Overview

• US community bank's Q1 net income and EPS declined sharply year-over-year

• Q1 gross income rose nearly 18% year-over-year

• Earnings pressured by merger-related costs and higher back-office spending ahead of acquisition

Outlook

• Company expects additive earnings from Farmers-Merchants Bank acquisition to increase post-systems conversion

• Merchants & Marine Bancorp plans to liquidate leverage position in coming quarters

Result Drivers

• MERGER-RELATED COSTS - Co said nearly half a million dollars in non-recurring costs related to the Farmers-Merchants Bank acquisition pressured Q1 earnings

• HIGHER BACK-OFFICE SPENDING - Increased expenditures on back-office operations and systems ahead of the Farmers-Merchants Bank acquisition weighed on results

• LEVERAGE STRATEGY - Interest income rose due to a leverage strategy involving purchase of $200 mln in floating rate securities to fund acquisition costs

Company press release: ID:nBw5gzQpRa

Key Details

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