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

·9-min read

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 BEACH

Income Statements (Unaudited)

(In thousands, except per share data)

Three Months Ended Dec. 31,

Twelve Months Ended 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 financial institutions

235

993

1,381

2,926

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 agreements

1,291

2,351

7,856

10,378

Other 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 for loan losses

65,211

61,676

250,881

247,238

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 outstanding

127,081

128,528

128,006

129,303

Diluted weighted-average shares outstanding

127,552

128,688

128,146

129,414

FARMERS & MERCHANTS BANK OF LONG BEACH

Balance Sheets (Unaudited)

(In thousands, except share and per share data)

Dec. 31, 2020

Dec. 31, 2019

Assets

Cash and due from banks:

Noninterest-bearing balances

$

72,109

$

64,556

Interest-bearing balances

939,566

54,309

Total cash and due from banks

1,011,675

118,865

Securities available-for-sale, at fair value

137,373

150,623

Securities held-to-maturity, at amortized cost

3,131,213

2,728,583

Loans held for sale

22,893

23,301

Gross loans

5,414,814

4,403,876

Allowance for loan losses

(72,267)

(62,489)

Unamortized deferred loan fees, net

(15,747)

(5,127)

Loans, net

5,326,800

4,336,260

Other real estate owned, net

966

-

Investments in FHLB and FRB stock, at cost

20,257

20,160

Bank premises and equipment, net

103,615

108,133

Deferred tax assets, net

26,489

22,213

Other assets

90,497

97,431

Total assets

$

9,871,778

$

7,605,569

Liabilities and Stockholders' Equity

Liabilities:

Deposits:

Noninterest-bearing demand deposits

$

2,889,012

$

2,135,056

Interest-bearing demand deposits

1,788,133

1,302,726

Savings and money market savings

2,129,755

1,669,525

Time deposits

810,726

720,958

Total deposits

7,617,626

5,828,265

Securities sold under repurchase agreements

1,062,348

632,428

Other liabilities

47,962

61,996

Total liabilities

8,727,936

6,522,689

Stockholders' Equity:

Common Stock, par value $20; authorized 250,000

126,617 and 128,528 shares issued and outstanding at
December 31, 2020 and December 31, 2019, respectively

2,532

2,571

Additional paid-in capital

90,516

95,446

Retained earnings

1,047,949

983,867

Accumulated other comprehensive income

2,845

996

Total stockholders' equity

1,143,842

1,082,880

Total liabilities and stockholders' equity

$

9,871,778

$

7,605,569

View source version on businesswire.com: https://www.businesswire.com/news/home/20210121005890/en/

Contacts

John Hinrichs
Executive Vice President
562-437-0011, ext. 5035

Roger Pondel
PondelWilkinson Inc.
Investor Relations
310-279-5965
investor@pondel.com