Farmers & Merchants Bancorp, Inc. Reports 2025 Second-Quarter and Year-to-Date Financial Results
ARCHBOLD, Ohio, July 28, 2025 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp, Inc. (NASDAQ:FMAO) today reported financial results for the 2025 second quarter and year-to-date ended June 30, 2025.
2025 Second Quarter Financial and Operating Highlights(at June 30, 2025 and on a year-over-year basis unless noted)
89 consecutive quarters of profitability
Net income increased 35.7% to $7.7 million, or $0.56 per basic and diluted share
Net interest margin expands for fourth consecutive quarter, up 51 basis points year-over-year to 3.22%
Total loans increased by $67.2 million, or 2.6% to $2.63 billion
Total assets increased by $23.1 million, or 0.7% to $3.35 billion
Total deposits increased by $69.2 million, or 2.6% to $2.71 billion
Efficiency ratio improved to 64.93%, compared to 69.03%
Asset quality remains at historically strong levels with nonperforming loans of only $3.7 million
Net charge-offs to average loans of 0.00%
Tier 1 leverage ratio was 8.50%
Lars B. Eller, President and Chief Executive Officer, stated, "Net income for the 2025 second quarter was one of the most profitable quarters and our second-strongest second quarter in F&M's 128-year history. This performance was driven by strong levels of core profitability, continued growth in our net interest margin, and the successful execution of our multi-year strategic plan. Over the past 12 months, we have enhanced our product offerings, simplified account openings, and continued our focus on attracting and developing proven talent across our regions. The positive momentum we are experiencing today is a direct result of these efforts, as well as our team's commitment to helping people in our communities live their best lives."
Mr. Eller continued, "Total revenue growth, which is defined by net interest income plus noninterest income, grew by 18.2% year-over-year in the 2025 second quarter, compared to 16.7% in the 2025 first quarter. This growth continues to significantly outpace the rise in noninterest expenses, contributing to a more favorable efficiency ratio and ongoing improvements in core profitability."
"Supporting this revenue momentum is the ongoing expansion of our net interest margin, which increased 51 basis points year-over-year and 19 basis points from the 2025 first quarter. Net interest margin is benefiting from higher asset yields as existing loans reprice and new originations are booked at more favorable rates. At the same time, our growing customer relationships and a more stable interest rate environment have improved our cost of funds."
Income StatementNet income for the 2025 second quarter ended June 30, 2025, was $7.7 million, compared to $5.7 million for the same period last year. Net income per basic and diluted share for the 2025 second quarter was $0.56, compared to $0.42 for the same period last year. Net income for the 2025 first half ended June 30, 2025, was $14.7 million, compared to $11.0 million for the same period last year. Net income per basic and diluted share for the 2025 first half was $1.07, compared to $0.81 for the same period last year.
DepositsAt June 30, 2025, total deposits were $2.71 billion, an increase of 2.6% from June 30, 2024. The Company's cost of interest-bearing liabilities was 2.83% for the quarter ended June 30, 2025, compared to 3.18% for the quarter ended June 30, 2024.
Mr. Eller commented, "We ended the second quarter with $2.71 billion in deposits, reflecting the success of our efforts to expand relationship-based banking across the Ohio, Indiana, and Michigan markets. Building on recent product enhancements, we are also investing in new tools and capabilities to expand our marketing efforts and better communicate the value of F&M's offerings."
Loan Portfolio and Asset Quality"Loan demand remains strong, with total loans, net increasing sequentially by $45.0 million, or at a 7.0% annualized rate. We are managing growth with disciplined pricing and remain focused on maintaining strong asset quality. Net charge offs to average loans have been under 0.03% for 17 consecutive quarters, demonstrating the growing sophistication of our credit cultural and risk management capabilities," continued Mr. Eller.
Total loans, net at June 30, 2025, increased 2.6%, or by $67.2 million to $2.63 billion, compared to $2.56 billion at June 30, 2024. The year-over-year increase was driven primarily by higher commercial real estate, commercial and industrial, and agricultural loans, partially offset primarily by lower agricultural real estate, consumer real estate, and consumer loans. Compared to the quarter ended December 31, 2024, total loans, net at June 30, 2025, increased by 2.5% or $65.0 million.
F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $3.7 million, or 0.14% of total loans at June 30, 2025, compared to $2.5 million, or 0.10% of total loans at June 30, 2024, and $3.1 million, or 0.12% at December 31, 2024.
F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 51.2% of the Company's total loan portfolio at June 30, 2025. F&M's CRE portfolio included the following categories at June 30, 2025:
CRE Category
Dollar Balance
Percent of CRE Portfolio(*)
Percent of Total Loan Portfolio(*)
Industrial
$
281,599
20.9%
10.7%
Retail
213,309
15.8%
8.1%
Multi-family
213,029
15.8%
8.1%
Hotels
172,026
12.8%
6.5%
Office
139,844
10.4%
5.3%
Gas Stations
77,527
5.8%
3.0%
Food Service
52,205
3.9%
2.0%
Senior Living
31,088
2.3%
1.2%
Development
28,565
2.1%
1.1%
Auto Dealers
26,744
2.0%
1.0%
Other
110,017
8.2%
4.2%
Total CRE
$
1,345,953
100.0%
51.2%
* Numbers have been rounded
At June 30, 2025, the Company's allowance for credit losses to nonperforming loans was 720.35%, compared to 1,016% at June 30, 2024, and up from 586.38% at March 31, 2025. The allowance to total loans was 1.08% at June 30, 2025, compared to 1.06% at June 30, 2024. Including accretable yield adjustments, associated with the Company's prior acquisitions, F&M's allowance for credit losses to total loans was 1.07% at June 30, 2025, compared to 1.10% at June 30, 2024.
Mr. Eller concluded, "We continue to believe F&M is in a strong position because of the platform we have built and the strategies we are pursuing to grow our business profitability. We expect continued loan growth, stable asset quality, and further expansion in our net interest margin to support increasing levels of profitability in the back half of 2025. As a result, we continue to believe 2025 will be another good year for F&M."
Stockholders' Equity and DividendsTotal stockholders' equity increased 8.7% to $350.8 million, or $25.56 per share at June 30, 2025, from $322.7 million, or $23.59 per share at June 30, 2024. The Company had a Tier 1 leverage ratio of 8.50% at June 30, 2025, compared to 8.02% at June 30, 2024.
Tangible stockholders' equity increased to $259.6 million at June 30, 2025, compared to $229.6 million at June 30, 2024. On a per share basis, tangible stockholders' equity at June 30, 2025, was $18.91 per share, compared to $16.79 per share at June 30, 2024.
For the six months ended June 30, 2025, the Company declared cash dividends of $0.44250 per share, representing a 0.6% increase over the same period last year. F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 30 consecutive years. For the six months ended June 30, 2025, the dividend payout ratio was 40.90% compared to 53.89% for the same period last year.
About Farmers & Merchants State Bank: F&M Bank is a local independent community bank that has been serving its communities since 1897. F&M Bank provides commercial banking, retail banking and other financial services. Our locations are in Butler, Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Shelby, Williams, and Wood counties in Ohio. In Northeast Indiana, we have offices located in Adams, Allen, DeKalb, Jay, Steuben and Wells counties. The Michigan footprint includes Oakland County, and we have Loan Production Offices in Troy, Michigan; Muncie, Indiana; and Perrysburg and Bryan, Ohio.
Safe Harbor StatementFarmers & 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 Exchange 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, capital market conditions, or the effects of the COVID-19 pandemic, and its impacts on our credit quality and business operations, as well as its impact on general economic and financial 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 or through F&M's website www.fm.bank.
FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
(Unaudited) (in thousands of dollars, except per share data)
Three Months Ended
Six Months Ended
June 30, 2025
March 31, 2025
December 31, 2024
September 30, 2024
June 30, 2024
June 30, 2025
June 30, 2024
Interest Income
Loans, including fees
$
39,530
$
37,072
$
36,663
$
36,873
$
36,593
$
76,602
$
71,793
Debt securities:
U.S. Treasury and government agencies
2,231
2,097
1,882
1,467
1,148
4,328
2,193
Municipalities
369
382
384
387
389
751
783
Dividends
311
338
367
334
327
649
660
Federal funds sold
-
-
24
7
7
-
14
Other
1,051
1,113
2,531
2,833
2,702
2,164
4,377
Total interest income
43,492
41,002
41,851
41,901
41,166
84,494
79,820
Interest Expense
Deposits
14,813
13,988
15,749
16,947
16,488
28,801
31,767
Federal funds purchased and securities sold under agreements to repurchase
272
271
274
277
276
543
560
Borrowed funds
2,411
2,550
2,713
2,804
2,742
4,961
5,431
Subordinated notes
285
284
285
284
285
569
569
Total interest expense
17,781
17,093
19,021
20,312
19,791
34,874
38,327
Net Interest Income - Before Provision for Credit Losses
25,711
23,909
22,830
21,589
21,375
49,620
41,493
Provision for Credit Losses - Loans
661
811
346
282
605
1,472
316
Provision for (Recovery of) Credit Losses - Off Balance Sheet Exposures
27
(260
)
(120
)
(267
)
(18
)
(233
)
(284
)
Net Interest Income After Provision for Credit Losses
25,023
23,358
22,604
21,574
20,788
48,381
41,461
Noninterest Income
Customer service fees
330
381
237
300
189
711
787
Other service charges and fees
1,206
1,124
1,176
1,155
1,085
2,330
2,142
Interchange income
1,259
1,421
1,322
1,315
1,330
2,680
2,759
Loan servicing income
629
762
771
710
513
1,391
1,052
Net gain on sale of loans
257
284
223
215
314
541
421
Increase in cash surrender value of bank owned life insurance
239
244
248
265
236
483
452
Net gain (loss) on sale of other assets owned
15
(54
)
22
-
49
(39
)
49
Total noninterest income
3,935
4,162
3,999
3,960
3,716
8,097
7,662
Noninterest Expense
Salaries and wages
7,567
7,878
7,020
7,713
7,589
15,445
15,435
Employee benefits
2,265
2,404
2,148
2,112
2,112
4,669
4,283
Net occupancy expense
1,075
1,199
1,072
1,054
999
2,274
2,026
Furniture and equipment
1,414
1,278
1,032
1,472
1,407
2,692
2,760
Data processing
1,057
557
160
339
448
1,614
948
Franchise taxes
397
397
312
410
265
794
820
ATM expense
761
491
328
472
397
1,252
870
Advertising
356
503
498
597
519
859
1,049
FDIC assessment
448
465
505
516
507
913
1,087
Servicing rights amortization - net
234
127
244
219
187
361
355
Loan expense
328
228
236
244
251
556
480
Consulting fees
494
745
242
251
198
1,239
384
Professional fees
502
559
368
453
527
1,061
972
Intangible asset amortization
444
445
446
445
444
889
889
Other general and administrative
1,918
1,484
1,465
1,128
1,495
3,402
2,828
Total noninterest expense
19,260
18,760
16,076
17,425
17,345
38,020
35,186
Income Before Income Taxes
9,698
8,760
10,527
8,109
7,159
18,458
13,937
Income Taxes
1,988
1,808
2,146
1,593
1,477
3,796
2,896
Net Income
7,710
6,952
8,381
6,516
5,682
14,662
11,041
Other Comprehensive Income (Loss) (Net of Tax):
Net unrealized gain (loss) on available-for-sale securities
1,149
6,464
(7,403
)
11,664
2,531
7,613
536
Reclassification adjustment for realized (gain) loss on sale of available-for-sale securities
-
-
-
-
-
-
-
Net unrealized gain (loss) on available-for-sale securities
1,149
6,464
(7,403
)
11,664
2,531
7,613
536
Tax expense (benefit)
241
1,358
(1,554
)
2,449
531
1,599
113
Other comprehensive income (loss)
908
5,106
(5,849
)
9,215
2,000
6,014
423
Comprehensive Income
$
8,618
$
12,058
$
2,532
$
15,731
$
7,682
$
20,676
$
11,464
Basic Earnings Per Share
$
0.56
$
0.51
$
0.61
$
0.48
$
0.42
$
1.07
$
0.81
Diluted Earnings Per Share
$
0.56
$
0.51
$
0.61
$
0.48
$
0.42
$
1.07
$
0.81
Dividends Declared
$
0.22125
$
0.22125
$
0.22125
$
0.22125
$
0.22000
$
0.44250
$
0.44000
