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

Rhea-AI Summary

Farmers & Merchants Bank of Long Beach reports financial results for Q2 2023, with total interest and dividend income rising to $102.3 million from $81.2 million in Q2 2022. Net interest income for Q2 2023 was $65.1 million compared to $78.1 million in Q2 2022. Net income for Q2 2023 was $18.1 million compared to $29.1 million in Q2 2022. Gross loans remained stable at $6.82 billion. Deposits decreased to $8.89 billion from $9.14 billion. Total assets increased to $12.27 billion.

Positive

• Total interest and dividend income rose to $102.3 million in Q2 2023, an increase of 26% compared to Q2 2022. Net interest income decreased by 16% to $65.1 million in Q2 2023. Gross loans remained stable at $6.82 billion. Total assets increased to $12.27 billion.

Negative

• Net income decreased by 38% to $18.1 million in Q2 2023 compared to Q2 2022. Deposits decreased to $8.89 billion from $9.14 billion.

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

FARMERS & MERCHANTS BANK OF LONG BEACH Income Statements (Unaudited) (In thousands, except per share data)
	Three Months Ended June 30,								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:
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

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

 

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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 was the net interest income for Q2 2023?

The net interest income for Q2 2023 was $65.1 million.

What was the net income for Q2 2023?

The net income for Q2 2023 was $18.1 million.

What was the gross loan amount at the end of Q2 2023?

The gross loan amount at the end of Q2 2023 was $6.82 billion.

What were the total assets at the end of Q2 2023?

The total assets at the end of Q2 2023 were $12.27 billion.

What were the deposits at the end of Q2 2023?

The deposits at the end of Q2 2023 were $8.89 billion.