# FARMERS & MERCHANTS BANCORP INC (FMAO)

Informational only - not investment advice.

CIK: 0000792966
SIC: 6035 Savings Institution, Federally Chartered
SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Depository Institutions](/major-group/60/) > [SIC 6035 Savings Institution, Federally Chartered](/industry/6035/)
Latest 10-K filed: 2026-02-27
SEC page: https://www.sec.gov/edgar/browse/?CIK=792966
Filing source: https://www.sec.gov/Archives/edgar/data/792966/000119312526081475/fmao-20251231.htm

## At a glance

FY2025 · period end 2025-12-31 · filed 2026-02-27 · accession 0001193125-26-081475 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000792966.json

| Metric | Value | FY | Provenance |
| --- | ---: | ---: | --- |
| Revenue | 173,544,000 USD | 2025 | verified |
| Net income | 33,309,000 USD | 2025 | verified |
| Assets | 3,434,382,000 USD | 2025 | verified |
| Free cash flow | 34,972,000 USD | 2025 | computed |
| Net margin | 19.19% | 2025 | computed |
| Revenue YoY | +6.10% | 2025 | computed |
| ROE | 8.98% | 2025 | computed |

Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity.

No market price, no rating, no forecast on this site. Not investment advice.

### Peer percentile fingerprint

| Ratio | FMAO | Peer median | Percentile | N |
| --- | ---: | ---: | ---: | ---: |
| Net margin | 19.2% | 15.2% | 67 | 22 |
| Revenue growth | 6.1% | 4.9% | 62 | 22 |
| FCF margin | 20.2% | 19.0% | 58 | 20 |
| ROE | 9.0% | 6.5% | 76 | 22 |
| ROA | 1.0% | 0.7% | 67 | 22 |
| Liabilities / equity | 8.26 | 8.30 | 48 | 22 |

Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC industry 6035 Savings Institution, Federally Chartered, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking.

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 173544000 | USD | 2025 | 2026-02-27 |
| Net income | 33309000 | USD | 2025 | 2026-02-27 |
| Assets | 3434382000 | USD | 2025 | 2026-02-27 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000792966.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | 37,727,000 | 41,248,000 | 46,429,000 | 68,306,000 | 70,169,000 | 76,840,000 | 101,149,000 | 139,808,000 | 163,572,000 | 173,544,000 |
| Net income | 11,664,000 | 12,720,000 | 14,949,000 | 18,402,000 | 20,095,000 | 23,495,000 | 32,515,000 | 22,787,000 | 25,938,000 | 33,309,000 |
| Diluted EPS |  |  |  |  | 1.80 | 2.01 | 2.46 | 1.67 | 1.90 | 2.43 |
| Operating cash flow | 12,430,000 | 17,649,000 | 10,737,000 | 23,931,000 | 27,382,000 | 34,741,000 | 40,669,000 | 22,146,000 | 32,474,000 | 36,739,000 |
| Capital expenditures | 2,406,000 | 1,888,000 | 2,628,000 | 3,510,000 | 3,222,000 | 1,965,000 | 2,600,000 | 10,929,000 | 1,871,000 | 1,767,000 |
| Dividends paid | 4,115,000 | 4,443,000 | 4,956,000 | 6,345,000 | 7,186,000 | 7,670,000 | 10,276,000 | 11,335,000 | 11,922,000 | 12,085,000 |
| Share buybacks | 194,000 | 196,000 | 490,000 | 381,000 | 383,000 | 338,000 | 308,000 | 218,000 | 664,000 | 362,000 |
| Assets | 1,055,895,000 | 1,107,009,000 | 1,116,163,000 | 1,607,330,000 | 1,909,544,000 | 2,638,300,000 | 3,015,351,000 | 3,283,229,000 | 3,364,723,000 | 3,434,382,000 |
| Liabilities | 930,318,000 | 972,872,000 | 972,876,000 | 1,377,072,000 | 1,660,384,000 | 2,341,133,000 | 2,717,211,000 | 2,966,686,000 | 3,029,512,000 | 3,063,520,000 |
| Stockholders' equity | 125,577,000 | 134,107,000 | 143,287,000 | 230,258,000 | 249,160,000 | 297,167,000 | 298,140,000 | 316,543,000 | 335,211,000 | 370,862,000 |
| Free cash flow | 10,024,000 | 15,761,000 | 8,109,000 | 20,421,000 | 24,160,000 | 32,776,000 | 38,069,000 | 11,217,000 | 30,603,000 | 34,972,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin | 30.92% | 30.84% | 32.20% | 26.94% | 28.64% | 30.58% | 32.15% | 16.30% | 15.86% | 19.19% |
| Return on equity | 9.29% | 9.48% | 10.43% | 7.99% | 8.07% | 7.91% | 10.91% | 7.20% | 7.74% | 8.98% |
| Return on assets | 1.10% | 1.15% | 1.34% | 1.14% | 1.05% | 0.89% | 1.08% | 0.69% | 0.77% | 0.97% |
| Liabilities / equity | 7.41 | 7.25 | 6.79 | 5.98 | 6.66 | 7.88 | 9.11 | 9.37 | 9.04 | 8.26 |

## As-reported value updates

2 tracked differences above grepcent's stated thresholds were found between the earliest XBRL-filed value and the value currently on file for the same fiscal period.

Ledger: /company/FMAO/revisions/


## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-07-29. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000792966.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q3 | 2022-09-30 |  |  | 0.68 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | 0.47 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 |  |  | 0.44 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 36,359,000 | 4,724,000 | 0.35 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 38,270,000 | 5,480,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 38,654,000 | 5,298,000 | 0.39 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 41,166,000 | 5,614,000 | 0.42 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 41,901,000 | 6,440,000 | 0.48 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 41,851,000 | 8,081,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 41,002,000 | 6,869,000 | 0.51 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 43,492,000 | 7,613,000 | 0.56 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 44,484,000 | 8,746,000 | 0.64 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 44,566,000 | 9,674,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 43,298,000 | 9,462,000 | 0.70 | reported discrete quarter |
| 2026-Q2 | 2026-06-30 | 45,647,000 | 11,649,000 | 0.86 | reported discrete quarter |

## Filed narrative (10-K & 10-Q)

## Business

Verbatim Item 1 Business section from FMAO's latest 10-K: [/company/FMAO/business/](/company/FMAO/business/).

## Risk Factors

Verbatim Item 1A Risk Factors from FMAO's latest 10-K: [/company/FMAO/risk-factors/](/company/FMAO/risk-factors/).

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/792966/000119312526323955/fmao-20260630.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-07-29
Report date: 2026-06-30

ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company continues to realize the benefits of being disciplined in the execution of our strategic plan. The largest benefit evident is the improvement in overall profitability. Net income is up 45.79% or over $6.7 million year to date compared to year-to-date 2025. On a quarterly basis, net income is up 23.17% compared to 1st quarter 2026 and 53.01% compared to same quarter last year. In comparing year-to-date June 30, 2026, to June 30, 2025, both aspects of net interest income have improved due to our pricing discipline – interest income is up $4.45 million and interest expense decreased by $2.29 million. Interest income from loans benefited with a higher average balance and a higher yield in comparing both the second quarters and the six months of 2026 to 2025.

Total deposits also grew in comparisons of the two periods, mainly in money market and certificate of deposit balances. Interest expense decreased in comparing 2026 to 2025 in both second quarter and year-to-date performances. Deposit growth enabled FHLB borrowings to be paid off along with the continuing paydown of the amortized borrowings. This all culminated with net interest margin for the 2nd quarter 2026 at 3.48% compared to 3.22% for the same period a year ago and year-to-date at 3.45% compared to 3.13% a year ago. We expect the net interest margin to continue to improve with the percentage of favorable repricing in the loan portfolio in the next 18 months.

A portion of our strategic plan focuses on improvement in noninterest income while controlling noninterest expense. Noninterest income has favorable comparisons in the quarter’s performance and year-to-date. In terms of dollars, it is higher than first quarter 2026, second quarter 2025 and year-to-date as of June 30th comparisons. The largest contributors to this success are gain on sale of loans and our restructure of our Bank Owned Life Insurance “BOLI” portfolio. Gain on sale of loans originates out of three real estate portfolios, 1-4 family, agricultural and small business. The improvement in gain on sale for 2026 is driven mostly by the agricultural real estate portfolio where we sell 90% of the loan and maintain 10% and receive servicing income for the life of the loan.

Operating expenses are up slightly due mainly to employee expenses, as we accrue with higher performance payouts. In comparing the first half of 2026 to the first half of 2025, furniture and equipment include our newest office in 2026 that was not added until the second half of 2025. Consulting fees are also considerably lower in 2026 versus 2025 which included one-time fees associated with data processing. A couple of upcoming projects will increase consulting fees in the second half.

Overall, we have seen improvement in our past due loans and nonaccrual/nonperforming loan balances. The Bank is back to a more normal range of 0.34% of loans past due, following a couple quarters with higher levels of past due loans. Consumer, Home Loans and Commercial loan past due percentages are all well below last year’s averages. Agricultural Real Estate past due loans includes one loan of $3.8 million as of June 2026. Nonaccrual loan balances are down 33.31% from last quarter; however, remain 97.14% higher when compared to second quarter 2025. Agricultural Real Estate nonaccrual loans remain higher than other loan segments primarily due to one loan that is in the work out process.

In looking at the current economy in our market areas, a great deal of attention remains on the agricultural section. For our grain farmers, the planting season was relatively timely and overall crop conditions are good in our market area. Projected margins are tight for 2026 but government subsidies have provided some support. Land values remain stable showing continued demand for land with financially able buyers. The livestock market continues to be profitable. The agricultural and grain elevator lines of credit saw increased usage in the first quarter of 2026, and we are starting to see some reductions in line usage area for the second quarter. Our agricultural equipment dealers continue to endure lower sales, but the overall performance of agricultural businesses has been acceptable.

The Commercial Banking Division realized flat growth for the first half of 2026. Loan volume in first half was consistent with previous quarters; however, the expected payoffs and normal amortization outweighed the overall production. Lending rates and overall terms remained consistent with the previous quarter, however, there are more competitive pressures on offerings as we finished the second quarter. The Iran conflict's impact on the economy, oil and overall inflation remained the largest concerns to commercial business in the F&M footprint year-to-date 2026. The commercial team continues to monitor the portfolio and borrowing bases closely for the impact of credit and inflationary pressures. Credit quality and past due pressures exist but remained sound in second quarter. Collateral values and auction values are still consistent with previous quarters.

The Bank made the decision to discontinue the Indirect Lending Department as of March 2026 and directed that business to our direct consumer lending department. This contributed to a decrease in the consumer loan portfolio of 13.4% or $7.89 million as compared to year-end 2025 and 14.1% or $8.40 million as compared to June 30, 2025.

Fixed home loan originations to be sold to the secondary market experienced the highest dollar volume by quarter of the last 2 years at $16.8 million. Similarly, the same is true for the actual dollar volume of sold loans during the quarter at $15.4 million.

48

We continue to see home equities being the driver to higher balances in the consumer real estate portfolio segment. Home equities account for increased balances of $8.53 million since year-end 2025 and $5.39 million over first quarter of 2026, while the overall consumer real estate portfolio segment shows a smaller gain in comparison to the same time periods of $7.0 million and lower by $1.55 million, respectively.

Overall, net income continues to expand in 2026 at a greater percentage than our asset growth. When comparing June 30, 2026, to June 30, 2025, assets grew 4.67% while net income grew 45.79%. Our continued attention on maximizing revenues while limiting expenses is serving us well. The Company remains well capitalized with sound liquidity levels and strong asset quality.

NATURE OF ACTIVITIES

Farmers & Merchants Bancorp, Inc. (the “Company”) is a financial holding company incorporated under the laws of Ohio in 1985. Our subsidiary is The Farmers & Merchants State Bank (the “Bank”), a local independent community bank that has been primarily serving Northwest Ohio, Northeast Indiana and Southeast Michigan since 1897. The Bank includes F&M Insurance Agency, LLC, a subsidiary offering insurance products, which was formed in November of 2023. We report our financial condition and net income on a consolidated basis and we have only one segment.

Our executive offices are located at 307 North Defiance Street, Archbold, Ohio 43502, and our telephone number is (419) 446-2501. The Bank operates thirty-eight full-service banking offices throughout Northwest Ohio, Northeast Indiana and Southeast Michigan along with a drive-up facility in Archbold. The Bank also operates three Loan Production Offices (LPOs), two in Ohio and one in Indiana.

The Farmers & Merchants State Bank engages in general commercial banking and savings business including commercial, agricultural and residential mortgage as well as consumer lending activities. The largest segment of the lending business relates to commercial, both real estate and non-real estate. The type of commercial business ranges from small business to multi-million dollar companies. The loans are a reflection of business located within the Banks’ market area of Ohio, Indiana and Michigan. Because the Bank's offices are primarily located in Northwest Ohio, Northeast Indiana and Southeast Michigan, a substantial amount of the loan portfolio is comprised of loans made to customers in the agricultural industry for such items as farmland, farm equipment and operating loans for seed, fertilizer, and feed. Other types of lending activities include loans for home improvements, and loans for the purchase of autos, trucks, and other consumer goods.

The Bank also provides checking account services, as well as savings and time deposit services such as certificates of deposits. In addition, Automated Teller Machines (ATMs) or Interactive Teller Machines (ITMs) are provided at most branch locations along with other independent locations in the market area. ITMs operate as an ATM. The Bank has custodial services for Individual Retirement Accounts (IRAs) and Health Savings Accounts (HSAs). The Bank provides on-line banking access for consumer and business customers. For consumers, this includes bill-pay, on-line statement opportunities and mobile banking. For business customers, it provides the option of electronic transaction origination such as wire and Automated Clearing House (ACH) file transmittal. In addition, the Bank offers remote deposit capture or electronic deposit processing. Mobile banking has been widely accepted and used by consumers. Upgrades to our digital products and services continue to occur in both retail and business lines. The Bank continues to offer new suites of products as customer preferences change and the Bank adapts and adopts new technologies. The Bank continues to offer products that also meet the needs of our more traditional customers.

The Bank has established underwriting policies and procedures which facilitate operating in a safe and sound manner in accordance with supervisory and regulatory laws and guidance. Within this sphere of safety and soundness, the Bank's practice has been to not promote innovative, unproven credit products which may not be in the best interest of the Bank or its customers. The Bank does offer a hybrid mortgage loan. Hybrid mortgage loans are loans that start out as a fixed rate mortgage but after a set number of years automatically adjust to an adjustable rate mortgage. The Bank offers a seven and ten year fixed rate mortgage and a seven year jumbo fixed rate mortgage after which the interest rate will adjust annually for all. In order to offer longer-term fixed rate mortgages, the Bank does participate in the Freddie Mac secondary mortgage market, Farm Service Agency (FSA) guaranteed secondary agricultural market and Small Business Lending programs. The Bank also normally retains the servicing rights on these partially or 100% sold loans. In order for the customer to participate in these programs they must meet the requirements established by those agencies. In addition, the Bank does sell some of its longer term fixed rate agricultural mortgages into the secondary market with the aid of brokers. The Bank currently participates in four State of Ohio programs: Ag-Link, Grow Now, Ohio Homebuyers Plus and Buckeye Business Advantage. These four programs allow the Bank to offer a more competitive interest rate to customers. With the acquisition of Perpetual Federal Savings Bank in the fourth quarter of 2021 and the addition of Peoples Federal Savings in the fourth quarter of 2022, the Bank saw an increase in fixed rate, long-term mortgage loans to our portfolio from that banking service area. In November 2023, the Bank began offering a home buyer mortgage program, Hometown Advantage Mortgage Program, which is available to low- and moderate-income home buyers as well as on properties located in low- and moderate-income census tracts. In the first quarter 2026, the Bank rolled out a CD/Savings secured loan product for credit building or credit repair to be secured by a time deposit or saving

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A (excerpt)

Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/792966/000119312526081475/fmao-20251231.htm
Complete FY 2025 MD&A: /company/FMAO/mda/fy2025/

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high
Filing date: 2026-02-27
Report date: 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Reclassification

Certain 2024 and 2023 amounts within the loans disclosure (Note 4) and the loan section of Management's Discussion and Analysis have been reclassified to conform with current year presentation to provide additional information to the reader. The reclassifications had no effect on income.

Critical Accounting Estimates

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, and the Company follows general practices within the financial services industry in which it operates. At times the application of these principles requires management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. These assumptions, estimates and judgments are based on information available as of the date of the financial statements. As this information changes, the financial statements could reflect different assumptions, estimates and judgments. Certain policies inherently have a greater reliance on assumptions, estimates and judgments and as such have a greater possibility of producing results that could be materially different than

25

originally reported. Examples of critical assumptions, estimates and judgments are when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not required to be recorded at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability must be recorded contingent upon a future event.

All significant accounting policies followed by the Company are presented in Note 1 to the consolidated financial statements. These policies, along with the disclosures presented in the notes to the consolidated financial statements and in the management's discussion and analysis of financial condition and results of operations, provide information on how significant assets and liabilities are valued and how those values are determined for the financial statements. Based on the valuation techniques used and the sensitivity of financial statement amounts to assumptions, estimates and judgments underlying those amounts, management has identified the Allowance for Credit Losses (ACL) as the accounting area that requires the most subjective or complex judgments, and as such could be the most subject to revision as new information becomes available.

The total allowance for credit losses represents management's estimate of credit losses inherent in the Bank's loan portfolio and unfunded loan commitments at the report date. The estimate is a composite of a variety of factors including experience, collateral value, and the general economy. The collection and ultimate recovery of the book value of the collateral, in most cases, is beyond our control.

For more information regarding the estimate and calculation used to establish the ACL, please see Note 1 to the consolidated financial statements provided herewith.

26

2025 in Review

The focus for 2025 was to improve profitability through the control of loan growth and improvement in the customer gathering of core deposits to fund loans. Cost control, balance sheet management and overall revenue enhancement were included. The Bank strove to reduce dependency on high-cost deposits and expand our contingent liability funding options. As the numbers show, we have been successful in all these areas and begin 2026 with a continuing focus on strong core deposit growth, moderate loan growth and controlling costs.

The largest contributor to better profitability was the increase in the net interest margin from 2.72% to 3.28%, a 56-basis point increase and net interest spread increasing 60 basis points in comparing year-end 2024 to year-end 2025. Loan growth at just under 6%, was funded by a decreased cash position by 44.6%, a 1.6% increase in deposits and a slight 1.3% decrease in investments. Most importantly, both sides of the balance sheet showed improved profitability. The asset yield improved from 5.17% for 2024 to 5.45% for 2025, a nice 28 basis point increase in a declining interest rate environment. The cost of interest-bearing liabilities decreased by 32 basis points for the year, 2024 at 3.12% and 2025 at 2.80%, respectively. In terms of dollars, net interest income increased $18.4 million year over year, easily surpassing the $4.5 million gain in 2024 over 2023.

The provision for credit losses related to loans increased by $1.65 million, predominately resultant from loan growth and, to a lesser extent, some weaker macro-economic data. Please refer to Note 4 for further analysis of both our loan portfolio and the associated allowance for credit loss.

The loan growth mentioned previously occurred mostly in the commercial and agricultural portfolios. F&M Commercial Banking Division had increased demand in the fourth quarter 2025 and overall solid growth for 2025. The commercial and the commercial real estate portfolios, combined, grew $84.0 million in outstandings year over year. Solid loan growth in the Commercial & Industrial sector was $17.9 million, or 6% in the last quarter of 2025 and $37.2 million for the year or 12%. We saw overall higher line of credit utilization as well as some new customers were added in the fourth quarter in the transportation sector. Lending rates and terms remained consistent with the previous quarter and an overall downward trend for 2025. Economic factors, inflation, and the impact on potential tariffs remained the largest concerns to commercial business in the F&M footprint in 2025. The commercial team continues to monitor the portfolio and borrowing bases closely for the impact from credit and inflationary pressures. Credit quality and past dues remained sound and collateral values and auction values are still holding consistent with previous quarters and 2024.

The largest single portfolio growth occurred in Agricultural, increasing 44% or $66.2 million in 2025 as compared to 2024. The Agricultural and Elevator portfolio saw increased usage in the 4th quarter of 2025, as our clients managed through the harvest season. Elevator line of credit usage increased from 29% at December 31, 2024 to 61% at December 31, 2025, and resulted in balances outstanding of $37.5 million at year-end 2025 compared to $14.1 million at year-end 2024. Throughout our market area grain farmers were affected by the late season drought, but overall yields were better than anticipated. Margins continue to be tight for grain farmers as commodity prices have remained lower due to ample supply. Crop insurance and government payments will provide support. Agricultural businesses have performed well, but the decline in net farm income has had the greatest impact on those in equipment sales resulting in higher Agricultural equipment dealer line utilization from additional usage from existing customers as well as new business with new customers. Seasonal demand of short-term borrowings was strong in last quarter of 2025 but moving forward is anticipated to be flat. Delinquencies continue to be low with positive performance within the Agricultural portfolio.

The Home Loan Division saw an increase to our production but predominantly in our HELOC balances. This growth was $21.7 million for the year or a 34% increase over 2024. We saw overall higher line of credit utilization, up from 40% on December 31, 2024, to 45% on December 31, 2025, as well as additional new customer growth. This is due to mortgage rates still being higher than what most borrowers have on their current mortgages thus making home equities the best option for borrowers in most cases. We did see a slight increase in construction loans which is a sign of communities looking to increase housing inventory. Fixed mortgage rates started declining in the 3rd quarter of 2025 which increased refinance opportunities. Limited inventory, while better than previous years, was still prevalent in most of the communities F&M Bank serves.

The aforementioned growth in the other portfolio sectors has reduced the Bank’s overall relative concentration in Commercial Real Estate (CRE) and Development, and our growth rate in non-owner-occupied CRE has decreased. The largest sector increases within CRE were hospitality and retail. The largest geographic increase with CRE was in the state of Michigan.

Overall, past due loans remain low, though increasing slightly, with some increase in Agriculture and Farmland portfolio. Non-accruals remain low, though increasing, with the larger increase in the Agriculture and Farmland portfolio. Special Mention and Substandard loans rose again in the fourth quarter and were up significantly for the year. While we have experienced migration to more criticized and classified assets, our adversely classified loans as a percentage of capital remain sound. We have also

27

experienced a migration to our less risky grades (2- and 3-grades) that increased $156 million in 2025 from 35% of the Commercial/Agricultural portfolio to 40%, which has resulted in a much lower concentration of baseline 4-grade loans. There was some further migration within the Criticized assets from Special Mention to Substandard in the fourth quarter, but we don’t expect to incur any losses at this time.

The Bank continues to see the benefit of originating higher yielding loans and having our longer duration loans amortize down. The Bank has much more floating-rate loans today than at this time last year and the concentration of longer-term, fixed-rate loans is decreasing.

A $1.5 million improvement occurred in noninterest income items for 2025 as compared 2024. Apart from net gain (loss) on sale of other assets owned and interchange income, all other line-item components experienced increased revenue over prior year. Items of note are the increase in cash surrender values in the Bank Owned Life Insurance due to the additional purchase of $18 million and the approximately $6.8 million surrender of policies. This improvement is expected to continue through 2026 with additional surrenders over the next 2 years. Loan servicing income and net gain on sale of loans increased reflecting the additional sale of loans both in the home loan portfolio and in the agricultural real estate partial sales. The Bank continues to earn servicing income as those managed portfolio balances continue to increase. Lastly, the additional revenue from our Treasury management team and the FM Investments division are evident in the other service charges and fees increase over 2024. The Bank also leased out a portion of our excess office space in Hicksville to medical providers. The Bank will continue to look for other opportunities to turn excess space at our offices into revenue opportunities.

In 2024, we focused on investing in our infrastructure and technology. These investments, along with a higher incentive expense (due to improved performance) for 2025, are much of the reason for the increase in noninterest expense of $8.1 million for 2025 as compared to 2024. The Bank also opened an additional office in the 3rd quarter of 2025 in Troy, Michigan. This office brings our total to 2 located in Michigan. Those offices manage over $514 million in loans and $64.6 million in deposits. ATM expense reports a significant increase of $923 thousand due to 2024 being lower from contract credits having been applied. It is in line with 2023 at $18 thousand lower than 2023. Data processing has the same experience and for the same reason as the ATM expense. 2025 is $2.24 million higher than 2024 though $540 thousand higher than 2023. The only noninterest expense that did not increase was in the FDIC assessments. This is a regulatory fee imposed by the FDIC. It fluctuates quarterly and the decrease reflects improved metrics at the Bank

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]

Read the full FY 2025 MD&A: /company/FMAO/mda/fy2025/
All MD&A years: /company/FMAO/mda/


## MD&A history

Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page.

- [FY 2024 MD&A](/company/FMAO/mda/fy2024/): filed 2025-02-26; accession 0000950170-25-027602 (https://www.sec.gov/Archives/edgar/data/792966/000095017025027602/fmao-20241231.htm)
- [FY 2023 MD&A](/company/FMAO/mda/fy2023/): filed 2024-02-27; accession 0000950170-24-021373 (https://www.sec.gov/Archives/edgar/data/792966/000095017024021373/fmao-20231231.htm)
- [FY 2022 MD&A](/company/FMAO/mda/fy2022/): filed 2023-02-24; accession 0000950170-23-004300 (https://www.sec.gov/Archives/edgar/data/792966/000095017023004300/fmao-20221231.htm)
- [FY 2021 MD&A](/company/FMAO/mda/fy2021/): filed 2022-02-22; accession 0001564590-22-005912 (https://www.sec.gov/Archives/edgar/data/792966/000156459022005912/fmao-10k_20211231.htm)




## Macro cross-references

Indicators mapped to this company's SIC classification (industry 6035 Savings Institution, Federally Chartered) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim.

- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity

Macro-to-micro threads including this sector: [Interest rates & the Fed](/thread/interest-rates-fed/), [Money & trade](/thread/money-trade/), [Consumer & credit](/thread/consumer-credit/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/).

All macro indicators: /indicators/


## For LLMs & downloads

Markdown twin: /company/FMAO.md · JSON record: /company/FMAO.json · verified financials: /company/FMAO/financials.json / /company/FMAO/financials.csv · machine TOC for the whole site: /llms.txt