Farmers & Merchants Bancorp Profile
Farmers & Merchants Bancorp, Inc. operates as a bank holding company.
The company’s primary subsidiary, The Farmers & Merchants State Bank (Bank) is a local independent community bank that has been primarily serving Northwest Ohio and Northeast Indiana.
The company’s other subsidiary, Farmers & Merchants Risk Management (Captive) was a captive insurance company formed in December 2014 and located in Nevada. The Captive was dissolved in December 2023.
The Farmers & Merchants State Bank engages in general commercial banking business. The company’s activities include commercial, agricultural and residential mortgage, as well as consumer lending activities. Because the majority of the bank's offices are located in Northwest Ohio, Northeast Indiana and Southern Michigan, a substantial amount of the loan portfolio is consisted of loans made to customers in the farming industry for such things as farm land, farm equipment, livestock and operating loans for seed, fertilizer, and feed. Other types of lending activities include loans for home improvements and loans for such items as autos, trucks, recreational vehicles and motorcycles. With the expansion into newer market areas, the most recent increases in loan activity have been in commercial real estate, providing operating lines of credit and machinery purchases. Consumer real estate also increased substantially with the acquisition of Perpetual Federal Savings Bank on October 1, 2021 and Peoples Federal Savings and Loan Association on October 1, 2022. The bank also operates various Loan Production Offices (LPOs) in Ohio and in Indiana and Michigan.
The bank also provides checking account services, as well as savings and time deposit services, such as certificates of deposits. In addition, Automated Teller Machines (ATMs) or Interactive Teller Machines (ITMs) are provided at most branch locations along with other independent locations in the market area. The bank has custodial services for Individual Retirement Accounts (IRAs) and Health Savings Accounts (HSAs). The bank provides on-line banking access for consumer and business customers. For consumers, this includes bill-pay, on-line statement opportunities and mobile banking. For business customers, it provides the option of electronic transaction origination, such as wire and Automated Clearing House (ACH) file transmittal. In addition, the bank offers remote deposit capture or electronic deposit processing. Upgrades to the company’s digital products and services continue to occur in both retail and business lines.
The bank does offer a hybrid mortgage loan. Hybrid loans are loans that start out as a fixed rate mortgage but after a set number of years automatically adjust to an adjustable rate mortgage. The bank offers a three year, a five year, a seven year and a ten year fixed rate mortgage and a ten year jumbo fixed rate mortgage after which the interest rate will adjust annually for all. In order to offer longer term fixed rate mortgages, the bank does participate in the Freddie Mac, FSA guaranteed secondary Ag market, and Small Business Lending programs. The bank also normally retains the servicing rights on these partially or 100% sold loans. In order for the customer to participate in these programs they must meet the requirements established by those agencies. In addition, the bank does sell some of its longer term fixed rate agricultural mortgages into the secondary market with the aid of brokers.
FM Investment Services, the brokerage department of the bank, has served the bank’s customers, providing investment services.
In December of 2014, the company became a financial holding company within the meaning of the Bank Holding Company Act of 1956 as amended, in order to provide the flexibility to take advantage of the expanded powers available to a financial holding company under the Act. The company’s subsidiary bank is in turn regulated and examined by the Ohio Division of Financial Institutions and the Federal Deposit Insurance Corporation. The activities of the company’s bank subsidiary are also subject to other federal and state laws and regulations. The company also formed a Captive insurance company in December 2014 and dissolved it in December 2023. The Captive was located in Nevada and regulated by the State of Nevada Division of Insurance. The bank formed an insurance agency in November 2023 to offer insurance products to the company’s customers.
The bank’s primary market includes communities located in the Ohio counties of Butler, Champaign, Defiance, Fulton, Hancock, Henry, Lucas, Shelby, Williams, Wood and in the Indiana counties of Adams, Allen, DeKalb, Jay, Steuben and Wells.
Loan Portfolio
As of December 31, 2023, the company’s loans included consumer real estate loans, agricultural real estate loans, agricultural loans, commercial real estate loans, commercial and industrial loans, consumer loans, other loans.
Deposits
As of December 31, 2023, the company’s deposits included interest bearing deposits, such as savings deposits, other time deposits, other borrowed money deposits, federal funds purchased and securities sold under agreement to repurchase, and subordinated notes; and non-interest bearing demand deposits and other deposits.
Securities
As of December 31, 2023, the company’s securities included the U.S. treasury; the U.S. government agencies; mortgage-backed securities; and state and local governments.
Supervision and Regulation
The company is a financial holding company and is subject to inspection, examination and supervision by the Board of Governors of the Federal Reserve System (the ‘Federal Reserve Board’) pursuant to the Bank Holding Company Act of 1956, as amended. As a financial holding company, the company is still subject to all the bank holding company regulations.
The bank is an Ohio chartered commercial bank. It is subject to regulation and examination by both the Ohio Division of Financial Institutions (ODFI) and the Federal Deposit Insurance Corporation (FDIC).
The Captive was an insurance company incorporated in Nevada, regulated by the State of Nevada, Division of Insurance and was dissolved in December 2023.
The Insurance agency is a limited liability company organized in Ohio and regulated by the State of Ohio, Division of Insurance.
As a financial holding company incorporated and doing business within the state of Ohio, the company is subject to regulation and supervision under the Bank Holding Act of 1956, as amended (the ‘Act’).
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act (‘Riegle-Neal’), subject to certain concentration limits and other requirements, adequately capitalized bank holding companies, such as the company is permitted to acquire banks and bank holding companies located in any state.
The bank is an FDIC-insured depository institution. The deposits of the bank are insured up to the regulatory limits set by the FDIC. The U.S. Treasury Department has issued a number of regulations that apply various requirements of the USA Patriot Act to financial institutions, such as the bank.
As a large bank examined for CRA, the bank is most attentive to the significant impact these amendments have. In addition, the activities and operations of the bank are subject to numerous additional detailed, complex and sometimes overlapping laws and regulations. These include state usury and consumer credit laws, state laws relating to fiduciaries, the federal Equal Credit Opportunity Act and Regulation B, the federal Electronic Funds Transfer Act and Regulation E, the federal Fair Credit Reporting Act and Regulation V, the federal Real Estate Settlement Procedures Act (RESPA) and Regulation X, the federal Truth in Lending Act and Regulation Z, the federal Truth in Savings Act and Regulation DD, the Bank Secrecy Act, the federal Community Reinvestment Act, anti-discrimination laws and legislation, and antitrust laws.
Competition
The company competes against entities, which are much larger than the company, including Huntington National Bank, Fifth Third Bank, PNC, Wells Fargo Bank, NA, KeyBank NA, and JPMorgan Chase Bank, NA.
History
Farmers & Merchants Bancorp, Inc. was founded in 1897. The company was incorporated under the laws of Ohio in 1985.
