2025 Fourth-Quarter Financial and Operating Highlights(at December 31, 2025, and on a year-over-year basis unless noted)
91 consecutive quarters of profitability
Net income increased 16.8% to a quarterly record of $9.8 million, or $0.71 per basic and diluted share
Net charge-offs to average loans of 0.01%
Tier 1 leverage ratio was 8.81%
Cost of interest-bearing liabilities improved to 2.69%, from 3.01%
Net interest margin increased by 62 basis points year-over-year to 3.46%
Efficiency ratio improved to 58.38%, compared to 59.82%
Fourth quarter dividend per share increased 4.0% to $0.92 annualized, reflecting two dividend increases in 2025 and the 31st consecutive annual increase in the Company's regular dividend payment
2025 Full-Year Financial and Operating Highlights(at December 31, 2025, and on a year-over-year basis unless noted)
Net income increased 28.4% to $33.3 million, or $2.43 per basic and diluted share
Return on average assets was 0.99%, compared to 0.78%
Total loans, net increased 5.9% to $2.71 billion, from $2.56 billion at December 31, 2024
Loans over 30 days past due to total loans averaged 0.26% for 2025, compared to 0.46% for 2024
Total assets increased 2.1% to $3.43 billion
Deposits increased 1.6% to $2.73 billion
Cost of interest-bearing liabilities improved to 2.80%, from 3.12%
Stockholders' equity increased 10.6% to a record $370.9 million
Tangible book value increased 15.0% to $20.40 per share
Net interest income after provision for credit losses increased 19.3% to $102.2 million
Lars B. Eller, President and Chief Executive Officer, stated, "I am proud to report that F&M ended 2025 with record quarterly earnings per share, record stockholders' equity, and record total assets, highlighting F&M's operating strength and financial consistency. Our performance throughout the year and in the fourth quarter reflects sustained organic growth and the continued expansion of our local market presence across Ohio, Indiana, and Michigan. These results demonstrate the effectiveness of our relationship-driven approach and our ongoing investments in people and capabilities. Most importantly, this record performance would not be possible without the dedication and professionalism of our team, whose commitment continues to differentiate F&M."
Income StatementNet income for the 2025 fourth quarter ended December 31, 2025, was $9.8 million, compared to $8.4 million for the same period last year. Net income per basic and diluted share for the 2025 fourth quarter was $0.71, compared to $0.61 for the same period last year. Net income for the twelve months ended December 31, 2025, was $33.3 million, compared to $25.9 million for the same period last year. Net income per basic and diluted share for the 2025 twelve months was $2.43, compared to $1.90 for the same period last year.
Mr. Eller commented, "Profitability has returned to levels not seen since the period of extraordinary industry support during the COVID era, this time driven entirely by core operating performance, prudent balance sheet management, and sustainable growth across our markets. These results underscore the earnings power of our business and provide confidence in our ability to deliver attractive, consistent returns. Based on our current momentum and operating fundamentals, we believe F&M is well positioned to sustain elevated levels of profitability throughout 2026."
DepositsAt December 31, 2025, total deposits were $2.73 billion, an increase of 1.6% from December 31, 2024. For the 2025 twelve months ended December 31, 2025, F&M's cost of interest-bearing liabilities was 2.80%, compared to 3.12% in the prior year.
Loan Portfolio and Asset Quality"Throughout 2025, we made targeted investments to strengthen F&M's operating capabilities and support both current performance and future growth, while maintaining disciplined expense management. We enhanced our leadership team, expanded local decision-making authority across our markets, and established a new office in Troy, Michigan to support growth in a strategically important region. Together, these actions improve execution, enhance scalability, and enable us to grow profitably while remaining closely connected to the communities we serve," continued Mr. Eller.
Total loans, net at December 31, 2025, increased 5.9%, or by $152.9 million to $2.71 billion, compared to $2.56 billion at December 31, 2024. The year-over-year increase was driven primarily by higher commercial real estate, agricultural real estate, consumer real estate, commercial and industrial, and agricultural loans, partially offset by lower consumer loans.
F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans were $11.3 million, or 0.42% of total loans at December 31, 2025, compared to $3.1 million, or 0.12% of total loans at December 31, 2024.
F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 50.0% of the Company's total loan portfolio at December 31, 2025. F&M's CRE portfolio included the following categories at December 31, 2025 (*):
CRE Category
DollarBalance
Percent ofCREPortfolio
Percent ofTotal LoanPortfolio
Industrial
$
265,009
19.6%
9.8%
Multi-family
237,902
17.5%
8.8%
Retail
234,754
17.3%
8.7%
Hotels
163,855
12.1%
6.0%
Office
136,564
10.1%
5.0%
Gas Stations
78,701
5.8%
2.9%
Food Service
51,561
3.8%
1.9%
Development
40,705
3.0%
1.5%
Auto Dealers
28,490
2.1%
1.0%
Senior Living
21,787
1.6%
0.8%
Other
96,243
7.1%
3.6%
Total CRE
$
1,355,571
100.0%
50.0%
* Numbers have been rounded; totals may not foot due to rounding; and dollar amounts in thousands.
At December 31, 2025, the Company's total allowance to total loans was 1.02%, compared to 1.07% at December 31, 2024. Including accretable yield adjustments, associated with the Company's prior acquisitions, F&M's allowance for credit losses to total loans was 1.03% at December 31, 2025, compared to 1.08% at December 31, 2024.
Mr. Eller concluded, "F&M enters 2026 from a position of strength, supported by a sound balance sheet, a scalable operating model, and a culture focused on long-term value creation. As we look ahead, we are approaching growth intentionally, allocating capital thoughtfully, investing in our business, and expanding within our markets in line with our strategic priorities. During the fall, we began developing a new three-year strategic plan that will establish a clear roadmap for the Company's next phase of progress. Anchored in our community-banking heritage and informed by the opportunities across Ohio, Indiana, and Michigan, this plan is designed to drive sustainable performance and create enduring value for shareholders. I am excited about the opportunities in 2026 and confident in F&M's long-term growth potential."
Stockholders' Equity and DividendsTotal stockholders' equity increased 10.6% to $370.9 million, or $26.98 per share at December 31, 2025, from $335.2 million, or $24.47 per share at December 31, 2024. The Company had a Tier 1 leverage ratio of 8.81% at December 31, 2025, compared to 8.12% at December 31, 2024.
Tangible stockholders' equity increased to $280.5 million at December 31, 2025, compared to $243.1 million at December 31, 2024. On a per share basis, tangible stockholders' equity at December 31, 2025, was $20.40 per share, compared to $17.74 per share at December 31, 2024. Tangible stockholders' equity and tangible book value per share are non-GAAP financial measures; see "Use of Non-GAAP Financial Measures."
F&M is committed to returning capital to shareholders and has increased the annual cash dividend for 31 consecutive years. For the quarter ended December 31, 2025, the Company declared cash dividends of $0.23 per share, representing a 4.0% increase over the same period last year.
For the twelve months ended December 31, 2025, the Company declared cash dividends of $0.90 per share, representing a 2.0% increase over the same period last year. For the twelve months ended December 31, 2025, the dividend payout ratio was 36.67% compared to 46.07% for the same period last year.
About Farmers & Merchants Bancorp, Inc.Farmers & Merchants Bancorp, Inc. (NASDAQ:FMAO) is a financial holding company headquartered in Archbold, Ohio, and the parent company of The Farmers & Merchants State Bank.
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 Muncie, Indiana; and Perrysburg and Bryan, Ohio.
Use of Non-GAAP Financial MeasuresThis release contains certain non-GAAP financial measures, including tangible stockholders' equity and tangible book value per share. Management believes these measures facilitate period-to-period comparisons of the Company's performance and provide useful supplemental information to investors; however, they should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Basis of PresentationThe financial information in this release is preliminary, based on management's current expectations, and is subject to change pending completion of customary quarterly closing processes and review. Unless otherwise indicated, all figures are presented on a consolidated basis and comparisons are to the same period of the prior year. Averages may be annualized. Totals may not foot due to rounding.
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 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "plan," "seek," "estimate," "project," "target," "goal," "will," "would," and similar expressions. 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, deposit flows and pricing, liquidity and access to wholesale funding, interest rate and asset-liability management, credit quality (including commercial real estate exposures), collateral values, inflation and macroeconomic conditions, changes in laws and regulations (including capital and liquidity requirements and the implementation of "Basel III Endgame"), FDIC assessments, stress testing and supervisory expectations, cybersecurity and third-party/vendor risks, competition and technological change, geopolitical events, severe weather and natural disasters, agricultural sector conditions, the accuracy of CECL estimates and other accounting judgments, capital and dividend restrictions, and other risks described in F&M's filings with the SEC. F&M undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 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
Twelve Months Ended
December 31, 2025
September 30, 2025
June 30, 2025
March 31, 2025
December 31, 2024
December 31, 2025
December 31, 2024
Interest Income
Loans, including fees
$
40,999
$
41,013
$
39,530
$
37,072
$
36,663
$
158,614
$
145,329
Debt securities:
U.S. Treasury and government agencies
2,259
2,224
2,231
2,097
1,882
8,811
5,542
Municipalities
362
366
369
382
384
1,479
1,554
Dividends
250
309
311
338
367
1,208
1,361
Federal funds sold
-
-
-
-
24
-
45
Other
696
572
1,051
1,113
2,531
3,432
9,741
Total interest income
44,566
44,484
43,492
41,002
41,851
173,544
163,572
Interest Expense
Deposits
14,318
15,060
14,813
13,988
15,749
58,179
64,463
Federal funds purchased and securities sold under agreements to repurchase
226
273
272
271
274
1,042
1,111
Borrowed funds
1,966
1,966
2,411
2,550
2,713
8,893
10,948
Subordinated notes
285
284
285
284
285
1,138
1,138
Total interest expense
16,795
17,583
17,781
17,093
19,021
69,252
77,660
Net Interest Income - Before Provision for Credit Losses
27,771
26,901
25,711
23,909
22,830
104,292
85,912
Provision for Credit Losses - Loans
567
557
661
811
346
2,596
944
Provision for (Recovery of) Credit Losses - Off Balance Sheet Exposures
(1
)
(272
)
27
(260
)
(120
)
(506
)
(671
)
Net Interest Income After Provision for Credit Losses
27,205
26,616
25,023
23,358
22,604
102,202
85,639
Noninterest Income
Customer service fees
337
370
330
381
237
1,418
1,324
Other service charges and fees
1,311
1,349
1,206
1,124
1,176
4,990
4,473
Interchange income
1,275
1,273
1,259
1,421
1,322
5,228
5,396
Loan servicing income
814
674
629
762
771
2,879
2,533
Net gain on sale of loans
306
444
257
284
223
1,291
859
Increase in cash surrender value of bank owned life insurance
640
247
239
244
248
1,370
965
Net gain (loss) on sale of other assets owned
(2
)
-
15
(54
)
22
(41
)
71
Total noninterest income
4,681
4,357
3,935
4,162
3,999
17,135
15,621
Noninterest Expense
Salaries and wages
8,037
8,108
7,567
7,878
7,020
31,590
30,168
Employee benefits
2,386
2,273
2,265
2,404
2,148
9,328
8,543
Net occupancy expense
1,052
1,104
1,075
1,199
1,072
4,430
4,152
Furniture and equipment
1,352
1,532
1,414
1,278
1,032
5,576
5,264
Data processing
964
1,109
1,057
557
160
3,687
1,447
Franchise taxes
397
397
397
397
312
1,588
1,542
ATM expense
676
665
761
491
328
2,593
1,670
Advertising
666
674
356
503
498
2,199
2,144
FDIC assessment
377
428
448
465
505
1,718
2,108
Servicing rights amortization - net
637
586
234
127
244
1,584
818
Loan expense
292
362
328
228
236
1,210
960
Consulting fees
182
242
494
745
242
1,663
877
Professional fees
352
516
502
559
368
1,929
1,793
Intangible asset amortization
446
445
444
445
446
1,780
1,780
Other general and administrative
1,237
1,298
1,918
1,484
1,465
5,937
5,421
Total noninterest expense
19,053
19,739
19,260
18,760
16,076
76,812
68,687
Income Before Income Taxes
12,833
11,234
9,698
8,760
10,527
42,525
32,573
Income Taxes
3,040
2,380
1,988
1,808
2,146
9,216
6,635
Net Income
9,793
8,854
7,710
6,952
8,381
33,309
25,938
Other Comprehensive Income (Loss) (Net of Tax):
Net unrealized gain (loss) on available-for-sale securities
2,657
6,610
1,149
6,464
(7,403
)
16,880
4,797
Reclassification adjustment for realized (gain) loss on sale of available-for-sale securities
-
-
-
-
-
-
-
Net unrealized gain (loss) on available-for-sale securities
2,657
6,610
1,149
6,464
(7,403
)
16,880
4,797
Tax expense (benefit)
558
1,388
241
1,358
(1,554
)
3,545
1,008
Other comprehensive income (loss)
2,099
5,222
908
5,106
(5,849
)
13,335
3,789
Comprehensive Income
$
11,892
$
14,076
$
8,618
$
12,058
$
2,532
$
46,644
$
29,727
Basic Earnings Per Share
$
0.71
