Earnings

Farmers & Merchants Year-over-Year Margin Expansion Slows to 17 bps

The Tip Desk · November 8, 2026 · 2 min read

Net interest margin reached 3.57% in the third quarter as net income was $11.5 million, or $0.84 a share, and the regular dividend rose 5.5% to $0.96 annualized.

Farmers & Merchants Bancorp (FMAO), the Archbold, Ohio community-bank holding company, reported third-quarter net income of $11.5 million, or $0.84 a share, up 30.3% from $8.9 million, or $0.64 a share, a year earlier.

The result marked 94 consecutive profitable quarters. Return on average assets was 1.29%, compared with 1.05% a year earlier.

Net interest margin widened 17 basis points year over year to 3.57% in the three months ended September 30, 2026, after 26 bps of year-over-year expansion to 3.48% in the second quarter and 39 bps to 3.42% in the first. The year-over-year margin expansion slowed for a third consecutive quarter.

Net interest income before provision for credit losses was $29.94 million. Cost of interest-bearing liabilities was 2.59%, compared with 2.83% in the same period last year.

President and Chief Executive Officer Lars B. Eller said loan repricing opportunities extend through 2028 and that the company believes it is well positioned to sustain positive momentum through the remainder of 2026 and into 2027.

Total deposits were $2.96 billion at September 30, 2026, up 7.7% from a year earlier. Total loans, net, were $2.74 billion, up 3.0% year over year. The company said the loan increase was driven primarily by higher agricultural, commercial and industrial, and consumer real estate loans, partially offset by lower commercial real estate, consumer, and agricultural real estate loans.

Nonperforming loans were $6.2 million, or 0.23% of total loans, down from $7.4 million, or 0.27%, at June 30, 2026. Net charge-offs were $35 thousand, or 0.00% of average loans. The allowance for credit losses to total loans was 1.08%. Commercial real estate loans were 48.2% of the portfolio.

Noninterest income was $4.87 million. Noninterest expense was $20.22 million. The efficiency ratio was 58.09%, compared with 63.11% a year earlier.

Stockholders’ equity was $386.9 million, or $28.12 a share. The Tier 1 leverage ratio was 9.14%. Tangible book value was $21.62 a share.

The regular dividend was raised 5.5% to $0.96 annualized, after 4.0% increases to $0.92 annualized in both the second and first quarters. The company declared an additional $0.01 special dividend, bringing the total third-quarter payment to $0.250 a share. It has increased the annual cash dividend for 32 consecutive years. For the nine months ended September 30, 2026, declared dividends were $0.71 a share, and the payout ratio was 29.34%.

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