LONG BEACH, Calif.–(BUSINESS WIRE)–Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the third quarter ended September 30, 2019.
“The positive performance experienced in the first half of 2019 continued into the third quarter,” said Henry Walker, president of Farmers & Merchants Bank. “We achieved a solid increase in net income over the prior year period, along with further growth in deposits and net loans. At quarter’s end, total assets advanced to a record high $7.60 billion.”
Income Statement
For the 2019 third quarter, interest and dividend income rose to $71.9 million from $66.6 million in the 2018 third quarter. Interest and dividend income for the nine-month period ended September 30, 2019 increased to $210.4 million from $192.1 million reported for the same period in 2018.
Interest expense for the 2019 third quarter was $8.8 million, compared with $5.8 million a year ago. Interest expense for the nine-month period ended September 30, 2019 was $24.6 million, versus $15.4 million reported for the same period last year.
Net interest income for the 2019 third quarter rose to $63.1 million from $60.9 million for the third quarter of 2018 and advanced to $185.8 million for the first nine months of 2019 from $176.7 million for the same period in 2018.
Farmers & Merchants’ net interest margin remained the same at 3.47% for the 2019 and 2018 third quarters. Net interest margin was 3.47% for the first nine months of 2019, versus 3.41% for the same period in 2018.
The Bank did not post a provision for loan losses for the third quarter of 2019, compared with a $2.0 million provision for the third quarter of 2018. The Bank’s provision for loan losses was $250,000 in the first nine months of 2019, versus $2.0 million for the comparable prior year period. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.43% at September 30, 2019, compared with 1.47% at December 31, 2018.
Non-interest income was $5.0 million for the 2019 third quarter, compared with $4.7 million in the third quarter a year ago. Non-interest income was $14.4 million for the nine-month period ended September 30, 2019, compared with $13.6 million for the same period in 2018.
Non-interest expense for the 2019 third quarter was $41.7 million, versus $42.0 million for the same period last year. Non-interest expense for the first nine months of 2019 was $119.2 million, compared with $107.9 million last year.
Net income for the 2019 third quarter advanced to $22.8 million, or $172.51 per diluted share, from $20.7 million, or $157.82 per diluted share, in the year ago period. The Bank’s net income for the first nine months of 2019 was $66.9 million, or $510.80 per diluted share, up from $63.5 million, or $484.90 per diluted share, for the same period in 2018.
Balance Sheet
At September 30, 2019, net loans totaled $4.30 billion, compared with $4.19 billion at December 31, 2018. The Bank’s deposits totaled $5.85 billion at the end of the 2019 third quarter, compared with $5.58 billion at December 31, 2018. Non-interest-bearing deposits represented 37.8% of total deposits at September 30, 2019, versus 37.6% of total deposits at December 31, 2018. Total assets increased to $7.60 billion at September 30, 2019, compared with $7.31 billion at December 31, 2018.
At September 30, 2019, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.70%, a tier 1 risk-based capital ratio of 19.46%, a common equity tier 1 capital ratio of 19.46%, 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.
“Our positive 2019 third quarter results again demonstrate that the Bank’s focus on achieving strong financial performance, with prudent credit underwriting and conservative operating principles, continues to create value for our stakeholders,” said Daniel Walker, chief executive officer and chairman of the board. “As well, our expansion one year ago into the robust community of Santa Barbara has widened our geographic reach within Southern California, proving the viability of our brand and attractiveness of the Bank’s financial strength and leadership position.”
During the third quarter, Farmers & Merchants Bank repurchased 238 shares of its common stock at a weighted average price of $8,355.31 per share. Year-to-date, the Bank has repurchased 2,400 shares at an average price of $8,194.03 per share. As previously disclosed in October 2018, F&M’s board of directors authorized the Bank to repurchase up to $20 million of its common stock prior to December 31, 2019. The Bank may continue to purchase shares of its common stock from time to time through various means, including open market transactions, privately negotiated transactions, or otherwise in accordance with applicable laws.
To the extent the Bank repurchases shares, the number of shares repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, stock price, trading volume, regulatory requirements, general business conditions and other factors. The Bank may choose to modify, suspend or discontinue such proposed repurchases at any time and anticipates that any such repurchases will be funded from existing cash and cash equivalents or future cash flow.
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 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 Bank’s website, www.fmb.com.
Forward-Looking Statements
In addition to the historical information contained herein, this press release may contain forward-looking statements about Farmers & Merchants Bank of Long Beach, including statements about the Bank’s expectations regarding the amount of and timing, methods and funding sources for potential repurchases of its common stock. Readers of this press release should understand that such forward-looking statements are neither promises nor guarantees and are subject to various risks and uncertainties, many of which are beyond the Bank’s control. Such risks and uncertainties could cause actual results and actions to differ materially from those contemplated in such forward-looking statements and the Bank’s reported results should not be considered an indication of the Bank’s future performance. Factors that could cause or contribute to such differences include, but are not limited to, credit, market, operational, liquidity and interest rate risks associated with the Bank’s business and operations, changes in interest rates, changes in general business and economic conditions, changes in banking laws and regulations, loan losses, increases in expenses, changes in rates charged on loans and earned on investments, accounting estimates and judgments, changes in rates on deposits, competition effects, the amount of non-interest income earned, as well as other factors. Given these factors, readers should not place undue reliance on any forward-looking statement.
| FARMERS & MERCHANTS BANK OF LONG BEACH | ||||||||||||||||
| Income Statements (Unaudited) | ||||||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||
|
Three Months Ended Sep. 30, |
Nine Months Ended Sep. 30, |
|||||||||||||||
|
|
2019 |
|
|
2018 |
|
2019 |
|
2018 |
||||||||
| Interest and dividend income: | ||||||||||||||||
| Loans |
$ |
|
53,334 |
|
$ |
|
48,714 |
$ |
|
155,845 |
$ |
|
139,521 |
|||
| Investment securities |
17,446 |
|
16,859 |
51,552 |
49,708 |
|||||||||||
| Investments in FHLB and FRB stock |
351 |
|
353 |
1,056 |
1,058 |
|||||||||||
|
Interest-bearing deposits in financial institutions |
736 |
|
713 |
1,933 |
1,777 |
|||||||||||
| Total interest and dividend income |
71,867 |
|
66,639 |
210,386 |
192,064 |
|||||||||||
| Interest expense: | ||||||||||||||||
| Deposits |
6,000 |
|
3,762 |
16,495 |
9,971 |
|||||||||||
| Securities sold under repurchase agreements |
2,752 |
|
2,016 |
8,027 |
5,418 |
|||||||||||
| Other borrowings |
11 |
|
4 |
52 |
7 |
|||||||||||
| Total interest expense |
8,763 |
|
5,782 |
24,574 |
15,396 |
|||||||||||
| Net interest income |
63,104 |
|
60,857 |
185,812 |
176,668 |
|||||||||||
| Provision for loan losses |
– |
|
2,000 |
250 |
2,000 |
|||||||||||
| Net interest income after provision for loan losses |
63,104 |
|
58,857 |
185,562 |
174,668 |
|||||||||||
| Non-interest income: | ||||||||||||||||
| Service charges on deposit accounts |
1,652 |
|
1,543 |
5,077 |
4,116 |
|||||||||||
| Card income |
765 |
|
961 |
2,571 |
2,849 |
|||||||||||
| Other real estate owned income |
194 |
|
– |
227 |
– |
|||||||||||
| Other income |
2,410 |
|
2,193 |
6,508 |
6,636 |
|||||||||||
| Total non-interest income |
5,021 |
|
4,697 |
14,383 |
13,601 |
|||||||||||
| Non-interest expense: | ||||||||||||||||
| Salaries and employee benefits |
25,986 |
|
21,835 |
72,620 |
66,189 |
|||||||||||
| FDIC and other insurance expense |
(343 |
) |
647 |
911 |
1,954 |
|||||||||||
| Occupancy expense |
2,914 |
|
2,529 |
8,583 |
7,283 |
|||||||||||
| Software and equipment expense |
3,219 |
|
2,675 |
9,428 |
7,809 |
|||||||||||
| Other real estate owned expense |
5 |
|
11 |
84 |
49 |
|||||||||||
| Professional and legal services |
1,747 |
|
1,597 |
5,311 |
4,170 |
|||||||||||
| Marketing expense |
2,613 |
|
1,962 |
6,549 |
4,183 |
|||||||||||
| Other expense |
5,567 |
|
10,729 |
15,685 |
16,242 |
|||||||||||
| Total non-interest expense |
41,708 |
|
41,985 |
119,171 |
107,879 |
|||||||||||
| Income before income tax expense |
26,417 |
|
21,569 |
80,774 |
80,390 |
|||||||||||
| Income tax expense |
3,582 |
|
906 |
13,860 |
16,903 |
|||||||||||
| Net income |
$ |
|
22,835 |
|
$ |
|
20,663 |
$ |
|
66,914 |
$ |
|
63,487 |
|||
| Basic earnings per common share |
$ |
|
177.61 |
|
$ |
|
157.82 |
$ |
|
516.46 |
$ |
|
484.90 |
|||
| Diluted earnings per common share |
$ |
|
172.51 |
|
$ |
|
157.82 |
$ |
|
510.80 |
$ |
|
484.90 |
|||
| Basic weighted-average shares outstanding |
128,570 |
|
130,928 |
129,564 |
130,928 |
|||||||||||
| Diluted weighted-average shares outstanding |
132,370 |
|
130,928 |
130,999 |
130,928 |
|||||||||||
| FARMERS & MERCHANTS BANK OF LONG BEACH | ||||||||
| Balance Sheets (Unaudited) | ||||||||
| (In thousands, except share and per share data) | ||||||||
|
Sep. 30, 2019 |
Dec. 31, 2018 |
|||||||
| Assets | ||||||||
| Cash and due from banks: | ||||||||
| Noninterest-bearing balances |
$ |
|
81,903 |
|
$ |
|
69,486 |
|
| Interest-bearing balances |
77,448 |
|
17,661 |
|
||||
| Total cash and due from banks |
159,351 |
|
87,147 |
|
||||
| Securities available-for-sale, at fair value |
531,545 |
|
134,008 |
|
||||
| Securities held-to-maturity, at amortized cost |
2,334,939 |
|
2,649,460 |
|
||||
| Loans held for sale |
23,133 |
|
20,718 |
|
||||
| Gross loans |
4,369,224 |
|
4,260,093 |
|
||||
| Allowance for loan losses |
(62,515 |
) |
(62,450 |
) |
||||
| Unamortized deferred loan fees, net |
(5,417 |
) |
(5,973 |
) |
||||
| Loans, net |
4,301,292 |
|
4,191,670 |
|
||||
| Other real estate owned, net |
– |
|
1,724 |
|
||||
| Investments in FHLB and FRB stock, at cost |
20,160 |
|
20,690 |
|
||||
| Bank premises and equipment, net |
109,259 |
|
100,478 |
|
||||
| Deferred tax assets, net |
20,946 |
|
19,680 |
|
||||
| Other assets |
96,455 |
|
82,661 |
|
||||
| Total assets |
$ |
|
7,597,080 |
|
$ |
|
7,308,236 |
|
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing demand deposits |
$ |
|
2,208,627 |
|
$ |
|
2,098,097 |
|
| Interest-bearing demand deposits |
1,253,483 |
|
1,178,886 |
|
||||
| Savings and money market savings |
1,647,666 |
|
1,566,446 |
|
||||
| Time deposits |
739,507 |
|
741,037 |
|
||||
| Total deposits |
5,849,283 |
|
5,584,466 |
|
||||
| Securities sold under repurchase agreements |
603,188 |
|
609,791 |
|
||||
| FHLB advances |
– |
|
30,000 |
|
||||
| Other liabilities |
76,383 |
|
56,106 |
|
||||
| Total liabilities |
6,528,854 |
|
6,280,363 |
|
||||
| Stockholders’ Equity: | ||||||||
| Common Stock, par value $20; authorized 250,000 | ||||||||
| shares; 128,528 and 130,928 shares issued |
2,571 |
|
2,619 |
|
||||
| and outstanding at September 30, 2019 and | ||||||||
| December 31, 2018, respectively | ||||||||
| Additional paid-in capital |
93,936 |
|
112,044 |
|
||||
| Retained earnings |
970,608 |
|
914,164 |
|
||||
| Accumulated other comprehensive income |
1,111 |
|
(954 |
) |
||||
| Total stockholders’ equity |
1,068,226 |
|
1,027,873 |
|
||||
| Total liabilities and stockholders’ equity |
$ |
|
7,597,080 |
|
$ |
|
7,308,236 |
|
Contacts
John Hinrichs
Executive Vice President
562-437-0011, ext. 4835
Roger Pondel
PondelWilkinson Inc.
Investor Relations
310-279-5980
[email protected]
