Exhibit 99.1

 

 

 
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
October 23, 2018    
     
Farmers and Merchants Bancshares, Inc.  Contact: Mr. James R. Bosley, Jr.
4510 Lower Beckleysville Rd, Suite H    President
Hampstead, Maryland 21074     (410) 374-1510, ext.104

 

FARMERS AND MERCHANTS BANCSHARES, INC. REPORTS RECORD EARNINGS FOR NINE MONTHS AND QUARTER ENDED SEPTEMBER 30, 2018

 

HAMPSTEAD, MARYLAND (October 23, 2018) – Farmers and Merchants Bancshares, Inc. (the “Company”), the parent of Farmers and Merchants Bank (the “Bank”), announced that net income for the nine months ended September 30, 2018 was $3,575,871, or $2.14 per common share, compared to $3,132,902, or $1.89 per common share, for the same period in 2017. This is the highest net income for the first nine months of any year in the Company’s history. The Company’s return on average equity during the nine months ended September 30, 2018 was 11.02% compared to 10.29% during the same period in 2017. The Company’s return on average assets was 1.16% for the first nine months of 2018 compared to 1.06% for the same period of 2017.

 

Net interest income for the nine months ended September 30, 2018 was $298,497 higher than for the same period last year due to a $21 million increase in average interest earning assets, offset by a decline in the taxable equivalent net yield on interest earning assets to 3.84% for the first nine months of 2018 from 3.95% for the same period of 2017. The net yield continues to decline as deposit rates have risen more quickly than yields on loans and investments. The provision for loan losses was $325,000 less than for the same period last year due primarily to the recovery of a 2017 loan charge-off. Noninterest income decreased by $233,742 primarily as a result of $153,738 lower gain on the sale of SBA loans, a decrease of $28,714 in service charges, and a $55,350 write-down of a real estate owned property. Noninterest expense was $277,274 higher in the nine months ended September 30, 2018 than in the same period last year due to usual salary increases and higher employee benefit costs. Income taxes declined by $330,488 for the nine months ended September 30, 2018 when compared to the same period of 2017 due to the lower federal tax rate as a result of the Tax Cuts and Jobs Act enacted in December 2017.

 

Net income for the three months ended September 30, 2018 was a quarterly record of $1,308,688, or $0.78 per common share, compared to $1,014,456, or $0.69 per common share, for the same period in 2017.

 

Total assets of $412 million at September 30, 2018 increased from $403 million at December 31, 2017. Loans increased to $341 million at September 30, 2018 compared to $333 million at December 31, 2017. Deposits increased to $350 million at September 30, 2018 compared to $320 million at December 31, 2017. The book value of the Company’s common stock was $26.59 per share at September 30, 2018, compared to $25.06 per share at December 31, 2017.

 

James R. Bosley, Jr., President and CEO, commented “We are pleased to announce record net income for the quarter and year to date, despite rising funding costs and downward pressure on our net interest margin.”

 

 

 

 

About the Company

 

Farmers and Merchants Bancshares, Inc. is a financial holding company and the parent of Farmers and Merchants Bank. Farmers and Merchants Bank was chartered in Maryland in 1919, and is currently celebrating over 98 years of service to the community. The Bank serves the deposit and financing needs of both consumers and businesses in Carroll and Baltimore Counties along the Route 30 and Route 795 corridors from Owings Mills, Maryland to the Pennsylvania State line. The main office is located in Upperco, Maryland, with seven additional branches in Owings Mills, Hampstead, Greenmount, Reisterstown, and Westminster. Certain broker-dealers make a market in the common stock of Farmers and Merchants Bancshares, Inc., and trades are reported through NASDAQ’s Over-The-Counter Bulletin Board under the symbol “FMFG.OB.

 

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

Consolidated Balance Sheets

 

   

September 30,

   

December 31,

 
   

2018

   

2017

 
   

(Unaudited)

         

Assets

 
                 

Cash and due from banks

  $ 9,773,804     $ 6,235,186  

Federal funds sold and other interest-bearing deposits

    2,844,890       1,002,199  

Cash and cash equivalents

    12,618,694       7,237,385  

Certificates of deposit in other banks

    342,000       100,000  

Securities available for sale

    23,409,440       27,929,510  

Securities held to maturity

    18,119,599       18,204,182  

Equity security at fair value

    496,916       503,881  

Federal Home Loan Bank stock, at cost

    575,800       1,063,600  

Mortgage loans held for sale

    150,000       327,700  

Loans, less allowance for loan losses of $2,672,584 and $2,458,911

    341,327,272       332,533,706  

Premises and equipment

    5,137,072       5,206,271  

Accrued interest receivable

    968,951       1,020,256  

Deferred income taxes

    1,145,214       998,032  

Other real estate owned

    210,150       265,500  

Bank owned life insurance

    7,012,864       6,891,590  

Other assets

    670,392       622,856  
    $ 412,184,364     $ 402,904,469  
                 

Liabilities and Stockholders' Equity

 
                 

Deposits

               

Noninterest-bearing

  $ 59,561,564     $ 64,403,133  

Interest-bearing

    289,952,691       255,393,291  

Total deposits

    349,514,255       319,796,424  

Securities sold under repurchase agreements

    12,163,423       21,768,507  

Federal Home Loan Bank of Atlanta advances

    3,000,000       17,000,000  

Accrued interest payable

    296,868       180,620  

Other liabilities

    2,672,864       2,359,986  
      367,647,410       361,105,537  

Stockholders' equity

               

Common stock, par value $.01 per share, authorized 5,000,000 shares; issued and outstanding 1,675,200 shares in 2018 and 1,667,813 shares in 2017

    16,752       16,678  

Additional paid-in capital

    27,086,751       26,869,796  

Retained earnings

    18,204,888       15,306,625  

Accumulated other comprehensive income

    (771,437 )     (394,167 )
      44,536,954       41,798,932  
    $ 412,184,364     $ 402,904,469  

 

 

 

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

   

Three Months Ended September 30

   

Nine Months Ended September 30

 
   

2018

   

2017

   

2018

   

2017

 
                                 

Interest income

                               

Loans, including fees

  $ 4,189,626     $ 3,863,788     $ 12,171,765     $ 11,245,018  

Investment securities - taxable

    145,791       189,096       450,649       558,648  

Investment securities - tax exempt

    142,493       152,519       428,055       454,626  

Federal funds sold and other interest earning assets

    47,280       26,614       117,973       72,097  

Total interest income

    4,525,190       4,232,017       13,168,442       12,330,389  
                                 

Interest expense

                               

Deposits

    604,697       357,200       1,543,023       1,000,884  

Securities sold under repurchase agreements

    42,841       37,208       112,242       121,495  

Federal Home Loan Bank advances and other borrowings

    16,480       48,397       125,427       118,757  

Total interest expense

    664,018       442,805       1,780,692       1,241,136  

Net interest income

    3,861,172       3,789,212       11,387,750       11,089,253  
                                 

Provision for loan losses

    (100,000 )     225,000       25,000       350,000  
                                 

Net interest income after provision for loan losses

    3,961,172       3,564,212       11,362,750       10,739,253  
                                 

Noninterest income

                               

Service charges on deposit accounts

    160,665       172,107       496,393       525,107  

Mortgage banking income

    105,144       76,916       219,805       185,649  

Bank owned life insurance income

    40,880       43,096       121,274       129,340  

Net unrealized (loss) gain on equity securities

    (3,869 )     -       (15,348 )     -  

Gain (loss) on sale and write down of other real estate owned

    (55,350 )     -       (55,350 )     -  

Gain on sale of SBA loans

    3,317       -       63,825       217,563  

Other fees and commissions

    21,634       20,873       73,433       80,115  

Total noninterest income

    272,421       312,992       904,032       1,137,774  
                                 

Noninterest expense

                               

Salaries

    1,344,759       1,278,741       3,892,971       3,670,613  

Employee benefits

    328,258       317,231       1,018,280       996,398  

Occupancy

    168,759       152,157       535,448       503,578  

Furniture and equipment

    148,945       156,700       475,953       491,356  

Other

    606,346       594,879       1,932,585       1,916,018  

Total noninterest expense

    2,597,067       2,499,708       7,855,237       7,577,963  
                                 

Income before income taxes

    1,636,526       1,377,496       4,411,545       4,299,064  

Income taxes

    327,838       363,040       835,674       1,166,162  

Net income

  $ 1,308,688     $ 1,014,456     $ 3,575,871     $ 3,132,902  
                                 

Earnings per share - basic and diluted

  $ 0.78     $ 0.69     $ 2.14     $ 1.89  

 

 

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