Business Wire | Jan 24, 2022 08:05AM EST

Farmers & Merchants Bank of Long Beach Reports 2021 Fourth-Quarter and Full-Year Results

Jan. 24, 2022

LONG BEACH, Calif.--(BUSINESS WIRE)--Jan. 24, 2022--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, 2021.

"Affirming the loyalty and trust of our growing client base, F&M ended what was another challenging year for our nation and our community in a position of financial strength," said Henry Walker, president. "The Bank effectively managed through the lingering pandemic and low interest rate environment to successfully assist our clients and finish 2021 with record high total deposits, net loans and total assets."

Income Statement

For the 2021 fourth quarter, total interest and dividend income rose to $76.0 million, from $71.6 million in the fourth quarter of 2020. Total interest and dividend income for the year ended December 31, 2021, increased to $307.3 million, from $286.3 million reported for 2020.

Interest expense for the 2021 fourth quarter declined to $2.8 million, from $4.4 million in the same period a year ago. Interest expense for 2021 was $12.2 million, versus $24.9 million in 2020.

The Bank's net interest income before loan loss provision for the 2021 fourth quarter advanced to $73.3 million, from $67.2 million for the 2020 fourth quarter. Net interest income before loan loss provision for 2021 rose to $295.1 million, from $261.4 million in 2020.

Net interest margin for the 2021 fourth quarter was 2.67%, compared with 2.83% for the same period in 2020. F&M's net interest margin was 2.83% for the year ended December 31, 2021, versus 2.99% in the previous year.

The Bank recorded a $1.0 million recapture of loan loss provision in the fourth quarter of 2021, compared with a $2.0 loan loss provision in the fourth quarter of 2020. For the full 2021 year, there was no loan loss provision, compared to $10.5 million of loan loss provision in 2020. The Bank's allowance for loan losses as a percentage of loans outstanding was 1.34% at December 31, 2021, equal to that at December 31, 2020.

Non-interest income increased to $6.5 million for the 2021 fourth quarter, from $6.0 million for the comparable period last year. Non-interest income for 2021 rose to $22.0 million, from $20.5 million in 2020.

Non-interest expense for the 2021 fourth quarter was $45.2 million, equal to that for the same period last year. Non-interest expense for the year ended December 31, 2021, was $172.6 million, versus $175.2 million last year.

The Bank's net income for the 2021 fourth quarter increased to $29.0 million, or $226.02 per diluted share, from $21.4 million, or $167.49 per diluted share, for the 2020 fourth quarter. The Bank's net income for the full year 2021 rose to $115.2 million, or $898.31 per diluted share, from $79.8 million, or $622.74 per diluted share, for 2020.

Balance Sheet

At December 31, 2021, net loans increased to $5.37 billion, from $5.33 billion at December 31, 2020. The Bank's deposits grew to $9.24 billion at the end of 2021, from $7.62 billion a year ago. Non-interest-bearing deposits represented 38.4% of total deposits at December 31, 2021, versus 37.9% of total deposits at the end of 2020. Total assets advanced to $11.44 billion at the close of 2021 from $9.87 billion at December 31, 2020.

Farmers & Merchants Bank remained "well-capitalized" under all regulatory categories at December 31, 2021, with a total risk-based capital ratio of 18.63%, a tier 1 risk-based capital ratio of 17.54%, a common equity tier 1 capital ratio of 17.54%, and a tier 1 leverage ratio of 10.88%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

"The Bank performed well in 2021, as we navigated the ongoing dual pressures of the pandemic and general economic environment," said Daniel Walker, chief executive officer and chairman of the board. "The F&M team showcased our ability to make prudent business decisions and achieve positive outcomes. Moving forward in 2022, empathy and understanding will remain hallmarks that are embedded in all of our client interactions, whether in-person or on a screen."

Stock Repurchase Program

Reflecting the Board of Directors confidence in the long-term outlook for the Bank, Farmers & Merchants Bank also announced today that the Board has authorized a new $20 million stock repurchase program, authorizing the Bank to repurchase of up to $20 million of the Bank's common stock from time to time through December 31, 2023.

Under the new stock repurchase program, the Bank may purchase shares of its common stock from time to time through various means, including open market transactions, privately negotiated transactions, or otherwise in accordance with applicable requirements and laws. To the extent the Bank repurchases shares, the number of shares repurchased and the timing of any repurchases will depend on a number of factors, including, but not limited to, stock price, trading volume, regulatory requirements, general business conditions and other factors. The Bank may choose to modify, suspend or discontinue such proposed repurchases at any time and anticipates that any such repurchases will be funded from existing cash and cash equivalents or future cash flow. The new stock repurchase program does not obligate the Bank to repurchase any specific number of shares in any particular period.

During 2021, the Bank repurchased a total of 989 shares of its common stock at an average price of $8,152.22 per share, pursuant to a prior stock repurchase program that expired December 31, 2021. No shares were repurchased as part of that program during the fourth quarter of 2021.

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 BEACH

Income Statements (Unaudited)

(In thousands, except per share data)



Three Months Ended Twelve Months Ended December 31, December 31,

2021 2020 2021 2020

Interest and dividend income:Loans $ 58,534 $ 58,780 $ 244,062 $ 226,663

Investment securities 16,569 12,345 60,444 57,181

Investments in FHLB and FRB 347 261 1,206 1,040stockInterest-bearing deposits in 566 235 1,578 1,381financial institutionsTotal interest and dividend 76,016 71,621 307,290 286,265incomeInterest expense:Deposits 2,068 3,119 8,952 17,028

Securities sold under repurchase 697 1,291 3,280 7,856agreementsTotal interest expense 2,765 4,410 12,232 24,884

Net interest income 73,251 67,211 295,058 261,381

Provision for loan losses (1,000 ) 2,000 - 10,500

Net interest income after 74,251 65,211 295,058 250,881provision for loan lossesNon-interest income:Service charges on deposit 1,489 1,271 5,602 5,193accountsCard income 1,644 1,057 4,007 3,370

Other income 3,330 3,711 12,421 11,940

Total non-interest income 6,463 6,039 22,030 20,503

Non-interest expense:Salaries and employee benefits 28,614 28,834 111,046 111,485

FDIC and other insurance expense 969 756 3,614 2,611

Occupancy expense 3,639 3,520 14,004 14,236

Software and equipment expense 3,823 4,741 14,254 14,046

Professional and legal services 1,720 1,589 6,070 6,009

Marketing expense 1,438 966 4,957 5,126

Other expense 4,958 4,780 18,618 21,681

Total non-interest expense 45,161 45,186 172,563 175,194

Income before income tax expense 35,553 26,064 144,525 96,190

Income tax expense 6,575 4,700 29,320 16,389

Net income $ 28,978 $ 21,364 $ 115,205 $ 79,801

Basic earnings per common share $ 230.66 $ 168.12 $ 913.60 $ 623.42

Diluted earnings per common $ 226.02 $ 167.49 $ 898.31 $ 622.74shareBasic weighted-average shares 125,628 127,081 126,100 128,006outstandingDiluted weighted-average shares 128,206 127,552 128,246 128,146outstandingFARMERS & MERCHANTS BANK OF LONG BEACHBalance Sheets (Unaudited)(In thousands, except share and per share data)Dec. 31, 2021Dec. 31, 2020AssetsCash and due from banks:Noninterest-bearing balances$49,025

$72,109

Interest-bearing balances1,252,646

939,566

Total cash and due from banks1,301,671

1,011,675

Securities available-for-sale, at fair value139,947

137,373

Securities held-to-maturity, at amortized cost4,366,821

3,131,213

Loans held for sale9,430

22,893

Gross loans5,453,279

5,414,814

Allowance for loan losses(72,880

)

(72,267

)

Unamortized deferred loan fees, net(8,650

)

(15,747

)

Loans, net5,371,749

5,326,800

Other real estate owned, net966

966

Investments in FHLB and FRB stock, at cost20,031

20,257

Bank premises and equipment, net115,827

103,615

Deferred tax assets, net27,939

26,489

Other assets83,879

90,497

Total assets$11,438,260

$9,871,778

Liabilities and Stockholders' EquityLiabilities:Deposits:Noninterest-bearing demand deposits$3,552,248

$2,889,012

Interest-bearing demand deposits2,187,998

1,788,133

Savings and money market savings2,755,862

2,129,755

Time deposits745,382

810,726

Total deposits9,241,490

7,617,626

Securities sold under repurchase agreements916,672

1,062,348

Other liabilities38,536

47,962

Total liabilities10,196,698

8,727,936

Stockholders' Equity:Common Stock, par value $20; authorized 250,000125,628 and 126,617 shares issued and outstandingat December 31, 2021 and 2020, respectively2,513

2,532

Additional paid-in capital89,972

90,516

Retained earnings1,147,661

1,047,949

Accumulated other comprehensive income1,416

2,845

Total stockholders' equity1,241,562

1,143,842

Total liabilities and stockholders' equity$11,438,260

$9,871,778

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