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Item 5. Market for Registrant’s Common Equity

2022-03-16 compared with 2021-03-15 · 61 added, 81 removed, 23 unchanged (86% of the section changed)

4 unchanged sentences

These figures are based on activity posted on the OTCQX:

Calendar Quarter

Cash Dividends

Declared (Per Share)

Fourth quarter

Third quarter

Second quarter

Year Ended December 31, 2021

Dividend Declared

First quarter

Calendar Quarter

Cash Dividends

Declared (Per Share)

Fourth quarter

Third quarter

Second quarter

Third quarter

Fourth quarter

Year Ended December 31, 2020

Dividend Declared

First quarter

As of January 31, 2021, there were approximately 1,650 stockholders of record of the Company’s common stock.

However, since approximately 30% of our common stock shares are held by brokers on behalf of stockholders, we are unable to determine the exact total number of stockholders.

The Company and, before the Company was formed, the Bank, has paid cash dividends for the past 86 consecutive years.

Second quarter

Third quarter

Fourth quarter

As of February 28, 2022, there were approximately 1,334 stockholders of record of the Company’s common stock.

The Company and, before the Company was formed, the Bank, has paid cash dividends for the past 86

consecutive years.

There are limitations under Delaware corporate law as to the amounts of cash dividends that may be paid by the Company.

Additionally, if we decided to defer interest on our 2003 subordinated debentures, we would be prohibited from paying cash dividends on the Company’s common stock.

Additionally, if we decided to defer interest on our 2003 subordinated debentures, we would be prohibited from

paying cash dividends on the Company’s common stock.

The Company is dependent on cash dividends paid by the Bank to fund its cash dividend payments to its stockholders.

1 unchanged sentence

“Business – Supervision and Regulation”.

In 1998, the Board approved the Company’s first common stock repurchase program.

This program has been extended and expanded several times since then, and most recently, on November 6, 2018, the Board of Directors approved an extension of the $20 million stock repurchase program over the three-year period ending December 31, 2021.

Repurchases under the program may be made from time to time on the open market or through private transactions.

The repurchase program also requires that no purchases may be made if the Bank would not remain “well-capitalized” after the repurchase.

There were no stock repurchases in 2020 or 2019 under the Common Stock Repurchase Plan.

The remaining dollar value of shares that may yet be purchased under the Company’s Common Stock Repurchase Plan is approximately $20 million.

On November 23, 2020, the Board of Directors of Farmers & Merchants Bancorp approved, and all applicable regulators provided statements of non-objection regarding, the Company’s repurchase and retirement of up to $8.5 million of its outstanding common stock during the fourth quarter of 2020 and the first half of 2021.

These repurchases will be done outside of the Company’s current repurchase plan.

All repurchases will be made at the then prevailing market prices.

In the fourth quarter of 2020, the Company repurchased $2.8 million of shares from shareholders.

On November 15, 2021, the Board of Directors has reauthorized its share repurchase program for up to $20.0 million of the Company’s common stock (“Repurchase Plan”), which represents approximately 4% of outstanding

shareholders’ equity.

Repurchases by the Company under the Repurchase Plan may be made from time to time through open market purchases, trading plans established in accordance with SEC rules, privately negotiated transactions, or by other means.

The actual means and timing of any repurchases, the quantity of purchased shares and prices will be subject to certain limitations, including, without limitation, market prices of the Company’s common shares, general

market and economic conditions, the Company’s financial performance, capital position, and applicable legal and regulatory requirements, and at the discretion of the Chief Executive Officer and Chief Financial Officer.

Repurchases under the Repurchase Plan may be initiated, discontinued, suspended, or restarted at any time in the Company’s discretion.

The Company is not obligated to repurchase any shares under the Repurchase Plan.

No shares may be repurchased pursuant to the authority granted in the Repurchase Plan after December 31, 2022.

Repurchased shares are to be used to fund the Company’s non-qualified retirement plans or may be returned to the status of authorized but

unissued common shares of the Company.

On May 24, 2018, stockholders approved a proposal to increase our authorized shares of common stock from 7,500,000 to 40,000,000.

In approving this proposal the stockholders also granted the Board discretionary authority (i.e., without further stockholder action) to determine whether to delay the proposed amendment.

In approving this proposal the stockholders also granted the Board discretionary

authority (i.e., without further stockholder action) to determine whether to delay the proposed amendment.

The Company has no immediate plans to effect the increase in the authorized shares of common stock.

On August 5, 2008, the Board of Directors approved a Share Purchase Rights Plan (the “Rights Plan”), pursuant to which the Company entered into a Rights Agreement dated August 5, 2008, with Computershare as Rights Agent, and the Company declared a dividend of a right to acquire one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock, $0.01 par value per share, to stockholders of record at the close of business on August 15, 2008.

Generally, the Rights are only triggered and become exercisable if a person or group (the “Acquiring Person”) acquires beneficial ownership of 10 percent or more of the Company’s common stock or announces a tender offer for 10 percent or more of the Company’s common stock.

Agent, and the Company declared a dividend of a right to acquire one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock, $0.01 par value per share, to stockholders of record at the close of business on

August 15, 2008.

percent or more of the Company’s common stock.

The Rights Plan is similar to plans adopted by many other publicly traded companies.

The effect of the Rights Plan is to discourage any potential acquirer from triggering the Rights without first convincing the Company’s Board of Directors that the proposed acquisition is fair to, and in the best interest of, all of the stockholders of the Company.

The provisions of the Plan, if triggered by the Acquiring Person, will substantially dilute the equity and voting interest of any potential acquirer unless the Board of Directors approves of the proposed acquisition (under Article XV of the Company’s Certificate of Incorporation, the Board of Directors has the authority to consider any and all factors in determining whether an acquisition is in the best interests of the Company and its stockholders).

Each Right, if and when exercisable, will entitle the registered holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock, no par value, at a purchase price of $1,600 for each one one-hundredth of a share, subject to adjustment.

Each holder of a Right (except for the Acquiring Person, whose Rights will be null and void upon such event) shall thereafter have the right to receive, upon exercise, that number of Common Shares of the Company having a market value of two times the exercise price of the Right.

At any time before a person becomes an Acquiring Person, the Rights can be redeemed, in whole, but not in part, by Farmers and Merchants Bancorp’s Board of Directors at a price of $0.001 per Right.

The effect of the Rights Plan is to discourage any potential acquirer from triggering the Rights without first convincing the

Company’s Board of Directors that the proposed acquisition is fair to, and in the best interest of, all of the stockholders of the Company.

The provisions of the Plan, if triggered by the Acquiring Person, will substantially dilute the equity and

voting interest of any potential acquirer unless the Board of Directors approves of the proposed acquisition (under Article XV of the Company’s Certificate of Incorporation, the Board of Directors has the authority to consider any and all factors in

determining whether an acquisition is in the best interests of the Company and its stockholders).

Each Right, if and when exercisable, will entitle the registered holder to purchase from the Company one one-hundredth of a share of Series A Junior

Participating Preferred Stock, no par value, at a purchase price of $1,600 for each one one-hundredth of a share, subject to adjustment.

a market value of two times the exercise price of the Right.

At any time before a person becomes an Acquiring Person, the Rights can be redeemed, in whole, but not in part, by the Company’s Board of Directors at a price of $0.001 per Right.

The Rights Plan was set to expire on August 5, 2018.

On November 19, 2015, the Board of Directors approved a seven-year extension of the term of the Rights Plan.

Pursuant to an Amendment to the Rights Agreement dated February 18, 2016, the term of the Rights Plan was extended from August 5, 2018 to August 5, 2025.

The extension of the term of the Rights Plan was intended as a means to continue to guard against abusive takeover tactics and was not in response to any particular proposal.

The Board also increased the purchase price under the Rights Plan to $1,600 per one one-hundredth of a preferred share from $1,200, to reflect the increase in the market price of the Company’s common stock over the past several years.

During 2020, the Company issued a combined total 523 shares of common stock to the Bank’s non-qualified deferred compensation retirement plans.

All of the shares were issued at a price of $770.00 per share based upon valuations completed during the quarter of issuance by a nationally recognized bank consulting and advisory firm and in reliance upon the exemption in Section 4(a)(2) of the Securities Act of 1933, as amended, and the regulations promulgated thereunder.

The proceeds were contributed to the Bank as equity capital.

See Note 14, located in “Item 8.

Financial Statements and Supplementary Data.”

During 2019, the Company issued a combined total 9,312 shares of common stock to the Bank’s non-qualified deferred compensation retirement plans.

All of the shares were issued at prices ranging from $715.00 to $770.00 per share based upon valuations completed during the quarter of issuance by a nationally recognized bank consulting and advisory firm and in reliance upon the exemption in Section 4(a)(2) of the Securities Act of 1933, as amended, and the regulations promulgated thereunder.

Pursuant to an Amendment to the Rights Agreement dated

February 18, 2016, the term of the Rights Plan was extended from August 5, 2018 to August 5, 2025.

The extension of the term of the Rights Plan was intended as a means to continue to guard against abusive takeover tactics and was not in response to

any particular proposal.

several years.

The Company did not issue or purchase any shares of common stock during 2021.

During 2020, the Company issued a combined total of 523 shares of common stock to the Bank’s non-qualified deferred compensation retirement plans.

All of the shares were issued at a price of $770.00 per share based

upon valuations completed during the quarter of issuance by a nationally recognized bank consulting and advisory firm and in reliance upon the exemption in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and the

regulations promulgated thereunder.

The proceeds were contributed to the Bank as equity capital.

See Note 14, located in “Item 8.

Financial Statements and Supplementary Data.”

See Note 12, “Employees Benefit Plans” located in Item 8.

“Financial Statements and Supplementary Data in this Annual Report on Form 10-K”.

Performance Graphs

The following graph compares the Company’s cumulative total stockholder return on common stock from December 31, 2016 to December 31, 2021 to that of:

(i) the Morningstar Banks Index - Regional (US) Industry Group;

(i) the S&P 600 Regional Banks (Sub Ind) (TR) Index (which

replaces the Morningstar Banks Index - Regional (US) Industry Group going forward through 2020, since the data is no longer accessible);

and (ii) the cumulative total return of the New York Stock Exchange market index.

The graph assumes an initial investment of $100 on December 31, 2015 and reinvestment of dividends.

The graph assumes an initial

investment of $100 on December 31, 2016 and reinvestment of dividends.

The stock price performance set forth in the following graph is not necessarily indicative of future price performance.

The Company’s stock price data is based on activity posted on the OTCQX and on private transactions between individual stockholders that are reported to the Company.

The Company’s stock price data is based on activity posted

on the OTCQX and on private transactions between individual stockholders that are reported to the Company.

This data was furnished by Zacks SEC Compliance Services Group.

This graph shall not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933.

Selected Financial Data

Farmers & Merchants Bancorp

Five Year Financial Summary of Operations

(in thousands except per share data)

Summary of Income:

Total Interest Income

Total Interest Expense

Net Interest Income

Provision for Credit Losses

Net Interest Income After Provision for Credit Losses

Total Non-Interest Income

Total Non-Interest Expense

Income Before Income Taxes

Provision for Income Taxes

Balance Sheet Data:

Loans & Leases

Allowance for Credit Losses

Investment Securities

Core Deposit Intangible

Shareholders' Equity

Selected Ratios:

Return on Average Assets

Return on Average Equity

Dividend Payout Ratio

Average Loans & Leases to Average Deposits

Average Equity to Average Assets

Period-end Shareholders' Equity to Total Assets

Basic and Diluted Per Share Data:

Cash Dividends Per Share

Book Value Per Share at Year End (2)

Based on the weighted average number of shares outstanding of 793,337, 787,227, 801,229, 809,834, and 793,970 for the years ended December 31, 2020, 2019, 2018, 2017, and 2016, respectively.

Based on the year-end number of shares outstanding of 789,646, 793,033, 783,721, 812,304, and 807,329 for the years ended December 31, 2020, 2019, 2018, 2017, and 2016, respectively.

This graph shall not be deemed filed or incorporated by reference into any filing under the Securities Act.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity