Farmers & Merchants Bank of Long Beach Reports 2023 First-Quarter Results

Rhea-AI Summary

Farmers & Merchants Bank of Long Beach (FMBL) reported its Q1 2023 financial results, highlighting a net income of $21.6 million or $170.86 per diluted share, a decline from $27.8 million or $217.02 in Q1 2022. Interest and dividend income increased to $97.3 million from $75.3 million, while net interest income fell to $70.8 million, down from $72.6 million. The bank maintained a strong capital position with a total risk-based capital ratio of 16.63%, surpassing regulatory requirements. Deposits decreased to $8.97 billion, down from $9.14 billion, yet the bank attracted a 17% increase in new accounts year-over-year. The Q1 results reflect the challenges faced by the banking sector amid rising interest rates.

Positive

• Interest and dividend income increased to $97.3 million, up from $75.3 million year-over-year.
• Despite lower net income, the bank's capital ratios remain strong, with total risk-based capital ratio at 16.63%.
• New accounts grew by 17% compared to Q1 2022.

Negative

• Net income decreased to $21.6 million from $27.8 million year-over-year.
• Net interest income fell to $70.8 million, down from $72.6 million.

LONG BEACH, Calif.--(BUSINESS WIRE)-- Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQX: FMBL) today reported financial results for the first quarter ended March 31, 2023.

“The stability of F&M’s deposit base, the quality composition of our loan portfolio and conservative management disciplines are allowing the Bank to register profitable operations and maintain solid financial health,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “Amidst one of the banking sector’s most challenging and volatile external environments in recent history, F&M stood out among its peers during the first quarter of 2023 and remained well capitalized, far exceeding all regulatory requirements.”

Income Statement

For the three months ended March 31, 2023, interest and dividend income rose to $97.3 million from $75.3 million a year ago. Interest expense for the 2023 first quarter amounted to $26.5 million, compared with $2.7 million for the same period last year.

Net interest income for the 2023 first quarter was $70.8 million, versus $72.6 million for the first quarter of 2022. Net interest margin was 2.33% for the 2023 first quarter, compared with 2.60% for the same period last year.

There was no net provision for credit losses for the 2023 first quarter under the Current Expected Credit Losses (CECL) methodology. This compares with a recapture of provision for loan losses under the prior incurred loss methodology of $1.0 million for the 2022 first quarter.

Non-interest income was $3.8 million for the 2023 first quarter, compared with $5.1 million in the 2022 first quarter. Non-interest expense for the 2023 first quarter was $48.3 million, versus $43.7 million for the same period last year.

The Bank registered net income for the 2023 first quarter of $21.6 million, or $170.86 per diluted share, compared with $27.8 million, or $217.02 per diluted share, for the 2022 first quarter.

Balance Sheet

At March 31, 2023, gross loans totaled $6.83 billion, compared with $6.77 billion at December 31, 2022. The Bank adopted the CECL accounting standard effective as of January 1, 2023 and recognized a Day 1 adjustment of its Allowance for Credit Losses (ACL) for loans of $22.5 million. The Bank’s allowance for credit losses was $99.0 million or 1.45% of loans held-for-investment at March 31, 2023, compared with $76.5 million or 1.13% of loans held-for-investment at December 31, 2022.

The Bank’s total deposits were $8.97 billion at the end of the 2023 first quarter, versus $9.14 billion at December 31, 2022. Non-interest-bearing deposits represented 35.3% of total deposits at March 31, 2023, versus 36.7% of total deposits at the end of 2022. Total assets were $12.02 billion at the close of the 2023 first quarter, compared with $12.05 billion at December 31, 2022.

At March 31, 2023, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 16.63%, a tier 1 risk-based capital ratio of 15.38%, a common equity tier 1 capital ratio of 15.38%, and a tier 1 leverage ratio of 10.87%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“Remaining true to our core principles, F&M withstood the turbulence that reverberated throughout the banking sector during the first quarter,” said Daniel Walker, chief executive officer and chairman of the board. “Compared with most other regional and community banks, F&M’s total deposits were down only minimally from year-end, reflecting the loyalty of our core depositors and attracting new accounts, which were up 17% over the same quarter last year. The Bank also benefitted from its meticulous, conservative lending policies on quality assets, with no dependence on any one sector.

“While no bank or business is immune to the effects of the rapid interest rate escalation and its continuing impact on our nation’s economic health, F&M has weathered volatile times throughout its 116+ year history, always caring for and serving the needs of our business and consumer clients and supporting the growing number of communities in which we operate,” Walker added.

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 Mar. 31,
		2023			2022
Interest and dividend income:
Loans		$	72,475		$	55,719
Investment securities			22,813			18,669
Investments in FHLB and FRB stock			400			272
Interest-bearing deposits in financial institutions			1,600			596
Total interest and dividend income			97,288			75,256
Interest expense:
Deposits			13,958			1,987
Securities sold under repurchase agreements			6,020			678
Borrowings			6,491			-
Total interest expense			26,469			2,665
Net interest income			70,819			72,591
Provision for credit losses			-			(1,000	)
Net interest income after provision for credit losses			70,819			73,591
Non-interest income:
Service charges on deposit accounts			1,544			1,535
Card income			230			970
Other income			2,061			2,568
Total non-interest income			3,835			5,073
Non-interest expense:
Salaries and employee benefits			31,793			29,110
FDIC and other insurance expense			1,758			1,000
Occupancy expense			3,827			3,548
Software and equipment expense			3,860			3,642
Professional and legal services			1,130			1,465
Marketing expense			882			1,021
Other expense			5,045			3,889
Total non-interest expense			48,295			43,675
Income before income tax expense			26,359			34,989
Income tax expense			4,736			7,154
Net income		$	21,623		$	27,835
Basic earnings per common share		$	175.47		$	221.65
Diluted earnings per common share		$	170.86		$	217.02
Basic weighted-average shares outstanding			123,228			125,581
Diluted weighted-average shares outstanding			126,552			128,256

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
			Mar. 31, 2023				Dec. 31, 2022
Assets
Cash and due from banks:
Noninterest-bearing balances		$	87,687			$	75,489
Interest-bearing balances			99,326				67,369
Total cash and due from banks			187,013				142,858
Securities available-for-sale, at fair value			121,014				123,919
Securities held-to-maturity, at amortized cost			4,673,107				4,789,522
Gross loans			6,833,148				6,765,391
Allowance for loan losses			(99,046	)			(76,503	)
Unamortized deferred loan fees, net			(14,916	)			(14,429	)
Loans, net			6,719,186				6,674,459
Investments in FHLB and FRB stock, at cost			22,647				27,088
Bank premises and equipment, net			120,114				118,228
Deferred tax assets, net			42,784				31,538
Other assets			135,750				147,132
Total assets		$	12,021,615			$	12,054,744
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits		$	3,161,715			$	3,355,298
Interest-bearing demand deposits			2,136,502				2,212,509
Savings and money market savings			2,676,094				2,668,334
Time deposits			994,836				906,355
Total deposits			8,969,147				9,142,496
Securities sold under repurchase agreements			822,379				785,912
Borrowings			800,000				700,000
Other liabilities			120,921				113,254
Total liabilities			10,712,447				10,741,662
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000 shares; 123,228 shares issued and outstanding at March 31, 2023 and December 31, 2022			2,465				2,465
Additional paid-in capital			179,269				177,433
Retained earnings			1,133,571				1,140,897
Accumulated other comprehensive income			(6,137	)			(7,713	)
Total stockholders' equity			1,309,168				1,313,082
Total liabilities and stockholders' equity		$	12,021,615			$	12,054,744

 

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John Hinrichs

Executive Vice President

562-437-0011, ext. 4835

Roger Pondel

PondelWilkinson Inc.

Investor Relations

310-279-5980

investor@pondel.com

Source: Farmers & Merchants Bank of Long Beach

FAQ

What are the financial results for Farmers & Merchants Bank of Long Beach for Q1 2023?

FMBL reported a net income of $21.6 million, or $170.86 per diluted share, a decrease from $27.8 million, or $217.02 per diluted share in Q1 2022.

How did interest income change for FMBL in Q1 2023?

Interest and dividend income increased to $97.3 million in Q1 2023, up from $75.3 million in the same quarter of the previous year.

What was the total deposit amount for FMBL at the end of Q1 2023?

FMBL reported total deposits of $8.97 billion at the end of Q1 2023, down from $9.14 billion at the end of December 2022.

What is the current capital position of Farmers & Merchants Bank?

FMBL remains well-capitalized with a total risk-based capital ratio of 16.63%, significantly above regulatory requirements.