in net total loans and an 18.8% increase in total deposits -- Asset quality remains strong and nonperforming loans to total loans was 0.58% compared to 0.28% -- Year-to-date, net charge-offs to average loans was 0.03%, compared to 0.04% for the same period last year -- The balance of interest only and full deferrals was $8.5 million at September 30, 2020, a 94.6% decline from $156.6 million at June 30, 2020 -- F&M remains well capitalized under regulatory guidelines with a Tier 1 capital to average assets of 10.65% -- Quarterly cash dividend increased 13.3% to $0.17 per share, reflecting F&Ms commitment to create long-term value for shareholders -- F&M donated over $36,000 to local organizations during the third quarter, a 100% increase from the same quarter last year -- New loan production offices in Muncie, IN and Oxford, OH contributing to loan growth -- New loan production office in West Bloomfield, MI and new full-service office in Fort Wayne expected to open in fourth quarter

Momentum in our business remains strong and I am extremely proud of the high level of service and dedication our employees continue to provide our customers and communities, stated Lars B. Eller, President and Chief Executive Officer. We entered the COVID-19 crisis from a position of strength through our commitment to community-oriented and prudent banking values. F&Ms continued success throughout this challenging period is encouraging and we have been able to offset an increased level of provision for loan losses by reducing our cost of funds, driving strong noninterest income, and improving our efficiency ratio. As a result, third quarter net income increased 3.2%, and earnings per diluted share are up 5.3% over the prior year period.

Mr. Eller continued: Our loan portfolio continues to be resilient. Loans 30 days past due to total loans, excluding PPP loan balance, is comparable to pre-COVID levels and was 0.26% at September 30, 2020, compared to 0.18% at December 31, 2019. In addition, we ended the third quarter with only $8.5 million of interest only and full deferrals, compared to $156.6 million at the end of the second quarter. Given this favorable performance, we believe interest only and full deferrals, as well as second deferrals, will continue to decline throughout the remainder of 2020. However, given the uncertainty surrounding the COVID-19 crisis and the continued impacts the pandemic is having on the global economy, we are proactively monitoring our portfolios performance and our approach to risk remains prudent. As a result, we have increased our allowance for loan and lease losses by nearly 76.0% over the past 12 months, and our allowance for loan and lease losses to total loans, adjusted for our PPP balances, are now over 1.0%.

Income StatementNet income for the 2020 third quarter ended September 30, 2020, was $4.4 million, compared to $4.3 million for the same period last year. Net income per basic and diluted share for the 2020 third quarter was $0.40, compared to $0.38 for the same period last year. Net income for the 2020 nine-month period ended September 30, 2020, was $13.3 million, compared to $13.7 million for the same period last year. Net income per basic and diluted share for the 2020 nine months was $1.20, compared to $1.23 for the same period last year.

Mr. Eller continued, Our provision for loan losses has increased from $410,000 for the nine months ended September 30, 2019 to $5.0 million for the nine months ended September 30, 2020. Helping offset this year-to-date increase, has been a slight increase in total interest income, a 23.5% improvement in total interest expense, and a 26.3% increase in noninterest income. In addition, noninterest expenses have increased only 4.9% year-to-date, primarily due to a one-time $0.5 million increase in salary and wages during the third quarter to support our employees annual incentive program. Despite higher operating expenses, our efficiency ratio for the nine months ended September 30, 2020 was 62.11%, compared to 65.86% for the same period last year and at the bank only level, excluding the parent or any affiliate, our efficiency ratio at September 30, 2020, was 59.89% compared to 62.45% for the same period last year.

DepositsAt September 30, 2020, total deposits were $1.519 billion, an increase of 18.8% from September 30, 2019, and an increase of 2.8% from June 30, 2020. The significant organic deposit growth being experienced is a result of continued strength in expanding relationships with new and existing customers, and the benefits of PPP activity. 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 QualityTotal loans, net at September 30, 2020, increased 17.7% or by $205.2 million to $1.364 billion, compared to $1.159 billion at September 30, 2019, and up 1.4% from $1.345 billion at June 30, 2020. The year-over-year improvement resulted primarily from the contribution of strong organic loan growth and $87.0 million of PPP loans originated during the 2020 second quarter.

Mr. Eller continued, Despite the challenges created by the COVID-19 crisis, we continue to grow our loan portfolio with high quality customers, reflecting the personal financial services and value we provide our local communities and the recent contribution of our newly opened loan production offices in Muncie, IN and Oxford, OH.

F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. The Bank initially had loans of $28 million in deferment and loans of $137 million making interest only payments. As of September 30, 2020, there is a total of $8.5 million outstanding between deferrals and interest only payments within the Companys commercial and agriculture portfolios. The $8.5 million balance comprised $1.4 million with one full month of deferment, $641,000 with three full months of deferment, $5.5 million with three months interest only payments, and $900,000 with six months interest only. Second deferrals were negligible at September 30, 2020 and at this point in time, existing loans outstanding in deferral or interest only payments are expected to be current as of December 31, 2020.

The Companys management team has evaluated its exposure to increased loan losses related to the COVID-19 pandemic and has identified the following industry segments most impacted by the pandemic as of September 30, 2020:

Percent Percent Percent of ofIndustry Segments of Total Total(Dollars in Outstanding Total Payment Loans Interest Only Loans Thousands) Loan Balance Loan Deferment Adjusted Modifications Adjusted Portfolio with with Deferment Interest OnlyHospitality $ 74,426 5.44 % $ - 0.00 % $ 1,679 26.19 %(Hotels)Restaurants 21,726 1.59 % - 0.00 % 2,000 31.20 %Retail Commercial 101,783 7.44 % - 0.00 % - 0.00 %Real Estate *Entertainment 24,568 1.80 % 641 31.10 % 1,302 20.32 %Car Dealers 32,094 2.35 % - 0.00 % - 0.00 %Gas Stations 17,586 1.29 % - 0.00 % - 0.00 %Other 770,197 56.31 % 1,420 68.90 % 1,429 22.29 %Total $ 1,042,380 76.22 % $ 2,061 100.00 % $ 6,410 100.00 % # of Customers 4 5 *Includes Owner Occupied Report on Adjusted Loans as of September 30, 2020

The other category in payment deferment at September 30, 2020, is a loan for a livestock production facility. The other category for interest modifications as of September 30, 2020, is for construction of an agricultural implement facility and a manufacturer.

F&Ms agriculture portfolio continues to perform well, as a result of the Companys experienced lenders, diversified market exposure, and geographic focus within strong agricultural markets. At September 30, 2020, F&Ms $103.3 million agriculture portfolio consisted primarily of row crop and livestock production, with almost no dairy exposure. Agriculture customers are proven farmers with strong balance sheets and 95% of row crop producers utilize crop insurance to mitigate weather and production risks. Approximately, 25% of F&Ms agriculture portfolio at September 30, 2020, was within the livestock sector, and approximately 70% of this exposure is to customers that support production but do not have direct livestock ownership. In addition, approximately 80% of F&Ms livestock exposure is for loans with balances under $750,000 and of the borrowers with direct livestock ownership, approximately 50% are not dependent on the income from livestock to manage their debt payments. Overall, F&M believes agricultural performance will be similar to 2019.

Focusing on Operational Excellence and Executing Long-Term Strategic PlanMr. Eller stated: Based on the lessons we have learned throughout the COVID-19 pandemic, we are making strategic investments across our organization that support the future needs of our operations as well as adapt to changing customer preferences. We are reviewing our office modification strategy. As a part of this, we are exploring the opportunity for offices in compelling markets with a high concentration of our core customer demographic. During the fourth quarter, we are expanding our physical presence into the state of Michigan with a new loan production office in West Bloomfield, MI. Our new full-service office in Fort Wayne, IN is also expected to open in fourth quarter.

We have recently split our back-end operations team into four separate locations to mitigate risk of operating one facility and promote social distancing within our facilities, in addition to supporting our employees efforts to work from home. We also remain focused on attracting and retaining employees to support our current and future growth, and during the third quarter we expanded our employee 401(k) offerings, and upgraded our HR system. Investments in our digital infrastructure continue and in the coming months we will go live with an upgrade to F&Ms website, improve our customers ability to automatically open accounts online, and open a new call center to support our growing digital strategies.

Mr. Eller concluded: Despite the unprecedented impacts of the COVID-19 pandemic, 2020 is shaping up to be a strong year demonstrating the resiliency of our employees, customers, and communities. We are all in this together and F&M remains focused on providing support for you and us, throughout the near-term challenges and future prosperity.

Stockholders Equity and DividendsTotal stockholders equity increased 7.0% to $243.4 million at September 30, 2020, from $227.4 million at September 30, 2019. At September 30, 2020, the Company had a Tier 1 leverage ratio of 10.65%, compared to 11.60% at September 30, 2019.

Tangible stockholders equity increased to $187.2 million at September 30, 2020, compared to $174.6 million at September 30, 2019. The largest change to intangible stockholders equity was an increase in accumulated comprehensive income, which increased from $1.471 million as of September 30, 2019 to $5.860 million as of September 30, 2020. On a per share basis, tangible stockholders equity at September 30, 2020, was $16.78 per share, compared to $15.68 per share at September 30, 2019.

For the nine months ended September 30, 2020, the Company has declared cash dividends of $0.49 per share, which is an 8.9% increase over the 2019 nine month declared dividend payment. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 26 consecutive years. For the nine months ended September 30, 2020, the dividend payout ratio was 42.66% compared to 38.67% 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 through its 30 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 Adams, Allen, DeKalb, Jay, and Steuben counties.

Safe harbor statementFarmers & 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 managements 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&Ms 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 SECs website, www.sec.gov or through F&Ms 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.

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME(Unaudited) (in thousands of dollars, except per share data)

Three Months Ended Nine Months Ended September June 30, March 31, December 31, September September September 30, 2020 2020 2020 2019 30, 2019 30, 2020 30, 2019Interest Income Loans, $ 16,181 $ 16,192 $ 15,883 $ 15,608 $ 15,202 $ 48,256 $ 46,605 including feesDebt securities:U.S. Treasuryand government 761 767 1,146 840 972 2,674 2,501 agenciesMunicipalities 279 243 262 225 190 784 612 Dividends 36 26 45 60 69 107 233 Federal funds 4 5 6 97 120 15 319 soldOther. 32 40 122 319 459 194 887 Total interest 17,293 17,273 17,464 17,149 17,012 52,030 51,157 incomeInterest ExpenseDeposits 1,864 2,254 2,901 3,336 3,654 7,019 9,606 Federal fundspurchased andsecurities sold 174 187 244 207 201 605 527 underagreements torepurchaseBorrowed funds 231 257 266 270 257 754 813 Total interest 2,269 2,698 3,411 3,813 4,112 8,378 10,946 expenseNet InterestIncome - Before 15,024 14,575 14,053 13,336 12,900 43,652 40,211 Provision for LoanLossesProvision for 1,987 1,569 1,430 728 247 4,986 410 Loan LossesNet InterestIncome After 13,037 13,006 12,623 12,608 12,653 38,666 39,801 Provision For LoanLossesNoninterest IncomeCustomer 2,299 2,258 1,586 1,732 1,722 6,143 4,994 service feesOther servicecharges and 879 704 1,039 1,132 1,179 2,622 3,311 feesNet gain on 1,537 364 227 119 260 2,128 558 sale of loansNet gain (loss) onsale of - - 270 - - 270 (26 )available-for-salesecuritiesTotalnoninterest 4,715 3,326 3,122 2,983 3,161 11,163 8,837 incomeNoninterest ExpenseSalaries and 5,102 4,043 4,223 4,029 4,158 13,420 12,300 wagesEmployee 1,566 1,218 1,677 1,410 1,331 4,461 4,148 benefitsNet occupancy 558 564 564 406 630 1,686 1,911 expenseFurniture and 875 750 758 596 720 2,383 2,179 equipmentData processing 490 408 442 396 482 1,340 2,157 Franchise taxes 368 369 368 246 248 1,105 735 ATM expense 444 376 414 434 416 1,234 1,281 Advertising 411 265 303 340 587 979 1,229 Net (gain) losson sale of (7 ) (7 ) 1 16 22 (13 ) 65 other assetsownedFDIC assessment 194 144 72 (11 ) - 410 194 Mortgageservicing 296 356 132 158 149 784 329 rightsamortizationConsulting fees 205 217 139 264 196 561 404 Other generaland 1,786 1,691 1,602 1,482 1,667 5,027 4,897 administrativeTotalnoninterest 12,288 10,394 10,695 9,766 10,606 33,377 31,829 expenseIncome Before 5,464 5,938 5,050 5,825 5,208 16,452 16,809 Income TaxesIncome Taxes 1,054 1,134 945 1,102 933 3,133 3,130 Net Income 4,410 4,804 4,105 4,723 4,275 13,319 13,679 OtherComprehensive Income (Loss)(Net of Tax):Net unrealizedgain (loss) on 639 661 4,998 (472 ) 841 6,298 5,651 available-for-salesecuritiesReclassificationadjustment forrealized (gain) - - (270 ) - - (270 ) 26 loss on sale ofavailable-for-salesecuritiesNet unrealizedgain (loss) on 639 661 4,728 (472 ) 841 6,028 5,677 available-for-salesecuritiesTax expense 134 139 993 (99 ) 176 1,266 1,192 (benefit)Othercomprehensive 505 522 3,735 (373 ) 665 4,762 4,485 income (loss)Comprehensive $ 4,915 $ 5,326 $ 7,840 $ 4,350 $ 4,940 $ 18,081 $ 18,164 IncomeBasic andDiluted $ 0.40 $ 0.43 $ 0.37 $ 0.43 $ 0.38 $ 1.20 $ 1.23 Earnings PerShareDividends $ 0.17 $ 0.16 $ 0.16 $ 0.16 $ 0.15 $ 0.49 $ 0.45 Declared



FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of dollars, except share data) September 30, June 30, 2020 March 31, 2020 December 31, September 30, 2020 2019 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Assets Cash and due from banks $ 46,395 $ 54,336 $ 49,844 $ 50,137 $ 103,188 Federal funds sold 41,358 31,105 40,993 1,159 11,404 Total cash and cash equivalents 87,753 85,441 90,837 51,296 114,592 Interest-bearing time 4,657 4,636 4,869 4,309 4,554 depositsSecurities - 259,041 236,292 204,121 222,293 190,465 available-for-saleOther securities, at cost 5,827 5,810 5,810 5,810 5,789 Loans held for sale 7,621 11,445 2,153 4,248 606 Loans, net 1,351,979 1,334,790 1,239,108 1,211,771 1,151,937 Premises and equipment 26,776 26,049 26,120 26,351 25,990 Goodwill 47,340 47,340 47,340 47,340 47,340 Mortgage servicing rights 3,027 2,740 2,672 2,629 2,556 Other real estate owned 206 135 185 214 351 Bank owned life insurance 15,501 15,399 15,313 15,235 15,151 Other assets 16,872 14,370 16,597 15,834 15,549 Total Assets $ 1,826,600 $ 1,784,447 $ 1,655,125 $ 1,607,330 $ 1,574,880 Liabilities and Stockholders' Equity Liabilities Deposits Noninterest-bearing $ 330,845 $ 336,027 $ 261,786 $ 265,156 $ 261,719 Interest-bearing NOW accounts 534,792 504,846 463,734 423,655 430,646 Savings 392,059 374,871 341,256 322,973 310,667 Time 261,177 261,631 281,931 276,563 274,996 Total deposits 1,518,873 1,477,375 1,348,707 1,288,347 1,278,028 Federal Funds Purchased and 29,859 30,949 30,585 48,073 30,056 securities sold under agreements to repurchaseFederal Home Loan Bank 17,724 19,087 24,788 24,806 24,669 (FHLB) advancesDividend payable 1,882 1,768 1,768 1,768 1,657 Accrued expenses and other 14,841 14,971 12,820 14,078 13,062 liabilities Total liabilities 1,583,179 1,544,150 1,418,668 1,377,072 1,347,472 Commitments and Contingencies Stockholders' Equity Common stock - No par value 20,000,000 sharesauthorized; issued and outstanding 12,230,000 81,577 82,134 81,844 81,535 81,264 shares 9/30/20 and 12/31/19Treasury stock - 1,071,299 shares 9/30/20, (12,397 ) (12,668 ) (12,636 ) (12,456 ) (12,453 ) 1,093,065 shares 12/31/19Retained earnings 168,381 165,476 162,416 160,081 157,126 Accumulated other comprehensive income 5,860 5,355 4,833 1,098 1,471 Total 243,421 240,297 236,457 230,258 227,408 stockholders' equity Total Liabilities and Stockholders' Equity $ 1,826,600 $ 1,784,447 $ 1,655,125 $ 1,607,330 $ 1,574,880

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES SELECT FINANCIAL DATA For the Three Months Ended For the Nine Months Ended Selected financial September 30, June 30, 2020 March 31, 2020 December 31, September 30, September 30, September 30, data 2020 2019 2019 2020 2019Return on average 0.98 % 1.10 % 1.02 % 1.18 % 1.10 % 1.03 % 1.24 % assetsReturn on average 7.28 % 8.07 % 7.06 % 8.26 % 7.40 % 7.45 % 8.26 % equityYield on earning 4.04 % 4.25 % 4.66 % 4.63 % 4.74 % 4.30 % 4.93 % assetsCost of interest 0.74 % 0.91 % 1.22 % 1.40 % 1.55 % 0.95 % 1.42 % bearing liabilitiesNet interest spread 3.30 % 3.34 % 3.44 % 3.23 % 3.19 % 3.35 % 3.51 % Net interest margin 3.51 % 3.59 % 3.75 % 3.60 % 3.60 % 3.61 % 3.88 % Efficiency 62.11 % 57.91 % 63.09 % 63.67 % 65.86 % 61.05 % 64.67 % Dividend payout ratio 42.66 % 36.80 % 43.07 % 43.34 % 38.67 % 40.68 % 34.26 % Tangible book value $ 16.78 $ 16.33 $ 16.26 $ 16.01 $ 15.68 per share (1)Tier 1 capital to 10.65 % 10.70 % 11.56 % 11.52 % 11.60 % average assetsAverage Shares 11,142,797 11,129,341 11,134,870 11,137,004 11,121,426 11,135,695 11,105,993 Outstanding Loans September 30, June 30, 2020 March 31, 2020 December 31, September 30, 2020 2019 2019(Dollar amounts in thousands)Commercial real $ 595,146 $ 589,382 $ 570,217 $ 551,309 $ 502,137 estateAgricultural real 192,883 194,606 194,383 199,105 200,791 estateConsumer real estate 175,963 174,069 174,731 165,349 159,074 Commercial and 238,175 223,842 143,261 135,631 130,150 industrialAgricultural 103,330 107,458 109,584 111,820 110,270 Consumer 53,320 50,108 49,022 49,237 49,552 Other 9,030 9,714 8,336 8,314 8,167 Less: Netdeferred loan fees (3,985 ) (4,456 ) (1,893 ) (1,766 ) (1,445 ) and costsTotal loans,net $ 1,363,862 $ 1,344,723 $ 1,247,641 $ 1,218,999 $ 1,158,696 Asset quality data September 30, June 30, 2020 March 31, 2020 December 31, September 30, 2020 2019 2019(Dollar amounts in thousands)Nonaccrual loans $ 7,870 $ 8,473 $ 3,344 $ 3,400 $ 3,275 Troubled debt $ 7,028 $ 7,034 $ 1,934 $ 956 $ 1,051 restructuring90 day past due and $ - $ - $ - $ - $ - accruingNonperforming loans $ 7,870 $ 8,473 $ 3,344 $ 3,400 $ 3,275 Other real estate $ 206 $ 135 $ 185 $ 214 $ 351 ownedNonperforming assets $ 8,076 $ 8,608 $ 3,529 $ 3,614 $ 3,626 (Dollar amounts in thousands)Allowance for loan $ 11,883 $ 10,538 $ 8,533 $ 7,228 $ 6,759 and lease lossesAllowance for loanand lease losses/ 0.87 % 0.78 % 0.68 % 0.59 % 0.58 % total loansNet charge-offs: Quarter-to-date $ 37 $ 169 $ 125 $ 295 $ 171 Year-to-date $ 331 $ 294 $ 125 $ 685 $ 426 Net charge-offs to average loansQuarter-to-date 0.00 % 0.01 % 0.01 % 0.03 % 0.02 % Year-to-date 0.03 % 0.02 % 0.01 % 0.06 % 0.04 % Nonperforming loans/ 0.58 % 0.63 % 0.27 % 0.28 % 0.28 % total loansAllowance for loanand lease losses/ 151.01 % 117.24 % 256.66 % 187.17 % 173.25 % nonperforming loans (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, 2020 September 30, 2019 Interest Average Interest/ Annualized Average Interest/ AnnualizedEarning Balance Dividends Yield/Rate Balance Dividends Yield/Rate Assets:Loans $ 1,359,156 $ 16,181 4.76 % $ 1,126,173 $ 15,202 5.40 % TaxableInvestment 245,274 968 1.58 % 167,654 1,082 2.58 % SecuritiesTax-exemptInvestment 26,032 108 2.10 % 32,530 149 2.32 % SecuritiesFed Funds 83,760 36 0.17 % 112,961 579 2.05 % Sold & OtherTotalInterest 1,714,222 $ 17,293 4.04 % 1,439,318 $ 17,012 4.74 % EarningAssets Nonearning 93,778 116,191 Assets Total Assets $ 1,808,000 $ 1,555,509 InterestBearing Liabilities:Savings $ 915,367 $ 798 0.35 % 734,075 2,044 1.11 % DepositsOther Time 258,809 1,066 1.65 % 276,793 1,610 2.33 % DepositsOtherBorrowed 18,920 231 4.88 % 24,582 257 4.18 % MoneyFed FundsPurchased & SecuritiesSoldunder 30,100 174 2.31 % 28,947 201 2.78 % Agreement toRepurch.TotalInterest $ 1,223,196 $ 2,269 0.74 % $ 1,064,397 $ 4,112 1.55 % BearingLiabilities Noninterestbearing 342,388 264,183 Liabilities Stockholders $ 242,416 $ 226,929 Equity Net InterestIncome and $ 15,024 3.30 % $ 12,900 3.19 % interestrate spread Net Interest 3.51 % 3.60 % Margin Yields on Tax exempt securities and the portion of the tax-exempt IDBloans 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, 2020 September 30, 2019 Interest Average Interest/ Annualized Average Interest/ AnnualizedEarning Balance Dividends Yield/Rate Balance Dividends Yield/Rate Assets:Loans $ 1,305,998 $ 48,256 4.93 % $ 1,113,892 $ 46,605 5.58 % TaxableInvestment 208,499 3,220 2.06 % 163,106 2,857 2.34 % SecuritiesTax-exemptInvestment 25,564 345 2.28 % 33,554 489 2.46 % SecuritiesFed Funds 75,917 209 0.37 % 77,296 1,206 2.08 % Sold & OtherTotalInterest 1,615,978 $ 52,030 4.30 % 1,387,848 $ 51,157 4.93 % EarningAssets Nonearning 109,564 78,442 Assets Total Assets $ 1,725,542 $ 1,466,290 InterestBearing Liabilities:Savings $ 849,748 $ 3,237 0.51 % 708,280 5,577 1.05 % DepositsOther Time 268,762 3,782 1.88 % 261,592 4,029 2.05 % DepositsOtherBorrowed 22,401 754 4.49 % 25,811 813 4.20 % MoneyFed FundsPurchased & SecuritiesSoldunder 33,118 605 2.44 % 29,657 527 2.37 % Agreement toRepurch.TotalInterest $ 1,174,029 $ 8,378 0.95 % $ 1,025,340 10,946 1.42 % BearingLiabilities Noninterestbearing 313,224 220,034 Liabilities Stockholders $ 238,289 $ 220,916 Equity Net InterestIncome and $ 43,652 3.35 % $ 40,211 3.51 % interestrate spread Net Interest 3.61 % 3.88 % Margin Yields on Tax exempt securities and the portion of the tax-exempt IDBloans included in loans have been tax adjusted based on a 21% tax rate in the charts



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