Farmers & Merchants Bank of Long Beach (OTCQX: FMBL) today reported financial results for the second quarter and six-months ended June 30, 2023.
“For 116 years, our first priority has always been, and continues to be, safeguarding our clients’ deposits through challenging economic times. F&M continues to accomplish this priority with capital levels far in excess of minimum regulatory requirements and a quality loan portfolio, which are testaments to our commitment to safety and soundness, as shown by our second quarter results,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “The current turbulence facing the banking sector is not the first and will not be the last. The rapid rise in interest rates over the prior year will challenge earnings for the banking sector and for Farmers & Merchants Bank in the near-term, but it will not challenge the safety of F&M for our depositors.”
Income Statement
For the three months ended June 30, 2023, total interest and dividend income rose to $102.3 million from $81.2 million in the second quarter of 2022. Total interest and dividend income for the first half of 2023 increased to $199.6 million from $156.4 million reported for the first half of 2022.
Total interest expense for the 2023 second quarter was $37.3 million, compared with $3.0 million in the second quarter of 2022. Interest expense for the first half of 2023 was $63.7 million, versus $5.7 million reported for the corresponding period last year.
Net interest income for the 2023 second quarter was $65.1 million versus $78.1 million for the second quarter of 2022. Net interest income for the first half of 2023 was $135.9 million, compared with $150.7 million for the six months ended June 30, 2022.
Net interest margin was 1.93% for the 2023 second quarter, versus 2.76% in the 2022 second quarter. Net interest margin was 2.31% for the first half of 2023, compared with 2.69% for the same period in 2022.
There was no provision for credit losses for the 2023 and 2022 second quarters or for the first half of 2023. For the first half of 2022, the Bank recorded a $1.0 million recapture of provision for credit losses.
Total non-interest income was $4.4 million for the 2023 second quarter, compared with $4.7 million for the same period a year ago. In the first half of 2023, total non-interest income was $8.2 million, compared with $9.8 million for the six months ended June 30, 2022.
Total non-interest expense for the 2023 second quarter was $50.8 million, compared with $46.9 million for the same period last year. Non-interest expense for the first half of 2023 was $99.1 million, compared with $90.6 million for the first half of 2022.
Net income for the 2023 second quarter was $18.1 million, or $143.69 per diluted share, compared with $29.1 million, or $228.51 per diluted share, for the 2022 second quarter. Net income for the first half of 2023 was $39.8 million, or $314.54 per diluted share, compared with $56.9 million, or $445.33 per diluted share, for the six months ended June 30, 2022.
Balance Sheet
At June 30, 2023, gross loans amounted to $6.82 billion, approximately equal to that at December 31, 2022, of $6.77 billion. The Bank’s allowance for credit losses was $98.9 million, or 1.45% of loans held-for-investment at June 30, 2023, compared with $76.5 million, or 1.13% of loans, held-for-investment at December 31, 2022.
The Bank’s deposits were $8.89 billion at the end of the 2023 second quarter, compared with $9.14 billion at December 31, 2022.
Non-interest-bearing deposits represented 34.7% of total deposits at June 30, 2023, versus 36.7% of total deposits at December 31, 2022.
Total assets increased to $12.27 billion at the close of the 2023 second quarter from $12.05 billion at December 31, 2022.
At June 30, 2023, Farmers & Merchants Bank’s total risk-based capital ratio was 16.93%; its tier 1 risk-based capital ratio was 15.68%, with a common equity tier 1 capital ratio of 15.68%, and a tier 1 leverage ratio of 10.86%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.
“As we move through 2023 and start to focus on 2024, we look for opportunities in the marketplace resulting from the disruption caused by the unprecedented interest rate increases, and we are finding it in strong customer growth,” said Daniel Walker, chief executive officer and chairman of the board. “F&M intends to emerge as an even more robust bank, as we have in prior periods of economic turbulence since our founding in 1907.”
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 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.
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FARMERS & MERCHANTS BANK OF LONG BEACH
Income Statements (Unaudited)
(In thousands, except per share data)
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|
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|
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|
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|
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Three Months Ended June 30, |
|
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Six Months Ended June 30, |
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest and dividend income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans |
$ |
74,632
|
|
|
$ |
57,048
|
|
|
$ |
147,107
|
|
|
$ |
112,767
|
|
| Investment securities |
|
22,345
|
|
|
|
22,219
|
|
|
|
45,158
|
|
|
|
40,888
|
|
| Investments in FHLB and FRB stock |
|
414
|
|
|
|
286
|
|
|
|
814
|
|
|
|
558
|
|
| Interest-bearing deposits in financial institutions |
|
4,957
|
|
|
|
1,613
|
|
|
|
6,557
|
|
|
|
2,209
|
|
| Total interest and dividend income |
|
102,348
|
|
|
|
81,166
|
|
|
|
199,636
|
|
|
|
156,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits |
|
19,611
|
|
|
|
2,042
|
|
|
|
33,569
|
|
|
|
4,029
|
|
| Securities sold under repurchase agreements |
|
7,274
|
|
|
|
997
|
|
|
|
13,294
|
|
|
|
1,675
|
|
| Borrowings |
|
10,390
|
|
|
|
-
|
|
|
|
16,881
|
|
|
|
-
|
|
| Total interest expense |
|
37,275
|
|
|
|
3,039
|
|
|
|
63,744
|
|
|
|
5,704
|
|
| Net interest income |
|
65,073
|
|
|
|
78,127
|
|
|
|
135,892
|
|
|
|
150,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for credit losses |
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income after provision for credit losses |
|
65,073
|
|
|
|
78,127
|
|
|
|
135,892
|
|
|
|
151,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
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| Service charges on deposit accounts |
|
1,810
|
|
|
|
1,565
|
|
|
|
3,354
|
|
|
|
3,100
|
|
| Card income |
|
370
|
|
|
|
1,074
|
|
|
|
600
|
|
|
|
2,044
|
|
| Other income |
|
2,206
|
|
|
|
2,097
|
|
|
|
4,267
|
|
|
|
4,665
|
|
| Total non-interest income |
|
4,386
|
|
|
|
4,736
|
|
|
|
8,221
|
|
|
|
9,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Salaries and employee benefits |
|
30,915
|
|
|
|
29,437
|
|
|
|
62,708
|
|
|
|
58,547
|
|
| FDIC and other insurance expense |
|
1,846
|
|
|
|
1,014
|
|
|
|
3,604
|
|
|
|
2,014
|
|
| Occupancy expense |
|
3,711
|
|
|
|
3,853
|
|
|
|
7,538
|
|
|
|
7,401
|
|
| Software and equipment expense |
|
3,803
|
|
|
|
3,771
|
|
|
|
7,663
|
|
|
|
7,413
|
|
| Professional and legal services |
|
2,353
|
|
|
|
1,962
|
|
|
|
3,483
|
|
|
|
3,427
|
|
| Marketing expense |
|
2,669
|
|
|
|
2,196
|
|
|
|
3,551
|
|
|
|
3,217
|
|
| Other expense |
|
5,522
|
|
|
|
4,688
|
|
|
|
10,567
|
|
|
|
8,577
|
|
| Total non-interest expense |
|
50,819
|
|
|
|
46,921
|
|
|
|
99,114
|
|
|
|
90,596
|
|
| Income before income tax expense |
|
18,640
|
|
|
|
35,942
|
|
|
|
44,999
|
|
|
|
70,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax expense |
|
491
|
|
|
|
6,853
|
|
|
|
5,227
|
|
|
|
14,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
$ |
18,149
|
|
|
$ |
29,089
|
|
|
$ |
39,772
|
|
|
$ |
56,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per common share |
$ |
147.28
|
|
|
$ |
233.52
|
|
|
$ |
322.75
|
|
|
$ |
455.13
|
|
| Diluted earnings per common share |
$ |
143.69
|
|
|
$ |
228.51
|
|
|
$ |
314.54
|
|
|
$ |
445.33
|
|
| Basic weighted-average shares outstanding |
|
123,228
|
|
|
|
124,566
|
|
|
|
123,228
|
|
|
|
125,071
|
|
| Diluted weighted-average shares outstanding |
|
126,301
|
|
|
|
127,297
|
|
|
|
126,444
|
|
|
|
127,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
June 30, 2023 |
|
|
Dec. 31, 2022 |
|
|
|
|
|
|
| Assets |
|
|
|
|
|
| Cash and due from banks: |
|
|
|
|
|
| Noninterest-bearing balances |
$ |
70,537
|
|
|
$ |
75,489
|
|
| Interest-bearing balances |
|
487,076
|
|
|
|
67,369
|
|
| Total cash and due from banks |
|
557,613
|
|
|
|
142,858
|
|
| Securities available-for-sale, at fair value |
|
117,897
|
|
|
|
123,919
|
|
| Securities held-to-maturity, at amortized cost |
|
4,552,612
|
|
|
|
4,789,522
|
|
| Gross loans |
|
6,824,991
|
|
|
|
6,765,391
|
|
| Allowance for loan losses |
|
(98,861
|
)
|
|
|
(76,503
|
)
|
| Unamortized deferred loan fees, net |
|
(13,377
|
)
|
|
|
(14,429
|
)
|
| Loans, net |
|
6,712,753
|
|
|
|
6,674,459
|
|
| Investments in FHLB and FRB stock, at cost |
|
22,702
|
|
|
|
27,088
|
|
| Bank premises and equipment, net |
|
122,698
|
|
|
|
118,228
|
|
| Deferred tax assets, net |
|
43,453
|
|
|
|
31,538
|
|
| Other assets |
|
138,487
|
|
|
|
147,132
|
|
| Total assets |
$ |
12,268,215
|
|
|
$ |
12,054,744
|
|
|
|
|
|
|
|
| Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
| Deposits: |
|
|
|
|
|
| Noninterest-bearing demand deposits |
$ |
3,087,354
|
|
|
$ |
3,355,298
|
|
| Interest-bearing demand deposits |
|
2,049,638
|
|
|
|
2,212,509
|
|
| Savings and money market savings |
|
2,725,261
|
|
|
|
2,668,334
|
|
| Time deposits |
|
1,032,476
|
|
|
|
906,355
|
|
| Total deposits |
|
8,894,729
|
|
|
|
9,142,496
|
|
| Securities sold under repurchase agreements |
|
930,489
|
|
|
|
785,912
|
|
| Borrowings |
|
1,000,000
|
|
|
|
700,000
|
|
| Other liabilities |
|
118,129
|
|
|
|
113,254
|
|
| Total liabilities |
|
10,943,347
|
|
|
|
10,741,662
|
|
|
|
|
|
|
|
| Stockholders' Equity: |
|
|
|
|
|
| Common Stock, par value $20; authorized 250,000 shares; |
|
|
|
|
|
| 123,228 shares issued and outstanding at |
|
|
|
|
|
| June 30, 2023 and December 31, 2022 |
|
2,465
|
|
|
|
2,465
|
|
| Additional paid-in capital |
|
181,104
|
|
|
|
177,433
|
|
| Retained earnings |
|
1,148,270
|
|
|
|
1,140,897
|
|
| Accumulated other comprehensive loss |
|
(6,971
|
)
|
|
|
(7,713
|
)
|
| Total stockholders' equity |
|
1,324,868
|
|
|
|
1,313,082
|
|
| Total liabilities and stockholders' equity |
$ |
12,268,215
|
|
|
$ |
12,054,744
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230719982203/en/