Farmers & Merchants Bank of Long Beach Reports 2022 Second-Quarter Results

LONG BEACH, Calif.–(BUSINESS WIRE)–Farmers & Merchants Bank of Long Beach (OTCQX: FMBL) today reported financial results for the second quarter and six-months ended June 30, 2022.

“Results for the 2022 second quarter demonstrated F&M’s financial strength during a period of inflationary pressures, rising interest rates and geopolitical uncertainty,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “Total assets, total deposits and net loans increased over the comparable prior year period, with all capital ratios far exceeding minimum requirements.”

Income Statement

For the three months ended June 30, 2022, total interest and dividend income rose to $81.2 million from $77.8 million in the second quarter of 2021. Total interest and dividend income for the first half of 2022 increased to $156.4 million from $151.6 million reported for the first half of 2021.

Total interest expense for the 2022 second quarter was $3.0 million, compared with $3.1 million in the second quarter of 2021. Interest expense for the first half of 2022 was $5.7 million, versus $6.5 million reported for the corresponding period last year.

Net interest income for the 2022 second quarter advanced to $78.1 million from $74.7 million for the second quarter of 2021. Net interest income for the first half of 2022 increased to $150.7 million from $145.2 million for the six months ended June 30, 2021.

Net interest margin was 2.76% for the 2022 second quarter, versus 2.96% in the 2021 second quarter. Net interest margin was 2.69% for the first half of 2022, compared with 2.91% for the same period in 2021.

The Bank had no provision for loan losses in both the second quarter of 2022 and 2021. For the first half of 2022, the Bank recorded a $1.0 million recapture of loan loss provision, compared with a $2.0 million loan loss provision for the corresponding period of 2021. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.23% at June 30, 2022, compared with 1.36% at December 31, 2021.

Total non-interest income was $4.7 million for the 2022 second quarter, compared with $5.4 million for the same period a year ago. In the first half of 2022, total non-interest income was $9.8 million, compared with $10.5 million for the six months ended June 30, 2021.

Total non-interest expense for the 2022 second quarter was $46.9 million, compared with $41.4 million for the same period last year. Non-interest expense for the first half of 2022 was $90.6 million, compared with $83.3 million for the first half of 2021.

Net income for the 2022 second quarter was $29.1 million, or $228.51 per diluted share, compared with $30.4 million, or $236.95 per diluted share, for the 2021 second quarter. Net income for the first half of 2022 was $56.9 million, or $445.33 per diluted share, compared with $55.7 million, or $434.39 per diluted share, for the six months ended June 30, 2021.

Balance Sheet

At June 30, 2022, net loans increased to $5.78 billion from $5.37 billion at December 31, 2021. The Bank’s deposits rose to $9.46 billion at the end of the 2022 second quarter from $9.24 billion at December 31, 2021.

Non-interest-bearing deposits represented 37.9% of total deposits at June 30, 2022, versus 38.4% of total deposits at December 31, 2021. Total assets increased to $11.73 billion at the close of the 2022 second quarter from $11.44 billion at December 31, 2021.

At June 30, 2022, Farmers & Merchants Bank’s total risk-based capital ratio was 17.07%; its tier 1 risk-based capital ratio was 16.13%, with a common equity tier 1 capital ratio of 16.13%, and a tier 1 leverage ratio of 10.94%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

During the 2022 second quarter, the Bank repurchased 1,352 shares of its common stock at an average price of $8,184.60 per share, pursuant to a stock repurchase program announced in January 2022, under which the board of directors authorized the repurchase of up to $20 million of the Bank’s common stock. Year to date, the Bank repurchased a total of 1,661 shares of its common stock at an average price of $8,189.37 per share. To the extent the Bank repurchases additional shares under this program, which expires December 31, 2023, 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 the share repurchase program does not obligate the Bank to acquire any specific number of shares in any period.

“F&M’s core performance measures continue to be strong, as we proceed into the second half of 2022,” said Daniel Walker, chief executive officer and chairman of the board. “We are particularly proud of our net loan growth during the first six months of this year, based, in part, on deep relationships with existing clients and our ability to serve new clients. While our nation and the communities we serve face economic headwinds, the Bank’s balance sheet remains strong. F&M stands ready and able to continue to serve the needs of our business and consumer clients as we have through many challenging business cycles during the past 114 years. As always, I thank our team for their hard work, dedication and for all they do for the Bank and for our growing base of valued clients.”

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 from San Clemente to Santa Barbara, as well as through its Online and Mobile Banking platforms. The Bank offers 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,

2022

 

2021

 

2022

 

2021

Interest and dividend income:
Loans

$

57,048

$

62,291

$

112,767

 

$

122,564

Investment securities

 

22,219

 

14,924

 

40,888

 

 

27,999

Investments in FHLB and FRB stock

 

286

 

298

 

558

 

 

560

Interest-bearing deposits in financial institutions

 

1,613

 

256

 

2,209

 

 

513

Total interest and dividend income

 

81,166

 

77,769

 

156,422

 

 

151,636

 

 

 

 

Interest expense:

 

 

 

 

Deposits

 

2,042

 

2,253

 

4,029

 

 

4,747

Securities sold under repurchase agreements

 

997

 

842

 

1,675

 

 

1,735

Total interest expense

 

3,039

 

3,095

 

5,704

 

 

6,482

Net interest income

 

78,127

 

74,674

 

150,718

 

 

145,154

 

 

 

 

Provision for loan losses

 

 

 

(1,000

)

 

2,000

Net interest income after provision for loan losses

 

78,127

 

74,674

 

151,718

 

 

143,154

 

 

 

 

Non-interest income:

 

 

 

 

Service charges on deposit accounts

 

1,565

 

1,361

 

3,100

 

 

2,686

Card income

 

1,074

 

835

 

2,044

 

 

1,408

Other income

 

2,097

 

3,167

 

4,665

 

 

6,365

Total non-interest income

 

4,736

 

5,363

 

9,809

 

 

10,459

 

 

 

 

Non-interest expense:

 

 

 

 

Salaries and employee benefits

 

29,437

 

26,852

 

58,547

 

 

54,730

FDIC and other insurance expense

 

1,014

 

861

 

2,014

 

 

1,714

Occupancy expense

 

3,853

 

3,444

 

7,401

 

 

6,698

Software and equipment expense

 

3,771

 

3,449

 

7,413

 

 

6,984

Professional and legal services

 

1,962

 

1,412

 

3,427

 

 

2,752

Marketing expense

 

2,196

 

1,111

 

3,217

 

 

1,790

Other expense

 

4,688

 

4,317

 

8,577

 

 

8,652

Total non-interest expense

 

46,921

 

41,446

 

90,596

 

 

83,320

Income before income tax expense

 

35,942

 

38,591

 

70,931

 

 

70,293

 

 

 

 

Income tax expense

 

6,853

 

8,160

 

14,007

 

 

14,587

 

 

 

 

Net income

$

29,089

$

30,431

$

56,924

 

$

55,706

 

 

 

 

Basic earnings per common share

$

233.52

$

240.92

$

455.13

 

$

440.51

Diluted earnings per common share

$

228.51

$

236.95

$

445.33

 

$

434.39

Basic weighted-average shares outstanding

 

124,566

 

126,309

 

125,071

 

 

126,457

Diluted weighted-average shares outstanding

 

127,297

 

128,424

 

127,823

 

 

128,239

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
  June 30, 2022   Dec. 31, 2021
   
Assets    
Cash and due from banks:    
Noninterest-bearing balances   $ 78,412   $ 49,025
Interest-bearing balances   417,706   1,252,646
Total cash and due from banks   496,118   1,301,671
Securities available-for-sale, at fair value   122,565   139,947
Securities held-to-maturity, at amortized cost   5,027,557   4,366,821
Loans held for sale     9,430
Gross loans   5,862,844   5,453,279
Allowance for loan losses   (71,801 )   (72,880 )
Unamortized deferred loan fees, net   (8,873 )   (8,650 )
Loans, net   5,782,170   5,371,749
Other real estate owned, net   966   966
Investments in FHLB and FRB stock, at cost   19,991   20,031
Bank premises and equipment, net   114,616   115,827
Deferred tax assets, net   28,495   27,939
Other assets   139,483   83,879
Total assets   $ 11,731,961   $ 11,438,260
   
   
Liabilities and Stockholders’ Equity    
   
Liabilities:    
Deposits:    
Noninterest-bearing demand deposits   $ 3,588,427   $ 3,552,248
Interest-bearing demand deposits   2,410,227   2,187,998
Savings and money market savings   2,776,544   2,755,862
Time deposits   686,669   745,382
Total deposits   9,461,867   9,241,490
Securities sold under repurchase agreements   905,927   916,672
Other liabilities   88,523   38,536
Total liabilities   10,456,317   10,196,698
   
Stockholders’ Equity:    
Common Stock, par value $20; authorized 250,000    
124,276 and 125,628 shares issued and outstanding    
at June 30, 2022 and December 31, 2021, respectively   2,485   2,513
Additional paid-in capital   82,196   89,972
Retained earnings   1,197,586   1,147,661
Accumulated other comprehensive (loss) income   (6,623 )   1,416
Total stockholders’ equity   1,275,644   1,241,562
Total liabilities and stockholders’ equity   $ 11,731,961   $ 11,438,260

 

Contacts

John Hinrichs

Executive Vice President

562-437-0011, ext. 4835

Roger Pondel

PondelWilkinson Inc.

Investor Relations

310-279-5980

investor@pondel.com

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