Farmers & Merchants Bank of Long Beach Reports 2015 Second-Quarter, First-Half Results

Company Release - 7/15/2015

LONG BEACH, Calif.--(BUSINESS WIRE)-- Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the second quarter and six-months ended June 30, 2015.

“Farmers & Merchants’ solid second quarter performance reflects the results-driven work ethic that resonates throughout the Bank,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “As we move into the second half of the year, the Bank maintains its focus on further developing products and enhancing efficiencies that are consistent with F&M’s longstanding strength.”

Income Statement

For the three months ended June 30, 2015, total interest income rose to $53.2 million from $45.0 million in the second quarter of 2014. Interest income for the first half of 2015 increased to $101.9 million from $88.3 million reported for the first half of 2014.

Interest expense for the 2015 second quarter was $1.8 million, compared with $1.7 million in the second quarter of 2014. Interest expense for the first half of 2015 was $3.5 million, versus $3.3 million reported for the corresponding period last year.

Net interest income for the 2015 second quarter advanced to $51.5 million from $43.3 million for the second quarter of 2014. Net interest income for the first half of 2015 increased to $98.4 million from $85.0 million for the six months ended June 30, 2014.

Farmers & Merchants’ net interest margin was 3.88% for the 2015 second quarter, up from 3.48% in the 2014 second quarter. Net interest margin was 3.73% for the first half of 2015, versus 3.44% for the same period in 2014.

The Bank did not have a provision for loan losses in the first half of 2015, nor in the same period a year ago, reflecting the continued strength of Farmers & Merchants’ loan portfolio. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.73% at June 30, 2015, compared with 1.69% at December 31, 2014.

Non-interest income was $6.5 million for the 2015 second quarter, compared with $9.8 million in the same period a year ago. In the first half of 2015, non-interest income was $13.5 million, compared with $16.3 million for the six months ended June 30, 2014.

Non-interest expense for the 2015 second quarter was $33.6 million, compared with $29.7 million for the same period last year. Non-interest expense for the first half of 2015 was $62.9 million, compared with $57.9 million for the first half of 2014.

Net income for the 2015 second quarter increased to $16.6 million, or $126.76 per diluted share, from $16.1 million, or $123.05 per diluted share, for the 2014 second quarter. Net income for the first half of 2015 rose to $33.3 million, or $254.52 per diluted share, from $30.2 million, or $230.44 per diluted share, for the six months ended June 30, 2014.

Balance Sheet

At June 30, 2015, net loans increased to $3.04 billion from $2.96 billion at December 31, 2014. The Bank’s deposits rose to $4.24 billion at the end of the 2015 second quarter from $4.20 billion at December 31, 2014. Non-interest bearing deposits represented 38.2% of total deposits at June 30, 2015, versus 37.3% of total deposits at December 31, 2014. Total assets increased to $5.66 billion at the close of the 2015 second quarter from $5.58 billion at December 31, 2014.

At June 30, 2015, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 22.53%, a tier 1 risk-based capital ratio of 21.27%, a common equity tier 1 capital ratio of 21.27%, and a tier 1 leverage ratio of 14.79%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“Maintaining a high level of liquidity on the balance sheet is key in this extended period of low interest rates,” said Daniel Walker, chief executive officer and chairman of the board. “It ensures the Bank has the flexibility to adapt to a range of economic conditions that we have successfully navigated during our more than 107 years of serving Southern California.”

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 www.fmb.com.

                       
FARMERS & MERCHANTS BANK OF LONG BEACH
Income Statements (Unaudited)
(In thousands except per share data)
 
Three Months Ended June 30,Six Months Ended June 30,
2015201420152014
 
Interest and dividend income:
 
Loans $ 39,086 $ 31,122 $ 74,283 $ 59,992
Investment securities 12,712 13,774 25,601 28,157
Investments in FHLB and FRB stock 1,380 7 1,879 13
Interest-bearing deposits in financial institutions 62 88 154 141
 
Total interest and dividend income 53,240 44,991 101,917 88,303
 
Interest expense:
 
Deposits 1,476 1,424 2,955 2,772
Securities sold under repurchase agreements 276 280 544 554
Other borrowings 6 - 6 4
6 -
Total interest expense 1,758 1,704 3,505 3,330
 
Net interest income 51,482 43,287 98,412 84,973
 
Provision for loan losses - - - -
 
Net interest income after provision for loan losses 51,482 43,287 98,412 84,973
 
Non-interest income:
 
Service charges on deposit accounts 984 1,154 2,008 2,287
Gains on sale of securities available for sale - - - 425
Other real estate owned income 57 338 1,372 503
Merchant bankcard income 2,497 2,429 4,783 4,703
Other income 2,936 5,846 5,288 8,431
 
Total non-interest income 6,474 9,767 13,451 16,349
 
Non-interest expense:
 
Salaries and employee benefits 19,560 16,247 36,520 31,926
FDIC and other insurance expense 783 769 1,572 1,521
Occupancy expense 2,082 1,982 4,075 3,753
Software and equipment expense 1,805 1,589 3,466 3,069
Other real estate owned expense 101 1,162 109 1,783
Amortization of public welfare investments 2,116 2,117 4,234 4,234
Merchant bankcard expense 1,950 1,938 3,934 3,725
Professional and legal services 1,020 782 1,890 1,725
Marketing expense 1,556 1,279 2,619 2,768
Other expense 2,641 1,807 4,522 3,361
 
Total non-interest expense 33,614 29,672 62,941 57,865
 
Income before income tax expense 24,342 23,382 48,922 43,457
 
Income tax expense 7,746 7,271 15,598 13,286
 
Net income$16,596$16,111$33,324$30,171
 
Basic and diluted earnings per common share $ 126.76 $ 123.05 $ 254.52 $ 230.44
 
 
 
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
 
 
         

June 30, 2015

   Dec. 31, 2014  
 
Assets
 
Cash and due from banks:
Noninterest-bearing balances $ 54,235 $ 55,322
Interest-bearing balances 188,162   137,826  
 
Total cash and due from banks 242,397 193,148
Securities available-for-sale, at fair value 212,904 215,223
Securities held-to-maturity, at amortized cost 1,965,866 2,008,064
Loans held for sale 3,135 1,751
Gross loans 3,098,849 3,010,018
Allowance for loan losses (53,563 ) (50,804 )
Unamortized deferred loan fees, net (3,341 ) (3,064 )
 
Loans, net 3,041,945   2,956,150  
 
Other real estate owned, net 1,438 3,406
Investments in FHLB and FRB stock, at cost 20,690 28,440
Public welfare investments 39,978 45,457
Bank premises and equipment, net 85,785 85,002
Deferred tax assets, net 24,746 23,829
Other assets 24,144   20,769  
 
Total assets$5,663,028   $5,581,239  
 
 
Liabilities and Stockholders' Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits $ 1,620,924 $ 1,567,046
Interest-bearing demand deposits 515,236 552,432
Savings and money market savings 1,271,079 1,228,584
Time deposits 832,475   852,211  
 
Total deposits 4,239,714 4,200,273
Securities sold under repurchase agreements 564,280 546,758
Other liabilities 25,296   27,647  
 
Total liabilities4,829,290   4,774,678  
 
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 717,455 689,892
Accumulated other comprehensive income 1,620   2,006  
 
Total stockholders' equity833,738   806,561  
 
Total liabilities and stockholders' equity$5,663,028   $5,581,239  
 

Farmers & Merchants Bank of Long Beach
John Hinrichs
Executive Vice President
562-437-0011, ext. 4835
or
PondelWilkinson Inc.
Evan Pondel
Investor Relations
310-279-5980
investor@pondel.com

Source: Farmers & Merchants Bank of Long Beach
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