Farmers and Merchants Bancshares (OTCPK:FMBN) is the holding company for Farmers and Merchants Bank and Trust, a small community bank (market capitalization of roughly $8.2 million) serving Burlington, Iowa, through two full service and two limited service branches.
Farmers and Merchants underperforms on virtually every banking operating measure and is thus, on the surface, unappealing from an investment standpoint. The company’s efficiency ratio is exceptionally high at approximately 90% which results in a return on equity in the very low single digits (and return on assets correspondingly low) which is well below that