Farmers & Merchants Bank of Long Beach Reports 2018 First-Quarter Results

Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the first quarter ended March 31, 2018.

“F&M achieved strong first-quarter financial results, as we posted solid gains in interest and dividend income, while also decreasing our non-interest expenses,” said Henry Walker, president of Farmers & Merchants Bank. “At the same time, we continued to invest in F&M’s infrastructure, as the Bank grows and enhances its presence in Southern California.”

Income Statement

For the three months ended March 31, 2018, interest and dividend income rose to $61.7 million from $57.4 million a year ago. Interest expense for the 2018 first quarter was $4.4 million, compared with $3.1 million in the same period last year.

Farmers & Merchants’ net interest income for the 2018 first quarter increased to $57.3 million from $54.3 million for the first quarter of 2017.

Farmers & Merchants’ net interest margin was 3.37% for the first quarter ended March 31, 2018, compared with 3.42% at the end of the same period last year.

The Bank did not have a loan loss provision in the first quarter of 2018, nor in the first quarter of 2017. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.51% at March 31, 2018, compared with 1.58% at March 31, 2017.

Non-interest income was $6.8 million for the 2018 first quarter, compared with $9.1 million for the 2017 first quarter. Non-interest expense for the 2018 first quarter was $35.2 million, versus $36.7 million for the same period last year.

The Bank’s net income for the 2018 first quarter advanced to $21.0 million, or $160.65 per diluted share, from $20.2 million, or $154.11 per diluted share, in the 2017 first quarter.

Balance Sheet

At March 31, 2018, net loans totaled $3.88 billion, compared with $3.83 billion at December 31, 2017. The Bank’s total deposits rose to $5.47 billion at the end of the 2018 first quarter from $5.39 billion at December 31, 2017. Non-interest bearing deposits represented 37.9% of total deposits at March 31, 2018, versus 37.6% of total deposits at December 31, 2017. Total assets grew to $7.11 billion at the close of the 2018 first quarter from $6.99 billion at December 31, 2017.

At March 31, 2018, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.23%, a tier 1 risk-based capital ratio of 18.98%, a common equity tier 1 capital ratio of 18.98%, and a tier 1 leverage ratio of 13.80%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“F&M’s first-quarter asset size of more than $7 billion represents a new milestone for the Bank, which we accomplished by adhering to our sound, conservative management and operating practices,” said Daniel Walker, chief executive officer and chairman of the board. “Strong and steady growth have long been hallmarks of F&M, and we remain focused on this strategy in the Bank’s 111th year of serving its community.”

About Farmers & Merchants Bank

Founded in Long Beach in 1907 by C.J. Walker, Farmers & Merchants Bank has 24 branches across Orange County, Long Beach and the South Bay. The Bank specializes in commercial and small business banking, business loan programs, home loans, and a robust offering of consumer retail banking products, including checking, savings and youth accounts. Farmers & Merchants Bank is a California state-chartered bank with deposits insured by the Federal Deposit Insurance Corporation (Member FDIC) and an Equal Housing Lender. For more information about F&M, please visit the website, www.fmb.com.

FARMERS & MERCHANTS BANK OF LONG BEACH
Income Statements (Unaudited)
(In thousands except per share data)
		Three Months Ended March 31,
		2018			2017
Interest and dividend income:
Loans		$	44,598		$	40,853
Investment securities			16,376			15,976
Investments in FHLB and FRB stock			356			446
Interest-bearing deposits in financial institutions			353			139
Total interest and dividend income			61,683			57,414
Interest expense:
Deposits			2,857			2,337
Securities sold under repurchase agreements			1,503			763
Other borrowings			-			20
Total interest expense			4,360			3,120
Net interest income			57,323			54,294
Provision for loan losses			-			-
Net interest income after provision for loan losses			57,323			54,294
Non-interest income:
Service charges on deposit accounts			1,026			959
Other real estate owned income			-			17
Merchant bankcard income			2,881			2,612
Other income			2,887			5,502
Total non-interest income			6,794			9,090
Non-interest expense:
Salaries and employee benefits			22,096			21,002
FDIC and other insurance expense			653			632
Occupancy expense			2,287			2,161
Software and equipment expense			2,571			1,976
Other real estate owned expense			22			30
Merchant bankcard expense			2,321			2,151
Professional and legal services			1,196			75
Marketing expense			1,146			1,352
Other expense			2,924			7,272
Total non-interest expense			35,216			36,651
Income before income tax expense			28,901			26,733
Income tax expense			7,867			6,556
Net income		$	21,034		$	20,177
Basic and diluted earnings per common share		$	160.65		$	154.11

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
		Mar. 31, 2018				Dec. 31, 2017
Assets
Cash and due from banks:
Noninterest-bearing balances		$	53,993			$	56,604
Interest-bearing balances			129,322				43,512
Total cash and due from banks			183,315				100,116
Securities available-for-sale, at fair value			163,616				187,102
Securities held-to-maturity, at amortized cost			2,683,559				2,657,796
Loans held for sale			12,735				15,038
Gross loans			3,947,924				3,899,110
Allowance for loan losses			(59,508	)			(59,502	)
Unamortized deferred loan fees, net			(6,175	)			(5,611	)
Loans, net			3,882,241				3,833,997
Investments in FHLB and FRB stock, at cost			20,690				20,690
Bank premises and equipment, net			96,520				95,550
Deferred tax assets, net			21,093				20,726
Other assets			50,452				60,563
Total assets		$	7,114,221			$	6,991,578
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits		$	2,076,834			$	2,026,237
Interest-bearing demand deposits			1,014,021				925,308
Savings and money market savings			1,616,483				1,643,859
Time deposits			766,113				795,707
Total deposits			5,473,451				5,391,111
Securities sold under repurchase agreements			641,793				614,410
Other liabilities			22,965				26,937
Total liabilities			6,138,209				6,032,458
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000 shares; issued and outstanding 130,928 shares			2,619				2,619
Additional paid-in capital			112,044				112,044
Retained earnings			862,393				844,370
Accumulated other comprehensive income			(1,044	)			87
Total stockholders' equity			976,012				959,120
Total liabilities and stockholders' equity		$	7,114,221			$	6,991,578

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