Farmers & Merchants Bank of Long Beach Reports 2018 First-Quarter Results

-- Total Assets Rise to Record $7.1 Billion --

LONG BEACH, Calif.--()--Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the first quarter ended March 31, 2018.

“F&M achieved strong first-quarter financial results, as we posted solid gains in interest and dividend income, while also decreasing our non-interest expenses,” said Henry Walker, president of Farmers & Merchants Bank. “At the same time, we continued to invest in F&M’s infrastructure, as the Bank grows and enhances its presence in Southern California.”

Income Statement

For the three months ended March 31, 2018, interest and dividend income rose to $61.7 million from $57.4 million a year ago. Interest expense for the 2018 first quarter was $4.4 million, compared with $3.1 million in the same period last year.

Farmers & Merchants’ net interest income for the 2018 first quarter increased to $57.3 million from $54.3 million for the first quarter of 2017.

Farmers & Merchants’ net interest margin was 3.37% for the first quarter ended March 31, 2018, compared with 3.42% at the end of the same period last year.

The Bank did not have a loan loss provision in the first quarter of 2018, nor in the first quarter of 2017. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.51% at March 31, 2018, compared with 1.58% at March 31, 2017.

Non-interest income was $6.8 million for the 2018 first quarter, compared with $9.1 million for the 2017 first quarter. Non-interest expense for the 2018 first quarter was $35.2 million, versus $36.7 million for the same period last year.

The Bank’s net income for the 2018 first quarter advanced to $21.0 million, or $160.65 per diluted share, from $20.2 million, or $154.11 per diluted share, in the 2017 first quarter.

Balance Sheet

At March 31, 2018, net loans totaled $3.88 billion, compared with $3.83 billion at December 31, 2017. The Bank’s total deposits rose to $5.47 billion at the end of the 2018 first quarter from $5.39 billion at December 31, 2017. Non-interest bearing deposits represented 37.9% of total deposits at March 31, 2018, versus 37.6% of total deposits at December 31, 2017. Total assets grew to $7.11 billion at the close of the 2018 first quarter from $6.99 billion at December 31, 2017.

At March 31, 2018, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.23%, a tier 1 risk-based capital ratio of 18.98%, a common equity tier 1 capital ratio of 18.98%, and a tier 1 leverage ratio of 13.80%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“F&M’s first-quarter asset size of more than $7 billion represents a new milestone for the Bank, which we accomplished by adhering to our sound, conservative management and operating practices,” said Daniel Walker, chief executive officer and chairman of the board. “Strong and steady growth have long been hallmarks of F&M, and we remain focused on this strategy in the Bank’s 111th year of serving its community.”

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 March 31,
2018 2017
 
Interest and dividend income:
 

Loans

$ 44,598 $ 40,853
Investment securities 16,376 15,976
Investments in FHLB and FRB stock 356 446
Interest-bearing deposits in financial institutions   353   139
 
Total interest and dividend income   61,683   57,414
 
Interest expense:
 
Deposits 2,857 2,337
Securities sold under repurchase agreements 1,503 763
Other borrowings   -   20
 
Total interest expense   4,360   3,120
 
Net interest income 57,323 54,294
 
Provision for loan losses   -   -
 
Net interest income after provision for loan losses   57,323   54,294
 
Non-interest income:
 
Service charges on deposit accounts 1,026 959
Other real estate owned income - 17
Merchant bankcard income 2,881 2,612
Other income   2,887   5,502
 
Total non-interest income   6,794   9,090
 
Non-interest expense:
 
Salaries and employee benefits 22,096 21,002
FDIC and other insurance expense 653 632
Occupancy expense 2,287 2,161
Software and equipment expense 2,571 1,976
Other real estate owned expense 22 30
Merchant bankcard expense 2,321 2,151
Professional and legal services 1,196 75
Marketing expense 1,146 1,352
Other expense   2,924   7,272
 
Total non-interest expense   35,216   36,651
 
Income before income tax expense 28,901 26,733
 
Income tax expense   7,867   6,556
 
Net income $ 21,034 $ 20,177
 
Basic and diluted earnings per common share $ 160.65 $ 154.11
 
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
   
Mar. 31, 2018 Dec. 31, 2017
 
Assets
 
Cash and due from banks:
Noninterest-bearing balances $ 53,993 $ 56,604
Interest-bearing balances   129,322     43,512  
 
Total cash and due from banks 183,315 100,116
Securities available-for-sale, at fair value 163,616 187,102
Securities held-to-maturity, at amortized cost 2,683,559 2,657,796
Loans held for sale 12,735 15,038
Gross loans 3,947,924 3,899,110
Allowance for loan losses (59,508 ) (59,502 )
Unamortized deferred loan fees, net   (6,175 )   (5,611 )
 
Loans, net   3,882,241     3,833,997  
 
Investments in FHLB and FRB stock, at cost 20,690 20,690
Bank premises and equipment, net 96,520 95,550
Deferred tax assets, net 21,093 20,726
Other assets   50,452     60,563  
 
Total assets $ 7,114,221   $ 6,991,578  
 
 
Liabilities and Stockholders' Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits $ 2,076,834 $ 2,026,237
Interest-bearing demand deposits 1,014,021 925,308
Savings and money market savings 1,616,483 1,643,859
Time deposits   766,113     795,707  
 
Total deposits 5,473,451 5,391,111
Securities sold under repurchase agreements 641,793 614,410
Other liabilities   22,965     26,937  
 
Total liabilities   6,138,209     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 862,393 844,370
Accumulated other comprehensive income   (1,044 )   87  
 
Total stockholders' equity   976,012     959,120  
 
Total liabilities and stockholders' equity $ 7,114,221   $ 6,991,578  

Contacts

Farmers & Merchants Bank of Long Beach
John Hinrichs
Executive Vice President
562-437-0011, ext. 4835
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. 4835
or
PondelWilkinson Inc.
Evan Pondel
Investor Relations
310-279-5980
investor@pondel.com