Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:
April 27, 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 OF $0.28 PER SHARE FOR THE THREE MONTHS ENDED MARCH 31, 2020

 

HAMPSTEAD, MARYLAND (April 27, 2020) – Farmers and Merchants Bancshares, Inc. (the “Company”), the parent of Farmers and Merchants Bank (the “Bank”), announced that net income for the three months ended March 31, 2020 was $843,307, or $0.28 per common share, compared to $1,096,287, or $0.37 per common share, for the same period in 2019. As previously announced, the Company entered into a definitive agreement on March 6, 2020 to acquire Carroll Bancorp, Inc. Significant one-time costs will be incurred in connection with the acquisition. During the three months ended March 31, 2020, the Company incurred $179,824 of such costs. The table below provides a comparison of the Company’s results with and without the acquisition costs and the prior year.

 

   

Three Months Ended

 
   

March 31, 2020

   

March 31, 2019

 
           

Excluding

         
   

As Reported

   

Acquisition Costs

   

As Reported

 
                         

Income before taxes

  $ 996,223     $ 1,176,047     $ 1,350,263  

Income taxes

    152,916       202,399       253,976  

Net income

  $ 843,307     $ 973,648     $ 1,096,287  

Earnings per share

  $ 0.28     $ 0.33     $ 0.37  

Return on average assets

    0.75 %     0.87 %     1.05 %

Return on average equity

    6.72 %     7.76 %     9.49 %

 

Net interest income for the three months ended March 31, 2020 was $39,381 higher than for the same period in 2019 due to a $28.2 increase in interest earning assets to $430.0 million for the three months ended March 31, 2020 as compared to $401.8 million for the same period in 2019, offset by a decline in the taxable equivalent net yield on interest earning assets to 3.54% in the 2020 period from 3.73% in the 2019 period. The net yield declined because the yield on loans and investments decreased 13 basis points to 4.42% for the three months ended March 31, 2020 from 4.55% for the same period in 2019 as a result of the Federal Reserve rate cuts. Additionally, while our cost of deposits and borrowings of 1.13% for the three months ended March 31, 2020 is lower than the previous three quarters, it is still higher than the cost of 1.06% for the three months ended March 31, 2019. We expect the cost of funds to continue to decline over the remainder of 2020 since we have significantly reduced rates on many of our deposit products. The provision for loan losses totaled $125,000 for the three months ended March 31, 2020, an increase of $112,000 over the same period in 2019 as a result of the economic downturn caused by the COVID-19 pandemic.

 

 

 

Noninterest income decreased by $90,394 in the three months ended March 31, 2020 when compared to the same period in 2019 primarily as a result of a $130,015 decrease in the gain on the sale of SBA loans, offset by a $29,538 increase in mortgage banking income. Noninterest expense was $191,027 higher in the three months ended March 31, 2020 when compared to the same period in 2019 due primarily to the aforementioned acquisition costs of 179,824 and usual salary and benefit increases of $93,276, offset by a decrease in other expenses of $56,107 and a decrease in occupancy, furniture and equipment costs of $25,966. Without the acquisition costs, noninterest expenses increased only $11,203. Income taxes declined by $101,060 during the three months ended March 31, 2020 when compared to the same period in 2019 due to lower income before taxes and a higher percentage of tax-exempt revenue.

 

Total assets increased to $460 million at March 31, 2020 from $442 million at December 31, 2019. Loans decreased to $358 million at March 31, 2020 from $359 million at December 31, 2019. Investment in debt securities increased to $60 million at March 31, 2020 from $56 million at December 31, 2019. Deposits increased to $390 million at March 31, 2020 from $377 million at December 31, 2019. The book value of the common stock of Farmers and Merchants Bancshares, Inc. was $16.95 per share at March 31, 2020, compared to $16.63 per share at December 31, 2019.

 

The COVID-19 pandemic is wreaking havoc on the U.S. economy. The full impact and its effect on the banking industry will not be known for several quarters, but will be significant. The Bank is providing relief to our borrowers, as needed, including temporary deferral of payments. In addition, the Bank has made a significant amount of Paycheck Protection Program loans to customers.

 

James R. Bosley, Jr., President and CEO, commented “We are all in uncharted territory with the COVID-19 pandemic. The Bank is committed to the safety of our customers and employees as well as assisting businesses and individuals during these difficult times. The Bank has thrived for over 100 years through the Great Depression of the 1930s and most recently the Great Recession. We are confident that our well-capitalized bank will thrive in this current crisis. In addition, we look forward to the completion of our acquisition of Carroll Community Bank. The acquisition process continues to proceed at the expected pace.”

 

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 over 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

 

   

March 31,

   

December 31,

 
   

2020

   

2019

 
   

(Unaudited)

         

Assets

 
                 

Cash and due from banks

  $ 17,409,858     $ 6,664,307  

Federal funds sold and other interest-bearing deposits

    5,233,944       2,457,045  

Cash and cash equivalents

    22,643,802       9,121,352  

Certificate of deposit in other bank

    100,000       100,000  

Securities available for sale

    40,666,045       36,531,774  

Securities held to maturity

    19,017,782       19,510,018  

Equity security at fair value

    543,599       532,321  

Federal Home Loan Bank stock, at cost

    611,300       376,200  

Mortgage loans held for sale

    1,481,450       242,000  

Loans, less allowance for loan losses of $2,740,150 and 2,593,715

    358,319,859       359,382,843  

Premises and equipment

    5,136,920       5,036,851  

Accrued interest receivable

    1,065,397       1,019,540  

Deferred income taxes

    988,558       1,036,078  

Bank owned life insurance

    7,187,489       7,145,477  

Other assets

    1,839,179       2,180,644  
    $ 459,601,380     $ 442,215,098  
                 

Liabilities and Stockholders' Equity

 
                 

Deposits

               

Noninterest-bearing

  $ 61,153,068     $ 60,659,015  

Interest-bearing

    328,611,361       315,954,299  

Total deposits

    389,764,429       376,613,314  

Securities sold under repurchase agreements

    9,708,344       10,958,118  

Federal Home Loan Bank of Atlanta advances

    5,000,000       -  

Accrued interest payable

    349,725       346,214  

Other liabilities

    4,356,888       4,843,936  
      409,179,386       392,761,582  

Stockholders' equity

               

Common stock, par value $.01 per share, authorized 5,000,000 shares; issued and outstanding 2,974,019 shares in 2020 and 2019

    29,740       29,740  

Additional paid-in capital

    27,812,991       27,812,991  

Retained earnings

    22,411,468       21,568,161  

Accumulated other comprehensive income

    167,795       42,624  
      50,421,994       49,453,516  
    $ 459,601,380     $ 442,215,098  

 

 

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

   

Three Months Ended March 31,

 
   

2020

   

2019

 
                 

Interest income

               

Loans, including fees

  $ 4,322,654     $ 4,160,086  

Investment securities - taxable

    210,506       174,836  

Investment securities - tax exempt

    144,084       138,088  

Federal funds sold and other interest earning assets

    32,792       74,526  

Total interest income

    4,710,036       4,547,536  
                 

Interest expense

               

Deposits

    906,199       775,531  

Securities sold under repurchase agreements

    38,194       25,299  

Federal Home Loan Bank advances and other borrowings

    109       20,553  

Total interest expense

    944,502       821,383  

Net interest income

    3,765,534       3,726,153  
                 

Provision for loan losses

    125,000       13,000  
                 

Net interest income after provision for loan losses

    3,640,534       3,713,153  
                 

Noninterest income

               

Service charges on deposit accounts

    158,555       152,060  

Mortgage banking income

    62,257       32,719  

Bank owned life insurance income

    42,012       40,386  

Unrealized gain (loss) on equity security

    8,510       7,845  

Gain on sale of SBA loans

    -       130,015  

Other fees and commissions

    30,668       29,371  

Total noninterest income

    302,002       392,396  
                 

Noninterest expense

               

Salaries

    1,354,919       1,326,783  

Employee benefits

    447,104       381,964  

Occupancy

    183,152       214,420  

Furniture and equipment

    160,449       155,147  

Acquisition

    179,824       -  

Other

    620,865       676,972  

Total noninterest expense

    2,946,313       2,755,286  
                 

Income before income taxes

    996,223       1,350,263  

Income taxes

    152,916       253,976  

Net income

  $ 843,307     $ 1,096,287  
                 

Earnings per share - basic and diluted

  $ 0.28     $ 0.37  

 

 

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