Farmers and Merchants Bancshares (FMFG) 8-K Results of Operations and Financial Condition

Exhibit 99.1

FOR IMMEDIATE RELEASE	FOR FURTHER INFORMATION CONTACT:
July 18, 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 $1.38 PER SHARE FOR THE SIX MONTHS ENDED JUNE 30, 2019

HAMPSTEAD, MARYLAND (July 18, 2019) – Farmers and Merchants Bancshares, Inc. (the “Company”), the parent of Farmers and Merchants Bank (the “Bank”), announced that net income for the six months ended June 30, 2019 was $2,322,108, or $1.38 per common share, compared to $2,267,183, or $1.36 per common share, for the same period in 2018. The Company’s return on average equity during the six months ended June 30, 2019 was 9.92% compared to 10.58% during the same period in 2018. The Company’s return on average assets was 1.09% in 2019 compared to 1.11% in 2018.

Net interest income for the six months ended June 30, 2019 was $65,833 lower than the same period last year due to a decline in the taxable equivalent net yield on interest earning assets to 3.70% in the 2019 period from 3.83% in the 2018 period, offset by an increase in interest earning assets of $14.9 million to $407.9 million for the six months ended June 30, 2019 as compared to $393.0 million for the same period last year. The net yield continues to decline as deposit rates have risen more quickly than yields on loans and investments.

Noninterest income increased by $84,018 primarily as a result of $79,027 higher gain on the sale of SBA loans and $202,004 higher bank owned life insurance income due to proceeds received from a policy, offset by a $210,150 write-down of other real estate owned required by regulation. Noninterest expense was $106,312 higher in the six months ended June 30, 2019 when compared to the same period last year primarily due to usual salary increases and higher employee benefit costs. Income taxes declined by $31,052 during the first half of 2019 when compared to the first half of 2018 due to a higher amount of tax exempt revenue.

Net income for the three months ended June 30, 2019 was $1,225,821, or $0.73 per common share, compared to $1,145,247, or $0.69 per common share, for the same period in 2018.

Total assets increased to $436 million at June 30, 2019 compared to $417 million at December 31, 2018. Loans decreased to $340 million at June 30, 2019 compared to $341 million at December 31, 2018. Investment in debt securities increased to $56 million at June 30, 2019 compared to $45 million at December 31, 2018. Deposits increased to $372 million at June 30, 2019 compared to $355 million at December 31, 2018. The book value of the common stock of Farmers and Merchants Bancshares, Inc. was $28.23 per share at June 30, 2019, compared to $26.97 per share at December 31, 2018.

James R. Bosley, Jr., President and CEO, commented “We are pleased to have the highest first half net income in the Company’s history despite the challenges of 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. 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

	June 30,		December 31,
	2019		2018
	(Unaudited)
Assets
Cash and due from banks	$	19,434,418	$	11,480,608
Federal funds sold and other interest-bearing deposits		3,221,403		3,137,629
Cash and cash equivalents		22,655,821		14,618,237
Certificate of deposit in other bank		100,000		100,000
Securities available for sale		36,098,444		26,591,991
Securities held to maturity		19,411,483		18,127,067
Equity security at fair value		524,710		503,827
Federal Home Loan Bank stock, at cost		503,700		575,800
Mortgage loans held for sale		972,750		573,638
Loans, less allowance for loan losses of $2,551,125 and 2,509,334		340,171,316		340,900,635
Premises and equipment		4,969,930		5,075,310
Accrued interest receivable		1,006,419		990,529
Deferred income taxes		981,334		1,179,454
Other real estate owned		-		210,150
Bank owned life insurance		7,063,146		7,053,354
Other assets		1,989,743		657,885
	$	436,448,796	$	417,157,877
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing	$	61,009,944	$	62,717,520
Interest-bearing		311,165,456		291,995,483
Total deposits		372,175,400		354,713,003
Securities sold under repurchase agreements		8,789,585		11,012,000
Federal Home Loan Bank of Atlanta advances		3,000,000		3,000,000
Accrued interest payable		580,101		311,489
Other liabilities		4,168,677		2,726,678
		388,713,763		371,763,170
Stockholders' equity
Common stock, par value $.01 per share, authorized 5,000,000 shares; issued and outstanding 1,691,091 shares in 2019 and 1,682,997 shares in 2018		16,911		16,830
Additional paid-in capital		27,561,593		27,324,794
Retained earnings		20,111,524		18,621,382
Accumulated other comprehensive income		45,005		(568,299	)
		47,735,033		45,394,707
	$	436,448,796	$	417,157,877

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Three Months Ended June 30						Six Month Ended June 30
	2019			2018			2019			2018
Interest income
Loans, including fees	$	4,172,235		$	4,048,984		$	8,332,321		$	7,982,139
Investment securities - taxable		222,272			149,998			397,108			304,858
Investment securities - tax exempt		143,125			142,799			281,213			285,562
Federal funds sold and other interest earning assets		121,824			43,725			196,350			70,693
Total interest income		4,659,456			4,385,506			9,206,992			8,643,252
Interest expense
Deposits		885,246			499,916			1,660,777			938,326
Securities sold under repurchase agreements		28,423			35,012			53,722			69,401
Federal Home Loan Bank advances and other borrowings		11,195			45,985			31,748			108,947
Total interest expense		924,864			580,913			1,746,247			1,116,674
Net interest income		3,734,592			3,804,593			7,460,745			7,526,578
Provision for loan losses		-			75,000			13,000			125,000
Net interest income after provision for loan losses		3,734,592			3,729,593			7,447,745			7,401,578
Noninterest income
Service charges on deposit accounts		166,115			173,888			318,175			335,728
Mortgage banking income		72,879			60,468			105,598			114,661
Bank owned life insurance income		242,012			40,489			282,398			80,394
Unrealized gain (loss) on equity security		6,911			(12,439	)		14,756			(11,479	)
Write down of other real estate owned		(210,150	)		-			(210,150	)		-
Gain on sale of SBA loans		9,520			-			139,535			60,508
Other fees and commissions		35,946			28,090			65,317			51,799
Total noninterest income		323,233			290,496			715,629			631,611
Noninterest expense
Salaries		1,309,007			1,264,702			2,635,790			2,548,212
Employee benefits		314,145			322,568			696,109			690,022
Occupancy		190,543			189,156			404,963			366,689
Furniture and equipment		155,933			165,392			311,080			327,008
Other		639,568			687,062			1,316,540			1,326,239
Total noninterest expense		2,609,196			2,628,880			5,364,482			5,258,170
Income before income taxes		1,448,629			1,391,209			2,798,892			2,775,019
Income taxes		222,808			245,962			476,784			507,836
Net income	$	1,225,821		$	1,145,247		$	2,322,108		$	2,267,183
Earnings per share - basic and diluted	$	0.73		$	0.69		$	1.38		$	1.36