Farmers And Merchants Bancshares, Inc. Reports Earnings Of $...| MENAFN.COM

Wednesday, 01 February 2023 11:15 GMT

Farmers And Merchants Bancshares, Inc. Reports Earnings Of $8,090,127 Or $2.66 Per Common Share For The Year Ended December 31, 2022


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HAMPSTEAD, Md., Jan. 24, 2023 (GLOBE NEWSWIRE) -- Farmers and Merchants Bancshares, Inc. (the“Company”) (OTC: FMFG), the parent of Farmers and Merchants Bank (the“Bank”), announced that net income for the year ended December 31, 2022 was $8,090,127, or $2.66 per common share (basic and diluted), compared to $8,149,606, or $2.70 per common share (basic and diluted), for the same period in 2021. The Company's return on average equity during the year ended December 31, 2022 was 16.03% compared to 14.85% for the same period in 2021. The Company's return on average assets during the year ended December 31, 2022 was 1.13% compared to 1.16% for the same period in 2021. Income from Paycheck Protection Program (“PPP”) loans added approximately $181,000 to net income for the year ended December 31, 2022 compared to $802,000 for the same period in 2021.

Net income for the three months ended December 31, 2022 was $2,014,282, or $0.66 per common share (basic and diluted), compared to $1,965,265, or $0.65 per common share (basic and diluted), for the fourth quarter of 2021.

Net interest income for the year ended December 31, 2022 was $1,248,391 higher than for the same period in 2021 due to a $22.0 million increase in average interest earning assets to $686.7 million for the year ended December 31, 2022 as compared to $664.7 million for the same period in 2021, and an increase in the taxable equivalent net yield on average net interest earning assets to 3.54% for the year ended December 31, 2022 from 3.47% for the year ended December 31, 2021. The taxable equivalent yield on total average interest-earning assets decreased 4 basis points to 3.85% for the year ended December 31, 2022 from 3.89% for the same period in 2021 primarily due to the aforementioned decline in PPP revenue. This decrease was offset by a 13 basis point decrease in the cost of deposits and borrowings to 0.41% for the year ended December 31, 2022 from 0.54% for the same period in 2021. Provision for loan losses totaled $475,000 for the year ended December 31, 2022, compared to $330,000 for the same period in 2021.

Noninterest income increased by $128,024 for the year ended December 31, 2022 when compared to the same period in 2021 primarily as a result of a $151,206 increase in the gain on sale of SBA loans and a $673,483 net gain from insurance proceeds related to storm damage suffered by its Upperco location during the third quarter of 2022, offset by a $696,470 decrease in mortgage banking revenue reflecting a decline in refinances due to rising interest rates. Noninterest expense was $1,238,681 higher in the year ended December 31, 2022 when compared to the same period in 2021 due primarily to a $730,008 increase in salaries and benefits and a $451,083 increase in other expenses. The increase in salaries and benefits was due to normal annual salary increases as well as the hiring of several new employees. The increase in other expenses was due primarily to third party fees related to the hiring of new employees. Income taxes increased by $52,213 during the year ended December 31, 2022 when compared to the same period in 2021 due to a decrease in the amount of nontaxable income included in pretax income year-over-year. The effective tax rate increased to 23.50% during the year ended December 31, 2022 compared to 22.99% during the same period last year.

Total assets were $718 million at December 31, 2022 compared to $717 million at December 31, 2021. Loans increased to $517 million at December 31, 2022 from $482 million at December 31, 2021 despite a $9 million decrease in PPP loans. Investments in debt securities decreased to $147 million at December 31, 2022 from $171 million at December 31, 2021 due primarily to a $25 million increase in the unrealized loss on available for sale (“AFS”) securities. Deposits decreased to $624 million at December 31, 2022 from $626 million at December 31, 2021. Federal Home Loan bank advances increased to $20 million at December 31, 2022 from $5 million at December 31, 2021. Despite the Company's strong earnings, the book value of the Company's common stock decreased to $15.56 per share at December 31, 2022, compared to $18.64 per share at December 31, 2021 due to the decline in the market value of the Company's AFS investment portfolio as a result of the significant rise in interest rates over the last year. Changes in the market value of the AFS investment portfolio, net of income taxes, are reflected in the Company's equity but are not included in the income statement. Because the Company has the intent and ability to hold the investments to maturity, no actual losses in the AFS investment portfolio are anticipated and the declines in market value are considered temporary. The decline in the market value of the AFS investment portfolio did not have an impact on regulatory capital because the Bank elected many years ago to not include in the calculation of regulatory capital changes in the market value of the AFS investment portfolio regardless of whether they are positive or negative.

Gary A. Harris, President & CEO, commented“I'd like to wish long-time President & CEO Jim Bosley a happy retirement and thank him again for leading the Bank for over 27 years. Jim left on a high note with net income for 2022 just short of our record earnings set last year. We are also pleased that our loan portfolio grew by 7.2% during 2022 despite PPP loan forgiveness. We look forward to 2023 despite rising rates on deposits which will put pressure on our net interest margin.”

About the Company

The Company is a financial holding company and the parent of the Bank. The Bank was chartered in Maryland in 1919 and has 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, Route 795, Route 140, and Route 26 corridors. The main office is located in Upperco, Maryland, with seven additional branches in Owings Mills, Hampstead, Greenmount, Reisterstown, Westminster, and Eldersburg. 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
(Unaudited)

December 31, December 31,
2022 2021
Assets
Cash and due from banks $ 6,414,822 $ 25,258,932
Federal funds sold and other interest-bearing deposits 848,715 1,203,174
Cash and cash equivalents 7,263,537 26,462,106
Certificates of deposit in other banks 100,000 350,000
Securities available for sale, at fair value 126,314,449 149,237,916
Securities held to maturity, at cost 20,508,997 21,851,975
Equity security, at fair value 489,145 543,605
Restricted stock, at cost 1,332,500 675,400
Mortgage loans held for sale 428,355 126,500
Loans, less allowance for loan losses of $4,150,198 and $3,650,268 516,920,540 482,011,334
Premises and equipment, net 6,186,594 6,259,421
Accrued interest receivable 1,815,784 1,609,063
Deferred income taxes, net 8,392,658 2,177,450
Other real estate owned, net 1,242,365 1,242,365
Bank owned life insurance 14,585,342 11,556,163
Goodwill and other intangibles, net 7,042,752 7,051,080
Other assets 5,587,654 5,522,877
$ 718,210,672 $ 716,677,255
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $ 126,695,349 $ 124,175,615
Interest-bearing 496,915,775 502,239,055
Total deposits 623,611,124 626,414,670
Securities sold under repurchase agreements 5,175,303 5,414,026
Federal Home Loan Bank of Atlanta advances 20,000,000 5,000,000
Long-term debt, net of issuance costs 15,095,642 16,978,905
Accrued interest payable 349,910 295,910
Other liabilities 6,203,730 5,952,286
670,435,709 660,055,797
Stockholders' equity
Common stock, par value $.01 per share,
authorized 5,000,000 shares; issued and outstanding
3,071,214 in 2022 and 3,037,137 shares in 2021 30,712 30,372
Additional paid-in capital 29,549,914 28,857,422
Retained earnings 35,300,166 29,128,600
Accumulated other comprehensive loss (17,105,829 ) (1,394,936 )
47,774,963 56,621,458
$ 718,210,672 $ 716,677,255


Farmers and Merchants Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)

Three Months Ended December 31, Twelve Months Ended December 31,
2022 2021 2022 2021
Interest income
Loans, including fees $ 5,904,409 $ 5,663,588 $ 22,565,034 $ 23,491,614
Investment securities - taxable 811,146 544,129 2,981,300 1,511,970
Investment securities - tax exempt 140,160 148,962 570,655 611,323
Federal funds sold and other interest earning assets 63,001 17,753 152,664 65,496
Total interest income 6,918,716 6,374,432 26,269,653 25,680,403
Interest expense
Deposits 404,371 408,539 1,375,691 1,997,873
Securities sold under repurchase agreements 4,210 6,498 12,768 44,628
Federal Home Loan Bank advances and long-term debt 214,666 192,256 757,699 762,798
Total interest expense 623,247 607,293 2,146,158 2,805,299
Net interest income 6,295,469 5,767,139 24,123,495 22,875,104
Provision for (recovery of) loan losses 380,000 (100,000 ) 475,000 330,000
Net interest income after provision for (recovery of) loan losses 5,915,469 5,867,139 23,648,495 22,545,104
Noninterest income
Service charges on deposit accounts 203,457 201,271 777,901 724,086
Mortgage banking income 18,214 206,109 214,043 910,513
Bank owned life insurance income 49,444 55,380 229,179 229,966
Fair value adjustment of equity security 431 (5,140 ) (62,093 ) (15,354 )
Gain on call of debt security - - - 9,190
Gain on insurance proceeds, net 673,483 - 673,483 -
Gain on sale of SBA loans - - 158,123 6,917
Other fees and commissions 73,976 70,815 303,302 300,596
Total noninterest income 1,019,005 528,435 2,293,938 2,165,914
Noninterest expense
Salaries 2,208,551 1,848,017 7,865,194 7,214,871
Employee benefits 430,321 418,565 1,798,150 1,718,465
Occupancy 219,988 211,670 890,926 948,757
Furniture and equipment 248,967 197,267 891,250 775,829
Other 1,106,578 1,083,695 3,921,760 3,470,677
Total noninterest expense 4,214,405 3,759,214 15,367,280 14,128,599
Income before income taxes 2,720,069 2,636,360 10,575,153 10,582,419
Income taxes 705,787 671,095 2,485,026 2,432,813
Net income $ 2,014,282 $ 1,965,265 $ 8,090,127 $ 8,149,606
Earnings per common share - basic and diluted $ 0.66 $ 0.65 $ 2.66 $ 2.70


Contact: Mr. Gary A. Harris
President & CEO
(410) 374-1510, ext.104




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