Farmers & Merchants Bancorp, Inc. (Nasdaq: FMAO) reported a 30.3% increase in third-quarter net income to $11.5 million, or $0.84 per basic and diluted share, for the period ended September 30, 2026. This performance extends the company's streak of profitability to 94 consecutive quarters.
Lars B. Eller, President and Chief Executive Officer, noted that year-to-date earnings per share rose 39.8% to $2.39. The bank attributes this growth to an expanded net interest margin, controlled operating expenses, and balance sheet growth. Eller stated the company is well positioned to sustain positive momentum through the remainder of 2026 and into 2027.
The net interest margin increased by 17 basis points to 3.57%, while the cost of interest-bearing liabilities improved to 2.59% from 2.83% in the same period last year. The efficiency ratio also improved to 58.09%, down from 63.11%. Return on average assets reached 1.29%, compared to 1.05% a year earlier.
Total deposits at September 30, 2026, stood at $2.96 billion, a 7.7% increase from the prior year. Total loans, net, grew by 3.0%, or $79.0 million, to $2.74 billion. The company credited the rise in agricultural, commercial and industrial, and consumer real estate lending for the overall growth, while noting declines in commercial real estate, consumer, and agricultural real estate loans.
Asset quality metrics showed nonperforming loans at $6.2 million, or 0.23% of total loans, at September 30, 2026. This figure compares to $7.4 million at June 30, 2026, and $5.2 million at September 30, 2025. The total allowance for credit losses to total loans was 1.08% at the end of the third quarter.
Commercial real estate (CRE) loans represented 48.2% of the total loan portfolio at September 30, 2026. Eller indicated the bank is well positioned to navigate a higher interest rate environment with loan repricing opportunities extending through 2028.
Total stockholders' equity increased by 6.9% to $386.9 million, or $28.12 per share, at September 30, 2026. The Tier 1 leverage ratio was 9.14%, up from 8.74% a year earlier. Tangible stockholders' equity rose to $297.5 million.
The company declared an annual cash dividend of $0.71 per share for the nine months ended September 30, 2026, a 6.0% increase over the same period last year. The third-quarter regular dividend was increased by 5.5% to $0.96 annualized per share, alongside an additional $0.01 per share special dividend. This marks the company's 32nd consecutive annual dividend increase.