ARCHBOLD, Ohio, Sept. 11, 2025 (GLOBE NEWSWIRE) -- F&M Bank (“F&M”), an Archbold, Ohio-based bank owned by Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO), is proud to announce the promotion of Curtis Metz to Market President for Northern Indiana. Metz, who has been with F&M for nearly 14 years, has built a strong and successful career in commercial banking. He has cultivated a diverse and loyal customer base across Northern Indiana and has served on F&M’s Commercial Loan and Deposit Rate Committees. A 201 ...

ARCHBOLD, Ohio, Aug. 18, 2025 (GLOBE NEWSWIRE) -- F&M Bank (“F&M”), an Archbold, Ohio-based bank owned by Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO), is inviting the community to put on their detective hats for a high-stakes summer challenge, $5,000 for a lucky hunter and $5,000 for a local charity. The Great Briefcase Hunt kicked off Monday, August 18, 2025, and dares residents across the F&M footprint to follow a series of weekly clues leading to a hidden briefcase in a local park. “It’s time to j ...

Core Insights - F&M Bank has announced the opening of its second full-service office in Michigan, located in Troy, reflecting its commitment to growth in the greater Detroit area [4][5] - The new office will enhance F&M's presence, bringing the total number of full-service offices to 38 across Ohio, Indiana, and Michigan [6] Company Overview - F&M Bank is a community bank established in 1897, providing commercial and retail banking services [7] - The bank operates in various counties in Ohio and Northeast Indiana, with a growing footprint in Michigan [7] Office Details - The Troy office spans nearly 3,000 square feet and includes multiple offices, a conference room, a customer lounge, a drive-up lane with an ATM, and on-site bankers [5] - A grand opening celebration for the Troy office is scheduled for October 28, 2026 [6]

Group 1: Stock Recommendations - Quad Graphics (QUAD) has seen a 7.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days and offers print and multichannel solutions [1] - Citizens Financial Services (CZFS) has experienced a 5.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days and has a dividend yield of 3.7%, above the industry average of 2.7% [2] - Farmers & Merchants Bancorp (FMAO) has reported a 6.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days and has a dividend yield of 3.6%, also above the industry average of 2.7% [3] Group 2: Industry Insights - The average dividend yield for the industry is notably low at 0.0% for print and related solutions, while the banking sector shows an average of 2.7% [2][3]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed consolidated financial statements and comprehensive notes detailing the company's financial position and performance [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | Change (In Thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total Assets | $3,345,763 | $3,364,723 | $(18,960) | -0.56% | | Total Liabilities | $2,994,971 | $3,029,512 | $(34,541) | -1.14% | | Total Stockholders' Equity | $350,792 | $335,211 | $15,581 | 4.65% | | Cash and cash equivalents | $88,231 | $176,351 | $(88,120) | -49.97% | | Loans, net | $2,599,917 | $2,536,043 | $63,874 | 2.52% | | Total deposits | $2,710,329 | $2,686,765 | $23,564 | 0.88% | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Condensed Consolidated Statements of Income (Three Months Ended June 30) | Item | June 30, 2025 (In Thousands) | June 30, 2024 (In Thousands) | Change (In Thousands) | % Change | | :------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Total interest income | $43,492 | $41,166 | $2,326 | 5.65% | | Total interest expense | $17,781 | $19,791 | $(2,010) | -10.16% | | Net Interest Income - Before Provision for Credit Losses | $25,711 | $21,375 | $4,336 | 20.28% | | Provision for Credit Losses - Loans | $661 | $605 | $56 | 9.26% | | Net Interest Income - After Provision for Credit Losses | $25,023 | $20,788 | $4,235 | 20.37% | | Total noninterest income | $3,935 | $3,716 | $219 | 5.90% | | Total noninterest expense | $19,260 | $17,345 | $1,915 | 11.04% | | Net Income | $7,710 | $5,682 | $2,028 | 35.69% | | Basic Earnings Per Share | $0.56 | $0.42 | $0.14 | 33.33% | Condensed Consolidated Statements of Income (Six Months Ended June 30) | Item | June 30, 2025 (In Thousands) | June 30, 2024 (In Thousands) | Change (In Thousands) | % Change | | :------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Total interest income | $84,494 | $79,820 | $4,674 | 5.86% | | Total interest expense | $34,874 | $38,327 | $(3,453) | -9.01% | | Net Interest Income - Before Provision for Credit Losses | $49,620 | $41,493 | $8,127 | 19.59% | | Provision for Credit Losses - Loans | $1,472 | $316 | $1,156 | 365.82% | | Net Interest Income - After Provision for Credit Losses | $48,381 | $41,461 | $6,920 | 16.70% | | Total noninterest income | $8,097 | $7,662 | $435 | 5.68% | | Total noninterest expense | $38,020 | $35,186 | $2,834 | 8.05% | | Net Income | $14,662 | $11,041 | $3,621 | 32.79% | | Basic Earnings Per Share | $1.07 | $0.81 | $0.26 | 32.10% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income (Three Months Ended June 30) | Item | June 30, 2025 (In Thousands) | June 30, 2024 (In Thousands) | Change (In Thousands) | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net Income | $7,710 | $5,682 | $2,028 | 35.69% | | Other comprehensive income (net of tax) | $908 | $2,000 | $(1,092) | -54.60% | | Comprehensive Income | $8,618 | $7,682 | $936 | 12.18% | Condensed Consolidated Statements of Comprehensive Income (Six Months Ended June 30) | Item | June 30, 2025 (In Thousands) | June 30, 2024 (In Thousands) | Change (In Thousands) | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net Income | $14,662 | $11,041 | $3,621 | 32.79% | | Other comprehensive income (net of tax) | $6,014 | $423 | $5,591 | 1321.75% | | Comprehensive Income | $20,676 | $11,464 | $9,212 | 80.36% | [Condensed Consolidated Statements of Changes to Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20to%20Stockholders'%20Equity) Changes in Stockholders' Equity (Six Months Ended June 30, 2025) | Item | January 1, 2025 (In Thousands) | June 30, 2025 (In Thousands) | Change (In Thousands) | | :-------------------------------- | :----------------------------- | :--------------------------- | :-------------------- | | Common Stock | $135,565 | $135,805 | $240 | | Treasury Stock | $(10,985) | $(10,674) | $311 | | Retained Earnings | $235,854 | $244,870 | $9,016 | | Accumulated Other Comprehensive Loss | $(25,223) | $(19,209) | $6,014 | | Total Stockholders' Equity | $335,211 | $350,792 | $15,581 | - Net income contributed **$14,662 thousand** to retained earnings for the six months ended June 30, 2025, while cash dividends declared reduced it by **$5,997 thousand**. Other comprehensive income increased by **$6,014 thousand**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Cash Flow Activity | June 30, 2025 (In Thousands) | June 30, 2024 (In Thousands) | Change (In Thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Net cash provided by operating activities | $12,113 | $11,201 | $912 | | Net cash (used in) provided by investing activities | $(60,508) | $12,946 | $(73,454) | | Net cash (used in) provided by financing activities | $(39,725) | $26,720 | $(66,445) | | Net (Decrease) Increase in Cash and Cash Equivalents | $(88,120) | $50,867 | $(138,987) | | Cash and Cash Equivalents - End of period | $88,231 | $193,068 | $(104,837) | - Investing activities shifted from providing cash in 2024 to using cash in 2025, primarily due to a net increase in loan originations and principal collections, and purchases of available-for-sale securities[18](index=18&type=chunk) - Financing activities also shifted from providing cash in 2024 to using cash in 2025, mainly driven by significant repayments of FHLB advances[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1 BASIS OF PRESENTATION AND OTHER](index=12&type=section&id=NOTE%201%20BASIS%20OF%20PRESENTATION%20AND%20OTHER) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, and do not include all information required for complete financial statements[20](index=20&type=chunk) - The Company's principal revenue source is interest income from loans and investment securities, supplemented by noninterest income from various banking and financial services[21](index=21&type=chunk) [NOTE 2 BUSINESS COMBINATION AND ASSET PURCHASE](index=12&type=section&id=NOTE%202%20BUSINESS%20COMBINATION%20AND%20ASSET%20PURCHASE) - On October 1, 2022, the Company acquired Peoples-Sidney Financial Corporation for approximately **$23.2 million**, consisting of **$9.8 million** in cash and **$13.4 million** in stock, aiming to increase its deposit base and reduce transaction costs through economies of scale[22](index=22&type=chunk) - The acquisition of Peoples-Sidney Financial Corporation resulted in the allocation of **$6.0 million** to core deposit intangible, amortized over seven years, and **$5.9 million** to goodwill[23](index=23&type=chunk) Annual Amortization of Core Deposit Intangible Assets (In Thousands) | Year | Geneva | Ossian | Perpetual | Peoples | Total | | :--- | :----- | :----- | :-------- | :------ | :---- | | 2025 | $560 | $140 | $95 | $861 | $1,656 | | 2026 | - | $140 | $95 | $861 | $1,096 | | 2027 | - | $140 | $95 | $861 | $1,096 | | 2028 | - | $47 | $73 | $861 | $981 | | 2029 | - | - | - | $646 | $646 | | Total | $560 | $467 | $358 | $4,090 | $5,475 | [NOTE 3 SECURITIES](index=18&type=section&id=NOTE%203%20SECURITIES) Available-for-Sale Securities (June 30, 2025 vs. December 31, 2024, In Thousands) | Item | June 30, 2025 Fair Value | December 31, 2024 Fair Value | Change | | :-------------------------- | :------------------------- | :--------------------------- | :----- | | U.S. Treasury | $95,390 | $105,999 | $(10,609) | | U.S. Government agencies | $137,666 | $135,166 | $2,500 | | Mortgage-backed securities | $136,953 | $120,631 | $16,322 | | State and local governments | $61,093 | $64,760 | $(3,667) | | Total available-for-sale securities | $431,102 | $426,556 | $4,546 | - The Company did not record an allowance for credit losses on its available-for-sale securities, as unrealized losses were attributed to interest rate changes, not credit quality, and management intends and has the ability to hold these securities until recovery[39](index=39&type=chunk)[41](index=41&type=chunk) Debt Securities by Contractual Maturity (June 30, 2025, In Thousands) | Maturity | Amortized Cost | Fair Value | | :-------------------------- | :------------- | :--------- | | One year or less | $63,149 | $62,185 | | After one year through five years | $224,876 | $212,978 | | After five years through ten years | $19,822 | $18,986 | | After ten years | - | - | | Mortgage-backed securities | $147,570 | $136,953 | | Total | $455,417 | $431,102 | [NOTE 4 LOANS](index=22&type=section&id=NOTE%204%20LOANS) [Loan Balances and Composition](index=22&type=section&id=Loan%20Balances%20and%20Composition) Loan Balances by Segment (June 30, 2025 vs. December 31, 2024, In Thousands) | Loan Segment | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------ | :---------------- | :----- | | Consumer Real Estate | $523,781 | $520,114 | $3,667 | | Agricultural Real Estate | $221,004 | $216,401 | $4,603 | | Agricultural | $157,870 | $152,080 | $5,790 | | Commercial Real Estate | $1,345,953 | $1,310,811 | $35,142 | | Commercial and Industrial | $293,826 | $275,152 | $18,674 | | Consumer | $59,348 | $63,009 | $(3,661) | | Other | $24,653 | $24,978 | $(325) | | Total Loans | $2,626,435 | $2,562,545 | $63,890 | - Commercial Real Estate and Commercial and Industrial loans saw the largest increases, while Consumer loans experienced a decrease[47](index=47&type=chunk) Fixed vs. Variable Rate Loans (June 30, 2025, In Thousands) | Loan Segment | Fixed Rate | Variable Rate | | :-------------------------- | :--------- | :------------ | | Consumer Real Estate | $281,802 | $241,979 | | Agricultural Real Estate | $111,837 | $109,167 | | Agricultural | $47,253 | $110,617 | | Commercial Real Estate | $873,725 | $472,228 | | Commercial and Industrial | $122,192 | $171,634 | | Consumer | $59,319 | $29 | | Other | $15,098 | $9,555 | [Loan Risk Characteristics and Underwriting](index=22&type=section&id=Loan%20Risk%20Characteristics%20and%20Underwriting) Past Due Loans by Portfolio Segment (June 30, 2025, In Thousands) | Loan Segment | 30-59 Days Past Due | 60-89 Days Past Due | Greater Than 90 Days Past Due | Total Past Due | | :-------------------------- | :------------------ | :------------------ | :---------------------------- | :------------- | | Consumer Real Estate | $2,487 | $449 | $656 | $3,592 | | Agricultural Real Estate | $251 | $6 | $125 | $382 | | Agricultural | $60 | - | $50 | $110 | | Commercial Real Estate | - | - | $141 | $141 | | Commercial and Industrial | $50 | $144 | - | $194 | | Consumer | $109 | $18 | $31 | $158 | | Other | - | - | - | - | | Total | $2,957 | $617 | $1,003 | $4,577 | Nonaccrual Loans by Portfolio Segment (June 30, 2025 vs. December 31, 2024, In Thousands) | Loan Segment | June 30, 2025 Nonaccrual | December 31, 2024 Nonaccrual | | :-------------------------- | :------------------------- | :--------------------------- | | Consumer Real Estate | $3,049 | $2,369 | | Agricultural Real Estate | $461 | $130 | | Agricultural | $60 | $90 | | Commercial Real Estate | $141 | $360 | | Commercial & Industrial | - | $57 | | Consumer | $34 | $118 | | Total | $3,745 | $3,124 | - The Bank uses a nine-tier risk rating system for loans, ranging from 'Excellent' (1) to 'Loss' (8), with 'Satisfactory' (3) and 'Satisfactory / Monitored' (4) representing average or slightly above average risk[57](index=57&type=chunk)[59](index=59&type=chunk) [Allowance for Credit Losses (ACL) Activity](index=36&type=section&id=Allowance%20for%20Credit%20Losses%20(ACL)%20Activity) Allowance for Credit Losses (ACL) Activity (Six Months Ended June 30, 2025, In Thousands) | Item | Consumer Real Estate | Agricultural Real Estate | Agricultural | Commercial Real Estate | Commercial and Industrial | Consumer | Other | Total | | :-------------------------------- | :------------------- | :----------------------- | :----------- | :--------------------- | :------------------------ | :------- | :---- | :------ | | Beginning balance (Jan 1, 2025) | $3,543 | $895 | $285 | $16,560 | $2,969 | $1,012 | $562 | $25,826 | | Provision for (recovery of) credit losses-loans | $108 | $(157) | $39 | $775 | $420 | $272 | $15 | $1,472 | | Charge-offs | - | - | - | - | $(25) | $(442) | - | $(467) | | Recoveries | $2 | - | $10 | $19 | $12 | $103 | - | $146 | | Ending Balance (June 30, 2025) | $3,653 | $738 | $334 | $17,354 | $3,376 | $945 | $577 | $26,977 | Allowance for Unfunded Loan Commitments and Letters of Credit (AULC) Activity (Six Months Ended June 30, 2025, In Thousands) | Item | Unfunded Loan Commitment & Letters of Credit | | :------------------------------------------------ | :------------------------------------------- | | Beginning balance (Jan 1, 2025) | $1,541 | | Recovery of credit losses-off balance sheet credit exposures | $(233) | | Ending Balance (June 30, 2025) | $1,308 | - The ACL increased by **$1,151 thousand** for the six months ended June 30, 2025, primarily due to a provision for credit losses of **$1,472 thousand**, partially offset by net charge-offs[79](index=79&type=chunk) [NOTE 5 SERVICING](index=42&type=section&id=NOTE%205%20SERVICING) - The unpaid principal balances of 1-4 family real estate loans serviced for others were **$362.8 million** at June 30, 2025, and agricultural real estate loans serviced for others were **$146.8 million**[84](index=84&type=chunk) Mortgage Servicing Rights Activity (Six Months Ended June 30, 2025, In Thousands) | Item | June 30, 2025 | | :-------------------------- | :------------ | | Beginning Balance | $5,753 | | Capitalized Additions | $515 | | Amortization | $(371) | | Ending Balance | $5,897 | | Valuation Allowance | $(87) | | Servicing Rights net | $5,810 | - A valuation allowance of **$87 thousand** was established at June 30, 2025, due to certain strata of 1-4 family real estate and agricultural real estate loans having carrying values slightly below fair value[86](index=86&type=chunk)[88](index=88&type=chunk) [NOTE 6 EARNINGS PER SHARE](index=42&type=section&id=NOTE%206%20EARNINGS%20PER%20SHARE) - Basic and diluted earnings per share are calculated using the two-class method, allocating earnings to common stock and participating securities (unvested restricted stock)[89](index=89&type=chunk) Earnings Per Share (Six Months Ended June 30) | Item | June 30, 2025 | June 30, 2024 | | :------------------------------------------------ | :------------ | :------------ | | Net income | $14,662 | $11,041 | | Less: distributed earnings allocated to participating securities | $(77) | $(72) | | Less: undistributed earnings allocated to participating securities | $(103) | $(57) | | Net earnings available to common shareholders | $14,482 | $10,912 | | Weighted average common shares outstanding | 13,544,662 | 13,515,966 | | Basic and diluted earnings per share | $1.07 | $0.81 | - Director stock awards are immediately vested and do not affect diluted earnings per share[91](index=91&type=chunk) [NOTE 7 DERIVATIVE FINANCIAL INSTRUMENTS](index=45&type=section&id=NOTE%207%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) - The Bank uses interest rate swap agreements with a combined notional value of **$100 million** to manage interest rate risk, designated as accounting hedges[95](index=95&type=chunk)[96](index=96&type=chunk) Interest Rate Swap Derivatives (June 30, 2025 vs. December 31, 2024, In Thousands) | Item | June 30, 2025 Notional Value | June 30, 2025 Fair Value | December 31, 2024 Notional Value | December 31, 2024 Fair Value | | :-------------------------------- | :----------------------------- | :----------------------- | :------------------------------- | :--------------------------- | | Interest rate swaps associated with loans | $100,000 | $(1,826) | $100,000 | $(976) | Effects of Interest Rate Swaps on Consolidated Statements of Income (Six Months Ended June 30) | Line Item | June 30, 2025 (In Thousands) | June 30, 2024 (In Thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Loans, including fees | $(45) | $5 | | Other interest income | $50 | $427 | | Total interest income | $5 | $432 | [NOTE 8 QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS](index=47&type=section&id=NOTE%208%20QUALIFIED%20AFFORDABLE%20HOUSING%20PROJECT%20INVESTMENTS) - The Company invests in qualified affordable housing projects, accounting for them using the proportional amortization method, which amortizes the initial cost to income tax expense in proportion to tax credits received[104](index=104&type=chunk) Qualified Affordable Housing Project Investments (June 30, 2025 vs. December 31, 2024, In Thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Low-income-housing tax credit investments | $4,000 | $4,000 | | Unfunded commitments | $(446) | $(880) | | Net funded low-income-housing tax credit investments | $3,554 | $3,120 | Related Expenses and Tax Credits Recognized (Six Months Ended June 30) | Item | June 30, 2025 (In Thousands) | June 30, 2024 (In Thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Amortization expense | $224 | $220 | | Tax credits recognized | $223 | $218 | [NOTE 9 FAIR VALUE OF FINANCIAL INSTRUMENTS](index=48&type=section&id=NOTE%209%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) - Fair values are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[110](index=110&type=chunk)[111](index=111&type=chunk)[114](index=114&type=chunk) Assets Measured at Fair Value on a Recurring Basis (June 30, 2025, In Thousands) | Item | Level 1 | Level 2 | Level 3 | | :-------------------------- | :------ | :------ | :------ | | U.S. Treasury | $95,390 | - | - | | U.S. Government agencies | $20,078 | $117,588 | - | | Mortgage-backed securities | - | $136,953 | - | | State and local governments | - | $59,639 | $1,454 | | Total Securities Available-for-Sale | $115,468 | $314,180 | $1,454 | | Interest rate swap liabilities | - | $(1,826) | - | Assets Measured at Fair Value on a Nonrecurring Basis (June 30, 2025, In Thousands) | Item | Level 1 | Level 2 | Level 3 | | :-------------------------- | :------ | :------ | :------ | | Collateral dependent loans | - | - | $3,597 | | Loan servicing rights | - | - | $323 | [NOTE 10 FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE](index=55&type=section&id=NOTE%2010%20FEDERAL%20FUNDS%20PURCHASED%20AND%20SECURITIES%20SOLD%20UNDER%20AGREEMENTS%20TO%20REPURCHASE) - The Company had no federal funds purchased at June 30, 2025, or December 31, 2024[127](index=127&type=chunk) Securities Sold Under Agreements to Repurchase (June 30, 2025, In Thousands) | Maturity | Overnight & Continuous | Up to 30 days | 30-90 days | Greater Than 90 days | Total | | :-------------------------- | :--------------------- | :------------ | :--------- | :------------------- | :---- | | US Treasury & agency securities | - | - | $344 | $27,218 | $27,562 | [NOTE 11 SUBORDINATED NOTES](index=56&type=section&id=NOTE%2011%20SUBORDINATED%20NOTES) - On July 30, 2021, the Company completed a private placement of **$35 million** aggregate principal amount of 3.25% fixed-to-floating rate subordinated notes due July 30, 2031[129](index=129&type=chunk) - These Notes qualify as Tier 2 capital for regulatory purposes, with proportionate reductions beginning July 31, 2026[129](index=129&type=chunk) Subordinated Notes (June 30, 2025 vs. December 31, 2024, In Thousands) | Item | June 30, 2025 Principal | June 30, 2025 Unamortized Costs | December 31, 2024 Principal | December 31, 2024 Unamortized Costs | | :-------------------------- | :---------------------- | :------------------------------ | :-------------------------- | :-------------------------------- | | Subordinated Notes | $35,000 | $(125) | $35,000 | $(182) | [NOTE 12 - SEGMENT REPORTING](index=56&type=section&id=NOTE%2012%20-%20SEGMENT%20REPORTING) - The Company operates as one reportable operating segment: commercial banking, providing a broad array of financial products and services across Ohio, Indiana, and Michigan[132](index=132&type=chunk) - Performance is evaluated on a Company-wide basis using net income, return on average total assets, return on average equity, earnings per common share, net interest margin, operating efficiency, and nonaccrual loans to total loans[134](index=134&type=chunk) [NOTE 13 RECENT ACCOUNTING PRONOUNCEMENTS](index=57&type=section&id=NOTE%2013%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) - ASU 2023-06 (Disclosure Improvements) requires new disclosures for cash flows from derivatives, unused lines of credit, unfunded commitments, and weighted-average interest rates on short-term borrowings, with early adoption prohibited[136](index=136&type=chunk)[137](index=137&type=chunk) - ASU 2023-09 (Income Taxes) mandates public business entities to disclose specific categories in rate reconciliation and additional information for significant reconciling items, effective for annual periods after December 15, 2024[139](index=139&type=chunk) - ASU 2024-03 (Expense Disaggregation) requires disclosure of employee compensation, depreciation, and intangible asset amortization within relevant expense captions, effective for annual periods after December 15, 2026[140](index=140&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=58&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, and liquidity, covering net interest income, loan/deposit changes, noninterest items, regulatory updates, and critical accounting estimates [OVERVIEW](index=58&type=section&id=OVERVIEW) - Net interest income for the first six months of 2025 increased by **$8.1 million** year-over-year, driven by a **47 basis point** improvement in net interest margin[142](index=142&type=chunk) - The decrease in the cost of funds was primarily due to lower repricing of higher-cost certificates of deposits (CDs) and a reduction in interest expense from NOW and savings accounts, benefiting from Federal Reserve rate cuts in late 2024[143](index=143&type=chunk) - Overall net income for Q2 2025 was **$7.7 million**, up **$2.0 million (35.7%)** from Q2 2024, and **$758 thousand** higher than Q1 2025, indicating a path towards a more profitable 2025[152](index=152&type=chunk) [NATURE OF ACTIVITIES](index=60&type=section&id=NATURE%20OF%20ACTIVITIES) - Farmers & Merchants Bancorp, Inc. is a financial holding company operating The Farmers & Merchants State Bank, which serves Northwest Ohio, Northeast Indiana, and Southeast Michigan through **37 full-service banking offices** and **four Loan Production Offices**[153](index=153&type=chunk)[154](index=154&type=chunk) - The Bank engages in commercial, agricultural, residential mortgage, and consumer lending, with a significant portion of its loan portfolio in the agricultural industry[155](index=155&type=chunk) - The Bank offers a range of services including checking, savings, time deposits, ATMs/ITMs, online and mobile banking, and investment services through FM Investment Services[156](index=156&type=chunk)[160](index=160&type=chunk) [RECENT REGULATORY DEVELOPMENTS](index=64&type=section&id=RECENT%20REGULATORY%20DEVELOPMENTS) - The CFPB's Section 1071 rule on small business lending data collection has faced legal challenges, resulting in a nationwide injunction extending compliance dates indefinitely for community banks[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - The Community Reinvestment Act (CRA) final rule, effective April 1, 2024, is also subject to a temporary injunction and ongoing litigation, with joint agencies announcing intent to rescind the 2023 rule and reinstate the prior framework[171](index=171&type=chunk) - New federal legislation, the GENIUS Act (July 2025), establishes a comprehensive regulatory framework for payment stablecoins, imposing requirements like asset reserve standards and enhanced reporting, which the Company is evaluating for compliance and strategic implications[173](index=173&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=67&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) - The Allowance for Credit Losses (ACL) is identified as the most subjective and complex accounting area, requiring significant management judgment and potentially subject to revision[178](index=178&type=chunk) - The ACL methodology estimates expected credit losses over the life of the loan, incorporating historical loss rates, economic projections (e.g., National Unemployment), and qualitative factors such as staff ability, collateral values, and economic conditions[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - Loans are placed on nonaccrual status if 90 days delinquent or full payment is not expected, with interest income recognized on a cash-basis or cost-recovery method until return to accrual status[180](index=180&type=chunk)[181](index=181&type=chunk) [MATERIAL CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES](index=71&type=section&id=MATERIAL%20CHANGES%20IN%20FINANCIAL%20CONDITION%2C%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - Loan balances increased by **$63.9 million (2.5%)** since December 31, 2024, with significant growth in non-real estate commercial loans (**9.4%**), commercial real estate loans (**3.3%**), and agricultural loans (**10.5%**) year-over-year[192](index=192&type=chunk)[196](index=196&type=chunk) - Total deposits increased by **$23.6 million (0.9%)** since year-end 2024, while cash and cash equivalents decreased by **$88.1 million**, primarily used to fund loan growth and repay FHLB advances[194](index=194&type=chunk)[207](index=207&type=chunk) - Shareholders' equity increased by **$15.6 million (4.65%)** since year-end 2024, driven by earnings exceeding dividends and a **$6.0 million** decrease in accumulated other comprehensive loss[208](index=208&type=chunk) [MATERIAL CHANGES IN RESULTS OF OPERATIONS](index=77&type=section&id=MATERIAL%20CHANGES%20IN%20RESULTS%20OF%20OPERATIONS) [Comparison of Results of Interest Earnings and Expenses for three month periods ended June 30, 2025 and 2024](index=77&type=section&id=Comparison%20of%20Results%20of%20Interest%20Earnings%20and%20Expenses%20for%20three%20month%20periods%20ended%20June%2030%2C%202025%20and%202024) - Total interest income increased by **$2.3 million (5.7%)** for Q2 2025 compared to Q2 2024, primarily due to higher loan interest income (**$2.9 million** increase) and increased available-for-sale securities income (**$1.0 million** increase)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - Total interest expense decreased by **$2.0 million (10.2%)** for Q2 2025 compared to Q2 2024, driven by a **$1.7 million** reduction in interest-bearing deposit expense and **$331 thousand** decrease in borrowed funds expense[216](index=216&type=chunk)[217](index=217&type=chunk) Net Interest Spread and Margin (Quarter Ended June 30) | Metric | June 30, 2025 | June 30, 2024 | | :------------------- | :------------ | :------------ | | Interest/Dividend income/yield | 5.45% | 5.22% | | Interest Expense/cost | 2.83% | 3.18% | | Net Interest Spread | 2.62% | 2.04% | | Net Interest Margin | 3.22% | 2.71% | [Comparison of Noninterest Results of Operations for three month periods ended June 30, 2025 and 2024](index=81&type=section&id=Comparison%20of%20Noninterest%20Results%20of%20Operations%20for%20three%20month%20periods%20ended%20June%2030%2C%202025%20and%202024) - Total provision for credit losses increased by **$56 thousand** for Q2 2025 compared to Q2 2024, with net charge-offs increasing by **$21 thousand**, primarily in the consumer portfolio segment[227](index=227&type=chunk) - Noninterest income increased by **$219 thousand (5.9%)** for Q2 2025, driven by higher customer service fees (**$141 thousand**) and other service fees (**$121 thousand**), partially offset by reductions in interchange income[237](index=237&type=chunk) - Noninterest expenses were **$1.9 million (11.0%)** higher for Q2 2025, mainly due to increased employee benefits (**$153 thousand**), consulting fees (**$296 thousand**), and a combined **$973 thousand** increase in data processing and ATM expenses[241](index=241&type=chunk)[242](index=242&type=chunk) [Comparison of Results of Interest Earnings and Expenses for six month periods ended June 30, 2025 and 2024](index=86&type=section&id=Comparison%20of%20Results%20of%20Interest%20Earnings%20and%20Expenses%20for%20six%20month%20periods%20ended%20June%2030%2C%202025%20and%202024) - Total interest income increased by **$4.7 million (5.9%)** for the six months ended June 30, 2025, compared to the same period in 2024, with loan interest income up **$4.8 million**[247](index=247&type=chunk)[249](index=249&type=chunk) - Total interest expense decreased by **$3.5 million (9.0%)** for the six months ended June 30, 2025, primarily due to a **$3.0 million** reduction in interest-bearing deposit expense and **$470 thousand** decrease in borrowed funds expense[252](index=252&type=chunk)[253](index=253&type=chunk) Net Interest Spread and Margin (Six Months Ended June 30) | Metric | June 30, 2025 | June 30, 2024 | | :------------------- | :------------ | :------------ | | Interest/Dividend income/yield | 5.32% | 5.11% | | Interest Expense/cost | 2.84% | 3.12% | | Net Interest Spread | 2.48% | 1.99% | | Net Interest Margin | 3.13% | 2.66% | [Comparison of Noninterest Results of Operations for six month periods ended June 30, 2025 and 2024](index=91&type=section&id=Comparison%20of%20Noninterest%20Results%20of%20Operations%20for%20six%20month%20periods%20ended%20June%2030%2C%202025%20and%202024) - Provision expense increased by **$1.2 million** for the six months ended June 30, 2025, compared to 2024, driven by higher net charge-offs (**$251 thousand** increase) and a **$1.3 million** increase in nonaccrual loans[259](index=259&type=chunk) - Noninterest income increased by **$435 thousand (5.7%)** for the six months ended June 30, 2025, mainly from other service fees (**$188 thousand** increase) and servicing rights income (**$304 thousand** increase)[267](index=267&type=chunk) - Noninterest expenses increased by **$2.8 million (8.1%)** for the six months ended June 30, 2025, primarily due to higher employee benefits (**$324 thousand** increase), consulting fees (**$855 thousand** increase), and a combined **$1.0 million** increase in data processing and ATM expenses[270](index=270&type=chunk)[271](index=271&type=chunk) [Item 3. Qualitative and Quantitative Disclosures About Market Risk](index=96&type=section&id=Item%203.%20Qualitative%20and%20Quantitative%20Disclosures%20About%20Market%20Risk) This section details the Company's market risk, primarily interest rate risk, and management strategies, including sensitivity analysis of net interest margin and income to hypothetical interest rate shocks - The primary market risk is interest rate risk, managed through an asset/liability framework to control sensitivity of net interest spreads and net income to interest rate changes[278](index=278&type=chunk)[279](index=279&type=chunk) Interest Rate Shock on Net Interest Margin and Net Interest Income (June 30, 2025) | Interest Rate Shock | Net Interest Margin (Ratio) | % Change to Flat Rate (NIM) | Cumulative Total ($000) (NII) | % Change to Flat Rate (NII) | | :------------------ | :-------------------------- | :-------------------------- | :---------------------------- | :-------------------------- | | Rising 3.00% | 3.39% | -5.82% | $100,252 | -8.82% | | Rising 2.00% | 3.46% | -3.63% | $103,532 | -5.83% | | Rising 1.00% | 3.63% | 0.97% | $109,591 | -0.32% | | Flat 0.00% | 3.59% | 0.00% | $109,946 | 0.00% | | Falling -1.00% | 3.50% | -2.74% | $108,187 | -1.60% | | Falling -2.00% | 3.30% | -8.30% | $103,487 | -5.88% | | Falling -3.00% | 3.14% | -12.69% | $100,364 | -8.72% | - The Bank's static balance sheet shifted from slightly asset-sensitive in March to mostly neutral in June, influenced by floating-rate liabilities and market rate inversions[280](index=280&type=chunk) [Item 4. Controls and Procedures](index=98&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the most recent fiscal quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[282](index=282&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[282](index=282&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=99&type=section&id=Item%201.%20Legal%20Proceedings) No material legal proceedings are reported for the Company - No legal proceedings are reported[283](index=283&type=chunk) [Item 1A. Risk Factors](index=100&type=section&id=Item%201A.%20Risk%20Factors) This section updates the Company's risk factors, including inflation, quantitative modeling, trade policy, and emerging financial technologies, impacting profitability and operations - Inflation risk may negatively impact profitability by increasing fixed costs, funding costs, and talent acquisition/retention expenses, potentially decreasing customer purchasing power and increasing loan default rates[284](index=284&type=chunk) - Quantitative modeling risk arises from reliance on models for financial estimates and risk management, which may be deficient due to assumptions, historical analyses, errors, or misuse, potentially leading to adverse business decisions[285](index=285&type=chunk)[286](index=286&type=chunk) - Trade policy risk, particularly from tariffs, could negatively impact commercial borrowers in agriculture, food processing, and manufacturing, leading to increased credit risk, higher loan delinquencies, and decreased loan demand in the Midwest market[287](index=287&type=chunk)[288](index=288&type=chunk) - Emerging financial technologies (digital assets, stablecoins, DLT) pose risks by potentially reducing demand for traditional banking services and creating new competitive pressures, which could erode the Company's relevance and financial condition[291](index=291&type=chunk)[293](index=293&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=101&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not repurchase treasury stock during Q2 2025 under its publicly announced program, which authorized the repurchase of 650,000 common shares Treasury Stock Repurchase Activity (Quarter Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs | Maximum Number of Shares that may yet be purchased under the Plans or Programs | | :-------------------- | :----------------------------- | :--------------------------- | :-------------------------------------------------------------------------- | :-------------------------------------------------------------------------- | | 4/1/2025 to 4/30/2025 | — | — | — | 650,000 | | 5/1/2025 to 5/31/2025 | — | — | — | 650,000 | | 6/1/2025 to 6/30/2025 | — | — | — | 650,000 | | Total | — | — | — | 650,000 | - The Board of Directors authorized the repurchase of **650,000 common shares** between January 28, 2025, and December 31, 2025[297](index=297&type=chunk) [Item 3. Defaults Upon Senior Securities](index=101&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - No defaults upon senior securities are reported[297](index=297&type=chunk) [Item 4. Mine Safety Disclosures](index=101&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Mine Safety Disclosures are not applicable[297](index=297&type=chunk) [Item 5. Other Information](index=101&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the most recent fiscal quarter - No director or officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the quarter[298](index=298&type=chunk) [Item 6. Exhibits](index=102&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, incentive plans, certifications, and XBRL data - Exhibits include Amended Articles of Incorporation, Amended and Restated Code of Regulations, Description of Common Stock, 2025 Long-Term Incentive Plan, Rule 13-a-14(a) Certifications (CEO, CFO), Section 1350 Certifications (CEO, CFO), and Inline XBRL documents[301](index=301&type=chunk) [Signatures](index=103&type=section&id=Signatures) The report is duly signed by Farmers & Merchants Bancorp, Inc.'s President and CEO, Lars B. Eller, and EVP and CFO, Barbara J. Britenriker, as of August 4, 2025 - The report is signed by Lars B. Eller, President and CEO, and Barbara J. Britenriker, Executive Vice-President and CFO, on August 4, 2025[303](index=303&type=chunk)

[2025 Second Quarter and Year-to-Date Financial Results Overview](index=1&type=section&id=2025%20Second%20Quarter%20and%20Year-to-Date%20Financial%20Results%20Overview) This section provides a high-level overview of the company's financial performance for the second quarter and year-to-date 2025, highlighting key achievements and strategic direction [2025 Second Quarter Financial and Operating Highlights](index=1&type=section&id=2025%20Second%20Quarter%20Financial%20and%20Operating%20Highlights) Farmers & Merchants Bancorp, Inc. reported one of its most profitable quarters in history, driven by significant net income growth, expanded net interest margin, and increases in total loans, assets, and deposits, alongside improved efficiency and strong asset quality - Net income increased by **35.7%** year-over-year to **$7.7 million**, with basic and diluted earnings per share at **$0.56**[5](index=5&type=chunk) - Net interest margin expanded for the fourth consecutive quarter, increasing by **51 basis points** year-over-year to **3.22%**[5](index=5&type=chunk) - Total loans increased by **$67.2 million**, growing **2.6%** year-over-year to **$2.63 billion**[5](index=5&type=chunk) - Total assets increased by **$23.1 million**, growing **0.7%** year-over-year to **$3.35 billion**[5](index=5&type=chunk) - Total deposits increased by **$69.2 million**, growing **2.6%** year-over-year to **$2.71 billion**[5](index=5&type=chunk) - Efficiency ratio improved from **69.03%** to **64.93%**[5](index=5&type=chunk) - Asset quality remained historically strong, with non-performing loans at only **$3.7 million** and an average loan net charge-off rate of **0.00%**[5](index=5&type=chunk) - Tier 1 leverage ratio stood at **8.50%**[5](index=5&type=chunk) [CEO Commentary and Strategic Outlook](index=1&type=section&id=CEO%20Commentary%20and%20Strategic%20Outlook) CEO Lars B. Eller highlighted strong core profitability, sustained net interest margin growth, and successful execution of multi-year strategic plans as drivers for record second-quarter performance, noting significant total revenue growth exceeding noninterest expenses and improving the efficiency ratio - Strategic initiatives include enhancing product offerings, streamlining account opening processes, and a continued focus on attracting and developing experienced talent[4](index=4&type=chunk) - Total revenue (net interest income plus noninterest income) for Q2 2025 increased by **18.2%** year-over-year, up from **16.7%** in Q1 2025, significantly outpacing noninterest expense growth[4](index=4&type=chunk) - Net Interest Margin (NIM) increased by **51 basis points** year-over-year and **19 basis points** from Q1 2025, benefiting from higher asset yields due to existing loan repricing and new loan originations at more favorable rates, alongside improved funding costs from customer relationship growth and a more stable interest rate environment[4](index=4&type=chunk) - Deposit growth strategies reflect success in expanding relationship-based banking across Ohio, Indiana, and Michigan markets, supported by product enhancements and investments in new tools and capabilities for marketing efforts[8](index=8&type=chunk) - Loan demand remains strong, with the company managing growth through disciplined pricing and focusing on maintaining robust asset quality, evidenced by 17 consecutive quarters of average loan net charge-off rates below **0.03%**[8](index=8&type=chunk) - The outlook anticipates continued loan growth, stable asset quality, and further net interest margin expansion in the second half of 2025 to support enhanced profitability, projecting 2025 to be another strong year for F&M[13](index=13&type=chunk) [Consolidated Statements of Income & Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20%26%20Comprehensive%20Income) This section presents the company's consolidated income and comprehensive income statements, detailing revenue, expenses, and net income for the second quarter and year-to-date periods [Three Months Ended June 30, 2025](index=4&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) In Q2 2025, the company experienced significant growth in net income and net interest income, primarily driven by increased interest income from loans and securities, while effectively managing interest expenses; noninterest income remained stable, and noninterest expenses increased, particularly in data processing and consulting fees Income Statement (Three Months Ended June 30, 2025 vs. Three Months Ended June 30, 2024) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Total Interest Income | $43,492 | $41,166 | 5.65% | | Total Interest Expense | $17,781 | $19,791 | -10.26% | | Net Interest Income - Before Provision for Credit Losses | $25,711 | $21,375 | 20.28% | | Provision for Credit Losses - Loans | $661 | $605 | 9.26% | | Net Interest Income After Provision for Credit Losses | $25,023 | $20,788 | 20.37% | | Total Noninterest Income | $3,935 | $3,716 | 5.89% | | Total Noninterest Expense | $19,260 | $17,345 | 11.04% | | Income Before Income Taxes | $9,698 | $7,159 | 35.46% | | Income Taxes | $1,988 | $1,477 | 34.60% | | Net Income | $7,710 | $5,682 | 35.69% | | Basic Earnings Per Share | $0.56 | $0.42 | 33.33% | | Diluted Earnings Per Share | $0.56 | $0.42 | 33.33% | | Dividends Declared Per Share | $0.22125 | $0.22 | 0.57% | [Six Months Ended June 30, 2025](index=4&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) The company demonstrated strong financial growth in the first half of 2025, with a substantial year-over-year increase in net income, primarily driven by a significant rise in net interest income and growth in noninterest income Income Statement (Six Months Ended June 30, 2025 vs. Six Months Ended June 30, 2024) | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Total Interest Income | $84,494 | $79,820 | 5.86% | | Total Interest Expense | $34,874 | $38,327 | -9.01% | | Net Interest Income - Before Provision for Credit Losses | $49,620 | $41,493 | 19.58% | | Provision for Credit Losses - Loans | $1,472 | $316 | 365.82% | | Net Interest Income After Provision for Credit Losses | $48,381 | $41,461 | 16.69% | | Total Noninterest Income | $8,097 | $7,662 | 5.68% | | Total Noninterest Expense | $38,020 | $35,186 | 8.06% | | Income Before Income Taxes | $18,458 | $13,937 | 32.44% | | Income Taxes | $3,796 | $2,896 | 31.01% | | Net Income | $14,662 | $11,041 | 32.79% | | Basic Earnings Per Share | $1.07 | $0.81 | 32.10% | | Diluted Earnings Per Share | $1.07 | $0.81 | 32.10% | | Dividends Declared Per Share | $0.44250 | $0.44 | 0.57% | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets and total deposits both increased year-over-year, while total liabilities saw a slight decrease, and stockholders' equity grew healthily, reflecting an improved financial position Balance Sheet (As of June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Total Assets | $3,345,763 | $3,322,633 | 0.70% | | Total Loans, net of allowance for credit losses | $2,599,917 | $2,534,468 | 2.58% | | Total Deposits | $2,710,329 | $2,641,090 | 2.62% | | Total Liabilities | $2,994,971 | $2,999,969 | -0.17% | | Total Stockholders' Equity | $350,792 | $322,664 | 8.72% | [Detailed Financial Data and Ratios](index=7&type=section&id=Detailed%20Financial%20Data%20and%20Ratios) This section provides an in-depth analysis of the company's financial performance through key ratios, deposit trends, loan portfolio composition, asset quality metrics, and stockholders' equity details [Key Performance Ratios](index=7&type=section&id=Key%20Performance%20Ratios) Compared to the prior year, the company demonstrated enhanced profitability and efficiency in Q2 and H1 2025, with improved returns on average assets and equity, expanded net interest margin, and a reduced efficiency ratio Key Ratios (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (bps) | | :-------------------------- | :------ | :------ | :----------- | | Return on average assets | 0.92% | 0.69% | 23 | | Return on average equity | 8.88% | 7.13% | 175 | | Yield on earning assets | 5.45% | 5.22% | 23 | | Cost of interest bearing liabilities | 2.83% | 3.18% | -35 | | Net interest spread | 2.62% | 2.04% | 58 | | Net interest margin | 3.22% | 2.71% | 51 | | Efficiency ratio | 64.93% | 69.03% | -410 | | Dividend payout ratio | 38.91% | 52.35% | -1344 | Key Ratios (H1 2025 vs. H1 2024) | Metric | H1 2025 | H1 2024 | Change (bps) | | :-------------------------- | :------ | :------ | :----------- | | Return on average assets | 0.88% | 0.67% | 21 | | Return on average equity | 8.55% | 6.94% | 161 | | Yield on earning assets | 5.32% | 5.11% | 21 | | Cost of interest bearing liabilities | 2.84% | 3.12% | -28 | | Net interest spread | 2.48% | 1.99% | 49 | | Net interest margin | 3.13% | 2.66% | 47 | | Efficiency ratio | 65.84% | 71.50% | -566 | | Dividend payout ratio | 40.90% | 53.89% | -1299 | [Deposits](index=2&type=section&id=Deposits) As of June 30, 2025, total deposits increased by **2.6%** year-over-year to **$2.71 billion**, reflecting the success of relationship-based banking, while the cost of interest-bearing liabilities significantly decreased during the same period - Total deposits as of June 30, 2025, were **$2.71 billion**, a **2.6%** increase from **$2.64 billion** as of June 30, 2024[7](index=7&type=chunk) - The cost of interest-bearing liabilities for the quarter ended June 30, 2025, was **2.83%**, down from **3.18%** in the prior year's corresponding period[7](index=7&type=chunk) [Loan Portfolio and Asset Quality](index=2&type=section&id=Loan%20Portfolio%20and%20Asset%20Quality) The loan portfolio achieved robust growth, primarily driven by commercial real estate, commercial and industrial, and agricultural loans, while asset quality remained strong with low non-performing loans and net charge-off rates, despite a year-over-year decrease in allowance for credit losses coverage of non-performing loans - Total loans, net, increased by **2.6% ($67.2 million)** to **$2.63 billion** as of June 30, 2025, compared to **$2.56 billion** as of June 30, 2024[9](index=9&type=chunk) - Non-performing loans were **$3.7 million** (**0.14%** of total loans) as of June 30, 2025, compared to **$2.5 million** (**0.10%** of total loans) as of June 30, 2024[10](index=10&type=chunk) - The average loan net charge-off rate for Q2 2025 was **0.00%**, marking 17 consecutive quarters below **0.03%**[5](index=5&type=chunk)[8](index=8&type=chunk)[27](index=27&type=chunk) [Loan Portfolio Composition](index=7&type=section&id=Loan%20Portfolio%20Composition) The company's loan portfolio is diversified, with commercial real estate being the largest and growing category, alongside other significant segments including consumer real estate, commercial and industrial, and agricultural loans Loan Portfolio Composition (As of June 30, 2025 vs. June 30, 2024) | Loan Category | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (%) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | | Commercial real estate | $1,345,953 | $1,303,598 | 3.25% | | Agricultural real estate | $221,004 | $222,558 | -0.70% | | Consumer real estate | $523,781 | $525,902 | -0.40% | | Commercial and industrial | $293,826 | $268,426 | 9.46% | | Agricultural | $157,870 | $142,909 | 10.47% | | Consumer | $59,348 | $70,918 | -16.32% | | Other | $24,653 | $26,449 | -6.79% | | **Total loans, net** | **$2,626,894** | **$2,559,738** | **2.62%** | [Commercial Real Estate (CRE) Portfolio Breakdown](index=2&type=section&id=Commercial%20Real%20Estate%20(CRE)%20Portfolio%20Breakdown) The Commercial Real Estate (CRE) portfolio constitutes **51.2%** of the total loan portfolio, with industrial, retail, and multi-family properties representing the largest sub-segments, indicating diversified exposure within the CRE sector CRE Portfolio Composition (As of June 30, 2025) | CRE Category | Dollar Balance (in thousands) | 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%** | [Asset Quality Metrics](index=8&type=section&id=Asset%20Quality%20Metrics) The company maintained strong asset quality with low non-performing loans and net charge-off rates; although non-performing loans slightly increased year-over-year, the allowance for credit losses remained adequate, despite a decrease in its coverage of non-performing loans Asset Quality Data (As of June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (%) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | | Nonaccrual loans | $3,745 | $2,487 | 50.58% | | Nonperforming loans | $3,745 | $2,487 | 50.58% | | Total allowance for credit losses | $28,285 | $27,198 | 3.99% | | Total allowance for credit losses/total loans | 1.08% | 1.06% | 0.02% | | Nonperforming loans/total loans | 0.14% | 0.10% | 0.04% | | Allowance for credit losses/nonperforming loans | 720.35% | 1016.08% | -295.73% | - Net charge-offs for Q2 2025 were **$36 thousand**, compared to **$15 thousand** in Q2 2024[27](index=27&type=chunk) - Net charge-offs for H1 2025 were **$321 thousand**, compared to **$70 thousand** in H1 2024[27](index=27&type=chunk) [Stockholders' Equity and Dividends](index=3&type=section&id=Stockholders'%20Equity%20and%20Dividends) Both stockholders' equity and tangible stockholders' equity significantly increased year-over-year, reflecting enhanced financial strength, and the company continued its long-standing tradition of increasing annual cash dividends, despite a decrease in the dividend payout ratio Stockholders' Equity (As of June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 | June 30, 2024 | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | | Total Stockholders' Equity | $350.8 million | $322.7 million | 8.7% | | Per Share | $25.56 | $23.59 | 8.35% | | Tangible Stockholders' Equity | $259.6 million | $229.6 million | 13.07% | | Tangible Stockholders' Equity Per Share | $18.91 | $16.79 | 12.63% | | Tier 1 Leverage Ratio | 8.50% | 8.02% | 0.48% | - For the six months ended June 30, 2025, the company declared cash dividends of **$0.44250 per share**, representing a **0.6%** increase from the prior year's corresponding period[15](index=15&type=chunk) - The company has increased its annual cash dividend for **30 consecutive years**[15](index=15&type=chunk) - The dividend payout ratio for the six months ended June 30, 2025, was **40.90%**, compared to **53.89%** in the prior year's corresponding period[15](index=15&type=chunk) [Net Interest Income and Yield/Rate Analysis](index=9&type=section&id=Net%20Interest%20Income%20and%20Yield%2FRate%20Analysis) This section analyzes the company's net interest income, average balance sheets, and related yields and rates for both the three-month and six-month periods, highlighting factors influencing profitability [Average Balance Sheets and Related Yields and Rates (Three Months)](index=9&type=section&id=Average%20Balance%20Sheets%20and%20Related%20Yields%20and%20Rates%20(Three%20Months)) In Q2 2025, the company significantly expanded its net interest income and net interest margin, primarily driven by higher yields on earning assets, particularly loans, and a reduction in the cost of interest-bearing liabilities Average Balance Sheets and Yields/Rates (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (bps) | | :------------------------------------ | :-------- | :-------- | :----------- | | Average Interest Earning Assets (in thousands) | $3,193,222 | $3,156,445 | 1.16% | | Yield on Total Interest Earning Assets | 5.45% | 5.22% | 23 | | Average Interest Bearing Liabilities (in thousands) | $2,515,968 | $2,489,104 | 1.08% | | Cost on Total Interest Bearing Liabilities | 2.83% | 3.18% | -35 | | Net Interest Income (in thousands) | $25,711 | $21,375 | 20.28% | | Net Interest Spread | 2.62% | 2.04% | 58 | | Net Interest Margin | 3.22% | 2.71% | 51 | - Loan yield for Q2 2025 was **6.04%**, up from **5.73%** in Q2 2024[29](index=29&type=chunk) - The cost of NOW accounts and savings deposits for Q2 2025 was **2.37%**, down from **2.73%** in Q2 2024[29](index=29&type=chunk) [Average Balance Sheets and Related Yields and Rates (Six Months)](index=10&type=section&id=Average%20Balance%20Sheets%20and%20Related%20Yields%20and%20Rates%20(Six%20Months)) For the first half of 2025, the company demonstrated significant improvements in net interest income and net interest margin, primarily due to increased yields on earning assets, particularly loans, and a decrease in the overall cost of interest-bearing liabilities Average Balance Sheets and Yields/Rates (H1 2025 vs. H1 2024) | Metric | H1 2025 | H1 2024 | Change (bps) | | :------------------------------------ | :-------- | :-------- | :----------- | | Average Interest Earning Assets (in thousands) | $3,177,266 | $3,125,221 | 1.66% | | Yield on Total Interest Earning Assets | 5.32% | 5.11% | 21 | | Average Interest Bearing Liabilities (in thousands) | $2,451,150 | $2,454,282 | -0.13% | | Cost on Total Interest Bearing Liabilities | 2.84% | 3.12% | -28 | | Net Interest Income (in thousands) | $49,620 | $41,493 | 19.58% | | Net Interest Spread | 2.48% | 1.99% | 49 | | Net Interest Margin | 3.13% | 2.66% | 47 | - Loan yield for H1 2025 was **5.90%**, up from **5.60%** in H1 2024[30](index=30&type=chunk) - The cost of NOW accounts and savings deposits for H1 2025 was **2.37%**, down from **2.67%** in H1 2024[30](index=30&type=chunk) [Company Information and Disclosures](index=3&type=section&id=Company%20Information%20and%20Disclosures) This section provides essential background information about Farmers & Merchants State Bank and includes a crucial safe harbor statement regarding forward-looking statements and associated risks [About Farmers & Merchants State Bank](index=3&type=section&id=About%20Farmers%20%26%20Merchants%20State%20Bank) Established in 1897, Farmers & Merchants State Bank operates as an independent community bank offering commercial, retail, and other financial services across multiple counties in Ohio, Northeast Indiana, and Oakland County, Michigan, supported by several loan production offices - Established in **1897**[16](index=16&type=chunk) - Provides commercial banking, retail banking, and other financial services[16](index=16&type=chunk) - Serves areas including Ohio (Butler, Champaign, Fulton, Defiance, Hancock, Henry, Lucas, Shelby, Williams, and Wood counties), Northeast Indiana (Adams, Allen, DeKalb, Jay, Steuben, and Wells counties), and Oakland County, Michigan[16](index=16&type=chunk) - Operates loan production offices in Troy, Michigan; Muncie, Indiana; and Perrysburg and Bryan, Ohio[16](index=16&type=chunk) [Safe Harbor Statement](index=3&type=section&id=Safe%20Harbor%20Statement) The safe harbor statement clarifies that this report contains forward-looking statements subject to various risks and uncertainties, including general banking conditions, competitive factors, future interest rate levels, legislative and regulatory decisions, capital market conditions, and the impact of the COVID-19 pandemic - The statement contains forward-looking statements not based on historical facts[17](index=17&type=chunk) - Risk factors include general and local banking conditions, competitive market factors, future interest rate levels, legislative and regulatory decisions, capital market conditions, and the impact of the COVID-19 pandemic on credit quality and business operations[17](index=17&type=chunk) - F&M assumes no obligation to update this information[17](index=17&type=chunk) - For more details, readers are directed to F&M's filings with the U.S. Securities and Exchange Commission (www.sec.gov) or F&M's website (www.fm.bank), including the latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q[17](index=17&type=chunk)

Core Insights - Farmers & Merchants Bancorp, Inc. reported strong financial results for the second quarter of 2025, achieving a net income of $7.7 million, marking a 35.7% increase from $5.7 million in the same period last year, and the second-strongest second quarter in the company's 128-year history [2][3][9] - Total revenue growth was 18.2% year-over-year, driven by an increase in net interest income and noninterest income, significantly outpacing the rise in noninterest expenses [2][9] - The net interest margin expanded by 51 basis points year-over-year to 3.22%, benefiting from higher asset yields and a stable interest rate environment [2][9] Financial Performance - Net income per share for the second quarter was $0.56, compared to $0.42 for the same period last year [3][9] - For the first half of 2025, net income reached $14.7 million, up from $11.0 million in the same period last year, with earnings per share increasing from $0.81 to $1.07 [3][9] - Total assets increased by $23.1 million, or 0.7%, to $3.35 billion as of June 30, 2025 [9] Deposits and Loans - Total deposits were $2.71 billion, reflecting a 2.6% increase from $2.64 billion a year earlier [4][9] - Total loans, net increased by $67.2 million, or 2.6%, to $2.63 billion, driven primarily by higher commercial real estate and industrial loans [6][9] - Loan demand remains strong, with a sequential increase of $45.0 million, or a 7.0% annualized rate [5][9] Asset Quality - Nonperforming loans were $3.7 million, or 0.14% of total loans, compared to $2.5 million, or 0.10% a year earlier [7][9] - The allowance for credit losses to total loans was 1.08% as of June 30, 2025, compared to 1.06% a year earlier [10][25] Stockholders' Equity and Dividends - Total stockholders' equity increased by 8.7% to $350.8 million, or $25.56 per share [11][12] - The company declared cash dividends of $0.44250 per share for the first half of 2025, representing a 0.6% increase over the same period last year [13][9]

Core Points - F&M Bank announced the resignation of Andrew Briggs as Chairman of the Board, effective immediately, as part of a transition plan he initiated [1][2] - Kevin J. Sauder has been appointed as the new Chairman of the Board, effective today, bringing extensive leadership experience and community ties [2][3] - The transition aims to ensure continuity and strategic momentum for F&M Bank, with both Briggs and Sauder collaborating over the next year [2][3] Company Overview - F&M Bank is an independent community bank established in 1897, providing commercial and retail banking services [4] - The bank operates in various counties across Ohio and has a presence in Northeast Indiana and Michigan [4]

Financial Performance & Growth - Total assets increased to $3365 million as of December 31, 2024, a year-over-year growth of 2.5%[26] - Net interest income after provision for credit losses increased 7.5% year-over-year for full year 2024[28] - Deposits reached a record $2690 million as of December 31, 2024, a 3.0% year-over-year increase[32] - From 2019 to 2024, total deposits increased at a CAGR of 15.8%[48] - F&M funded $1423 million in PPP loans over two years, including $538 million in 2021[69] Market Position & Expansion - F&M's total deposits have increased 42.7%, or by $791 million from 2021 to 2024[16] - Deposits within F&M's Ohio markets have increased 45.8%, or by $607 million from 2021 to 2024[16] - Deposits within F&M's Indiana markets have increased 27.6%, or by $145 million from 2021 to 2024[16] - New offices opened in 2023 added $53.9 million of new deposits and $80.5 million in new loans during 2024[32] Digital Transformation & Loan Portfolio - Mobile customers increased by 27.26% in 2024[30] - Approximately 31% of F&M's loan portfolio is subject to reprice in the next 12 months as of December 31, 2024[56]

Core Viewpoint - F&M Bank has appointed Ahmed Alomari to its Board of Directors, which is expected to enhance the bank's digital capabilities and technology infrastructure [1][3]. Company Overview - F&M Bank is an independent community bank established in 1897, providing commercial and retail banking services across various counties in Ohio and Northeast Indiana, as well as in Michigan [5]. Appointment Details - Ahmed Alomari was appointed to the Board of Directors during the monthly board meeting on June 24, 2025 [1]. - Alomari is recognized for his expertise in Oracle database performance and enterprise systems architecture, having founded Cybernoor in 2007 and served as CEO until its acquisition by Buchanan Technologies in 2021 [2]. Executive Insights - Lars Eller, President and CEO of F&M Bank, highlighted Alomari's technical expertise and innovative track record as valuable assets for the bank's future [3]. - Alomari holds a degree in Computer Science from the University of Michigan's School of Engineering [3].