Farmers & Merchants Bancorp, Inc. Reports 2025 Second-Quarter and Year-to-Date Financial Results

Rhea-AI Summary

Farmers & Merchants Bancorp (Nasdaq: FMAO) reported strong financial results for Q2 2025, marking its 89th consecutive quarter of profitability. The bank achieved a 35.7% increase in net income to $7.7 million ($0.56 per share), driven by expanding net interest margin and robust loan growth.

Key metrics include a 51 basis point year-over-year increase in net interest margin to 3.22%, total loans growth of $67.2 million to $2.63 billion, and deposit growth of $69.2 million to $2.71 billion. The bank maintained strong asset quality with minimal nonperforming loans of $3.7 million and a Tier 1 leverage ratio of 8.50%.

The company's efficiency ratio improved to 64.93% from 69.03%, while stockholders' equity increased 8.7% to $350.8 million. F&M continued its 30-year tradition of increasing dividends, declaring $0.44250 per share for the first half of 2025.

Positive

• Net income increased 35.7% to $7.7 million, marking second-strongest Q2 in company's 128-year history
• Net interest margin expanded for fourth consecutive quarter, up 51 basis points to 3.22%
• Total loans grew by $67.2 million (2.6%) while maintaining strong asset quality
• Total deposits increased by $69.2 million (2.6%) to $2.71 billion
• Efficiency ratio improved to 64.93% from 69.03%
• Zero net charge-offs to average loans
• 30 consecutive years of dividend increases

Negative

• Nonperforming loans increased to $3.7 million from $2.5 million year-over-year
• Allowance for credit losses to nonperforming loans decreased to 720.35% from 1,016% year-over-year

Insights

Banking Sector Financial Analyst

FMAO reports strong Q2 with 35.7% earnings growth, expanding margins, and improving efficiency amid continued loan and deposit growth.

F&M's Q2 2025 results demonstrate impressive financial momentum with net income surging 35.7% to $7.7 million ($0.56 per share), marking one of its most profitable quarters in its 128-year history. The bank's net interest margin expanded by 51% year-over-year to 3.22% - the fourth consecutive quarterly improvement - driven by higher asset yields from loan repricing and new originations at more favorable rates.

Total revenue growth (net interest income plus noninterest income) accelerated to 18.2% year-over-year, outpacing the rise in noninterest expenses and driving efficiency ratio improvement from 69.03% to 64.93%. This demonstrates effective cost control while growing the business.

The loan portfolio expanded by $67.2 million to $2.63 billion (2.6% year-over-year), with sequential quarterly growth at a 7.0% annualized rate. Meanwhile, deposits increased by $69.2 million to $2.71 billion. The bank's growth is being achieved without compromising asset quality, with nonperforming loans at just $3.7 million (0.14% of total loans) and zero net charge-offs during the quarter.

The commercial real estate (CRE) portfolio, which represents 51.2% of total loans, appears well-diversified across sectors, with the largest concentrations in industrial (20.9% of CRE), retail and multi-family (each at 15.8%). Office loans - a sector facing challenges industry-wide - comprise just 10.4% of the CRE portfolio or 5.3% of total loans.

Capital position remains solid with total stockholders' equity increasing 8.7% year-over-year to $350.8 million and a Tier 1 leverage ratio of 8.50%, up from 8.02% a year ago. The dividend payout ratio decreased to 40.90% from 53.89% last year, reflecting the bank's stronger earnings while maintaining its 30-year streak of dividend increases.

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 Statement
Net 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.

Deposits
At 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 Dividends
Total 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 Statement
Farmers & 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

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands of dollars, except share data)
		June 30, 2025				March 31, 2025				December 31, 2024				September 30, 2024				June 30, 2024
		(Unaudited)				(Unaudited)								(Unaudited)				(Unaudited)
Assets
Cash and due from banks		$	87,596			$	172,612			$	174,855			$	244,572			$	191,785
Federal funds sold			635				425				1,496				932				1,283
Total cash and cash equivalents			88,231				173,037				176,351				245,504				193,068
Interest-bearing time deposits			1,992				1,992				2,482				2,727				3,221
Securities - available-for-sale			431,102				438,568				426,556				404,881				365,209
Other securities, at cost			13,994				14,062				14,400				15,028				14,721
Loans held for sale			6,359				2,331				2,996				1,706				1,628
Loans, net of allowance for credit losses			2,599,917				2,555,552				2,536,043				2,512,852				2,534,468
Premises and equipment			32,885				33,163				33,828				33,779				34,507
Construction in progress			-				-				-				35				38
Goodwill			86,358				86,358				86,358				86,358				86,358
Loan servicing rights			5,810				5,805				5,656				5,644				5,504
Bank owned life insurance			35,355				35,116				34,872				34,624				34,359
Other assets			43,760				42,802				45,181				46,047				49,552
Total Assets		$	3,345,763			$	3,388,786			$	3,364,723			$	3,389,185			$	3,322,633
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing		$	497,804			$	502,318			$	516,904			$	481,444			$	479,069
Interest-bearing
NOW accounts			899,602				874,881				850,462				865,617				821,145
Savings			691,468				696,635				671,818				661,565				673,284
Time			621,455				626,450				647,581				676,187				667,592
	Total deposits		2,710,329				2,700,284				2,686,765				2,684,813				2,641,090
Federal funds purchased and securities sold under agreements to repurchase			27,562				27,258				27,218				27,292				27,218
Federal Home Loan Bank (FHLB) advances			188,445				245,474				246,056				263,081				266,102
Subordinated notes, net of unamortized issuance costs			34,875				34,846				34,818				34,789				34,759
Dividend payable			3,000				2,997				2,996				2,998				2,975
Accrued expenses and other liabilities			30,760				33,326				31,659				40,832				27,825
	Total liabilities		2,994,971				3,044,185				3,029,512				3,053,805				2,999,969
Commitments and Contingencies
Stockholders' Equity
Common stock - No par value authorized 40,000,000 shares at 6/30/25 and 20,000,000 shares at 12/31/24; issued 14,564,425 shares 6/30/25 and 12/31/24; outstanding 13,725,998 shares 6/30/25 and 13,699,536 shares 12/31/24			135,805				135,407				135,565				135,193				135,829
Treasury stock - 838,427 shares 6/30/25 and 864,889 shares 12/31/24			(10,674	)			(10,768	)			(10,985	)			(10,904	)			(11,006	)
Retained earnings			244,870				240,079				235,854				230,465				226,430
Accumulated other comprehensive loss			(19,209	)			(20,117	)			(25,223	)			(19,374	)			(28,589	)
	Total stockholders' equity		350,792				344,601				335,211				335,380				322,664
Total Liabilities and Stockholders' Equity		$	3,345,763			$	3,388,786			$	3,364,723			$	3,389,185			$	3,322,633

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
SELECT FINANCIAL DATA
		For the Three Months Ended																				For the Six Months Ended
Selected financial data		June 30, 2025				March 31, 2025				December 31, 2024				September 30, 2024				June 30, 2024				June 30, 2025				June 30, 2024
Return on average assets			0.92	%			0.85	%			0.99	%			0.78	%			0.69	%			0.88	%			0.67	%
Return on average equity			8.88	%			8.31	%			10.00	%			7.93	%			7.13	%			8.55	%			6.94	%
Yield on earning assets			5.45	%			5.19	%			5.20	%			5.27	%			5.22	%			5.32	%			5.11	%
Cost of interest bearing liabilities			2.83	%			2.76	%			3.01	%			3.21	%			3.18	%			2.84	%			3.12	%
Net interest spread			2.62	%			2.43	%			2.19	%			2.06	%			2.04	%			2.48	%			1.99	%
Net interest margin			3.22	%			3.03	%			2.84	%			2.71	%			2.71	%			3.13	%			2.66	%
Efficiency ratio			64.93	%			66.79	%			59.82	%			67.98	%			69.03	%			65.84	%			71.50	%
Dividend payout ratio			38.91	%			43.10	%			35.75	%			45.99	%			52.35	%			40.90	%			53.89	%
Tangible book value per share		$	18.91			$	18.44			$	17.74			$	17.72			$	16.79
Tier 1 leverage ratio			8.50	%			8.44	%			8.12	%			8.04	%			8.02	%
Average shares outstanding			13,720,339				13,706,003				13,699,869				13,687,119				13,681,501				13,713,211				13,676,333
Loans		June 30, 2025				March 31, 2025				December 31, 2024				September 30, 2024				June 30, 2024
(Dollar amounts in thousands)
Commercial real estate		$	1,345,953			$	1,325,698			$	1,310,811			$	1,301,160			$	1,303,598
Agricultural real estate			221,004				215,898				216,401				220,328				222,558
Consumer real estate			523,781				523,383				520,114				524,055				525,902
Commercial and industrial			293,826				278,254				275,152				260,732				268,426
Agricultural			157,870				153,607				152,080				137,252				142,909
Consumer			59,348				60,115				63,009				67,394				70,918
Other			24,653				24,985				24,978				25,916				26,449
Less: Net deferred loan fees, costs and other (1)			459				(36	)			(676	)			1,499				(1,022	)
Total loans, net		$	2,626,894			$	2,581,904			$	2,561,869			$	2,538,336			$	2,559,738
Asset quality data		June 30, 2025				March 31, 2025				December 31, 2024				September 30, 2024				June 30, 2024
(Dollar amounts in thousands)
Nonaccrual loans		$	3,745			$	4,494			$	3,124			$	2,898			$	2,487
90 day past due and accruing		$	-			$	-			$	-			$	-			$	-
Nonperforming loans		$	3,745			$	4,494			$	3,124			$	2,898			$	2,487
Other real estate owned		$	-			$	-			$	-			$	-			$	-
Nonperforming assets		$	3,745			$	4,494			$	3,124			$	2,898			$	2,487
Allowance for credit losses - loans		$	26,977			$	26,352			$	25,826			$	25,484			$	25,270
Allowance for credit losses - off balance sheet credit exposures			1,308				1,281				1,541				1,661				1,928
Total allowance for credit losses		$	28,285			$	27,633			$	27,367			$	27,145			$	27,198
Total allowance for credit losses/total loans			1.08	%			1.07	%			1.07	%			1.07	%			1.06	%
Adjusted credit losses with accretable yield/total loans			1.07	%			1.08	%			1.08	%			1.10	%			1.10	%
Net charge-offs:
Quarter-to-date		$	36			$	285			$	4			$	68			$	15
Year-to-date		$	321			$	285			$	142			$	138			$	70
Net charge-offs to average loans
Quarter-to-date			0.00	%			0.01	%			0.00	%			0.00	%			0.00	%
Year-to-date			0.01	%			0.01	%			0.01	%			0.01	%			0.00	%
Nonperforming loans/total loans			0.14	%			0.17	%			0.12	%			0.11	%			0.10	%
Allowance for credit losses/nonperforming loans			720.35	%			586.38	%			826.70	%			879.37	%			1016.08	%
NPA coverage ratio			720.35	%			586.38	%			826.70	%			879.37	%			1016.08	%
(1) Includes carrying value adjustments of $1.9 million as of June 30, 2025, $1.7 million as of March 31, 2025, $1.1 million as of December 31, 2024, $3.0 million as of September 30, 2024, and $612 thousand as of June 30, 2024 related to interest rate swaps associated with fixed rate loans

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
(in thousands of dollars, except percentages)
	For the Three Months Ended												For the Three Months Ended
	June 30, 2025												June 30, 2024
Interest Earning Assets:	Average Balance				Interest/Dividends				Annualized Yield/Rate				Average Balance				Interest/Dividends				Annualized Yield/Rate
Loans	$	2,617,278			$	39,530				6.04	%		$	2,556,417			$	36,593				5.73	%
Taxable investment securities		459,298				2,837				2.47	%			391,439				1,782				1.82	%
Tax-exempt investment securities		16,682				74				2.25	%			20,907				82				1.99	%
Fed funds sold & other		99,964				1,051				4.21	%			187,682				2,709				5.77	%
Total Interest Earning Assets		3,193,222			$	43,492				5.45	%			3,156,445			$	41,166				5.22	%
Nonearning Assets		175,969												156,239
Total Assets	$	3,369,191											$	3,312,684
Interest Bearing Liabilities:
NOW accounts and savings deposits	$	1,599,067			$	9,479				2.37	%		$	1,492,831			$	10,193				2.73	%
Time deposits		626,036				5,334				3.41	%			668,583				6,295				3.77	%
Other borrowed money		228,708				2,411				4.22	%			265,229				2,742				4.14	%
Fed funds purchased & securities sold under agreement to repurchase		27,301				272				3.99	%			27,721				276				3.98	%
Subordinated notes		34,856				285				3.27	%			34,740				285				3.28	%
Total Interest Bearing Liabilities	$	2,515,968			$	17,781				2.83	%		$	2,489,104			$	19,791				3.18	%
Noninterest Bearing Liabilities		505,129												504,821
Stockholders' Equity	$	348,094											$	318,759
Net Interest Income and Interest Rate Spread					$	25,711				2.62	%						$	21,375				2.04	%
Net Interest Margin										3.22	%											2.71	%
Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts
	For the Six Months Ended												For the Six Months Ended
	June 30, 2025												June 30, 2024
Interest Earning Assets:	Average Balance				Interest/Dividends				Annualized Yield/Rate				Average Balance				Interest/Dividends				Annualized Yield/Rate
Loans	$	2,598,011			$	76,602				5.90	%		$	2,566,765			$	71,793				5.60	%
Taxable investment securities		458,903				5,576				2.43	%			388,225				3,468				1.79	%
Tax-exempt investment securities		17,501				152				2.20	%			21,196				168				2.01	%
Fed funds sold & other		102,851				2,164				4.21	%			149,035				4,391				5.89	%
Total Interest Earning Assets		3,177,266			$	84,494				5.32	%			3,125,221			$	79,820				5.11	%
Nonearning Assets		171,324												157,510
Total Assets	$	3,348,590											$	3,282,731
Interest Bearing Liabilities:
NOW accounts and savings deposits	$	1,524,965			$	18,043				2.37	%		$	1,467,669			$	19,600				2.67	%
Time deposits		626,767				10,758				3.43	%			659,581				12,167				3.69	%
Other borrowed money		237,185				4,961				4.18	%			264,217				5,431				4.11	%
Fed funds purchased & securities sold under agreement to repurchase		27,391				543				3.96	%			28,089				560				3.99	%
Subordinated notes		34,842				569				3.27	%			34,726				569				3.28	%
Total Interest Bearing Liabilities	$	2,451,150			$	34,874				2.84	%		$	2,454,282			$	38,327				3.12	%
Noninterest Bearing Liabilities		553,686												510,453
Stockholders' Equity	$	343,754											$	317,996
Net Interest Income and Interest Rate Spread					$	49,620				2.48	%						$	41,493				1.99	%
Net Interest Margin										3.13	%											2.66	%
Yields on Tax exempt securities and the portion of the tax-exempt IDB loans included in loans have been tax adjusted based on a 21% tax rate in the charts

FARMERS & MERCHANTS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES
(in thousands of dollars, except percentages)
	For the Three Months Ended June 30, 2025																					For the Three Months Ended June 30, 2024
	As Reported							Excluding Acc/Amort							Difference							As Reported							Excluding Acc/Amort							Difference
	$			Yield				$			Yield				$			Yield				$			Yield				$			Yield				$			Yield
Interest Earning Assets:
Loans	$	39,530			6.04	%		$	38,928			5.95	%		$	602			0.09	%		$	36,593			5.73	%		$	35,914			5.62	%		$	679			0.11	%
Taxable investment securities		2,837			2.47	%			2,837			2.47	%			-			0.00	%			1,782			1.82	%			1,782			1.82	%			-			0.00	%
Tax-exempt investment securities		74			2.25	%			74			2.25	%			-			0.00	%			82			1.99	%			82			1.99	%			-			0.00	%
Fed funds sold & other		1,051			4.21	%			1,051			4.21	%			-			0.00	%			2,709			5.77	%			2,709			5.77	%			-			0.00	%
Total Interest Earning Assets		43,492			5.45	%			42,890			5.38	%			602			0.07	%			41,166			5.22	%			40,487			5.13	%			679			0.09	%
Interest Bearing Liabilities:
NOW accounts and savings deposits	$	9,479			2.37	%		$	9,479			2.37	%		$	-			0.00	%		$	10,193			2.73	%		$	10,193			2.73	%		$	-			0.00	%
Time deposits		5,334			3.41	%			5,334			3.41	%			-			0.00	%			6,295			3.77	%			6,295			3.77	%			-			0.00	%
Other borrowed money		2,411			4.22	%			2,407			4.21	%			4			0.01	%			2,742			4.14	%			2,747			4.14	%			(5	)		0.00	%
Federal funds purchased and securities sold under agreement to repurchase		272			3.99	%			272			3.99	%			-			0.00	%			276			3.98	%			276			3.98	%			-			0.00	%
Subordinated notes		285			3.27	%			285			3.27	%			-			0.00	%			285			3.28	%			285			3.28	%			-			0.00	%
Total Interest Bearing Liabilities		17,781			2.83	%			17,777			2.83	%			4			0.00	%			19,791			3.18	%			19,796			3.18	%			(5	)		0.00	%
Interest/Dividend income/yield		43,492			5.45	%			42,890			5.38	%			602			0.07	%			41,166			5.22	%			40,487			5.13	%			679			0.09	%
Interest Expense / yield		17,781			2.83	%			17,777			2.83	%			4			0.00	%			19,791			3.18	%			19,796			3.18	%			(5	)		0.00	%
Net Interest Spread		25,711			2.62	%			25,113			2.55	%			598			0.07	%			21,375			2.04	%			20,691			1.95	%			684			0.09	%
Net Interest Margin					3.22	%						3.15	%						0.07	%						2.71	%						2.62	%						0.09	%
	For the Six Months Ended June 30, 2025																					For the Six Months Ended June 30, 2024
	As Reported							Excluding Acc/Amort							Difference							As Reported							Excluding Acc/Amort							Difference
	$			Yield				$			Yield				$			Yield				$			Yield				$			Yield				$			Yield
Interest Earning Assets:
Loans	$	76,602			5.90	%		$	75,396			5.80	%		$	1,206			0.10	%		$	71,793			5.60	%		$	70,439			5.49	%		$	1,354			0.11	%
Taxable investment securities		5,576			2.43	%			5,576			2.43	%			-			0.00	%			3,468			1.79	%			3,468			1.79	%			-			0.00	%
Tax-exempt investment securities		152			2.20	%			152			2.20	%			-			0.00	%			168			2.01	%			168			2.01	%			-			0.00	%
Fed funds sold & other		2,164			4.21	%			2,164			4.21	%			-			0.00	%			4,391			5.89	%			4,391			5.89	%			-			0.00	%
Total Interest Earning Assets		84,494			5.32	%			83,288			5.25	%			1,206			0.07	%			79,820			5.11	%			78,466			5.03	%			1,354			0.08	%
Interest Bearing Liabilities:
NOW accounts and savings deposits	$	18,043			2.37	%		$	18,043			2.37	%		$	-			0.00	%		$	19,600			2.67	%		$	19,600			2.67	%		$	-			0.00	%
Time deposits		10,758			3.43	%			10,758			3.43	%			-			0.00	%			12,167			3.69	%			12,167			3.69	%			-			0.00	%
Other borrowed money		4,961			4.18	%			4,954			4.18	%			7			0.00	%			5,431			4.11	%			5,454			4.13	%			(23	)		-0.02	%
Federal funds purchased and securities sold under agreement to repurchase		543			3.96	%			543			3.96	%			-			0.00	%			560			3.99	%			560			3.99	%			-			0.00	%
Subordinated notes		569			3.27	%			569			3.27	%			-			0.00	%			569			3.28	%			569			3.28	%			-			0.00	%
Total Interest Bearing Liabilities		34,874			2.84	%			34,867			2.85	%			7			-0.01	%			38,327			3.12	%			38,350			3.13	%			(23	)		-0.01	%
Interest/Dividend income/yield		84,494			5.32	%			83,288			5.25	%			1,206			0.07	%			79,820			5.11	%			78,466			5.03	%			1,354			0.08	%
Interest Expense / yield		34,874			2.84	%			34,867			2.85	%			7			-0.01	%			38,327			3.12	%			38,350			3.13	%			(23	)		-0.01	%
Net Interest Spread		49,620			2.48	%			48,421			2.40	%			1,199			0.08	%			41,493			1.99	%			40,116			1.90	%			1,377			0.09	%
Net Interest Margin					3.13	%						3.05	%						0.08	%						2.66	%						2.57	%						0.09	%

Company Contact: Lars B. Eller President and Chief Executive Officer Farmers & Merchants Bancorp, Inc. (419) 446-2501 leller@fm.bank	Investor and Media Contact:   Andrew M. Berger Managing Director SM Berger & Company, Inc. (216) 464-6400 andrew@smberger.com

FAQ

What were FMAO's Q2 2025 earnings per share?

FMAO reported earnings of $0.56 per basic and diluted share for Q2 2025, compared to $0.42 for the same period last year.

How much did Farmers & Merchants Bancorp's deposits grow in Q2 2025?

Total deposits increased by $69.2 million or 2.6% year-over-year to reach $2.71 billion.

What is FMAO's current dividend payout ratio?

For the six months ended June 30, 2025, FMAO's dividend payout ratio was 40.90%, compared to 53.89% for the same period last year.

How strong is Farmers & Merchants Bancorp's asset quality?

Asset quality remains strong with nonperforming loans of only $3.7 million (0.14% of total loans) and zero net charge-offs to average loans.

What is FMAO's net interest margin in Q2 2025?

Net interest margin was 3.22%, representing a 51 basis point increase year-over-year and a 19 basis point increase from Q1 2025.