Farmers & Merchants Bancorp, Inc. Reports 2015 Fourth-Quarter and Full-Year Financial Results

Feb 04, 2016, 08:15 ET from Farmers & Merchants Bancorp, Inc.

ARCHBOLD, Ohio, Feb. 4, 2016 /PRNewswire/ -- Farmers & Merchants Bancorp, Inc. (OTCQX: FMAO) today reported financial results for the 2015 fourth quarter and twelve months ended December 31, 2015.

2015 Fourth Quarter Financial Highlights Include (on a year-over-year basis unless noted):

  • 51 consecutive quarters of profitability
  • Total loans increased 8.0% from 2015 third quarter
  • Net interest income after provision for loan losses increased 2.0% to $7,725,000
  • Net income increased 4.2% to $2,772,000
  • Earnings per basic and diluted shares increased 5.3% to $0.60
  • Noninterest income improved 4.6% to $2,705,000
  • Construction of Ft. Wayne, Indiana branch is on track for a 2016 spring opening

2015 Full-Year Financial Highlights Include:

  • Total loans increased 10.3% to a record $685,878,000
  • Net income increased 7.2% to a record $10,340,000
  • Earnings per basic and diluted shares increased 7.7% to a record $2.24
  • Noninterest income improved 5.9% to $10,788,000
  • Return on average assets of 1.08%, up from 1.02%
  • Return on average equity of 8.80%, up from 8.72%
  • Tangible book value per share increased 5.4%

Paul S. Siebenmorgen, President and Chief Executive Officer, stated, "We achieved many operating and financial milestones during 2015, which include record earnings, loans, and assets.  These solid financial results are possible because of the strong support of our loyal customers, local communities, dedicated employees, and shareholders.  I am pleased we were able to share our success with our shareholders, and during 2015 we paid $3,943,000 in dividend payments as well as repurchasing 30,685 shares of our common stock.  On January 15, 2016 F&M's Board of Directors authorized the repurchase of up to 200,000 shares of our common stock, reflecting the confidence management and the Board have in our future.  We continue to methodically add F&M offices to grow our presence in locations that share our community banking values.  Most recently, we added our Sylvania office, which opened during the second half of 2014 and exceeded our expectations, while contributing to profits in 2015.  The Company continues to focus on expansion and our next office in Ft. Wayne, Indiana is under construction and on schedule for a 2016 spring opening.  We are excited to expand our footprint to this compelling market.  As a note, we expect the office will be a slight drag on earnings during 2016 as a result of start-up costs, but we are optimistic this will be a temporary impact, and expect the office will contribute significantly to earnings as it matures." 

Income Statement
Net income for the 2015 fourth quarter ended December 31, 2015 was $2,772,000, or $0.60 per basic and diluted share compared to $2,661,000, or $0.57 per basic and diluted share for the same period last year. The 4.2% improvement in net income for the 2015 fourth quarter was primarily due to a 2.0% increase in net interest income after provision for loan losses, and a 4.6% increase in noninterest income, partially offset by a 3.5% increase in noninterest expense. 

Net income for the 2015 twelve months was $10,340,000, or $2.24 per basic and diluted share compared to $9,646,000, or $2.08 per basic and diluted share for the twelve months ended December 31, 2014.  The 7.7% improvement in net income for 2015 was primarily due to a 3.1% increase in net interest income after provision for loan losses, and a 5.9% increase in noninterest income, which was partially offset by a 3.4% increase in noninterest expense. 

Loan Portfolio and Asset Quality
Total loans at December 31, 2015 were $685,878,000, compared to $621,926,000 at December 31, 2014, and $635,239,000 at September 30, 2015.  Total loans for the 2015 fourth quarter compared with the same period last year increased 10.3%, and were up 8.0% from the 2015 third quarter.  The year-over-year improvement resulted primarily from a 19.5% increase in commercial real estate loans, a 10.8% increase in agricultural loans, and a 15.0% increase in agricultural real estate loans, offset by a 9.6% reduction in consumer real estate loans. 

Asset quality remains strong as the company's provision for loan losses for the 2015 fourth quarter was $85,000, compared to $37,000 for the 2014 fourth quarter.  The provision for loan losses for 2015 was $625,000, a 47.5% reduction from 2014.  The allowance for loan losses to nonperforming loans was 293.8% at December 31, 2015, compared to 346.3% at December 31, 2014.  Net charge-offs for the year ended December 31, 2015 were $473,000, or 0.08% of total loans, compared to $480,000 or 0.08% of total loans, at December 31, 2014.  

Stockholders' Equity and Dividends
Tangible stockholders' equity increased to $114,960,000 as of December 31, 2015, compared to $109,034,000 at December 31, 2014.  On a per share basis, tangible stockholders' equity at December 31, 2015 was $24.92 compared with $23.56 at December 31, 2014. The increase in tangible stockholders' equity is the result of growth in retained earnings due to increased profitability.  At December 31, 2015, the company had a Tier 1 leverage ratio of 11.91%, up from 11.70% at December 31, 2014. 

For 2015, the company declared cash dividends of $0.87 per share, which is a 3.6% increase over 2014's dividend payment.  For 2015, the dividend payout ratio was 38.5% compared to 40.0% for the same period last year.

Mr. Siebenmorgen concluded, "On the backdrop of improving local economies, our loan portfolio grew significantly in the fourth quarter.  This growth was driven by strong demand for commercial real estate and commercial and industrial loans.  I am pleased that our loan to deposit ratio was 88.1% at December 31, 2015 compared to 80.8% last year, and 65.0% in 2012.  Not only are we utilizing our deposit base more effectively, but we are also realigning our strategy to provide value to our depositors while building revenue or decreasing costs to the Bank.  The goal of all these strategies is to improve the overall profitability of the bank, and I am encouraged by the progress we made in 2015 as we experienced improvements in both return on average assets and return on average equity. We ended 2015 with favorable momentum, and we are optimistic this will continue throughout 2016." 

About Farmer & 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 22 offices, with expansion underway in the greater Ft. Wayne, Indiana market. Our locations are in Fulton, Defiance, Henry, Lucas, Williams, and Wood counties in northwest Ohio. In Northeast Indiana we have offices located in DeKalb 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; 000's Omitted, Except Per Share Data)



Condensed Consolidated Statement of Income & Comprehensive Income


(in thousands of dollars, except per share data)


Three  Months Ended 


Twelve  Months Ended 


December 31, 


December 31, 


2015


2014


2015


2014

Interest Income








Loans, including fees

$                     7,695


$                     7,308


$                   29,293


$                   28,070

Debt securities:








U.S. Treasury and government agencies

615


689


2,434


3,171

Municipalities 

378


478


1,739


2,037

Dividends

37


37


148


156

Federal funds sold

1


3


8


7

Other

7


4


28


12

Total interest income

8,733


8,519


33,650


33,453

Interest Expense








Deposits

823


843


3,269


3,458

Federal funds purchased and securities sold 








under agreements to repurchase

99


64


317


254

Borrowed funds

1


-


1


4

Total interest expense

923


907


3,587


3,716

Net Interest Income - Before provision for loan losses

7,810


7,612


30,063


29,737

Provision for Loan Losses  

85


37


625


1,191

Net Interest Income After Provision








For Loan Losses

7,725


7,575


29,438


28,546

Noninterest Income








Customer service fees

1,676


1,383


5,847


5,224

Other service charges and fees

827


1,052


3,790


3,819

Net gain on sale of loans 

169


150


700


647

Net gain on sale of available-for-sale securities

33


-


451


494

Total noninterest income

2,705


2,585


10,788


10,184

Noninterest Expense








Salaries and Wages

2,824


2,657


10,907


10,186

Employee benefits

1,000


832


3,555


3,324

Net occupancy expense

340


265


1,352


1,107

Furniture and equipment

305


309


1,629


1,541

Data processing

333


307


1,300


1,250

Franchise taxes

186


195


746


781

Net loss on sale of other assets owned

4


4


47


157

FDIC Assessment

121


115


485


503

Mortgage servicing rights amortization 

98


86


374


344

Other general and administrative

1,398


1,615


5,672


6,020

Total noninterest expense

6,609


6,385


26,067


25,213

Income Before Income Taxes

3,821


3,775


14,159


13,517

Income Taxes

1,049


1,114


3,819


3,871

Net Income

2,772


2,661


10,340


9,646

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








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

(1,016)


712


100


1,158

Reclassification adjustment for gain on sale of
     available-for-sale securities

(33)


-


(451)


(494)

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

(1,049)


712


(351)


664

Tax effect

(356)


242


(119)


226

Other Comprehensive Income (Loss)

(693)


470


(232)


438









Comprehensive Income

$                     2,079


$                     3,131


$                   10,108


$                   10,084

Earnings Per Share - Basic and Diluted

$                       0.60


$                       0.57


$                       2.24


$                       2.08

Weighted Average Shares Outstanding

4,621,122


4,627,338


4,617,058


4,628,178

Dividends Declared 

$                       0.22


$                       0.21


$                       0.87


$                       0.84

 

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2015 AND 2014

(000'S OMITTED EXCEPT PER SHARE DATA)






2015


2014

Assets






Assets






          Cash and due from banks



$        21,333


$        22,246

          Federal Funds Sold



685


2,049


Total cash and cash equivalents



22,018


24,295

          Securities - available for sale



235,115


248,492

          Other Securities, at cost



3,717


3,717

          Loans, net



679,821


616,021

          Premises and equipment



20,587


20,300

          Goodwill



4,074


4,074

          Mortgage Servicing Rights



2,056


2,023

          Other Real Estate Owned 



1,175


1,094

          Other assets



20,505


21,197








Total Assets



$      989,068


$      941,213

Liabilities and Stockholders' Equity






Liabilities







          Deposits 







Noninterest-bearing



$      171,112


$      164,009


Interest-bearing







     NOW accounts 



190,890


179,862


     Savings



225,052


223,189


     Time



184,285


195,500


Total deposits



771,339


762,560

          Federal Funds purchased and 






               Securities sold under agreement to repurchase



78,815


55,962

          Federal Home Loan Bank (FHLB) Advances



10,000


-

          Dividend payable



1,007


965

          Accrued expenses and other liabilities



7,810


7,233


Total liabilities



868,971


826,720

Commitments and Contingencies













Stockholders' Equity






          Common stock - No par value - 6,500,000 shares







authorized; 5,200,000 shares issued & outstanding



12,086


12,222

          Treasury Stock - 587,466 shares 2015, 572,662 shares 2014



(12,389)


(11,928)

          Retained earnings



120,188


113,755

          Accumulated other comprehensive income 



212


444


                 Total stockholders' equity 



120,097


114,493








Total Liabilities and Stockholders' Equity



$      989,068


$      941,213

 




For the Three Months

Ended



For the Twelve Months Ended



December 31,



December 31,

Selected financial data


2015



2014



2015



2014

Return on average assets


1.14%



1.14%



1.08%



1.02%

Return on average equity


9.26%



9.40%



8.80%



8.72%

Yield on earning assets


3.90%



3.94%



3.90%



4.07%

Cost of interest bearing liabilities


0.49%



0.50%



0.54%



0.55%

Net interest spread


3.41%



3.44%



3.35%



3.52%

Net interest margin


3.49%



3.52%



3.49%



3.63%

Efficiency


62.72%



62.28%





















December 31,









2015



2014



















Tier 1 capital to average assets


11.91%



11.70%







Tangible book value per share

$

24.92


$

23.56







Dividend payout ratio


38.54%



40.04%





















December 31,







Loans


2015



2014







(Dollar amounts in thousands)










Consumer real estate

$

88,189


$

97,550







Agricultural real estate


58,525



50,895







Agricultural


82,654



74,611







Commerical real estate


322,762



270,188







Commercial and industrial


100,125



100,126







Consumer


27,770



24,277







Industrial development bonds


6,491



4,698







  Less: Net deferred loan fees and costs


(638)



(419)







Total loans


685,878



621,926







  Less: Allowance for loan losses


(6,057)



(5,905)







            Loans - Net

$

679,821


$

616,021





















December 31,







Asset quality data


2015



2014







(Dollar amounts in thousands)










Non-accrual loans

$

2,041


$

1,705







Troubled debt restructuring

$

1,239


$

810







90 day past due and accruing

$

-


$

-







Nonperforming loans

$

2,062


$

1,705







Other real estate owned

$

1,175


$

1,094







Non-performing assets

$

3,237


$

2,799



















(Dollar amounts in thousands)










Allowance for loan and lease losses

$

6,057


$

5,905







Allowance for loan and lease losses/total loans


0.88%



0.95%







Net charge-offs:












   Quarter-to-date

$

193


$

48







   Year-to-date

$

473


$

480







Net charge-offs to average loans












   Quarter-to-date


0.03%



0.01%







   Year-to-date


0.08%



0.08%







Non-performing loans/total loans


0.30%



0.27%







Allowance for loan and lease losses/nonperforming loans


293.75%



346.30%







 

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.com




Andrew M. Berger

Managing Director

SM Berger & Company, Inc.

(216) 464-6400

andrew@smberger.com

 

SOURCE Farmers & Merchants Bancorp, Inc.