Earnings surge at Farmers and Merchants Bancshares (OTC: FMFG) in Q1 2026
Rhea-AI Filing Summary
Farmers and Merchants Bancshares, Inc. reported first-quarter 2026 net income of $1.8 million, or $0.56 per share, up from $1.2 million, or $0.37 per share, a 57% increase from the prior-year quarter.
Net interest income rose to $6.8 million from $5.5 million as the yield on earning assets improved to 5.37% and average loans grew to $637.9 million. The net yield on interest-earning assets widened to 3.28% from 2.81%, while the efficiency ratio improved to 65.83% from 75.23%.
Return on average equity reached 11.03% and return on average assets was 0.84%. Asset quality remained strong, with zero non-accrual loans and nonperforming assets at 0.19% of total assets. Total assets were $863.4 million and deposits were $711.3 million, reflecting repayment of $8.5 million in brokered CDs. Book value per share increased to $20.43, and the company reported access to approximately $360 million of liquidity as of March 31, 2026.
Positive
- Strong earnings growth: Net income for Q1 2026 was $1.8 million, or $0.56 per share, up from $1.2 million, or $0.37 per share, a 57% year-over-year increase.
- Margin and efficiency improvement: Net interest income rose to $6.8 million, net yield on interest-earning assets increased to 3.28% from 2.81%, and the efficiency ratio improved to 65.83% from 75.23%.
- Robust asset quality and capital: The company reported zero non-accrual loans, nonperforming assets at 0.19% of total assets, Tier 1 leverage ratio of 9.73%, and book value per share rising to $20.43.
Negative
- None.
Insights
Quarter shows strong earnings growth, margin expansion, and solid asset quality.
Farmers and Merchants Bancshares delivered net income of $1.8M in Q1 2026, up 57% year over year, with EPS rising to $0.56. Net interest income increased to $6.8M, driven by higher asset yields and average loans of $637.9M.
Profitability metrics improved, with return on average equity at 11.03% and return on average assets at 0.84%. The net yield on interest-earning assets widened to 3.28%, and the efficiency ratio improved to 65.83%, indicating better cost control relative to revenue.
Asset quality appears strong: the company reported zero non-accrual loans and nonperforming assets of 0.19% of total assets as of March 31, 2026. Total assets were $863.4M and deposits $711.3M, with an $8.5M reduction in brokered CDs. Liquidity access of roughly $360M provides additional balance sheet flexibility.
8-K Event Classification
Key Figures
Key Terms
net interest income financial
efficiency ratio financial
nonperforming assets financial
Tier 1 capital leverage ratio financial
allowance for credit losses financial
Earnings Snapshot
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Item 2.02.
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Results of Operation and Financial Condition.
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Item 9.01.
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Financial Statements and Exhibits.
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(d)
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Exhibits.
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The exhibits furnished with this report are listed in the following Exhibit Index:
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Exhibit No.
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Description
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99.1
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Press release dated April 24, 2026 (furnished herewith).
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document).
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| FARMERS AND MERCHANTS BANCSHARES, INC. | |||
| Dated: April 24, 2026 |
By:
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/s/ Gary A. Harris
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| Gary A. Harris | |||
| President & CEO | |||
Exhibit 99.1
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FOR IMMEDIATE RELEASE |
FOR FURTHER INFORMATION CONTACT: |
April 24, 2026
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Farmers and Merchants Bancshares, Inc. |
Contact: |
Mr. Gary A. Harris |
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4510 Lower Beckleysville Rd, Suite H |
President and Chief Executive Officer |
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Hampstead, Maryland 21074 |
(410) 374-1510, ext. 1104 |
FARMERS AND MERCHANTS BANCSHARES, INC. REPORTS EARNINGS OF $1.8 MILLION, OR $0.56 PER SHARE, FOR THE THREE MONTHS ENDED
MARCH 31, 2026
HAMPSTEAD, MARYLAND (April 24, 2026) – 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, 2026 was $1.8 million, or $0.56 per common share (basic and diluted), compared to $1.2 million, or $0.37 per common share (basic and diluted), for the same period in 2025, representing a 57% increase in net income. The Company’s return on average equity during the quarter ended March 31, 2026 was 11.03% compared to 8.22% for the same period in 2025. The Company’s return on average assets during the quarter ended March 31, 2026 was 0.84% compared to 0.57% for the same period in 2025.
Net interest income was $6.8 million for the quarter ended March 31, 2026, an increase of $1.3 million, or 23%, over the $5.5 million reported for the same period in 2025. The increase was due to a 34 basis point increase in the yield on earning assets to 5.37% for the three months ended March 31, 2026 compared to 5.03% for the same period in 2025. Average earning assets increased $44.5 million to $835.0 million for the quarter ended March 31, 2026. Average loans increased to $637.9 million for the quarter ended March 31, 2026, an increase of $44.2 million over the $593.7 million for the quarter ended March 31, 2025. The combination of higher yields on earning assets plus higher average earning asset balances was the primary reason for the increase. Also contributing to the increase in net interest income was the lower cost of funds in 2026. The average interest rate paid on interest bearing liabilities was 2.65% for the three months ended March 31, 2026, compared to 2.70% for the same period in 2025. Average interest bearing liabilities increased to $659.9 million, an increase of $9.9 million when compared to the $650.0 million reported for the three months ended March 31, 2025.
There was no provision for credit losses for the quarter ended March 31, 2026 versus a $30 thousand provision for credit losses for the quarter ended March 31, 2025. The Company’s loan portfolio continues to perform at a high level with zero non-accrual loans at March 31, 2026.
Noninterest income decreased to $431 thousand for the quarter ended March 31, 2026 compared to $514 thousand for the same period in 2025. The majority of the decrease was due to the non-recurring gain on the settlement of a fair value hedge in 2025 of $94 thousand.
Noninterest expense was $244 thousand higher for the quarter ended March 31, 2026 when compared to the same period in 2025. This increase was due primarily to a $312 thousand increase in employee benefits, a $147 thousand increase in occupancy and furniture and equipment costs, and a $39 thousand increase in other real estate owned expenses. These increases were offset by a $98 thousand decrease in Federal Deposit Insurance Corporation premiums and a $30 thousand decrease in professional services.
Income taxes increased by $320 thousand during the quarter ended March 31, 2026 when compared to the same period in 2025 due to higher earnings before taxes. The effective tax rate increased to 25.8% for the quarter ended March 31, 2026 from 21.3% for the same period last year due to a lower amount of tax exempt income year over year.
Total assets were $863.4 million at March 31, 2026 compared to $872.0 million at December 31, 2025. The decrease is attributable to a net decrease in loans of $4.8 million and a decrease in securities available for sale (“AFS”) of $6.3 million. The decrease was offset by a $2.1 million increase in cash and cash equivalents.
Deposits decreased by $9.2 million to $711.3 million at March 31, 2026 from $720.5 million at December 31, 2025. The decrease is attributed to the repayment of $8.5 million in brokered CDs.
The book value of the Company’s common stock increased to $20.43 per share at March 31, 2026 from $20.02 per share at December 31, 2025. Book value per share at March 31, 2026 was inclusive of the $13.2 million unrealized loss, net of income taxes, on the Bank’s AFS investment portfolio. 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 Company’s tangible equity was $59.1 million at March 31, 2026 compared to $57.6 million at December 31, 2025.
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 $360 million of liquidity as of March 31, 2026.
Gary A. Harris, President and CEO, commented “After coming off of a strong 2025, we are pleased to have carried that momentum into the first quarter of 2026. Year over year, our first quarter earnings increased 57%; reflecting improving yields on earning assets and widening interest margins. Asset quality remains high with zero non-accrual loans as of March 31, 2026. We are making meaningful investments in the future of the Bank, including modernizing our technology, equipping our team with stronger tools, and attracting top talent to help lead our next chapter of growth. We are confident that 2026 will be another strong year for our shareholders, customers, and communities."
About the Company
The Company is the financial holding company for Farmers and Merchants Bank, a Maryland-chartered community bank headquartered in Hampstead, Maryland. Founded in 1919, the Bank has served the deposit, lending, and financial needs of consumers and businesses across Carroll and Baltimore Counties for more than a century. The Bank operates eight locations along Route 30, 795, 140, 26, and 45 corridors, including offices in Hampstead, Upperco, Owings Mills, Reisterstown, Westminster, Eldersburg, Greenmount, and Towson. Certain broker-dealers make a market in the common stock of Farmers and Merchants Bancshares, Inc., and trades are reported through the OTCID Basic Market under the symbol “FMFG”. For more information, visit fmb1919.bank.
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)
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March 31, |
December 31, |
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| Dollars in thousands except per share data |
2026 |
2025 * |
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Assets |
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Cash and due from banks |
$ | 48,162 | $ | 46,113 | ||||
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Federal funds sold and other interest-bearing deposits |
571 | 566 | ||||||
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Cash and cash equivalents |
48,733 | 46,679 | ||||||
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Certificates of deposit in other banks |
100 | 100 | ||||||
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Securities available for sale, at fair value |
112,456 | 118,730 | ||||||
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Securities held to maturity, at amortized cost less allowance for credit |
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losses of $88 and $79 |
21,227 | 21,055 | ||||||
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Equity security, at fair value |
551 | 550 | ||||||
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Restricted stock, at cost |
3,713 | 3,693 | ||||||
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Mortgage loans held for sale |
344 | 714 | ||||||
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Loans, less allowance for credit losses of $4,458 and $4,361 |
628,298 | 633,144 | ||||||
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Premises and equipment, net |
7,042 | 7,141 | ||||||
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Accrued interest receivable |
2,467 | 2,535 | ||||||
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Deferred income taxes, net |
6,510 | 6,277 | ||||||
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Other real estate owned, net |
1,673 | 1,673 | ||||||
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Bank owned life insurance |
15,453 | 15,353 | ||||||
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Goodwill and other intangibles, net |
7,016 | 7,018 | ||||||
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Other assets |
7,811 | 7,296 | ||||||
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Total Assets |
$ | 863,394 | $ | 871,958 | ||||
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Liabilities and Stockholders' Equity |
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Deposits |
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Noninterest-bearing |
$ | 122,965 | $ | 117,098 | ||||
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Interest-bearing |
588,331 | 603,361 | ||||||
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Total deposits |
711,296 | 720,459 | ||||||
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Securities sold under repurchase agreements |
3,452 | 4,317 | ||||||
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Federal Home Loan Bank of Atlanta advances |
62,700 | 62,700 | ||||||
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Long-term debt, net of issuance costs |
12,048 | 12,036 | ||||||
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Accrued interest payable |
762 | 1,278 | ||||||
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Other liabilities |
7,035 | 6,508 | ||||||
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Total liabilities |
797,293 | 807,298 | ||||||
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Stockholders' equity |
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Common stock, par value $.01 per share, authorized 5,000,000 shares; issued and outstanding 3,235,707 shares in 2026 and 3,229,795 shares in 2025 |
32 | 32 | ||||||
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Additional paid-in capital |
32,253 | 32,148 | ||||||
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Retained earnings |
47,035 | 45,210 | ||||||
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Accumulated other comprehensive loss |
(13,219 | ) | (12,730 | ) | ||||
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Total Stockholders' equity |
66,101 | 64,660 | ||||||
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Total liabilities and stockholders' equity |
$ | 863,394 | $ | 871,958 | ||||
* Derived from audited consolidated financial statements
The accompanying notes are an integral part of these consolidated financial statements.
Farmers and Merchants Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
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Three Months Ended March 31, |
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| Amounts in thousands except per share data |
2026 |
2025 |
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Interest income |
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Loans, including fees |
$ | 9,762 | $ | 8,366 | ||||
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Investment securities - taxable |
845 | 1,051 | ||||||
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Investment securities - tax exempt |
141 | 156 | ||||||
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Federal funds sold and other interest earning assets |
402 | 313 | ||||||
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Total interest income |
11,150 | 9,886 | ||||||
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Interest expense |
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Deposits |
3,505 | 4,249 | ||||||
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Securities sold under repurchase agreements |
16 | 17 | ||||||
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Federal Home Loan Bank advances |
599 | 12 | ||||||
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Long-term debt |
258 | 113 | ||||||
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Total interest expense |
4,378 | 4,391 | ||||||
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Net interest income |
6,772 | 5,495 | ||||||
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Provision for credit losses |
- | 30 | ||||||
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Net interest income after provision for credit losses |
6,772 | 5,465 | ||||||
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Noninterest income |
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Service charges on deposit accounts |
157 | 165 | ||||||
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Mortgage banking income |
58 | 29 | ||||||
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Bank owned life insurance income |
100 | 105 | ||||||
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Fair value adjustment of equity security |
(3 | ) | 9 | |||||
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Gain on settlement of fair value hedge |
- | 94 | ||||||
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Other fees and commissions |
119 | 112 | ||||||
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Total noninterest income |
431 | 514 | ||||||
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Noninterest expense |
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Salaries |
2,077 | 2,207 | ||||||
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Employee benefits |
694 | 382 | ||||||
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Occupancy |
345 | 328 | ||||||
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Furniture and equipment |
465 | 335 | ||||||
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Professional services |
143 | 173 | ||||||
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Automated teller machine and debit card expenses |
169 | 168 | ||||||
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Federal Deposit Insurance Corporation premiums |
101 | 199 | ||||||
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Postage, delivery, and armored carrier |
66 | 78 | ||||||
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Advertising |
57 | 56 | ||||||
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Other real estate owned expense |
44 | 5 | ||||||
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Other |
581 | 567 | ||||||
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Total noninterest expense |
4,742 | 4,498 | ||||||
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Income before income taxes |
2,461 | 1,481 | ||||||
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Income taxes |
636 | 316 | ||||||
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Net income |
$ | 1,825 | $ | 1,165 | ||||
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Earnings per common share - basic |
$ | 0.56 | $ | 0.37 | ||||
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Earnings per common share - diluted |
$ | 0.56 | $ | 0.37 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
Farmers and Merchants Bancshares, Inc. and Subsidiaries
Selected Consolidated Financial Data
(Unaudited)
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As of or For the Three Months Ended March 31, |
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| Amounts in thousands except per share data |
2026 |
2025 |
2024 |
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OPERATING DATA |
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Interest income |
$ | 11,150 | $ | 9,886 | $ | 9,066 | ||||||
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Interest expense |
4,378 | 4,391 | 3,892 | |||||||||
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Net interest income |
6,772 | 5,495 | 5,174 | |||||||||
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Provision for credit losses |
- | 30 | - | |||||||||
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Net interest income after provision for credit losses |
6,772 | 5,465 | 5,174 | |||||||||
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Noninterest income |
431 | 514 | 504 | |||||||||
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Noninterest expense |
4,742 | 4,498 | 4,112 | |||||||||
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Income before income taxes |
2,461 | 1,481 | 1,566 | |||||||||
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Income taxes |
636 | 316 | 346 | |||||||||
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Net income |
$ | 1,825 | $ | 1,165 | $ | 1,220 | ||||||
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PER SHARE DATA |
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Net income (Basic and diluted) |
$ | 0.56 | $ | 0.37 | $ | 0.39 | ||||||
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Dividends |
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
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Book value |
$ | 20.43 | $ | 18.44 | $ | 17.03 | ||||||
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KEY RATIOS |
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Return on average assets |
0.84 | % | 0.57 | % | 0.61 | % | ||||||
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Return on average equity |
11.03 | % | 8.22 | % | 9.40 | % | ||||||
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Efficiency ratio |
65.83 | % | 75.23 | % | 72.42 | % | ||||||
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Dividend payout ratio |
0.00 | % | 0.00 | % | 0.00 | % | ||||||
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Net yield on interest-earning assets |
3.28 | % | 2.81 | % | 2.69 | % | ||||||
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Tier 1 capital leverage ratio |
9.73 | % | 9.48 | % | 9.39 | % | ||||||
Farmers and Merchants Bancshares, Inc. and Subsidiaries
Selected Consolidated Financial Data
(Unaudited)
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As of or For the Three Months Ended March 31, |
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| Amounts in thousands except per share data |
2026 |
2025 |
2024 |
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AT PERIOD END |
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Total assets |
$ | 863,394 | $ | 817,558 | $ | 794,593 | ||||||
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Gross loans |
632,756 | 604,352 | 541,398 | |||||||||
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Cash and cash equivalents |
48,733 | 22,697 | 25,633 | |||||||||
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Debt Securities |
133,683 | 145,569 | 182,325 | |||||||||
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Deposits |
711,296 | 735,598 | 655,978 | |||||||||
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Borrowings |
74,748 | 10,858 | 71,742 | |||||||||
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Stockholders' equity |
66,101 | 58,548 | 53,077 | |||||||||
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SELECTED AVERAGE BALANCES |
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Total assets |
$ | 867,193 | $ | 816,760 | $ | 799,841 | ||||||
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Gross loans |
637,922 | 593,653 | 534,566 | |||||||||
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Cash and cash equivalents |
44,808 | 26,648 | 37,224 | |||||||||
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Debt Securities |
154,616 | 169,215 | 208,134 | |||||||||
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Deposits |
697,518 | 634,274 | 550,010 | |||||||||
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Borrowings |
74,740 | 4,946 | 69,551 | |||||||||
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Stockholders' equity |
66,193 | 54,127 | 51,928 | |||||||||
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ASSET QUALITY |
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Nonperforming assets |
$ | 1,673 | $ | 3,789 | $ | 1,898 | ||||||
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Nonperforming assets/total assets |
0.19 | % | 0.46 | % | 0.24 | % | ||||||
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Allowance for credit losses/total loans |
0.70 | % | 0.71 | % | 0.80 | % | ||||||