Farmers & Merchants Bank of Long Beach Reports 2018 Fourth-Quarter and Full-Year Results

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, 2018.

“Farmers and Merchants Bank achieved strong results for 2018, bolstered by a 9% increase in loan growth for the year that reflected the Bank’s solid reputation for responsive customer service and its competitive position in the marketplace,” said Henry Walker, president of Farmers & Merchants Bank. “As a 112-year-old regional bank with 25 branches, we provide high touch, white glove client service, coupled with top technology, fulfilling the niche of California’s strongest.”

Income Statement

For the 2018 fourth quarter, total interest and dividend income was $68.9 million, compared with $62.0 million in the fourth quarter of 2017. Total interest and dividend income for the year ended December 31, 2018 was $261.0 million, compared with $238.9 million reported for 2017.

Interest expense for the 2018 fourth quarter was $6.5 million, compared with $4.0 million in the same period a year ago. Interest expense for 2018 was $21.9 million versus $14.4 million in 2017.

Farmers & Merchants’ net interest income for the 2018 fourth quarter was $62.4 million, compared with net interest income of $58.1 million for the fourth quarter in 2017. Net interest income for 2018 was $239.1 million, versus $224.6 million in 2017.

Net interest margin for the fourth quarter 2018 was 3.56%, compared with net interest margin of 3.44% for the same period in 2017. Farmers & Merchants’ net interest margin was 3.45% for the year ended December 31, 2018, compared with 3.43% in the previous year.

Farmers & Merchants’ provision for loan losses was $500.0 thousand in the fourth quarter of 2018, while the Bank did not record a loan loss provision in the same period a year ago. The Bank’s provision for loan losses was $2.5 million for the year ended December 31, 2018, compared with a loan loss provision of $1.0 million for the year ended December 31, 2017. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.47% at December 31, 2018, compared with 1.53% at December 31, 2017.

Non-interest income was $4.6 million for the 2018 fourth quarter, compared with non-interest income of $6.5 million for the 2017 fourth quarter. Non-interest income for 2018 totaled $18.2 million, compared with $28.9 million in 2017.

Non-interest expense for the 2018 fourth quarter was $38.2 million, compared with $42.3 million for the same period last year. Non-interest expense for the year ended December 31, 2018 was $146.1 million, compared with $161.8 million last year.

The Bank’s net income for the 2018 fourth quarter was $22.1 million, or $169.17 per diluted share, compared with net income of $11.5 million, or $87.53 per diluted share, for the 2017 fourth quarter. The Bank’s net income for 2018 was $85.6 million, or $654.07 per diluted share, compared with $64.8 million, or $494.65 per diluted share, for 2017.

Balance Sheet

At December 31, 2018, net loans totaled $4.19 billion, compared with $3.83 billion at December 31, 2017. The Bank’s deposits grew to $5.58 billion at the end of 2018, from $5.39 billion at December 31, 2017. Non-interest-bearing deposits represented 37.6% of total deposits at December 31, 2018 and the end of 2017. Total assets increased to $7.31 billion at the close of 2018 from $6.99 billion at December 31, 2017.

At December 31, 2018, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 19.87%, a tier 1 risk-based capital ratio of 18.63%, a common equity tier 1 capital ratio of 18.63%, and a tier 1 leverage ratio of 14.04%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“The strength of F&M’s brand is consistent with the excellent health of our balance sheet and the growth we achieved during the past year,” said Daniel Walker, chief executive officer and chairman of the board of Farmers & Merchants Bank. “Entering the new year, we are well positioned to continue our leadership role in the communities we serve, and extend deep gratitude to our customers, special thanks to our employees for their dedication and teamwork, and appreciation to all of our stockholders.”

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 Dec. 31,     Twelve Months Ended Dec. 31,
2018   2017 2018   2017
 
Interest and dividend income:
 
Loans $ 50,713 $ 45,269 $ 190,234 $ 172,772
Investment securities 17,326 15,926 67,034 63,155
Investments in FHLB and FRB stock 636 313 1,694 1,460
Interest-bearing deposits in financial institutions 258 527   2,035 1,550  
 
Total interest and dividend income 68,933 62,035   260,997 238,937  
 
Interest expense:
 
Deposits 4,231 2,665 14,202 10,037
Securities sold under repurchase agreements 2,280 1,288 7,698 4,252
Other borrowings 34 2   41 66  
 
Total interest expense 6,545 3,955   21,941 14,355  
 
Net interest income 62,388 58,080 239,056 224,582
 
Provision for loan losses 500 -   2,500 1,000  
 
Net interest income after provision for loan losses 61,888 58,080   236,556 223,582  
 
Non-interest income:
 
Service charges on deposit accounts 1,534 1,005 5,650 3,971
Card income* 1,028 - # 3,877 -
Merchant bankcard income* - 2,716 - 10,773
Other real estate owned income - - - 17
Other income 2,003 2,737   8,639 14,162  
 
Total non-interest income 4,565 6,458   18,166 28,923  
 
Non-interest expense:
 
Salaries and employee benefits 22,274 21,071 88,463 85,086
FDIC and other insurance expense 639 652 2,593 2,574
Occupancy expense 2,912 2,460 10,195 9,252
Software and equipment expense 3,070 2,843 10,879 9,380
Other real estate owned expense 90 (762 ) 139 (605 )
Merchant bankcard expense* - 2,095 - 8,486
Professional and legal services 1,633 1,836 5,803 6,024
Marketing expense 1,767 1,240 5,950 5,307
Other expense 5,834 10,893   22,076 36,341  
 
Total non-interest expense 38,219 42,328   146,098 161,845  
 
Income before income tax expense 28,234 22,210 108,624 90,660
 
Income tax expense 6,085 10,750   22,988 25,896  
 
Net income $ 22,149 $ 11,460   $ 85,636 $ 64,764  
 
Basic and diluted earnings per common share $ 169.17 $ 87.53   $ 654.07 $ 494.65  
 

*An accounting standard effective for 2018 requires a net presentation of revenues and expenses for the Bank’s merchant and debit card products; periods prior to 2018 have not been restated.

 
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
 
    Dec. 31, 2018     Dec. 31, 2017
 
Assets
 
Cash and due from banks:
Noninterest-bearing balances $ 69,486

 

$

56,604
Interest-bearing balances 17,661   43,512  
 
Total cash and due from banks 87,147 100,116
Securities available-for-sale, at fair value 134,008 187,102
Securities held-to-maturity, at amortized cost 2,649,460 2,657,796
Loans held for sale 20,718 15,038
Gross loans 4,260,093 3,899,110
Allowance for loan losses (62,450 ) (59,502 )
Unamortized deferred loan fees, net (5,973 ) (5,611 )
 
Loans, net 4,191,670   3,833,997  
 
Other real estate owned, net 1,724 -
Investments in FHLB and FRB stock, at cost 20,690 20,690
Bank premises and equipment, net 100,478 95,550
Deferred tax assets, net 19,680 20,726
Other assets 82,661   60,563  
 
Total assets $ 7,308,236  

 

$

6,991,578  
 
 
Liabilities and Stockholders' Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits $ 2,098,097

 

$

2,026,237
Interest-bearing demand deposits 1,178,886 925,308
Savings and money market savings 1,566,446 1,643,859
Time deposits 741,037   795,707  
 
Total deposits 5,584,466 5,391,111
Securities sold under repurchase agreements 609,791 614,410
FHLB advances 30,000 -
Other liabilities 56,106   26,937  
 
Total liabilities 6,280,363   6,032,458  
 
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 914,164 844,370
Accumulated other comprehensive income (954 ) 87  
 
Total stockholders' equity 1,027,873   959,120  
 
Total liabilities and stockholders' equity $ 7,308,236  

 

$

6,991,578  
 

Contacts

John Hinrichs
Executive Vice President
562-437-0011, ext. 5035

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

Contacts

John Hinrichs
Executive Vice President
562-437-0011, ext. 5035

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