Farmers & Merchants Bank of Long Beach Reports 2023 Second-Quarter Results

Farmers & Merchants Bank of Long Beach (OTCQX: FMBL) today reported financial results for the second quarter and six-months ended June 30, 2023.

“For 116 years, our first priority has always been, and continues to be, safeguarding our clients’ deposits through challenging economic times. F&M continues to accomplish this priority with capital levels far in excess of minimum regulatory requirements and a quality loan portfolio, which are testaments to our commitment to safety and soundness, as shown by our second quarter results,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “The current turbulence facing the banking sector is not the first and will not be the last. The rapid rise in interest rates over the prior year will challenge earnings for the banking sector and for Farmers & Merchants Bank in the near-term, but it will not challenge the safety of F&M for our depositors.”

Income Statement

For the three months ended June 30, 2023, total interest and dividend income rose to $102.3 million from $81.2 million in the second quarter of 2022. Total interest and dividend income for the first half of 2023 increased to $199.6 million from $156.4 million reported for the first half of 2022.

Total interest expense for the 2023 second quarter was $37.3 million, compared with $3.0 million in the second quarter of 2022. Interest expense for the first half of 2023 was $63.7 million, versus $5.7 million reported for the corresponding period last year.

Net interest income for the 2023 second quarter was $65.1 million versus $78.1 million for the second quarter of 2022. Net interest income for the first half of 2023 was $135.9 million, compared with $150.7 million for the six months ended June 30, 2022.

Net interest margin was 1.93% for the 2023 second quarter, versus 2.76% in the 2022 second quarter. Net interest margin was 2.31% for the first half of 2023, compared with 2.69% for the same period in 2022.

There was no provision for credit losses for the 2023 and 2022 second quarters or for the first half of 2023. For the first half of 2022, the Bank recorded a $1.0 million recapture of provision for credit losses.

Total non-interest income was $4.4 million for the 2023 second quarter, compared with $4.7 million for the same period a year ago. In the first half of 2023, total non-interest income was $8.2 million, compared with $9.8 million for the six months ended June 30, 2022.

Total non-interest expense for the 2023 second quarter was $50.8 million, compared with $46.9 million for the same period last year. Non-interest expense for the first half of 2023 was $99.1 million, compared with $90.6 million for the first half of 2022.

Net income for the 2023 second quarter was $18.1 million, or $143.69 per diluted share, compared with $29.1 million, or $228.51 per diluted share, for the 2022 second quarter. Net income for the first half of 2023 was $39.8 million, or $314.54 per diluted share, compared with $56.9 million, or $445.33 per diluted share, for the six months ended June 30, 2022.

Balance Sheet

At June 30, 2023, gross loans amounted to $6.82 billion, approximately equal to that at December 31, 2022, of $6.77 billion. The Bank’s allowance for credit losses was $98.9 million, or 1.45% of loans held-for-investment at June 30, 2023, compared with $76.5 million, or 1.13% of loans, held-for-investment at December 31, 2022.

The Bank’s deposits were $8.89 billion at the end of the 2023 second quarter, compared with $9.14 billion at December 31, 2022.

Non-interest-bearing deposits represented 34.7% of total deposits at June 30, 2023, versus 36.7% of total deposits at December 31, 2022.

Total assets increased to $12.27 billion at the close of the 2023 second quarter from $12.05 billion at December 31, 2022.

At June 30, 2023, Farmers & Merchants Bank’s total risk-based capital ratio was 16.93%; its tier 1 risk-based capital ratio was 15.68%, with a common equity tier 1 capital ratio of 15.68%, and a tier 1 leverage ratio of 10.86%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“As we move through 2023 and start to focus on 2024, we look for opportunities in the marketplace resulting from the disruption caused by the unprecedented interest rate increases, and we are finding it in strong customer growth,” said Daniel Walker, chief executive officer and chairman of the board. “F&M intends to emerge as an even more robust bank, as we have in prior periods of economic turbulence since our founding in 1907.”

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 26 branches from San Clemente to 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 a robust offering of consumer retail 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 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,

2023

2022

2023

2022

 

 
Interest and dividend income:
Loans $

74,632

$

57,048

$

147,107

$

112,767

 

Investment securities

22,345

22,219

45,158

40,888

 

Investments in FHLB and FRB stock

414

286

814

558

 

Interest-bearing deposits in financial institutions

4,957

1,613

6,557

2,209

 

Total interest and dividend income

102,348

81,166

199,636

156,422

 

 
Interest expense:
Deposits

19,611

2,042

33,569

4,029

 

Securities sold under repurchase agreements

7,274

997

13,294

1,675

 

Borrowings

10,390

-

16,881

-

 

Total interest expense

37,275

3,039

63,744

5,704

 

Net interest income

65,073

78,127

135,892

150,718

 

 
Provision for credit losses

-

-

-

(1,000

)

 
Net interest income after provision for credit losses

65,073

78,127

135,892

151,718

 

 
Non-interest income:
Service charges on deposit accounts

1,810

1,565

3,354

3,100

 

Card income

370

1,074

600

2,044

 

Other income

2,206

2,097

4,267

4,665

 

Total non-interest income

4,386

4,736

8,221

9,809

 

 
Non-interest expense:
Salaries and employee benefits

30,915

29,437

62,708

58,547

 

FDIC and other insurance expense

1,846

1,014

3,604

2,014

 

Occupancy expense

3,711

3,853

7,538

7,401

 

Software and equipment expense

3,803

3,771

7,663

7,413

 

Professional and legal services

2,353

1,962

3,483

3,427

 

Marketing expense

2,669

2,196

3,551

3,217

 

Other expense

5,522

4,688

10,567

8,577

 

Total non-interest expense

50,819

46,921

99,114

90,596

 

Income before income tax expense

18,640

35,942

44,999

70,931

 

 
Income tax expense

491

6,853

5,227

14,007

 

 
Net income $

18,149

$

29,089

$

39,772

$

56,924

 

 
Basic earnings per common share $

147.28

$

233.52

$

322.75

$

455.13

 

Diluted earnings per common share $

143.69

$

228.51

$

314.54

$

445.33

 

Basic weighted-average shares outstanding

123,228

124,566

123,228

125,071

 

Diluted weighted-average shares outstanding

126,301

127,297

126,444

127,823

 

 

FARMERS & MERCHANTS BANK OF LONG BEACH

Balance Sheets (Unaudited)

(In thousands, except share and per share data)

 
June 30, 2023 Dec. 31, 2022
 
Assets
Cash and due from banks:
Noninterest-bearing balances $

70,537

 

$

75,489

 

Interest-bearing balances

487,076

 

67,369

 

Total cash and due from banks

557,613

 

142,858

 

Securities available-for-sale, at fair value

117,897

 

123,919

 

Securities held-to-maturity, at amortized cost

4,552,612

 

4,789,522

 

Gross loans

6,824,991

 

6,765,391

 

Allowance for loan losses

(98,861

)

(76,503

)

Unamortized deferred loan fees, net

(13,377

)

(14,429

)

Loans, net

6,712,753

 

6,674,459

 

Investments in FHLB and FRB stock, at cost

22,702

 

27,088

 

Bank premises and equipment, net

122,698

 

118,228

 

Deferred tax assets, net

43,453

 

31,538

 

Other assets

138,487

 

147,132

 

Total assets $

12,268,215

 

$

12,054,744

 

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

3,087,354

 

$

3,355,298

 

Interest-bearing demand deposits

2,049,638

 

2,212,509

 

Savings and money market savings

2,725,261

 

2,668,334

 

Time deposits

1,032,476

 

906,355

 

Total deposits

8,894,729

 

9,142,496

 

Securities sold under repurchase agreements

930,489

 

785,912

 

Borrowings

1,000,000

 

700,000

 

Other liabilities

118,129

 

113,254

 

Total liabilities

10,943,347

 

10,741,662

 

 
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000 shares;
123,228 shares issued and outstanding at
June 30, 2023 and December 31, 2022

2,465

 

2,465

 

Additional paid-in capital

181,104

 

177,433

 

Retained earnings

1,148,270

 

1,140,897

 

Accumulated other comprehensive loss

(6,971

)

(7,713

)

Total stockholders' equity

1,324,868

 

1,313,082

 

Total liabilities and stockholders' equity $

12,268,215

 

$

12,054,744

 

 

 

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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