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Farmers And Merchants Bank of Long Beach

Farmers & Merchants Bank of Long Beach Reports 2024 Third Quarter Results

LONG BEACH, Calif.--(BUSINESS WIRE)--Oct. 17, 2024-- Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQX: FMBL) today reported financial results for the third quarter ended September 30, 2024.

“F&M achieved profitable operations for the third quarter ended September 30, 2024, and our balance sheet remained strong, with capital ratios far exceeding all regulatory requirements,” said W. Henry Walker, Chief Executive Officer. “As has been the case throughout F&M’s 117-year history, our solid capital and liquidity levels, along with prudent risk management strategies, position the Bank well for the long-term. Throughout the challenging external economic environment, we maintained a stable, conservative loan portfolio, strong liquidity, and always with the first priority of serving our clients well and safeguarding deposits,” he added.

Daniel Walker, F&M’s Executive Chairman of the Board, said, “Earnings for the third quarter, as expected, were again impacted by higher deposit costs, pressure from low-yielding securities in our HTM (Held-to-Maturity) portfolio, and tepid demand for loans in the higher interest rate environment. Looking ahead, the Federal Reserve’s 50 BPS interest rate cut in September, with additional rate cuts anticipated, signals a positive sign for the economy, for the banking sector, and for all of F&M’s stakeholders.”

Operating Results

For the third quarter of 2024, total interest and dividend income rose to $113.6 million from $107.9 million for the third quarter of 2023. Total interest and dividend income for the nine months ended September 30, 2024 increased to $330.9 million from $307.6 million reported for the nine months ended September 30, 2023.

Total interest expense for the third quarter of 2024 was $53.2 million, compared with $43.0 million in the third quarter of 2023. Interest expense for the nine months ended September 30, 2024 was $156.0 million, compared to $106.8 million reported for the same period in 2023.

Net interest income before provision for credit losses for the third quarter of 2024 was $60.4 million versus $64.9 million for the third quarter of 2023. Net interest income for the nine months ended September 30, 2024 was $174.9 million, compared with $200.8 million for the nine months ended September 30, 2023.

F&M’s net interest margin was 2.02% for the third quarter of 2024, versus 2.14% in the third quarter of 2023. Net interest margin was 1.95% for the nine months ended September 30, 2024, compared with 2.25% for the same period in 2023.

The Bank recorded a recapture of provision for credit losses of $3.7 million in the third quarter of 2024 compared with a $3.6 million recapture of provision for credit losses for the third quarter of 2023. For the nine months ended September 30, 2024, the Bank recorded a $7.2 million recapture of provision for credit losses, compared with a $3.6 million recapture of provision for credit losses for the nine months ended September 30, 2023.

Non-interest income was $4.5 million for the third quarter of 2024, compared with $4.1 million in the third quarter of 2023. For the nine months ended September 30, 2024, total non-interest income was $23.3 million, compared with $12.3 million for the same period in 2023.

Total non-interest expense for the third quarter of 2024 was $48.6 million, compared with $52.3 million in the third quarter of 2023. Non-interest expense for the nine months ended September 30, 2024 was $148.4 million, compared with $151.4 million for the nine months ended September 30, 2023.

Net income for the third quarter of 2024 was $14.3 million, or $115.17 per diluted share, compared with $17.4 million, or $137.57 per diluted share, for the third quarter of 2023. Net income for the nine months ended September 30, 2024 was $40.9 million, or $325.64 per diluted share, compared with $57.2 million, or $452.11 per diluted share, for the nine months ended September 30, 2023.

Balance Sheet

Gross loans were $6.46 billion as of September 30, 2024, compared with $6.76 billion at December 31, 2023. The Bank’s allowance for loan losses totaled $95.9 million, or 1.49% of loans held-for-investment at September 30, 2024, compared with $97.9 million, or 1.45% of loans held-for-investment at December 31, 2023.

The Bank’s total deposits were $8.77 billion at September 30, 2024, compared with $8.67 billion at December 31, 2023. Noninterest-bearing deposits represented 32.8% of total deposits at September 30, 2024, versus 33.2% of total deposits at December 31, 2023. Securities sold under repurchase agreements decreased to $877.4 million at September 30, 2024, from $909.4 million at December 31, 2023. Borrowings were $900 million as of September 30, 2024 and $1.0 billion at December 31, 2023.

Total assets were $12.02 billion as of September 30, 2024 compared with $12.04 billion at December 31, 2023. Total stockholders’ equity was $1.37 billion at September 30, 2024 compared with $1.35 billion at December 31, 2023.

Capital

Capital ratios are the foundation of safety in all banks, and F&M continues to exceed national banks and peer banks in this area. All of Farmers & Merchants Bank’s capital ratios exceeded regulatory capital requirements to meet the definition of a “well-capitalized” financial institution. The Bank’s total risk-based capital ratio was 18.65%; its tier 1 risk-based capital ratio was 17.40%, with a common equity tier 1 capital ratio of 17.40%, and a tier 1 leverage ratio of 11.20%, as of September 30, 2024. The minimum ratios for capital adequacy for a “well-capitalized” bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

Stock Repurchase Program

During the nine months ended September 30, 2024, the Bank repurchased 2,573 shares of its common stock on the open market at an average repurchase price of $4,874.05 per share. Under the stock purchase program, the Bank may purchase shares of its common stock through various means, including open market transactions and privately negotiated transactions, in each case, subject to 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 purchases at any time and anticipates that any such repurchases will be funded from existing cash and cash equivalents or future cash flow. The stock repurchase program does not obligate the Bank to repurchase any specific number of shares in any particular 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 27 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 September 30,

Nine Months Ended September 30,

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 
Interest and dividend income:
 
Loans

$

75,743

 

$

76,184

 

$

225,253

 

$

223,291

 

Investment securities

 

20,545

 

 

21,458

 

 

60,619

 

 

66,616

 

Investments in FHLB and FRB stock

 

456

 

 

415

 

 

1,455

 

 

1,229

 

Interest-bearing deposits in financial institutions

 

16,857

 

 

9,859

 

 

43,573

 

 

16,416

 

 
Total interest and dividend income

 

113,601

 

 

107,916

 

 

330,900

 

 

307,552

 

 
Interest expense:
 
Deposits

 

31,789

 

 

23,009

 

 

88,567

 

 

56,578

 

Securities sold under repurchase agreements

 

9,783

 

 

8,918

 

 

28,876

 

 

22,212

 

Borrowings

 

11,677

 

 

11,103

 

 

38,567

 

 

27,984

 

 
Total interest expense

 

53,249

 

 

43,030

 

 

156,010

 

 

106,774

 

 
Net interest income before provision for credit losses

 

60,352

 

 

64,886

 

 

174,890

 

 

200,778

 

 
Provision for credit losses
 
Loans

 

(1,600

)

 

(1,800

)

 

(3,100

)

 

(1,800

)

Investment securities

 

-

 

 

-

 

 

-

 

 

100

 

Reserve for unfunded loan commitments

 

(2,100

)

 

(1,800

)

 

(4,100

)

 

(1,900

)

 
Total provision for credit losses

 

(3,700

)

 

(3,600

)

 

(7,200

)

 

(3,600

)

 
Net interest income after provision for credit losses

 

64,052

 

 

68,486

 

 

182,090

 

 

204,378

 

 
Non-interest income:
 
Service charges on deposit accounts

 

1,884

 

 

1,799

 

 

5,570

 

 

5,153

 

Card income

 

226

 

 

357

 

 

665

 

 

957

 

Other income

 

2,432

 

 

1,919

 

 

17,114

 

 

6,186

 

 
Total non-interest income

 

4,542

 

 

4,075

 

 

23,349

 

 

12,296

 

 
Non-interest expense:
 
Salaries and employee benefits

 

29,677

 

 

30,831

 

 

91,428

 

 

93,538

 

FDIC and other insurance expense

 

2,506

 

 

2,319

 

 

8,017

 

 

5,923

 

Occupancy expense

 

4,057

 

 

4,103

 

 

11,856

 

 

11,641

 

Software and equipment expense

 

4,456

 

 

3,891

 

 

13,187

 

 

11,554

 

Other real estate owned expense

 

83

 

 

-

 

 

332

 

 

-

 

Professional and legal services

 

3,198

 

 

2,113

 

 

8,795

 

 

5,597

 

Marketing expense

 

900

 

 

2,694

 

 

2,857

 

 

6,245

 

Other expense

 

3,713

 

 

6,357

 

 

11,953

 

 

16,924

 

 
Total non-interest expense

 

48,590

 

 

52,308

 

 

148,425

 

 

151,422

 

 
Income before income tax expense

 

20,004

 

 

20,253

 

 

57,014

 

 

65,252

 

 
Income tax expense

 

5,658

 

 

2,866

 

 

16,132

 

 

8,093

 

 
Net income

$

14,346

 

$

17,387

 

$

40,882

 

$

57,159

 

 
Basic earnings per common share

$

115.98

 

$

141.11

 

$

333.03

 

$

463.86

 

Diluted earnings per common share

$

115.17

 

$

137.57

 

$

325.64

 

$

452.11

 

Basic weighted-average shares outstanding

 

123,696

 

 

123,216

 

 

122,757

 

 

123,224

 

Diluted weighted-average shares outstanding

 

124,563

 

 

126,389

 

 

125,545

 

 

126,428

 

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
 
Sep. 30, 2024 Dec. 31, 2023
 
Assets
 
Cash and due from banks:
Noninterest-bearing balances

$

78,460

 

$

74,595

 

Interest-bearing balances

 

1,075,886

 

 

548,874

 

 
Total cash and due from banks

 

1,154,346

 

 

623,469

 

Securities available-for-sale, at fair value

 

257,906

 

 

115,883

 

Securities held-to-maturity, at amortized cost

 

3,923,032

 

 

4,301,060

 

Loans held for sale

 

766

 

 

-

 

Gross loans

 

6,463,026

 

 

6,756,207

 

Allowance for loan losses

 

(95,916

)

 

(97,900

)

Unamortized deferred loan fees, net

 

(8,637

)

 

(11,469

)

 
Loans, net

 

6,358,473

 

 

6,646,838

 

 
Other real estate owned, net

 

2,929

 

 

-

 

Investments in FHLB and FRB stock, at cost

 

22,570

 

 

22,798

 

Bank premises and equipment, net

 

120,528

 

 

125,929

 

Deferred tax assets, net

 

42,000

 

 

45,723

 

Other assets

 

134,515

 

 

154,154

 

 
Total assets

$

12,017,065

 

$

12,035,854

 

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

$

2,880,846

 

$

2,880,315

 

Interest-bearing demand deposits

 

2,142,551

 

 

2,069,275

 

Savings and money market savings

 

2,694,866

 

 

2,661,312

 

Time deposits

 

1,053,531

 

 

1,059,166

 

 
Total deposits

 

8,771,794

 

 

8,670,068

 

Securities sold under repurchase agreements

 

877,404

 

 

909,376

 

Borrowings

 

900,000

 

 

1,000,000

 

Other liabilities

 

97,234

 

 

104,965

 

 
Total liabilities

 

10,646,432

 

 

10,684,409

 

 
Stockholders' Equity:
 
Common Stock, par value $20; authorized 250,000 shares;
123,501 and 123,135 shares issued and outstanding at
September 30, 2024 and December 31, 2023, respectively

 

2,470

 

 

2,463

 

Additional paid-in capital

 

171,594

 

 

184,483

 

Retained earnings

 

1,200,517

 

 

1,169,759

 

Accumulated other comprehensive loss

 

(3,948

)

 

(5,260

)

 
Total stockholders' equity

 

1,370,633

 

 

1,351,445

 

 
Total liabilities and stockholders' equity

$

12,017,065

 

$

12,035,854

 

 

 

Kevin Tiber
President
562-499-4829

Roger Pondel
PondelWilkinson Inc.
Investor Relations
310-279-5980
investor@pondel.com

Source: Farmers & Merchants Bank of Long Beach