Farmers & Merchants Bank of Long Beach Reports 2016 Second-Quarter Results

Company Release - 7/18/2016

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, 2016.

“We achieved steady loan and deposit growth in the first half of 2016, a testament to Farmers & Merchants’ expanded lending team, as well as new and existing customers’ confidence banking with us amid economic uncertainty,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “We are entering the second half of our 109th year of serving Southern California with financial strength, and just as the Bank’s founder, C.J. Walker, noted that ‘safeguarding our clients’ money is a sacred trust,’ we continue to uphold his philosophy with more than a century of continuous protection of depositors’ funds.”

Income Statement

For the three months ended June 30, 2016, total interest income rose to $55.8 million from $53.2 million in the second quarter of 2015. Interest income for the first half of 2016 increased to $110.7 million from $101.9 million reported for the first half of 2015.

Interest expense for the 2016 second quarter was $2.5 million, compared with $1.8 million in the second quarter of 2015. Interest expense for the first half of 2016 was $4.9 million, versus $3.5 million reported for the corresponding period last year.

Net interest income for the 2016 second quarter advanced to $53.3 million from $51.5 million for the second quarter of 2015. Net interest income for the first half of 2016 increased to $105.8 million from $98.4 million for the six months ended June 30, 2015.

Farmers & Merchants’ net interest margin was 3.59% for the 2016 second quarter, versus 3.88% in the 2015 second quarter. Net interest margin was 3.60% for the first half of 2016, compared with 3.73% for the same period in 2015.

The Bank did not have a provision for loan losses in the first half of 2016, 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 1.63% at June 30, 2016, compared with 1.73% at December 31, 2015.

Non-interest income was $6.1 million for the 2016 second quarter, compared with $6.5 million in the same period a year ago. In the first half of 2016, non-interest income was $12.3 million, compared with $13.5 million for the six months ended June 30, 2015.

Non-interest expense for the 2016 second quarter was $32.8 million, compared with $33.7 million for the same period last year. Non-interest expense for the first half of 2016 was $64.6 million, compared with $63.0 million for the first half of 2015.

Net income for the 2016 second quarter increased to $17.9 million, or $136.56 per diluted share, from $16.6 million, or $126.76 per diluted share, for the 2015 second quarter. Net income for the first half of 2016 rose to $36.0 million, or $274.85 per diluted share, from $33.3 million, or $254.52 per diluted share, for the six months ended June 30, 2015.

Balance Sheet

At June 30, 2016, net loans increased to $3.43 billion from $3.22 billion at December 31, 2015. The Bank’s deposits rose to $4.85 billion at the end of the 2016 second quarter from $4.69 billion at December 31, 2015. Non-interest bearing deposits represented 37.6% of total deposits at June 30, 2016, versus 38.9% of total deposits at December 31, 2015. Total assets increased to $6.34 billion at the close of the 2016 second quarter from $6.15 billion at December 31, 2015.

At June 30, 2016, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.94%, a tier 1 risk-based capital ratio of 19.68%, a common equity tier 1 capital ratio of 19.68%, and a tier 1 leverage ratio of 14.12%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“Our robust balance sheet continues to further distinguish F&M as a bank that is committed to ensuring the safety and soundness of the products and services we provide our customers,” said Daniel Walker, chief executive officer and chairman of the board. “Maintaining stability is fundamental to F&M and certainly evidenced by the strength of our balance sheet.

“Additionally, I’d like to note that the second quarter represented F&M’s 487th dividend payment, including special dividends, since 1916,” Walker added.

About Farmers & Merchants Bank of Long Beach

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 June 30,Six Months Ended June 30,
2016   20152016   2015
 
Interest and dividend income:
 
Loans $ 41,119 $ 39,086 $ 80,844 $ 74,283
Investment securities 14,089 12,712 28,724 25,601
Investments in FHLB and FRB stock 434 1,380 833 1,879
Interest-bearing deposits in financial institutions 174   62 327   154
 
Total interest and dividend income 55,816   53,240 110,728   101,917
 
Interest expense:
 
Deposits 2,055 1,476 3,985 2,955
Securities sold under repurchase agreements 467 276 907 544
Other borrowings -   6 -   6
 
Total interest expense 2,522   1,758 4,892   3,505
 
Net interest income 53,294 51,482 105,836 98,412
 
Provision for loan losses -   - -   -
 
Net interest income after provision for loan losses 53,294   51,482 105,836   98,412
 
Non-interest income:
 
Service charges on deposit accounts 965 985 1,973 2,008
Other real estate owned income 4 57 16 1,372
Merchant bankcard income 2,516 2,497 4,939 4,783
Other income 2,607   2,998 5,384   5,350
 
Total non-interest income 6,092   6,537 12,312   13,513
 
Non-interest expense:
 
Salaries and employee benefits 19,266 19,560 38,292 36,520
FDIC and other insurance expense 867 783 1,725 1,572
Occupancy expense 2,265 2,082 4,420 4,075
Software and equipment expense 1,822 1,805 3,598 3,466
Other real estate owned expense (84 ) 101 (127 ) 109
Amortization of public welfare investments 2,117 2,116 4,234 4,234
Merchant bankcard expense 1,946 1,950 3,714 3,934
Professional and legal services 1,196 1,020 2,223 1,890
Marketing expense 1,605 1,556 2,779 2,619
Other expense 1,799   2,704 3,756   4,584
 
Total non-interest expense 32,799   33,677 64,614   63,003
 
Income before income tax expense 26,587 24,342 53,534 48,922
 
Income tax expense 8,707   7,746 17,549   15,598
 
Net income$17,880   $16,596$35,985   $33,324
 
Basic and diluted earnings per common share $ 136.56   $ 126.76 $ 274.85   $ 254.52
 
   
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
 
June 30, 2016   Dec. 31, 2015
 
Assets

 

Cash and due from banks:
Noninterest-bearing balances $ 59,479 $ 64,742
Interest-bearing balances 142,115   103,278  

 

Total cash and due from banks 201,594 168,020
Securities available-for-sale, at fair value 199,186 206,649
Securities held-to-maturity, at amortized cost 2,304,223 2,363,383
Loans held for sale 8,020 3,168
Gross loans 3,490,705 3,278,852
Allowance for loan losses (56,892 ) (56,670 )
Unamortized deferred loan fees, net (4,924 ) (4,139 )
 
Loans, net 3,428,889   3,218,043  
 
Other real estate owned, net 791 1,351
Investments in FHLB and FRB stock, at cost 20,690 20,690
Public welfare investments 28,932 34,499
Bank premises and equipment, net 87,390 86,781
Deferred tax assets, net 27,960 27,892
Other assets 27,528   23,124  
 
Total assets$6,335,203   $6,153,600  
 
 
Liabilities and Stockholders' Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits $ 1,823,029 $ 1,824,516
Interest-bearing demand deposits 747,796 645,125
Savings and money market savings 1,418,934 1,376,920
Time deposits 863,406   843,405  
 
Total deposits 4,853,165 4,689,966
Securities sold under repurchase agreements 565,886 572,915
Other liabilities 30,390   35,388  
 
Total liabilities 5,449,441   5,298,269  
 
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 769,222 739,259
Accumulated other comprehensive income 1,877   1,409  
 
Total stockholders' equity 885,762   855,331  
 
Total liabilities and stockholders' equity$6,335,203   $6,153,600  
 

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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