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Farmers & Merchants Bank of Long Beach Reports 2022 Fourth-Quarter and Full-Year Results

Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQX: FMBL) today reported financial results for the fourth quarter and full year ended December 31, 2022.

“Farmers & Merchants Bank of Long Beach maintained its financial strength in 2022, a year in which our nation experienced economic challenges, including persistent high inflation and a rapid acceleration in interest rates,” said Henry Walker, president. “Throughout the year, we remained true to our core of serving our business and consumer clients with a wide, competitive suite of products and the exceptional service for which the Bank has become known for more than a century. Net loan growth for 2022 was up sharply, and again we finished the year with capital ratios far exceeding minimum requirements.”

Income Statement

For the 2022 fourth quarter, total interest and dividend income rose to $95.9 million, from $76.0 million in the fourth quarter of 2021. Total interest and dividend income for the year ended December 31, 2022, increased to $340.3 million, from $307.3 million reported for 2021.

Interest expense for the 2022 fourth quarter increased to $18.6 million, from $2.8 million in the same period a year ago. Interest expense for the full year 2022 was $31.2 million, versus $12.2 million in 2021.

The Bank’s net interest income before loan loss provision for the 2022 fourth quarter advanced to $77.3 million, from $73.3 million for the 2021 fourth quarter. Net interest income before loan loss provision for the full year 2022 rose to $309.0 million, from $295.1 million in 2021.

Net interest margin for the 2022 fourth quarter was 2.40%, compared with 2.67% for the same period in 2021. F&M’s net interest margin was 2.70% for the full year 2022, versus 2.83% in the previous year.

The Bank had no loan loss provision in the fourth quarter of 2022, compared with a $1.0 million recapture of loan loss provision in the fourth quarter of 2021. For the full year 2022, the loan loss provision was $3.5 million, compared with no net loan loss provision in 2021. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.13% at December 31, 2022, compared with 1.34% at December 31, 2021.

Non-interest income decreased to $4.2 million for the 2022 fourth quarter, from $6.5 million for the comparable period last year. Non-interest income for the full year 2022 declined to $18.5 million, from $22.0 million in 2021.

Non-interest expense for the 2022 fourth quarter amounted to $50.6 million, compared with $45.2 million for the same period last year. Non-interest expense for the full year 2022 was $188.8 million, versus $172.6 million last year.

The Bank’s net income for the 2022 fourth quarter amounted to $25.4 million, or $200.86 per diluted share, compared with $29.0 million, or $226.02 per diluted share, for the 2021 fourth quarter. The Bank’s net income for the full year 2022 was $109.0 million, or $855.56 per diluted share, compared with $115.2 million, or $898.31 per diluted share, for 2021.

Balance Sheet

At December 31, 2022, net loans increased to $6.67 billion, from $5.37 billion at December 31, 2021. The Bank’s deposits decreased to $9.14 billion at the end of 2022, from $9.24 billion a year ago. Non-interest-bearing deposits represented 36.7% of total deposits at December 31, 2022, versus 38.4% of total deposits at the end of 2021. Total assets rose to a record $12.05 billion at the close of 2022 from $11.44 billion at December 31, 2021.

Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories at December 31, 2022, with a total risk-based capital ratio of 16.37%, a tier 1 risk-based capital ratio of 15.44%, a common equity tier 1 capital ratio of 15.44%, and a tier 1 leverage ratio of 10.91%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“With today’s high interest rate environment impacting all banks, we are focused on controlling costs throughout our organization, including rising interest expense, as the general economic environment poses lingering uncertainties,” said Daniel Walker, chief executive officer. “Our management team and Board remain optimistic about F&M’s long-term future, notwithstanding the headwinds that financial institutions are facing, with the Bank’s asset quality and loan pipeline remaining healthy. While, as expected, deposits fell modestly for the year because of higher-yielding market alternatives, our loyal clients and core deposit base continue to remain strong as we proceed into the new year.”

Stock Repurchase Program

During the 2022 fourth quarter, the Bank repurchased 604 shares of its common stock on the open market at an average price of $8,052.47 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. For the full year 2022, the Bank purchased a total of 2,400 shares of its common stock at an average price of $8,132.92 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 oblige 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 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

December 31,

 

Twelve Months Ended

December 31,

 

 

2022

 

2021

 

2022

 

2021

Interest and dividend income:
Loans

$

70,869

 

$

58,534

 

$

246,818

 

$

244,062

 

Investment securities

 

23,236

 

 

16,569

 

 

87,601

 

 

60,444

 

Investments in FHLB and FRB stock

 

389

 

 

347

 

 

1,226

 

 

1,206

 

Interest-bearing deposits in financial institutions

 

1,406

 

 

566

 

 

4,628

 

 

1,578

 

Total interest and dividend income

 

95,900

 

 

76,016

 

 

340,273

 

 

307,290

 

 

 

 

 

Interest expense:

 

 

 

 

Deposits

 

8,448

 

 

2,068

 

 

15,732

 

 

8,952

 

Securities sold under repurchase agreements

 

4,739

 

 

697

 

 

8,762

 

 

3,280

 

Borrowings

 

5,423

 

 

-

 

 

6,740

 

 

-

 

Total interest expense

 

18,610

 

 

2,765

 

 

31,234

 

 

12,232

 

 

 

 

 

Net interest income

 

77,290

 

 

73,251

 

 

309,039

 

 

295,058

 

 

 

 

 

Provision for loan losses

 

-

 

 

(1,000

)

 

3,500

 

 

-

 

 

 

 

 

Net interest income after provision for loan losses

 

77,290

 

 

74,251

 

 

305,539

 

 

295,058

 

 

 

 

 

Non-interest income:

 

 

 

 

Service charges on deposit accounts

 

1,719

 

 

1,489

 

 

6,451

 

 

5,602

 

Card income

 

242

 

 

1,644

 

 

2,543

 

 

4,007

 

Other income

 

2,194

 

 

3,330

 

 

9,536

 

 

12,421

 

Total non-interest income

 

4,155

 

 

6,463

 

 

18,530

 

 

22,030

 

 

 

 

 

Non-interest expense:

 

 

 

 

Salaries and employee benefits

 

31,841

 

 

28,614

 

 

119,978

 

 

111,046

 

FDIC and other insurance expense

 

1,237

 

 

969

 

 

4,306

 

 

3,614

 

Occupancy expense

 

3,923

 

 

3,639

 

 

15,354

 

 

14,004

 

Software and equipment expense

 

3,738

 

 

3,823

 

 

15,060

 

 

14,254

 

Professional and legal services

 

2,064

 

 

1,720

 

 

7,612

 

 

6,070

 

Marketing expense

 

1,672

 

 

1,438

 

 

6,886

 

 

4,957

 

Other expense

 

6,136

 

 

4,958

 

 

19,602

 

 

18,618

 

Total non-interest expense

 

50,611

 

 

45,161

 

 

188,798

 

 

172,563

 

 

 

 

 

Income before income tax expense

 

30,834

 

 

35,553

 

 

135,271

 

 

144,525

 

 

 

 

 

Income tax expense

 

5,390

 

 

6,575

 

 

26,269

 

 

29,320

 

 

 

 

 

Net income

$

25,444

 

$

28,978

 

$

109,002

 

$

115,205

 

 

 

 

 

Basic earnings per common share

$

206.12

 

$

230.66

 

$

876.17

 

$

913.60

 

Diluted earnings per common share

$

200.86

 

$

226.02

 

$

855.56

 

$

898.31

 

Basic weighted-average shares outstanding

123,442

 

125,628

 

124,407

 

126,100

 

Diluted weighted-average shares outstanding

126,672

 

128,206

 

127,404

 

128,246

 

 

FARMERS & MERCHANTS BANK OF LONG BEACH

Balance Sheets (Unaudited)

(In thousands, except share and per share data)

 

 

 

 

 

 

Dec. 31, 2022

Dec. 31, 2021

Assets
Cash and due from banks:
Noninterest-bearing balances

$

75,489

 

$

49,025

 

Interest-bearing balances

67,369

 

1,252,646

 

Total cash and due from banks

142,858

 

1,301,671

 

Federal funds sold
Securities available-for-sale, at fair value

123,919

 

139,947

 

Securities held-to-maturity, at amortized cost

4,789,522

 

4,366,821

 

Loans held for sale

-

 

9,430

 

Gross loans

6,765,391

 

5,453,279

 

Allowance for loan losses

(76,503

)

(72,880

)

Unamortized deferred loan fees, net

(14,429

)

(8,650

)

Loans, net

6,674,459

 

5,371,749

 

Other real estate owned, net

-

 

966

 

Investments in FHLB and FRB stock, at cost

27,088

 

20,031

 

Bank premises and equipment, net

118,228

 

115,827

 

Deferred tax assets, net

31,538

 

27,939

 

Other assets

147,132

 

83,879

 

Total assets

$

12,054,744

 

$

11,438,260

 

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

$

3,355,298

 

$

3,552,248

 

Interest-bearing demand deposits

2,212,509

 

2,187,998

 

Savings and money market savings

2,668,334

 

2,755,862

 

Time deposits

906,355

 

745,382

 

Total deposits

9,142,496

 

9,241,490

 

Securities sold under repurchase agreements

785,912

 

916,672

 

Borrowings

700,000

 

-

 

Other liabilities

113,254

 

38,536

 

Total liabilities

10,741,662

 

10,196,698

 

 
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000
123,228 and 125,628 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

2,465

 

2,513

 

Additional paid-in capital

177,433

 

89,972

 

Retained earnings

1,140,897

 

1,147,661

 

Accumulated other comprehensive (loss) income

(7,713

)

1,416

 

Total stockholders' equity

1,313,082

 

1,241,562

 

Total liabilities and stockholders' equity

$

12,054,744

 

$

11,438,260

 

 

Contacts

John Hinrichs

Executive Vice President

562-437-0011, ext. 5035



Roger Pondel

PondelWilkinson Inc.

Investor Relations

310-279-5965

investor@pondel.com

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