Farmers and Merchants Bancshares, Inc. operates as a bank holding company primarily serving as the parent entity of Farmers and Merchants Bank and holding an investment in First Community Bankers Insurance Co., LLC. The company functions within the banking and financial services industry, providing traditional banking products and services through its subsidiary bank while also maintaining a protected cell captive insurance subsidiary for risk management and tax efficiency purposes. Its core activities center on community banking operations and related financial services in Maryland.
The company generates revenue primarily through interest income from loans and investments, service charges on deposit accounts, and fees from various banking services offered by its subsidiary bank. Additional revenue streams include premium income and investment returns from the Insurance Subsidiary, which functions as a protected cell captive insurance entity. The Bank’s lending activities encompass residential mortgages, commercial loans, consumer installment loans, and agricultural financing, while deposit services include checking, savings, money market accounts, and certificates of deposit.
The company operates through the following segments: Banking Activities, Investment Activities, and Insurance Activities.
- Banking Activities: This segment involves the general commercial and retail banking business conducted by Farmers and Merchants Bank, which has been operating since 1919. The Bank provides a full range of deposit services including checking accounts, savings accounts, money market accounts, certificates of deposit, and individual retirement accounts. It also offers remote check deposits and repurchase agreements as part of its deposit product suite.
- Banking Activities: On the lending side, the Bank grants credit for residential mortgages (including FHA and VA loans), construction loans, home equity lines, personal installment loans, and other consumer financing. It also engages in financing commerce and industry through commercial mortgages, land acquisition and development loans, lines of credit, accounts receivable financing, term loans for fixed asset purchases, and SBA and USDA-guaranteed loans. Commercial depositors benefit from checking accounts, remote deposit services, sweep accounts, money market accounts, savings accounts, and certificates of deposit.
- Banking Activities: The Bank has strategic alliances enabling credit card issuance to retail customers and merchant services for commercial customers to accept credit and debit cards. It offers 24-hour online banking, mobile banking, debit cards, and access to over 55,000 surcharge-free ATMs through the Allpoint network. Drive-through and walk-up ATMs are available at multiple branch locations, with drive-thru windows at several branches and a satellite branch at Carroll Lutheran Village.
- Investment Activities: This segment manages the Bank’s portfolio of debt securities to provide liquidity and income. As of December 31, 2025, the investment portfolio totaled $139.8 million, representing approximately 16% of total assets. The portfolio is invested primarily in mortgage-backed securities and municipal bonds.
- Investment Activities: A key objective of the investment portfolio is to balance the Bank’s asset mix between investments and loans consistent with its liability structure and to assist in managing interest rate risk. The investments augment the Bank’s capital position, providing liquidity to meet fluctuations in credit demand and deposit levels.
- Investment Activities: The portfolio also provides collateral for pledging against public funds and repurchase agreements, offers opportunities to minimize income tax liability, and is designed to generate income for the Bank. Only securities meeting conservative investment criteria are purchased to align with the Bank’s risk management policies.
- Insurance Activities: This segment consists of the Company’s investment in First Community Bankers Insurance Co., LLC, specifically the “Series Protected Cell FCB-4,” a protected cell of a Tennessee series limited liability company. The Insurance Subsidiary was formed on November 9, 2016, to better manage risk programs, provide insurance efficiencies, and add operating income.
- Insurance Activities: From its formation through November 7, 2022, the Insurance Subsidiary reinsured certain risks of the Bank and other non-affiliated entities, earning premiums that could be retained as earnings after claim deadlines passed. As the sole owner, the Company may terminate the subsidiary’s participation in reinsurance arrangements at any time.
- Insurance Activities: The Company chose not to renew the most recent policy when it expired on November 6, 2022. As of December 31, 2025, the Insurance Subsidiary’s only activity was paying claims for events that occurred prior to November 7, 2022. The subsidiary remains licensed and supervised by the Tennessee Department of Commerce and Insurance and must maintain at least $25,000 in unimpaired paid-in capital and surplus.
Farmers and Merchants Bancshares, Inc. operates in a highly competitive banking environment within its market area, competing with commercial banks, savings and loan associations, credit unions, consumer finance companies, and other financial institutions. The Bank competes based on interest rates, personalized service, quality and range of financial services, convenience of office locations and hours, and loan origination fees. The company relies on local promotional activities, personal relationships established by staff, and specialized services tailored to customer needs to maintain its competitive position.
The Bank serves approximately 18,800 deposit accounts as of December 31, 2025, primarily consisting of individual consumers, small to medium-sized businesses, and agricultural customers within its market area. Its general market area spans Carroll County and Baltimore County, Maryland, including communities such as Reisterstown, Upperco, Hampstead, Manchester, Eldersburg, Westminster, Woodbine, New Windsor, Sparks, Hereford, and Parkton. The Bank also maintains a loan production office in Towson, Maryland, to serve commercial lending needs in that region.