Farmers & Merchants Bancorp reports Q3 EPS $33.92 vs. $29.96 last year

Tangible book value per share increased 9.8% to $877.13 compared to $799.04 as of September 30, 2024; Continued to grow solid capital position with a preliminary total risk-based capital ratio of 15.76%, a common equity tier 1 ratio of 14.28%, a tier 1 leverage ratio of 11.60% and a tangible common equity ratio of 11.26%; Credit quality remains resilient with an allowance for credit losses on loans and leases of 2.10%; a net charge-off ratio of 0.03% for the quarter; and a non-accrual loan and leases ratio of 0.03% at quarter-end. Kent Steinwert, CEO, stated, “We are very pleased with the Company’s financial performance in the third quarter of 2025, highlighted by record third quarter net income of $23.7M, a return on average assets of 1.70%, and a return on average equity of 15.10%. Net income for the first nine months of 2025 of $69.8M is the best-performing nine-month period in the history of the Company. We achieved these impressive results while continuing to maintain a strong liquidity position and balance sheet at quarter-end with $172.6M in cash, $1.6B in investment securities, of which $870.2M are available-for-sale, no borrowings and access to $2.1B in borrowing capacity, while maintaining a conservative loan-to-deposit ratio of 74.16%. Capital levels continued to grow and were significantly above the regulatory thresholds for “well-capitalized” banks at quarter-end. Total deposits increased $185.9M, or 4.0%, to $4.9B at September 30, 2025, compared to December 31, 2024, as we continued our focus on growing deposits with our longstanding client relationships and developing new client relationships. Gross loans and leases were $3.6B at the end of the third quarter, down $67.6M or 1.8% from December 31, 2024, with most of the decrease coming in the first quarter of 2025 before growth in the second quarter followed by a relatively flat third quarter, as we continued to prioritize risk appropriate loan pricing and loan structure over loan growth. Given the unprecedented length of the inverted yield curve, together with the lack of movement in either the long or short term market interest rates, we believe market rates are not providing sufficient net interest margin to adequately compensate for duration risk on loans. Thus, we have favored investing in lower risk government guaranteed securities rather than loans with duration. These current market pricing conditions could exist for some time making it challenging to maintain and grow loans without reducing current loan portfolio spreads. Credit quality remained resilient as we continued to work closely with our borrowers while they work through the current economic cycle, particularly in a few agricultural products adversely impacted by negative conditions in the export market. Our Company remains in excellent financial condition, continues to perform at a high-level and is well positioned to navigate the challenges ahead as we have for the past 109 years.”