2026 First-Quarter Financial and Operating Highlights(at March 31, 2026, and on a year-over-year basis unless noted)
92 consecutive quarters of profitability
Net income increased 37.8% to a first quarter record of $9.6 million, or $0.70 per basic and diluted share
Strong profitability drives ROAA to 1.14%, compared to 0.85%
Net charge-offs to average loans of 0.01%
Tier 1 leverage ratio was 9.02%
Cost of interest-bearing liabilities improved to 2.54%, from 2.76%
Net interest margin increased by 39 basis points to 3.42%
Efficiency ratio improved to 60.08%, compared to 66.79%
First quarter dividend per share increased 4.0% to $0.92 annualized
Lars B. Eller, President and Chief Executive Officer, stated, "We are off to an outstanding start in 2026, delivering 37.8% year-over-year earnings growth driven by a 39-basis point expansion in net interest margin, strong levels of noninterest income, and solid balance sheet management. Our ability to generate this level of growth in profitability while maintaining excellent credit quality and disciplined expense management underscores the strength of our core franchise. We are seeing meaningful operating leverage across the business, and believe this momentum positions us well for continued earnings expansion and long-term shareholder value creation."
Income StatementNet income for the quarter ended March 31, 2026, was $9.6 million, compared to $7.0 million for the same period last year. Net income per basic and diluted share for the 2026 first quarter was $0.70, compared to $0.51 for the same period last year.
DepositsAt March 31, 2026, total deposits were $2.81 billion, an increase of 4.1%, or $109.4 million from March 31, 2025. For the three months ended March 31, 2026, F&M's cost of interest-bearing liabilities was 2.54%, compared to 2.76% in the same period last year.
"Deposit growth in the quarter demonstrates the early success of our new three-year, growth-oriented strategic plan, including our renewed focus on strengthening core deposit generation and expanding our treasury management and retail offerings. In addition, asset quality within the loan portfolio remains strong, with low levels of nonperforming assets, historically low charge-offs, and continued stability across our markets. We successfully resolved a number of watch list credits during the quarter, reflecting the effectiveness of our proactive credit management team. Importantly, underlying loan demand remains strong, with approximately $60 million in approved loans within our pipeline, providing a solid foundation for continued portfolio growth. These trends reflect our local decision-making, disciplined underwriting and proactive risk management practices," continued Mr. Eller.
Loan Portfolio and Asset Quality
Total loans, net at March 31, 2026, increased 3.9%, or by $100.7 million to $2.68 billion, compared to $2.58 billion at March 31, 2025. The year-over-year increase was driven primarily by higher consumer real estate, commercial and industrial, and agricultural loans, partially offset by lower commercial real estate, agricultural real estate, and consumer loans.
F&M continues to closely monitor its loan portfolio with a particular emphasis on higher risk sectors. Nonperforming loans continue to normalize on a quarter-over-quarter basis and were $11.1 million, or 0.42% of total loans at March 31, 2026, compared to $11.3 million, or 0.42% of total loans at December 31, 2025, and $4.5 million, or 0.17% of total loans at March 31, 2025.
F&M maintains a well-balanced, diverse and high performing CRE portfolio. CRE loans represented 49.0% of the Company's total loan portfolio at March 31, 2026. F&M's CRE portfolio included the following categories at March 31, 2026 (*):
CRE Category
DollarBalance
Percent of CREPortfolio
Percent of Total Loan Portfolio
Multi-family
$
241,208
18.4%
9.0%
Industrial
233,030
17.7%
8.7%
Retail
224,629
17.1%
8.4%
Hotels
163,217
12.4%
6.1%
Office
133,398
10.1%
4.9%
Gas Stations
75,874
5.8%
2.8%
Food Service
51,638
3.9%
1.9%
Development
34,204
2.6%
1.3%
Auto Dealers
26,819
2.0%
1.0%
Senior Living
21,382
1.6%
0.8%
Other
110,150
8.4%
4.1%
Total CRE
$
1,315,549
100.0%
49.0%
* Numbers have been rounded; totals may not foot due to rounding; and dollar amounts in thousands.
At March 31, 2026, the Company's total allowance for credit losses to total loans was 1.08%, compared to 1.07% at March 31, 2025.
Mr. Eller concluded, "We have built a strong and scalable platform that positions F&M to deliver consistent performance while continuing to provide local banking solutions to the individuals and businesses we serve across Ohio, Indiana, and Michigan communities. This is an exciting time as we execute on our new three-year strategic plan, which is designed to build on our momentum and take F&M to the next level of growth, profitability, and long-term value creation."
Stockholders' Equity and DividendsTotal stockholders' equity increased 9.1% to $375.9 million, or $27.30 per share at March 31, 2026, from $344.6 million, or $25.12 per share at March 31, 2025. The Company had a Tier 1 leverage ratio of 9.02% at March 31, 2026, compared to 8.44% at March 31, 2025.
Tangible stockholders' equity increased to $285.9 million at March 31, 2026, compared to $252.9 million at March 31, 2025. On a per share basis, tangible stockholders' equity at March 31, 2026, was $20.76 per share, compared to $18.44 per share at March 31, 2025. 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 March 31, 2026, the Company declared cash dividends of $0.23 per share, representing a 4.0% increase over 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
March 31, 2026
December 31, 2025
September 30, 2025
June 30, 2025
March 31, 2025
Interest Income
Loans, including fees
$
39,827
$
40,999
$
41,013
$
39,530
$
37,072
Debt securities:
U.S. Treasury and government agencies
2,305
2,259
2,224
2,231
2,097
Municipalities
349
362
366
369
382
Dividends
245
250
309
311
338
Federal funds sold and other
572
696
572
1,051
1,113
Total interest income
43,298
44,566
44,484
43,492
41,002
Interest Expense
Deposits
13,249
14,318
15,060
14,813
13,988
Federal funds purchased and securities sold under agreements to repurchase
145
226
273
272
271
Borrowed funds
2,176
1,966
1,966
2,411
2,550
Subordinated notes
284
285
284
285
284
Total interest expense
15,854
16,795
17,583
17,781
17,093
Net Interest Income - Before Provision for Credit Losses
27,444
27,771
26,901
25,711
23,909
Provision for Credit Losses - Loans
302
567
557
661
811
Provision for (Recovery of) Credit Losses - Off Balance Sheet Exposures
6
(1
)
(272
)
27
(260
)
Net Interest Income After Provision for Credit Losses
27,136
27,205
26,616
25,023
23,358
Noninterest Income
Customer service fees
483
337
370
330
381
Other service charges and fees
1,283
1,311
1,349
1,206
1,124
Interchange income
1,513
1,275
1,273
1,259
1,421
Loan servicing income
838
814
674
629
762
Net gain on sale of loans
575
306
444
257
284
Increase in cash surrender value of bank owned life insurance
655
640
247
239
244
Gain (loss) on sale of other assets owned
-
(2
)
-
15
(54
)
Loss on sale of available-for-sale securities
(347
)
-
-
-
-
Total noninterest income
5,000
4,681
4,357
3,935
4,162
Noninterest Expense
Salaries and wages
8,267
8,037
8,108
7,567
7,878
Employee benefits
2,379
2,386
2,273
2,265
2,404
Net occupancy expense
1,169
1,052
1,104
1,075
1,199
Furniture and equipment
1,566
1,352
1,532
1,414
1,278
Data processing
994
964
1,109
1,057
557
Franchise taxes
400
397
397
397
397
ATM expense
576
676
665
761
491
Advertising
472
666
674
356
503
FDIC assessment
396
377
428
448
465
Servicing rights amortization - net
523
637
586
234
127
Loan expense
309
292
362
328
228
Consulting fees
254
182
242
494
745
Professional fees
500
352
516
502
559
Intangible asset amortization
305
446
445
444
445
Other general and administrative
1,691
1,237
1,298
1,918
1,484
Total noninterest expense
19,801
19,053
19,739
19,260
18,760
Income Before Income Taxes
12,335
12,833
11,234
9,698
8,760
Income Taxes
2,757
3,040
2,380
1,988
1,808
Net Income
9,578
9,793
8,854
7,710
6,952
Other Comprehensive Income (Loss) (Net of Tax):
Net unrealized gain (loss) on available-for-sale securities
(2,420
)
2,657
6,610
1,149
6,464
Reclassification adjustment for realized loss on sale of available-for-sale securities
347
