Exhibit 99.1

FOR IMMEDIATE RELEASE  January 23, 2019   Farmers and Merchants Bancshares, Inc.  4510 Lower Beckleysville Rd, Suite H  Hampstead, Maryland 21074	FOR FURTHER INFORMATION CONTACT:     Contact:         Mr. James R. Bosley, Jr. President 410-374-1510, ext. 104

 

FARMERS AND MERCHANTS BANCSHARES, INC. REPORTS RECORD EARNINGS FOR 2018 OF $4,712,676 or $2.82 PER SHARE

HAMPSTEAD, MARYLAND (January 23, 2019) – 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, 2018 was $4,712,676, or $2.82 per common share, compared to $3,789,241, or $2.28 per common share, in 2017. This is the highest net income in the history of the Company and the Bank surpassing the previous high achieved in 2015. Return on average equity was 10.77% in 2018 compared to 9.26% in 2017. Return on average assets was 1.14% in 2018 compared to 0.96% in 2017. Cash dividends paid to stockholders in 2018 increased 9% to $0.83 per common share from $0.76 per common share in 2017.

The increase in net income of $923,435 was due primarily to a decrease in income taxes of $896,105. The impact of the reduction of the federal corporate income tax rate from 34% to 21% as a result of the Tax Cuts and Jobs Act enacted in December 2017 accounted for $478,606 of the decrease. The other primary driver of the decrease was that income taxes for 2017 included a one-time charge of $410,391 as a result of the revaluation of the Company’s net deferred tax asset required by the aforementioned Act.

Net income before taxes in 2018 increased $27,330 from the amount recorded in 2017 due to an increase in net interest income of $373,529 and an increase in noninterest income of $28,179, offset by an increase in noninterest expense of $309,378, and an increase in the provision for loan losses of $65,000.

The increase in net interest income was due to an increase in average interest earning assets of $21 million, offset by a decline in the net yield of 16 basis points. The net yield continues to decline as deposit rates have risen at a faster pace than yields on loans and investments due to the flattening yield curve and intense competition for new loans and deposits. The primary reasons for the increase in noninterest expense were higher compensation and benefit costs as a result of normal salary increases. The provision for loan losses increased due to a larger loan portfolio and a delinquent commercial real estate loan that management identified as impaired during 2018.

Total assets at December 31, 2018 were $417 million, an increase of 4% from the $403 million recorded at December 31, 2017. The loan portfolio increased 3% to $341 million at December 31, 2018 from $333 million at December 31, 2017. Deposits increased 11% to $355 million at December 31, 2018 from $320 million at the end of 2017. The book value of the common stock of the Company was $26.97 per share at December 31, 2018, compared to $25.06 per share at the end of 2017.

James R. Bosley, Jr., President and CEO, commented “We are proud to have achieved record earnings in 2018 as we prepare to celebrate our 100^th anniversary of serving our community in 2019.”

Net income for the three months ended December 31, 2018 was $1,136,805, or $0.68 per common share, compared to $656,339 or $0.39 per common share for the same period in 2017. The net income recorded for the fourth quarter of 2017 was reduced by the $410,391one-time tax charge mentioned above.

About the Company

Farmers and Merchants Bancshares, Inc. is a financial holding company and the parent of Farmers and Merchants Bank. Farmers and Merchants Bank was chartered in Maryland in 1919, and will celebrate 100 years of service to the community later in the year. 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 over-the-counter market (OTC Pink) 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

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income