LONG BEACH, Calif.--(BUSINESS WIRE)--Farmers & Merchants Bank of Long Beach (OTCBB: FMBL) today reported financial results for the second quarter ended June 30, 2013.
“Despite prevailing headwinds from the low interest rate environment, our second quarter results were in line with expectations, as F&M maintained its strong financial position for the first half of 2013,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “As favorable economic signs appear to be surfacing, the Bank is well poised to serve its personal and business banking customers, while we also benefit from the talents and prowess of new members of our team.”
Income Statement
For the three months ended June 30, 2013, interest income was $39.2 million, compared with $42.9 million in the second quarter of 2012; the decline reflects the continuing low interest rate and competitive loan pricing environment. Interest income for the first half of 2013 was $78.8 million, compared with $89.2 million reported for the first half of 2012.
Interest expense for the 2013 second quarter declined to $1.5 million from $1.8 million in the second quarter of 2012. Interest expense for the first half of 2013 declined to $3.0 million from $3.6 million reported for the first half of 2012. Interest expense continues to reflect the impact of historically low rates and strong levels of non-interest bearing demand accounts.
Net interest income for the 2013 second quarter was $37.6 million, compared with $41.1 million for the second quarter of 2012. Net interest income for the first half of 2013 was $75.7 million, compared with $85.5 million for the six months ended June 30, 2012.
Farmers & Merchants’ net interest margin was 3.20% for the 2013 second quarter, compared with 3.73% in the 2012 second quarter. Net interest margin was 3.24% for the first half of 2013, compared with 3.87% for the same period in 2012.
The Bank did not have a provision for loan losses in the first half of 2013, nor in the same period a year ago, reflecting the continued improvement in the quality of the Bank’s loan portfolio. The Bank’s allowance for loan losses as a percentage of loans outstanding was 2.40% at June 30, 2013, compared with 2.57% at December 31, 2012.
Non-interest income was $10.0 million for the 2013 second quarter, which included one-time income of $3.5 million, compared with non-interest income of $4.5 million in the second quarter of 2012. In the first half of 2013, non-interest income was $20.1 million, compared with $10.9 million for the six months ended June 30, 2012.
Non-interest expense for the 2013 second quarter was $25.9 million, compared with $21.0 million for the same period last year. Non-interest expense for the first half of 2013 was $49.1 million, compared with $44.1 million for the first half of 2012.
Net income for the 2013 second quarter totaled $14.9 million, or $113.76 per diluted share, compared with net income of $16.7 million, or $127.88 per diluted share, for the 2012 second quarter. Net income for the first half of 2013 was $32.1 million, or $245.44 per diluted share, compared with $35.3 million, or $269.35 per diluted share, for the six months ended June 30, 2012.
Balance Sheet
At June 30, 2013, net loans increased to $2.06 billion from $1.93 billion at December 31, 2012. The Bank’s deposits rose to $3.77 billion at the end of the 2013 second quarter from $3.69 billion at December 31, 2012. Non-interest bearing deposits represented 40.5% of total deposits at June 30, 2013, versus 40.0% of total deposits at December 31, 2012. Total assets increased to $5.15 billion at the close of the 2013 second quarter from $4.99 billion at December 31, 2012.
At March 31, 2013, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 29.09%, a Tier 1 risk-based capital ratio of 27.84%, and a Tier 1 leverage ratio of 14.48%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 6.00% and 5.00%, respectively.
“We continued to report steady loan and deposit growth and maintained strong capital ratios during the first half of the year,” said Daniel Walker, chief executive officer and chairman of the board. “As Farmers & Merchants Bank continues to grow, the financial health of our balance sheet is indicative of the Bank’s competitive advantage in the communities we serve.”
About Farmers & Merchants Bank of Long Beach
Farmers & Merchants Bank of Long Beach provides personal and business banking services through 21 offices in Los Angeles and Orange Counties. Founded in 1907 by C.J. Walker, the Bank specializes in commercial and small business banking along with business loan programs.
| 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, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Interest income: | ||||||||||||||||
| Loans | $ | 25,252 | $ | 27,945 | $ | 50,811 | $ | 59,355 | ||||||||
| Securities available-for-sale | 2,069 | 2,776 | 4,309 | 5,791 | ||||||||||||
| Securities held-to-maturity | 11,688 | 11,911 | 23,317 | 23,544 | ||||||||||||
| Deposits with banks | 146 | 252 | 353 | 471 | ||||||||||||
| Total interest income | 39,155 | 42,884 | 78,790 | 89,161 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | 1,224 | 1,513 | 2,485 | 3,079 | ||||||||||||
| Securities sold under repurchase agreements | 284 | 280 | 557 | 549 | ||||||||||||
| Total interest expense | 1,508 | 1,793 | 3,042 | 3,628 | ||||||||||||
| Net interest income | 37,647 | 41,091 | 75,748 | 85,533 | ||||||||||||
| Provision for loan losses | - | - | - | - | ||||||||||||
| Net interest income after provision for loan losses | 37,647 | 41,091 | 75,748 | 85,533 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Service charges on deposit accounts | 1,115 | 1,153 | 2,268 | 2,352 | ||||||||||||
| Gain on sale of securities | - | - | 1,048 | 42 | ||||||||||||
| Merchant bankcard income | 2,388 | 1,598 | 4,562 | 3,226 | ||||||||||||
| Other income | 6,483 | 1,794 | 12,271 | 5,303 | ||||||||||||
| Total non-interest income | 9,986 | 4,545 | 20,149 | 10,923 | ||||||||||||
| Non-interest expense: | ||||||||||||||||
| Salaries and employee benefits | 13,383 | 11,803 | 26,724 | 23,564 | ||||||||||||
| FDIC and other insurance expense | 1,707 | 1,609 | 3,399 | 3,179 | ||||||||||||
| Occupancy expense | 1,384 | 1,358 | 2,704 | 2,736 | ||||||||||||
| Equipment expense | 1,538 | 1,379 | 2,972 | 2,716 | ||||||||||||
| Other real estate owned expense, net | 658 | (757 | ) | (469 | ) | 538 | ||||||||||
| Amortization of public welfare investments | 2,020 | 1,830 | 4,041 | 4,031 | ||||||||||||
| Merchant bankcard expense | 1,939 | 1,063 | 3,660 | 2,170 | ||||||||||||
| Legal and professional services | 1,001 | 580 | 1,749 | 1,045 | ||||||||||||
| Marketing expense | 801 | 483 | 1,407 | 1,113 | ||||||||||||
| Other expense | 1,493 | 1,627 | 2,922 | 3,022 | ||||||||||||
| 2,922 | ||||||||||||||||
| Total non-interest expense | 25,924 | 20,975 | 49,109 | 44,114 | ||||||||||||
| Income before income tax expense | 21,709 | 24,661 | 46,788 | 52,342 | ||||||||||||
| Income tax expense | 6,815 | 7,918 | 14,653 | 17,077 | ||||||||||||
| Net income | $ | 14,894 | $ | 16,743 | $ | 32,135 | $ | 35,265 | ||||||||
| Basic and diluted earnings per common share | $ | 113.76 | $ | 127.88 | $ | 245.44 | $ | 269.35 | ||||||||
| FARMERS & MERCHANTS BANK OF LONG BEACH | ||||||||||
| Balance Sheets (Unaudited) | ||||||||||
| (In Thousands Except Share and Per Share Data) | ||||||||||
| June 30, 2013 | Dec. 31, 2012 | |||||||||
| Assets | ||||||||||
| Cash and due from banks: | ||||||||||
| Noninterest-bearing balances | $ | 76,231 | $ | 60,914 | ||||||
| Interest-bearing balances | 193,267 | 253,087 | ||||||||
| Securities available-for-sale | 566,239 | 630,055 | ||||||||
| Securities held-to-maturity | 2,083,998 | 1,942,085 | ||||||||
| Gross loans | 2,112,854 | 1,984,440 | ||||||||
| Less allowance for loan losses | (50,762 | ) | (50,994 | ) | ||||||
| Less unamortized deferred loan fees, net | (360 | ) | (364 | ) | ||||||
| Net loans | 2,061,732 | 1,933,082 | ||||||||
|
Other real estate owned, net |
17,953 | 17,696 | ||||||||
| Public welfare investments | 31,763 | 35,804 | ||||||||
| Bank premises and equipment, net | 64,530 | 60,504 | ||||||||
| Net deferred tax assets | 26,784 | 26,060 | ||||||||
| Other assets | 23,646 | 29,674 | ||||||||
| Total assets | $ | 5,146,143 | $ | 4,988,961 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Liabilities: | ||||||||||
| Deposits: | ||||||||||
| Demand, non-interest bearing | $ | 1,527,624 | $ | 1,474,215 | ||||||
| Demand, interest bearing | 359,149 | 346,991 | ||||||||
| Savings and money market savings | 1,048,565 | 1,011,029 | ||||||||
| Time deposits | 836,735 | 853,631 | ||||||||
| Total deposits | 3,772,073 | 3,685,866 | ||||||||
| Securities sold under repurchase agreements | 605,373 | 551,293 | ||||||||
| Other liabilities | 29,643 | 34,543 | ||||||||
| Total liabilities | 4,407,089 | 4,271,702 | ||||||||
| 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 | 12,044 | 12,044 | ||||||||
| Retained earnings | 721,543 | 695,169 | ||||||||
| Other comprehensive income | 2,848 | 7,427 | ||||||||
| Total stockholders' equity | 739,054 | 717,259 | ||||||||
| Total liabilities and stockholders' equity | $ | 5,146,143 | $ | 4,988,961 | ||||||
