LONG BEACH, Calif.--(BUSINESS WIRE)--Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQB: FMBL) today reported financial results for the first quarter ended March 31, 2020, and announced that its board of directors has authorized the Bank to repurchase up to $20 million of its common stock as part of a new stock repurchase program that expires on December 31, 2021.
“Results for our first quarter further demonstrated the Bank’s financial strength,” said Henry Walker, president of Farmers & Merchants Bank. “Total deposits, net loans and total assets all increased from year-end, and F&M remained ‘well capitalized’ in all categories, far exceeding regulatory requirements. As the world endures the pandemic and unsettling economic disruption, the financial safety and security of all our stakeholders remains our top priority, as it has through many crises and economic cycles over the past 113-years since F&M was founded.”
Income Statement
For the three months ended March 31, 2020, interest and dividend income rose to $69.1 million from $68.3 million a year ago. Interest expense for the 2020 first quarter was $8.0 million, compared with $7.4 million in the same period last year.
Farmers & Merchants’ net interest income for the 2020 first quarter increased to $61.2 million from $60.9 million for the first quarter of 2019.
Farmers & Merchants’ net interest margin was 3.28% for the first quarter ended March 31, 2020, compared with 3.49% at the end of the same period last year.
The Bank’s provision for loan losses in the first quarter of 2020 was $800,000, versus $250,000 in the first quarter of 2019. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.44% at March 31, 2020, compared with 1.45% at March 31, 2019.
Non-interest income was $4.6 million for the 2020 first quarter, compared with $4.5 million for the 2019 first quarter. Non-interest expense for the 2020 first quarter was $43.6 million, versus $37.8 million for the same period last year.
The Bank’s net income for the 2020 first quarter was $17.9 million, or $139.50 per diluted share, from $22.3 million, or $170.91 per diluted share, in the 2019 first quarter.
Balance Sheet
At March 31, 2020, net loans totaled $4.35 billion, compared with $4.34 billion at December 31, 2019. The Bank’s total deposits rose to $6.18 billion at the end of the 2020 first quarter, up from $5.83 billion at December 31, 2019. Non-interest bearing deposits represented 36.6% of total deposits at March 31, 2020 and December 31, 2019. Total assets grew to $7.95 billion at the close of the 2020 first quarter from $7.61 billion at December 31, 2019.
At March 31, 2020, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.90%, a tier 1 risk-based capital ratio of 19.65%, a common equity tier 1 capital ratio of 19.65%, and a tier 1 leverage ratio of 14.08%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.
“As we move forward together during this unprecedented time, we believe F&M is prepared to take on today’s challenges, both operationally and financially,” said Daniel Walker, chief executive officer and chairman of the board. “While the pandemic continues to unfold, it is creating uncertainties for every individual and for all organizations. Our team is working collaboratively to reinvent new ways of working and solving customer challenges. Our board of directors demonstrated its confidence in F&M with its authorization of the new share repurchase program. We believe that F&M’s conservative policies and prudent financial management will continue to serve the Bank and its customers well.”
To the extent the Bank repurchases shares pursuant to its $20.0 million share repurchase program announced today, the timing and number of shares repurchased will depend on a variety of factors, including, but not limited to, stock price, trading volume, regulatory requirements, general business conditions and others. The Bank may choose to modify, suspend or discontinue such proposed repurchases at any time without prior notice and anticipates that any such repurchases will be funded from existing cash and cash equivalents or future cash flow. The share repurchase program does not obligate the Bank to acquire any specific number of shares in any period.
About Farmers & Merchants Bank
Founded in Long Beach in 1907 by C.J. Walker, Farmers & Merchants Bank provides white-glove service to clients at 25 branches across Orange County, Long Beach, the South Bay and Santa Barbara, as well as through robust Online and Mobile Banking platforms. The Bank offers commercial and small business banking, business loan programs, home loans, and consumer 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 Bank’s website, www.fmb.com.
| FARMERS & MERCHANTS BANK OF LONG BEACH | |||||
| Income Statements (Unaudited) | |||||
| (In thousands, except per share data) | |||||
Three Months Ended Mar. 31, |
|||||
2020 |
2019 |
||||
| Interest and dividend income: | |||||
| Loans | $ |
51,325 |
$ |
50,740 |
|
| Investment securities | 16,745 |
16,926 |
|||
| Investments in FHLB and FRB stock | 348 |
356 |
|||
| Interest-bearing deposits in financial institutions | 728 |
318 |
|||
| Total interest and dividend income | 69,146 |
68,340 |
|||
| Interest expense: | |||||
| Deposits | 5,690 |
4,935 |
|||
| Securities sold under repurchase agreements | 2,300 |
2,444 |
|||
| Other borrowings | - |
40 |
|||
| Total interest expense | 7,990 |
7,419 |
|||
| Net interest income | 61,156 |
60,921 |
|||
| Provision for loan losses | 800 |
250 |
|||
| Net interest income after provision for loan losses | 60,356 |
60,671 |
|||
| Non-interest income: | |||||
| Service charges on deposit accounts | 1,527 |
1,645 |
|||
| Card income | 870 |
928 |
|||
| Other real estate owned income | - |
18 |
|||
| Other income | 2,240 |
1,956 |
|||
| Total non-interest income | 4,637 |
4,547 |
|||
| Non-interest expense: | |||||
| Salaries and employee benefits | 27,701 |
23,294 |
|||
| FDIC and other insurance expense | 445 |
622 |
|||
| Occupancy expense | 3,333 |
2,648 |
|||
| Software and equipment expense | 3,066 |
3,040 |
|||
| Other real estate owned expense | - |
50 |
|||
| Professional and legal services | 1,161 |
1,671 |
|||
| Marketing expense | 1,768 |
1,715 |
|||
| Other expense | 6,166 |
4,775 |
|||
| Total non-interest expense | 43,640 |
37,815 |
|||
| Income before income tax expense | 21,353 |
27,403 |
|||
| Income tax expense | 3,409 |
5,069 |
|||
| Net income | $ |
17,944 |
$ |
22,334 |
|
| Basic earnings per common share | $ |
139.61 |
$ |
170.91 |
|
| Diluted earnings per common share | $ |
139.50 |
$ |
170.91 |
|
| Basic weighted-average shares outstanding | 128,528 |
130,681 |
|||
| Diluted weighted-average shares outstanding | 128,630 |
130,681 |
|||
| FARMERS & MERCHANTS BANK OF LONG BEACH | |||||
| Balance Sheets (Unaudited) | |||||
| (In thousands, except share and per share data) | |||||
Mar. 31, 2020 |
Dec. 31, 2019 |
||||
| Assets | |||||
| Cash and due from banks: | |||||
| Noninterest-bearing balances | $ |
68,779 |
$ |
64,556 |
|
| Interest-bearing balances | 343,191 |
54,309 |
|||
| Total cash and due from banks | 411,970 |
118,865 |
|||
| Securities available-for-sale, at fair value | 98,877 |
150,623 |
|||
| Securities held-to-maturity, at amortized cost | 2,829,575 |
2,728,583 |
|||
| Loans held for sale | 23,630 |
23,301 |
|||
| Gross loans | 4,414,856 |
4,403,876 |
|||
| Allowance for loan losses | (63,457) |
(62,489) |
|||
| Unamortized deferred loan fees, net | (6,285) |
(5,127) |
|||
| Loans, net | 4,345,114 |
4,336,260 |
|||
| Investments in FHLB and FRB stock, at cost | 20,160 |
20,160 |
|||
| Bank premises and equipment, net | 107,116 |
108,133 |
|||
| Deferred tax assets, net | 25,027 |
22,213 |
|||
| Other assets | 89,248 |
97,431 |
|||
| Total assets | $ |
7,950,717 |
$ |
7,605,569 |
|
| Liabilities and Stockholders' Equity | |||||
| Liabilities: | |||||
| Deposits: | |||||
| Noninterest-bearing demand deposits | $ |
2,263,885 |
$ |
2,135,056 |
|
| Interest-bearing demand deposits | 1,400,363 |
1,302,726 |
|||
| Savings and money market savings | 1,703,193 |
1,669,525 |
|||
| Time deposits | 817,296 |
720,958 |
|||
| Total deposits | 6,184,737 |
5,828,265 |
|||
| Securities sold under repurchase agreements | 611,858 |
632,428 |
|||
| Other liabilities | 54,203 |
61,996 |
|||
| Total liabilities | 6,850,798 |
6,522,689 |
|||
| Stockholders' Equity: | |||||
| Common Stock, par value $20; authorized 250,000 | |||||
| shares; issued and outstanding 128,528 shares | 2,571 |
2,571 |
|||
| Additional paid-in capital | 96,955 |
95,446 |
|||
| Retained earnings | 998,341 |
983,867 |
|||
| Accumulated other comprehensive income | 2,052 |
996 |
|||
| Total stockholders' equity | 1,099,919 |
1,082,880 |
|||
| Total liabilities and stockholders' equity | $ |
7,950,717 |
$ |
7,605,569 |
|