2025 First Quarter Investor Presentation NASDAQ: FMAO Forward Looking Statement Statements contained in any portion of the Company's annual meeting may be forward-looking statements, as that term is defined in the private securities litigation reform act of 1995. Forward- looking statements may be identified by the use of such words as "intend," "believe," "expect," "anticipate," "should," "planned," "estimated," and "potential." Such forward-looking statements are based on current expectations but may diff ...

Acquisitions - The total consideration for the acquisition of Peoples-Sidney Financial Corporation was approximately $23.2 million, consisting of $9.8 million in cash and $13.4 million in stock[21]. - The acquisition of Perpetual Federal Savings Bank had a total consideration of approximately $100.3 million, with $59.2 million in cash and $41.1 million in stock[24]. - The total purchase price for the acquisition of Ossian Financial Services, Inc. was approximately $20.0 million, all in cash[27]. - The acquisition of Limberlost Bancshares, Inc. amounted to approximately $78.9 million, with $8.5 million in cash and $70.4 million in stock[29]. - The goodwill resulting from the acquisition of Peoples Federal Savings and Loan Association was $5.9 million, primarily due to expected synergies and economies of scale[22]. - The Company has reduced costs through economies of scale as a result of the acquisitions[21]. Financial Performance - Net income for the three months ended March 31, 2025, was $6.952 million, a 29.7% increase from $5.359 million in the same period of 2024[90]. - Basic and diluted earnings per share increased to $0.51 for the three months ended March 31, 2025, up from $0.39 in 2024, reflecting improved profitability[90]. - Overall net income for Q1 2025 was $1.6 million higher than Q1 2024, indicating a positive outlook for profitability[149]. - Noninterest income exceeded $4 million for the quarter, driven primarily by treasury services and increased debit card usage[147]. - Noninterest expenses rose by $919 thousand compared to Q1 2024, with significant increases in consulting services and employee benefits[148]. Loan Portfolio - The company reported a net loan balance of $2.56 billion as of March 31, 2025, an increase from $2.54 billion as of December 31, 2024[45]. - The company’s loan portfolio included $1.33 billion in commercial real estate loans as of March 31, 2025, up from $1.31 billion at the end of 2024[45]. - Fixed-rate loans accounted for $1.04 billion of the total loan portfolio as of March 31, 2025, while variable-rate loans totaled $1.54 billion[46]. - The total current financing receivables as of March 31, 2025, were $2,580,190,000[49]. - The total gross charge-offs year-to-date for Consumer Real Estate loans are reported at $0, indicating no losses in this segment[60]. - The total risk rating for Consumer Real Estate loans indicates a significant portion, 38.41%, is under Special Mention (5) status, which may require monitoring[60]. Credit Quality and Allowance for Credit Losses - The total allowance for credit losses (ACL) increased to $26.352 million as of March 31, 2025, from $25.826 million at the end of 2024[78]. - The Company recorded a one-time adjustment of $4.5 million to the allowance for credit losses, which is $3.4 million net of tax[72]. - The specific reserve portion of the ACL was $159 thousand at March 31, 2025, up from $52 thousand at December 31, 2024[185]. - The company employs a nine-tier risk rating system to assess loan quality, with ratings ranging from 1 (Excellent) to 8 (Loss)[56]. - The company recognizes that repayment success for consumer loans is influenced by borrower income, debt levels, and employment status[51]. Securities and Investments - As of March 31, 2025, total available-for-sale securities amounted to $464.0 million with a fair value of $438.6 million, reflecting unrealized losses of $25.7 million[36]. - The total amortized cost of mortgage-backed securities was $140.9 million with a fair value of $130.9 million, indicating unrealized losses of $10.2 million[36]. - The fair value of securities is expected to recover as bonds approach their maturity date, indicating a positive outlook for the company's investment strategy[39]. - The balance of investments in qualified affordable housing projects was $3.5 million as of March 31, 2025, slightly down from $3.6 million at December 31, 2024[101]. Regulatory and Accounting Updates - Recent accounting pronouncements include ASU 2023-06, which requires additional disclosures related to cash flows and debt, effective for annual periods beginning after December 15, 2024[133]. - The company plans to adopt ASU 2023-07 regarding segment reporting, which enhances disclosure requirements, effective December 31, 2024[136]. - The company does not expect the adoption of recent accounting updates to have a material effect on its financial position or results of operations[135]. - The company is attentive to ongoing regulatory changes, including the CFPB's final rule on data collection for small business loans[167]. Capital and Liquidity - The company remains well-capitalized with strong liquidity levels and asset quality, positioning itself for future growth[149]. - The Bank declared a dividend of $3.5 million in Q1 2025 and remains well-capitalized with a Tier I Leverage Ratio of 9.10%[208]. - The Bank's uninsured deposit ratio remains low at 12.1%, with total uninsured deposits of $327.0 million as of March 31, 2025[191]. - The company has issued $35,000,000 in subordinated notes with a fixed-to-floating interest rate, qualifying as Tier 2 capital until July 30, 2026[125].

Core Viewpoint - Farmers & Merchants Bancorp, Inc. reported strong financial results for the first quarter of 2025, highlighting improvements in profitability, efficiency, and asset quality, driven by strategic priorities and local community banking services [2][10]. Financial Performance - Net income for Q1 2025 was $7.0 million, a 29.7% increase from $5.4 million in Q1 2024, with earnings per share rising to $0.51 from $0.39 [3][6]. - Total revenue increased by 16.7% year-over-year, while noninterest expense rose by 5.2%, leading to a 49.6% increase in pre-tax, pre-provision income [2][6]. - The net interest margin grew by 43 basis points year-over-year to 3.03%, reflecting effective loan repricing and disciplined loan origination [2][24]. Deposits and Cost of Funds - Total deposits reached $2.70 billion, marking a 3.0% increase from the previous year, with a reduction in the cost of interest-bearing liabilities to 2.76% from 3.06% [4][24]. - The company successfully optimized its deposit base, resulting in a decline of $19.5 million in more expensive time-account balances [5]. Loan Portfolio and Asset Quality - Total loans increased by 1.6% year-over-year to $2.58 billion, driven by growth in agricultural, commercial, and industrial loans [7][9]. - Nonperforming loans represented only 0.17% of total loans, indicating strong credit quality, down from 0.76% a year earlier [8][9]. Stockholders' Equity and Dividends - Total stockholders' equity increased by 8.5% to $344.6 million, with a Tier 1 leverage ratio of 8.44% [10][11]. - The company declared cash dividends of $0.22125 per share, a 0.6% increase from the same period last year, maintaining a commitment to returning capital to shareholders [12].

Financial Performance - Total revenue rose by 16.7% year-over-year, while noninterest expense increased by 5.2%, leading to a 49.6% increase in pre-tax, pre-provision income to $9.3 million [5]. - Net income for Q1 2025 was $7.0 million, a 29.7% increase from $5.4 million in Q1 2024, with earnings per share rising to $0.51 [7]. - Net income for Q1 2025 was $6,952,000, down 17.03% from $8,381,000 in Q4 2024 [22]. - Basic and diluted earnings per share for Q1 2025 were both $0.51, compared to $0.61 in Q4 2024 [22]. - Cash dividends declared were $0.22125 per share, reflecting a 0.6% increase over the same period last year [16]. Loan and Deposit Growth - Total loans increased by $40.5 million, or 1.6%, to $2.58 billion compared to the same period last year [6]. - Total deposits grew by $78.9 million, or 3.0%, to $2.70 billion [6]. - Total loans, net increased to $2,581,904 million as of March 31, 2025, from $2,561,869 million in the previous quarter, marking a growth of 0.8% [27]. - Total deposits rose to $2,700,284 million, up from $2,686,765 million in the previous quarter, indicating an increase of 0.5% [25]. Asset Management - Total assets increased to $3,388,786 million as of March 31, 2025, compared to $3,364,723 million as of December 31, 2024, reflecting a growth of 0.7% [24]. - The total assets of the company reached $3,327,760,000 in March 2025, compared to $3,252,779,000 in March 2024, marking a growth of 2.3% [31]. - Total interest-earning assets increased to $3,161,130,000 in March 2025 from $3,093,539,000 in March 2024, reflecting a growth of 2.2% [31]. Credit Quality - Nonperforming loans were $4.5 million, representing only 0.17% of total loans, a significant improvement from 0.76% a year ago [11]. - Nonperforming loans increased to $4,494,000 in March 2025 from $3,124,000 in December 2024, representing a 43.8% increase [29]. - The allowance for credit losses to nonperforming loans was 586.38%, compared to 127.28% a year ago [12]. - The allowance for credit losses to nonperforming loans ratio was 586.38% in March 2025, down from 826.70% in December 2024, indicating a decrease in coverage [29]. - Provision for credit losses on loans was $811,000 in Q1 2025, up from $346,000 in Q4 2024 [21]. - Net charge-offs for the quarter-to-date in March 2025 were $285,000, significantly higher than $4,000 in the previous quarter, indicating a substantial increase in credit losses [29]. Efficiency and Ratios - The efficiency ratio improved to 66.79%, down from 74.08% [6]. - Efficiency ratio was reported at 66.79%, an increase from 59.82% in the previous quarter, indicating a decline in operational efficiency [27]. - Return on average assets decreased to 0.85% for the three months ended March 31, 2025, down from 0.99% in the previous quarter [27]. - Return on average equity declined to 8.31% from 10.00% in the previous quarter, showing a decrease of 1.69 percentage points [27]. - The Tier 1 leverage ratio improved to 8.44%, up from 8.12% in the previous quarter, indicating a stronger capital position [27]. Interest Income and Expenses - Net interest margin increased by 43 basis points year-over-year to 3.03% and by 19 basis points from Q4 2024 [5]. - Total interest income for Q1 2025 was $41,002,000, a decrease of 2.03% from $41,851,000 in Q4 2024 [21]. - Net interest income after provision for credit losses was $23,358,000, up 3.32% from $22,604,000 in Q4 2024 [22]. - Total interest expense decreased to $17,093,000 in Q1 2025 from $19,021,000 in Q4 2024, a decline of 10.14% [21]. - The net interest margin improved to 3.03% compared to 2.84% in the previous quarter, reflecting an increase of 0.19 percentage points [27]. - The net interest margin improved to 3.03% in March 2025, up from 2.60% in March 2024, indicating enhanced profitability on interest-earning assets [31].

ARCHBOLD, Ohio, March 25, 2025 (GLOBE NEWSWIRE) -- The Board of Directors of Farmers & Merchants Bancorp, Inc., (NASDAQ:FMAO) the holding company of F&M Bank, with total assets of $3.36 billion at December 31, 2024, today announced that it has approved the Company's quarterly cash dividend of $0.22125 per share. The first-quarter dividend is payable on April 20, 2025, to shareholders of record as of April 4, 2025. About Farmers & Merchants State Bank:Farmers & Merchants Bancorp, Inc. (NASDAQ:FMAO) is the ho ...

Market Position and Operations - The Bank ranked 3rd in its primary market with a 9.78% market share as of June 30, 2024[21] - The Bank operates five Loan Production Offices (LPOs) across Ohio, Indiana, and Michigan, with recent increases in loan activity in commercial and industrial sectors[13] - The Bank's primary market includes communities in Ohio and Indiana, competing with approximately five other depository institutions[21] Lending Practices and Policies - The Bank's loan-to-value (LTV) requirements for various types of loans include a maximum of 80% for livestock and grain, and 65%-75% for raw land depending on improvements[19] - The Bank does not fund sub-prime loans, focusing instead on creditworthy borrowers[16] - The Bank has established underwriting policies to ensure safe lending practices in accordance with regulatory guidance[15] - The Bank's Loan Policy was revised to comply with new General QM Final Rule effective October 2022, which amended the definition of Qualified Mortgages[56] Capital and Compliance - The Company is required to maintain minimum capital levels as per Federal Reserve Board guidelines, with specific capital positions summarized for December 31, 2024, and 2023[37] - As of December 31, 2024, the Bank was classified as well capitalized under the prompt corrective action guidelines[39] - The Company must ensure compliance with extensive new disclosure and reporting requirements resulting from the Dodd-Frank Act and other regulations[47] - The Company is subject to restrictions on dividend payments based on the retained earnings of its banking subsidiary, requiring regulatory approval for excess amounts[40] Regulatory Environment - The Dodd-Frank Act permanently raised the standard maximum deposit insurance coverage amount to $250,000 per depositor, per insured depository institution[44] - The Bank's deposits are insured up to regulatory limits set by the FDIC, with the Deposit Insurance Fund primarily funded through quarterly assessments[41] - The Dodd-Frank Act provisions expanded reportable data points for the Home Mortgage Disclosure Act to 52 fields, enhancing data accuracy and integrity[57] - The USA PATRIOT Act imposes significant compliance obligations on financial institutions to combat money laundering and terrorist financing[50] Consumer Protection and Data Reporting - The Consumer Financial Protection Bureau's final rules require the collection and reporting of demographic data on small business credit applications starting April 1, 2025[61] - A federal judge granted an injunction on July 31, 2023, preventing the CFPB from enforcing Section 1071 rules until the U.S. Supreme Court rules on its funding[62] - The Supreme Court ruled on May 16, 2024, that the CFPB's funding mechanism does not violate the U.S. Constitution, leading to an interim final rule issued on June 25, 2024, which extended compliance dates for data collection by 290 days[62] - The final rule with amendments to the Community Reinvestment Act (CRA) was released on October 24, 2023, with certain amendments effective from April 1, 2024, through January 1, 2031[63] Financial Performance and Strategy - The Bank's net interest margin was forecasted at 3.20% with a potential decrease of 4.35% if interest rates rise by 2.00%[299] - The Bank's monthly cost of funds decreased from 3.16% in September to 2.89% in December 2024[300] - The Bank's balance sheet is slightly asset-sensitive after experiencing 100 basis points of Fed rate cuts from September through December 2024[299] - The Company aims to gather more core deposits, such as checking and savings accounts, to lower the cost of funds and increase noninterest revenue[299] - Interest rate risk is primarily managed within an asset/liability framework to ensure that net interest spreads and net income are not excessively affected by rate changes[298] - The Company continues to review and adjust assumptions regarding decay rates, deposit betas, and loan prepayment speeds in response to changing rates[300] - The Company must maintain improved pricing discipline for new loans and deposits to enhance overall profitability[301] Product and Service Development - The Bank continues to upgrade its digital products and services to meet changing customer preferences[14] - The Bank formed F&M Insurance Agency, LLC in November 2023 to offer insurance products to customers[19] - The Bank participates in Freddie Mac and Farm Service Agency programs to offer longer-term fixed-rate mortgages[15]

Group 1 - F&M Bank has appointed Carly Buchanan as the new Chief People Officer, bringing over 18 years of HR and organizational development experience [1][2] - Carly has a decade of retail banking experience, which will enhance customer-focused strategies and operational efficiency at F&M Bank [2] - Carly holds senior HR certifications and has been recognized as a 2023 Fort Wayne 40 Under 40 honoree, reflecting her commitment to community involvement [2][3] Group 2 - The President and CEO of F&M Bank, Lars Eller, emphasized that Carly's leadership and strategic vision will strengthen the bank's culture and enhance employee engagement [3] - F&M Bank has been serving its communities since 1897, providing various financial services across multiple counties in Ohio and Northeast Indiana [4]

Core Insights - F&M Bank has appointed Carly Buchanan as the new Chief People Officer, bringing over 18 years of HR and organizational development experience [1][2] - Carly has a decade of retail banking experience, which will enhance customer-focused strategies and operational efficiency at F&M Bank [2] - The leadership of Carly is expected to strengthen the bank's culture, enhance employee engagement, and support its mission of serving customers and communities [3] Company Overview - F&M Bank is an independent community bank established in 1897, providing commercial and retail banking services [4] - The bank operates in multiple counties across Ohio and Northeast Indiana, with additional loan production offices in Michigan and Indiana [4]

Financial Performance - Net income for the fourth quarter of 2024 increased by 51.2% to $8.4 million, or $0.61 per share, compared to $5.5 million, or $0.41 per share in the same period last year[7]. - Net income for the three months ended December 31, 2024, was $8,381,000, an increase of 28.5% compared to $6,516,000 for the same period in 2023[25]. - Basic earnings per share for the twelve months ended December 31, 2024, were $1.90, up from $1.67 in 2023, indicating a growth of 13.8%[25]. - The company’s income before income taxes for the three months ended December 31, 2024, was $10,527,000, an increase of 29.8% compared to $8,109,000 for the same period in 2023[25]. Asset and Deposit Growth - Total assets rose by 2.5% to $3.36 billion, while total deposits reached a record $2.69 billion, an increase of 3.0% year-over-year[7]. - Total assets as of December 31, 2024, were $3,364,723,000, compared to $3,283,229,000 as of December 31, 2023, reflecting a year-over-year increase of 2.5%[27]. - Total deposits increased to $2,686,765,000 as of December 31, 2024, from $2,607,463,000 a year earlier, representing a growth of 3.0%[28]. - The company added nearly 7,500 new checking accounts in 2024, optimizing its deposit base and growing low-cost checking deposits[11]. Loan Performance - Nonperforming loans decreased significantly to $3.1 million, or 0.12% of total loans, down from $22.4 million, or 0.87% a year earlier[13]. - Loans, including fees, for the twelve months ended December 31, 2024, totaled $145,329,000, compared to $129,344,000 in 2023, representing an increase of 12.4%[24]. - Loans generated $9,500,000 with a yield of 5.68% for the twelve months ended December 31, 2024, up from $8,400,000 and a yield of 5.19% in 2023, indicating a growth in loan performance[37]. Interest Income and Margin - Net interest margin increased by 27 basis points to 2.84%, contributing to strong earnings growth[7]. - Total interest income for the twelve months ended December 31, 2024, was $163,572,000, an increase from $139,808,000 in 2023, reflecting a growth of 17.0%[24]. - The net interest margin improved to 2.84% for the twelve months ended December 31, 2024, compared to 2.71% in the previous year[31]. - The net interest margin improved to 2.72% for the twelve months ended December 31, 2024, compared to 2.60% in 2023, showcasing enhanced profitability from interest-earning assets[37]. Expense Management - The efficiency ratio improved to 59.82%, compared to 69.23% for the same period last year, indicating enhanced operational efficiency[7]. - Total noninterest expense for the twelve months ended December 31, 2024, was $68,687,000, a slight increase from $67,204,000 in 2023[25]. - Interest expense for the twelve months ended December 31, 2024, was $77,660,000 with a yield of 3.12%, consistent with the previous year, indicating stable cost management[37]. Dividends and Equity - Cash dividends declared for the twelve months ended December 31, 2024, were $0.8825 per share, representing a 3.8% increase year-over-year[19]. - Total stockholders' equity increased by 5.9% to $335.2 million, with a Tier 1 leverage ratio of 8.12% remaining stable[17]. - The company declared dividends of $0.22125 per share for the three months ended December 31, 2024, consistent with the previous quarter[25]. - Total stockholders' equity as of December 31, 2024, is $335,211,000, a slight decrease from $335,380,000 as of December 31, 2023[29]. Risk Management - The allowance for credit losses to nonperforming loans was 826.70%, significantly higher than 111.95% at the end of 2023, reflecting strong risk management[16]. - Provision for credit losses on loans for the twelve months ended December 31, 2024, was $944,000, a decrease from $1,698,000 in 2023, showing a reduction of 44.4%[24]. - The allowance for credit losses was $27,367,000 as of December 31, 2024, compared to $27,236,000 as of December 31, 2023[32].

Core Viewpoint - Farmers & Merchants Bancorp, Inc. reported strong financial performance for 2024, driven by strategic execution and improvements in profitability, asset quality, and operational efficiencies [4][8]. Financial Performance - Net income for Q4 2024 was $8.4 million, a 51.2% increase from $5.5 million in Q4 2023, with earnings per share rising to $0.61 from $0.41 [5][8]. - For the full year 2024, net income reached $25.9 million, up from $22.8 million in 2023, with earnings per share increasing to $1.90 from $1.67 [5][8]. Deposits and Liabilities - Total deposits at year-end 2024 were a record $2.69 billion, reflecting a 3.0% increase from $2.61 billion at the end of 2023 [6][8]. - The cost of interest-bearing liabilities was 3.12% for 2024, up from 2.53% in the previous year, influenced by a higher rate environment [6][8]. Loan Portfolio and Asset Quality - Total loans, net decreased by 0.7% year-over-year to $2.56 billion, primarily due to lower consumer and agricultural real estate loans, partially offset by increases in commercial loans [9][10]. - Nonperforming loans were only $3.1 million, or 0.12% of total loans, significantly down from $22.4 million, or 0.87% at the end of 2023 [10][8]. Efficiency and Profitability - The efficiency ratio improved to 59.82% from 69.23% a year ago, indicating better operational efficiency [8]. - Net interest margin increased by 27 basis points to 2.84% [8]. Stockholders' Equity and Dividends - Total stockholders' equity rose by 5.9% to $335.2 million at year-end 2024, with a Tier 1 leverage ratio of 8.12% [12][8]. - The company declared cash dividends of $0.8825 per share for 2024, marking a 3.8% increase over the previous year, and representing the 30th consecutive annual increase in dividends [14][8].