Farmers & Merchants Bank of Long Beach Reports 2021 Second-Quarter Results

Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the second quarter and six-months ended June 30, 2021.

“F&M again achieved growth in key measurements of performance for the second quarter of 2021,” said Henry Walker, president. “Total assets, total deposits, net loans and net income all increased over the prior year period. The Bank’s performance demonstrated resiliency during the protracted low interest rate environment, as well as the outstanding work our entire team is doing to serve and attract increasing numbers of business and individual clients.”

Income Statement

For the three months ended June 30, 2021, total interest and dividend income rose to $77.8 million from $74.7 million in the second quarter of 2020. Total interest and dividend income for the first half of 2021 increased to $151.6 million from $143.9 million reported for the first half of 2020.

Total interest expense for the 2021 second quarter was $3.1 million, compared with $6.7 million in the second quarter of 2020. Interest expense for the first half of 2021 was $6.5 million, versus $14.7 million reported for the corresponding period last year.

Net interest income for the 2021 second quarter advanced to $74.7 million from $68.0 million for the second quarter of 2020, 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 2021 increased to $145.2 million from $129.2 million for the six months ended June 30, 2020.

Net interest margin was 2.96% for the 2021 second quarter, versus 3.13% in the 2020 second quarter. Net interest margin was 2.91% for the first half of 2021, compared with 3.20% for the same period in 2020.

The Bank had no provision for loan losses in the second quarter of 2021, compared with $4.7 million for loan losses in the second quarter of 2020. For the first half of 2021, the provision for loan losses was $2.0 million, compared with $5.5 million in the corresponding period last year. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.36% at June 30, 2021, compared with 1.34% at December 31, 2020.

Total non-interest income was $5.4 million for the 2021 second quarter, compared with $4.3 million for the same period a year ago. In the first half of 2021, total non-interest income was $10.5 million, compared with $8.9 million for the six months ended June 30, 2020.

Total non-interest expense for the 2021 second quarter was $41.4 million, compared with $42.6 million for the same period last year. Non-interest expense for the first half of 2021 was $83.3 million, compared with $86.2 million for the first half of 2020.

Net income for the 2021 second quarter was $30.4 million, or $236.95 per diluted share, compared with $20.6 million, or $160.52 per diluted share, for the 2020 second quarter. Net income for the first half of 2021 was $55.7 million, or $434.39 per diluted share, compared with $38.6 million, or $300.12 per diluted share, for the six months ended June 30, 2020.

Balance Sheet

At June 30, 2021, net loans increased to $5.36 billion from $5.33 billion at December 31, 2020. The Bank’s deposits rose to $8.37 billion at the end of the 2021 second quarter from $7.62 billion at December 31, 2020, continuing, in part, to reflect a general flight to safety, as well as funding of PPP loans.

Non-interest-bearing deposits represented 39.0% of total deposits at June 30, 2021, versus 37.9% of total deposits at December 31, 2020. Total assets increased to $10.68 billion at the close of the 2021 second quarter from $9.87 billion at December 31, 2020.

At June 30, 2021, Farmers & Merchants Bank’s total risk-based capital ratio was 18.96%; its tier 1 risk-based capital ratio was 17.78%, with a common equity tier 1 capital ratio of 17.78%, and a tier 1 leverage ratio of 11.93%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“F&M’s growth over the past 113-plus years has been built on a culture of relationships during good as well as challenging times, serving businesses and individuals and enriching lives,” said Daniel Walker, chief executive officer and chairman of the board. “Through it all, we are unwavering in our mandate to maintain conservative fiscal policies, with strong capital ratios that exceed requirements. We had an excellent first half of 2021, thanks to our hard-working, talented F&M team and our loyal clients throughout the communities we serve.”

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 370 shares of its common stock during the second quarter of the current fiscal year at an average price of $8,179.75 per share. Year to date, the Bank repurchased a total of 509 shares of its common stock at an average price of $8,052.81 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 its 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,

 

 

2021

 

2020

 

2021

 

2020

   
Interest and dividend income:  
Loans  

$

62,291

$

59,020

$

122,564

$

110,345

Investment securities  

14,924

15,345

27,999

32,090

Investments in FHLB and FRB stock  

298

171

560

519

Interest-bearing deposits in financial institutions  

256

211

513

939

Total interest and dividend income

77,769

74,747

151,636

143,893

Interest expense:  
Deposits  

2,253

4,452

4,747

10,142

Securities sold under repurchase agreements  

842

2,253

1,735

4,553

Total interest expense  

3,095

6,705

6,482

14,695

Net interest income  

74,674

68,042

145,154

129,198

Provision for loan losses  

-

4,700

2,000

5,500

Net interest income after provision for loan losses  

74,674

63,342

143,154

123,698

Non-interest income:  
Service charges on deposit accounts  

1,361

1,192

2,686

2,719

Card income  

835

578

1,408

1,448

Other income  

3,167

2,531

6,365

4,771

Total non-interest income  

5,363

4,301

10,459

8,938

Non-interest expense:  
Salaries and employee benefits  

26,852

27,715

54,730

55,416

FDIC and other insurance expense  

861

738

1,714

1,183

Occupancy expense  

3,444

3,561

6,698

6,894

Software and equipment expense  

3,449

3,579

6,984

6,898

Other real estate owned expense  

7

-

20

-

Professional and legal services  

1,412

1,663

2,752

2,824

Marketing expense  

1,111

1,155

1,790

2,923

Other expense  

4,310

4,143

8,632

10,056

Total non-interest expense  

41,446

42,554

83,320

86,194

Income before income tax expense  

38,591

25,089

70,293

46,442

Income tax expense  

8,160

4,459

14,587

7,868

Net income  

$

30,431

$

20,630

$

55,706

$

38,574

Basic earnings per common share  

$

240.92

$

160.53

$

440.51

$

300.15

Diluted earnings per common share  

$

236.95

$

160.52

$

434.39

$

300.12

Basic weighted-average shares outstanding  

126,309

128,508

126,457

128,518

Diluted weighted-average shares outstanding  

128,424

128,521

128,239

128,531

FARMERS & MERCHANTS BANK OF LONG BEACH

Balance Sheets (Unaudited)

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

Dec. 31, 2020

     
Assets    
Cash and due from banks:    
Noninterest-bearing balances   $

73,903

  $

72,109

Interest-bearing balances  

937,358

 

939,566

Total cash and due from banks  

1,011,261

 

1,011,675

Securities available-for-sale, at fair value  

147,402

 

137,373

Securities held-to-maturity, at amortized cost  

3,899,259

 

3,131,213

Loans held for sale  

15,896

 

22,893

Gross loans  

5,455,970

 

5,414,814

Allowance for loan losses  

(74,172)

 

(72,267)

Unamortized deferred loan fees, net  

(18,157)

 

(15,747)

Loans, net  

5,363,641

 

5,326,800

Other real estate owned, net  

966

 

966

Investments in FHLB and FRB stock, at cost  

20,042

 

20,257

Bank premises and equipment, net  

103,313

 

103,615

Deferred tax assets, net  

28,691

 

26,489

Other assets  

93,676

 

90,497

Total assets   $

10,684,147

  $

9,871,778

     
Liabilities and Stockholders' Equity    
 
Liabilities:    
Deposits:    
Noninterest-bearing demand deposits   $

3,263,345

  $

2,889,012

Interest-bearing demand deposits  

2,001,944

 

1,788,133

Savings and money market savings  

2,307,252

 

2,129,755

Time deposits  

799,430

 

810,726

Total deposits  

8,371,971

 

7,617,626

Securities sold under repurchase agreements  

1,080,453

 

1,062,348

Other liabilities  

40,183

 

47,962

Total liabilities  

9,492,607

 

8,727,936

     
Stockholders' Equity:    
     
Common Stock, par value $20; authorized 250,000    
126,108 and 126,617 shares issued and outstanding    
at June 30, 2021 and December 31, 2020. respectively  

2,522

 

2,532

Additional paid-in capital  

90,176

 

90,516

Retained earnings  

1,096,830

 

1,047,949

Accumulated other comprehensive income  

2,012

 

2,845

Total stockholders' equity  

1,191,540

 

1,143,842

Total liabilities and stockholders' equity   $

10,684,147

  $

9,871,778

 

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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