Merchants & Marine Bancorp, Inc. Announces Third Quarter Financial Results

Merchants & Marine Bancorp, Inc. (OTCQX:MNMB), the parent company of Merchants & Marine Bank, reported net income in the third quarter of $1.42 million, or $1.07 per share, compared with earnings of $1.93 million, or $1.45 per share, in the same period of the prior year. Gross income in the third quarter of 2025 totaled $14.88 million, an increase of 14.17% from the same quarter in the prior year. Balance sheet footings increased by 30.55% to $947.47 million during the 12 months ended September 30, 2025. Net loans grew to $466.73 million at September 30, 2025 from $449.34 million at the end of the same period in the prior year, an increase of 3.87%. Total deposits increased 3.69% from the same period in the prior year, from $582.31 million to $603.81 million. Balance sheet growth, and the significant increase in interest expense related to borrowings resulted from a temporary balance sheet strategy employed in the second quarter. This strategy consisted of match-funding $200 million in variable rate Ginnie Mae guaranteed Home Equity Conversion Mortgage (HECM) mortgage-backed securities with monthly-repricing borrowings from the Federal Home Loan Bank of Dallas. This allowed the company to garner approximately an 80 basis points spread with virtually zero interest rate risk and no credit risk. Management intends to liquidate the position upon its merger with Farmers-Merchants Bank and Trust Company, which was announced earlier this month.

Selected financial highlights:

• Net loans grew by $17.39 million, or 3.87%, from September 30, 2024. Loan growth was diversified across four brands: Merchants & Marine Bank, Mississippi River Bank, the retained portions of SBA loans within Voyager Lending, and portfolio mortgage products at Canvas Mortgage.
• Total interest income for the first nine months of the year totaled $33.83 million, compared to $29.66 million during the same period in 2024. The 7.50% increase is a result of increased interest on securities as a part of the previously mentioned balance sheet strategy, as well as continued improvement in overall loan yields through repricing of maturing loans.
• The company's cost of funds totaled 1.13% during the third quarter, significantly below industry averages. While cost of funds increased from 66 basis points in the same period in the prior year, this increase is almost exclusively linked to the variable rate Federal Home Loan Bank borrowings that are funding the previously mentioned balance sheet strategy. The company's cost of interest bearing deposits remains exceptionally low, with these costs totaling just 46 basis points through the first nine months of the year.
• Credit quality remained strong at the end of the third quarter. The ratio of loans past due 30-89 days totaled 0.77% of total loans at the end of the third quarter, compared to 1.09% in the same period in the prior year. The ratio of non-accrual loans was 1.59%, which represents an increase from 1.09% of total loans in the same period in the prior year. The increase in nonaccrual loans is linked to the company's proactive resolution of a small number of problem loans, and not indicative of broader declines in portfolio quality. The Company continues to closely monitor credit quality in light of the continued economic uncertainty caused by, among other factors, the ongoing U.S. government shutdown, the prolonged elevated interest rate environment, continued uncertainty regarding U.S. trade and tariff policy and the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas. Accordingly, additional provisions for credit losses may be necessary in future periods.
• Accumulated Other Comprehensive Income (AOCI) mark-to-market losses in the securities portfolio increased to ($7.77 million) at the end of the quarter from ($6.62 million) at the end of the same period in 2024. These losses represent just 2.30% and 4.24% of the total securities portfolio for the respective reporting periods, and remain well below peer averages.

"The company's core financial performance continued to strengthen throughout the first three quarters of 2025. Our low-cost deposit base has remained strong, and steady improvements in loan yields have further expanded our net interest margin," remarked Casey Hill, the company's Chief Financial Officer. Hill continued, "Our team has worked diligently to manage overhead expenses throughout 2025 as we prepared for additional growth. Increases in operational expenses throughout 2025 have been related to preparations for growth resulting from our anticipated merger with Farmers-Merchants Bank & Trust, including personnel and technology. We very much look forward to the addition of FM Bank's balance sheet and earnings, and we believe these will quickly right-size our efficiency metrics which have been somewhat skewed by our preparations."

In the second quarter of the year, the company employed a carefully constructed balance sheet strategy to supplement earnings without taking on additional interest rate of credit risk, and without requiring additional capital. This was done by purchasing $200 million in floating rate Ginnie Mae guaranteed HECM Mortgage-Backed Securities. Those securities are variable rate and reprice at the beginning of each month. These securities were match funded with an equivalent amount on its Federal Home Loan Bank advances, which are refunded monthly as the securities reprice. Management believes this structure virtually eliminates any interest rate risk, while the explicit payment guarantee of Ginnie Mae eliminates any credit risk. The net yield on the strategy is roughly 80 basis points.

"While we worked through negotiations on the forthcoming merger, management deemed it prudent to maintain strong operational readiness to position the combined company for compliance with the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) that is triggered by surpassing $1 billion in assets. The pending merger with Farmers & Merchants Bank & Trust will increase our assets well beyond that mark," remarked Hill. He continued, "While reducing earnings is never ideal, we've seen too many times that FDICIA compliance hobbles companies and eliminates their continued growth activity. Given our long-term strategy, we decided it would be a much more advantageous strategy to spend wisely on key people and initiatives to ensure that we weren't disrupted in that way. We are very confident that the earnings and efficiency of the combined entity will far overshadow the temporary dip in earnings."

"Our Family of Brand's strong performance through the first nine months of 2025 gives us much to be thankful for," remarked Clayton Legear, the company's Chairman & Chief Executive Officer. Legear continued, "Solidifying our partnership with Farmers-Merchants Bank & Trust Company will allow us to welcome another best-in-class community bank into our Family of Brands. Being able to embark on this partnership from a position of operational and technological strength – thanks to the investments that have been made and maintained thus far – will set us up for even greater success, together. We look forward to the additional strength in earnings, diversification, and scale that our partnership with FM Bank will bring to our combined company. Their place as the community bank of choice in Acadiana is a perfect fit for our family of brands, and we look forward to continuing their legacy of service for generations to come."

Merchants & Marine Bancorp, Inc. (OTCQX:MNMB) is the parent company of Merchants & Marine Bank, a Mississippi chartered community bank serving the Gulf South region. Originally founded in 1899, Merchants & Marine Bank was reborn in 1932 during the middle of the worst economic disaster in the history of the United States: The Great Depression. More than eight decades later, Merchants & Marine Bank has grown from $25,000 to nearly $1 billion in assets as of September 30, 2025. The Bank offers banking services to customers in Southern Mississippi and Coastal Alabama under its legacy Merchants & Marine Bank brand, and in Southern Louisiana through its Mississippi River Bank division. It offers mortgage financing through its Canvas Mortgage division, medical cannabis banking through its CannaFirst Financial division, and access to government-guaranteed credit through Voyager Lending. It provides bank operational, risk, and support services through its Community of Resources bank services division. For more information on Merchants & Marine Bancorp, Inc., visit https://mandmbank.com/investor-relations

Cautionary Statement Regarding Forward-Looking Statements

This press release contains, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding certain of the Company's goals and expectations with respect to future events that are subject to various risks and uncertainties, and statements preceded by, followed by, or that include the words "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursuant," "target," "continue," and similar expressions. These statements are based upon the current belief and expectations of the Company's management team and are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company's control). Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations include, but are not limited to: (i) the impact on us or our customers of a decline in general economic conditions and any regulatory responses thereto; (ii) slower economic growth rates or potential recession in the United States and our market areas; (iii) the impacts related to or resulting from uncertainty in the banking industry as a whole; (iv) increased competition for deposits among traditional and nontraditional financial services companies, and related changes in deposit customer behavior; (v) the impact of changes in market interest rates, whether due to a continuation of the elevated interest rate environment or further reductions in interest rates and a resulting decline in net interest income; (vi) the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas; (vii) the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Federal Reserve; (viii) changes in unemployment rates in the United States and our market areas; (ix) adverse changes in customer spending, borrowing and savings habits; (x) declines in commercial real estate values and prices; (xi) a deterioration of the credit rating for U.S. long-term sovereign debt or the impact of uncertain or changing political conditions, including federal government shutdowns and uncertainty regarding United States fiscal debt, deficit and budget matters; (xii) cyber incidents or other failures, disruptions or breaches of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks; (xiii) severe weather, natural disasters, acts of war or terrorism, geopolitical instability or other external events, including as a result of in the policies of the current U.S. presidential administration or Congress; (xiv) the impact of tariffs, sanctions and other trade policies of the U.S. and its global trading counterparts and the resulting impact on the Company and its customers; (xv) the maintenance and development of well-established and valued client relationships and referral source relationships; (xvi) acquisition or loss of key production personnel; (xvii) changes in tax laws; (xviii) the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learnings; (xix) potential costs related to the impacts of climate change; (xx) current or future litigation, regulatory examinations or other legal and/or regulatory actions; (xxi) risks related to the Company's acquisitions generally, including disruption to current plans and operations; (xxiii) our ability to recognize the expected benefits and synergies of our completed acquisitions; and (xxiv) our ability to successfully complete the conversion of the core data processing systems of acquired banks into the core data processing system of the Bank. These forward-looking statements are based on current information and/or management's good faith belief as to future events. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. The inclusion of this forward-looking information should not be construed as a representation by the Company or any person that the future events, plans or expectations contemplated by the Company will be achieved. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. The forward-looking statements are made as of the date of this press release. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. All forward-looking statements, express or implied, included in the press release are qualified in their entirety by this cautionary statement.

Available Information

The Company maintains an Internet web site at www.mandmbank.com/investor-relations. The Company makes available, free of charge, on its web site the Company's annual reports, quarterly earnings reports, and other press releases. In addition, the OTC Markets Group maintains an Internet site that contains reports, proxy and information statements, and other information regarding the Company (at www.otcmarkets.com/stock/MNMB/overview).

The Company routinely posts important information for investors on its web site (under www.mandmbank.com and, more specifically, under the Investor Relations tab at www.mandmbank.com/investor-relations). The Company intends to use its web site as a means of disclosing material non-public information and for complying with its disclosure obligations under the OTC Markets Group OTCQX Rules for U.S. Banks. Accordingly, investors should monitor the Company's web site, in addition to following the Company's press releases, OTC filings, public conference calls, presentations and webcasts.

The information contained on, or that may be accessed through, the Company's web site is not incorporated by reference into, and is not a part of, this press release.

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Casey Hill, CFO

Merchants & Marine Bancorp, Inc.

casey.hill@mandmbank.com

(228) 934-1307