Farmers and Merchants Bancshares, Inc. Reports Earnings of $1.2 Million, or $0.37 per Share, for the Three Months Ended March 31, 2025

Rhea-AI Summary

Farmers and Merchants Bank reported Q1 2025 net income of $1.2 million, or $0.37 per share, maintaining stable earnings compared to Q1 2024. The bank's net interest income increased by $321,000 to $5.5 million, driven by higher yields on earning assets and loan growth.

Key performance metrics include:

• Return on average equity: 8.22% (down from 9.40%)
• Return on average assets: 0.57% (down from 0.61%)
• Average loans increased by $59.1 million to $593.7 million
• Total assets reached $817.6 million

The bank's loan portfolio shows strong performance with only four non-accrual loans totaling $2.6 million. The new Towson Commercial Banking Office, opened in June 2024, has generated $29 million in new commercial loans and $8 million in deposits. Despite unrealized losses in the investment portfolio, the bank maintains strong liquidity with access to approximately $337.8 million.

Positive

• Net interest income increased by $321,000 to $5.5M in Q1 2025
• Loan portfolio grew by $17.1M to $600M in Q1 2025
• Strong loan quality with only 4 non-accrual loans totaling $2.6M
• New Towson office generated $29M in commercial loans and $8M in deposits since June 2024
• Yield on earning assets improved by 35 basis points to 5.03%
• Strong liquidity position with access to $337.8M

Negative

• Net income per share decreased to $0.37 from $0.39 YoY
• Return on equity declined to 8.22% from 9.40% YoY
• Return on assets decreased to 0.57% from 0.61% YoY
• Higher cost of funds at 2.70% vs 2.48% YoY
• Noninterest expenses increased by $386,000 YoY
• Total deposits decreased by $23.2M from December 2024

HAMPSTEAD, Md., April 29, 2025 (GLOBE NEWSWIRE) -- Farmers and Merchants Bancshares, Inc. (the “Company”), the parent company of Farmers and Merchants Bank (the “Bank” and, together with the Company, “we”, “us” and “our”), announced that net income for the quarter ended March 31, 2025 was $1.2 million, or $0.37 per common share (basic and diluted), compared to $1.2 million, or $0.39 per common share (basic and diluted), for the same period in 2024. The Company’s return on average equity during the quarter ended March 31, 2025 was 8.22% compared to 9.40% for the same period in 2024. The Company’s return on average assets during the quarter ended March 31, 2025 was 0.57% compared to 0.61% for the same period in 2024.

Net interest income was $5.5 million for the quarter ended March 31, 2025, an increase of $321 thousand over the $5.2 million reported for the same period in 2024. The increase was due to a 35 basis point increase in the yield on earning assets to 5.03% for the three months ended March 31, 2025 compared to 4.68% for the same period in 2024. Average earning assets increased $10.6 million to $790.6 million as of March 31, 2025. Average loans increased to $593.7 million for the quarter ended March 31, 2025, an increase of $59.1 million over the $534.6 million for the quarter ended March 31, 2024. The combination of higher yields on earning assets plus higher average earning asset balances was the primary reason for the increase. Offsetting the increase in interest income was the higher cost of funds in 2025. The average interest rate paid on interest bearing liabilities was 2.70% for the three months ended March 31, 2025, compared to 2.48% for the same period in 2024. Average interest bearing liabilities increased to $650.0 million, an increase of $23.0 million when compared to the $627.0 million reported as of March 31, 2024.

A provision for credit losses of $30 thousand was recorded for the quarter ended March 31, 2025 compared to no provision for credit loss for the quarter ended March 31, 2024. The Company’s loan portfolio continues to perform at a high level with just four non-accrual loans totaling $2.6 million and two loans more than 30 days delinquent totaling $577 thousand at March 31, 2025.

Noninterest income increased slightly to $514 thousand for the quarter ended March 31, 2025 compared to $504 thousand for the same period in 2024. Mortgage banking income increased $24 thousand, income on bank owned life insurance increased $15 thousand, gains on the sale of investment securities increased $94 thousand, and other fees and commissions increased $37 thousand. The increases were offset by a decrease in service charges of $30 thousand and a decrease in insurance proceeds of $143 thousand due to the non-recurring receipt of insurance proceeds during the first quarter of 2024 in connection with storm damage to the Bank’s office building in Upperco, Maryland.

Noninterest expense was $386 thousand higher for the quarter ended March 31, 2025 when compared to the same period in 2024. This increase was due primarily to a $175 thousand increase in occupancy and furniture and equipment costs, a $101 thousand increase in FDIC premiums, a $33 thousand increase in ATM related costs, and a $96 thousand increase in other expenses. The increase in other expenses was due primarily to legal fees incurred for stockholder matters and additional costs related to the Company’s captive insurance company subsidiary. The Bank’s FDIC assessment expense increased due to higher asset size and higher FDIC assessment rates. The increase in occupancy and furniture and equipment was due primarily to depreciation on the renovations and new equipment for the Bank’s Upperco, Maryland location which was placed in service at the end of the first quarter of 2024 and the Bank’s new Towson, Maryland location that was placed in service during the second quarter of 2024. The increase in ATM related expenses was due to vendor price increases.

Income taxes decreased by $30 thousand during the quarter ended March 31, 2025 when compared to the same period in 2024 due to lower earnings before taxes. The effective tax rate decreased to 21.3% for the quarter ended March 31, 2025 from 22.1% for the same period last year due to an increase in the amount of nontaxable income included in pretax income year over year.

Total assets were $817.6 million at March 31, 2025 compared to $844.6 million at December 31, 2024. Compared to December 31, 2024, total loans, net of the allowance for credit losses, increased $17.1 million to $600.0 million at March 31, 2025. Offsetting the increase in loans was a decrease in cash and cash equivalents of $42.0 million. The decrease was primarily due to the funding of new loans of $17.1 million, a decrease in deposits of $23.2 million, and the repayment of $5.0 million of Federal Home Loan Bank borrowings. Deposits decreased to $735.6 million at March 31, 2025 from $758.8 million at December 31, 2024. The Company’s tangible equity was $51.5 million at March 31, 2025 compared to $49.2 million at December 31, 2024.

The book value of the Company’s common stock increased to $18.44 per share at March 31, 2025 from $17.77 per share at December 31, 2024. Book value per share at March 31, 2025 was inclusive of the $15.6 million unrealized loss, net of income taxes, on the Bank’s available for sale (“AFS”) investment portfolio as a result of higher interest rates. Changes in the market value of the AFS investment portfolio, net of income taxes, are reflected in the Company’s equity, but are not included in the income statement. The AFS investment portfolio is comprised of 72% government agency mortgage backed securities which are fully guaranteed, 22% investment grade non agency mortgage backed securities, less than 1% investment grade corporate and municipal bonds, and 5% subordinated debt of other community banks. There is no indication of credit deterioration in any of the bonds and we intend to hold these investments to maturity, so no actual losses are anticipated. The unrealized loss in the AFS investment portfolio did not impact regulatory capital because the Bank elected many years ago to not include changes in the market value of the AFS investment portfolio in the calculation of regulatory capital regardless of whether they are positive or negative.

Our Federal Home Loan Bank facility, other borrowing lines available, unpledged securities, brokered deposit access, and cash and cash equivalents provided us with access to approximately $337.8 million of liquidity as of March 31, 2025.

Gary A. Harris, President and CEO, commented “Our loan growth remains strong with a $17.1 million increase in net loans over the past quarter. We previously announced the opening of the new Towson Commercial Banking Office. Since its inception in June 2024, the office has produced over $29 million in new commercial loans and $8 million in new relationship deposits through March 31, 2025. We believe that this new office will be instrumental in both loan and deposit growth in 2025. Our asset growth along with the Federal Reserve’s three interest rate decreases over the past seven months have led to positive gains in our net interest margin. Asset quality remains high and our liquidity position remains strong. We continue to believe that Farmers and Merchants is well positioned to grow earnings in 2025.”

About the Company

The Company is a financial holding company and the parent company of the Bank. The Bank was chartered in Maryland in 1919 and has over 100 years of service to the community. The Bank serves the deposit and financing needs of both consumers and businesses in Carroll and Baltimore Counties along the Route 30, Route 795, Route 140, Route 26, and Route 45 corridors. The main office is located in Upperco, Maryland, with seven additional Maryland branches in Owings Mills, Hampstead, Greenmount, Reisterstown, Westminster, Eldersburg, and Towson. Certain broker-dealers make a market in the common stock of Farmers and Merchants Bancshares, Inc., and trades are reported through the OTC Markets Group’s Pink Market under the symbol “FMFG”.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “will,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Farmers and Merchants Bancshares, Inc. with the Securities and Exchange Commission entitled “Risk Factors”.

Farmers and Merchants Bancshares, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited)
Dollars in thousands except per share and share data
	March 31,				December 31,
		2025				2024
Assets
Cash and due from banks	$	21,779			$	63,962
Federal funds sold and other interest-bearing deposits		918				697
Cash and cash equivalents		22,697				64,659
Certificates of deposit in other banks		100				100
Securities available for sale, at fair value		123,780				125,713
Securities held to maturity, at amortized cost less allowance for credit
losses of $62.5 thousand and $35.6 thousand		21,135				20,499
Equity security, at fair value		530				518
Restricted stock, at cost		715				921
Mortgage loans held for sale		240				157
Loans, less allowance for credit losses of $4.3 million and $4.3 million		600,048				582,993
Premises and equipment, net		7,316				7,349
Accrued interest receivable		2,376				2,439
Deferred income taxes, net		7,246				7,606
Other real estate owned, net		1,176				1,176
Bank owned life insurance		15,429				15,324
Goodwill and other intangibles, net		7,024				7,026
Other assets		7,746				8,163
Total assets	$	817,558			$	844,643
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing	$	104,379			$	107,197
Interest-bearing		631,219				651,609
Total deposits		735,598				758,806
Securities sold under repurchase agreements		5,482				5,564
Federal Home Loan Bank of Atlanta advances		-				5,000
Long-term debt, net of issuance costs		10,858				11,329
Accrued interest payable		766				1,003
Other liabilities		6,306				6,669
Total liabilities		759,010				788,371
Stockholders' equity
Common stock, par value $.01 per share,
authorized 5,000,000 shares; issued and outstanding
3,175,347 shares in 2025 and 3,166,653 shares in 2024		32				32
Additional paid-in capital		31,294				31,136
Retained earnings		42,777				41,613
Accumulated other comprehensive loss		(15,555	)			(16,509	)
Total stockholders' equity		58,548				56,272
Total liabilities and stockholders' equity	$	817,558			$	844,643

Farmers and Merchants Bancshares, Inc. and Subsidiaries Consolidated Statements of Income (Unaudited)
Dollars in thousands except per share data
	Three Months Ended March 31,
		2025			2024
Interest income
Loans, including fees	$	8,366		$	6,882
Investment securities - taxable		1,051			1,579
Investment securities - tax exempt		156			137
Federal funds sold and other interest earning assets		313			468
Total interest income		9,886			9,066
Interest expense
Deposits		4,249			3,101
Securities sold under repurchase agreements		17			23
Federal Home Loan Bank advances		12			13
Federal Reserve Bank advances		-			622
Long-term debt		113			134
Total interest expense		4,391			3,893
Net interest income		5,495			5,174
Provision for credit losses		30			-
Net interest income after provision for credit losses		5,465			5,174
Noninterest income
Service charges on deposit accounts		165			195
Mortgage banking income		29			5
Bank owned life insurance income		105			90
Fair value adjustment of equity security		9			(4	)
Gain on sale of investment securities		94			-
Gain on insurance proceeds, net		-			143
Other fees and commissions		112			75
Total noninterest income		514			504
Noninterest expense
Salaries		2,207			1,976
Employee benefits		382			606
Occupancy		328			246
Furniture and equipment		335			242
Professional services		173			205
Automated teller machine and debit card expenses		168			135
Federal Deposit Insurance Corporation premiums		199			98
Postage, delivery, and armored carrier		78			82
Advertising		56			48
Other real estate owned expense		5			3
Other		567			471
Total noninterest expense		4,498			4,112
Income before income taxes		1,481			1,566
Income taxes		316			346
Net income	$	1,165		$	1,220
Earnings per common share - basic	$	0.37		$	0.39
Earnings per common share - diluted	$	0.37		$	0.39

Farmers and Merchants Bancshares, Inc.
Selected Consolidated Financial Data
(Unaudited)
Dollars in thousands except per share data
	As of or For the Three Months Ended March 31,
		2025				2024				2023
OPERATING DATA
Interest income	$	9,886			$	9,066			$	7,051.53
Interest expense		4,391				3,892				1,395
Net interest income		5,495				5,174				5,657
Provision for credit losses		30				-				(270	)
Net interest income after provision for credit losses		5,465				5,174				5,927
Noninterest income		514				504				382
Noninterest expense		4,498				4,112				3,757
Income before income taxes		1,481				1,566				2,552
Income taxes		316				346				651
Net income	$	1,165			$	1,220			$	1,901
PER SHARE DATA
Net income (Basic and diluted)	$	0.37			$	0.39			$	0.62
Dividends	$	0.00			$	0.00			$	0.00
Book value	$	18.44			$	17.03			$	16.53
KEY RATIOS
Return on average assets		0.57	%			0.61	%			1.05	%
Return on average equity		8.22	%			9.40	%			15.49	%
Efficiency ratio		75.23	%			72.42	%			59.55	%
Dividend payout ratio		0.00	%			0.00	%			0.00	%
Net yield on interest-earning assets		2.81	%			2.69	%			3.24	%
Tier 1 capital leverage ratio		9.48	%			9.39	%			9.97	%

Farmers and Merchants Bancshares, Inc.
Selected Consolidated Financial Data
(Unaudited)
Dollars in thousands except per share data
	As of or For the Three Months Ended March 31,
		2025				2024				2023
AT PERIOD END
Total assets	$	817,558			$	794,593			$	722,679
Gross loans		604,352				541,398				525,485
Cash and cash equivalents		22,697				25,633				9,566
Securities		145,569				182,325				146,300
Deposits		735,598				655,978				637,309
Borrowings		10,858				71,742				24,625
Stockholders' equity		58,548				53,077				50,757
SELECTED AVERAGE BALANCES
Total assets	$	816,760			$	799,841			$	723,106
Gross loans		593,653				534,566				525,516
Cash and cash equivalents		26,648				37,224				8,719
Securities		169,215				208,134				169,873
Deposits		634,274				550,010				501,185
Borrowings		4,946				69,551				36,124
Stockholders' equity		54,127				51,928				49,071
ASSET QUALITY
Nonperforming assets	$	3,789			$	1,898			$	1,898
Nonperforming assets/total assets		0.46	%			0.24	%			0.26	%
Allowance for credit losses/total loans		0.71	%			0.80	%			0.87	%

Contact:	Mr. Gary A. Harris President and Chief Executive Officer (410) 374-1510, ext. 1104

FAQ

What was FMFG's earnings per share (EPS) for Q1 2025?

Farmers and Merchants Bancshares (FMFG) reported earnings of $0.37 per share for Q1 2025, compared to $0.39 per share in Q1 2024.

How much did FMFG's net interest income grow in Q1 2025?

FMFG's net interest income increased by $321,000 to $5.5 million in Q1 2025, up from $5.2 million in Q1 2024, driven by higher yields on earning assets and increased average earning asset balances.

What is FMFG's loan growth performance in Q1 2025?

FMFG's total loans increased by $17.1 million to $600.0 million in Q1 2025, with their new Towson office generating $29 million in new commercial loans since June 2024.

How strong is FMFG's asset quality in Q1 2025?

FMFG maintains high asset quality with only four non-accrual loans totaling $2.6 million and two loans over 30 days delinquent totaling $577,000 as of March 31, 2025.

What is FMFG's book value per share as of March 2025?

FMFG's book value per share increased to $18.44 as of March 31, 2025, up from $17.77 at December 31, 2024, despite including $15.6 million in unrealized losses on the investment portfolio.

How much liquidity does FMFG have available as of Q1 2025?

FMFG had access to approximately $337.8 million in liquidity as of March 31, 2025, through Federal Home Loan Bank facilities, borrowing lines, unpledged securities, brokered deposit access, and cash equivalents.