Farmers & Merchants Bank of Long Beach Reports 2016 Fourth-Quarter and Full-Year Results

-- 2016 Net Income Increases 10 Percent to $71.5 Million --

LONG BEACH, Calif.--()--Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the fourth quarter and full year ended December 31, 2016.

“F&M achieved steady loan and deposit growth, in addition to strong profitability in a year characterized by low interest rates and a highly competitive environment,” said Henry Walker, president of Farmers & Merchants Bank. “As the Bank enters its 110th year, Farmers and Merchants continues to distinguish itself in the marketplace by investing in relationships and providing stellar service to the communities we serve.”

Income Statement

For the 2016 fourth quarter, total interest and dividend income was $56.4 million, compared with $53.3 million in the fourth quarter of 2015. Total interest and dividend income for the year ended December 31, 2016 was $222.8 million, compared with $206.2 million reported for 2015.

Interest expense for the 2016 fourth quarter was $2.8 million, compared with $2.1 million in the same period a year ago. Interest expense for the full 2016 year was $10.3 million versus $7.6 million in 2015.

Farmers & Merchants’ net interest income for the 2016 fourth quarter was $53.6 million, compared with net interest income of $51.1 million for the fourth quarter in 2015. Net interest income for 2016 was $212.5 million, versus $198.6 million in 2015.

Net interest margin for the fourth quarter 2016 was 3.41%, compared with net interest margin of 3.54% for the same period in 2015. Farmers & Merchants’ net interest margin was 3.51% for the year ended December 31, 2016, compared with 3.63% in the previous year.

Farmers & Merchants did not record a loan loss provision in the fourth quarter of 2016, nor the year ended December 31, 2016. The Bank had recorded $2.7 million in loan loss provision recapture for the same periods in 2015. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.64% at December 31, 2016, compared with 1.73% at December 31, 2015.

Non-interest income was $6.5 million for the 2016 fourth quarter, compared with $5.7 million in the 2015 fourth quarter. Non-interest income for the full 2016 year totaled $25.3 million, essentially in line with non-interest income for 2015.

Non-interest expense for the 2016 fourth quarter was $45.8 million, compared with $37.8 million for the same period last year. Non-interest expense for the year ended December 31, 2016 was $143.5 million, compared with $132.7 million last year.

The Bank’s net income for the 2016 fourth quarter was $17.7 million, or $135.42 per diluted share, compared with $15.5 million, or $118.07 per diluted share, in the 2015 fourth quarter. The Bank’s net income for 2016 was $71.5 million, or $546.16 per diluted share, compared with $64.9 million, or $496.06 per diluted share, for 2015.

Balance Sheet

At December 31, 2016, net loans totaled $3.40 billion, compared with $3.22 billion at December 31, 2015. The Bank’s deposits grew to $5.12 billion at the end of 2016, from $4.70 billion at December 31, 2015. Non-interest bearing deposits represented 37.7% of total deposits at December 31, 2016, versus 38.9% of total deposits at December 31, 2015. Total assets increased to $6.73 billion at the close of 2016 from $6.15 billion at December 31, 2015.

At December 31, 2016, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.85%, a tier 1 risk-based capital ratio of 19.60%, a common equity tier 1 capital ratio of 19.60%, and a tier 1 leverage ratio of 13.62%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“Farmers and Merchants’ strong fourth-quarter and year-end results reflect our focus on adhering to core fundamentals that have helped the Bank generate profits consistently and maintain a healthy balance sheet since 1907,” said Daniel Walker, chief executive officer and chairman of the board of Farmers & Merchants Bank. “Whether it is the Bank’s commitment to protecting depositors, investment in technology, or contributing to charitable needs in our community, F&M’s values are integral to its strategy and success.”

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 Dec. 31,   Twelve Months Ended Dec. 31,
2016   2015 2016   2015
 
Interest and dividend income:
 
Loans $ 40,094 $ 38,092 $ 161,742 $ 149,424
Investment securities 14,996 14,632 57,823 53,527
Investments in FHLB and FRB stock 1,028 448 2,305 2,864

Interest-bearing deposits in financial institutions

266   96   963   412  
 
Total interest and dividend income 56,384   53,268   222,833   206,227  
 
Interest expense:
 
Deposits 2,290 1,833 8,452 6,468
Securities sold under repurchase agreements 477 294 1,877 1,144
Other borrowings 5   -   5   6  
 
Total interest expense 2,772   2,127   10,334   7,618  
 
Net interest income 53,612 51,141 212,499 198,609
 
Provision for loan losses -   (2,700 ) -   (2,700 )
 
Net interest income after provision for loan losses 53,612   53,841   212,499   201,309  
 
Non-interest income:
 
Service charges on deposit accounts 953 998 3,930 4,035
Other real estate owned income 10 39 27 1,454
Merchant bankcard income 2,633 2,331 10,298 9,722
Other income 2,885   2,296   11,033   10,069  
 
Total non-interest income 6,481   5,664   25,288   25,280  
 
Non-interest expense:
 
Salaries and employee benefits 20,551 20,239 77,190 74,853
FDIC and other insurance expense 620 841 2,963 3,238
Occupancy expense 3,661 2,483 10,433 8,843
Software and equipment expense 1,928 2,097 7,337 7,353
Other real estate owned expense (4 ) 593 (62 ) 704
Merchant bankcard expenses and losses 2,087 1,850 8,040 8,039
Professional and legal services 2,009 1,633 5,649 4,602
Marketing expense 1,800 1,020 6,396 5,504
Other expense 13,155   7,080   25,587   19,597  
 
Total non-interest expense 45,807   37,836   143,533   132,733  
 
Income before income tax expense 14,286 21,669 94,254 93,856
 
Income tax expense (3,444 ) 6,210   22,746   28,908  
 
Net income $ 17,730   $ 15,459   $ 71,508   $ 64,948  
 
Basic and diluted earnings per common share $ 135.42   $ 118.07   $ 546.16   $ 496.06  
 
 
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
 
  Dec. 31, 2016 Dec. 31, 2015
 
Assets
 
Cash and due from banks:
Noninterest-bearing balances $ 63,797 $ 64,742
Interest-bearing balances 84,918   103,278  
 
Total cash and due from banks 148,715 168,020
Securities available-for-sale, at fair value 182,320 206,649
Securities held-to-maturity, at amortized cost 2,762,877 2,363,383
Loans held for sale 6,080 3,168
Gross loans 3,466,382 3,278,852
Allowance for loan losses (56,867 ) (56,670 )
Unamortized deferred loan fees, net (5,314 ) (4,139 )
 
Loans, net 3,404,201   3,218,043  
 
Other real estate owned, net 791 1,351
Investments in FHLB and FRB stock, at cost 20,690 20,690
Bank premises and equipment, net 87,775 86,781
Deferred tax assets, net 30,281 27,892
Other assets 85,328   57,623  
 
Total assets $ 6,729,058   $ 6,153,600  
 
 
Liabilities and Stockholders' Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits $ 1,931,931 $ 1,824,516
Interest-bearing demand deposits 868,380 645,125
Savings and money market savings 1,460,669 1,376,920
Time deposits 861,977   843,405  
 
Total deposits 5,122,957 4,689,966
Securities sold under repurchase agreements 540,035 572,915
Other borrowings 100,000 -
Other liabilities 55,753   35,388  
 
Total liabilities 5,818,745   5,298,269  
 
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 795,187 739,259
Accumulated other comprehensive income 463   1,409  
 
Total stockholders' equity 910,313   855,331  
 
Total liabilities and stockholders' equity $ 6,729,058   $ 6,153,600  
 

Contacts

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

Contacts

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