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

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, 2019.

“We continued to generate solid net interest income in the second quarter, as well as steady deposit growth from existing customers,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “We intend to maintain our prudent lending philosophy heading into the second half of the year, in addition to prioritizing the safety of our depositors, demonstrated by our strong capital ratios.”

Income Statement

For the three months ended June 30, 2019, total interest and dividend income rose to $70.2 million from $63.7 million in the second quarter of 2018. Interest and dividend income for the first half of 2019 increased to $138.5 million from $125.4 million reported for the first half of 2018.

Interest expense for the 2019 second quarter was $8.4 million, compared with $5.3 million in the second quarter of 2018. Interest expense for the first half of 2019 was $15.8 million, versus $9.6 million reported for the corresponding period last year.

Net interest income for the 2019 second quarter advanced to $61.8 million from $58.5 million for the second quarter of 2018. Net interest income for the first half of 2019 increased to $122.7 million from $115.8 million for the six months ended June 30, 2018.

Net interest margin was 3.45% for the 2019 second quarter, versus 3.39% in the 2018 second quarter. Net interest margin was 3.47% for the first half of 2019, compared with 3.38% for the same period in 2018.

The Bank did not have a provision for loan losses in the second quarter of 2019, nor in the same period a year ago. The Bank’s provision for loan losses was $250,000 in the first half of 2019, while the Bank did not have a provision for loan losses in the first half of 2018. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.44% at June 30, 2019, compared with 1.47% at December 31, 2018.

Non-interest income was $4.8 million for the 2019 second quarter, essentially in line with the same period a year ago. In the first half of 2019, non-interest income was $9.4 million, compared with $8.9 million for the six months ended June 30, 2018.

Non-interest expense for the 2019 second quarter was $39.6 million, compared with $33.4 million for the same period last year. Non-interest expense for the first half of 2019 was $77.5 million, compared with $65.9 million for the first half of 2018.

Net income for the 2019 second quarter was $21.7 million, or $167.35 per diluted share, compared with $21.8 million, or $166.43 per diluted share, for the 2018 second quarter. Net income for the first half of 2019 rose to $44.1 million, or $338.27 per diluted share, from $42.8 million, or $327.08 per diluted share, for the six months ended June 30, 2018.

Balance Sheet

At June 30, 2019, net loans increased to $4.29 billion from $4.19 billion at December 31, 2018. The Bank’s deposits rose to $5.73 billion at the end of the 2019 second quarter from $5.58 billion at December 31, 2018. Non-interest-bearing deposits represented 37.7% of total deposits at June 30, 2019, versus 37.6% of total deposits at December 31, 2018. Total assets increased to $7.53 billion at the close of the 2019 second quarter from $7.31 billion at December 31, 2018.

At June 30, 2019, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 19.88%, a tier 1 risk-based capital ratio of 18.66%, a common equity tier 1 capital ratio of 18.66%, and a tier 1 leverage ratio of 13.98%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“We repurchased additional shares during the second quarter, which reflects our confidence in the Bank’s financial performance and commitment to delivering value for our shareholders,” said Daniel Walker, chief executive officer and chairman of the board. “As California’s Strongest since 1907, we also maintain our conviction in a strong balance sheet, particularly amid continued volatility in the market.”

As previously disclosed, in October 2018, F&M’s board of directors authorized the Bank to repurchase up to $20.0 million of its common stock prior to December 31, 2019. In the first quarter of 2019, the Bank repurchased 750 shares of its common stock for approximately $6.1 million at a weighted average price of $8,061.83 per share. During the second quarter of 2019, Farmers & Merchants Bank repurchased 1,412 shares of its common stock for approximately $11.6 million at a weighted average price of $8,237.07 per share.

As of June 30, 2019, the Bank had approximately $2.3 million of authorization remaining for additional share repurchases. To the extent the Bank repurchases any additional shares, the number of shares repurchased and the timing of such 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 any potential share repurchases at any time.

About Farmers & Merchants Bank of Long Beach

Founded in Long Beach in 1907 by C.J. Walker, Farmers & Merchants Bank provides white-glove service to clients at 25 branches across Orange County, Long Beach, the South Bay and Santa Barbara, as well as through robust Online and Mobile Banking platforms. The Bank offers commercial and small business banking, business loan programs, home loans, and 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,

2019

 

2018

 

2019

 

2018

 
Interest and dividend income:
 
Loans

$

51,771

$

46,209

$

102,511

$

90,807

Investment securities

17,180

16,473

34,106

32,849

Investments in FHLB and FRB stock

349

349

705

705

Interest-bearing deposits in financial institutions

879

711

1,197

1,064

 
Total interest and dividend income

70,179

63,742

138,519

125,425

 
Interest expense:
 
Deposits

5,560

3,352

10,495

6,209

Securities sold under repurchase agreements

2,831

1,899

5,275

3,402

Other borrowings

1

3

41

3

 
Total interest expense

8,392

5,254

15,811

9,614

 
Net interest income

61,787

58,488

122,708

115,811

 
Provision for loan losses

250

 
Net interest income after provision for loan losses

61,787

58,488

122,458

115,811

 
Non-interest income:
 
Service charges on deposit accounts

1,780

1,547

3,425

2,573

Card income

878

987

1,806

1,888

Other real estate owned income

15

33

Other income

2,142

2,293

4,098

4,443

 
Total non-interest income

4,815

4,827

9,362

8,904

 
Non-interest expense:
 
Salaries and employee benefits

23,340

22,258

46,634

44,354

FDIC and other insurance expense

632

654

1,254

1,307

Occupancy expense

3,021

2,467

5,669

4,754

Software and equipment expense

3,169

2,563

6,209

5,134

Other real estate owned expense

29

16

79

38

Professional and legal services

1,893

1,377

3,564

2,573

Marketing expense

2,221

1,075

3,936

2,221

Other expense

5,343

2,985

10,118

5,513

 
Total non-interest expense

39,648

33,395

77,463

65,894

 
Income before income tax expense

26,954

29,920

54,357

58,821

 
Income tax expense

5,209

8,130

10,278

15,997

 
Net income

$

21,745

$

21,790

$

44,079

$

42,824

 
Basic earnings per common share

$

167.98

$

166.43

$

338.89

$

327.08

Diluted earnings per common share

$

167.35

$

166.43

$

338.27

$

327.08

Basic weighted-average shares outstanding

129,464

130,928

130,069

130,928

Diluted weighted-average shares outstanding

129,936

130,928

130,306

130,928

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
 
June 30, 2019 Dec. 31, 2018
 
Assets
 
Cash and due from banks:
Noninterest-bearing balances

$

64,822

$

69,486

Interest-bearing balances

149,407

17,661

 
Total cash and due from banks

214,229

87,147

Securities available-for-sale, at fair value

389,862

134,008

Securities held-to-maturity, at amortized cost

2,380,521

2,649,460

Loans held for sale

24,750

20,718

Gross loans

4,353,640

4,260,093

Allowance for loan losses

(62,648)

(62,450)

Unamortized deferred loan fees, net

(5,929)

(5,973)

 
Loans, net

4,285,063

4,191,670

 
Other real estate owned, net

1,019

1,724

Investments in FHLB and FRB stock, at cost

20,690

20,690

Bank premises and equipment, net

108,301

100,478

Deferred tax assets, net

20,249

19,680

Other assets

85,710

82,661

 
Total assets

$

7,530,394

$

7,308,236

 
 
Liabilities and Stockholders’ Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits

$

2,157,684

$

2,098,097

Interest-bearing demand deposits

1,237,744

1,178,886

Savings and money market savings

1,588,199

1,566,446

Time deposits

741,392

741,037

 
Total deposits

5,725,019

5,584,466

Securities sold under repurchase agreements

697,807

609,791

FHLB advances

30,000

Other liabilities

58,398

56,106

 
Total liabilities

6,481,224

6,280,363

 
Stockholders’ Equity:
 
Common Stock, par value $20; authorized 250,000
shares; 128,766 and 130,928 shares issued

 

 

and outstanding at June 30, 2019 and
December 31, 2018, respectively

2,575

2,619

Additional paid-in capital

94,410

112,044

Retained earnings

951,243

914,164

Accumulated other comprehensive income

942

(954)

 
Total stockholders’ equity

1,049,170

1,027,873

 
Total liabilities and stockholders’ equity

$

7,530,394

$

7,308,236

 

Contacts

John Hinrichs

Executive Vice President

562-437-0011, ext. 4835

Evan Pondel

PondelWilkinson Inc.

Investor Relations

310-279-5980

[email protected]

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