Exhibit 99.1




January 23, 2019


Farmers and Merchants Bancshares, Inc. 

4510 Lower Beckleysville Rd, Suite H 

Hampstead, Maryland 21074          




Contact:         Mr. James R. Bosley, Jr.


410-374-1510, ext. 104




HAMPSTEAD, MARYLAND (January 23, 2019) – Farmers and Merchants Bancshares, Inc. (the “Company”), the parent of Farmers and Merchants Bank (the “Bank”), announced that net income for the year ended December 31, 2018 was $4,712,676, or $2.82 per common share, compared to $3,789,241, or $2.28 per common share, in 2017. This is the highest net income in the history of the Company and the Bank surpassing the previous high achieved in 2015. Return on average equity was 10.77% in 2018 compared to 9.26% in 2017. Return on average assets was 1.14% in 2018 compared to 0.96% in 2017. Cash dividends paid to stockholders in 2018 increased 9% to $0.83 per common share from $0.76 per common share in 2017.


The increase in net income of $923,435 was due primarily to a decrease in income taxes of $896,105. The impact of the reduction of the federal corporate income tax rate from 34% to 21% as a result of the Tax Cuts and Jobs Act enacted in December 2017 accounted for $478,606 of the decrease. The other primary driver of the decrease was that income taxes for 2017 included a one-time charge of $410,391 as a result of the revaluation of the Company’s net deferred tax asset required by the aforementioned Act.


Net income before taxes in 2018 increased $27,330 from the amount recorded in 2017 due to an increase in net interest income of $373,529 and an increase in noninterest income of $28,179, offset by an increase in noninterest expense of $309,378, and an increase in the provision for loan losses of $65,000.


The increase in net interest income was due to an increase in average interest earning assets of $21 million, offset by a decline in the net yield of 16 basis points. The net yield continues to decline as deposit rates have risen at a faster pace than yields on loans and investments due to the flattening yield curve and intense competition for new loans and deposits. The primary reasons for the increase in noninterest expense were higher compensation and benefit costs as a result of normal salary increases. The provision for loan losses increased due to a larger loan portfolio and a delinquent commercial real estate loan that management identified as impaired during 2018.


Total assets at December 31, 2018 were $417 million, an increase of 4% from the $403 million recorded at December 31, 2017. The loan portfolio increased 3% to $341 million at December 31, 2018 from $333 million at December 31, 2017. Deposits increased 11% to $355 million at December 31, 2018 from $320 million at the end of 2017. The book value of the common stock of the Company was $26.97 per share at December 31, 2018, compared to $25.06 per share at the end of 2017.





James R. Bosley, Jr., President and CEO, commented “We are proud to have achieved record earnings in 2018 as we prepare to celebrate our 100th anniversary of serving our community in 2019.”


Net income for the three months ended December 31, 2018 was $1,136,805, or $0.68 per common share, compared to $656,339 or $0.39 per common share for the same period in 2017. The net income recorded for the fourth quarter of 2017 was reduced by the $410,391one-time tax charge mentioned above.



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 will celebrate 100 years of service to the community later in the year. 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 the over-the-counter market (OTC Pink) under the symbol “FMFG”.


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



Year Ended December 31,










Cash and due from banks

  $ 11,480,608     $ 6,235,186  

Federal funds sold and other interest bearing deposits

    3,137,629       1,002,199  

Cash and cash equivalents

    14,618,237       7,237,385  

Certificate of deposit in other bank

    100,000       100,000  

Securities available for sale

    26,591,991       27,929,510  

Securities held to maturity

    18,127,067       18,204,182  

Equity security at fair value

    503,827       503,881  

Federal Home Loan Bank stock, at cost

    575,800       1,063,600  

Loans held for sale

    573,638       327,700  

Loans, less allowance for loan losses of $2,509,334 and $2,458,911

    340,900,635       332,533,706  

Premises and equipment

    5,075,310       5,206,271  

Accrued interest receivable

    990,529       1,020,256  

Deferred income taxes

    1,179,454       998,032  

Other real estate owned

    210,150       265,500  

Bank owned life insurance

    7,053,354       6,891,590  

Other assets

    657,885       622,856  
    $ 417,157,877     $ 402,904,469  

Liabilities and Stockholders' Equity





  $ 62,717,520     $ 64,403,133  


    291,995,483       255,393,291  

Total deposits

    354,713,003       319,796,424  

Securities sold under repurchase agreements

    11,012,000       21,768,507  

Federal Home Loan Bank of Atlanta advances

    3,000,000       17,000,000  

Accrued interest payable

    311,489       202,038  

Other liabilities

    2,726,678       2,338,568  
      371,763,170       361,105,537  

Stockholders' equity


Common stock, par value $.01 per share, authorized 5,000,000 shares; issued and outstanding 1,682,997 shares in 2018 and 1,667,813 shares in 2017

    16,830       16,678  

Additional paid-in capital

    27,324,794       26,869,796  

Retained earnings

    18,621,382       15,306,625  

Accumulated other comprehensive income

    (568,299 )     (394,167 )
      45,394,707       41,798,932  
    $ 417,157,877     $ 402,904,469  





Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income



Three Months Ended December 31,


Year Ended December 31,
















Interest income


Loans, including fees

  $ 4,229,789     $ 3,944,220     $ 16,401,554     $ 15,189,238  

Investment securities - taxable

    160,302       151,790       610,951       710,438  

Investment securities - tax exempt

    142,474       143,293       570,529       597,919  

Federal funds sold and other interest earning assets

    67,326       25,111       185,299       97,208  

Total interest income

    4,599,891       4,264,414       17,768,333       16,594,803  

Interest expense



    682,593       377,424       2,225,616       1,378,308  

Securities sold under repurchase agreements

    32,639       40,419       144,881       161,914  

Federal Home Loan Bank advances and other borrowings

    11,317       48,261       136,744       167,018  

Total interest expense

    726,549       466,104       2,507,241       1,707,240  

Net interest income

    3,873,342       3,798,310       15,261,092       14,887,563  

Provision for loan losses

    450,000       60,000       475,000       410,000  

Net interest income after provision for loan losses

    3,423,342       3,738,310       14,786,092       14,477,563  

Noninterest income


Service charges on deposit accounts

    174,260       175,684       670,653       700,791  

Mortgage banking income

    51,962       93,715       271,767       279,364  

Bank owned life insurance income

    40,490       41,248       161,764       170,588  

Net unrealized (loss) gain on equity securities

    3,919       -       (11,429 )     -  

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

    -       (148,500 )     (55,350 )     (148,500 )

Gain on sale of SBA loans

    162,201       5,688       226,026       223,251  

Other fees and commissions

    28,409       31,485       101,842       111,600  

Total noninterest income

    461,241       199,320       1,365,273       1,337,094  

Noninterest expense



    1,301,900       1,260,819       5,194,871       4,931,432  

Employee benefits

    295,112       292,865       1,313,392       1,289,263  


    170,745       180,595       706,193       684,173  

Furniture and equipment

    156,377       153,220       632,330       644,576  


    553,109       557,640       2,485,694       2,473,658  

Total noninterest expense

    2,477,243       2,445,139       10,332,480       10,023,102  

Income before income taxes

    1,407,340       1,492,491       5,818,885       5,791,555  

Income taxes

    270,535       836,152       1,106,209       2,002,314  

Net income

  $ 1,136,805     $ 656,339     $ 4,712,676     $ 3,789,241  

Earnings per share - basic and diluted

  $ 0.68     $ 0.39     $ 2.82     $ 2.28  



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