Farmers & Merchants Bancorp (FMCB) Reports Record Third Quarter 2025 Earnings

Rhea-AI Summary

Farmers & Merchants Bancorp (OTCQX: FMCB) reported record third quarter 2025 net income of $23.7 million and diluted EPS of $33.92, up from $29.96 in Q3 2024. Trailing twelve-month diluted EPS rose to $130.83 (+10.4% YoY). Net interest income was $55.4 million and net interest margin remained strong at ~4.14% (nine months). Tangible book value per share increased 9.8% to $877.13. Capital ratios strengthened with a preliminary total risk-based ratio of 15.76% and CET1 of 14.28%. Liquidity included $172.6 million cash and $1.6 billion investment securities at September 30, 2025.

Positive

• Record quarterly net income of $23.7M
• Diluted EPS $33.92, up from $29.96 YoY
• Tangible book value per share +9.8% to $877.13
• Net interest income $55.4M, up $3.4M YoY
• Preliminary total risk-based capital ratio of 15.76%

Negative

• Gross loans and leases down $67.6M (1.8%) since Dec 31, 2024
• Loan-to-deposit ratio fell to 74.16% from 78.53% at year-end
• Provision for credit losses of $0.7M in Q3 2025 versus none in Q3 2024
• Efficiency ratio rose vs prior quarter to 46.48% from 44.88%

Third Quarter 2025 Highlights

• Net income of $23.7 million, an increase of $1.6 million or 7.22% compared to the third quarter of 2024;
• Basic earnings per share of $34.24 and diluted earnings per share of $33.92; diluted earnings per share up 13.22% compared to the third quarter of 2024;
• Diluted earnings per share of $130.83 over the trailing twelve months, up 10.4% compared to $118.46 over the same trailing period a year ago and up 14.6% compared to $114.13 for the same period two years ago;
• Tangible book value per share increased 9.8% to $877.13 compared to $799.04 as of September 30, 2024;
• Achieved a return on average assets of 1.70% and a return on average equity of 15.10%;
• Net interest income of $55.4 million, up $3.4 million or 6.6% compared to $52.0 million in the third quarter of 2024; net interest margin (tax equivalent basis) of 4.16%, up from 4.07% in the third quarter of 2024;
• Continued cost discipline resulted in an efficiency ratio of 46.48%;
• Liquidity position remains strong with $172.6 million in cash, $1.6 billion in investment securities, of which $870.2 million are available-for-sale, no borrowings and a borrowing capacity of $2.1 billion as of September 30, 2025;
• Continued to grow our solid capital position with a preliminary total risk-based capital ratio of 15.76%, a common equity tier 1 ratio of 14.28%, a tier 1 leverage ratio of 11.60% and a tangible common equity ratio of 11.26%;
• Credit quality remains resilient with an allowance for credit losses on loans and leases of 2.10%; a net charge-off ratio of 0.03% for the quarter; and a non-accrual loan and leases ratio of 0.03% at quarter-end.
  
  

LODI, Calif., Oct. 16, 2025 (GLOBE NEWSWIRE) -- Farmers & Merchants Bancorp (OTCQX: FMCB) (the “Company” or “FMCB”), the parent company of Farmers & Merchants Bank of Central California (the “Bank” or “F&M Bank”), reported record third quarter net income of $23.7 million, or $33.92 per diluted common share compared with $22.1 million, or $29.96 per diluted common share, for the third quarter of 2024 and $23.1 million, or $32.94 per diluted common share, for the second quarter of 2025. The record third quarter net income is the highest quarterly net income in the history of the Company. The annualized return on average assets was 1.70% and the return on average equity was 15.10% for the third quarter of 2025 compared with 1.65% and 15.03% for the third quarter of 2024, and 1.65% and 15.09% for the second quarter of 2025, respectively. The expense efficiency ratio for third quarter was 46.48% down from 47.63% for the third quarter of 2024 and up from 44.88% for the second quarter of 2025.

Net income over the trailing twelve months was $91.6 million compared with $88.0 million for the same trailing period a year earlier. Diluted earnings per share over the trailing twelve months totaled $130.83, up 10.4% compared with $118.46 for the same trailing period a year ago and up 14.6% compared with $114.13 for the same period two years ago. Basic earnings per share over the trailing twelve months totaled $131.29, up 10.8% compared with $118.46 for the same trailing period a year ago and up 15.0% compared with $114.13 for the same period two years ago.

CEO Commentary

Kent Steinwert, Farmers & Merchants Bancorp’s Chairman, President and Chief Executive Officer, stated, “We are very pleased with the Company’s financial performance in the third quarter of 2025, highlighted by record third quarter net income of $23.7 million, a return on average assets of 1.70%, and a return on average equity of 15.10%. Net income for the first nine months of 2025 of $69.8 million is the best-performing nine-month period in the history of the Company. We achieved these impressive results while continuing to maintain a strong liquidity position and balance sheet at quarter-end with $172.6 million in cash, $1.6 billion in investment securities, of which $870.2 million are available-for-sale, no borrowings and access to $2.1 billion in borrowing capacity, while maintaining a conservative loan-to-deposit ratio of 74.16%. Capital levels continued to grow and were significantly above the regulatory thresholds for “well-capitalized” banks at quarter-end. Total deposits increased $185.9 million, or 4.0%, to $4.9 billion at September 30, 2025, compared to December 31, 2024, as we continued our focus on growing deposits with our longstanding client relationships and developing new client relationships. Gross loans and leases were $3.6 billion at the end of the third quarter, down $67.6 million or 1.8% from December 31, 2024, with most of the decrease coming in the first quarter of 2025 before growth in the second quarter followed by a relatively flat third quarter, as we continued to prioritize risk appropriate loan pricing and loan structure over loan growth. Given the unprecedented length of the inverted yield curve, together with the lack of movement in either the long or short term market interest rates, we believe market rates are not providing sufficient net interest margin to adequately compensate for duration risk on loans. Thus, we have favored investing in lower risk government guaranteed securities rather than loans with duration. These current market pricing conditions could exist for some time making it challenging to maintain and grow loans without reducing current loan portfolio spreads. Credit quality remained resilient as we continued to work closely with our borrowers while they work through the current economic cycle, particularly in a few agricultural products adversely impacted by negative conditions in the export market. Our Company remains in excellent financial condition, continues to perform at a high-level and is well positioned to navigate the challenges ahead as we have for the past 109 years.”

Earnings

Net interest income for the quarter ended September 30, 2025, was $55.4 million compared with $52.0 million in the same quarter in 2024 and $53.9 million in the second quarter of 2025. Net interest income for the nine months ended September 30, 2025, was $162.4 million, an increase of $7.9 million, or 5.1%, when compared with $154.5 million for the same period in 2024. The Company’s net interest margin increased to 4.14% for the nine months ended September 30, 2025, compared with 4.04% for the same period in 2024. The increase in the net interest margin was driven primarily by a decrease in deposit costs. Tangible book value per share increased to $877.13 at September 30, 2025, up 9.8% compared with $799.04 a year ago.

Balance Sheet

Total assets at quarter-end were $5.6 billion, up from $5.4 billion as of December 31, 2024. Total cash and cash equivalents were $172.6 million, a decrease of $40.0 million from December 31, 2024, and a decrease of $119.2 million compared to June 30, 2025, as management proactively moved excess cash into investment securities in anticipation of lower market rates in the future. Total loans and leases outstanding were $3.6 billion, a decrease of $67.6 million or 1.8% from December 31, 2024, and a decrease of $13.2 million or 0.4% from June 30, 2025. As of September 30, 2025, our total investment securities portfolio was $1.6 billion, an increase of $371.0 million from December 31, 2024, and an increase of $283.0 million from June 30, 2025, primarily due to purchases of $303.4 million during the quarter. As of September 30, 2025, the portfolio was comprised of $870.2 million in available-for-sale securities and $734.6 million in held-to-maturity securities. Total deposits increased $185.9 million to $4.9 billion compared to December 31, 2024, and increased $124.7 million or 2.6% from June 30, 2025. Our loan to deposit ratio was 74.16% as of September 30, 2025, down from 78.53% as of December 31, 2024, due to an increase in total deposits and a decrease in total loans and leases.

Credit Quality

The Company’s credit quality remained solid with only $1.0 million, or 0.03%, in non-accrual loans and leases as of September 30, 2025, and a negligible delinquency ratio of 0.03% of total loans and leases. Net charge-offs were $0.9 million or 0.03% of average loans and leases for the third quarter of 2025 and $1.6 million or 0.04% for the first nine months of 2025. The total allowance for credit losses on loans and leases as well as unfunded commitments was $78.8 million as of September 30, 2025, compared to $79.0 million as of June 30, 2025. The allowance for credit losses on loans and leases decreased by $0.2 million to $76.0 million, or 2.10%, as of September 30, 2025, compared with $76.2 million or 2.09% as of June 30, 2025. A provision for credit losses of $0.7 million was recorded during the third quarter of 2025 compared to no provision for credit losses during the third quarter of 2024. Provision for credit losses totaled $2.4 million for the first nine months of 2025 compared to no provision for credit losses in the first nine months of 2024.

Capital

The Company’s regulatory capital ratios continued to strengthen during the third quarter of 2025. The growth in capital was driven by net income of $23.7 million offset by stock repurchases of $2.5 million and dividends paid of $3.6 million. On August 13, 2025, the Company announced that it changed its dividend policy related to the frequency of cash dividend payments from semi-annually to quarterly. The first quarterly dividend was declared on August 12, 2025 and was paid on October 1, 2025. The Company repurchased 2,540 shares during the quarter, reducing total outstanding shares to 721,411. On August 14, 2025, the Company announced the authorization of an increase of $45.0 million to the existing share repurchase program along with an extension of the program through December 31, 2027. As of September 30, 2025, there remained $57.1 million authorized for repurchases under the board-approved repurchase plan. At September 30, 2025, the Company’s preliminary total risk-based capital ratio was 15.76% and the common equity tier 1 capital ratio was 14.28%, an increase from 15.36% and 13.88% as of June 30, 2025, respectively. At September 30, 2025, the Company’s preliminary tier 1 leverage capital ratio was 11.60%, an increase from 11.18% as of June 30, 2025, as a result of higher average assets. At September 30, 2025, all F&M Bank capital ratios exceeded the regulatory requirements to be classified as “well-capitalized.” At September 30, 2025, the tangible common equity ratio was 11.26%, up from 11.08% compared to June 30, 2025.

About Farmers & Merchants Bancorp

Farmers & Merchants Bancorp trades on the OTCQX under the symbol FMCB, and is the parent company of Farmers & Merchants Bank of Central California, also known as F&M Bank. Founded in 1916, F&M Bank is a locally owned and operated community bank, which proudly serves California through 33 convenient locations. F&M Bank is financially strong, with $5.6 billion in assets, and is consistently recognized as one of the nation's safest banks by national bank rating firms. The Bank has maintained a 5-Star rating from BauerFinancial for 35 consecutive years, longer than any other commercial bank in the State of California.

Farmers & Merchants Bancorp has paid dividends for 90 consecutive years and has increased dividends for 60 consecutive years. As a result, Farmers & Merchants Bancorp is a member of a select group of only 55 publicly traded companies referred to as “Dividend Kings,” and is ranked 17^th in that group based on consecutive years of dividend increases. A “Dividend King” is a stock with 50 or more consecutive years of dividend increase.

In July 2025, Farmers & Merchants Bancorp was named by Bank Director’s Magazine as the #3 best-performing bank in the nation across all asset categories in their annual “Ranking Banking” study of the top performing banks for 2024. In July 2024, Farmers & Merchants Bancorp was named by Bank Director’s Magazine as the #2 best-performing bank in the nation across all asset categories in their annual “Ranking Banking” study of the top performing banks for 2023. In July 2023, the Bank was named by Bank Director’s Magazine as the #1 best-performing bank in the nation across all asset categories in their annual “Ranking Banking” study of the top performing banks for 2022.

In April 2024, F&M Bank was ranked 6^th on Forbes Magazine’s list of "America’s Best Banks" in 2023. Forbes’ annual “America’s Best Banks” list looks at ten metrics measuring growth, credit quality, profitability, and capital for the 2023 calendar year, as well as stock performance in the 12 months through March 18, 2024.

In December 2023, F&M Bank was ranked 4^th on S&P Global Market Intelligence's “Top 50 List of Best-Performing Community Banks” in the US with assets between $3.0 billion and $10.0 billion for 2023. S&P Global Market Intelligence ranks financial institutions based on several key factors including financial returns, growth, and balance sheet risk profile.

In October 2021, F&M Bank was named the “Best Community Bank in California” by Newsweek magazine. Newsweek’s ranking recognizes those financial institutions that best serve their customers’ needs in each state. This recognition speaks to the superior customer service the F&M Bank team members provide to its clients.

F&M Bank is the 19^th largest bank lender to agriculture in the United States. F&M Bank operates in the mid-Central Valley of California, including Sacramento, San Joaquin, Solano, Stanislaus, and Merced counties and the east region of the San Francisco Bay Area, including Napa, Alameda and Contra Costa counties.

F&M Bank was inducted into the National Agriculture Science Center’s “Ag Hall of Fame” at the end of 2021 for providing resources, financial advice, guidance, and support to the agribusiness communities as well as to students in the next generation of agribusiness workforce. F&M Bank is dedicated to helping California remain the premier agricultural region in the world and will continue to work with the next generation of farmers, ranchers, and processors. F&M Bank remains committed to servicing the needs of agribusiness in California as has been the case since its founding over 109 years ago.

F&M Bank offers a full complement of loan, deposit, equipment leasing and treasury management products to businesses, as well as a full suite of consumer banking products. The FDIC awarded F&M Bank the highest possible rating of "Outstanding" in their last Community Reinvestment Act (“CRA”) evaluation.

Forward-Looking Statements

This press release may contain certain forward-looking statements that are based on management's current expectations regarding the Company’s financial performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “intend,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Forward-looking statements in this press release include, without limitation, statements regarding loan production levels and pricing, loan growth, the competitive environment, general economic conditions, including in the export market, and financial condition and competitive positioning. Forward-looking statements in this earnings release include matters that involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from results expressed or implied by such forward-looking statements. Such risk factors include, among others: the effects of and changes in monetary and fiscal policies, including the interest rate policies of the Federal Reserve Board and their effects on inflation risk; financial and regulatory policies of the United States government; political and economic uncertainty, including any decline in global, domestic or local economic conditions or the stability of credit and financial markets and the impact of tariffs; and other relevant risks detailed in the Company’s Form 10-K, Form 10-Qs, and various other securities law filings made periodically by the Company, copies of which are available from the Company’s website. All such factors are difficult to predict and are beyond the Company's ability to control or predict. There also may be additional risks that the Company does not presently know, or that the Company currently believes to be immaterial, that could also cause actual results to differ materially and adversely from those contained in these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances after the date of this press release or otherwise, except as may be required by applicable law.

For more information about Farmers & Merchants Bancorp and F&M Bank, visit fmbonline.com.

Investor Relations Contact
Farmers & Merchants Bancorp
Bart R. Olson
Executive Vice President and Chief Financial Officer

Phone: 209-367-2485
bolson@fmbonline.com

FINANCIAL HIGHLIGHTS
			Three-Months Ended													Nine-Months Ended
(dollars in thousands, except share and per share data)			September 30, 2025				June 30, 2025				September 30, 2024					September 30, 2025				September 30, 2024
Earnings and Profitability:
Interest income			$	70,592			$	70,061			$	68,635				$	207,791			$	205,107
Interest expense				15,175				16,193				16,642					45,365				50,620
Net interest income				55,417				53,868				51,993					162,426				154,487
Provision for credit losses				700				1,400				-					2,400				-
Non-interest income				6,867				5,519				6,280					17,407				16,122
Non-interest expense				28,948				26,651				27,755					81,108				78,698
Income before taxes				32,636				31,336				30,518					96,325				91,911
Income tax expense				8,918				8,281				8,397					26,543				25,300
Net income			$	23,718			$	23,055			$	22,121				$	69,782			$	66,611
Basic earnings per common share			$	34.24			$	33.06			$	29.96				$	100.18			$	89.91
Diluted earnings per common share			$	33.92			$	32.94			$	29.96				$	99.67			$	89.91
Weighted Average Shares Outstanding - Basic				692,727				697,332				738,421					696,572				740,898
Weighted Average Shares Outstanding - Diluted				699,211				699,852				738,421					700,128				740,898
Common shares outstanding				721,411				725,367				737,995					721,411				737,995
Return on average assets				1.70	%			1.65	%			1.65	%				1.68	%			1.65	%
Return on average equity				15.10	%			15.09	%			15.03	%				15.28	%			15.55	%
Loan yield				6.05	%			6.08	%			6.13	%				6.06	%			6.11	%
Cost of average total deposits				1.22	%			1.31	%			1.39	%				1.24	%			1.39	%
Net interest margin - tax equivalent				4.16	%			4.07	%			4.07	%				4.14	%			4.04	%
Effective tax rate				27.33	%			26.43	%			27.51	%				27.56	%			27.53	%
Efficiency ratio				46.48	%			44.88	%			47.63	%				45.10	%			46.13	%
Book value per common share(1)			$	894.43			$	852.72			$	816.67				$	894.43			$	816.67
Tangible book value per common share(2)(b)			$	877.13			$	835.33			$	799.04				$	877.13			$	799.04
Balance Sheet:
Total assets			$	5,629,867			$	5,478,773			$	5,418,132				$	5,629,867			$	5,418,132
Cash and cash equivalents				172,567				291,752				293,250					172,567				293,250
of which held at Fed				102,120				178,999				198,637					102,120				198,637
Total investment securities				1,604,789				1,321,812				1,182,073					1,604,789				1,182,073
of which available-for-sale				870,161				572,951				401,563					870,161				401,563
of which held-to-maturity				734,628				748,861				780,510					734,628				780,510
Gross loans and leases				3,622,582				3,635,831				3,713,735					3,622,582				3,713,735
Allowance for credit losses - loans and leases				75,963				76,169				75,816					75,963				75,816
Total deposits				4,885,014				4,760,364				4,708,682					4,885,014				4,708,682
Subordinated debentures				10,310				10,310				10,310					10,310				10,310
Total shareholders' equity			$	645,252			$	618,532			$	602,696				$	645,252			$	602,696
Loan-to-deposit ratio				74.16	%			76.38	%			78.87	%				74.16	%			78.87	%
Percentage of checking deposits to total deposits				48.69	%			49.23	%			50.01	%				48.69	%			50.01	%
Capital ratios (Bancorp)(a)
Common equity tier 1 capital to risk-weighted assets				14.28	%			13.88	%			13.47	%				14.28	%			13.47	%
Tier 1 capital to risk-weighted assets				14.50	%			14.10	%			13.70	%				14.50	%			13.70	%
Risk-based capital to risk-weighted assets				15.76	%			15.36	%			14.95	%				15.76	%			14.95	%
Tier 1 leverage capital ratio				11.60	%			11.18	%			11.32	%				11.60	%			11.32	%
Tangible common equity ratio(3)(b)				11.26	%			11.08	%			10.91	%				11.26	%			10.91	%
(a) Capital information is preliminary for September 30, 2025
(b) Non-GAAP measurement
Non-GAAP measurement reconciliation:
(Dollars in thousands)			September 30, 2025				June 30, 2025				September 30, 2024
Shareholders' equity			$	645,252			$	618,532			$	602,696
Less: Intangible assets				12,478				12,609				13,007
Tangible common equity			$	632,774			$	605,923			$	589,689
Total assets			$	5,629,867			$	5,478,773			$	5,418,132
Less: Intangible assets				12,478				12,609				13,007
Tangible assets			$	5,617,389			$	5,466,164			$	5,405,125
Tangible common equity ratio(3)				11.26	%			11.08	%			10.91	%
(1)   Total common equity divided by common shares outstanding
(2)   Tangible common equity divided by common shares outstanding
(3)   Tangible common equity divided by tangible assets

FAQ

What drove Farmers & Merchants Bancorp (FMCB) to record Q3 2025 net income of $23.7 million?

Higher net interest income of $55.4M, improved net interest margin and cost discipline producing a 46.48% efficiency ratio.

How did FMCB's diluted EPS in Q3 2025 compare to Q3 2024?

Diluted EPS was $33.92 in Q3 2025 versus $29.96 in Q3 2024, an increase of about 13.2%.

What capital ratios did FMCB report at September 30, 2025?

Preliminary total risk-based capital ratio was 15.76%, common equity tier 1 was 14.28%, and tier 1 leverage was 11.60%.

Did FMCB change its dividend or repurchase programs in 2025?

Yes. FMCB moved to quarterly dividends (first quarterly dividend declared Aug 12, 2025) and authorized a $45.0M increase in its share repurchase program.

What happened to FMCB's loan growth and loan-to-deposit ratio in Q3 2025?

Gross loans and leases were down $67.6M (1.8%) versus Dec 31, 2024, and the loan-to-deposit ratio declined to 74.16%.

How strong was FMCB's liquidity position at September 30, 2025?

Liquidity included $172.6M cash and $1.6B in investment securities, with no borrowings and $2.1B borrowing capacity.