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

Rhea-AI Summary

Farmers & Merchants Bank of Long Beach (FMBL) reported strong financial results for the fourth quarter and full year ending December 31, 2022. Total interest and dividend income rose to $95.9 million for Q4 and $340.3 million for the year, while net interest income before loan loss provision increased to $77.3 million in Q4 and $309.0 million for the year. Despite net income decreasing to $25.4 million in Q4, the bank's capital ratios remain strong, exceeding regulatory requirements. However, non-interest income fell to $4.2 million for Q4 and $18.5 million for the year. The bank repurchased shares under a stock buyback program, purchasing 2,400 shares at an average price of $8,132.92.

Positive

• Net loan growth increased significantly, totaling $6.67 billion, up from $5.37 billion in 2021.
• Total assets rose to a record $12.05 billion, compared to $11.44 billion in 2021.
• Total risk-based capital ratio at 16.37% and well-capitalized under regulatory standards.

Negative

• Non-interest income declined to $4.2 million in Q4, down from $6.5 million in 2021.
• Net income for 2022 decreased to $109.0 million from $115.2 million in 2021.
• Deposits fell to $9.14 billion from $9.24 billion year-over-year.

LONG BEACH, Calif.--(BUSINESS WIRE)-- 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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230123005129/en/

John Hinrichs

Executive Vice President

562-437-0011, ext. 5035



Roger Pondel

PondelWilkinson Inc.

Investor Relations

310-279-5965

investor@pondel.com

Source: Farmers & Merchants Bank of Long Beach

FAQ

What were the financial results of Farmers & Merchants Bank for Q4 2022?

In Q4 2022, Farmers & Merchants Bank reported total interest and dividend income of $95.9 million, with a net income of $25.4 million.

How did Farmers & Merchants Bank's net income in 2022 compare to 2021?

Net income for 2022 was $109.0 million, down from $115.2 million in 2021.

What is the current capital ratio for Farmers & Merchants Bank?

The total risk-based capital ratio is 16.37%, exceeding the minimum requirements for well-capitalized banks.

How much did Farmers & Merchants Bank's total assets increase in 2022?

Total assets rose to $12.05 billion in 2022, an increase from $11.44 billion in 2021.

What was the average price of shares repurchased by Farmers & Merchants Bank in 2022?

The bank repurchased shares at an average price of $8,132.92 per share during 2022.