Farmers & Merchants Bank of Long Beach Reports 2020 First-Quarter Results

Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQB: FMBL) today reported financial results for the first quarter ended March 31, 2020, and announced that its board of directors has authorized the Bank to repurchase up to $20 million of its common stock as part of a new stock repurchase program that expires on December 31, 2021.

“Results for our first quarter further demonstrated the Bank’s financial strength,” said Henry Walker, president of Farmers & Merchants Bank. “Total deposits, net loans and total assets all increased from year-end, and F&M remained ‘well capitalized’ in all categories, far exceeding regulatory requirements. As the world endures the pandemic and unsettling economic disruption, the financial safety and security of all our stakeholders remains our top priority, as it has through many crises and economic cycles over the past 113-years since F&M was founded.”

Income Statement

For the three months ended March 31, 2020, interest and dividend income rose to $69.1 million from $68.3 million a year ago. Interest expense for the 2020 first quarter was $8.0 million, compared with $7.4 million in the same period last year.

Farmers & Merchants’ net interest income for the 2020 first quarter increased to $61.2 million from $60.9 million for the first quarter of 2019.

Farmers & Merchants’ net interest margin was 3.28% for the first quarter ended March 31, 2020, compared with 3.49% at the end of the same period last year.

The Bank’s provision for loan losses in the first quarter of 2020 was $800,000, versus $250,000 in the first quarter of 2019. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.44% at March 31, 2020, compared with 1.45% at March 31, 2019.

Non-interest income was $4.6 million for the 2020 first quarter, compared with $4.5 million for the 2019 first quarter. Non-interest expense for the 2020 first quarter was $43.6 million, versus $37.8 million for the same period last year.

The Bank’s net income for the 2020 first quarter was $17.9 million, or $139.50 per diluted share, from $22.3 million, or $170.91 per diluted share, in the 2019 first quarter.

Balance Sheet

At March 31, 2020, net loans totaled $4.35 billion, compared with $4.34 billion at December 31, 2019. The Bank’s total deposits rose to $6.18 billion at the end of the 2020 first quarter, up from $5.83 billion at December 31, 2019. Non-interest bearing deposits represented 36.6% of total deposits at March 31, 2020 and December 31, 2019. Total assets grew to $7.95 billion at the close of the 2020 first quarter from $7.61 billion at December 31, 2019.

At March 31, 2020, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.90%, a tier 1 risk-based capital ratio of 19.65%, a common equity tier 1 capital ratio of 19.65%, and a tier 1 leverage ratio of 14.08%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“As we move forward together during this unprecedented time, we believe F&M is prepared to take on today’s challenges, both operationally and financially,” said Daniel Walker, chief executive officer and chairman of the board. “While the pandemic continues to unfold, it is creating uncertainties for every individual and for all organizations. Our team is working collaboratively to reinvent new ways of working and solving customer challenges. Our board of directors demonstrated its confidence in F&M with its authorization of the new share repurchase program. We believe that F&M’s conservative policies and prudent financial management will continue to serve the Bank and its customers well.”

To the extent the Bank repurchases shares pursuant to its $20.0 million share repurchase program announced today, the timing and number of shares repurchased will depend on a variety of factors, including, but not limited to, stock price, trading volume, regulatory requirements, general business conditions and others. The Bank may choose to modify, suspend or discontinue such proposed repurchases at any time without prior notice and anticipates that any such repurchases will be funded from existing cash and cash equivalents or future cash flow. The share repurchase program does not obligate the Bank to acquire any specific number of shares in any period.

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 Mar. 31,
	2020			2019
Interest and dividend income:
Loans	$	51,325		$	50,740
Investment securities		16,745			16,926
Investments in FHLB and FRB stock		348			356
Interest-bearing deposits in financial institutions		728			318
Total interest and dividend income		69,146			68,340
Interest expense:
Deposits		5,690			4,935
Securities sold under repurchase agreements		2,300			2,444
Other borrowings		-			40
Total interest expense		7,990			7,419
Net interest income		61,156			60,921
Provision for loan losses		800			250
Net interest income after provision for loan losses		60,356			60,671
Non-interest income:
Service charges on deposit accounts		1,527			1,645
Card income		870			928
Other real estate owned income		-			18
Other income		2,240			1,956
Total non-interest income		4,637			4,547
Non-interest expense:
Salaries and employee benefits		27,701			23,294
FDIC and other insurance expense		445			622
Occupancy expense		3,333			2,648
Software and equipment expense		3,066			3,040
Other real estate owned expense		-			50
Professional and legal services		1,161			1,671
Marketing expense		1,768			1,715
Other expense		6,166			4,775
Total non-interest expense		43,640			37,815
Income before income tax expense		21,353			27,403
Income tax expense		3,409			5,069
Net income	$	17,944		$	22,334
Basic earnings per common share	$	139.61		$	170.91
Diluted earnings per common share	$	139.50		$	170.91
Basic weighted-average shares outstanding		128,528			130,681
Diluted weighted-average shares outstanding		128,630			130,681

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
		Mar. 31, 2020			Dec. 31, 2019
Assets
Cash and due from banks:
Noninterest-bearing balances	$	68,779		$	64,556
Interest-bearing balances		343,191			54,309
Total cash and due from banks		411,970			118,865
Securities available-for-sale, at fair value		98,877			150,623
Securities held-to-maturity, at amortized cost		2,829,575			2,728,583
Loans held for sale		23,630			23,301
Gross loans		4,414,856			4,403,876
Allowance for loan losses		(63,457)			(62,489)
Unamortized deferred loan fees, net		(6,285)			(5,127)
Loans, net		4,345,114			4,336,260
Investments in FHLB and FRB stock, at cost		20,160			20,160
Bank premises and equipment, net		107,116			108,133
Deferred tax assets, net		25,027			22,213
Other assets		89,248			97,431
Total assets	$	7,950,717		$	7,605,569
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits	$	2,263,885		$	2,135,056
Interest-bearing demand deposits		1,400,363			1,302,726
Savings and money market savings		1,703,193			1,669,525
Time deposits		817,296			720,958
Total deposits		6,184,737			5,828,265
Securities sold under repurchase agreements		611,858			632,428
Other liabilities		54,203			61,996
Total liabilities		6,850,798			6,522,689
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000
shares; issued and outstanding 128,528 shares		2,571			2,571
Additional paid-in capital		96,955			95,446
Retained earnings		998,341			983,867
Accumulated other comprehensive income		2,052			996
Total stockholders' equity		1,099,919			1,082,880
Total liabilities and stockholders' equity	$	7,950,717		$	7,605,569

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200417005060/en/