Farmers & Merchants Bank of Long Beach Reports 2019 Fourth-Quarter and Full-Year Results

Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the fourth quarter and full year ended December 31, 2019.

“Results again demonstrated the foundational strength of our organization,” said Henry Walker, president of Farmers & Merchants Bank. “For 2019, total deposits, net loans and total assets all increased over the prior year. Our clients, both new and those who have been with us for decades, fully appreciate the exceptional service they receive from our highly trained, professional staff, along with user-friendly and robust technology, and Farmers and Merchants’ financial strength, to meet all of their banking needs.”

Income Statement

For the 2019 fourth quarter, total interest and dividend income was $70.1 million, compared with $68.9 million in the fourth quarter of 2018. Total interest and dividend income for the year ended December 31, 2019 was $280.5 million, compared with $261.0 million reported for 2018.

Interest expense for the 2019 fourth quarter was $8.4 million, compared with $6.5 million in the same period a year ago. Interest expense for 2019 was $33.0 million, versus $21.9 million in 2018.

Farmers & Merchants’ net interest income for the 2019 fourth quarter was $61.7 million, compared with $62.4 million for the fourth quarter in 2018. Net interest income for 2019 was $247.5 million, versus $239.1 million in 2018.

Net interest margin for the 2019 fourth quarter was 3.34%, compared with 3.56% for the same period in 2018. Farmers & Merchants’ net interest margin was 3.43% for the year ended December 31, 2019, versus 3.45% in the previous year.

The Bank did not record a provision for loan losses in the 2019 fourth quarter, compared with a $500,000 loan loss provision in the 2018 fourth quarter. For the full 2019 year, the loan loss provision was $250,000, versus $2.5 million in 2018. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.42% at December 31, 2019, compared with 1.47% at December 31, 2018.

Non-interest income was $4.9 million for the 2019 fourth quarter, compared with $4.6 million for the 2018 fourth quarter. Non-interest income for 2019 totaled $19.3 million, versus $18.2 million in 2018.

Non-interest expense for the 2019 fourth quarter was $44.6 million, compared with $38.2 million for the same period last year. Non-interest expense for the year ended December 31, 2019 was $163.7 million, compared with $146.1 million last year.

The Bank’s net income for the 2019 fourth quarter was $18.7 million, or $141.03 per diluted share, compared with $22.1 million, or $169.17 per diluted share, for the 2018 fourth quarter. The Bank’s net income for 2019 was $85.6 million, or $651.60 per diluted share, compared with $85.6 million, or $654.07 per diluted share, for 2018.

Balance Sheet

At December 31, 2019, net loans increased to $4.34 billion, from $4.19 billion at December 31, 2018. The Bank’s deposits grew to $5.83 billion at the end of 2019, from $5.58 billion at December 31, 2018. Non-interest-bearing deposits represented 36.6% of total deposits at December 31, 2019, versus 37.6% of total deposits at the end of 2018. Total assets advanced to $7.61 billion at the close of 2019 from $7.31 billion at December 31, 2018.

At December 31, 2019, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.64%, a tier 1 risk-based capital ratio of 19.42%, a common equity tier 1 capital ratio of 19.42%, and a tier 1 leverage ratio of 13.99%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“Despite the challenges of a persistently low interest rate environment, Farmers & Merchants Bank continues to maintain its solid financial strength and leadership stature in the communities we serve,” said Daniel Walker, chief executive officer and chairman of the board. “The growth in our loan and deposit portfolios for 2019 further exemplifies the attractiveness of our service offerings and the professionalism and dedication of our talented and growing staff throughout the Bank. As we proceed into 2020, on behalf of our board of directors and management team, I extend appreciation and thanks to all of our valued stakeholders.”

During 2019, Farmers & Merchants Bank repurchased 2,400 shares of its common stock at an average price of $8,194.03 per share pursuant to its previously announced repurchase program. The repurchase program expired at the end of 2019.

About Farmers & Merchants Bank

Founded in Long Beach in 1907 by C.J. Walker, Farmers & Merchants Bank provides white-glove service to clients at 25 branches across Orange County, Long Beach, the South Bay and Santa Barbara, as well as through robust Online and Mobile Banking platforms. The Bank offers commercial and small business banking, business loan programs, home loans, and consumer 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 Bank’s website, www.fmb.com.

FARMERS & MERCHANTS BANK OF LONG BEACH
Income Statements (Unaudited)
(In thousands, except per share data)
		Three Months Ended Dec. 31,						Twelve Months Ended Dec. 31,
		2019			2018			2019			2018
Interest and dividend income:
Loans		$	51,449		$	50,713		$	207,294		$	190,234
Investment securities			17,277			17,326			68,829			67,034
Investments in FHLB and FRB stock			348			636			1,404			1,694
Interest-bearing deposits in financial institutions			993			258			2,926			2,035
Total interest and dividend income			70,067			68,933			280,453			260,997
Interest expense:
Deposits			6,038			4,231			22,533			14,202
Securities sold under repurchase agreements			2,351			2,280			10,378			7,698
Other borrowings			2			34			54			41
Total interest expense			8,391			6,545			32,965			21,941
Net interest income			61,676			62,388			247,488			239,056
Provision for loan losses			-			500			250			2,500
Net interest income after provision for loan losses			61,676			61,888			247,238			236,556
Non-interest income:
Service charges on deposit accounts			1,507			1,534			6,584			5,650
Card income			1,047			1,028			3,618			3,877
Other real estate owned income			-			-			227			-
Other income			2,330			2,003			8,838			8,639
Total non-interest income			4,884			4,565			19,267			18,166
Non-interest expense:
Salaries and employee benefits			27,063			22,274			99,683			88,463
FDIC and other insurance expense			130			639			1,041			2,593
Occupancy expense			3,347			2,912			11,930			10,195
Software and equipment expense			3,297			3,070			12,725			10,879
Other real estate owned expense			1			90			85			139
Professional and legal services			1,843			1,633			7,154			5,803
Marketing expense			2,007			1,767			8,556			5,950
Other expense			6,870			5,834			22,555			22,076
Total non-interest expense			44,558			38,219			163,729			146,098
Income before income tax expense			22,002			28,234			102,776			108,624
Income tax expense			3,344			6,085			17,204			22,988
Net income		$	18,658		$	22,149		$	85,572		$	85,636
Basic earnings per common share		$	145.17		$	169.17		$	661.80		$	654.07
Diluted earnings per common share		$	141.03		$	169.17		$	651.60		$	654.07
Basic weighted-average shares outstanding			128,528			130,928			129,303			130,928
Diluted weighted-average shares outstanding			132,303			130,928			131,327			130,928

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
			Dec. 31, 2019			Dec. 31, 2018
Assets
Cash and due from banks:
Noninterest-bearing balances		$	64,556		$	69,486
Interest-bearing balances			54,309			17,661
Total cash and due from banks			118,865			87,147
Securities available-for-sale, at fair value			150,623			134,008
Securities held-to-maturity, at amortized cost			2,728,583			2,649,460
Loans held for sale			23,301			20,718
Gross loans			4,403,876			4,260,093
Allowance for loan losses			(62,489)			(62,450)
Unamortized deferred loan fees, net			(5,127)			(5,973)
Loans, net			4,336,260			4,191,670
Other real estate owned, net			-			1,724
Investments in FHLB and FRB stock, at cost			20,160			20,690
Bank premises and equipment, net			108,133			100,478
Deferred tax assets, net			24,679			19,680
Other assets			94,965			82,661
Total assets		$	7,605,569		$	7,308,236
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits		$	2,135,056		$	2,098,097
Interest-bearing demand deposits			1,302,726			1,178,886
Savings and money market savings			1,669,525			1,566,446
Time deposits			720,958			741,037
Total deposits			5,828,265			5,584,466
Securities sold under repurchase agreements			632,428			609,791
FHLB advances			-			30,000
Other liabilities			61,996			56,106
Total liabilities			6,522,689			6,280,363
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000
shares; 128,528 and 130,928 shares issued
and outstanding at December 31, 2019 and
December 31, 2018, respectively			2,571			2,619
Additional paid-in capital			95,446			112,044
Retained earnings			983,867			914,164
Accumulated other comprehensive income			996			(954)
Total stockholders' equity			1,082,880			1,027,873
Total liabilities and stockholders' equity		$	7,605,569		$	7,308,236

 

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