Farmers & Merchants Bank of Long Beach Reports 2015 Fourth-Quarter and Full-Year Results

Company Release - 1/28/2016

-- Net Assets Grow to More Than $6 Billion --

-- 2015 Net Income Increases to $64.9 Million --

LONG BEACH, Calif.--(BUSINESS WIRE)-- Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the fourth quarter and full year ended December 31, 2015.

“F&M recorded a new milestone in the fourth quarter, registering more than $6 billion in total assets amid steady loan and deposit growth,” said Henry Walker, president of Farmers & Merchants Bank. “The Bank is entering 2016 in a position of financial strength, focusing on F&M’s core fundamentals to maintain our fiscal health, as well as adhering to our conservative lending practices.”

Income Statement

For the 2015 fourth quarter, total interest and dividend income was $53.3 million, compared with $49.8 million in the fourth quarter of 2014. Total interest and dividend income for the year ended December 31, 2015 was $206.2 million, compared with $184.9 million reported for 2014.

Interest expense for the 2015 fourth quarter was $2.1 million, compared with $1.8 million in the same period a year ago. Interest expense for the full 2015 year was $7.6 million versus $6.9 million in 2014.

Farmers & Merchants’ net interest income for the 2015 fourth quarter was $51.1 million, compared with net interest income of $48.0 million for the fourth quarter in 2014. Net interest income for 2015 was $198.6 million, versus $178.0 million in 2014.

Net interest margin for the fourth quarter 2015 was 3.54%, compared with net interest margin of 3.65% for the same period in 2014. Farmers & Merchant’s net interest margin was 3.63% for the year ended December 31, 2015, compared with 3.50% in the previous year.

In the 2015 fourth quarter, the Bank recorded $2.7 million in loan loss provision recapture, compared with no loan loss provision in the fourth quarter of 2014. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.73% at December 31, 2015, compared with 1.69% at December 31, 2014.

Non-interest income was $5.6 million for the 2015 fourth quarter, compared with $7.3 million in the 2014 fourth quarter. Non-interest income for the full 2015 year totaled $25.1 million, versus $32.0 million for 2014.

Non-interest expense for the 2015 fourth quarter was $37.8 million, compared with $32.2 million for the same period last year. Non-interest expense for the year ended December 31, 2015 was $132.6 million, compared with $119.4 million last year.

The Bank’s net income for the 2015 fourth quarter was $15.5 million, or $118.07 per diluted share, compared with $15.8 million, or $120.94 per diluted share, in the 2014 fourth quarter. The Bank’s net income for 2015 was $64.9 million, or $496.06 per diluted share, compared with $62.4 million, or $476.67 per diluted share, for 2014.

Balance Sheet

At December 31, 2015, net loans totaled $3.22 billion, compared with $2.96 billion at December 31, 2014. The Bank’s deposits grew to $4.69 billion at the end of 2015, from $4.20 billion at December 31, 2014. Non-interest bearing deposits represented 38.9% of total deposits at December 31, 2015, versus 37.3% of total deposits at December 31, 2014. Total assets increased to $6.15 billion at the close of 2015 from $5.58 billion at December 31, 2014.

At December 31, 2015, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 21.33%, a tier 1 risk-based capital ratio of 20.08%, a common equity tier 1 capital ratio of 20.08%, and a tier 1 leverage ratio of 14.02%. 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 robust health in 2015 is a function of hiring the right executives during the last several years, and I would like to express my gratitude for their hard work and commitment to helping the Bank continue to achieve excellent results,” said Daniel Walker, chief executive officer and chairman of the board of Farmers & Merchants Bank. “In addition to F&M finishing 2015 with a strong balance sheet, I would also like to note that the year marked a total of 485 continuous dividend payments of equal or greater value since 1916.”

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 Dec. 31,Twelve Months Ended Dec. 31,
  2015     2014   2015     2014
 
Interest and dividend income:
 
Loans $ 38,092 $ 35,281 $ 149,424 $ 128,254
Investment securities 14,632 13,472 53,527 55,012
Investments in FHLB and FRB stock 448 956 2,864 1,290
Interest-bearing deposits in financial institutions 96   63 412   313
 
Total interest and dividend income 53,268   49,772 206,227   184,869
 
Interest expense:
 
Deposits 1,833 1,490 6,468 5,744
Securities sold under repurchase agreements 294 267 1,144 1,140
Other borrowings -   30 6   34
 
Total interest expense 2,127   1,787 7,618   6,918
 
Net interest income 51,141 47,985 198,609 177,951
 
Provision for loan losses (2,700 ) - (2,700 ) -
 
Net interest income after provision for loan losses 53,841   47,985 201,309   177,951
 
Non-interest income:
 
Service charges on deposit accounts 998 1,098 4,035 4,570
Gains on sale of securities available for sale - 689 - 1,114
Other real estate owned income 39 827 1,454 1,583
Merchant bankcard income 2,331 2,281 9,722 9,365
Other income 2,235   2,361 9,892   15,385
 
Total non-interest income 5,603   7,256 25,103   32,017
 
Non-interest expense:
 
Salaries and employee benefits 22,539 17,093 77,153 64,492
FDIC and other insurance expense 841 782 3,238 3,087
Occupancy expense 2,483 2,077 8,843 8,043
Software and equipment expense 2,097 2,143 7,353 7,057
Other real estate owned expense 593 703 704 3,207
Amortization of public welfare investments 2,117 2,117 8,468 8,468
Merchant bankcard expense 1,801 1,814 7,815 7,386
Professional and legal services 1,633 1,151 4,602 3,709
Marketing expense 1,020 1,925 5,504 6,334
Other expense 2,651   2,399 8,876   7,643
 
Total non-interest expense 37,775   32,204 132,556   119,426
 
Income before income tax expense 21,669 23,037 93,856 90,542
 
Income tax expense 6,210   7,202 28,908   28,133
 
Net income$15,459   $15,835$64,948   $62,409
 
Basic and diluted earnings per common share $ 118.07   $ 120.94 $ 496.06   $ 476.67
 
 

FARMERS & MERCHANTS BANK OF LONG BEACH

Balance Sheets (Unaudited)
(In thousands except share and per share data)
   
Dec. 31, 2015Dec. 31, 2014
 
Assets
 
Cash and due from banks:
Noninterest-bearing balances $ 64,742 $ 55,322
Interest-bearing balances 103,278   137,826  
 
Total cash and due from banks 168,020 193,148
Securities available-for-sale, at fair value 206,649 215,223
Securities held-to-maturity, at amortized cost 2,363,383 2,008,064
Loans held for sale 3,168 1,751
Gross loans 3,278,852 3,010,018
Allowance for loan losses (56,670 ) (50,804 )
Unamortized deferred loan fees, net (4,139 ) (3,064 )
 
Loans, net 3,218,043   2,956,150  
 
Other real estate owned, net 1,351 3,406
Investments in FHLB and FRB stock, at cost 20,690 28,440
Public welfare investments 34,499 45,457
Bank premises and equipment, net 86,781 85,002
Deferred tax assets, net 27,892 23,829
Other assets 23,124   20,769  
 
Total assets$6,153,600   $5,581,239  
 
 
Liabilities and Stockholders' Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits $ 1,824,516 $ 1,567,046
Interest-bearing demand deposits 645,125 552,432
Savings and money market savings 1,376,920 1,228,584
Time deposits 843,405   852,211  
 
Total deposits 4,689,966 4,200,273
Securities sold under repurchase agreements 572,915 546,758
Other liabilities 35,388   27,647  
 
Total liabilities5,298,269   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 739,259 689,892
Accumulated other comprehensive income 1,409   2,006  
 
Total stockholders' equity855,331   806,561  
 
Total liabilities and stockholders' equity$6,153,600   $5,581,239  

Farmers & Merchants Bank of Long Beach
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 of Long Beach
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