0001437749-22-027142.txt : 20221114 0001437749-22-027142.hdr.sgml : 20221114 20221114120049 ACCESSION NUMBER: 0001437749-22-027142 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 68 CONFORMED PERIOD OF REPORT: 20220930 FILED AS OF DATE: 20221114 DATE AS OF CHANGE: 20221114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Farmers & Merchants Bancshares, Inc. CENTRAL INDEX KEY: 0001698022 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 813605835 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55756 FILM NUMBER: 221382578 BUSINESS ADDRESS: STREET 1: 4510 LOWER BECKLEYSVILLE ROAD STREET 2: SUITE H CITY: HAMPSTEAD STATE: MD ZIP: 21074 BUSINESS PHONE: 4103741510 MAIL ADDRESS: STREET 1: 4510 LOWER BECKLEYSVILLE ROAD STREET 2: SUITE H CITY: HAMPSTEAD STATE: MD ZIP: 21074 10-Q 1 fmfg20220930_10q.htm FORM 10-Q fmfg20220930_10q.htm
0001698022 Farmers & Merchants Bancshares, Inc. false --12-31 Q3 2022 3,747,178 3,650,268 0.01 0.01 5,000,000 5,000,000 3,053,487 3,053,487 3,037,137 3,037,137 0.28 0.31 1 1 1 2 1 1 2 1 0 1 1 6.5 8 10 5 00016980222022-01-012022-09-30 xbrli:shares 00016980222022-11-10 thunderdome:item iso4217:USD 00016980222022-09-30 00016980222021-12-31 iso4217:USDxbrli:shares 00016980222022-07-012022-09-30 00016980222021-07-012021-09-30 00016980222021-01-012021-09-30 0001698022us-gaap:DepositAccountMember2022-07-012022-09-30 0001698022us-gaap:DepositAccountMember2021-07-012021-09-30 0001698022us-gaap:DepositAccountMember2022-01-012022-09-30 0001698022us-gaap:DepositAccountMember2021-01-012021-09-30 0001698022us-gaap:FinancialServiceOtherMember2022-07-012022-09-30 0001698022us-gaap:FinancialServiceOtherMember2021-07-012021-09-30 0001698022us-gaap:FinancialServiceOtherMember2022-01-012022-09-30 0001698022us-gaap:FinancialServiceOtherMember2021-01-012021-09-30 0001698022us-gaap:CommonStockMember2021-06-30 0001698022us-gaap:AdditionalPaidInCapitalMember2021-06-30 0001698022us-gaap:RetainedEarningsMember2021-06-30 0001698022us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-30 00016980222021-06-30 0001698022us-gaap:CommonStockMember2021-07-012021-09-30 0001698022us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-30 0001698022us-gaap:RetainedEarningsMember2021-07-012021-09-30 0001698022us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-30 0001698022us-gaap:CommonStockMember2021-09-30 0001698022us-gaap:AdditionalPaidInCapitalMember2021-09-30 0001698022us-gaap:RetainedEarningsMember2021-09-30 0001698022us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-30 00016980222021-09-30 0001698022us-gaap:CommonStockMember2020-12-31 0001698022us-gaap:AdditionalPaidInCapitalMember2020-12-31 0001698022us-gaap:RetainedEarningsMember2020-12-31 0001698022us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-31 00016980222020-12-31 0001698022us-gaap:CommonStockMember2021-01-012021-09-30 0001698022us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-30 0001698022us-gaap:RetainedEarningsMember2021-01-012021-09-30 0001698022us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-30 0001698022us-gaap:CommonStockMember2022-06-30 0001698022us-gaap:AdditionalPaidInCapitalMember2022-06-30 0001698022us-gaap:RetainedEarningsMember2022-06-30 0001698022us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-30 00016980222022-06-30 0001698022us-gaap:CommonStockMember2022-07-012022-09-30 0001698022us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-30 0001698022us-gaap:RetainedEarningsMember2022-07-012022-09-30 0001698022us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-30 0001698022us-gaap:CommonStockMember2022-09-30 0001698022us-gaap:AdditionalPaidInCapitalMember2022-09-30 0001698022us-gaap:RetainedEarningsMember2022-09-30 0001698022us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-30 0001698022us-gaap:CommonStockMember2021-12-31 0001698022us-gaap:AdditionalPaidInCapitalMember2021-12-31 0001698022us-gaap:RetainedEarningsMember2021-12-31 0001698022us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-31 0001698022us-gaap:CommonStockMember2022-01-012022-09-30 0001698022us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-30 0001698022us-gaap:RetainedEarningsMember2022-01-012022-09-30 0001698022us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-30 xbrli:pure 0001698022fmfg:FirstCommunityBankersInsuranceCoLLCMember2022-01-012022-09-30 0001698022us-gaap:USStatesAndPoliticalSubdivisionsMember2022-09-30 0001698022fmfg:SBAPoolsMember2022-09-30 0001698022us-gaap:CorporateDebtSecuritiesMember2022-09-30 0001698022us-gaap:MortgageBackedSecuritiesMember2022-09-30 0001698022us-gaap:USStatesAndPoliticalSubdivisionsMember2021-12-31 0001698022fmfg:SBAPoolsMember2021-12-31 0001698022us-gaap:CorporateDebtSecuritiesMember2021-12-31 0001698022us-gaap:MortgageBackedSecuritiesMember2021-12-31 0001698022us-gaap:AssetPledgedAsCollateralMemberfmfg:GovernmentDepositsAndSecuritiesSoldUnderRepurchaseAgreementMember2022-09-30 0001698022us-gaap:AssetPledgedAsCollateralMemberfmfg:GovernmentDepositsAndSecuritiesSoldUnderRepurchaseAgreementMember2021-12-31 0001698022fmfg:SecuritiesCalledAtAPremiumMember2022-01-012022-09-30 0001698022fmfg:SecuritiesCalledAtAPremiumMember2021-01-012021-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:SBACaresActPaycheckProtectionProgramMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:SBACaresActPaycheckProtectionProgramMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:SBACaresActPaycheckProtectionProgramMember2021-01-012021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:SBACaresActPaycheckProtectionProgramMember2022-01-012022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:SBACaresActPaycheckProtectionProgramMember2021-01-012021-09-30 0001698022fmfg:NonaccrualLoansMember2022-09-30 0001698022fmfg:NonaccrualLoansMember2022-01-012022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMember2022-07-31 00016980222021-01-012021-12-31 0001698022fmfg:NonaccrualLoansMember2021-12-31 0001698022fmfg:NonaccrualLoansMember2021-01-012021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:FinancialAssetPastDueMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:FinancialAssetNotPastDueMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-09-30 0001698022us-gaap:FinancingReceivables30To59DaysPastDueMember2022-09-30 0001698022us-gaap:FinancingReceivables60To89DaysPastDueMember2022-09-30 0001698022us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-09-30 0001698022us-gaap:FinancialAssetPastDueMember2022-09-30 0001698022us-gaap:FinancialAssetNotPastDueMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:FinancialAssetPastDueMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:FinancialAssetNotPastDueMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2021-12-31 0001698022us-gaap:FinancingReceivables30To59DaysPastDueMember2021-12-31 0001698022us-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-31 0001698022us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-31 0001698022us-gaap:FinancialAssetPastDueMember2021-12-31 0001698022us-gaap:FinancialAssetNotPastDueMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMember2022-01-012022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMember2022-01-012022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMember2022-01-012022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMember2021-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMember2021-01-012021-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMember2021-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMember2021-01-012021-09-30 0001698022us-gaap:CommercialPortfolioSegmentMember2021-09-30 0001698022us-gaap:CommercialPortfolioSegmentMember2021-01-012021-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMember2021-01-012021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMember2021-01-012021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMember2021-01-012021-12-31 0001698022fmfg:ImpairedLoansMember2022-01-012022-09-30 0001698022fmfg:ImpairedLoansMember2021-01-012021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberfmfg:ExcellentMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberfmfg:AboveAverageMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberfmfg:AverageMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberfmfg:AcceptableMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:PassMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:SpecialMentionMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:SubstandardMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:DoubtfulMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberfmfg:ExcellentMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberfmfg:AboveAverageMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberfmfg:AverageMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberfmfg:AcceptableMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:PassMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:SpecialMentionMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:SubstandardMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:DoubtfulMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberfmfg:ExcellentMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberfmfg:AboveAverageMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberfmfg:AverageMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberfmfg:AcceptableMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:PassMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:SpecialMentionMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:SubstandardMember2022-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:DoubtfulMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:ExcellentMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:AboveAverageMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:AverageMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:AcceptableMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:SpecialMentionMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:SubstandardMember2022-09-30 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:DoubtfulMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberfmfg:ExcellentMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberfmfg:AboveAverageMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberfmfg:AverageMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberfmfg:AcceptableMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:PassMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:SpecialMentionMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:SubstandardMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:DoubtfulMember2022-09-30 0001698022fmfg:ExcellentMember2022-09-30 0001698022fmfg:AboveAverageMember2022-09-30 0001698022fmfg:AverageMember2022-09-30 0001698022fmfg:AcceptableMember2022-09-30 0001698022us-gaap:PassMember2022-09-30 0001698022us-gaap:SpecialMentionMember2022-09-30 0001698022us-gaap:SubstandardMember2022-09-30 0001698022us-gaap:DoubtfulMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberfmfg:ExcellentMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberfmfg:AboveAverageMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberfmfg:AverageMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberfmfg:AcceptableMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:PassMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:SpecialMentionMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:SubstandardMember2021-12-31 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:DoubtfulMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberfmfg:ExcellentMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberfmfg:AboveAverageMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberfmfg:AverageMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberfmfg:AcceptableMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:PassMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:SpecialMentionMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:SubstandardMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMemberus-gaap:DoubtfulMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberfmfg:ExcellentMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberfmfg:AboveAverageMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberfmfg:AverageMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberfmfg:AcceptableMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:PassMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:SpecialMentionMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:SubstandardMember2021-12-31 0001698022us-gaap:ResidentialPortfolioSegmentMemberus-gaap:DoubtfulMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:ExcellentMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:AboveAverageMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:AverageMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberfmfg:AcceptableMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:SpecialMentionMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:SubstandardMember2021-12-31 0001698022us-gaap:CommercialPortfolioSegmentMemberus-gaap:DoubtfulMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberfmfg:ExcellentMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberfmfg:AboveAverageMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberfmfg:AverageMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberfmfg:AcceptableMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:PassMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:SpecialMentionMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:SubstandardMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMemberus-gaap:DoubtfulMember2021-12-31 0001698022fmfg:ExcellentMember2021-12-31 0001698022fmfg:AboveAverageMember2021-12-31 0001698022fmfg:AverageMember2021-12-31 0001698022fmfg:AcceptableMember2021-12-31 0001698022us-gaap:PassMember2021-12-31 0001698022us-gaap:SpecialMentionMember2021-12-31 0001698022us-gaap:SubstandardMember2021-12-31 0001698022us-gaap:DoubtfulMember2021-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2022-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMember2022-01-012022-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberfmfg:ConstructionAndLandDevelopmentMember2022-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ResidentialPortfolioSegmentMember2022-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:CommercialPortfolioSegmentMember2022-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMember2022-01-012022-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ConsumerPortfolioSegmentMember2022-09-30 0001698022us-gaap:UnallocatedFinancingReceivablesMember2021-12-31 0001698022us-gaap:UnallocatedFinancingReceivablesMember2022-01-012022-09-30 0001698022us-gaap:UnallocatedFinancingReceivablesMember2022-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:UnallocatedFinancingReceivablesMember2022-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMember2022-09-30 0001698022us-gaap:CommercialRealEstatePortfolioSegmentMember2020-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2021-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMember2020-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMember2021-01-012021-09-30 0001698022fmfg:ConstructionAndLandDevelopmentMember2021-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberfmfg:ConstructionAndLandDevelopmentMember2021-09-30 0001698022us-gaap:ResidentialPortfolioSegmentMember2020-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ResidentialPortfolioSegmentMember2021-09-30 0001698022us-gaap:CommercialPortfolioSegmentMember2020-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:CommercialPortfolioSegmentMember2021-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMember2020-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMember2021-01-012021-09-30 0001698022us-gaap:ConsumerPortfolioSegmentMember2021-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ConsumerPortfolioSegmentMember2021-09-30 0001698022us-gaap:UnallocatedFinancingReceivablesMember2020-12-31 0001698022us-gaap:UnallocatedFinancingReceivablesMember2021-01-012021-09-30 0001698022us-gaap:UnallocatedFinancingReceivablesMember2021-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:UnallocatedFinancingReceivablesMember2021-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMember2021-09-30 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2021-12-31 0001698022fmfg:ConstructionAndLandDevelopmentMember2021-01-012021-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberfmfg:ConstructionAndLandDevelopmentMember2021-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ResidentialPortfolioSegmentMember2021-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:CommercialPortfolioSegmentMember2021-12-31 0001698022us-gaap:ConsumerPortfolioSegmentMember2021-01-012021-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-31 0001698022us-gaap:UnallocatedFinancingReceivablesMember2021-01-012021-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMemberus-gaap:UnallocatedFinancingReceivablesMember2021-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMember2021-12-31 0001698022us-gaap:FinancialAssetAcquiredWithCreditDeteriorationMember2022-01-012022-09-30 0001698022us-gaap:CoreDepositsMember2021-12-31 0001698022us-gaap:CoreDepositsMember2022-01-012022-06-30 00016980222022-01-012022-06-30 0001698022us-gaap:CoreDepositsMember2022-06-30 utr:Y 0001698022us-gaap:CoreDepositsMember2021-01-012022-09-30 0001698022us-gaap:CoreDepositsMember2022-09-30 0001698022us-gaap:OtherAssetsMember2021-09-30 0001698022us-gaap:OtherAssetsMember2021-12-31 0001698022us-gaap:OtherLiabilitiesMember2021-09-30 0001698022us-gaap:OtherLiabilitiesMember2021-12-31 0001698022fmfg:OtherRealEstateOwnedMember2022-01-012022-09-30 0001698022fmfg:ImpairedLoansMember2022-01-012022-09-30 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2022-09-30 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2022-09-30 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2022-09-30 0001698022us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2022-09-30 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberfmfg:SBAPoolsMember2022-09-30 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberfmfg:SBAPoolsMember2022-09-30 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberfmfg:SBAPoolsMember2022-09-30 0001698022us-gaap:FairValueMeasurementsRecurringMemberfmfg:SBAPoolsMember2022-09-30 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-09-30 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-09-30 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-09-30 0001698022us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-09-30 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2022-09-30 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2022-09-30 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2022-09-30 0001698022us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2022-09-30 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-30 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-30 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-30 0001698022us-gaap:FairValueMeasurementsRecurringMember2022-09-30 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-09-30 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-09-30 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-09-30 0001698022us-gaap:FairValueMeasurementsNonrecurringMember2022-09-30 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2021-12-31 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2021-12-31 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2021-12-31 0001698022us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2021-12-31 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberfmfg:SBAPoolsMember2021-12-31 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberfmfg:SBAPoolsMember2021-12-31 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberfmfg:SBAPoolsMember2021-12-31 0001698022us-gaap:FairValueMeasurementsRecurringMemberfmfg:SBAPoolsMember2021-12-31 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CorporateDebtSecuritiesMember2021-12-31 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CorporateDebtSecuritiesMember2021-12-31 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CorporateDebtSecuritiesMember2021-12-31 0001698022us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CorporateDebtSecuritiesMember2021-12-31 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2021-12-31 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2021-12-31 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2021-12-31 0001698022us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2021-12-31 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-31 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-31 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-31 0001698022us-gaap:FairValueMeasurementsRecurringMember2021-12-31 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-31 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-31 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-31 0001698022us-gaap:FairValueMeasurementsNonrecurringMember2021-12-31 0001698022fmfg:ImpairedCommercialRealEstateLoansMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-09-30 0001698022fmfg:ImpairedCommercialRealEstateLoansMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-01-012022-09-30 0001698022fmfg:ImpairedCommercialLoansMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-09-30 0001698022fmfg:ImpairedCommercialLoansMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-01-012022-09-30 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-01-012022-09-30 0001698022fmfg:OtherRealEstateOwnedMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-09-30 0001698022fmfg:OtherRealEstateOwnedMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-01-012022-09-30 0001698022fmfg:ImpairedCommercialRealEstateLoansMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-31 0001698022fmfg:ImpairedCommercialRealEstateLoansMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-01-012021-12-31 0001698022fmfg:ImpairedCommercialLoansMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-31 0001698022fmfg:ImpairedCommercialLoansMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-01-012021-12-31 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-01-012021-12-31 0001698022fmfg:OtherRealEstateOwnedMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-31 0001698022fmfg:OtherRealEstateOwnedMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-01-012021-12-31 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-30 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-09-30 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-31 0001698022us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-31 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-30 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-09-30 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-31 0001698022us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-31 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-30 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-09-30 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-12-31 0001698022us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-31 0001698022fmfg:ProfitSharingPlanMember2022-01-012022-09-30 0001698022us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2022-09-30 0001698022us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2022-07-012022-09-30 0001698022us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2021-07-012021-09-30 0001698022us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2022-01-012022-09-30 0001698022us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember2021-01-012021-09-30
 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  
 For quarterly period ended September 30, 2022

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 For the transition period from _______________ to ________________

 

Commission file number 000-55756

 

Farmers and Merchants Bancshares, Inc.

(Exact name of registrant as specified in its charter)

 

Maryland 81-3605835

(State or other jurisdiction of

incorporation or organization)

 (I. R. S. Employer Identification No.)

 

4510 Lower Beckleysville Road, Suite H, Hampstead, Maryland         21074

(Address of principal executive offices)          (Zip Code)

 

(410) 374-1510

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer ☐Accelerated filer ☐
Non-accelerated filerSmaller reporting company
Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No ☑

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 3,053,487 as of November 10, 2022.

 

 

 

 

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

 

Table of Contents

 

  Page
 

 

PART I – FINANCIAL INFORMATION 3
   
Item 1. Financial Statements 3
   
  Consolidated balance sheets at September 30, 2022 (unaudited) and December 31, 2021 3
     
  Consolidated statements of income (unaudited) for the three and nine months ended September 30, 2022 and 2021 4
     
  Consolidated statements of comprehensive income (loss) (unaudited) for the three and nine months ended September 30, 2022 and 2021 5
     
  Consolidated statements of changes in stockholders’ equity (unaudited) for the three and nine months ended September 30, 2022 and 2021 6
     
  Consolidated statements of cash flows (unaudited) for the nine months ended September 30, 2022 and 2021 7
     
  Notes to financial statements (unaudited) 9
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 41
   
Item 4. Controls and Procedures 41
   
PART II – OTHER INFORMATION 42
   
Item 1. Legal Proceedings 42
   
Item 1A. Risk Factors 42
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 42
   
Item 3. Defaults upon Senior Securities 42
   
Item 4. Mine Safety Disclosures 42
   
Item 5. Other Information 42
   
Item 6. Exhibits 42
   
SIGNATURES 44

 

2

 

  

PART I FINANCIAL INFORMATION

Item 1 Financial Statements

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

 

 
  

September 30,

  

December 31,

 
  

2022

  

2021

 
         

Assets

     
         

Cash and due from banks

 $14,495,448  $25,258,932 

Federal funds sold and other interest-bearing deposits

  1,536,296   1,203,174 

Cash and cash equivalents

  16,031,744   26,462,106 

Certificates of deposit in other banks

  100,000   350,000 

Securities available for sale, at fair value

  128,614,033   149,237,916 

Securities held to maturity, at cost

  20,537,254   21,851,975 

Equity security, at fair value

  486,237   543,605 

Restricted stock, at cost

  695,000   675,400 

Mortgage loans held for sale

  370,000   126,500 

Loans, less allowance for loan losses of $3,747,178 and $3,650,268

  505,395,375   482,011,334 

Premises and equipment, net

  6,316,605   6,259,421 

Accrued interest receivable

  1,600,382   1,609,063 

Deferred income taxes, net

  8,347,805   2,177,450 

Other real estate owned, net

  1,242,365   1,242,365 

Bank owned life insurance

  14,535,898   11,556,163 

Goodwill and other intangibles, net

  7,044,834   7,051,080 

Other assets

  5,817,259   5,522,877 
  $717,134,791  $716,677,255 
         

Liabilities and Stockholders' Equity

 
         

Deposits

        

Noninterest-bearing

 $131,269,680  $124,175,615 

Interest-bearing

  507,700,154   502,239,055 

Total deposits

  638,969,834   626,414,670 

Securities sold under repurchase agreements

  5,422,642   5,414,026 

Federal Home Loan Bank of Atlanta advances

  5,000,000   5,000,000 

Long-term debt, net of issuance costs

  15,566,458   16,978,905 

Accrued interest payable

  260,266   295,910 

Other liabilities

  6,072,683   5,952,286 
   671,291,883   660,055,797 

Stockholders' equity

        

Common stock, par value $.01 per share, authorized 5,000,000 shares; issued and outstanding 3,053,487 in 2022 and 3,037,137 shares in 2021

  30,535   30,372 

Additional paid-in capital

  29,197,340   28,857,422 

Retained earnings

  34,263,001   29,128,600 

Accumulated other comprehensive loss

  (17,647,968)  (1,394,936)
   45,842,908   56,621,458 
  $717,134,791  $716,677,255 

 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

 

3

 

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

 

 
  

Three months ended

  

Nine months ended

 
  

September 30,

  

September 30,

 
  

2022

  

2021

  

2022

  

2021

 
                 

Interest income

                

Loans, including fees

 $5,606,913  $6,059,709  $16,660,625  $17,828,026 

Investment securities - taxable

  783,606   426,886   2,170,154   967,841 

Investment securities - tax exempt

  140,185   149,375   430,495   462,361 

Federal funds sold and other interest earning assets

  55,361   18,298   89,663   47,743 

Total interest income

  6,586,065   6,654,268   19,350,937   19,305,971 
                 

Interest expense

                

Deposits

  313,556   460,377   971,320   1,589,334 

Securities sold under repurchase agreements

  2,874   9,647   8,558   38,130 

Federal Home Loan Bank advances and long-term debt

  177,883   192,255   543,033   570,542 

Total interest expense

  494,313   662,279   1,522,911   2,198,006 

Net interest income

  6,091,752   5,991,989   17,828,026   17,107,965 
                 

Provision for loan losses

  95,000   330,000   95,000   430,000 
                 

Net interest income after provision for loan losses

  5,996,752   5,661,989   17,733,026   16,677,965 
                 

Noninterest income

                

Service charges on deposit accounts

  201,251   187,141   574,444   522,815 

Mortgage banking income

  8,155   207,471   195,829   704,404 

Bank owned life insurance income

  70,479   49,116   179,735   174,602 

Fair value adjustment on equity security

  (17,611)  (2,056)  (62,524)  (10,214)

Gain on sale of SBA loans

  -   6,917   158,123   6,917 

Gain on premium call of debt security

  -   621   -   9,190 

Other fees and commissions

  75,211   82,768   229,326   229,765 

Total noninterest income

  337,485   531,978   1,274,933   1,637,479 
                 

Noninterest expense

                

Salaries

  1,987,991   1,895,780   5,656,643   5,366,854 

Employee benefits

  418,422   388,879   1,367,829   1,299,900 

Occupancy

  229,273   241,557   670,938   737,087 

Furniture and equipment

  203,075   198,190   642,283   578,562 

Other

  945,930   740,722   2,815,182   2,386,982 

Total noninterest expense

  3,784,691   3,465,128   11,152,875   10,369,385 
                 

Income before income taxes

  2,549,546   2,728,839   7,855,084   7,946,059 

Income taxes

  575,236   606,292   1,779,239   1,761,718 

Net income

 $1,974,310  $2,122,547  $6,075,845  $6,184,341 
                 

Earnings per share - basic and diluted

 $0.65  $0.70  $2.00  $2.05 

 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

 

4

 

 

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

 

 

 
  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2022

  

2021

  

2022

  

2021

 
                 

Net income

 $1,974,310  $2,122,547  $6,075,845  $6,184,341 
                 

Other comprehensive loss, net of income taxes:

                
                 

Securities available for sale

                

Net unrealized loss arising during the period

  (5,960,588)  (321,489)  (22,423,388)  (1,428,240)
                 

Reclassification adjustment for realized gains and losses included in net income

  -   621   -   9,190 

Total unrealized loss on investment securities available for sale

                
                 

Income tax benefit

  (1,640,205)  (88,295)  (6,170,356)  (390,487)

Total other comprehensive loss

  (4,320,383)  (232,573)  (16,253,032)  (1,028,563)
                 

Total comprehensive (loss) income

 $(2,346,073) $1,889,974  $(10,177,187) $5,155,778 

 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

 

5

 

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

Three and nine months Ended September 30, 2022 and 2021

(Unaudited)

 

 

 
          

Additional

      

Accumulated other

  

Total

 
  

Common stock

  

paid-in

  

Retained

  

comprehensive

  

stockholders'

 
  

Shares

  

Par value

  

capital

  

earnings

  

income (loss)

  

equity

 

Three months ended September 30, 2021

                     

Balance, June 30, 2021

  3,023,487  $30,235  $28,557,249  $25,917,571  $(89,713) $54,415,342 

Net income

  -   -   -   2,122,547   -   2,122,547 

Other comprehensive loss

  -   -   -   -   (232,573)  (232,573)
                         

Balance, September 30, 2021

  3,023,487  $30,235  $28,557,249  $28,040,118  $(322,286) $56,305,316 
                         

Nine months ended September 30, 2021

                     

Balance, December 31, 2020

  3,011,255  $30,113  $28,294,139  $22,698,954  $706,277  $51,729,483 

Net income

  -   -   -   6,184,341   -   6,184,341 

Other comprehensive loss

  -   -   -   -   (1,028,563)  (1,028,563)

Cash dividends, $0.28 per share

  -   -   -   (843,177)  -   (843,177)

Dividends reinvested

  12,232   122   263,110   -   -   263,232 
                         

Balance, September 30, 2021

  3,023,487  $30,235  $28,557,249  $28,040,118  $(322,286) $56,305,316 
                         

Three months ended September 30, 2022

                     

Balance, June 30, 2022

  3,053,487  $30,535  $29,197,475  $32,288,555  $(13,327,585) $48,188,980 

Net income

  -   -   -   1,974,310   -   1,974,310 

Other comprehensive loss

  -   -   -   -   (4,320,383)  (4,320,383)

Dividend reinvestment adjustment

  -   -   (135)  136   -   1 
                         

Balance, September 30, 2022

  3,053,487  $30,535  $29,197,340  $34,263,001  $(17,647,968) $45,842,908 
                         

Nine months ended September 30, 2022

                     

Balance, December 31, 2021

  3,037,137  $30,372  $28,857,422  $29,128,600  $(1,394,936) $56,621,458 

Net income

  -   -   -   6,075,845   -   6,075,845 

Other comprehensive loss

  -   -   -   -   (16,253,032)  (16,253,032)

Cash dividends, $0.31 per share

  -   -   -   (941,444)  -   (941,444)

Dividends reinvested

  16,350   163   339,918   -   -   340,081 
                         

Balance, September 30, 2022

  3,053,487  $30,535  $29,197,340  $34,263,001  $(17,647,968) $45,842,908 

 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements

 

6

 

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

2022

  

2021

 
         

Reconciliation of net income to net cash provided by operating activities

        

Net income

 $6,075,845  $6,184,341 

Adjustments to reconcile net income to net cash provided by operating activities

        

Depreciation and amortization

  354,814   356,439 

Provision for loan losses

  95,000   430,000 

Amortization of right of use asset

  4,412   14,023 

Equity security dividends reinvested

  (5,156)  (4,997)

Fair value adjustment on equity security

  62,524   10,214 

Gain on sale of SBA loans

  (158,123)  (6,917)

Gain on sale of premises and equipment

  -   (44,510)

Gain on premium call of debt security

  -   (9,190)

Amortization of debt issuance costs

  4,218   4,219 

Amortization of premiums and accretion of discounts, net

  (237,876)  (38,029)

Bank owned life insurance cash surrender value

  (179,735)  (232,983)

Increase (decrease) in

        

Deferred loan fees and costs, net

  (136,377)  105 

Accrued interest payable

  (35,644)  (86,202)

Other liabilities

  228,072   777,175 

Decrease (increase) in

        

Mortgage loans held for sale

  (243,500)  (84,200)

Accrued interest receivable

  8,681   478,044 

Other assets

  (433,594)  493,856 

Net cash provided by operating activities

  5,403,561   8,241,388 

 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements

 

7

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

 

 

Nine Months Ended September 30,

 

2022

  

2021

 
         
         

Cash flows from investing activities

        

Proceeds from maturity and call of securities

        

Available for sale

  15,121,772   24,273,762 

Held to maturity

  1,398,420   2,121,989 

Purchase of securities

        

Available for sale

  (17,278,216)  (92,992,748)

Held to maturity

  -   (842,061)

Maturity of certificates of deposit

  250,000   500,000 

Loans made to customers, net of principal collected

  (24,044,676)  25,701,580 

Proceeds from sale of SBA loans

  1,250,154   61,595 

Redemption (purchase) of stock in FHLB of Atlanta

  (19,600)  225,100 

Purchase of bank owned life insurance

  (2,800,000)  (28,855)

Purchase of annuity

  -   (3,671,145)

Proceeds from sale of premises and equipment

  -   1,387,613 

Purchases of premises, equipment and software

  (384,873)  (227,010)

Net cash used in investing activities

  (26,507,019)  (43,490,180)
         

Cash flows from financing activities

        

Net increase (decrease) in

        

Noninterest-bearing deposits

  7,094,065   22,686,309 

Interest-bearing deposits

  5,588,443   26,047,473 

Securities sold under repurchase agreements

  8,616   (14,278,851)

Long-term debt principal payments

  (1,416,665)  - 

Dividends paid, net of reinvestments

  (601,363)  (579,945)
         

Net cash provided by financing activities

  10,673,096   33,874,986 
         

Net decrease in cash and cash equivalents

  (10,430,362)  (1,373,806)
         

Cash and cash equivalents at beginning of period

  26,462,106   40,975,670 

Cash and cash equivalents at end of period

 $16,031,744  $39,601,864 
         

Supplementary disclosure of cash flow information:

        

Cash paid during the period for interest

 $1,675,435  $2,476,513 

Cash paid during the period for income taxes

  2,531,122   1,065,000 

Supplementary disclosure of noncash investing an financing activities:

     

Net unrealized loss on securities available for sale

 $(22,423,388) $(1,428,240)

 

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements

 

8

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

 

 

1.          Principles of consolidation

 

The consolidated financial statements include the accounts of Farmers and Merchants Bancshares, Inc. and its wholly owned subsidiaries, Farmers and Merchants Bank (the “Bank”), and Series Protected Cell FCB-4 (the “Insurance Subsidiary”), and one subsidiary of the Bank, Reliable Community Financial Services, Inc. (collectively the “Company”, “we”, “us”, or “our”). The Insurance Subsidiary constitutes an investment by Farmers and Merchants Bancshares, Inc. in 100% of a series of membership interests issued by First Community Bankers Insurance Co., LLC, a Tennessee “series” limited liability company and licensed property and casualty insurance company. Intercompany balances and transactions, including the insurance premium paid by the Bank to the Insurance Subsidiary through an intermediary, have been eliminated.

 

 

2.          Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the results of operations for the interim periods have been made. Such adjustments were normal and recurring in nature. The results of operations for the three- and nine- month periods ended September 30, 2022 do not necessarily reflect the results that may be expected for the fiscal year ending December 31, 2022 or any future interim period. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2021, which are included in Farmers and Merchants Bancshares, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2021 that was filed with the Securities and Exchange Commission (the “SEC”).

 

Recent Accounting Pronouncements

 

In June 2016, FASB issued Accounting Standards Update (“ASU”) 2016‑13, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (CECL) model that requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. ASU 2019-10 “Financial Instruments – Credit Losses (Topic 326), Derivatives and hedging (Topic 815), and Leases (Topic 842): Effective Dates” extended the implementation date to January 1, 2023 for SEC-registered smaller reporting companies and private companies. The Company is a smaller reporting company. The Company has engaged a third-party vendor to assist in the implementation of this ASU. The CECL model is being run parallel with the current calculation of the allowance for loan losses during 2022. The detailed loan data was successfully uploaded to the new model for both March 31, June 30, 2022, and September 30, 2022. Loan categories have been finalized and qualitative factors are being fine-tuned. Model validation is in process. Several members of the Company’s senior management and credit administration teams are participating in the implementation.

 

9

 

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

 

2. Basis of Presentation (continued)

 

 

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 843)”: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU Provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effect of) reference rate reform, on financial reporting. The risk of termination of the London Interbank Offered Rate (LIBOR), has caused regulators to undertake reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based that are less susceptible to manipulation. ASU 2020-04 is effective between March 12, 2020 and December 31, 2022. The Company has identified its products that utilize LIBOR and has begun efforts to transition to the Secured Overnight Financing Rate in 2023. Borrowers have been notified of the pending change.

 

In March 2022, the FASB issued ASU No. 2022-02, “Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022-02 addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require a public business entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The amendments in this ASU should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. For entities that have adopted ASU 2016-13, ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For entities that have not yet adopted ASU 2016-13, the effective dates for ASU 2022-02 are the same as the effective dates in ASU 2016-13. Early adoption is permitted if an entity has adopted ASU 2016-13. An entity may elect to early adopt the amendments about TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. The Company is currently assessing the impact that ASU 2022-02 will have on its consolidated financial statements.

 

The accounting policies adopted by management are consistent with authoritative GAAP and are consistent with those followed by our peers.

 

10

  

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

 

 

3.          Investment Securities

 

Investments in debt securities are summarized as follows:

 

   

Amortized

   

Unrealized

   

Unrealized

   

Fair

 

September 30, 2022

 

cost

   

gains

   

losses

   

value

 
                                 

Available for sale

                               
                                 

State and municipal

  $ 570,310     $ -     $ 22,581     $ 547,729  

SBA pools

    1,119,622       1,796       15,363       1,106,055  

Corporate bonds

    10,429,690       -       1,001,138       9,428,552  

Mortgage-backed securities

    140,842,314       152       23,310,769       117,531,697  
    $ 152,961,936     $ 1,948     $ 24,349,851     $ 128,614,033  
                                 

Held to maturity

                               
                                 

State and municipal

  $ 20,537,254     $ 1,375     $ 2,112,198     $ 18,426,431  

 

   

Amortized

   

Unrealized

   

Unrealized

   

Fair

 

December 31, 2021

 

cost

   

gains

   

losses

   

value

 
                                 

Available for sale

                               
                                 

State and municipal

  $ 753,061     $ 10,437     $ -     $ 763,498  

SBA pools

    1,418,770       1,656       22,664       1,397,762  

Corporate bonds

    9,225,153       64,595       55,541       9,234,207  

Mortgage-backed securities

    139,765,445       336,084       2,259,080       137,842,449  
    $ 151,162,429     $ 412,772     $ 2,337,285     $ 149,237,916  
                                 

Held to maturity

                               
                                 

State and municipal

  $ 21,851,975     $ 1,020,877     $ 67,251     $ 22,805,601  

 

11

 
 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

 

3.          Investment Securities (continued)

 

Contractual maturities, shown below, will differ from actual maturities because borrowers and issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

   

Available for Sale

   

Held to Maturity

 
   

Amortized

   

Fair

   

Amortized

   

Fair

 

September 30, 2022

 

cost

   

value

   

cost

   

value

 
                                 

Within one year

  $ 70,310     $ 69,699     $ 330,000     $ 330,172  

Over one to five years

    3,602,980       3,415,812       473,510       464,965  

Over five to ten years

    7,326,710       6,490,770       2,246,345       2,088,287  

Over ten years

    -       -       17,487,399       15,543,007  
      11,000,000       9,976,281       20,537,254       18,426,431  

Mortgage-backed securities and

                               

SBA pools, due in monthlyinstallments

    141,961,936       118,637,752       -       -  
    $ 152,961,936     $ 128,614,033     $ 20,537,254     $ 18,426,431  

 

 

Securities with a carrying value of $14,245,224 and $14,307,989 as of September 30, 2022 and December 31, 2021, respectively, were pledged as collateral for government deposits and securities sold under repurchase agreements.

 

During the nine months ended September 30, 2022, there were no sales of securities. During the nine months ended September 30, 2021, the Company received proceeds of $1,263,845 from the call at a premium of available for sale investment securities. The Company realized a $9,190 gain on the call of the securities.

 

12

 
 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

 

3.          Investment Securities (continued)

 

The following table sets forth the Company’s gross unrealized losses on a continuous basis for investments in debt securities, by category and length of time, at September 30, 2022 and December 31, 2021.

 

September 30, 2022

 

Less than 12 months

   

12 months or more

   

Total

 

Description of investments

 

Fair Value

   

Unrealized

Loss

   

Fair Value

   

Unrealized

Loss

   

Fair Value

   

Unrealized

Loss

 
                                                 

State and municipal

  $ 13,564,241     $ 1,565,843     $ 1,556,463     $ 568,936     $ 15,120,704     $ 2,134,779  

SBA pools

    -       -       923,700       15,363       923,700       15,363  

Corporate bonds

    8,039,155       875,570       989,397       125,568       9,028,552       1,001,138  

Mortgage-backed securities

    64,335,274       10,303,353       53,002,811       13,007,416       117,338,085       23,310,769  

Total

  $ 85,938,670     $ 12,744,766     $ 56,472,371     $ 13,717,283     $ 142,411,041     $ 26,462,049  

 

December 31, 2021

 

Less than 12 months

   

12 months or more

   

Total

 

Description of investments

 

Fair value

   

Unrealized

loss

   

Fair value

   

Unrealized

loss

   

Fair value

   

Unrealized

loss

 
                                                 

State and municipal

  $ 1,324,648     $ 35,720     $ 715,650     $ 31,531     $ 2,040,298     $ 67,251  

SBA pools

    -       -       1,133,398       22,664       1,133,398       22,664  

Corporate bonds

    5,443,886       55,541       -       -       5,443,886       55,541  

Mortgage-backed securities

    117,840,965       2,034,858       4,781,586       224,222       122,622,551       2,259,080  

Total

  $ 124,609,499     $ 2,126,119     $ 6,630,634     $ 278,417     $ 131,240,133     $ 2,404,536  

 

 

Held to maturity securities are securities that the Company has both the ability and the intent to hold until they mature, at which time the Company should receive full value for the securities. As of September 30, 2022 and December 31, 2021, management did not have the intent to sell any of the held to maturity or available for sale securities with unrealized losses before a recovery of cost. The unrealized losses detailed in the table above were due to increases in market interest rates over the yields available at the time the underlying securities were purchased as well as other market conditions for each particular security based upon the structure and remaining principal balance. The fair values of the debt securities are expected to recover as the securities approach their maturity dates or repricing dates or if market yields for such investments decline. Based on the foregoing factors, as of September 30, 2022 and December 31, 2021, management believes that these unrealized losses are temporary and, accordingly, they have not been recognized in the Company’s consolidated statements of income. At September 30, 2022, 179 available for sale securities and 38 held to maturity securities had unrealized losses.

 

At September 30, 2022, none of the available for sale securities or held to maturity securities were other-than-temporarily impaired. In determining whether other-than-temporary impairment exists, management considers many factors, including (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) whether the Bank intends to sell the security, whether it is more likely than not that the Bank will be required to sell the security before recovery of its amortized cost basis, and whether the Bank expects to recover the security’s entire amortized cost basis. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

 

13

  

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

 

 

4.         Loans

Major categories of loans are as follows:

 

   

September 30,

   

December 31,

 
   

2022

   

2021

 

Real estate:

               

Commercial

  $ 342,620,080     $ 319,185,116  

Construction and land development

    24,416,365       28,221,854  

Residential

    113,435,287       107,436,033  

Commercial

    28,885,402       31,182,206  

Consumer

    368,607       355,958  
      509,725,741       486,381,167  

Less: Allowance for loan losses

    3,747,178       3,650,268  

Deferred origination fees net of costs

    583,188       719,565  
    $ 505,395,375     $ 482,011,334  

 

Commercial loans in the table above include $0.7 million and $9.7 million of Paycheck Protection Program (“PPP”) loans as of September 30, 2022 and December 31, 2021, respectively, which are 100% guaranteed by the Small Business Administration (“SBA”). $60 million were originated during 2021 and 2020 and we collected approximately $2,323,000 in fees from the SBA. The fees, net of related origination costs, are being recognized as interest income over the term of the loans using the straight-line method, with accelerated recognition when the loan pays off before maturity through SBA forgiveness or other means. Income from PPP loans, net of taxes, added approximately $181,000 for the nine months ended September 30, 2022 compared to $679,000 for the same period in 2021.

 

Nonaccrual loans, segregated by class of loans, were as follows:

 

   

September 30,

   

December 31,

 
   

2022

   

2021

 

Commercial real estate

  $ 502,961     $ 4,810,965  

Residential real estate

    31,500       31,500  

Commercial

    152,449       152,449  
    $ 686,910     $ 4,994,914  

 

At September 30, 2022, the Company had one nonaccrual commercial real estate loan totaling $502,961, one nonaccrual residential real estate loan totaling $31,500, and one nonaccrual commercial loan totaling $152,449. The loans were secured by real estate, business assets, and personal guarantees. Gross interest income of $38,155 would have been recorded for the nine months ended September 30, 2022 had these nonaccrual loans been current and performing in accordance with their original terms. The Company allocated $281,910 of its allowance for loan losses to these nonaccrual loans. The recorded investment of the nonaccrual loans was net of charge-offs and a nonaccretable discount totaling $8,176 at September 30, 2022. The decrease in commercial real estate nonaccrual loans from December 31, 2021 to September 30, 2022 was due to a loan with a principal balance of approximately $4.3 million at December 31, 2021 resuming full principal and interest payments in July 2022.

 

14

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

 

4.         Loans (continued)

 

At December 31, 2021, the Company had two nonaccrual commercial real estate loan totaling $4,810,965 and one nonaccrual residential real estate loan totaling $31,500, and one commercial loan totaling $152,449. The real estate loans were secured by real estate and business assets and were personally guaranteed. The commercial loan was secured by business assets and was personally guaranteed. Gross interest income of $219,734 would have been recorded in 2021 if these nonaccrual loans had been current and performing in accordance with their original terms. The Company allocated $281,910 of its allowance for loan losses to these nonaccrual loans. The balance of nonaccrual loans was net of charge-offs and a nonaccretable discount totaling $27,146 at December 31, 2021.

 

An age analysis of past due loans, segregated by type of loan, is as follows:

 

                 

90 Days

                           

Past Due 90

 
 

30 - 59 Days

   

60 - 89 Days

   

or More

   

Total

           

Total

   

Days or More

 
 

Past Due

   

Past Due

   

Past Due

   

Past Due

   

Current

   

Loans

   

and Accruing

 

September 30, 2022

                                                     

Real estate:

                                                     

Commercial

$ -     $ 166,386     $ 502,961     $ 669,347     $ 341,950,733     $ 342,620,080     $ -  

Construction and land development

  -       -       -       -       24,416,365       24,416,365       -  

Residential

  -       -       31,500       31,500       113,403,787       113,435,287       -  

Commercial

  -       -       152,449       152,449       28,732,953       28,885,402       -  

Consumer

  -       -       -       -       368,607       368,607       -  

Total

$ -     $ 166,386     $ 686,910     $ 853,296     $ 508,872,445     $ 509,725,741     $ -  
                                                       

December 31, 2021

                                                     

Real estate:

                                                     

Commercial

$ -     $ -     $ 502,961     $ 502,961     $ 318,682,155     $ 319,185,116     $ -  

Construction and land development

  -       -       -       -       28,221,854       28,221,854       -  

Residential

  -       -       249,161       249,161       107,186,872       107,436,033       217,661  

Commercial

  -       -       415,690       415,690       30,766,516       31,182,206       263,241  

Consumer

  -       -       -       -       355,958       355,958       -  

Total

$ -     $ -     $ 1,167,812     $ 1,167,812     $ 485,213,355     $ 486,381,167     $ 480,902  

 

15

 

Farmers and Merchants Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

 

4.         Loans (continued)

 

Impaired loans, segregated by class of loans with average recorded investment and interest recognized for the nine months ended September 30, 2022 and the year ended December 31, 2021, are set forth in the following table:

 

   

Unpaid

   

Recorded

   

Recorded

                                 
   

Contractual

   

Investment

   

Investment

   

Total

           

Average

         
   

Principal

   

With No

   

With

   

Recorded

   

Related

   

Recorded

   

Interest

 
   

Balance

   

Allowance

   

Allowance

   

Investment

   

Allowance

   

Investment

   

Recognized

 

September 30, 2022

                                                       

Commercial real estate

  $ 7,210,361     $ 6,707,400     $ 502,961     $ 7,210,361     $ 129,461     $ 7,015,647     $ 141,479  

Residential real estate

    34,954       34,954       -       34,954       -       37,091       1,104  

Commercial

    152,449       -       152,449       152,449       152,449       152,449       -  
      7,397,764       6,742,354       655,410       7,397,764       281,910       7,205,187       142,583  
                                                         

September 30, 2021

                                                       

Commercial real estate

  $ 6,875,087     $ 6,367,416