ARCHBOLD, Ohio, Oct. 28, 2015 /PRNewswire/ -- Farmers & Merchants Bancorp, Inc. (OTCQX: FMAO) today reported financial results for the 2015 third quarter and nine months ended September 30, 2015.

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

• 50 consecutive quarters of profitability
• Net interest income after provision for loan losses declined by 0.4% to $7,266,000
• Net income increased 5.9% to $2,620,000, and year-to-date improved 8.3% to $7,568,000
• Earnings per basic and diluted share increased 5.6% to $0.57, and year-to-date improved 8.6% to $1.64
• Noninterest income improved 2.4% to $2,827,000
• Noninterest expenses declined by 1.0%
• Tangible equity increased 4.5% from December 31, 2014
• Construction of Ft. Wayne, Indiana branch is on track for a 2016 spring opening

Paul S. Siebenmorgen, President and Chief Executive Officer, stated, "Loans, assets, and net income all increased during the 2015 third quarter, while we controlled noninterest expenses.  We have a strong pipeline of loans, but converting this pipeline into earnings assets has taken longer than expected.  Despite this delay in closing loans, our loan portfolio increased 2.4% from June 30, 2015 and is up 4.4% from September 30, 2014.  We are cautiously optimistic our closing rate will improve in the coming quarters and will result in an accelerating pace of loan growth.  With this said, we remain committed to strict underwriting standards that manage risk while producing adequate returns for our shareholders.  Our asset quality levels remain strong with nonperforming assets to total assets at September 30, 2015 of less than 0.4% and our provision for loan losses declined 13.8% to $243,000 in the 2015 third quarter.  As a result of our strong asset quality, low cost of funds, and controlled operating expenses, F&M grew earnings 5.6% to $0.57 per diluted share in the quarter. Looking ahead, we are excited about a number of banking products and services that will be available to customers during the fourth quarter and into next year." 

Income Statement
Net income for the 2015 third quarter ended September 30, 2015 was $2,620,000, or $0.57 per basic and diluted share compared to $2,474,000, or $0.54 per basic and diluted share for the same period last year. The 5.9% improvement in net income for the 2015 third quarter was primarily due to a 2.4% increase in noninterest income, a 1.0% decline in noninterest expense, offset by slightly lower net interest income. 

Net income for the 2015 nine months was $7,568,000, or $1.64 per basic and diluted share compared to $6,985,000, or $1.51 per basic and diluted share for the nine months ended September 30, 2014.  The 8.3% improvement in net income for the 2015 nine month period was primarily due to a 6.4% increase in noninterest income, and a 5.2% reduction in interest expense.  Total interest income for the 2015 nine month period, compared with the same period last year, was basically flat, and noninterest expenses increased 3.3%.

Loan Portfolio and Asset Quality
Total loans at September 30, 2015 were $635,239,000, compared to $621,926,000 at December 31, 2014, and $608,604,000 at September 30, 2014.  Total loans for the 2015 third quarter compared with the same period last year increased 4.4%, and since the beginning of the year are up 2.1%.  The year-over-year improvement resulted primarily from a 10.1% increase in commercial real estate loans, an 8.9% increase in agricultural loans, and a 12.8% increase in agricultural real estate loans, offset by a 9.7% reduction in consumer real estate loans and a 9.2% reduction in commercial and industrial loans. 

Asset quality remains strong as the company's provision for loan losses for the 2015 third quarter was $243,000, a 13.8% reduction from the 2014 third quarter.  The provision for loan losses for the 2015 nine month was $540,000, a 53.2% reduction from the same period a year ago.  The allowance for loan losses to nonperforming loans was 266.7% at September 30, 2015, compared to 362.1% at September 30, 2014.  Year-to-date, net charge-offs were $280,000, or 0.04% of total loans, compared to $432,000 or 0.07% of total loans, at September 30, 2014.  

Stockholders' Equity and Dividends
Tangible stockholders' equity increased to $115,419,000 as of September 30, 2015, compared to $109,034,000 at December 31, 2014 and $107,948,000 at September 30, 2014.  On a per share basis, tangible stockholders' equity at September 30, 2015 was $24.21 compared with $23.56 at December 31, 2014 and $23.00 at September 30, 2014. The increase tangible stockholders' equity is the result of growth in retained earnings due to increased profitability. At September 30, 2015, the company had a Tier 1 leverage ratio of 12.04%, up from 11.90% at September 30, 2014.

For the 2015 nine months, the company has declared cash dividends of $0.65 per share, which represents a dividend payout ratio of 39.6% and includes a $0.01 per share, or 4.8% increase in the quarterly dividend rate in the 2015 third quarter compared with the same period last year.

Mr. Siebenmorgen concluded, "According to the FDIC's recently released annual deposit market share study, as of June 30, 2015, F&M continued to achieve the number one position in market share in the six Northwest Ohio counties where we are located.  The Sylvania, Ohio office we opened in 2014 is performing well and providing new growth opportunities, meanwhile construction is underway on our Ft. Wayne, Indiana office which is expected to be completed by the end of first quarter 2016.  We continue to enhance the way customers interact with the bank and I am pleased to report that mobile transactions have increased 17.2% year-to-date as more customers choose to interact with the bank using their mobile devices.  As we enter the final quarter of 2015, we are cautiously optimistic 2015 will be another good year for F&M." 

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.

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SOURCE Farmers & Merchants Bancorp, Inc.