Farmers & Merchants Bank of Long Beach Reports 2019 First-Quarter Results

Company Release - 4/15/2019

LONG BEACH, Calif.--(BUSINESS WIRE)-- Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the first quarter ended March 31, 2019.

“F&M achieved profitable results for the first quarter, as it continued to invest in technology to further enhance the Bank’s infrastructure and customer experience,” said Henry Walker, president of Farmers & Merchants Bank. “Our ongoing priority is to develop and continue building strong relationships with our customers and the communities we serve, as we distinguish ourselves as a Bank committed to the success of all our stakeholders.”

Income Statement

For the three months ended March 31, 2019, interest and dividend income rose to $68.3 million from $61.7 million a year ago. Interest expense for the 2019 first quarter was $7.4 million, compared with $4.4 million in the same period last year.

Farmers & Merchants’ net interest income for the 2019 first quarter increased to $60.9 million from $57.3 million for the first quarter of 2018.

Farmers & Merchants’ net interest margin was 3.49% for the first quarter ended March 31, 2019, compared with 3.37% at the end of the same period last year.

The Bank’s provision for loan losses in the first quarter of 2019 was $250,000, while it did not have a loan loss provision in the same period a year ago. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.45% at March 31, 2019, compared with 1.51% at March 31, 2018.

Noninterest income was $4.5 million for the 2019 first quarter, compared with $4.1 million for the 2018 first quarter. Noninterest expense for the 2019 first quarter was $37.8 million, versus $32.5 million for the same period last year.

The Bank’s net income for the 2019 first quarter advanced to $22.3 million, or $170.91 per diluted share, from $21.0 million, or $160.65 per diluted share, in the 2018 first quarter.

Balance Sheet

At March 31, 2019, net loans totaled $4.26 billion, compared with $4.19 billion at December 31, 2018. The Bank’s total deposits rose to $5.67 billion at the end of the 2019 first quarter, up from $5.58 billion at December 31, 2018. Noninterest-bearing deposits represented 37.0% of total deposits at March 31, 2019, versus 37.6% of total deposits at December 31, 2018. Total assets grew to $7.37 billion at the close of the 2019 first quarter from $7.31 billion at December 31, 2018.

At March 31, 2019, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 19.99%, a tier 1 risk-based capital ratio of 18.75%, a common equity tier 1 capital ratio of 18.75%, and a tier 1 leverage ratio of 14.23%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“F&M had a very productive first quarter, with the completion of our office expansion in Newport Beach, the grand opening of our Redondo Beach branch, and the appointment of JoAnn Bourne and Christine Scheuneman to the board of directors,” said Daniel Walker, chief executive officer and chairman of the board. “F&M also repurchased shares in the first quarter, which is a testament to the conviction we have in the strength of the Bank in its 112th year of serving Southern California.”

During the first quarter, Farmers & Merchants Bank repurchased 750 shares of its common stock for approximately $6.05 million at a weighted average price of $8,061.83 per share. As previously disclosed, in October 2018, F&M’s board of directors authorized the Bank to repurchase up to $20 million of its common stock prior to December 31, 2019. The Bank may continue to purchase shares of its common stock from time to time through various means, including open market transactions, privately negotiated transactions, or otherwise in accordance with applicable laws.

To the extent the Bank repurchases shares, the number of shares repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, stock price, trading volume, regulatory requirements, general business conditions and other factors. The Bank may choose to modify, suspend or discontinue such proposed repurchases at any time and anticipates that any such repurchases will be funded from existing cash and cash equivalents or future cash flow.

About Farmers & Merchants Bank

Founded in Long Beach in 1907 by C.J. Walker, Farmers & Merchants Bank has 25 branches across Orange County, Long Beach, the South Bay and Santa Barbara. 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 Mar. 31,
20192018
Interest and dividend income:
 
Loans $ 50,740 $ 44,598
Investment securities 16,926 16,376
Investments in FHLB and FRB stock 356 356
Interest-bearing deposits in financial institutions 318 353
 
Total interest and dividend income 68,340 61,683
 
Interest expense:
 
Deposits 4,935 2,857
Securities sold under repurchase agreements 2,444 1,503
Other borrowings 40 -
 
Total interest expense 7,419 4,360
 
Net interest income 60,921 57,323
 
Provision for loan losses 250 -
 
Net interest income after provision for loan losses 60,671 57,323
 

Noninterest income:

 
Service charges on deposit accounts 1,645 1,026
Card income 928 901
Other real estate owned income 18 -
Other income 1,956 2,150
 

Total noninterest income

4,547 4,077
 

Noninterest expense:

 
Salaries and employee benefits 23,294 22,096
FDIC and other insurance expense 622 653
Occupancy expense 2,648 2,287
Software and equipment expense 3,040 2,571
Other real estate owned expense 50 22
Professional and legal services 1,671 1,196
Marketing expense 1,715 1,146
Other expense 4,775 2,528
 

Total noninterest expense

37,815 32,499
 
Income before income tax expense 27,403 28,901
 
Income tax expense 5,069 7,867
 
Net income$22,334$21,034
 
Basic and diluted earnings per common share $ 170.91 $ 160.65
 
Basic and diluted weighted-average shares outstanding 130,681 130,928
 
 
                         
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
 
Mar. 31, 2019Dec. 31, 2018
Assets
 
Cash and due from banks:
Noninterest-bearing balances $ 79,847 $ 69,486
Interest-bearing balances 103,150   17,661  
 
Total cash and due from banks 182,997 87,147
Securities available-for-sale, at fair value 169,808 134,008
Securities held-to-maturity, at amortized cost 2,513,606 2,649,460
Loans held for sale 22,112 20,718
Gross loans 4,326,174 4,260,093
Allowance for loan losses (62,714 ) (62,450 )
Unamortized deferred loan fees, net (5,675 ) (5,973 )
 
Loans, net 4,257,785   4,191,670  
 
Other real estate owned, net 1,699 1,724
Investments in FHLB and FRB stock, at cost 20,690 20,690
Bank premises and equipment, net 99,379 100,478
Deferred tax assets, net 20,101 19,680
Other assets 86,600   82,661  
 
Total assets$7,374,777   $7,308,236  
 
 
Liabilities and Stockholders' Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits $ 2,096,366 $ 2,098,097
Interest-bearing demand deposits 1,211,691 1,178,886
Savings and money market savings 1,614,295 1,566,446
Time deposits 744,709   741,037  
 
Total deposits 5,667,061 5,584,466
Securities sold under repurchase agreements 605,670 609,791
FHLB advances - 30,000
Other liabilities 60,372   56,106  
 
Total liabilities 6,333,103   6,280,363  
 
Stockholders' Equity:
 

Common Stock, par value $20; authorized 250,000 shares; 130,178 and 130,928 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively

2,604

2,619

Additional paid-in capital 106,012 112,044
Retained earnings 932,977 914,164
Accumulated other comprehensive income 81   (954 )
 
Total stockholders' equity 1,041,674   1,027,873  
 
Total liabilities and stockholders' equity$7,374,777   $7,308,236  
 

John Hinrichs
Executive Vice President
562-437-0011, ext. 4835

Evan Pondel
PondelWilkinson Inc.
Investor Relations
310-279-5980
investor@pondel.com

Source: Farmers & Merchants Bank of Long Beach
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