Farmers & Merchants Bancorp reported a net income of $23.1 million for the second quarter of 2025, reflecting a 5.9% increase from $21.8 million in the same period last year. For the first half of 2025, net income reached $46.1 million, up 3.5% from $44.5 million in the prior year. The increase in net income was primarily driven by a rise in net interest income, which grew by 6.1% to $53.9 million for the quarter and by 4.4% to $107.0 million for the six months ended June 30, 2025. The bank's net interest margin improved to 4.07% for the second quarter, compared to 3.91% a year earlier, aided by a decrease in interest expense on deposits.
Total assets for Farmers & Merchants Bancorp increased to $5.5 billion as of June 30, 2025, up from $5.4 billion at the end of 2024. The growth in assets was supported by a rise in total deposits, which increased by $61.2 million, or 1.3%, to $4.8 billion. Non-interest bearing deposits accounted for 32.5% of total deposits, while interest-bearing deposits remained stable. The bank's loan portfolio, however, saw a decrease of $54.4 million, or 1.5%, to $3.6 billion, attributed to lower loan production.
In terms of operational metrics, the bank's provision for credit losses was $1.4 million for the second quarter, compared to no provision in the same quarter of 2024. The allowance for credit losses on loans and leases stood at $76.2 million, representing 2.09% of total loans. The bank reported no non-accrual loans as of June 30, 2025, a decrease from $929,000 at the end of 2024. Other real estate owned (OREO) increased to $1.2 million, up from $873,000 at the end of the previous year.
Strategically, Farmers & Merchants Bancorp has focused on enhancing its capital position, with total shareholders' equity rising to $618.5 million, a 7.9% increase from $573.1 million at the end of 2024. The bank's capital ratios remain strong, with a common equity tier 1 capital ratio of 13.88% as of June 30, 2025, exceeding regulatory requirements. The bank also initiated a share repurchase program, authorizing up to $55 million in stock buybacks, with $14.7 million remaining under the plan as of June 30, 2025.
Looking ahead, Farmers & Merchants Bancorp anticipates continued focus on managing interest rate risk and maintaining liquidity. The bank's asset-liability management strategies are designed to mitigate the impact of fluctuating interest rates on net interest income. Management remains optimistic about leveraging its strong capital position and diversified deposit base to support future growth and navigate potential economic challenges.
About FARMERS & MERCHANTS BANCORP
Farmers & Merchants Bancorp is a bank holding company that operates through its wholly-owned subsidiary, Farmers & Merchants Bank of Central California. It provides a range of banking services, including deposit products, commercial and consumer loans, and investment services, primarily serving small to medium-sized businesses and local consumers in California's Central Valley and Bay Area markets. The company emphasizes personalized service, relationship banking, and community-focused financial solutions.
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