Farmers and Merchants Bancshares, Inc. Reports Earnings of $5.8 Million or $1.81 per Share for the Year Ended December 31, 2025

Company Release - 1/29/2026 4:05 PM ET HAMPSTEAD, Md., Jan. 29, 2026 (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 year ended December 31, 2025 was $5.8 million, or $1.81 per common share (basic and diluted) compared to $4.3 million, or $1.37 per common share (basic and diluted), for the same period in 2024. The Company’s return on average equity during the year ended December 31, 2025 was 9.57% compared to 7.83% for the same period in 2024. The Company’s return on average assets during the years ended December 31, 2025 and 2024 was 0.68% and 0.53%, respectively. Net income for the three months ended December 31, 2025 was $1.7 million, or $0.53 per common share (basic and diluted), compared to $0.9 million, or $0.27 per common share (basic and diluted), for the fourth quarter of 2024. The Company’s return on average equity during the three months ended December 31, 2025 was 10.48% compared to 5.96% for the same period in 2024. The Company’s return on average assets during the three months ended December 31, 2025 was 0.77% compared to 0.41% for the same period in 2024. Net interest income for the year ended December 31, 2025 was $3.6 million higher when compared to the same period in 2024 due to a widening net yield on interest-earning assets of 3.01% for the year ended December 31, 2025 compared to 2.68% for the same period in 2024. The yield on earning assets increased to 5.22% for the year ended December 31, 2025, compared to 4.92% for the same period in 2024. The cost of interest bearing liabilities decreased to 2.70% for the year ended December 31, 2025, down from 2.76% for the same period in 2024. Average interest earning assets were $815.7 million for the year ended December 31, 2025 compared to $784.6 million for the same period in 2024. Gross interest income increased by $4.0 million to $42.4 million for the year ended December 31, 2025, up from $38.4 million for the same period in 2024. Average interest bearing liabilities increased by $31.6 million to $666.2 million for the year ended December 31, 2025 from $634.7 million for the same period in 2024. Total interest expense increased $438 thousand to $18.0 million for the year ended December 31, 2025 compared to $17.5 million for the same period in 2024. The Company recorded a $698 thousand provision for credit losses for the year ended December 31, 2025 compared to $150 thousand for the same period in 2024. The increase in the provision was related to the write down of two loans, both of which were foreclosed upon, as well as growth in the loan portfolio. Noninterest income increased by $224 thousand for the year ended December 31, 2025 when compared to the same period in 2024. The increase was due to several factors, including a $49 thousand increase in mortgage banking revenue, a $30 thousand increase in bank owned life insurance income, a $94 thousand increase in gain on settlement of fair vlue hedge, and an $89 thousand increase in gains on the sale of SBA loans. Noninterest expense was $1.4 million higher for the year ended December 31, 2025 when compared to the same period in 2024, due primarily to a $677 thousand increase in salaries and benefits and a $417 thousand combined increase in occupancy and furniture and equipment costs. The Bank’s FDIC assessment expense increased by $187 thousand due to higher FDIC assessment rates and deposit mix. Other real estate owned expenses increased by $101 thousand due to the foreclosure of three properties in 2025. Total assets increased to $872.0 million at December 31, 2025 from $844.6 million at December 31, 2024. Loans, net of the allowance for credit losses, increased to $633.1 million at December 31, 2025 from $583.0 million at December 31, 2024. Investments in debt securities decreased to $139.8 million at December 31, 2025 from $146.2 million at December 31, 2024. Deposits decreased to $720.5 million at December 31, 2025 from $758.8 million at December 31, 2024, largely due to a decrease in brokered CDs of $88.3 million. Federal Home Loan Bank advances and other long-term debt increased by $58.4 million to $74.7 million as of December 31, 2025, up from $16.3 million at December 31, 2024. The increase was primarily due to the Company utilizing Federal Home Loan Bank advances to repay $57.7 million of maturing brokered CDs. Additionally, the Company issued $12.5 million in subordinated debt during September 2025. The proceeds were used to repay the Company’s maturing term loan of approximately $10 million as well to add an interest reserve and increase the Bank’s capital. The Company’s tangible equity was $57.6 million at December 31, 2025 compared to $49.2 million at December 31, 2024. The book value of the Company’s common stock increased to $20.02 per share at December 31, 2025 from $17.77 per share at December 31, 2024. Book value per share at December 31, 2025 was reflective of the $12.7 million unrealized loss, net of income taxes, on the Bank’s available for sale (“AFS”) securities portfolio as a result of the rise in interest rates since the time of purchase. Changes in the market value of the AFS securities portfolio, net of income taxes, are reflected in the Company’s equity, but are not included in the income statement. Management does not believe there is any indication of credit deterioration in any of the bonds and we do not intend to sell any of these securities, so no actual losses are anticipated. The securities portfolio is comprised of 62% government agency mortgage-backed securities which are fully guaranteed, 20% investment grade non-agency mortgage-backed securities, 14% investment grade corporate and municipal bonds, and 4% subordinated debt of other community banks. Unrealized gains and losses do not impact regulatory capital because the Bank elected many years ago to not include in the calculation of regulatory capital changes in the market value of the AFS securities portfolio regardless of whether they are positive or negative. Gary A. Harris, President and CEO, commented, “In 2025, we achieved a 35% increase in net income which was accomplished by growing our loan portfolio and reducing our funding costs. Our loan portfolio, net of allowance for credit losses, grew to $633 million, which is an increase of $50 million, or 9%, over last year’s balance. The yield on loans improved to 5.84% as existing loans in our portfolio repriced over the past year. This, along with lower cost of funds, has resulted in our net interest rate yield rising to 3.01% for the year. Our asset quality remains strong with zero non-accrual loans as of December 31, 2025. We look forward to building on a successful year as we continue to capitalize on our strategic investments in technology and people.” 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 eight additional 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 OTCID 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 Dollars in thousands except share data (Unaudited) December 31, December 31, 2025 2024 Assets Cash and due from banks $46,113 $63,962 Federal funds sold and other interest-bearing deposits 566 697 Cash and cash equivalents 46,679 64,659 Certificates of deposit in other banks 100 100 Securities available for sale, at fair value 118,730 125,713 Securities held to maturity, at amortized cost less allowance for credit losses of $79 and $60 21,055 20,499 Equity security, at fair value 550 518 Restricted stock, at cost 3,693 921 Mortgage loans held for sale 714 157 Loans, less allowance for credit losses of $4,361 and $4,260 633,144 582,993 Premises and equipment, net 7,141 7,349 Accrued interest receivable 2,535 2,439 Deferred income taxes, net 6,277 7,606 Other real estate owned, net 1,673 1,176 Bank owned life insurance 15,353 15,324 Goodwill and other intangibles, net 7,018 7,026 Other assets 7,296 8,163 Total Assets $871,958 $844,643 Liabilities and Stockholders' Equity Deposits Noninterest-bearing $117,098 $107,197 Interest-bearing 603,361 651,609 Total deposits 720,459 758,806 Securities sold under repurchase agreements 4,317 5,564 Federal Home Loan Bank of Atlanta advances 62,700 5,000 Long-term debt, net of unamortized issuance costs 12,036 11,329 Accrued interest payable 1,278 1,003 Other liabilities 6,508 6,669 Total liabilities 807,298 788,371 Stockholders' equity Common stock, par value $.01 per share, authorized 5,000,000 shares; issued and outstanding 3,229,795 shares in 2025 and 3,166,653 shares in 2024 32 32 Additional paid-in capital 32,148 31,136 Retained earnings 45,210 41,613 Accumulated other comprehensive loss (12,730) (16,509)Total Stockholders' equity 64,660 56,272 Total liabilities and stockholders' equity $871,958 $844,643 Farmers and Merchants Bancshares, Inc. and Subsidiaries Consolidated Statements of Income Dollars in thousands except per share data (Unaudited) Three Months Ended December 31, Year Ended December 31, 2025 2024 2025 2024 Interest income Loans, including fees $9,490 $8,317 $36,062 $30,338 Investment securities - taxable 978 1,469 4,169 6,263 Investment securities - tax exempt 156 143 623 559 Federal funds sold and other interest earning assets 592 342 1,501 1,203 Total interest income 11,216 10,271 42,355 38,363 Interest expense Deposits 3,795 4,275 16,460 14,519 Securities sold under repurchase agreements 17 16 59 65 Federal Home Loan Bank advances 596 14 847 123 Federal Reserve Bank advances - 402 - 2,313 Long-term debt 257 120 599 507 Total interest expense 4,665 4,827 17,965 17,527 Net interest income 6,551 5,444 24,390 20,836 Provision for credit losses 103 150 698 150 Net interest income after provision for credit losses 6,448 5,294 23,692 20,686 Noninterest income Service charges on deposit accounts 166 189 693 810 Mortgage banking income 6 41 157 108 Bank owned life insurance income 108 106 424 394 Gain (loss) on sale of debt securities - 19 - (13)Fair value adjustment of equity security 1 (18) 17 (4)Gain on settlement of fair value hedge - - 94 - Loss on sale of premises and equipment - - - (5)Gain on sale of SBA loans 89 - 89 - (Loss)/Gain on insurance proceeds, net (20) - 53 142 Other fees and commissions 106 86 449 320 Total noninterest income 456 423 1,976 1,752 Noninterest expense Salaries 2,142 2,006 8,718 7,854 Employee benefits 514 590 2,000 2,187 Occupancy 279 271 1,169 1,070 Furniture and equipment 426 396 1,611 1,293 Professional services 173 335 738 865 Automated teller machine and debit card expenses 253 174 660 648 Federal Deposit Insurance Corporation premiums 112 109 578 391 Postage, delivery, and armored carrier 66 77 270 294 Advertising 56 48 249 228 Other real estate owned expense, net 119 59 177 76 Other 518 557 2,125 2,023 Total noninterest expense 4,658 4,622 18,295 16,929 Income before income taxes 2,246 1,095 7,373 5,509 Income taxes 549 238 1,607 1,231 Net income $1,697 $857 $5,766 $4,278 Earnings per common share - basic $0.53 $0.27 $1.81 $1.37 Earnings per common share - diluted $0.53 $0.27 $1.81 $1.37 Farmers and Merchants Bancshares, Inc. Selected Consolidated Financial Data (Unaudited) Dollars in thousands except per share data As of or for the Years Ended December 31, 2025 2024 2023 OPERATING DATA Interest income $42,355 $38,363 $31,323 Interest expense 17,965 17,527 9,907 Net interest income 24,390 20,836 21,416 Provision for (recovery of) credit losses 698 150 (570)Net interest income after provision for credit losses 23,692 20,686 21,986 Noninterest income 1,976 1,752 1,591 Noninterest expense 18,295 16,929 15,142 Income before income taxes 7,373 5,509 8,435 Income taxes 1,607 1,231 2,017 Net income $5,766 $4,278 $6,418 PER SHARE DATA Net income (Basic and diluted) $1.81 $1.37 $2.08 Dividends $0.68 $0.67 $0.66 Book value $20.02 $17.77 $16.74 KEY RATIOS Return on average assets 0.68% 0.53% 0.86%Return on average equity 9.57% 7.83% 13.08%Efficiency ratio 69.39% 74.95% 65.81%Dividend payout ratio 37.57% 48.91% 31.73%Net yield on interest-earning assets 3.01% 2.68% 2.97%Tier 1 capital leverage ratio 9.38% 9.12% 9.42% AT PERIOD END Total assets $871,958 $844,643 $799,941 Gross loans 637,505 587,979 528,166 Cash and cash equivalents 46,679 64,659 44,690 Securities 139,785 146,211 184,248 Deposits 720,459 758,806 680,963 Long term debt, FRB and FHLB borrowings 74,736 11,329 57,973 Stockholders' equity 64,660 56,272 52,178 SELECTED AVERAGE BALANCES Total assets $846,190 $810,043 $745,479 Gross loans 617,249 557,862 528,910 Cash and cash equivalents 34,139 27,564 18,497 Securities 164,300 177,743 182,160 Deposits 740,792 672,493 642,039 Long term debt, FRB and FHLB borrowings 33,346 72,287 48,041 Stockholders' equity 60,254 54,610 49,063 ASSET QUALITY Nonperforming assets $1,673 $1,580 $1,898 Nonperforming assets/total assets 0.19% 0.19% 0.24% Allowance for credit losses/total loans 0.68% 0.72% 0.81% Contact: Mr. Gary A. Harris President and Chief Executive Officer (410) 374-1510, ext. 1104 Source: Farmers and Merchants Bancshares, Inc.