Fate Therapeutics
Annual Report 2022

Plain-text annual report

FARMERS & MERCHANTS B A N C O RP, I NC. 2022 ANNUAL REPORT Celebrating 125 Years in the Community A letter from our PRESIDENT & CEO Dear Shareholders, On behalf of everyone at F&M, I am proud to share the progress we made during 2022. For the year ended December 31, 2022, F&M achieved another year of record net income, earnings per share, total assets, and loans, which reflects our commitment to create sustainable value for our customers, associates, communities, and shareholders. In addition, our achievements during 2022 represent the successful completion of the three-year strategic plan we began implementing in 2019. Our 2019 strategic plan was focused on five key pillars including 1) customer acquisition and retention, 2) attract, develop and retain talent, 3) actively pursue accretive acquisitions, 4) drive financial and operating excellence, and 5) develop a compelling digital strategy. I am extremely pleased by the progress we have made over the past three years as we have become a highly profitable financial institution with over $3 billion in total assets and operations in Ohio, Indiana, and Michigan. Our success is also a result of our commitment to our communities, the local financial services we provide customers, and the dedication and hard work of our team members. As we look to the future, we will remain focused on nurturing lasting relationships and helping our customers realize their best lives. 125th Anniversary and Celebration Throughout 2022, F&M celebrated 125 years of serving its local communities. As you may know, Farmers & Merchants State Bank was founded on April 1, 1897, by six local businessmen who realized the need for a bank in the village of Archbold, Ohio. F&M’s commitment to serve its communities by offering local and expert financial services to customers and providing a safe, committed and positive work environment to our employees has been key to our growth and success. Since the Company’s founding, F&M has expanded throughout Northwest Ohio, Northeast Indiana and Southern Michigan. Today, F&M has 33 full- service office locations in Ohio and Indiana, four Loan Production Offices, a brokerage firm, FM Investment Services, and a subsidiary captive insurance company. Celebrations to commemorate our 125th year anniversary included special events, promotions, and donations throughout our communities. During the month of April 2022, every F&M office hosted an anniversary party for employees and customers with $125 cash giveaways at each office. On July 18, 2022, over 50 members of the F&M family, including 11, 30+ year employees, went to the Nasdaq Market Site in the heart of Times Square to ring the closing bell. The closing bell ceremony at Nasdaq was a once-in-a-lifetime event for many of us at F&M. It brought the Company to the national spotlight, and I was happy to share it with many of the people that make F&M such a special place. Throughout the year, our customers enjoyed special deposit and loan product promotions to celebrate our anniversary. Finally, the Board declared a special one-time cash dividend of $0.0125 in June to honor F&M’s 125th anniversary. Invested in Our Communities We ended 2022 with a record amount of charitable giving, which was up nearly 48% from the prior year. We provided $642,000 of charitable donations to support organizations throughout Indiana and Ohio. Because to the success of our 5th Annual Ohio F&M Charity Golf Classic, we expanded our efforts and hosted the inaugural Indiana F&M Charity Golf Classic in October. Combined, these two events raised approximately $45,000 for organizations in our Ohio and Indiana communities. For the year, our chartiable giving went to support organizations including Connecting Kids to Meals, Community Harvest Food Bank, 50 North Community Center, several local Amish Schools, Archbold Parks and Recreation, Arts Place in Portland, Jumpstart in Toledo, Foundation of Independent Colleges, and the Sauder Museum Farm & Craft Village. Invested in Our Team Our record results are fueled by our talented, high performing team members and I am pleased with the progress we continue to make attracting, developing, and retaining highly engaged, top talent in our areas. We also continue to promote an inclusive work environment. Of the top 13 executives of the bank, 46% are women, compared to just 30% three years ago. In addition, we continued to expand our team by promoting over 45 associates and hiring over 150 new employees. During the year, Eric Faust was appointed Senior Vice President and Chief Risk Officer (CRO) and brings prior CRO and regulatory experience to F&M. This is the first CRO in F&M’s history, and since Eric’s appointment, we have built a comprehensive risk team and expanded our capabilities. This includes implementing an enhanced dashboard for cybersecurity measurement and awareness and creating a cyber committee at both the Board and Senior Executive levels, as well as additional resources to manage enterprise and regulatory risks across F&M’s platform. Andy Baker joined F&M in November as the Regional President for our Northern Indiana market. Andy brings over 27 years of banking experience, most recently as Executive Vice President and Market Manager for PNC. He has a long and proven history 2 of building markets and his incredible leadership skills will benefit F&M as we look to enhance our Northern Indiana market. In 2022, Benét Rupp was promoted to Executive Vice President and to Chief Administrative Officer, managing F&M’s loan operations, HR, strategic planning, and deposit administration functions. Shalini Singhal was promoted to Chief Information Officer and assumed additional responsibilities associated with the Company’s M&A integration strategies. Alexis Smith was promoted to Chief People Officer, leading Human Resources for F&M inclusive of talent, learning, benefits, organization development and payroll. Amy Cover was promoted to Chief Marketing Officer, responsible for marketing and brand strategy, communications and public relations across F&M’s footprint. Finally, Benét, Shalini, Alexis, and Amy are instrumental members of the Company’s executive team and I look forward to their increased leadership and continued contributions to F&M. After a 48-year tenure at F&M, Ed Leininger, EVP & Chief Operating Officer, retired in June 2022. Ed began in the bookkeeping department when the Bank had two offices in Ohio and $45 million in assets and he was an integral part of F&M’s growth. Throughout his career at F&M, Ed was a wonderful mentor, leader, and partner to our communities. On behalf of the entire F&M family and I wish him all the best in his well-deserved retirement. Invested in Accretive Acquisitions Acquisitions have been an important part of our strategy over the past three years, and I am pleased to report that in October 2022 we completed the acquisition of Peoples-Sidney Financial Corporation (“Peoples”). The Peoples acquisition represents the fifth acquisition we have closed since 2019. It expands our presence in Sidney, Ohio and throughout greater Shelby County by adding offices in Sidney, Anna and Jackson Center, and a drive-through facility in Sidney. Peoples also contributed approximately $133 million in total assets, over $104.6 million in loans, and $111.9 million in deposits. Excluding one-time transaction costs, we expect the transaction to be accretive to earnings in 2023 and for it to provide a payback period of approximately 3.25 years. Overall, F&M has created a compelling acquisition platform and acquisitions remain an important component of our strategic growth plan. As a result, we remain committed to pursuing acquisitions of community banks within our core market areas that share our core community banking values. 2022 Financial Recap As you can see, the investments we are making “Our success is also a result of our commitment to our communities, the local financial services we provide customers, and the dedication and hard work of our team members.“ have enhanced our competitive position, provided our communities with more resources and better services, and created a powerful platform for F&M to excel. These investments are also reflected in our financial results and for the eighth consecutive year, we produced record annual financial results in 2022 including record net income, earnings per share, net loans, and total assets. Net income for the year ended December 31, 2022, was a record of $32.5 million, or $2.46 per diluted share, compared to $23.5 million, or $2.01 per diluted share for the same period last year. We achieved record net income in 2022, despite one-time costs associated with the Peoples acquisition. Adjusted net income, excluding one-time tax adjusted acquisition expenses, was $34.6 million, or $2.62 per diluted share for the year ended December 31, 2022, compared to $26.6 million, or $2.28 per diluted share for the year ended December 31, 2021. At December 31, 2022, total loans, excluding PPP loans, and loan balances at the time of the Peoples acquisition, increased organically by $397.0 million, or by 21.4% from December 31, 2021. In addition, total loans including the October 2022 Peoples acquisition, increased 26.9% to a record $2.356 billion at December 31, 2022. The significant loan growth we achieved in 2022 reflects our strong team of lenders throughout Ohio, Indiana, and Michigan and our local presence, personalized services, and quick decision making. Our asset quality has also improved over the past 12 months reflecting our prudent approach to risk. Even as our total loans increased 26.9% year-over-year, our nonperforming loans declined 41.9% over this period, and we have no loans that are 90 days past due and accruing. As a result, nonperforming loans to total loans was 0.20% at December 31, 2022, compared to 0.43% at December 31, 2021. for deposits At December 31, 2022, total deposits were a record $2.47 billion. The 12.6% increase from December 31, 2021, was a result of the Peoples acquisition and organic growth from expanding relationships with new and existing customers. The competition intensified throughout the year as a result of aggressive actions taken by the Federal Reserve to raise interest rates and reduce inflation. This caused our cost of interest-bearing liabilities to increase to 0.74% for the year ended December 31, 2022, compared to 0.48% for the year ended December 31, 2021. Despite the increase in our cost of interest-bearing liabilities, our net interest margin remained stable and was 3.32% for the year ended December 31, 2022, compared to 3.31% for the same period a year ago. Capital Allocation Record financial results support the Company’s growing dividend policy. F&M paid a record $10.8 million of dividends to our shareholders in 2022, an increase of 30.4% over the prior year. F&M has increased its annual dividend payment for 28 consecutive years reflecting our commitment to returning capital to shareholders. In fact, according to data from S&P Global Market Intelligence, of the nearly 800 publicly traded banks, F&M has the 9th longest track record of consecutive dividend increases. New Strategic Growth Plan After the success of our 2019 strategic growth plan, in 2022 we developed a new, three-year plan to guide the next phase of F&M’s evolution. Our 2023 plan builds on many of the key strategies developed under our 2019 plan. Overall, we continue to believe F&M’s community-oriented approach fills a significant need across our markets as many larger banks don’t provide local resources to assist customers and many community banks lack modern banking platforms to support customers’ needs. As we follow our new strategic growth plan, 2023 will be a year of meaningful investments aimed at growing our presence in attractive markets, expanding our team, and enhancing our capabilities. During 2023, we will open new full-service offices in Toledo, Ohio, Fort Wayne, Indiana, and Birmingham, Michigan, as well as an office relocation in Auburn, Indiana. Top talent is required to support our growth and geographic expansion, while providing our customers with Throughout 2023, we best-in-class service. will continue to focus significant resources on attracting, developing, and retaining highly engaged talent. Expanding our banking resources and platform will be another important area of investment during 2023. Priorities include supporting our digital growth initiatives, further enhancements to our risk team, and expanding our IT infrastructure. Outlook After several years of strong economic growth and expansionary monetary policy, we expect 2023 to be a more challenging year for the U.S. economy as the Federal Reserve combats inflation and maintains a hawkish interest rate stance. Rapid rate increases throughout much of 2022 have impacted business activity and important 3 for tighter addition, rates increased economic sectors like the housing i n d u s t r y . In higher have the competition We are not deposits. immune from interest rate policies, but we believe our Bank positioned to navigate any near- term economic challenges as a result of our strong capital levels, robust asset quality, profitable financial model, and most importantly the value we provide our customers. We believe profitability in 2023 will be temporarily impacted by the planned strategic investments we are making to enhance our business and support future growth. In addition, we believe our larger scale and diversified geographic footprint provide additional benefits that will help us navigate a more uncertain economic period. is well Conclusion As we turn the page on our 125th anniversary, I am encouraged by our performance during 2022 and outlook for the future. We have built a leading financial institution that provides our communities with superior local services and nurtures lasting relationships. This is the cornerstone of our community banking approach, which will support and grow our business for decades to come. I am proud of our record operating and financial accomplishments, and I am excited about what the future holds for F&M’s communities, customers, associates, and shareholders. Sincerely, Lars Eller President and CEO OUR LEADERSHIP Board of Directors & Senior Management BOARD OF DIRECTORS Front row, from left: Marcia S. Latta, Vice President-University of Findlay Division of University Advancement, Jo Ellen Hornish, CEO-Hornish Bros, Inc., Fountain City Leasing, Inc., Powder Coating, Inc., Lars B. Eller, President/Chief Executive Officer-Farmers & Merchants Bancorp, Inc., Farmers & Merchants State Bank, Jack C. Johnson, Chairman of the Board, President-Hawks Clothing, Inc.; Lori A. Johnston, President- ProMedica Insurance Corp., Back Row, from left: Andrew J. Briggs, Retired, former Chairman-Limberlost Bancshares, Inc., President-Bank of Geneva, K. Brad Stamm, President and Educational Consultant-Stamm Management Group, Eugene N. Burkholder, President-Falor Farm Center, Inc., David P. Vernon, Owner, Licensed Funeral Director & Embalmer-Vernon Family Funeral Homes, Kevin J. Sauder, President/CEO-Sauder Woodworking Co., Frank R. Simon, Founding & Managing Member/Attorney-Simon PLC Attorneys & Counselors, Steven J. Planson, President-Planson Farms, Inc. FARMERS & MERCHANTS BANCORP, INC. RINGS THE NASDAQ STOCK MARKET CLOSING BELL. President and Chief Executive Officer, Lars Eller, as well as members of the Company’s Board of Directors, Leadership Team, and 30+ year employees celebrate 125 years and 5 years listed on the Nasdaq by ringing the Nasdaq Closing Bell on Monday, July 18, 2022. SENIOR MANAGEMENT Front row, from Left: Brett Baumeister, Senior Vice President, Regional President; Barbara J. Britenriker, Executive Vice President, Chief Retail Banking Officer, Chief Financial Officer (Bancorp); Lars B. Eller, President, Chief Executive Officer; Phillip P. Lucas, Senior Vice President, Regional President East Central Indiana; Katrina L. DeGroff, Senior Vice President, Chief Financial Officer (Bank); Shalini Singhal, Senior Vice President, Chief Information Officer; Back Row, from left: Rex D. Rice, Executive Vice President, Chief Lending Officer; Eric D. Faust, Senior Vice President, Chief Risk Officer; Alexis E. Smith, Vice President, Chief People Officer; Amy L. Cover, Vice President, Chief Marketing Officer; Benét S. Rupp, Executive Vice President, Chief Administrative Officer; Andrew S. Baker, Senior Vice President, Regional President Northern Indiana; David R. Gerken, Senior Vice President, Senior Commercial Banking Manager. 4 Celebrating Celebrating 125 YEARS IN THE COMMUNITY “We are proud to celebrate our 125th year anniversary with our friends, customers and communities. We would not be where we are today without the dedication of our team and leadership, both past and present. While our footprint has greatly expanded, our values remain true to our original mission. We look forward to providing leading financial products and services to our customers, associates, shareholders and communities for many more years to come.” - Lars Eller, President and CEO 1897 The Farmers & Merchants State Bank is a community bank, as it has been since 1897. The bank’s first office was one room located in the Vernier Hotel building, currently occupied by the Archbold Barber Shop. 1919 The founding directors elected to change from a private bank to a state chartered bank and at this time changed its name from the Farmers & Merchants Bank to The Farmers & Merchants State Bank as required in the state charter. 1969 With resources over $23 million in 1969, The Farmers & Merchants State Bank again realized the need for additional space and inaugurated a building expansion, which nearly doubled the original structure built in 1958. 1958 The bank moved to N. Defiance Street, greatly improving service to its customers and offering drive-up banking, electronic bookkeeping, convenient parking, and a social room for the community to use. 1985 In 1985, the conversion of the former bank, The Farmers & Merchants State Bank, into a holding company structure was performed to provide greater flexibility for expanding the banks business into activities closely related to banking. 1994 1994 was a very special year for The Farmers & Merchants State Bank. Earnings were very strong, asset quality remained outstanding, and the bank expanded its presence within its market area. 6 1907 The first new structure was built on the corner of Depot and North Defiance Streets. The bank was heralded as one of the most unusual and attractive banks in the area, featuring marble interior, brass trimmed teller cages, tile floor, leaded windows, and high vaulted ceilings. 2017 Farmers & Merchants Bancorp announced its listing on NASDAQ and was added to the ABA NASDAQ Community Bank Index 1996 In June of 1996, Farmers & Merchants Bancorp split its stock, 5 for 1. The goal was to bring the price per share down so it would be more affordable and possibly encourage trading. 2002 Construction of the new Operations Center began on Clyde’s Way in Archbold. 2007 The Bank made its first acquisition when it purchased Knisely Bank based in Butler, Indiana. Knisely Bank had offices in Auburn, Butler and St. Joe, Indiana. 2016 A significant time in F&M history. F&M passes the billion dollar barrier in assets. 2020 F&M purchased the assets and clients of Adams County Financial Resources located in Geneva, IN. F&M also opened three Loan Production offices located in Oxford, OH, Muncie, IN, and West Bloomfield, MI. 2018 Farmers & Merchants Bancorp agreed to acquire Limberlost Bancshares base in Geneva, Indiana 2021 F&M announces the acquisition of Ossian Financial Services, Inc., adding two offices in Ossian and Bluffton, IN. F&M announces its second acquisition of the year, Perpetual Federal Savings Bank of Urbana, adding one office in Urbana. OH. 2019 F&M added Offices in Berne, Decatur, Geneva, Monroe, Monroeville and Portland and added Adams and Jay Counties in Indiana to the F&M footprint. 2022 F&M celebrates 125th Anniversary. F&M completes the acquisition of Peoples Federal Savings and Loan Association, adding 3 new offices to the F&M footprint in Anna, Jackson Center, and Sidney, OH. 7 WE ARE ROOTED IN COMMUNITY. There are banks that start out small and get too big to fail. Too corporate to connect with customers. Too automated to stay human. F&M Bank is as far from that as a bank can get. This is a place where you can call the CEO and he answers. Where customers feel embraced like family. Where relationships matter a whole lot more than quotas. Where it’s about being flexible, not checking off a list. When you’re local and rural and your customers are farmers, local businesses and neighbors, you respect your deep roots in the community, and you live by them. WE VALUE HARD WORK & Human Connections. We don’t have high marks to hit. We just have high standards. We don’t commit a value statement to memory. We just have solid, traditional values. We don’t look at solutions like products on a shelf. We tailor them to fit what works for the customer. So we get out in the community and get to know our customers. We cheer on the sidelines of football games and parades. We volunteer to build homes while building relationships. Real, honest-to- goodness teamwork. That’s who we are. Our customers work hard. So do we. Born from hard work and determination, the F&M team has never been afraid of rolling up their sleeves. You ask a certain something from yourself and do whatever it takes to help our hardworking families, farmers and communities succeed. Why? Because banking on their success is our business. As a financial institution with over 125 years of trust-building experience, it’s important to reinforce our strong sense of commitment to our customers. WE GENUINELY CARE. Life is full of unknowns and curveballs. The only constant is how we look out for each other as people. So our promise is this: We will always work hard for our customers, because we know how hard they work. We value the trust they place in us. And we genuinely care. For us, that’s not just how you build a bank. It’s how you build community. WE NURTURE LASTING RELATIONSHIPS 8 9 OFFICERS SENIOR MANAGEMENT Lars B. Eller President Chief Executive Officer Barbara J. Britenriker Executive Vice President Chief Retail Banking Officer Chief Financial Officer (Bancorp) Benét S. Rupp Executive Vice President Chief Administrative Officer Rex D. Rice Executive Vice President Chief Lending Officer Andrew S. Baker Senior Vice President Regional President Brett Baumeister Senior Vice President Regional President David R. Gerken Senior Vice President Senior Commercial Banking Manager Eric D. Faust Senior Vice President Chief Risk Officer Katrina L. DeGroff Senior Vice President Chief Financial Officer (Bank) Phillip P. Lucas Senior Vice President Regional President Shalini Singhal  Senior Vice President Chief Information Officer & CISO Amy L. Cover  Vice President Chief Marketing Officer Alexis E. Smith Vice President Chief People Officer AGRICULTURE & COMMERCIAL BANKING Brian C. Ternet Senior Vice President Commercial Banker Michael F. Schnitkey Senior Vice President Agri Finance Manager Robert D. Graham Senior Vice President Commercial Banker Rob Slusser Senior Vice President Market President Adam Bennett Vice President Commercial/Agri Finance Banker Amy J. Hammons Vice President Commercial/Agri Finance Banker Blake H. Fox Vice President Commercial/Agri Finance Banker Chad M. Harris  Vice President Commercial/Agri Finance Banker Curtis M. Metz  Vice President Commercial Banker Dan R. Clark Vice President Commercial Banker Dana N. Snyder Vice President Commercial Banker Derek P. Loeffler Vice President Agri Finance Banker Douglas W. Shaw, Jr.  Vice President Regional Commercial Banking Manager James E. Collins Vice President Commercial/Agri Finance Banker Jeffery C. Shrader  Vice President Commercial Banker John D. Kantner  Vice President Commercial Banker Josh Buehler Vice President Commercial/Ag Banker II Kelby J. Schmucker  Vice President Credit Decisioning Manager Kenneth J. Schoen Vice President Commercial/Agri Finance Banker Kevin J. Becker Vice President Deputy Chief Credit Officer Kirk R. Keiser Vice President Agri Finance Banker 10 Kirk T. Wensink Vice President Agri Finance Banker Lee A. Panagiotides Vice President Commercial Banker Lesley R. Shirkey  Vice President Commercial & Ag Administration Manager Logan A. Frey Vice President Commercial Banker Micah W. Hefty Senior Vice President Commercial/Agri Finance Banker Michael J. Rywalski  Vice President Regional Commercial Banking Manager Robert E. Rhoades Vice President Commercial/Agri Finance Banker Robert K. Weaver Vice President Commercial Banker Ruth A. Kauffman Vice President Credit Manager Steven R. Habig Vice President Commercial Banker Thomas W. Lueck  Vice President Commercial Banker Tim Porter Vice President Commercial/Agri Finance Banker Todd Ferrell Vice President Commercial Banker William B. Millice Vice President Commercial/Ag Banker II Allan J. Kinsman  Assistant Vice President Commercial Banker Brittany McCann Assistant Vice President Commercial Loan Supervisor Jacob T. Willey Assistant Vice President Commercial Banker Jared M. Heyerly Assistant Vice President Senior Credit Analyst Joel Schneider Assistant Vice President Commercial Portfolio Manager Adam N. Chambers Assistant Vice President Home Loan Originator John M. Hulyk Assistant Vice President Commercial Portfolio Manager Julie B. Steiner Assistant Vice President Credit Analyst Sharon D. Blair  Assistant Vice President Loss Mitigation Manager Timothy A. DeCant Assistant Vice President Commercial Banker RETAIL BANKING Taryn L. Marino  Senior Vice President Retail Banking Manager Amanda L. Brandenburg Vice President Regional Community Relationship Banker Arthur J. Short Vice President Indirect Consumer Lending Manager Curtis H. Rash Vice President Treasury Management Sales Eric Peterson Vice President Regional Community Relationship Banker Jennifer A. Knapp  Vice President Regional Community Relationship Banker Jonathan S. Kundo  Vice President Regional Community Relationship Banker Mary E. Stefko Vice President Home Loan Manager Marybeth Shunck Vice President Senior Consumer Lender Private Banker Michael T. Smith Vice President Regional Community Relationship Banker Trisha L. Schneider Vice President Treasury Management Sales Manager April M. Witte  Assistant Vice President Deposit Accounts Supervisor Brenda L. Mossing Assistant Vice President Business Development Officer Casey Robbins Assistant Vice President Home Loan Originator Christopher Coy Assistant Vice President Home Loan Originator Connie S. Nickells Assistant Vice President Business Development Officer Corey Rodgers Assistant Vice President Business Development Officer Crystal M. Jordan Assistant Vice President Business Development Officer Dana E. Sauveur Assistant Vice President Home Loan Process Manager Debra L. Cochran Assistant Vice President Home Loan Originator Eric T. Warrick Assistant Vice President Regional Community Relationship Banker Jeremy Davis Assistant Vice President Home Loan Originator John Mezinko Assistant Vice President Home Loan Originator Joey C. Sherwood Assistant Vice President Business Development Officer Josiah Shaffer Assistant Vice President Home Loan Originator Judith G. Pusateri Assistant Vice President Senior Home Loan Originator Judy L. Heflin Assistant Vice President Home Loan Originator  Katherine S. Thorpe Assistant Vice President Home Loan Originator Larry D. Lechel Assistant Vice President Home Loan Originator Leigh M. Boothman  Assistant Vice President Senior Home Loan Originator  Margaret L. Carico Assistant Vice President Senior Home Loan Originator Michael E. Nitchman Assistant Vice President Home Loan Originator Michael L. Straley Assistant Vice President Home Loan Originator Patricia R. Burkholder Assistant Vice President Home Loan Originator Philip A. Constien Assistant Vice President Business Development Officer Sara A. Jones Assistant Vice President Business Development Officer Shauna L. Cotter Assistant Vice President Business Development Officer Travis G. Hunt Assistant Vice President Senior Home Loan Originator Todd Lotz Assistant Vice President Business Development Officer Vandee Salay Assistant Vice President Home Loan Originator AUDIT, COMPLIANCE & RISK Kent E. Roth Vice President Risk Manager/Security Officer Marilyn K. Johnson Vice President Compliance & CRA Manager Jacqueline K. Wells Assistant Vice President Bank Secrecy Officer R. Jeffrey Justus Assistant Vice President Internal Audit Manager Daniel T. Kiscoe Assistant Vice President Assistant Compliance & CRA Manager 11 OPERATIONS D. Robin Timbrook Vice President Deposit Services Manager Jane C. Bruner Vice President Payment Systems Manager Tim Carsey Vice President Sr. Operations Manager Timothy W. Dubach Vice President Vendor/BCP Project Manager Steve Goins Vice President Regional Vendor Management/BCP Coordinator Kimberly A. Graber Assistant Vice President Retail Loan Servicing Supervisor Michael S. Hess Assistant Vice President Systems Engineer Traci D. Tucker Assistant Vice President Loan Operations Manager SUPPORT Donna Williams Vice President Team Member Conversion Consultant Jared E. Riblet Assistant Vice President Financial Reporting Manager Kevin L. Schaffner Assistant Vice President Facility Manager Lisa M. Beverly Comptroller Lydia A. Huber Corporate Secretary INVESTMENT SERVICES Jason P. Maassel Vice President FM Investment Manager Lorie A. Garwood Vice President Financial Advisor 2022 FINANCIAL HIGHLIGHTS 38.4% Annual record of $32.5 million! INCREASE IN NET INCOME 55.95% EFFICIENCY RATE Improved for full year 2022 Earnings per Share increased 22.4% to an annual record of $2.46 per basic and diluted share $ 12.6% INCREASE IN DEPOSITS 2022 - 2.47 billion 2021 - 2.19 billion ANNUAL DIVIDEND PAYMENT Increased 14.4% to $0.8125 per share, which included a $0.0125 special dividend in honor of the Company’s 125th Anniversary 2022 2021 +14.4% $641,542 IN CHARITABLE DONATIONS TO SUPPORT ORGANIZATIONS THROUGHOUT INDIANA & OHIO STOCK PERFORMANCE 26.9% INCREASE IN TOTAL LOANS Record increase to $2.36 billion! 2022 n o i l l i b 2 0 3 $ . 2021 n o i l l i b 4 6 2 $ . 39.2% INCREASE IN TOTAL ASSETS 250.00 200.00 150.00 100.00 50.00 2017 2018 2019 2020 2021 2022 FMAO NASDAQ - COMPOSITE NASDAQ - BANK INDEX 12 FINANCIAL DATA SUMMARY OF CONSOLIDATED STATEMENT OF INCOME (In Thousands, except share Data) 2022 2021 2020 2019 2018 SUMMARY OF INCOME Interest income Interest expense Net Interest Income Provision for loan losses Net interest income after provision for loan losses Other income (expense), net Net income before income taxes Income Taxes Net income $ $ 101,149 14,362 86,787 4,600 82,187 (41,712) 40,475 7,960 32,515 PER SHARE OF COMMON STOCK Earnings per common share outstanding * Net income Dividends $ $ 2.46 0.8125 $ $ $ $ 76,840 7,342 69,498 3,444 66,054 (36,557) 29,497 6,002 23,495 2.01 0.71 $ $ $ $ 70,169 10,393 59,776 6,981 52,795 (27,589) 25,206 5,111 20,095 1.80 0.66 $ $ $ $ 68,306 14,759 53,547 1,138 52,409 (29,647) 22,762 4,360 18,402 1.66 0.61 $ $ $ $ 46,429 6,572 39,857 324 39,533 (21,283) 18,250 3,301 14,949 1.61 0.56 Weighted average number of shares outstanding, including participating securities 13,206,713 11,664,852 11,146,270 11,113,810 9,272,964 *Based on weighted average number of shares outstanding 1 2 0 2 SUMMARY OF CONSOLIDATED BALANCE SHEET (In Thousands) 2022 2021 2020 2019 2018 SUMMARY OF INCOME Total Assets Loans, net Total deposits Stockholders’ equity KEY RATIOS Return on average equity Return on average assets Loans to deposits Capital to assets Dividend payout $ 3,015,351 2,336,074 2,468,864 298,140 $ 2,638,300 1,841,177 2,193,462 297,167 $ 1,909,544 1,289,318 1,596,162 249,160 $ 1,607,330 1,211,771 1,288,347 230,258 $ 1,116,163 839,599 928,790 143,287 11.30% 1.17% 94.62% 9.89% 32.74% 9.09% 1.05% 83.94% 11.26% 35.08% 13 8.38% 1.14% 80.78% 13.05% 36.36% 8.26% 1.23% 94.06% 14.33% 36.59% 10.86% 1.34% 90.40% 12.84% 34.40% ✓ MARKET AREA You see greatness in your community. So do we. F&M Office Loan Production Office CORPORATE INFO Farmers & Merchants Bancorp, Inc. OHIO Anna Archbold Bowling Green Bryan Bryan Custar Defiance Delta Findlay Hicksville Jackson Center Montpelier Napoleon Oxford Perrysburg Sidney Stryker Swanton Sylvania Urbana Waterville Wauseon West Unity INDIANA Angola Auburn Berne Bluffton Butler Decatur Fort Wayne Geneva Huntertown Monroe Muncie Ossian Portland MICHIGAN West Bloomfield NATURE OF BUSINESS Farmers & Merchants Bancorp, Inc. is a $3.0 billion bank holding company headquartered in Archbold, Ohio. Farmers & Merchants State Bank services 33 full-service offices located in Champaign, Defiance, Fulton, Hancock, Henry, Lucas, Shelby, Williams and Wood Counties in Ohio and Adams, Allen, DeKalb, Jay, Steuben, and Wells Counties in Indiana. DIVIDEND REINVESTMENT Farmers & Merchants Bancorp, Inc. has a Dividend Reinvestment Plan administered by Computershare. Shareholders of record have cash payments applied toward the purchase of additional shares at no additional cost. Shareholders desiring information about this plan may contact Lydia Huber, Corporate Secretary at 419.446.2501 or toll-free 800.451.7843. HEADQUARTERS Farmers & Merchants Bancorp, Inc. 307 North Defiance Street Archbold, Ohio 43502 Ph: 419.446.2501 Toll-free: 800.451.7843 www.fm.bank Lydia Huber, Corporate Secretary ANNUAL MEETING April 17, 2023 1:30 p.m. Virtual Event COMMON STOCK LISTING Farmers & Merchants Bancorp, Inc. common stock is traded on the Nasdaq stock market under the symbol “FMAO.” STOCK TRANSFER AGENT Computershare 150 Royall Street Canton, MA 02021 INDEPENDENT ACCOUNTANTS FORVIS, LLP 111 E. Wayne Street, Suite 600 Fort Wayne, IN 46802-2600 DIVIDENDS Common stock dividends are payable quarterly upon authorization of the Board of Directors. DIRECT DEPOSIT OF DIVIDENDS Automatic direct deposit of quarterly dividends into a deposit account is offered to our shareholders and provides secure and timely access to their funds. For further information, please contact Lydia Huber, Corporate Secretary at 419.446.2501 or toll-free 800.451.7843. CORPORATE COUNSEL Mr. Mark D. Hagans Mr. Robert W. Bohmer Rupp, Hagans & Bohmer, LLP 302 North Defiance St. Archbold, OH 43502 Mr. Thomas Blank Mr. David J. Mack Mr. Martin Werner Shumaker, Loop & Kendrick, LLP 1000 Jackson St. Toledo, OH 43624 MARKET MAKERS Boenning & Scattergood 400 Lydia Street, Suite 100 Carnegie, PA 15106 Ph: 800.889.6440 D. A. Davidson 3773 Attucks Drive Powell, OH 43065 Ph: 800.394.9230 Keefe, Bruyette & Woods (KBW) 787 7th Avenue, 4th Floor New York, NY 10019 Ph: 212.887.8901 Raymond James Financial, Inc. 222 S. Riverside Plaza, 7th Floor Chicago, IL 60606 Ph: 800.800.4693 36 COMMUNITIES 115,260 TOTAL CUSTOMERS 14 440 EMPLOYEES 15 INDIANAOHIOMICHIGANT E B A N K A T R A F ME R S & M E R CHANTS S 1897125 125125IN THE COMMUNITY O L O K YEARS 2022 D W AR I N G BACK MO V I N G F R O FARMERS & MERCHANTS B A N C O RP, I NC. 307 N Defiance St Archbold, OH 43502 (800) 451.7843 fm.bank 

Continue reading text version or see original annual report in PDF format above