Farmers & Merchants Bank : AND MERCHANTS BANK REPORTS SIXTH CONSECUTIVE YEAR OF RECORD EARNINGS FOR 2015

Pres Release 505

FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION CONTACT:

January 14, 2016

Farmers and Merchants Bank	Contact:	Mr. James R. Bosley, Jr.
15226 Hanover Pike	President
Upperco, Maryland 21155	410-374-1510, ext. 104

FARMERS AND MERCHANTS BANK REPORTS SIXTH CONSECUTIVE YEAR OF RECORD EARNINGS FOR 2015

UPPERCO, MARYLAND (January 14, 2016) - Farmers and Merchants Bank (the "Bank") announced that net income for the year ended December 31, 2015 was $4,268,222 or $2.61 per share compared to $3,573,973 or $2.21 per share in 2014 - the sixth consecutive year that the Bank has set a record for net income. The increase of $694,249 or 19% over 2014 was due to an increase in net interest income of $592,174, an increase in noninterest income of $745,900, and a decrease in the provision for loan losses of $124,000, offset by an increase in noninterest expense of $282,474 and an increase in income taxes of $485,351. The increase in net interest income was due to an increase in average interest earning assets of $23 million, offset by a decline in the net yield of 14 basis points. The increase in noninterest income was due primarily to an increase in the gain on the sale of other real estate owned (OREO) of $661,736 and an increase in mortgage banking income of $116,927.

Return on average equity was 12.26% in 2015 compared to 11.43% in 2014. Return on average assets was 1.29% in 2015 compared to 1.15% in 2014. Cash dividends paid to shareholders in 2015 increased 8% to $0.64 per common share from

$0.59 per common share in 2014.

The increase in noninterest income for the year included non-recurring items relating to the gain on sale of OREO and Bank owned life insurance (BOLI) fees which totaled, net of income taxes, $297,094. Excluding this amount would result in net income for 2015 of $3,971,128 or $2.43 per share - still a new record.

Net income for the three months ended December 31, 2015 was $1,081,074 or $.66 per share, compared to $939,218 or

$.58 per share per share for the same period in 2014. The increase was due to a $93,094 increase in net interest income, a

$126,534 increase in noninterest income, and a $75,000 decrease in the provision for loan losses, offset by an increase of

$140,662 in noninterest expenses and an increase of $12,110 in income taxes. The fourth quarter net income included non-recurring items totaling $94,794, net of income taxes, related to BOLI. Excluding this amount would result in net income for the quarter of $986,280 or $.60 per share.

Total assets of $345 million as of December 31, 2015 increased 7% from $323 million as of December 31, 2014. The book value of the common stock of the Bank was $21.99 per share at December 31, 2015, compared to $20.08 per share at December 31, 2014.

James R. Bosley, Jr., President and CEO, commented "Our sixth consecutive year of record earnings is testament to our long-term commitment to a high quality loan portfolio and controlled overhead costs. Our outstanding performance over the last six years is reflective of the hard work, diligence and dedication of all of our Directors, Officers and Employees."

Farmers and Merchants Bank was chartered in Maryland in 1919, and is currently celebrating over 96 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 six additional branches in Owings Mills, Hampstead, Greenmount, Reisterstown, and Westminster. Shares of the Bank's common stock are traded through NASDAQ's Over-The-Counter Bulletin Board under the symbol "FMFG.OB".