, ext. 1104 FARMERS AND MERCHANTS BANCSHARES, INC. REPORTS EARNINGS OF $3.7 MILLION OR $1.14 PER SHARE FOR THE SIX MONTHS ENDED JUNE 30, 2026 HAMPSTEAD,

FARMERS AND MERCHANTS BANCSHARES, INC. REPORTS EARNINGS OF $3.7 MILLION OR $1.14 PER SHARE FOR THE SIX MONTHS ENDED JUNE 30, 2026 HAMPSTEAD, MARYLAND (July 23, 2026) – Farmers and Merchants Bancshares, Inc. (the “Company”), the parent company of Farmers and Merchants Bank (the “Bank” and, together with the Company, “we”, “us” and “our”), announced that net income for the six months ended June 30, 2026 was $3.7 million, or $1.14 per common share (basic and diluted) compared to $2.4 million, or $0.74 per common share (basic and diluted), for the same period in 2025. The Company’s annualized return on average assets during the six months ended June 30, 2026 was 0.87% compared to 0.58% for the same period in 2025. The Company’s annualized return on average equity during the six months ended June 30, 2026 was 11.23% compared to 8.18% for the same period in 2025.

Net income for the three months ended June 30, 2026 was $1.9 million, or $0.58 per common share (basic and diluted) compared to $1.2 million, or $0.38 per common share (basic and diluted), for the second quarter of 2025. The Company’s annualized return on average assets during the three months ended June 30, 2026 was 0.88% compared to 0.58% for the same period in 2025. The Company’s annualized return on average equity during the three months ended June 30, 2026 was 11.28% compared to 8.15% for the same period in 2025.          

Net interest income for the six months ended June 30, 2026 was $2.1 million higher when compared to the same period in 2025 due to a widening net yield on interest-earning assets of 3.27% for the six months ended June 30, 2026 compared to 2.92% for the same period in 2025. The yield on earning assets increased to 5.35% for the six months ended June 30, 2026, compared to 5.11% for the same period in 2025. The cost of interest bearing liabilities decreased to 2.57% for the six months ended June 30, 2026, down from 2.67% for the same period in 2025. Average interest earning assets were $831.8 million for the six months ended June 30, 2026 compared to $793.5 million for the same period in 2025. Gross interest income increased by $2.0 million to $22.2 million for the six months ended June 30, 2026, up from $20.2 million for the same period in 2025. Average interest bearing liabilities increased by $19.1 million to $669.8 million for the six months ended June 30, 2026 from $650.7 million for the same period in 2025. Total interest expense decreased slightly to $8.6 million for the six months ended June 30, 2026 compared to $8.7 million for the same period in 2025.

The Company did not record a provision for credit losses for the six months ended June 30, 2026. There was a $268 thousand provision recorded for the six months ended June 30, 2025 which was related to a write down of one loan that was ultimately foreclosed upon.

Noninterest income decreased by $15 thousand for the six months ended June 30, 2026 when compared to the same period in 2025. The decrease was due to several factors, including the non-recurrence of a gain on the settlement of a fair value hedge of $94 thousand in 2025, an $11 thousand decrease in service charges on deposit accounts, a $9 thousand decrease in bank owned life insurance income, and a $15 thousand decrease in the fair value adjustment of an equity security. These were offset by a $54 thousand increase in mortgage banking revenue and a $60 thousand increase in other fees and commissions. Noninterest expense was $306 thousand higher for the six months ended June 30, 2026 when compared to the same period in 2025, due primarily to a $391 thousand increase in salaries and benefits resulting from new staffing additions. Also contributing to the increase was a $126 thousand combined increase in occupancy and furniture and equipment costs. These increases were offset in part by year over year decreases in ATM and debit card expenses of $20 thousand, FDIC assessments of $134 thousand due to lower FDIC assessment rates, professional services of $47 thousand, advertising costs of $24 thousand, and other real estate owned expenses of $21 thousand.

Total assets increased to $874.2 million at June 30, 2026 from $872.0 million at December 31, 2025. Loans, net of the allowance for credit losses, increased to $636.5 million at June 30, 2026 from $633.1 million at December 31, 2025. Investments in debt securities decreased to $130.0 million at June 30, 2026 from $139.8 million at December 31, 2025. Deposits increased to $725.1 million at June 30, 2026 from $720.5 million at December 31, 2025. Total borrowings decreased by $4.7 million to $74.3 million as of June 30, 2026, down from $79.0 million at December 31, 2025. The decrease was primarily due to the Company repaying $5.0 million in Federal Home Loan Bank advances.

The book value of the Company’s common stock increased to $20.72 per share at June 30, 2026 from $20.02 per share at December 31, 2025. Book value per share at June 30, 2026 is reflective of the $12.9 million unrealized loss, net of income taxes, on the Bank’s available for sale (“AFS”) securities portfolio as a result of the rise in interest rates since the time of purchase. Changes in the market value of the AFS securities portfolio, net of income taxes, are reflected in the Company’s equity, but are not included in the income statement. The Company’s tangible equity was $60.6 million at June 30, 2026 compared to $57.6 million at December 31, 2025.

Gary A. Harris, President and CEO, commented “Our second quarter results reflect the continued momentum we have built across the organization. Net income for the first six months of 2026 increased 57% compared to the same period in 2025, demonstrating the strength of our core banking operations and the effectiveness of our growth strategy. As we continue investing in talent, technology, and customer experience, we remain confident in our ability to generate sustainable earnings growth and position the Bank for long-term success.”

About the Company

The Company is the financial holding company for Farmers and Merchants Bank, a Maryland-chartered community bank headquartered in Hampstead, Maryland. Founded in 1919, the Bank has served the deposit, lending, and financial needs of consumers and businesses across Carroll and Baltimore Counties for more than a century. The Bank operates eight locations along Routes 30, 795, 140, 26, and 45 corridors, including offices in Hampstead, Upperco, Owings Mills, Reisterstown, Westminster, Eldersburg, Greenmount, and Towson. Certain broker-dealers make a market in the common stock of Farmers and Merchants Bancshares, Inc., and trades are reported through the OTCID Basic Market under the symbol “FMFG”. For more information, visit fmb1919.bank.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “will,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These projections involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. For a discussion of these risks and uncertainties, see the section of the periodic reports filed by Farmers and Merchants Bancshares, Inc. with the Securities and Exchange Commission entitled “Risk Factors”.

 Farmers and Merchants Bancshares, Inc. and Subsidiaries 

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