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 | |
