Farmers & Merchants Bank of Long Beach Reports 2015 Third-Quarter Results

Company Release - 10/19/2015

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

“The prolonged low interest rate environment continues to put pressure on net interest margins. However, Farmers & Merchants’ solid third-quarter results reflect the Bank’s focus on core fundamentals and applying a disciplined lending philosophy,” said Henry Walker, president of Farmers & Merchants Bank. “The Bank is in excellent financial health, and we intend to maintain Farmers & Merchants’ strength by continuing to listen to our customers, providing high-quality products and services, and taking a long-term approach when establishing relationships with the communities we serve.”

Income Statement

For the 2015 third quarter, interest and dividend income rose to $51.0 million from $46.8 million in the 2014 third quarter. Interest income for the nine-month period ended September 30, 2015 advanced to $153.0 million from $135.1 million reported for the same period in 2014.

Interest expense for the 2015 third quarter was $2.0 million, compared with $1.8 million in last year’s third quarter. Interest expense for the nine-month period ended September 30, 2015 was $5.5 million, versus $5.1 million reported for the same period last year.

Net interest income for the 2015 third quarter rose to $49.1 million from $45.0 million for the third quarter of 2014, and increased to $147.5 million for the first nine months of 2015, versus $130.0 million for the same period in 2014.

Farmers & Merchants’ net interest margin was 3.53% for the 2015 third quarter, compared with 3.48% for the 2014 third quarter. Net interest margin was 3.66% for the first nine months of 2015, compared with 3.45% for the same period in 2014.

The Bank did not have a provision for loan losses in the first nine months of 2015, nor in the same period a year ago, amid continued strength in its loan portfolio. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.69% at September 30, 2015, in line with the Bank’s allowance for loan losses as a percentage of loans outstanding at December 31, 2014.

Non-interest income was $6.0 million for the 2015 third quarter, compared with $8.4 million in the third quarter a year ago. Non-interest income was $19.5 million for the nine-month period ended September 30, 2015, compared with $24.8 million for the same period in 2014.

Non-interest expense for the 2015 third quarter was $31.8 million, versus $29.4 million for the same period last year. Non-interest expense for the first nine months of 2015 was $94.8 million, compared with $87.2 million last year.

Net income for the 2015 third quarter was $16.2 million, or $123.47 per diluted share, compared with $16.4 million, or $125.28 per diluted share, in the year-ago period. The Bank’s net income for the first nine months of 2015 was $49.5 million, or $377.99 per diluted share, compared with $46.6 million, or $355.72 per diluted share, for the same period in 2014.

Balance Sheet

At September 30, 2015, net loans totaled $3.15 billion, compared with $2.96 billion at December 31, 2014. The Bank’s deposits totaled $4.52 billion at the end of the 2015 third quarter, compared with $4.20 billion at December 31, 2014. Non-interest bearing deposits represented 37.8% of total deposits at September 30, 2015, versus 37.3% of total deposits at December 31, 2014. Total assets increased to $5.98 billion at the close of the 2015 third quarter, compared with $5.58 billion at the close of the prior year.

At September 30, 2015, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 21.49%, a tier 1 risk-based capital ratio of 20.24%, a common equity tier 1 capital ratio of 20.24%, and a tier 1 leverage ratio of 14.37%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“In addition to a conservative lending philosophy, Farmers & Merchants has managed an exceptionally healthy security portfolio that has been a defining characteristic of the Bank’s bedrock fundamentals,” said Daniel Walker, chief executive officer and chairman of the board. “Indeed, the banking environment is increasingly challenging and competitive, but we are resolute on continuing to grow with sustainable strength for generations to come.”

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 Sept. 30,Nine Months Ended Sept. 30,
  2015   2014   2015   2014
 
Interest and dividend income:
 
Loans $ 37,048 $ 32,981 $ 111,331 $ 92,973
Investment securities 13,294 13,383 38,895 41,540
Investments in FHLB and FRB stock 537 321 2,416 334
Interest-bearing deposits in financial institutions 163 109 317 250
 
Total interest and dividend income 51,042 46,794 152,959 135,097

 

Interest expense:
 
Deposits 1,681 1,482 4,636 4,254
Securities sold under repurchase agreements 305 319 849 873
Other borrowings - - 6 4

 

 

Total interest expense 1,986 1,801 5,491 5,131
 
Net interest income 49,056 44,993 147,468 129,966
 
Provision for loan losses - - - -
 
Net interest income after provision for loan losses 49,056 44,993 147,468 129,966
 
Non-interest income:
 
Service charges on deposit accounts 1,029 1,185 3,037 3,472
Gains on sale of securities available for sale - - - 425
Other real estate owned income 42 253 1,414 756
Merchant bankcard income 2,608 2,381 7,391 7,084
Other income 2,370 4,592 7,658 13,024
 
Total non-interest income 6,049 8,411 19,500 24,761
 
Non-interest expense:
 
Salaries and employee benefits 18,094 15,473 54,614 47,399
FDIC and other insurance expense 826 785 2,398 2,306
Occupancy expense 2,286 2,213 6,361 5,966
Software and equipment expense 1,789 1,843 5,255 4,913
Other real estate owned expense 2 721 111 2,504
Amortization of public welfare investments 2,117 2,117 6,351 6,351
Merchant bankcard expense 2,080 1,847 6,014 5,572
Professional and legal services 1,079 832 2,969 2,558
Marketing expense 1,865 1,640 4,484 4,408
Other expense 1,702 1,885 6,224 5,245
 
Total non-interest expense 31,840 29,356 94,781 87,222
 
Income before income tax expense 23,265 24,048 72,187 67,505
 
Income tax expense 7,100 7,645 22,698 20,931
 
Net income$16,165$16,403$49,489$46,574
 
Basic and diluted earnings per common share $ 123.47 $ 125.28 $ 377.99 $ 355.72
 
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
 
Sept. 30, 2015Dec. 31, 2014
 
Assets
 
Cash and due from banks:
Noninterest-bearing balances $ 49,465 $ 55,322
Interest-bearing balances 93,243   137,826  
 
Total cash and due from banks 142,708 193,148
Securities available-for-sale, at fair value 205,934 215,223
Securities held-to-maturity, at amortized cost 2,289,320 2,008,064
Loans held for sale 1,601 1,751
Gross loans 3,204,795 3,010,018
Allowance for loan losses (54,047 ) (50,804 )
Unamortized deferred loan fees, net (4,076 ) (3,064 )
 
Loans, net 3,146,672   2,956,150  
 
Other real estate owned, net 1,439 3,406
Investments in FHLB and FRB stock, at cost 20,690 28,440
Public welfare investments 37,238 45,457
Bank premises and equipment, net 85,808 85,002
Deferred tax assets, net 24,636 23,829
Other assets 22,844   20,769  
 
Total assets$5,978,890   $5,581,239  
 
 
Liabilities and Stockholders' Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits $ 1,709,998 $ 1,567,046
Interest-bearing demand deposits 626,886 552,432
Savings and money market savings 1,340,835 1,228,584
Time deposits 844,036   852,211  
 
Total deposits 4,521,755 4,200,273
Securities sold under repurchase agreements 581,313 546,758
Other liabilities 28,516   27,647  
 
Total liabilities5,131,584   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 730,739 689,892
Accumulated other comprehensive income 1,904   2,006  
 
Total stockholders' equity847,306   806,561  
 
Total liabilities and stockholders' equity$5,978,890   $5,581,239  

Farmers & Merchants Bank
John Hinrichs
Executive Vice President
562-437-0011, ext. 5035
or
PondelWilkinson Inc.
Evan Pondel
Investor Relations
310-279-5980
investor@pondel.com

Source: Farmers & Merchants Bank
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