Farmers & Merchants Bank of Long Beach Reports 2022 Third Quarter Results
10/17/2022 | 08:11am EST
Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQX: FMBL) today reported financial results for the third quarter ended September 30, 2022.
“Farmers & Merchants Bank of Long Beach demonstrated its ongoing commitment to client relationships during the 2022 third quarter, as the banking sector faced a challenging external environment, characterized by the nation’s rapid rise in interest rates,” said Henry Walker, president. “We are responsively meeting the demands of our business and consumer clients, both on the lending side, as well as with new product offerings for savers. At the close of the third quarter, total assets, net loans and total deposits all increased from December 31, 2021, and capital ratios again far exceeded minimum requirements.”
For the 2022 third quarter, interest and dividend income increased to $88.0 million from $79.6 million in the 2021 third quarter. Interest and dividend income for the nine-month period ended September 30, 2022 rose to $244.4 million from $231.3 million for the same period in 2021.
Interest expense for the 2022 third quarter amounted to $6.9 million, versus $3.0 million a year ago,reflecting the higher interest rate environment, along with Bank borrowings, which are anticipated to continue in the months ahead to accommodate increased client lending needs. Interest expense for the nine-month period ended September 30, 2022 was $12.6 million, versus $9.5 million reported for the same period last year.
Net interest income before provision for loan losses for the 2022 third quarter advanced to $81.0 million from $76.7 million for the third quarter of 2021 and increased to $231.7 million for the first nine months of 2022 from $221.8 million for the same period in 2021.
Farmers & Merchants’ net interest margin for the 2022 third quarter was 2.83%, versus 2.90% for the 2021 third quarter. Net interest margin was 2.75% for the first nine months of 2022, versus 2.89% for the same period in 2021.
For the 2022 third quarter, the Bank recorded a $4.5 million provision for loan losses, compared with a $1.0 million recapture of loan loss provision in last year’s third quarter. The Bank’s provision for loan losses was $3.5 million for the first nine months of 2022, versus $1.0 million for the first nine months of 2021. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.18% at September 30, 2022, compared with 1.34% at December 31, 2021.
Non-interest income was $4.6 million for the 2022 third quarter, compared with $5.1 million in the third quarter a year ago. For the nine-month period ended September 30, 2022, non-interest income was $14.4 million, compared with $15.6 million for the same period in 2021.
Non-interest expense for the 2022 third quarter was $47.6 million, versus $44.1 million for the same period last year. Non-interest expense for the first nine months of 2022 was $138.2 million, compared with $127.4 million last year.
Net income for the 2022 third quarter was $26.6 million, or $209.64 per diluted share, compared with $30.5 million, or $238.07 per diluted share, in the year-ago period. The Bank’s net income for the first nine months of 2022 was $83.6 million, or $654.87 per diluted share, compared with $86.2 million, or $672.37 per diluted share, for the same period in 2021.
At September 30, 2022, net loans increased to $6.4 billion, from $5.4 billion at December 31, 2021. The Bank’s deposits rose to $9.4 billion at the end of the 2022 third quarter, from $9.2 billion at December 31, 2021. Noninterest-bearing deposits represented 38.5% of total deposits at September 30, 2022, versus 38.4% of total deposits at December 31, 2021. Total assets increased to $11.9 billion at September 30, 2022, from $11.4 billion at December 31, 2021.
At September 30, 2022, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 16.61%, a tier 1 risk-based capital ratio of 15.66%, a common equity tier 1 capital ratio of 15.66%, and a tier 1 leverage ratio of 11.11%. 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 third quarter, demonstrating its confidence in F&M’s long-term outlook, the Bank repurchased 444 shares of its common stock on the open market at an average price of $8,085.00 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 first nine months of 2022, the Bank purchased a total of 1,796 shares of its common stock at an average price of $8,159.98 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.
“The Bank’s long history of generating profits for our stockholders, while prudently managing risk, combined with our unwavering commitment to serving our clients during periods of economic stress, continue to serve F&M and all of its stakeholders well,” said Daniel Walker, chief executive officer and chairman of the board. “Our talented team and F&M’s sound fundamentals remain central to our performance, as we navigate the volatile rate environment and uncertainties that lay ahead.”
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.
In addition to the historical information contained herein, this press release may contain forward-looking statements about Farmers & Merchants Bank of Long Beach, including, but not limited to, statements about the Bank’s ability to navigate through the challenges of a volatile rate environment and economic uncertainties, anticipated Bank borrowings to accommodate increased client lending needs, as well as expectations regarding the amount of, timing, and methods for potential repurchases of its common stock. Readers of this press release should understand that such forward-looking statements are neither promises nor guarantees and are subject to various risks and uncertainties, many of which are beyond the Bank’s control. Such risks and uncertainties could cause actual results and actions to differ materially from those contemplated in such forward-looking statements and the Bank’s reported results should not be considered an indication of the Bank’s future performance. Factors that could cause or contribute to such differences include, but are not limited to, the adverse effects and negative impacts related to, or caused by the COVID-19 pandemic, credit, market, operational, liquidity and interest rate risks associated with the Bank’s business and operations, changes in interest rates, changes in general business and economic conditions, changes in banking laws and regulations, loan losses, increases in expenses, changes in rates charged on loans and earned on investments, accounting estimates and judgments, changes in rates on deposits, competition effects, the amount of non-interest income earned, as well as other factors. Given these factors, readers should not place undue reliance on any forward-looking statements, which reflect management’s opinions only as of the date hereof. Except as otherwise required by law, the Bank assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
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,
Interest and dividend income:
Investments in FHLB and FRB stock
Interest-bearing deposits in financial institutions
Total interest and dividend income
Securities sold under repurchase agreements
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Service charges on deposit accounts
Total non-interest income
Salaries and employee benefits
FDIC and other insurance expense
Software and equipment expense
Professional and legal services
Total non-interest expense
Income before income tax expense
Income tax expense
Basic earnings per common share
Diluted earnings per common share
Basic weighted-average shares outstanding
Diluted weighted-average shares outstanding
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
Sept. 30, 2022
Dec. 31, 2021
Cash and due from banks:
Total cash and due from banks
Securities available-for-sale, at fair value
Securities held-to-maturity, at amortized cost
Loans held for sale
Allowance for loan losses
Unamortized deferred loan fees, net
Other real estate owned, net
Investments in FHLB and FRB stock, at cost
Bank premises and equipment, net
Deferred tax assets, net
Liabilities and Stockholders' Equity
Noninterest-bearing demand deposits
Interest-bearing demand deposits
Savings and money market savings
Securities sold under repurchase agreements
Common Stock, par value $20; authorized 250,000 123,832 and 125,628 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively