Business Wire | Jul 14, 2021 08:05AM EDT

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

Jul. 14, 2021

LONG BEACH, Calif.--(BUSINESS WIRE)--Jul. 14, 2021--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 Six Months Ended June June 30, 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 298 171 560 519stockInterest-bearing deposits in 256 211 513 939financial institutionsTotal interest and dividend 77,769 74,747 151,636 143,893income

Interest expense: Deposits 2,253 4,452 4,747 10,142

Securities sold under 842 2,253 1,735 4,553repurchase agreementsTotal 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 74,674 63,342 143,154 123,698provision for loan lossesNon-interest income: Service charges on deposit 1,361 1,192 2,686 2,719accountsCard 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 861 738 1,714 1,183expenseOccupancy 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 38,591 25,089 70,293 46,442expenseIncome 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 $ 236.95 $ 160.52 $ 434.39 $ 300.12shareBasic weighted-average shares 126,309 128,508 126,457 128,518outstandingDiluted weighted-average shares 128,424 128,521 128,239 128,531outstandingFARMERS & MERCHANTS BANK OF LONG BEACH

Balance Sheets (Unaudited)

(In thousands, except share and per share data)

June 30, 2021

Dec. 31, 2020

AssetsCash and due from banks:Noninterest-bearing balances$73,903

$72,109

Interest-bearing balances937,358

939,566

Total cash and due from banks1,011,261

1,011,675

Securities available-for-sale, at fair value147,402

137,373

Securities held-to-maturity, at amortized cost3,899,259

3,131,213

Loans held for sale15,896

22,893

Gross loans5,455,970

5,414,814

Allowance for loan losses(74,172)

(72,267)

Unamortized deferred loan fees, net(18,157)

(15,747)

Loans, net5,363,641

5,326,800

Other real estate owned, net966

966

Investments in FHLB and FRB stock, at cost20,042

20,257

Bank premises and equipment, net103,313

103,615

Deferred tax assets, net28,691

26,489

Other assets93,676

90,497

Total assets$10,684,147

$9,871,778

Liabilities and Stockholders' EquityLiabilities:Deposits:Noninterest-bearing demand deposits$3,263,345

$2,889,012

Interest-bearing demand deposits2,001,944

1,788,133

Savings and money market savings2,307,252

2,129,755

Time deposits799,430

810,726

Total deposits8,371,971

7,617,626

Securities sold under repurchase agreements1,080,453

1,062,348

Other liabilities40,183

47,962

Total liabilities9,492,607

8,727,936

Stockholders' Equity:Common Stock, par value $20; authorized 250,000126,108 and 126,617 shares issued and outstandingat June 30, 2021 and December 31, 2020. respectively2,522

2,532

Additional paid-in capital90,176

90,516

Retained earnings1,096,830

1,047,949

Accumulated other comprehensive income2,012

2,845

Total stockholders' equity1,191,540

1,143,842

Total liabilities and stockholders' equity$10,684,147

$9,871,778

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