Farmers & Merchants Bancorp, Inc.

FMAO Details

Farmers & Merchants Bancorp, Inc. (NASDAQ: FMAO) is the parent corporation of The Farmers & Merchants State Bank, which offers commercial, retail, and other financial services to individuals and small businesses. The bank has 28 locations in northwest Ohio and northeast Indiana, a drive-up place in Archbold, Ohio, and three loan production centers (LPOs).

Latest News:

• Acquisition of Perpetual Federal Savings Bank: On October 01, 2021, FMAO reported that the acquisition of Perpetual Federal Savings Bank, Inc. (PFSB) was completed. FMAO now has total assets of roughly USD 2.64 billion, owing to the merger of PFSB, and provides financial services through its offices in Ohio and Indiana and Loan production offices (LPOs) in Ohio, Indiana, and Michigan.

9MFY21 Results:

• Progress in Total Interest Income: The company's total interest income increased by 4.59% during 9MFY21 (ended September 30, 2021) to USD 54.42 million from USD 52.03 million during 9MFY20.
• Boost in Bottomline: The net income during 9MFY21 was USD 15.81 million vs. USD 13.32 million reported during 9MFY20.
• Deterioration of NIM: FMAO witnessed a 25 basis point (bps) decline in NIM to 3.36% during 9MFY21 from 3.61% during 9MFY20.
• Non-Performing Loans (NPLs): It has further witnessed a decline in NPL to USD 6.25 million as of September 30, 2021, from USD 9.40 million at FY20 end.

Key Risk:

• Product Concentration Risk: Real estate loans make up a substantial portion of FMAO's loan portfolio, focused in and around its primary markets in northwest Ohio and northeast Indiana. Due to market conditions in the regions where the company operates, the market value of real estate can fluctuate dramatically in a short period.

Valuation Methodology: Price/Book Value Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

FMAO Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

FMAO stock has surged 33.67% in the past six months and is currently leaning towards the higher-band of the 52-week range of USD 21.06 to USD 30.00. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 72.90, indicating an overbought zone. We have valued the stock using the Price/Book Value-based relative valuation methodology and arrived at a target price of USD 26.62.

Considering the uptick in the stock price and technical indicators, we believe the decent business fundamentals are adequately reflected at trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 29.46, up 0.36% as of December 03, 2021, at 9:30 AM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.