A New Peak in Profitability for Farmers & Merchants Bancorp

Farmers & Merchants Bancorp has concluded its most profitable fiscal year on record, reinforcing its prestigious standing as a "Dividend King" through exceptional earnings and an unparalleled dividend history. The financial institution's latest results highlight significant growth across key performance metrics.

The company's annual net income reached a historic high of $93.6 million. This performance was significantly bolstered by a 6.04% increase in net interest income, which climbed to $219.2 million. A key driver was the improvement in the net interest margin, which expanded to 4.15% from 4.05% in the prior year.

This annual profit marks a substantial leap when viewed against the company's longer-term trajectory. For context, net earnings stood at $28.4 million in 2017. The most recent earnings per share figure was reported at $133.96.

Operational Strength and Credit Growth

A detailed look at the fourth quarter reveals robust activity in the core lending business. The bank's loan portfolio grew by $44.7 million compared to the preceding quarter. Simultaneously, the company enhanced its funding efficiency. The cost of deposits was reduced, falling to an average of 1.22% from 1.35%. This strategic management, combined with a yield on earning assets that rose to 3.44%, supported the healthy interest margin.

Should investors sell immediately? Or is it worth buying Farmers, Merchants?

The bank's foundational strength is further evidenced by its balance sheet. The tangible book value per share saw considerable growth, increasing by over 13% within twelve months to reach $907.24 by year-end. With a net margin approaching 39%, the institution demonstrates an operational profitability level that exceeds industry norms.

A Legacy of Shareholder Returns

For investors, the dividend policy remains a cornerstone of the bank's appeal. Farmers & Merchants has now distributed dividends without interruption for nine decades. More impressively, it has raised its dividend payout for 60 consecutive years, securing the 17th position on the list of U.S. public companies with the longest such growth streaks.

Recent market activity included an insider transaction that sheds light on the current valuation. On February 4, a member of the board of directors returned 102 shares to meet tax obligations associated with a stock plan. This transaction was executed at a price of $1,160 per share.

Looking ahead to 2026, management's stated focus is on preserving high profitability. The strategy centers on implementing further efficiency gains and maintaining disciplined lending practices amidst an evolving market environment.