Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
October 22, 2019  
     
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 EARNINGS OF $1.19 PER SHARE FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019

 

HAMPSTEAD, MARYLAND (October 22, 2019) – 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, 2019 was $3,500,018, or $1.19 per common share, compared to $3,575,871, or $1.22 per common share, for the same period in 2018. The Company’s return on average equity during the nine months ended September 30, 2019 was 9.84% compared to 11.02% for the same period in 2018. The Company’s return on average assets during the nine months ended September 30, 2019 was 1.09% compared to 1.16% for the same period in 2018.

 

On September 16, 2019, the Board of Directors of the Company declared a 75% stock dividend payable on October 31, 2019. All per share information has been adjusted to give effect to that stock dividend.

 

Net interest income for the nine months ended September 30, 2019 was $164,404 lower than for the same period in 2018 due to a decline in the taxable equivalent net yield on interest earning assets to 3.69% in the 2019 period from 3.88% in the 2018 period, offset by a $14.7 increase in interest earning assets to $409.8 million for the nine months ended September 30, 2019 as compared to $395.1 million for the same period in 2018. Despite the recent Federal Reserve rate cuts, the net yield continues to decline as our cost of deposits and borrowings have increased 36 basis points to 1.14% for the nine months ended September 30, 2019 from 0.78% for the same period in 2018 while the yield on loans and investments has increased only 10 basis points to 4.58% for the nine months ended September 30, 2019 from 4.48% for the same in 2018.

 

Noninterest income increased by $204,565 in the nine months ended September 30, 2019 when compared to the same period in 2018 primarily as a result of a $75,710 increase in gains on the sale of SBA loans and a $200,567 increase in bank owned life insurance income due to proceeds received from a policy, offset by a $154,800 write-down of other real estate owned (“OREO”) that was required by law due to the length of time that the OREO has been held. Noninterest expense was $192,180 higher in the nine months ended September 30, 2019 when compared to the same period in 2018 due primarily to usual salary increases of $101,027, an increase in occupancy costs of $59,118, and an increase in other expenses of $57,769. Income taxes declined by $51,166 during the nine months ended September 30, 2019 when compared to the same period in 2018 due to lower income before taxes and a higher percentage of tax exempt revenue.

 

 

 

 

Net income for the three months ended September 30, 2019 was $1,177,910, or $0.40 per common share, compared to $1,308,688, or $0.45 per common share, for the same period in 2018. The decrease of $130,778 was due to a decrease in net interest income after provision for loan losses of $185,571 and an increase in noninterest expenses of $85,868, offset by an increase in other income of $120,547 and a decrease in income taxes of $20,114.

 

Total assets increased to $435 million at September 30, 2019 from $417 million at December 31, 2018. Loans decreased to $337 million at September 30, 2019 from $341 million at December 31, 2018. Investment in debt securities increased to $60 million at September 30, 2019 from $45 million at December 31, 2018. Deposits increased to $372 million at September 30, 2019 from $355 million at December 31, 2018. The book value of the common stock of Farmers and Merchants Bancshares, Inc. was $16.56 per share at September 30, 2019, compared to $15.41 per share at December 31, 2018.

 

James R. Bosley, Jr., President and CEO, commented “As we celebrate the 100 year anniversary of the Bank on October 24th, we would like to thank those who made it possible: our customers, shareholders, employees, and directors. Our 2019 earnings continue to be strong and are just slightly behind 2018’s all-time record pace despite the downward pressure on our net interest margin. We are hopeful that the recent and projected Federal Reserve rate cuts will improve our net yield in the near future.”

 

About the Company

 

Farmers and Merchants Bancshares, Inc. is a financial holding company and the parent of Farmers and Merchants Bank. The Bank was chartered in Maryland in 1919, and is currently celebrating 100 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 the OTC Markets Group’s Pink Market 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

 

   

September 30,

   

December 31,

 
   

2019

   

2018

 
   

(Unaudited)

         

Assets

 
                 

Cash and due from banks

  $ 16,281,158     $ 11,480,608  

Federal funds sold and other interest-bearing deposits

    3,313,899       3,137,629  

Cash and cash equivalents

    19,595,057       14,618,237  

Certificate of deposit in other bank

    100,000       100,000  

Securities available for sale

    40,101,155       26,591,991  

Securities held to maturity

    19,509,907       18,127,067  

Equity security at fair value

    531,714       503,827  

Federal Home Loan Bank stock, at cost

    503,700       575,800  

Mortgage loans held for sale

    1,538,574       573,638  

Loans, less allowance for loan losses of $2,546,115 and 2,509,334

    336,748,866       340,900,635  

Premises and equipment

    4,913,640       5,075,310  

Accrued interest receivable

    978,300       990,529  

Deferred income taxes

    950,207       1,179,454  

Other real estate owned

    -       210,150  

Bank owned life insurance

    7,102,589       7,053,354  

Other assets

    1,931,803       657,885  
    $ 434,505,512     $ 417,157,877  
                 

Liabilities and Stockholders' Equity

 
                 

Deposits

               

Noninterest-bearing

  $ 58,298,592     $ 62,717,520  

Interest-bearing

    313,897,923       291,995,483  

Total deposits

    372,196,515       354,713,003  

Securities sold under repurchase agreements

    7,583,212       11,012,000  

Federal Home Loan Bank of Atlanta advances

    1,000,000       3,000,000  

Accrued interest payable

    348,862       311,489  

Other liabilities

    4,382,403       2,726,678  
      385,510,992       371,763,170  

Stockholders' equity

               

Common stock, par value $.01 per share, authorized 5,000,000 shares; issued and outstanding 2,959,411 shares in 2019 and 1,682,997 shares in 2018

    29,594       16,830  

Additional paid-in capital

    27,561,138       27,324,794  

Retained earnings

    21,276,793       18,621,382  

Accumulated other comprehensive income

    126,995       (568,299 )
      48,994,520       45,394,707  
    $ 434,505,512     $ 417,157,877  

 

 

 

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

   

Three Months Ended September 30,

   

Nine Month Ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 
                                 

Interest income

                               

Loans, including fees

  $ 4,250,071     $ 4,189,626     $ 12,582,392     $ 12,171,765  

Investment securities - taxable

    234,274       145,791       631,382       450,649  

Investment securities - tax exempt

    150,141       142,493       431,354       428,055  

Federal funds sold and other interest earning assets

    84,526       47,280       280,876       117,973  

Total interest income

    4,719,012       4,525,190       13,926,004       13,168,442  
                                 

Interest expense

                               

Deposits

    916,452       604,697       2,577,229       1,543,023  

Securities sold under repurchase agreements

    29,190       42,841       82,912       112,242  

Federal Home Loan Bank advances and other borrowings

    10,769       16,480       42,517       125,427  

Total interest expense

    956,411       664,018       2,702,658       1,780,692  

Net interest income

    3,762,601       3,861,172       11,223,346       11,387,750  
                                 

Provision for loan losses

    (13,000 )     (100,000 )     -       25,000  
                                 

Net interest income after provision for loan losses

    3,775,601       3,961,172       11,223,346       11,362,750  
                                 

Noninterest income

                               

Service charges on deposit accounts

    176,577       160,665       494,752       496,393  

Mortgage banking income

    144,268       105,144       249,867       219,805  

Bank owned life insurance income

    39,443       40,880       321,841       121,274  

Unrealized gain (loss) on equity security

    3,966       (3,869 )     18,721       (15,348 )

Write down of other real estate owned

    -       (55,350 )     (210,150 )     (55,350 )

Gain on sale of SBA loans

    -       3,317       139,535       63,825  

Other fees and commissions

    28,714       21,634       94,031       73,433  

Total noninterest income

    392,968       272,421       1,108,597       904,032  
                                 

Noninterest expense

                               

Salaries

    1,358,208       1,344,759       3,993,998       3,892,971  

Employee benefits

    312,119       328,258       1,008,228       1,018,280  

Occupancy

    189,603       168,759       594,566       535,448  

Furniture and equipment

    149,191       148,945       460,271       475,953  

Other

    673,814       606,346       1,990,354       1,932,585  

Total noninterest expense

    2,682,935       2,597,067       8,047,417       7,855,237  
                                 

Income before income taxes

    1,485,634       1,636,526       4,284,526       4,411,545  

Income taxes

    307,724       327,838       784,508       835,674  

Net income

  $ 1,177,910     $ 1,308,688     $ 3,500,018     $ 3,575,871  
                                 

Earnings per share - basic and diluted

  $ 0.40     $ 0.45     $ 1.19     $ 1.22  

 

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