Page 1

F FARMERS & LM MERCHANTS BANCORP , INC . Farmers & Merchants Bancorp , Inc. Reports Record 2021 First Quarter Financial Results April 21 , 2021 ARCHBOLD , Ohio , April 21 , 2021 ( GLOBE NEWSWIRE ) -- Farmers & Merchants Bancorp , Inc. ( Nasdaq : FMAO ) today reported financial results for the 2021 first quarter ended March 31 , 2021 . 2021 First Quarter Financial Highlights Include ( on a year - over - year basis unless noted ) : • Net income increased 19.6 % to $ 4.9 million • Earnings increased 18.9 % to $ 0.44 per basic and diluted share • Net interest income after provision for loan losses increased by 5.7 % to $ 13.3 million , which included a $ 0.3 million increase in the first quarter provision for loan losses • Noninterest income increased 59.9 % to $ 5.0 million • First quarter after - tax income benefited from $ 0.5 million of accelerated fees associated with the Paycheck Protection Program ( " PPP " ) . • Strong organic growth supported a 7.1 % increase in net total loans and a 24.8 % increase in total deposits Originated $ 43.5 million of new loans under the latest Paycheck Protection Program , helping F & M protect over 18,000 jobs throughout the program • Return on average tangible equity increased to 10.10 % from 9.13 % for the first quarter last year • Loans 30 days past due to total loans , excluding COVID related loans , was only 0.18 % • New full - service office in Fort Wayne , IN opened in 2021 second quarter " 2021 is off to a strong start as our markets emerge from the COVID - 19 crisis and we continue to focus on providing local services and leading financial products to our retail , commercial , and agriculture customers . As a result , we are gaining market share and benefitting from robust growth in loans , deposits , and noninterest income , which have helped us successfully offset higher provision for loan losses and operating expenses during the 2021 first quarter , " stated Lars B. Eller , President and Chief Executive Officer . " I am grateful to our team members who continue to work diligently and support the financial needs of our local customers and communities . " " The acquisition of Ossian Financial Services is expected to close in the coming weeks , and we are well positioned to quickly integrate Ossian into F & M's platform . Once completed , we expect the acquisition will add approximately $ 122 million in assets to F & M and will begin contributing to earnings in 2021. In addition , we expect to see the benefit to noninterest expense of our office realignment strategy over the next several quarters , and we will use a portion of the savings to reinvest in expanding our digital and online offerings . " Income Statement Net income for the 2021 first quarter ended March 31 , 2021 , was $ 4.9 million , compared to $ 4.1 million for the same period last year . Earnings per basic and diluted share for the 2021 first quarter was $ 0.44 , compared to $ 0.37 for the same period last year . Higher provision for loan losses and operating expenses were successfully offset by increased interest income , successful reductions in cost of funds , interest and fees earned from the Paycheck Protection Program , and a 59.9 % or $ 1.9 million year - over - year increase in noninterest income . Increases in Customer Service Fees and Gain on sales of both 1-4 family mortgage loans and fixed rate agricultural loans were the biggest contributors in noninterest income . F & M's provision for loan losses increased from $ 1.4 million for the three months ended March 31 , 2020 , to $ 1.7 million for the three months ended March 31 , 2021 , as the Company prudently increased its allowance of loan losses primarily associated with continued economic uncertainty caused by the COVID - 19 crisis . In addition , noninterest expense increased by $ 1.7 million , due to higher operating expenses supporting a 20 % larger Company in asset size and servicing a larger footprint . It also included a one - time expense of $ 0.3 million related to the Company's pension . Deposits At March 31 , 2021 , total deposits were $ 1.684 billion , an increase of 24.8 % from March 31 , 2020 , and an increase of 5.5 % from December 31 , 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 Quality Total loans , net at March 31 , 2021 , increased 7.5 % or by $ 94.0 million to $ 1.342 billion , compared to $ 1.248 billion at March 31 , 2020 , and up from $ 1.303 billion at December 31 , 2020. The year - over - year improvement resulted primarily from the contribution of continued strong organic loan growth . In addition , during the 2021 first quarter , the Company processed $ 57.5 million of PPP loan forgiveness and principal payments received and originated $ 43.5 million of new PPP loans , resulting in a total of $ 12.777 million of PPP loans within F & M's loan portfolio . Mr. Eller continued , " Since the start of the crisis , we strengthened our relationships by increasing the amount of financial relief , assistance , and advice we are providing customers . During the first quarter , we processed more than 1,200 new PPP loans , and throughout the PPP process , we have helped our small business customers protect more than 18,000 jobs within our markets . " " Our local relationships continue to produce strong organic growth , and loans not including PPP loans , increased nearly 2.3 % during the 2021 first quarter . We are experiencing organic loan growth across our Ohio , Indiana , and Michigan markets , due to our recently opened LPOs and our strong ,