Farmers & Merchants Bank of Long Beach Reports 2017 First-Quarter Results

Company Release - 4/20/2017

--First-Quarter Net Income Rises More Than 11% in Year-Over-Year Comparison--

LONG BEACH, Calif.--(BUSINESS WIRE)-- Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the first quarter ended March 31, 2017.

“First-quarter financial results reflect strong growth in our loan portfolio, in addition to continued investments in technology and human capital, as we further enhance the deployment of F&M’s products and services in our 110th year of serving Southern California,” said Henry Walker, president of Farmers & Merchants Bank. “Prudent maintenance of the Bank’s financial health, including targeted investments in renewable energy resulting in a significant reduction of income tax expense, remains a cornerstone of the Bank’s ongoing business strategy.”

Income Statement

For the three months ended March 31, 2017, interest and dividend income rose to $57.4 million from $54.9 million a year ago. Interest expense for the 2017 first quarter was $3.1 million, compared with $2.4 million in the same period last year.

Farmers & Merchants’ net interest income for the 2017 first quarter increased to $54.3 million from $52.5 million for the first quarter of 2016.

Farmers & Merchants’ net interest margin was 3.42% for the first quarter ended March 31, 2017, compared with 3.60% at the end of the same period last year.

The Bank did not have a loan loss provision in the first quarter of 2017, nor in the first quarter of 2016. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.58% at March 31, 2017, compared with 1.70% at March 31, 2016.

Non-interest income was $9.1 million for the 2017 first quarter, compared with $6.3 million for the 2016 first quarter. Non-interest expense for the 2017 first quarter was $36.7 million, versus $31.9 million for the same period last year.

The Bank’s net income for the 2017 first quarter advanced to $20.2 million, or $154.11 per diluted share, from $18.1 million, or $138.28 per diluted share, in the 2016 first quarter.

Balance Sheet

At March 31, 2017, net loans totaled $3.54 billion, compared with $3.40 billion at December 31, 2016. The Bank’s total deposits rose to $5.22 billion at the end of the 2017 first quarter from $5.12 billion at December 31, 2016. Non-interest bearing deposits represented 39.3% of total deposits at March 31, 2017, versus 37.7% of total deposits at December 31, 2016. Total assets grew to $6.83 billion at the close of the 2017 first quarter from $6.73 billion at December 31, 2016.

At March 31, 2017, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.81%, a tier 1 risk-based capital ratio of 19.56%, a common equity tier 1 capital ratio of 19.56%, and a tier 1 leverage ratio of 13.72%. 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 strong first-quarter results are a testament to fundamentals that have contributed to the Bank’s financial health since its inception in 1907, including conservative lending practices and a robust balance sheet,” said Daniel Walker, chief executive officer and chairman of the board. “As F&M’s asset size continues to grow, we remain steadfast in our commitment to the core values our clients know and trust.”

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 March 31,
20172016
 
Interest and dividend income:
 
Loans $ 40,822 $ 39,725
Investment securities 15,976 14,635
Investments in FHLB and FRB stock 446 399
Interest-bearing deposits in financial institutions 139 153  
 
Total interest and dividend income 57,383 54,912  
 
Interest expense:
 
Deposits 2,337 1,930
Securities sold under repurchase agreements 763 440
Other borrowings 20 -  
 
Total interest expense 3,120 2,370  
 
Net interest income 54,263 52,542
 
Provision for loan losses - -  
 
Net interest income after provision for loan losses 54,263 52,542  
 
Non-interest income:
 
Service charges on deposit accounts 959 1,008
Other real estate owned income 17 12
Merchant bankcard income 2,612 2,423
Other income 5,533 2,825  
 
Total non-interest income 9,121 6,268  
 
Non-interest expense:
 
Salaries and employee benefits 21,002 19,026
FDIC and other insurance expense 632 858
Occupancy expense 2,161 2,155
Software and equipment expense 1,976 1,776
Other real estate owned expense 30 (43 )
Merchant bankcard expense 2,151 1,837
Professional and legal services 75 1,027
Marketing expense 1,352 1,174
Other expense 7,272 4,053  
 
Total non-interest expense 36,651 31,863  
 
Income before income tax expense 26,733 26,947
 
Income tax expense 6,556 8,842  
 
Net income$20,177$18,105  
 
Basic and diluted earnings per common share $ 154.11 $ 138.28  
 
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
 
Mar. 31, 2017Dec. 31, 2016
 
Assets
 
Cash and due from banks:
Noninterest-bearing balances $ 56,684 $ 63,797
Interest-bearing balances 96,795   84,918  
 
Total cash and due from banks 153,479 148,715
Securities available-for-sale, at fair value 204,306 182,320
Securities held-to-maturity, at amortized cost 2,718,760 2,762,877
Loans held for sale 4,044 6,080
Gross loans 3,604,892 3,466,382
Allowance for loan losses (56,954 ) (56,867 )
Unamortized deferred loan fees, net (5,183 ) (5,314 )
 
Loans, net 3,542,755   3,404,201  
 
Other real estate owned, net - 791
Investments in FHLB and FRB stock, at cost 20,690 20,690
Bank premises and equipment, net 89,710 87,775
Deferred tax assets, net 29,151 30,281
Other assets 71,173   85,328  
 
Total assets$6,834,068   $6,729,058  
 
 
Liabilities and Stockholders' Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits $ 2,049,161 $ 1,931,931
Interest-bearing demand deposits 803,824 868,380
Savings and money market savings 1,512,568 1,460,669
Time deposits 854,812   861,977  
 
Total deposits 5,220,365 5,122,957
Securities sold under repurchase agreements 611,577 540,035
Other borrowings 50,000 100,000
Other liabilities 24,340   55,753  
 
Total liabilities 5,906,282   5,818,745  
 
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 812,353 795,187
Accumulated other comprehensive income 770   463  
 
Total stockholders' equity 927,786   910,313  
 
Total liabilities and stockholders' equity$6,834,068   $6,729,058  

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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