Business Wire | Jan 21, 2021 04:05PM EST

Farmers & Merchants Bank of Long Beach Reports 2020 Fourth-Quarter and Full-Year Results

Jan. 21, 2021

LONG BEACH, Calif.--(BUSINESS WIRE)--Jan. 21, 2021--Farmers & Merchants Bank of Long Beach ("F&M" or the "Bank") (OTCQB: FMBL) today reported financial results for the fourth quarter and full year ended December 31, 2020.

"Farmers & Merchants Bank finished 2020 in a position of strength, with total deposits, net loans and total assets all achieving record highs," said Henry Walker, president. "In a year and business environment characterized by the unprecedented challenges of the pandemic, we remained focused on maintaining our strong capital position, our continuous pursuit of enhancing operating efficiencies and our legacy of providing clients with a superior banking experience."

Income Statement

For the 2020 fourth quarter, total interest and dividend income rose to $71.6 million, from $70.1 million in the fourth quarter of 2019. Total interest and dividend income for the year ended December 31, 2020 increased to $286.3 million, from $280.5 million reported for 2019.

Interest expense for the 2020 fourth quarter was $4.4 million, compared with $8.4 million in the same period a year ago. Interest expense for 2020 was $24.9 million, versus $33.0 million in 2019.

Farmers & Merchants' net interest income before loan loss provision for the 2020 fourth quarter advanced to $67.2 million, from $61.7 million for the 2019 fourth quarter. Net interest income before loan loss provision for 2020 rose to $261.4 million, from $247.5 million in 2019.

Net interest margin for the 2020 fourth quarter was 2.83%, compared with 3.34% for the same period in 2019. Farmers & Merchants' net interest margin was 2.99% for the year ended December 31, 2020, versus 3.43% in the previous year.

The Bank recorded a $2.0 million provision for loan losses in the 2020 fourth quarter, compared with no loan loss provision in the 2019 fourth quarter. For the full 2020 year, the loan loss provision was $10.5 million, versus $250,000 in 2019. The Bank's allowance for loan losses as a percentage of loans outstanding was 1.34% at December 31, 2020, compared with 1.42% at December 31, 2019.

Non-interest income increased to $6.0 million for the 2020 fourth quarter, from $4.9 million for the comparable period last year. Non-interest income for 2020 rose to $20.5 million, from $19.3 million in 2019.

Non-interest expense for the 2020 fourth quarter amounted to $45.2 million, compared with $44.6 million for the same period last year. Non-interest expense for the year ended December 31, 2020 was $175.2 million, versus $163.7 million last year.

The Bank's net income for the 2020 fourth quarter increased to $21.4 million, or $167.49 per diluted share, from $18.7 million, or $144.99 per diluted share, for the 2019 fourth quarter. The Bank's net income for 2020 was $79.8 million, or $622.74 per diluted share, compared with $85.6 million, or $661.23 per diluted share, for 2019.

Balance Sheet

At December 31, 2020, net loans increased to $5.33 billion, from $4.34 billion at December 31, 2019. The Bank's deposits grew to $7.62 billion at the end of 2020, from $5.83 billion a year ago. Non-interest-bearing deposits represented 37.9% of total deposits at December 31, 2020, versus 36.6% of total deposits at the end of 2019. Total assets advanced to $9.87 billion at the close of 2020 from $7.61 billion at December 31, 2019.

At December 31, 2020, Farmers & Merchants Bank remained "well-capitalized" under all regulatory categories, with a total risk-based capital ratio of 19.57%, a tier 1 risk-based capital ratio of 18.33%, a common equity tier 1 capital ratio of 18.33%, and a tier 1 leverage ratio of 12.41%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

"While the economic environment remains uncertain, our robust balance sheet demonstrates Farmers & Merchants' commitment to long-term relationships, as well as our ability to attract new clients in their flight to financial safety," said Daniel Walker, chief executive officer and chairman of the board. "Throughout 2020, we worked closely with our clients in each of the communities we serve, in some cases, helping their businesses survive. For F&M, 2020 was a financially rewarding year, setting the stage for a solid start in 2021. I am extremely proud of the outstanding job our entire team has shown, with tremendous resiliency during the ongoing pandemic to keep our clients safe and provide the service and attention they have come to expect."

During 2020, the Bank repurchased 1,911 shares of its common stock at an average price of $6,173.58 per share, pursuant to a stock repurchase program announced in April 2020, under which the board of directors authorized the repurchase of up to $20 million of the Bank's common stock. To the extent the Bank repurchases additional shares under this program, which expires December 31, 2021, 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.

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 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.

(Tables Follow)

FARMERS & MERCHANTS BANK OF LONG BEACHIncome Statements (Unaudited)(In thousands, except per share data) Three Months Ended Twelve Months Ended Dec. 31, Dec. 31,

2020 2019 2020 2019

Interest and dividend income: Loans $ 58,780 $ 51,449 $ 226,663 $ 207,294

Investment securities 12,345 17,277 57,181 68,829

Investments in FHLB and FRB stock 261 348 1,040 1,404

Interest-bearing deposits in 235 993 1,381 2,926financial institutions Total interest and dividend income 71,621 70,067 286,265 280,453

Interest expense: Deposits 3,119 6,038 17,028 22,533

Securities sold under repurchase 1,291 2,351 7,856 10,378agreementsOther borrowings - 2 - 54

Total interest expense 4,410 8,391 24,884 32,965

Net interest income 67,211 61,676 261,381 247,488

Provision for loan losses 2,000 - 10,500 250

Net interest income after provision 65,211 61,676 250,881 247,238for loan losses Non-interest income: Service charges on deposit accounts 1,271 1,507 5,193 6,584

Card income 1,057 1,047 3,370 3,618

Other real estate owned income - - - 227

Other income 3,711 2,330 11,940 8,838

Total non-interest income 6,039 4,884 20,503 19,267

Non-interest expense: Salaries and employee benefits 28,834 27,063 111,485 99,683

FDIC and other insurance expense 756 130 2,611 1,041

Occupancy expense 3,520 3,347 14,236 11,930

Software and equipment expense 3,535 3,727 14,046 14,234

Other real estate owned expense 17 1 34 85

Professional and legal services 1,589 1,843 6,009 7,154

Marketing expense 966 2,007 5,126 8,556

Other expense 5,969 6,440 21,647 21,046

Total non-interest expense 45,186 44,558 175,194 163,729

Income before income tax expense 26,064 22,002 96,190 102,776

Income tax expense 4,700 3,344 16,389 17,204

Net income $ 21,364 $ 18,658 $ 79,801 $ 85,572

Basic earnings per common share $ 168.12 $ 145.17 $ 623.42 $ 661.80

Diluted earnings per common share $ 167.49 $ 144.99 $ 622.74 $ 661.23

Basic weighted-average shares 127,081 128,528 128,006 129,303outstandingDiluted weighted-average shares 127,552 128,688 128,146 129,414outstandingFARMERS & MERCHANTS BANK OF LONG BEACHBalance Sheets (Unaudited)(In thousands, except share and per share data)Dec. 31, 2020

Dec. 31, 2019

AssetsCash and due from banks:Noninterest-bearing balances$72,109

$64,556

Interest-bearing balances939,566

54,309

Total cash and due from banks1,011,675

118,865

Securities available-for-sale, at fair value137,373

150,623

Securities held-to-maturity, at amortized cost3,131,213

2,728,583

Loans held for sale22,893

23,301

Gross loans5,414,814

4,403,876

Allowance for loan losses(72,267)

(62,489)

Unamortized deferred loan fees, net(15,747)

(5,127)

Loans, net5,326,800

4,336,260

Other real estate owned, net966

-

Investments in FHLB and FRB stock, at cost20,257

20,160

Bank premises and equipment, net103,615

108,133

Deferred tax assets, net26,489

22,213

Other assets90,497

97,431

Total assets$9,871,778

$7,605,569

Liabilities and Stockholders' EquityLiabilities:Deposits:Noninterest-bearing demand deposits$2,889,012

$2,135,056

Interest-bearing demand deposits1,788,133

1,302,726

Savings and money market savings2,129,755

1,669,525

Time deposits810,726

720,958

Total deposits7,617,626

5,828,265

Securities sold under repurchase agreements1,062,348

632,428

Other liabilities47,962

61,996

Total liabilities8,727,936

6,522,689

Stockholders' Equity:Common Stock, par value $20; authorized 250,000126,617 and 128,528 shares issued and outstanding atDecember 31, 2020 and December 31, 2019, respectively2,532

2,571

Additional paid-in capital90,516

95,446

Retained earnings1,047,949

983,867

Accumulated other comprehensive income2,845

996

Total stockholders' equity1,143,842

1,082,880

Total liabilities and stockholders' equity$9,871,778

$7,605,569

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