Key Highlights

  • Net income rose 30.3% to USD 11.5 million, or USD 0.84 per share.
  • Net interest Margin rose 17 basis points to 3.57%.
  • Efficiency ratio improved to 58.09% from 63.11% a year earlier.
  • The total third-quarter Dividend was USD 0.250 including a special USD 0.01.

Quarterly Results

Farmers & Merchants Bancorp (NASDAQ:FMAO) reported third-quarter 2026 results on Thursday, marking its 94th consecutive profitable quarter. Net Income rose 30.3% to USD 11.5 million from USD 8.9 million, and net income per basic and diluted share was USD 0.84 against USD 0.64. Return on average Assets was 1.29% against 1.05%.

For the nine months, net income was USD 32.9 million against USD 23.5 million, and Earnings Per Share rose 39.8% to USD 2.39 from USD 1.71. President and Chief Executive Officer Lars Eller called 2026 a historic year of profitability and growth.

Margin and Efficiency

The net interest margin rose 17 basis points from a year earlier to 3.57%. The cost of interest-bearing liabilities improved to 2.59% from 2.83%. The efficiency ratio improved to 58.09%, an improvement of 5.02 percentage points. Net charge-offs to average loans were 0.00%.

Eller said Loan repricing opportunities extend through 2028, which management views as a favorable backdrop for interest income. He said discipline on deposit pricing and funding costs is meant to hold the margin improvement of the past year.

Loans and Deposits

Total deposits were USD 2.96 billion, up 7.7%, or USD 210.6 million, from a year earlier. Net loans were USD 2.74 billion, up 3.0%, or USD 79.0 million, from USD 2.66 billion, driven by higher agricultural, commercial and industrial, and consumer real estate loans and partly offset by lower commercial real estate, consumer and agricultural real estate loans.

Deposits grew more than twice as fast as loans over the year, 7.7% against 3.0%, which leaves the Balance Sheet with a lower loan to deposit ratio than a year earlier.

Credit Quality, Capital and Dividend

Nonperforming loans were USD 6.2 million, or 0.23% of total loans, against USD 7.4 million, or 0.27%, at June 30 and USD 5.2 million, or 0.19%, a year earlier. The company said nonperforming loans continue to normalize year over year.

Commercial real estate loans were 48.2% of the portfolio, about USD 1.32 billion. Multi-family loans were USD 248.9 million, or 18.8% of that Commercial Real Estate portfolio. The Tier 1 Leverage Ratio was 9.14%.

The regular dividend rose 5.5% to USD 0.96 annualized, or USD 0.24 per quarter. The board declared an additional Special Dividend of USD 0.01 per share, bringing the third-quarter payment to USD 0.250. The company has increased its annual Cash Dividend for 32 consecutive years. Dividends declared in the nine months were USD 0.71 per share, up 6.0%, and the nine-month Payout Ratio was 29.34% against 38.64% a year earlier, a decline of 9.30 percentage points as earnings grew faster than dividends. The company also continues to repurchase shares, in part to offset dilution from equity-based compensation. The bank, founded in 1897, operates in Ohio, Northeast Indiana and Oakland County, Michigan, with loan production offices in Muncie, Perrysburg and Bryan.

Indicators to Watch

Net income rose 30.3% while the margin rose 17 basis points and the cost of interest-bearing liabilities fell 24 basis points. Reference points include the margin at 3.57%, the pace of loan repricing through 2028, nonperforming loans at 0.23% of loans, commercial real estate at 48.2% of loans, and deposit growth against loan growth.