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 |
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Income Statements (Unaudited) |
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(In thousands, except per share data) |
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|
|
|
|
|
|
|
|
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|
Three Months Ended
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|
Twelve Months Ended
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|
|
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 |
|
||||
|
|
|
|
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| 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 |
|
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FARMERS & MERCHANTS BANK OF LONG BEACH |
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Balance Sheets (Unaudited) |
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(In thousands, except share and per share data) |
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|
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|
Dec. 31, 2022 |
Dec. 31, 2021 |
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| 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 |
|
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View source version on businesswire.com: https://www.businesswire.com/news/home/20230123005129/en/
Contacts
John Hinrichs
Executive Vice President
562-437-0011, ext. 5035
Roger Pondel
PondelWilkinson Inc.
Investor Relations
310-279-5965
investor@pondel.com
