Farmers & Merchants Bancshares Reports Q1 2025 Financial Results with Decrease in Net Income

Farmers & Merchants Bancshares, Inc. reported its financial results for the first quarter of 2025, revealing a net income of $1.165 million, a slight decrease from $1.220 million in the same period last year. Total interest income increased to $9.886 million, up from $9.066 million, primarily driven by a rise in loan interest income, which grew to $8.366 million from $6.882 million. However, total interest expense also rose to $4.391 million from $3.892 million, leading to a net interest income of $5.495 million, compared to $5.174 million in the prior year. The company’s earnings per share decreased to $0.37 from $0.39 year-over-year.

In terms of balance sheet performance, total assets decreased by $27.1 million, or 3.2%, to $817.6 million as of March 31, 2025, down from $844.6 million at the end of 2024. This decline was largely attributed to a $42 million drop in cash and cash equivalents, partially offset by a $17.1 million increase in loans. Total liabilities also fell by $29.4 million, or 3.7%, primarily due to a $23.2 million decrease in deposits. Conversely, stockholders' equity rose by $2.3 million, or 4.0%, to $58.6 million, bolstered by retained earnings and a reduction in accumulated other comprehensive loss.

The company’s loan portfolio showed growth, with total loans increasing by $17.1 million, or 2.9%, to $600.0 million. This growth was driven by a $16.9 million increase in commercial real estate loans and a $5.5 million rise in commercial loans, despite declines in residential and construction loans. The allowance for credit losses remained stable at $4.3 million, representing 0.71% of the loan portfolio, slightly down from 0.72% at the end of 2024. The company continues to implement policies to manage credit risk effectively, including stringent underwriting standards and ongoing monitoring of asset quality.

Looking ahead, Farmers & Merchants Bancshares, Inc. anticipates continued challenges in the competitive banking environment, particularly regarding deposit retention amid rising interest rates. The company is focused on leveraging its recent hiring of new lending staff to drive loan growth and improve profitability. Management remains optimistic about maintaining adequate liquidity and capital levels, with the bank categorized as well-capitalized under regulatory standards. The outlook for the remainder of 2025 will depend on economic conditions, interest rate movements, and the company's ability to adapt to market changes.