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

BusinessWire - Earnings News

LONG BEACH, Calif.–()–Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the second quarter and six-months ended June 30, 2018.

“Our strong second-quarter results reflect a combination of solid topline growth and prudent management of expenses,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “We believe the financial performance achieved thus far in 2018 is a testament to the health of the Bank, as we enter the second half of the year.”

Income Statement

For the three months ended June 30, 2018, total interest and dividend income rose to $63.7 million from $58.8 million in the second quarter of 2017. Interest and dividend income for the first half of 2018 increased to $125.4 million from $116.2 million reported for the first half of 2017.

Interest expense for the 2018 second quarter was $5.3 million, compared with $3.4 million in the second quarter of 2017. Interest expense for the first half of 2018 was $9.6 million, versus $6.6 million reported for the corresponding period last year.

Net interest income for the 2018 second quarter advanced to $58.5 million from $55.3 million for the second quarter of 2017. Net interest income for the first half of 2018 increased to $115.8 million from $109.6 million for the six months ended June 30, 2017.

Farmers & Merchants’ net interest margin was 3.39% for the 2018 second quarter, versus 3.44% in the 2017 second quarter. Net interest margin was 3.38% for the first half of 2018, compared with 3.43% for the same period in 2017.

The Bank did not have a provision for loan losses in the first half of 2018, nor in the same period a year ago. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.50% at June 30, 2018, compared with 1.53% at December 31, 2017.

Non-interest income was $7.7 million for the 2018 second quarter, compared with $6.8 million in the same period a year ago. In the first half of 2018, non-interest income was $14.4 million, compared with $15.9 million for the six months ended June 30, 2017.

Non-interest expense for the 2018 second quarter was $36.2 million, compared with $41.3 million for the same period last year. Non-interest expense for the first half of 2018 was $71.4 million, compared with $78.0 million for the first half of 2017.

Net income for the 2018 second quarter was $21.8 million, or $166.43 per diluted share, compared with $16.4 million, or $125.56 per diluted share, for the 2017 second quarter. Net income for the first half of 2018 rose to $42.8 million, or $327.08 per diluted share, from $36.6 million, or $279.67 per diluted share, for the six months ended June 30, 2017.

Balance Sheet

At June 30, 2018, net loans increased to $3.94 billion from $3.83 billion at December 31, 2017. The Bank’s deposits rose to $5.59 billion at the end of the 2018 second quarter from $5.40 billion at December 31, 2017. Non-interest-bearing deposits represented 38.4% of total deposits at June 30, 2018, versus 37.6% of total deposits at December 31, 2017. Total assets increased to $7.27 billion at the close of the 2018 second quarter from $6.99 billion at December 31, 2017.

At June 30, 2017, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.09%, a tier 1 risk-based capital ratio of 18.86%, a common equity tier 1 capital ratio of 18.86%, and a tier 1 leverage ratio of 13.87%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“The financial strength of F&M’s second-quarter results parallels our plans to enhance the Bank’s presence with new branch openings in Santa Barbara and Redondo Beach, in addition to expanding our office in Newport Beach, making it the Bank’s first regional office in Orange County,” said Daniel Walker, chief executive officer and chairman of the board. “These initiatives provide even better access for F&M’s existing and future clients who value an independent and regionally focused bank that is uniquely positioned to understand the needs of its community.”

About Farmers & Merchants Bank of Long Beach

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 June 30,       Six Months Ended June 30,
2018       2017 2018       2017
 
Interest and dividend income:
 
Loans $ 46,209 $ 42,415 $ 90,807 $ 83,268
Investment securities 16,473 15,831 32,849 31,807
Investments in FHLB and FRB stock 349 349 705 795
Interest-bearing deposits in financial institutions   711   185   1,064   324
 
Total interest and dividend income   63,742   58,780   125,425   116,194
 
Interest expense:
 
Deposits 3,352 2,400 6,209 4,737
Securities sold under repurchase agreements 1,899 997 3,402 1,760
Other borrowings   3   42   3   62
 
Total interest expense   5,254   3,439   9,614   6,559
 
Net interest income 58,488 55,341 115,811 109,635
 
Provision for loan losses        
 
Net interest income after provision for loan losses   58,488   55,341   115,811   109,635
 
Non-interest income:
 
Service charges on deposit accounts 1,547 1,004 2,573 1,963
Other real estate owned income 17
Merchant bankcard income 3,087 2,752 5,968 5,364
Other income   3,017   3,058   5,904   8,560
 
Total non-interest income   7,651   6,814   14,445   15,904
 
Non-interest expense:
 
Salaries and employee benefits 22,258 21,440 44,354 42,442
FDIC and other insurance expense 654 639 1,307 1,271
Occupancy expense 2,467 2,326 4,754 4,487
Software and equipment expense 2,563 2,273 5,134 4,249
Other real estate owned expense 16 94 38 124
Merchant bankcard expense 2,385 2,144 4,706 4,295
Professional and legal services 1,377 1,785 2,573 1,860
Marketing expense 1,075 1,218 2,221 2,570
Other expense   3,424   9,392   6,348   16,664
 
Total non-interest expense   36,219   41,311   71,435   77,962
 
Income before income tax expense 29,920 20,844 58,821 47,577
 
Income tax expense   8,130   4,405   15,997   10,961
 
Net income $ 21,790 $ 16,439 $ 42,824 $ 36,616
 
Basic and diluted earnings per common share $ 166.43 $ 125.56 $ 327.08 $ 279.67
 
 
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands except share and per share data)
 
     

Jun. 30, 2018

     

Dec. 31, 2017

 

Assets
 
Cash and due from banks:
Noninterest-bearing balances $ 61,154 $ 56,604
Interest-bearing balances   238,016     43,512  
 
Total cash and due from banks 299,170 100,116
Securities available-for-sale, at fair value 152,262 187,102
Securities held-to-maturity, at amortized cost 2,673,711 2,657,796
Loans held for sale 16,018 15,038
Gross loans 4,006,319 3,899,110
Allowance for loan losses (59,853 ) (59,502 )
Unamortized deferred loan fees, net   (6,623 )   (5,611 )
 
Loans, net   3,939,843     3,833,997  
 
Investments in FHLB and FRB stock, at cost 20,690 20,690
Bank premises and equipment, net 97,483 95,550
Deferred tax assets, net 21,337 20,726
Other assets   53,855     60,563  
 
Total assets $ 7,274,369   $ 6,991,578  
 
 
Liabilities and Stockholders’ Equity
 
Liabilities:
 
Deposits:
Noninterest-bearing demand deposits $ 2,144,526 $ 2,026,237
Interest-bearing demand deposits 1,090,065 925,308
Savings and money market savings 1,594,576 1,643,859
Time deposits   759,783     795,707  
 
Total deposits 5,588,950 5,391,111
Securities sold under repurchase agreements 664,127 614,410
Other liabilities   26,791     26,937  
 
Total liabilities   6,279,868     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 881,172 844,370
Accumulated other comprehensive income   (1,334 )   87  
 
Total stockholders’ equity   994,501     959,120  
 
Total liabilities and stockholders’ equity $ 7,274,369   $ 6,991,578  
 

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