Business Wire | Apr 15, 2021 08:05AM EDT

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

Apr. 15, 2021

LONG BEACH, Calif.--(BUSINESS WIRE)--Apr. 15, 2021--Farmers & Merchants Bank of Long Beach ("F&M" or the "Bank") (OTCQB: FMBL) today reported financial results for the quarter ended March 31, 2021.

"We are pleased to report on an outstanding first quarter for 2021, as total assets surpassed the milestone $10 billion mark for the first time, and further increases were achieved in total deposits and net loans," said Henry Walker, president of Farmers & Merchants Bank of Long Beach. "The Bank's conservative policies and disciplined business approach enabled us to respond quickly and effectively to the challenges posed by the COVID-19 pandemic. As vaccination efforts continue throughout our state and nation, we will continue to meet the needs of our clients through the extraordinary efforts of our dedicated F&M team."

Income Statement

For the three months ended March 31, 2021, interest and dividend income rose to $73.9 million from $69.1 million a year ago. Interest expense for the 2021 first quarter was $3.4 million, compared with $8.0 million in the same period last year.

Farmers & Merchants' net interest income for the 2021 first quarter increased to $70.5 million from $61.2 million for the first quarter of 2020.

Farmers & Merchants' net interest margin was 2.87% for the first quarter ended March 31, 2021, compared with 3.28% at the end of the same period last year.

The Bank's provision for loan losses in the first quarter of 2021 was $2,000,000, versus $800,000 in the first quarter of 2020. The Bank's allowance for loan losses as a percentage of loans outstanding was 1.32% at March 31, 2021, compared with 1.44% at March 31, 2020.

Non-interest income was $5.1 million for the 2021 first quarter, compared with $4.6 million for the 2020 first quarter. Non-interest expense for the 2021 first quarter was $41.9 million, versus $43.6 million for the same period last year.

The Bank's net income for the 2021 first quarter was $25.3 million, or $197.51 per diluted share, from $17.9 million, or $139.50 per diluted share, in the 2020 first quarter.

Balance Sheet

At March 31, 2021, net loans totaled $5.53 billion, compared with $5.33 billion at December 31, 2020. The Bank's total deposits rose to $8.24 billion at the end of the 2021 first quarter, up from $7.62 billion at December 31, 2020. Non-interest-bearing deposits represented 38.1% of total deposits at March 31, 2021 compared with 37.9% at December 31, 2020. Total assets grew to $10.45 billion at the close of the 2021 first quarter from $9.87 billion at December 31, 2020.

At March 31, 2021, Farmers & Merchants Bank remained "well-capitalized" under all regulatory categories, with a total risk-based capital ratio of 19.22%, a tier 1 risk-based capital ratio of 18.00%, a common equity tier 1 capital ratio of 18.00%, and a tier 1 leverage ratio of 12.18%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

"Proceeding into 2021, F&M continues to successfully navigate an evolving business and economic environment, as demonstrated by our first quarter results," said Daniel Walker, chief executive officer and chairman of the board. "Despite the protracted period of low interest rates, the Bank remains financially strong. F&M is well positioned to perform effectively, with high levels of capital and liquidity, diversified revenue streams, and an exceptional core deposit base."

During the first quarter of 2021, the Bank repurchased 139 shares of its common stock at an average price of $7,714.91 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.

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

2021 2020

Interest and dividend income:Loans $ 60,273 $ 51,325

Investment securities 13,075 16,745

Investments in FHLB and FRB stock 262 348

Interest-bearing deposits in financial institutions 257 728

Total interest and dividend income 73,867 69,146

Interest expense:Deposits 2,494 5,690

Securities sold under repurchase agreements 893 2,300

Total interest expense 3,387 7,990

Net interest income 70,480 61,156

Provision for loan losses 2,000 800

Net interest income after provision for loan losses 68,480 60,356

Non-interest income:Service charges on deposit accounts 1,325 1,527

Card income 573 870

Other income 3,198 2,240

Total non-interest income 5,096 4,637

Non-interest expense:Salaries and employee benefits 27,878 27,701

FDIC and other insurance expense 853 445

Occupancy expense 3,254 3,333

Software and equipment expense 3,535 3,320

Other real estate owned expense 13 -

Professional and legal services 1,340 1,161

Marketing expense 679 1,768

Other expense 4,322 5,912

Total non-interest expense 41,874 43,640

Income before income tax expense 31,702 21,353

Income tax expense 6,427 3,409

Net income $ 25,275 $ 17,944

Basic earnings per common share $ 199.64 $ 139.61

Diluted earnings per common share $ 197.51 $ 139.50

Basic weighted-average shares outstanding 126,607 128,528

Diluted weighted-average shares outstanding 127,970 128,630

FARMERS & MERCHANTS BANK OF LONG BEACHBalance Sheets (Unaudited)(In thousands, except share and per share data)Mar. 31, 2021

Dec. 31, 2020

AssetsCash and due from banks:Noninterest-bearing balances$77,874

$72,109

Interest-bearing balances927,877

939,566

Total cash and due from banks1,005,751

1,011,675

Securities available-for-sale, at fair value146,482

137,373

Securities held-to-maturity, at amortized cost3,506,580

3,131,213

Loans held for sale21,493

22,893

Gross loans5,629,832

5,414,814

Allowance for loan losses(74,171)

(72,267)

Unamortized deferred loan fees, net(21,774)

(15,747)

Loans, net5,533,887

5,326,800

Other real estate owned, net966

966

Investments in FHLB and FRB stock, at cost20,257

20,257

Bank premises and equipment, net103,466

103,615

Deferred tax assets, net27,830

26,489

Other assets87,065

90,497

Total assets$10,453,777

$9,871,778

Liabilities and Stockholders' EquityLiabilities:Deposits:Noninterest-bearing demand deposits$3,138,863

$2,889,012

Interest-bearing demand deposits2,040,460

1,788,133

Savings and money market savings2,256,003

2,129,755

Time deposits806,989

810,726

Total deposits8,242,315

7,617,626

Securities sold under repurchase agreements1,007,841

1,062,348

Other liabilities38,508

47,962

Total liabilities9,288,664

8,727,936

Stockholders' Equity:Common Stock, par value $20; authorized 250,000 shares;126,478 and 126,617 shares issued and outstandingat March 31, 2021 and December 31, 2020, respectively2,530

2,532

Additional paid-in capital91,321

90,516

Retained earnings1,069,806

1,047,949

Accumulated other comprehensive income1,456

2,845

Total stockholders' equity1,165,113

1,143,842

Total liabilities and stockholders' equity$10,453,777

$9,871,778

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