LONG BEACH, Calif.--(BUSINESS WIRE)--Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the second quarter and six-months ended June 30, 2020.
“The second quarter of 2020 demonstrated the Bank’s financial strength and deep commitment to our clients and communities at a most unsettling time in world history,” said Henry Walker, president. “With the pandemic still surging, our top priority remains focused on the health and safety of our staff, clients and their families.
“From a financial perspective, the Bank continues to maintain strong capital ratios and remains ‘well capitalized’ in all financial categories, far exceeding regulatory requirements. This has been our legacy through many crises and economic cycles since F&M’s founding more than a century ago,” Walker added.
Income Statement
For the three months ended June 30, 2020, total interest and dividend income rose to $74.7 million from $70.2 million in the second quarter of 2019. Total interest and dividend income for the first half of 2020 increased to $143.9 million from $138.5 million reported for the first half of 2019.
Total interest expense for the 2020 second quarter was $6.7 million, compared with $8.4 million in the second quarter of 2019. Interest expense for the first half of 2020 was $14.7 million, versus $15.8 million reported for the corresponding period last year.
Net interest income for the 2020 second quarter advanced to $68.0 million from $61.8 million for the second quarter of 2019, with the increase primarily reflecting the recognition of net loan fees and interest income from Paycheck Protection Program (PPP) loans. Net interest income for the first half of 2020 increased to $129.2 million from $122.7 million for the six months ended June 30, 2019.
Net interest margin was 3.13% for the 2020 second quarter, versus 3.45% in the 2019 second quarter. Net interest margin was 3.20% for the first half of 2020, compared with 3.47% for the same period in 2019.
The Bank’s provision for loan losses in the second quarter of 2020 was $4.7 million, with no provision for loan losses in the second quarter of 2019. For the first half of 2020, the provision for loan losses was $5.5 million, compared with $250,000 in the corresponding period last year. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.31% at June 30, 2020, compared with 1.42% at December 31, 2019.
Total non-interest income was $4.3 million for the 2020 second quarter, compared with $4.8 million for the same period a year ago. In the first half of 2020, total non-interest income was $8.9 million, compared with $9.4 million for the six months ended June 30, 2019.
Total non-interest expense for the 2020 second quarter was $42.6 million, compared with $39.6 million for the same period last year. Non-interest expense for the first half of 2020 was $86.2 million, compared with $77.5 million for the first half of 2019.
Net income for the 2020 second quarter was $20.6 million, or $160.52 per diluted share, compared with $21.7 million, or $167.92 per diluted share, for the 2019 second quarter. Net income for the first half of 2020 was $38.6 million, or $300.12 per diluted share, compared with $44.1 million, or $338.82 per diluted share, for the six months ended June 30, 2019.
Balance Sheet
At June 30, 2020, net loans increased to $5.12 billion from $4.34 billion at December 31, 2019. The Bank’s deposits rose to $7.23 billion at the end of the 2020 second quarter from $5.83 billion at December 31, 2019, reflecting a general flight to safety and funds from PPP loans.
Non-interest-bearing deposits represented 40.0% of total deposits at June 30, 2020, versus 36.6% of total deposits at December 31, 2019. Total assets increased to $9.45 billion at the close of the 2020 second quarter from $7.61 billion at December 31, 2019.
At June 30, 2020, Farmers & Merchants Bank’s total risk-based capital ratio was 20.64%; its tier 1 risk-based capital ratio was 19.39%, with a common equity tier 1 capital ratio of 19.39%, and a tier 1 leverage ratio of 13.03%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.
“Our entire F&M team has been working tirelessly to serve a growing number of clients during this protracted period of uncertainty,” said Daniel Walker, chief executive officer and chairman of the board. “During the quarter, we processed more than $700 million in PPP loans, with each loan averaging approximately $170,000, for more than 4,000 existing and new clients, including many small businesses.
“Moving forward, we are determined to maintain our conservative policies of financial prudence, as we seek to help our clients and communities navigate through uncharted terrain, doing our part to help preserve financial safety and security for all of our stakeholders,” Walker said.
As announced in April 2020, the board of directors authorized the repurchase up to $20 million of the Bank’s common stock as part of a stock repurchase program that expires on December 31, 2021. As part of this program, the Bank repurchased 145 shares of its common stock during the second quarter at an average price of $6,054.34 per share. To the extent the Bank repurchases additional shares pursuant to this program, 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 of Long Beach
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 June 30, | Six Months Ended June 30, | ||||||||||
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||
| Interest and dividend income: | |||||||||||
| Loans | $ | 59,020 |
$ | 51,771 |
$ | 110,345 |
$ | 102,511 |
|||
| Investment securities | 15,345 |
17,180 |
32,090 |
34,106 |
|||||||
| Investments in FHLB and FRB stock | 171 |
349 |
519 |
705 |
|||||||
| Interest-bearing deposits in financial institutions | 211 |
879 |
939 |
1,197 |
|||||||
| Total interest and dividend income | 74,747 |
70,179 |
143,893 |
138,519 |
|||||||
| Interest expense: | |||||||||||
| Deposits | 4,452 |
5,560 |
10,142 |
10,495 |
|||||||
| Securities sold under repurchase agreements | 2,253 |
2,831 |
4,553 |
5,275 |
|||||||
| Other borrowings | - |
1 |
- |
41 |
|||||||
| Total interest expense | 6,705 |
8,392 |
14,695 |
15,811 |
|||||||
| Net interest income | 68,042 |
61,787 |
129,198 |
122,708 |
|||||||
| Provision for loan losses | 4,700 |
- |
5,500 |
250 |
|||||||
| Net interest income after provision for loan losses | 63,342 |
61,787 |
123,698 |
122,458 |
|||||||
| Non-interest income: | |||||||||||
| Service charges on deposit accounts | 1,192 |
1,780 |
2,719 |
3,425 |
|||||||
| Card income | 578 |
878 |
1,448 |
1,806 |
|||||||
| Other real estate owned income | - |
15 |
- |
33 |
|||||||
| Other income | 2,531 |
2,142 |
4,771 |
4,098 |
|||||||
| Total non-interest income | 4,301 |
4,815 |
8,938 |
9,362 |
|||||||
| Non-interest expense: | |||||||||||
| Salaries and employee benefits | 27,715 |
23,340 |
55,416 |
46,634 |
|||||||
| FDIC and other insurance expense | 738 |
632 |
1,183 |
1,254 |
|||||||
| Occupancy expense | 3,561 |
3,021 |
6,894 |
5,669 |
|||||||
| Software and equipment expense | 3,101 |
3,169 |
6,167 |
6,209 |
|||||||
| Other real estate owned expense | - |
29 |
- |
79 |
|||||||
| Professional and legal services | 1,663 |
1,893 |
2,824 |
3,564 |
|||||||
| Marketing expense | 1,155 |
2,221 |
2,923 |
3,936 |
|||||||
| Other expense | 4,621 |
5,343 |
10,787 |
10,118 |
|||||||
| Total non-interest expense | 42,554 |
39,648 |
86,194 |
77,463 |
|||||||
| Income before income tax expense | 25,089 |
26,954 |
46,442 |
54,357 |
|||||||
| Income tax expense | 4,459 |
5,209 |
7,868 |
10,278 |
|||||||
| Net income | $ | 20,630 |
$ | 21,745 |
$ | 38,574 |
$ | 44,079 |
|||
| Basic earnings per common share | $ | 160.53 |
$ | 167.98 |
$ | 300.15 |
$ | 338.89 |
|||
| Diluted earnings per common share | $ | 160.52 |
$ | 167.92 |
$ | 300.12 |
$ | 338.82 |
|||
| Basic weighted-average shares outstanding | 128,508 |
129,464 |
128,518 |
130,069 |
|||||||
| Diluted weighted-average shares outstanding | 128,521 |
129,492 |
128,531 |
130,097 |
|||||||
| FARMERS & MERCHANTS BANK OF LONG BEACH | |||||
| Balance Sheets (Unaudited) | |||||
| (In thousands, except share and per share data) | |||||
| June 30, 2020 | Dec. 31, 2019 | ||||
| Assets | |||||
| Cash and due from banks: | |||||
| Noninterest-bearing balances | $ | 68,518 |
$ | 64,556 |
|
| Interest-bearing balances | 734,678 |
54,309 |
|||
| Total cash and due from banks | 803,196 |
118,865 |
|||
| Securities available-for-sale, at fair value | 115,181 |
150,623 |
|||
| Securities held-to-maturity, at amortized cost | 3,149,908 |
2,728,583 |
|||
| Loans held for sale | 23,246 |
23,301 |
|||
| Gross loans | 5,204,660 |
4,403,876 |
|||
| Allowance for loan losses | (67,907) |
(62,489) |
|||
| Unamortized deferred loan fees, net | (21,143) |
(5,127) |
|||
| Loans, net | 5,115,610 |
4,336,260 |
|||
| Investments in FHLB and FRB stock, at cost | 20,236 |
20,160 |
|||
| Bank premises and equipment, net | 105,877 |
108,133 |
|||
| Deferred tax assets, net | 25,492 |
22,213 |
|||
| Other assets | 89,443 |
97,431 |
|||
| Total assets | $ | 9,448,189 |
$ | 7,605,569 |
|
| Liabilities and Stockholders' Equity | |||||
| Liabilities: | |||||
| Deposits: | |||||
| Noninterest-bearing demand deposits | $ | 2,893,639 |
$ | 2,135,056 |
|
| Interest-bearing demand deposits | 1,607,940 |
1,302,726 |
|||
| Savings and money market savings | 1,907,562 |
1,669,525 |
|||
| Time deposits | 819,589 |
720,958 |
|||
| Total deposits | 7,228,730 |
5,828,265 |
|||
| Securities sold under repurchase agreements | 1,042,698 |
632,428 |
|||
| Other liabilities | 58,007 |
61,996 |
|||
| Total liabilities | 8,329,435 |
6,522,689 |
|||
| Stockholders' Equity: | |||||
| Common Stock, par value $20; authorized 250,000 | |||||
| 128,383 and 128,528 shares issued and outstanding | |||||
| at June 30, 2020 and December 31, 2019. respectively | 2,568 |
2,571 |
|||
| Additional paid-in capital | 97,651 |
95,446 |
|||
| Retained earnings | 1,015,502 |
983,867 |
|||
| Accumulated other comprehensive income | 3,033 |
996 |
|||
| Total stockholders' equity | 1,118,754 |
1,082,880 |
|||
| Total liabilities and stockholders' equity | $ | 9,448,189 |
$ | 7,605,569 |
|