FMFG · Farmers and Merchants Bancshares, Inc.

Farmers and Merchants Bancshares, Inc. delivered a strong first quarter in 2026, with net income rising 57% year-over-year to $1.8 million, or $0.56 per share. This performance was primarily driven by a 23% increase in net interest income to $6.8 million. The improvement in net interest income was attributed to a combination of higher yields on earning assets, which increased by 34 basis points to 5.37%, and growth in average earning assets, particularly average loans which grew $44.2 million to $637.9 million. Additionally, the cost of funds decreased slightly to 2.65%, further supporting margin expansion. The net yield on interest-earning assets improved to 3.28% from 2.81% in the prior year.

Asset quality remains a highlight, with zero non-accrual loans reported at period-end and no provision for credit losses required for the quarter, compared to a $30 thousand provision in the same period last year. Noninterest income decreased to $431 thousand, largely due to the absence of a $94 thousand non-recurring gain on the settlement of a fair value hedge recorded in 2025. Noninterest expense increased by $244 thousand, primarily driven by higher employee benefits, occupancy costs, and other real estate owned expenses, though partially offset by lower FDIC premiums. The efficiency ratio improved significantly to 65.83% from 75.23%.

Balance sheet activity included a decrease in total assets to $863.4 million, mainly due to reductions in loans and securities available for sale. Deposits decreased by $9.2 million, attributed to the repayment of brokered CDs. Tangible equity grew to $59.1 million, and book value per share increased to $20.43. Management expressed confidence in continuing the momentum into 2026, citing investments in technology and talent to support future growth.