Farmers & Merchants Bank of Long Beach Reports 2014 First Quarter Results

--Net Loans Exceed $2.5 Billion for the First Time--

--Total Assets Achieve Record High of $5.4 Billion--

LONG BEACH, Calif.--()--Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the first quarter ended March 31, 2014.

“Interest income was up 9 percent in the first quarter, demonstrating the solid traction that the Bank’s recently expanded lending and retail teams continue to achieve,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “As we grow our topline, we maintain a long-term view that investing in the Bank’s people and infrastructure will help us achieve new heights and provide superior service to new and existing clients.”

Income Statement

For the three months ended March 31, 2014, interest income advanced to $43.3 million from $39.6 million in the first quarter of 2013. Interest expense for the 2014 first quarter was $1.6 million, compared with $1.5 million last year.

Net interest income for the 2014 first quarter rose to $41.7 million from $38.1 million for the first quarter of 2013. Farmers & Merchants’ net interest margin was 3.40% for the 2014 first quarter, compared with 3.28% a year ago.

The Bank did not have a provision for loan losses in the first quarter of 2014, nor in the same period a year ago, reflecting the continued strength of the loan portfolio. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.98% at March 31, 2014, compared with 2.50% at March 31, 2013; the decrease being indicative of loan growth, coupled with strong loan quality.

Non-interest income was $6.6 million for the 2014 first quarter, compared with $10.2 million for the first quarter a year ago. Non-interest income for the 2013 first quarter included a $3.6 million gain on the sale of a branch building.

Non-interest expense for the 2014 first quarter was $28. 2 million, compared with $23.8 million for the same period last year. The increase in the 2014 first quarter is reflective of investments in talent and human capital, new awareness and customer-generation marketing campaigns and other real estate owned expenses.

Net income for the 2014 first quarter totaled $14.1 million, or $107.38 per diluted share, compared with net income of $16.7 million, or $127.77 per diluted share, for the 2013 first quarter.

Balance Sheet

At March 31, 2014, net loans increased to $2.53 billion from $2.40 billion at December 31, 2013. The Bank’s deposits totaled $3.98 billion at the end of the 2014 first quarter, compared with $3.83 billion at December 31, 2013. Non-interest bearing deposits represented 39.1% of total deposits at March 31, 2014, versus 38.5% of total deposits at December 31, 2013. Total assets increased to $5.36 billion at the close of the 2014 first quarter from $5.21 billion at December 31, 2013.

Additional paid-in capital was $112.04 million at March 31, 2014, versus $12.04 million at the end of 2013, reflecting a transfer of $100 million from retained earnings to additional paid-in capital for regulatory purposes regarding investments in bank premises.

At March 31, 2014, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 25.36%, a Tier 1 risk-based capital ratio of 24.10%, and a Tier 1 leverage ratio of 14.60%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 6.00% and 5.00%, respectively.

“F&M’s solid loan growth and the sound and stable characteristics of its balance sheet are indicative of the strategic initiatives and core fundamentals that ultimately enhance the Bank’s position of strength,” said Daniel Walker, chief executive officer and chairman of the board. “Now in F&M’s 107th year of service, we continue to maintain the Bank’s bedrock values, while expanding our presence and preparing for future growth. We are very proud of our continued standing as one of California's strongest banks.”

About Farmers & Merchants Bank of Long Beach

Founded in Long Beach in 1907 by C.J. Walker, Farmers & Merchants Bank has 23 branches in Los Angeles and Orange Counties. The Bank specializes in commercial and small business banking along with business loan programs. Farmers & Merchants Bank of Long Beach 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 www.fmb.com.

 
FARMERS & MERCHANTS BANK OF LONG BEACH
Income Statements (Unaudited)
(In thousands except per share data)
 
    Three Months Ended March 31,
2014     2013
 
Interest income:
 
Loans $ 28,870 $ 25,559
Securities available-for-sale 1,530 2,240
Securities held-to-maturity 12,853 11,629
Deposits with banks   53   207  
 
Total interest income   43,306   39,635  
 
Interest expense:
 
Deposits 1,348 1,261
Federal funds purchased 4 -
Securities sold under repurchase agreements   274   273  
 
Total interest expense   1,626   1,534  
 
Net interest income 41,680 38,101
 
Provision for loan losses   -   -  
 
Net interest income after provision for loan losses   41,680   38,101  
 
Non-interest income:
 
Service charges on deposit accounts 1,133 1,154
Gains on sale of securities 425 536
Other real estate owned income 165 310
Merchant bankcard income 2,274 2,174
Other income   2,591   6,066  
 
Total non-interest income   6,588   10,240  
 
Non-interest expense:
 
Salaries and employee benefits 15,679 13,340
FDIC and other insurance expense 752 1,692
Occupancy expense 1,772 1,598
Equipment expense 1,481 1,435
Other real estate owned expense 621 (817 )
Amortization of public welfare investments 2,117 2,020
Merchant bankcard expense 1,787 1,721
Legal and professional services 944 748
Marketing expense 1,488 589
Other expense   1,553   1,447  
 
Total non-interest expense   28,194   23,773  
 
Income before income tax expense 20,074 24,568
 
Income tax expense   6,015   7,839  
 
Net income $ 14,059 $ 16,729  
 
Basic and diluted earnings per common share $ 107.38 $ 127.77  
 
 
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
 
    Mar. 31, 2014     Dec. 31, 2013
 
Assets
 
Cash and due from banks:
Noninterest-bearing balances $ 75,319 $ 65,261
Interest-bearing balances 146,860 20,755
Securities available-for-sale 336,639 427,942
Securities held-to-maturity 2,070,679 2,145,289
Loan held for sale 263 465
Gross loans 2,584,961 2,454,302
Less allowance for loan losses (51,280 ) (51,251 )
Less unamortized deferred loan fees, net   (1,663 )   (1,704 )
Net loans   2,532,018     2,401,347  
Other real estate owned,net 13,237 14,502
Public welfare investments 53,016 27,722
Bank premises and equipment, net 65,429 66,212
Net deferred tax assets 23,664 23,512
Other assets   39,684     21,579  
 
Total assets $ 5,356,808   $ 5,214,586  
 
 
Liabilities and Stockholders' Equity
 
Liabilities:
 
Deposits:
Demand, non-interest bearing $ 1,556,932 $ 1,475,888
Demand, interest bearing 416,942 413,291
Savings and money market savings 1,145,556 1,080,774
Time deposits   860,018     861,489  
 
Total deposits 3,979,448 3,831,442
 
Securities sold under repurchase agreements 564,923 595,991
Other liabilities   41,867     27,986  
 
Total liabilities   4,586,238     4,455,419  
 
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 12,044
Retained earnings 653,587 742,408
Accumulated other comprehensive income   2,320     2,096  
 
Total stockholders' equity   770,570     759,167  
 
Total liabilities and stockholders' equity $ 5,356,808   $ 5,214,586  
 

Contacts

Farmers & Merchants Bank of Long Beach
John Hinrichs, 562-437-0011, ext. 5035
Executive Vice President
or
PondelWilkinson Inc.
Evan Pondel, 310-279-5980
Corporate and Investor Relations
investor@pondel.com

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Contacts

Farmers & Merchants Bank of Long Beach
John Hinrichs, 562-437-0011, ext. 5035
Executive Vice President
or
PondelWilkinson Inc.
Evan Pondel, 310-279-5980
Corporate and Investor Relations
investor@pondel.com