--Board Authorizes Repurchase of Up to an
Additional $10 million of the Bank’s Common Stock--
Farmers & Merchants Bank of Long Beach (“F&M” or the
“Bank”) (OTCQX: FMBL) today reported financial results for the
second quarter ended June 30, 2024.
"F&M’s second quarter performance demonstrated the Bank’s
resilience and strategic management of resources amidst the
continued challenging external environment for regional banks,”
said W. Henry Walker, Chief Executive Officer. “We are staying true
to our core values, which include conservative lending policies and
maintaining a stable loan portfolio. At the close of the second
quarter, our balance sheet remains strong, and we are pleased to
report again that F&M’s capital ratios far exceeded all
regulatory requirements.
“We continue working actively to improve the return on our
investments and manage expenses, while meeting increased regulatory
demands, since F&M was categorized last year as a regional,
versus community, bank. Growth in lower cost deposits will
significantly help with the scaling of expenses and paying existing
borrowings, and, in turn, enhancing profitability over time.
Although the yield on our loan portfolio continues to improve, we
find that our HTM (Held-to-Maturity) securities portfolio continues
to exert downward pressure on earnings, as is the case with many
banks. Fortunately, both categories of F&M investments are of
superior quality, posing no risk to capital, and the Bank remains
safe and sound.”
Daniel Walker, F&M’s Executive Chairman of the Board, added,
“Our commitment to exceptional service remains a top priority, and
combined with F&M’s financial strength, is enabling us to
attract new clients. Showing confidence in F&M’s long-term
future, we are pleased that our Board has authorized the repurchase
of up to an additional $10 million of the Bank’s common stock,
following the $10 million repurchase authorization in January of
this year.”
Operating Results
For the second quarter of 2024, total interest and dividend
income rose to $108.7 million from $102.3 million for the second
quarter of 2023. Total interest and dividend income for the six
months ended June 30, 2024 increased to $217.3 million from $199.6
million reported for the six months ended June 30, 2023.
Total interest expense for the second quarter of 2024 was $51.6
million, compared with $37.3 million in the second quarter of 2023.
Interest expense for the six months ended June 30, 2024 was $102.8
million, compared to $63.7 million reported for the same period in
2023.
Net interest income before provision for credit losses for the
second quarter of 2024 was $57.1 million versus $65.1 million for
the second quarter of 2023. Net interest income for the six months
ended June 30, 2024 was $114.5 million, compared with $135.9
million for the six months ended June 30, 2023.
F&M’s net interest margin was 1.92% for the second quarter
of 2024, versus 2.19% in the second quarter of 2023. Net interest
margin was 1.92% for the six months ended June 30, 2024, compared
with 2.31% for the same period in 2023.
The Bank recorded a recapture of provision for credit losses of
$1.0 million in the second quarter of 2024 due to a reduced level
of unfunded loan commitments, compared with no net provision for
credit losses for the second quarter of 2023. For the six months
ended June 30, 2024, the Bank recorded a $3.5 million recapture of
provision for credit losses, compared with no net provision for
credit losses for the six months ended June 30, 2023.
Non-interest income was $10.6 million for the second quarter of
2024, compared with $4.4 million in the second quarter of 2023. For
the six months ended June 30, 2024, total non-interest income was
$18.8 million, compared with $8.2 million for the same period in
2023. The increase in non-interest income was due primarily to Visa
Inc. accepting the Bank’s tender of its approximately 30 thousand
shares of Visa Class B-1 common stock in exchange for a combination
of Visa Class B-2 common stock and Visa Class C common stock. As a
result of the exchange, the Bank marked its Visa Class C common
stock to fair value and recorded a gain of $6.3 million based on
the conversion and the closing price of Visa Class A common stock
on June 30, 2024.
Total non-interest expense for the second quarter of 2024 was
$49.8 million, compared with $50.8 million in the second quarter of
2023. Non-interest expense for the six months ended June 30, 2024
was $99.8 million, compared with $99.1 million for the six months
ended June 30, 2023.
Net income for the second quarter of 2024 was $13.5 million, or
$107.86 per diluted share, compared with $18.1 million, or $143.69
per diluted share, for the second quarter of 2023. Net income for
the six months ended June 30, 2024 was $26.5 million, or $210.54
per diluted share, compared with $39.8 million, or $314.54 per
diluted share, for the six months ended June 30, 2023.
Balance Sheet
Gross loans were $6.51 billion as of June 30, 2024, compared
with $6.76 billion at December 31, 2023. The Bank’s allowance for
loan losses totaled $97.5 million, or 1.50% of loans
held-for-investment at June 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 $8.81 billion at June 30, 2024,
compared with $8.67 billion at December 31, 2023.
Noninterest-bearing deposits represented 32.0% of total deposits at
June 30, 2024, versus 33.2% of total deposits at December 31, 2023.
Securities sold under repurchase agreements grew to $926.2 million
at June 30, 2024, from $909.4 million at December 31, 2023.
Borrowings were $1.0 billion as of June 30, 2024 and December 31,
2023.
Total assets were $12.19 billion as of June 30, 2024 compared
with $12.04 billion at December 31, 2023. Total stockholders’
equity was $1.36 billion at June 30, 2024.
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 18.26%; its tier 1 risk-based capital
ratio was 17.00%, with a common equity tier 1 capital ratio of
17.00%, and a tier 1 leverage ratio of 11.21%, as of June 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 first half of 2024, the Bank repurchased 1,824 shares
of its common stock on the open market at an average repurchase
price of $4,796.46 per share, pursuant to the stock repurchase
program announced in January 2024, under which the board of
directors authorized the repurchase of up to $10 million of the
Bank’s common stock, which expires December 31, 2024.
As noted above, the Board authorized the repurchase of up to an
additional $10 million of the Bank’s common stock from time to time
through May 31, 2025. Under the stock repurchase 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 repurchases at any time and
anticipates that any such repurchases will be funded from existing
cash and cash equivalents or future cash flow. The new 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 June 30, Six Months Ended June
30,
2024
2023
2024
2023
Interest and dividend income: Loans
$
74,025
$
74,632
$
149,510
$
147,107
Investment securities
19,703
22,345
40,074
45,158
Investments in FHLB and FRB stock
460
414
999
814
Interest-bearing deposits in financial institutions
14,475
4,957
26,716
6,557
Total interest and dividend income
108,663
102,348
217,299
199,636
Interest expense: Deposits
29,319
19,611
56,778
33,569
Securities sold under repurchase agreements
9,483
7,274
19,093
13,294
Borrowings
12,767
10,390
26,890
16,881
Total interest expense
51,569
37,275
102,761
63,744
Net interest income before provision for credit losses
57,094
65,073
114,538
135,892
Provision for credit losses Loans
-
-
(1,500
)
-
Investment securities
-
-
-
100
Reserve for unfunded loan commitments
(1,000
)
-
(2,000
)
(100
)
Total provision for credit losses
(1,000
)
-
(3,500
)
-
Net interest income after provision for credit losses
58,094
65,073
118,038
135,892
Non-interest income: Service charges on deposit
accounts
1,877
1,810
3,686
3,354
Card income
214
370
439
600
Other income
8,473
2,206
14,682
4,267
Total non-interest income
10,564
4,386
18,807
8,221
Non-interest expense: Salaries and employee benefits
30,974
30,915
61,751
62,708
FDIC and other insurance expense
2,637
1,846
5,511
3,604
Occupancy expense
3,909
3,711
7,799
7,538
Software and equipment expense
4,468
3,803
8,731
7,663
Other real estate owned expense
212
-
249
-
Professional and legal services
3,102
2,353
5,597
3,483
Marketing expense
919
2,669
1,957
3,551
Other expense
3,533
5,522
8,240
10,567
Total non-interest expense
49,754
50,819
99,835
99,114
Income before income tax expense
18,904
18,640
37,010
44,999
Income tax expense
5,370
491
10,474
5,227
Net income
$
13,534
$
18,149
$
26,536
$
39,772
Basic earnings per common share
$
111.12
$
147.28
$
217.01
$
322.75
Diluted earnings per common share
$
107.86
$
143.69
$
210.54
$
314.54
Basic weighted-average shares outstanding
121,792
123,228
122,282
123,228
Diluted weighted-average shares outstanding
125,481
126,301
126,038
126,444
FARMERS & MERCHANTS BANK
OF LONG BEACH
Balance Sheets
(Unaudited)
(In thousands, except share
and per share data)
Jun. 30, 2024 Dec. 31, 2023
Assets Cash and due from banks: Noninterest-bearing balances
$
66,258
$
74,595
Interest-bearing balances
1,246,277
548,874
Total cash and due from banks
1,312,535
623,469
Securities available-for-sale, at fair value
98,181
115,883
Securities held-to-maturity, at amortized cost
4,029,122
4,301,060
Loans held for sale
460
-
Gross loans
6,506,539
6,756,207
Allowance for loan losses
(97,510
)
(97,900
)
Unamortized deferred loan fees, net
(9,156
)
(11,469
)
Loans, net
6,399,873
6,646,838
Other real estate owned, net
2,929
-
Investments in FHLB and FRB stock, at cost
22,740
22,798
Bank premises and equipment, net
124,634
125,929
Deferred tax assets, net
44,456
45,723
Other assets
158,152
154,154
Total assets
$
12,193,082
$
12,035,854
Liabilities and Stockholders' Equity
Liabilities: Deposits: Noninterest-bearing demand deposits
$
2,820,940
$
2,880,315
Interest-bearing demand deposits
2,267,720
2,069,275
Savings and money market savings
2,675,284
2,661,312
Time deposits
1,049,341
1,059,166
Total deposits
8,813,285
8,670,068
Securities sold under repurchase agreements
926,151
909,376
Borrowings
1,000,000
1,000,000
Other liabilities
92,926
104,965
Total liabilities
10,832,362
10,684,409
Stockholders' Equity: Common Stock, par value $20;
authorized 250,000 shares; 123,969 and 123,135 shares issued and
outstanding at June 30, 2024 and December 31, 2023, respectively
2,479
2,463
Additional paid-in capital
174,863
184,483
Retained earnings
1,189,629
1,169,759
Accumulated other comprehensive loss
(6,251
)
(5,260
)
Total stockholders' equity
1,360,720
1,351,445
Total liabilities and stockholders' equity
$
12,193,082
$
12,035,854
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Kevin Tiber President 562 499-4829
Roger Pondel PondelWilkinson Inc. Investor Relations
310-279-5980 investor@pondel.com