Exhibit 99.1

 

     
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
January 23, 2020    
     
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 FOR 2019 OF $4,560,804 OR $1.54 PER SHARE

 

HAMPSTEAD, MARYLAND (January 23, 2020) – 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, 2019 was $4,560,804, or $1.54 per common share, compared to $4,712,676, or $1.61 per common share, in 2018. This was the second highest net income in the history of the Company and the Bank. The Company’s return on average equity during 2019 was 9.52% compared to 10.77% during 2018. The Company’s return on average assets during 2019 was 1.06% compared to 1.14% during 2018.

 

Net interest income for 2019 was $238,707 lower than 2018 due to a decline in the taxable equivalent net yield on interest earning assets to 3.67% in 2019 from 3.88% in 2018, offset by a $18.0 million increase in interest earning assets to $414.7 million for 2019 as compared to $396.7 million for 2018. Despite the recent Federal Reserve rate cuts, the net yield continues to decline as our cost of deposits and borrowings has increased 33 basis points to 1.15% for 2019 from 0.82% for 2018 while the yield on loans and investments has increased only 4 basis points to 4.55% for 2019 from 4.51% for 2018.

 

Noninterest income increased by $128,294 during 2019 when compared 2018 primarily as a result of a $125,943 increase in mortgage banking income and a $202,965 increase in bank owned life insurance income due to proceeds received from a policy, offset by a $86,491 decrease in the gain on the sale of SBA loans and 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 $543,334 higher during 2019 when compared 2018 due primarily to usual salary and benefit increases of $316,548, an increase in occupancy costs of $65,724, and an increase in other expenses of $178,849. Income taxes declined by $66,875 during 2019 when compared to 2018 due to lower income before taxes and a higher percentage of tax exempt revenue.

 

Net income for the three months ended December 31, 2019 was $1,060,786, or $0.36 per common share, compared to $1,136,805, or $0.39 per common share, for the same period in 2018. The decrease of $76,019 was due to a decrease in net interest income of $74,303, a decrease in noninterest income of $76,271, and an increase in noninterest expenses of $351,154, offset by a decrease in the provision for loan losses of $410,000 and a decrease in income taxes of $15,709.

 

 

 

 

Total assets increased 6% to $442 million at December 31, 2019 from $417 million at December 31, 2018. Loans increased 5% to $359 million at December 31, 2019 from $341 million at December 31, 2018. Investment in debt securities increased 25% to $56 million at December 31, 2019 from $45 million at December 31, 2018. Deposits increased 6% to $377 million at December 31, 2019 from $355 million at December 31, 2018. The book value of the common stock of Farmers and Merchants Bancshares, Inc. was $16.63 per share at December 31, 2019, compared to $15.41 per share at December 31, 2018.

 

James R. Bosley, Jr., President and CEO, commented “We are pleased to have such strong results during 2019 as we celebrated the Bank’s 100 year anniversary. In addition to the second highest net income in our history, we achieved solid growth in assets, loans, and deposits. As we end our 100 year celebration we would like to thank those who made it possible: our customers, shareholders, employees, and directors.”

 

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

 

   

December 31,

   

December 31,

 
   

2019

   

2018

 
   

(Unaudited)

         

Assets

                 

Cash and due from banks

  $ 6,664,307     $ 11,480,608  

Federal funds sold and other interest-bearing deposits

    2,457,045       3,137,629  

Cash and cash equivalents

    9,121,352       14,618,237  

Certificate of deposit in other bank

    100,000       100,000  

Securities available for sale

    36,531,774       26,591,991  

Securities held to maturity

    19,510,018       18,127,067  

Equity security at fair value

    532,321       503,827  

Federal Home Loan Bank stock, at cost

    376,200       575,800  

Mortgage loans held for sale

    242,000       573,638  

Loans, less allowance for loan losses of $2,593,715 and $2,509,334

    359,382,843       340,900,635  

Premises and equipment

    5,036,851       5,075,310  

Accrued interest receivable

    1,019,540       990,529  

Deferred income taxes

    1,036,078       1,179,454  

Other real estate owned

    -       210,150  

Bank owned life insurance

    7,145,477       7,053,354  

Other assets

    2,180,644       657,885  
    $ 442,215,098     $ 417,157,877  
                 

Liabilities and Stockholders' Equity

                 

Deposits

               

Noninterest-bearing

  $ 60,659,015     $ 62,717,520  

Interest-bearing

    315,954,299       291,995,483  

Total deposits

    376,613,314       354,713,003  

Securities sold under repurchase agreements

    10,958,118       11,012,000  

Federal Home Loan Bank of Atlanta advances

    -       3,000,000  

Accrued interest payable

    346,214       311,489  

Other liabilities

    4,843,936       2,726,678  
      392,761,582       371,763,170  

Stockholders' equity

               

Common stock, par value $.01 per share, authorized 5,000,000 shares; issued and outstanding 2,974,019 shares in 2019 and 1,682,997 shares in 2018

    29,740       16,830  

Additional paid-in capital

    27,812,991       27,324,794  

Retained earnings

    21,568,161       18,621,382  

Accumulated other comprehensive income

    42,624       (568,299 )
      49,453,516       45,394,707  
    $ 442,215,098     $ 417,157,877  

 

 

 

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

 

   

Three Months Ended December 31,

   

Year Ended December 31,

 
   

2019

   

2018

   

2019

   

2018

 
    (Unaudited)     (Unaudited)     (Unaudited)          

Interest income

                               

Loans, including fees

  $ 4,312,265     $ 4,229,789     $ 16,894,657     $ 16,401,554  

Investment securities - taxable

    238,075       160,302       869,457       610,951  

Investment securities - tax exempt

    149,030       142,474       580,384       570,529  

Federal funds sold and other interest earning assets

    76,964       67,326       357,840       185,299  

Total interest income

    4,776,334       4,599,891       18,702,338       17,768,333  
                                 

Interest expense

                               

Deposits

    942,731       682,593       3,519,960       2,225,616  

Securities sold under repurchase agreements

    31,729       32,639       114,641       144,881  

Federal Home Loan Bank advances and other borrowings

    2,835       11,317       45,352       136,744  

Total interest expense

    977,295       726,549       3,679,953       2,507,241  

Net interest income

    3,799,039       3,873,342       15,022,385       15,261,092  
                                 

Provision for loan losses

    40,000       450,000       40,000       475,000  
                                 

Net interest income after provision for loan losses

    3,759,039       3,423,342       14,982,385       14,786,092  
                                 

Noninterest income

                               

Service charges on deposit accounts

    168,923       174,260       663,675       670,653  

Mortgage banking income

    147,843       51,962       397,710       271,767  

Bank owned life insurance income

    42,888       40,490       364,729       161,764  

Unrealized gain (loss) on equity security

    (2,489 )     3,919       16,232       (11,429 )

Write down of other real estate owned

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

Gain on sale of SBA loans

    -       162,201       139,535       226,026  

Other fees and commissions

    27,805       28,409       121,836       101,842  

Total noninterest income

    384,970       461,241       1,493,567       1,365,273  
                                 

Noninterest expense

                               

Salaries

    1,478,611       1,301,900       5,472,609       5,194,871  

Employee benefits

    343,974       295,112       1,352,202       1,313,392  

Occupancy

    177,351       170,745       771,917       706,193  

Furniture and equipment

    154,272       156,377       614,543       632,330  

Other

    674,189       553,109       2,664,543       2,485,694  

Total noninterest expense

    2,828,397       2,477,243       10,875,814       10,332,480  
                                 

Income before income taxes

    1,315,612       1,407,340       5,600,138       5,818,885  

Income taxes

    254,826       270,535       1,039,334       1,106,209  

Net income

  $ 1,060,786     $ 1,136,805     $ 4,560,804     $ 4,712,676  
                                 

Earnings per share - basic and diluted

  $ 0.36     $ 0.39     $ 1.54     $ 1.61  

 

 

 

 

Farmers and Merchants Bancshares, Inc.

Selected Consolidated Financial Data

 

   

2019

   

2018

   

2017

   

2016

   

2015

 
   

(unaudited)

                                 

OPERATING DATA

                                 
                                         

Interest income

  $ 18,702,338     $ 17,768,333     $ 16,594,803     $ 15,351,497     $ 14,705,401  

Interest expense

    3,679,953       2,507,241       1,707,240       1,346,120       1,189,646  

Net interest income

    15,022,385       15,261,092       14,887,563       14,005,377       13,515,755  

Provision for loan losses

    40,000       475,000       410,000       -       -  

Net interest income after provision for loan losses

    14,982,385       14,786,092       14,477,563       14,005,377       13,515,755  

Noninterest income

    1,493,567       1,365,273       1,337,094       1,465,197       1,986,260  

Noninterest expense

    10,875,814       10,332,480       10,023,102       9,534,625       8,703,588  

Income before income taxes

    5,600,138       5,818,885       5,791,555       5,935,949       6,798,427  

Income taxes

    1,039,334       1,106,209       2,002,314       2,026,820       2,530,205  

Net income

  $ 4,560,804     $ 4,712,676     $ 3,789,241     $ 3,909,129     $ 4,268,222  
                                         

PER SHARE DATA

                                 
                                         

Net income (Basic)

  $ 1.54     $ 1.61     $ 1.30     $ 1.35     $ 1.49  

Dividends

  $ 0.51     $ 0.47     $ 0.43     $ 0.40     $ 0.37  

Book value

  $ 16.63     $ 15.41     $ 14.32     $ 13.46     $ 12.57  
                                         

KEY RATIOS

                                 
                                         

Return on average assets

    1.06 %     1.14 %     0.96 %     1.08 %     1.29 %

Return on average equity

    9.52 %     10.77 %     9.26 %     10.26 %     12.26 %

Net yield on interest-earning assets

    3.67 %     3.88 %     4.04 %     4.21 %     4.40 %

Efficiency ratio

    65.85 %     62.15 %     61.78 %     61.63 %     56.14 %

Average equity to average assets

    11.10 %     10.60 %     10.32 %     10.56 %     10.50 %

Dividend payout ratio

    33.12 %     29.43 %     33.33 %     29.58 %     24.52 %
                                         

AT PERIOD END

                                 
                                         

Total assets

  $ 442,215,098     $ 417,157,877     $ 402,904,469     $ 379,831,359     $ 345,309,996  

Gross loans

    362,494,703       343,940,842       335,595,916       298,126,919       271,263,338  

Cash and cash equivalents

    9,121,352       14,618,237       7,237,385       13,312,915       20,192,839  

Debt securities

    56,041,792       44,719,058       46,133,692       52,373,567       40,248,651  

Deposits

    376,613,314       354,713,003       319,796,424       302,715,136       275,964,737  

Borrowings

    10,958,118       14,012,000       38,768,507       36,226,159       31,490,619  

Stockholders' equity

    49,453,516       45,394,707       41,798,932       39,012,277       36,223,361  
                                         

SELECTED AVERAGE BALANCES

                         
                                         

Total assets

  $ 431,595,287     $ 412,586,954     $ 396,454,271     $ 361,005,005     $ 331,522,302  

Gross loans

    344,793,736       343,573,784       319,825,707       284,804,975       273,626,511  

Cash and cash equivalents

    20,124,328       12,054,442       12,428,778       13,271,319       15,227,040  

Debt securities

    53,049,768       44,471,457       50,251,527       48,301,835       31,041,271  

Deposits

    367,570,825       339,624,630       315,159,559       284,921,811       265,634,314  

Borrowings

    11,975,017       26,524,352       38,627,588       36,175,989       29,363,070  

Stockholders' equity

    47,927,778       43,748,434       40,926,674       38,115,746       34,810,159  
                                         

ASSET QUALITY

                                       
                                         

Nonperforming assets

  $ -     $ 1,209,468     $ 2,657,702     $ 1,166,889     $ 1,429,313  
                                         

Nonperforming assets/total assets

    0.00 %     0.29 %     0.66 %     0.31 %     0.41 %
                                         

Allowance for loan losses/total loans

    0.72 %     0.73 %     0.73 %     0.79 %     0.95 %

 

 

 

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