Farmers & Merchants Bank of Long Beach (OTCQX: FMBL) today reported financial results for the second quarter and six-months ended June 30, 2022.
“Results for the 2022 second quarter demonstrated F&M’s financial strength during a period of inflationary pressures, rising interest rates and geopolitical uncertainty,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “Total assets, total deposits and net loans increased over the comparable prior year period, with all capital ratios far exceeding minimum requirements.”
Income Statement
For the three months ended June 30, 2022, total interest and dividend income rose to $81.2 million from $77.8 million in the second quarter of 2021. Total interest and dividend income for the first half of 2022 increased to $156.4 million from $151.6 million reported for the first half of 2021.
Total interest expense for the 2022 second quarter was $3.0 million, compared with $3.1 million in the second quarter of 2021. Interest expense for the first half of 2022 was $5.7 million, versus $6.5 million reported for the corresponding period last year.
Net interest income for the 2022 second quarter advanced to $78.1 million from $74.7 million for the second quarter of 2021. Net interest income for the first half of 2022 increased to $150.7 million from $145.2 million for the six months ended June 30, 2021.
Net interest margin was 2.76% for the 2022 second quarter, versus 2.96% in the 2021 second quarter. Net interest margin was 2.69% for the first half of 2022, compared with 2.91% for the same period in 2021.
The Bank had no provision for loan losses in both the second quarter of 2022 and 2021. For the first half of 2022, the Bank recorded a $1.0 million recapture of loan loss provision, compared with a $2.0 million loan loss provision for the corresponding period of 2021. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.23% at June 30, 2022, compared with 1.36% at December 31, 2021.
Total non-interest income was $4.7 million for the 2022 second quarter, compared with $5.4 million for the same period a year ago. In the first half of 2022, total non-interest income was $9.8 million, compared with $10.5 million for the six months ended June 30, 2021.
Total non-interest expense for the 2022 second quarter was $46.9 million, compared with $41.4 million for the same period last year. Non-interest expense for the first half of 2022 was $90.6 million, compared with $83.3 million for the first half of 2021.
Net income for the 2022 second quarter was $29.1 million, or $228.51 per diluted share, compared with $30.4 million, or $236.95 per diluted share, for the 2021 second quarter. Net income for the first half of 2022 was $56.9 million, or $445.33 per diluted share, compared with $55.7 million, or $434.39 per diluted share, for the six months ended June 30, 2021.
Balance Sheet
At June 30, 2022, net loans increased to $5.78 billion from $5.37 billion at December 31, 2021. The Bank’s deposits rose to $9.46 billion at the end of the 2022 second quarter from $9.24 billion at December 31, 2021.
Non-interest-bearing deposits represented 37.9% of total deposits at June 30, 2022, versus 38.4% of total deposits at December 31, 2021. Total assets increased to $11.73 billion at the close of the 2022 second quarter from $11.44 billion at December 31, 2021.
At June 30, 2022, Farmers & Merchants Bank’s total risk-based capital ratio was 17.07%; its tier 1 risk-based capital ratio was 16.13%, with a common equity tier 1 capital ratio of 16.13%, and a tier 1 leverage ratio of 10.94%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.
During the 2022 second quarter, the Bank repurchased 1,352 shares of its common stock at an average price of $8,184.60 per share, pursuant to a stock repurchase program announced in January 2022, under which the board of directors authorized the repurchase of up to $20 million of the Bank’s common stock. Year to date, the Bank repurchased a total of 1,661 shares of its common stock at an average price of $8,189.37 per share. To the extent the Bank repurchases additional shares under this program, which expires December 31, 2023, 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.
“F&M’s core performance measures continue to be strong, as we proceed into the second half of 2022,” said Daniel Walker, chief executive officer and chairman of the board. “We are particularly proud of our net loan growth during the first six months of this year, based, in part, on deep relationships with existing clients and our ability to serve new clients. While our nation and the communities we serve face economic headwinds, the Bank’s balance sheet remains strong. F&M stands ready and able to continue to serve the needs of our business and consumer clients as we have through many challenging business cycles during the past 114 years. As always, I thank our team for their hard work, dedication and for all they do for the Bank and for our growing base of valued clients.”
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 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, |
||||||||||
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||
| Interest and dividend income: | ||||||||||||
| Loans | $ |
57,048 |
$ |
62,291 |
$ |
112,767 |
|
$ |
122,564 |
|||
| Investment securities |
|
22,219 |
|
14,924 |
|
40,888 |
|
|
27,999 |
|||
| Investments in FHLB and FRB stock |
|
286 |
|
298 |
|
558 |
|
|
560 |
|||
| Interest-bearing deposits in financial institutions |
|
1,613 |
|
256 |
|
2,209 |
|
|
513 |
|||
| Total interest and dividend income |
|
81,166 |
|
77,769 |
|
156,422 |
|
|
151,636 |
|||
|
|
|
|
|||||||||
| Interest expense: |
|
|
|
|
||||||||
| Deposits |
|
2,042 |
|
2,253 |
|
4,029 |
|
|
4,747 |
|||
| Securities sold under repurchase agreements |
|
997 |
|
842 |
|
1,675 |
|
|
1,735 |
|||
| Total interest expense |
|
3,039 |
|
3,095 |
|
5,704 |
|
|
6,482 |
|||
| Net interest income |
|
78,127 |
|
74,674 |
|
150,718 |
|
|
145,154 |
|||
|
|
|
|
|||||||||
| Provision for loan losses |
|
- |
|
- |
|
(1,000 |
) |
|
2,000 |
|||
| Net interest income after provision for loan losses |
|
78,127 |
|
74,674 |
|
151,718 |
|
|
143,154 |
|||
|
|
|
|
|||||||||
| Non-interest income: |
|
|
|
|
||||||||
| Service charges on deposit accounts |
|
1,565 |
|
1,361 |
|
3,100 |
|
|
2,686 |
|||
| Card income |
|
1,074 |
|
835 |
|
2,044 |
|
|
1,408 |
|||
| Other income |
|
2,097 |
|
3,167 |
|
4,665 |
|
|
6,365 |
|||
| Total non-interest income |
|
4,736 |
|
5,363 |
|
9,809 |
|
|
10,459 |
|||
|
|
|
|
|||||||||
| Non-interest expense: |
|
|
|
|
||||||||
| Salaries and employee benefits |
|
29,437 |
|
26,852 |
|
58,547 |
|
|
54,730 |
|||
| FDIC and other insurance expense |
|
1,014 |
|
861 |
|
2,014 |
|
|
1,714 |
|||
| Occupancy expense |
|
3,853 |
|
3,444 |
|
7,401 |
|
|
6,698 |
|||
| Software and equipment expense |
|
3,771 |
|
3,449 |
|
7,413 |
|
|
6,984 |
|||
| Professional and legal services |
|
1,962 |
|
1,412 |
|
3,427 |
|
|
2,752 |
|||
| Marketing expense |
|
2,196 |
|
1,111 |
|
3,217 |
|
|
1,790 |
|||
| Other expense |
|
4,688 |
|
4,317 |
|
8,577 |
|
|
8,652 |
|||
| Total non-interest expense |
|
46,921 |
|
41,446 |
|
90,596 |
|
|
83,320 |
|||
| Income before income tax expense |
|
35,942 |
|
38,591 |
|
70,931 |
|
|
70,293 |
|||
|
|
|
|
|||||||||
| Income tax expense |
|
6,853 |
|
8,160 |
|
14,007 |
|
|
14,587 |
|||
|
|
|
|
|||||||||
| Net income | $ |
29,089 |
$ |
30,431 |
$ |
56,924 |
|
$ |
55,706 |
|||
|
|
|
|
|||||||||
| Basic earnings per common share | $ |
233.52 |
$ |
240.92 |
$ |
455.13 |
|
$ |
440.51 |
|||
| Diluted earnings per common share | $ |
228.51 |
$ |
236.95 |
$ |
445.33 |
|
$ |
434.39 |
|||
| Basic weighted-average shares outstanding |
|
124,566 |
|
126,309 |
|
125,071 |
|
|
126,457 |
|||
| Diluted weighted-average shares outstanding |
|
127,297 |
|
128,424 |
|
127,823 |
|
|
128,239 |
|||
| FARMERS & MERCHANTS BANK OF LONG BEACH | ||||||||
| Balance Sheets (Unaudited) | ||||||||
| (In thousands, except share and per share data) | ||||||||
| June 30, 2022 | Dec. 31, 2021 | |||||||
| Assets | ||||||||
| Cash and due from banks: | ||||||||
| Noninterest-bearing balances | $ | 78,412 | $ | 49,025 | ||||
| Interest-bearing balances | 417,706 | 1,252,646 | ||||||
| Total cash and due from banks | 496,118 | 1,301,671 | ||||||
| Securities available-for-sale, at fair value | 122,565 | 139,947 | ||||||
| Securities held-to-maturity, at amortized cost | 5,027,557 | 4,366,821 | ||||||
| Loans held for sale | - | 9,430 | ||||||
| Gross loans | 5,862,844 | 5,453,279 | ||||||
| Allowance for loan losses | (71,801 | ) | (72,880 | ) | ||||
| Unamortized deferred loan fees, net | (8,873 | ) | (8,650 | ) | ||||
| Loans, net | 5,782,170 | 5,371,749 | ||||||
| Other real estate owned, net | 966 | 966 | ||||||
| Investments in FHLB and FRB stock, at cost | 19,991 | 20,031 | ||||||
| Bank premises and equipment, net | 114,616 | 115,827 | ||||||
| Deferred tax assets, net | 28,495 | 27,939 | ||||||
| Other assets | 139,483 | 83,879 | ||||||
| Total assets | $ | 11,731,961 | $ | 11,438,260 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing demand deposits | $ | 3,588,427 | $ | 3,552,248 | ||||
| Interest-bearing demand deposits | 2,410,227 | 2,187,998 | ||||||
| Savings and money market savings | 2,776,544 | 2,755,862 | ||||||
| Time deposits | 686,669 | 745,382 | ||||||
| Total deposits | 9,461,867 | 9,241,490 | ||||||
| Securities sold under repurchase agreements | 905,927 | 916,672 | ||||||
| Other liabilities | 88,523 | 38,536 | ||||||
| Total liabilities | 10,456,317 | 10,196,698 | ||||||
| Stockholders' Equity: | ||||||||
| Common Stock, par value $20; authorized 250,000 | ||||||||
| 124,276 and 125,628 shares issued and outstanding | ||||||||
| at June 30, 2022 and December 31, 2021, respectively | 2,485 | 2,513 | ||||||
| Additional paid-in capital | 82,196 | 89,972 | ||||||
| Retained earnings | 1,197,586 | 1,147,661 | ||||||
| Accumulated other comprehensive (loss) income | (6,623 | ) | 1,416 | |||||
| Total stockholders' equity | 1,275,644 | 1,241,562 | ||||||
| Total liabilities and stockholders' equity | $ | 11,731,961 | $ | 11,438,260 | ||||
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Contacts
John Hinrichs
Executive Vice President
562-437-0011, ext. 4835
Roger Pondel
PondelWilkinson Inc.
Investor Relations
310-279-5980
investor@pondel.com
