Farmers & Merchants Bank of Long Beach Reports 2020 Fourth-Quarter and Full-Year Results

Rhea-AI Summary

Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) reported robust financial results for Q4 and 2020, achieving record highs in deposits, loans, and total assets. Total interest and dividend income rose to $71.6 million in Q4, while net interest income before loan loss provision increased to $67.2 million. The Bank recorded a $2 million provision for loan losses in Q4 2020, compared to none in Q4 2019. Net income for 2020 was $79.8 million, with diluted earnings per share at $622.74. The Bank remains well-capitalized, with strong ratios exceeding regulatory requirements.

Positive

• Record total deposits of $7.62 billion, up from $5.83 billion YoY.
• Net loans increased to $5.33 billion, compared to $4.34 billion YoY.
• Total assets rose to $9.87 billion, from $7.61 billion YoY.
• Net interest income before loan loss provision increased to $261.4 million for 2020.

Negative

• Net income decreased to $79.8 million in 2020, down from $85.6 million in 2019.
• Net interest margin declined to 2.99% from 3.43% YoY.
• Loan loss provision significantly increased to $10.5 million in 2020, from $250,000 in 2019.

Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQB: FMBL) today reported financial results for the fourth quarter and full year ended December 31, 2020.

“Farmers & Merchants Bank finished 2020 in a position of strength, with total deposits, net loans and total assets all achieving record highs,” said Henry Walker, president. “In a year and business environment characterized by the unprecedented challenges of the pandemic, we remained focused on maintaining our strong capital position, our continuous pursuit of enhancing operating efficiencies and our legacy of providing clients with a superior banking experience.”

Income Statement

For the 2020 fourth quarter, total interest and dividend income rose to $71.6 million, from $70.1 million in the fourth quarter of 2019. Total interest and dividend income for the year ended December 31, 2020 increased to $286.3 million, from $280.5 million reported for 2019.

Interest expense for the 2020 fourth quarter was $4.4 million, compared with $8.4 million in the same period a year ago. Interest expense for 2020 was $24.9 million, versus $33.0 million in 2019.

Farmers & Merchants’ net interest income before loan loss provision for the 2020 fourth quarter advanced to $67.2 million, from $61.7 million for the 2019 fourth quarter. Net interest income before loan loss provision for 2020 rose to $261.4 million, from $247.5 million in 2019.

Net interest margin for the 2020 fourth quarter was 2.83%, compared with 3.34% for the same period in 2019. Farmers & Merchants’ net interest margin was 2.99% for the year ended December 31, 2020, versus 3.43% in the previous year.

The Bank recorded a $2.0 million provision for loan losses in the 2020 fourth quarter, compared with no loan loss provision in the 2019 fourth quarter. For the full 2020 year, the loan loss provision was $10.5 million, versus $250,000 in 2019. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.34% at December 31, 2020, compared with 1.42% at December 31, 2019.

Non-interest income increased to $6.0 million for the 2020 fourth quarter, from $4.9 million for the comparable period last year. Non-interest income for 2020 rose to $20.5 million, from $19.3 million in 2019.

Non-interest expense for the 2020 fourth quarter amounted to $45.2 million, compared with $44.6 million for the same period last year. Non-interest expense for the year ended December 31, 2020 was $175.2 million, versus $163.7 million last year.

The Bank’s net income for the 2020 fourth quarter increased to $21.4 million, or $167.49 per diluted share, from $18.7 million, or $144.99 per diluted share, for the 2019 fourth quarter. The Bank’s net income for 2020 was $79.8 million, or $622.74 per diluted share, compared with $85.6 million, or $661.23 per diluted share, for 2019.

Balance Sheet

At December 31, 2020, net loans increased to $5.33 billion, from $4.34 billion at December 31, 2019. The Bank’s deposits grew to $7.62 billion at the end of 2020, from $5.83 billion a year ago. Non-interest-bearing deposits represented 37.9% of total deposits at December 31, 2020, versus 36.6% of total deposits at the end of 2019. Total assets advanced to $9.87 billion at the close of 2020 from $7.61 billion at December 31, 2019.

At December 31, 2020, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 19.57%, a tier 1 risk-based capital ratio of 18.33%, a common equity tier 1 capital ratio of 18.33%, and a tier 1 leverage ratio of 12.41%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“While the economic environment remains uncertain, our robust balance sheet demonstrates Farmers & Merchants’ commitment to long-term relationships, as well as our ability to attract new clients in their flight to financial safety,” said Daniel Walker, chief executive officer and chairman of the board. “Throughout 2020, we worked closely with our clients in each of the communities we serve, in some cases, helping their businesses survive. For F&M, 2020 was a financially rewarding year, setting the stage for a solid start in 2021. I am extremely proud of the outstanding job our entire team has shown, with tremendous resiliency during the ongoing pandemic to keep our clients safe and provide the service and attention they have come to expect.”

During 2020, the Bank repurchased 1,911 shares of its common stock at an average price of $6,173.58 per share, pursuant to a stock repurchase program announced in April 2020, under which the board of directors authorized the repurchase of up to $20 million of the Bank’s common stock. To the extent the Bank repurchases additional shares under this program, which expires December 31, 2021, 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 obligate 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 25 branches across Orange County, Long Beach, the South Bay and 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 consumer 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 Bank’s website, www.fmb.com.

(Tables Follow)

FARMERS & MERCHANTS BANK OF LONG BEACH
Income Statements (Unaudited)
(In thousands, except per share data)
	Three Months Ended Dec. 31,						Twelve Months Ended Dec. 31,
	2020			2019			2020			2019
Interest and dividend income:
Loans	$	58,780		$	51,449		$	226,663		$	207,294
Investment securities		12,345			17,277			57,181			68,829
Investments in FHLB and FRB stock		261			348			1,040			1,404
Interest-bearing deposits in financial institutions		235			993			1,381			2,926
Total interest and dividend income		71,621			70,067			286,265			280,453
Interest expense:
Deposits		3,119			6,038			17,028			22,533
Securities sold under repurchase agreements		1,291			2,351			7,856			10,378
Other borrowings		-			2			-			54
Total interest expense		4,410			8,391			24,884			32,965
Net interest income		67,211			61,676			261,381			247,488
Provision for loan losses		2,000			-			10,500			250
Net interest income after provision for loan losses		65,211			61,676			250,881			247,238
Non-interest income:
Service charges on deposit accounts		1,271			1,507			5,193			6,584
Card income		1,057			1,047			3,370			3,618
Other real estate owned income		-			-			-			227
Other income		3,711			2,330			11,940			8,838
Total non-interest income		6,039			4,884			20,503			19,267
Non-interest expense:
Salaries and employee benefits		28,834			27,063			111,485			99,683
FDIC and other insurance expense		756			130			2,611			1,041
Occupancy expense		3,520			3,347			14,236			11,930
Software and equipment expense		3,535			3,727			14,046			14,234
Other real estate owned expense		17			1			34			85
Professional and legal services		1,589			1,843			6,009			7,154
Marketing expense		966			2,007			5,126			8,556
Other expense		5,969			6,440			21,647			21,046
Total non-interest expense		45,186			44,558			175,194			163,729
Income before income tax expense		26,064			22,002			96,190			102,776
Income tax expense		4,700			3,344			16,389			17,204
Net income	$	21,364		$	18,658		$	79,801		$	85,572
Basic earnings per common share	$	168.12		$	145.17		$	623.42		$	661.80
Diluted earnings per common share	$	167.49		$	144.99		$	622.74		$	661.23
Basic weighted-average shares outstanding		127,081			128,528			128,006			129,303
Diluted weighted-average shares outstanding		127,552			128,688			128,146			129,414

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
		Dec. 31, 2020			Dec. 31, 2019
Assets
Cash and due from banks:
Noninterest-bearing balances	$	72,109		$	64,556
Interest-bearing balances		939,566			54,309
Total cash and due from banks		1,011,675			118,865
Securities available-for-sale, at fair value		137,373			150,623
Securities held-to-maturity, at amortized cost		3,131,213			2,728,583
Loans held for sale		22,893			23,301
Gross loans		5,414,814			4,403,876
Allowance for loan losses		(72,267)			(62,489)
Unamortized deferred loan fees, net		(15,747)			(5,127)
Loans, net		5,326,800			4,336,260
Other real estate owned, net		966			-
Investments in FHLB and FRB stock, at cost		20,257			20,160
Bank premises and equipment, net		103,615			108,133
Deferred tax assets, net		26,489			22,213
Other assets		90,497			97,431
Total assets	$	9,871,778		$	7,605,569
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits	$	2,889,012		$	2,135,056
Interest-bearing demand deposits		1,788,133			1,302,726
Savings and money market savings		2,129,755			1,669,525
Time deposits		810,726			720,958
Total deposits		7,617,626			5,828,265
Securities sold under repurchase agreements		1,062,348			632,428
Other liabilities		47,962			61,996
Total liabilities		8,727,936			6,522,689
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000
126,617 and 128,528 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively		2,532			2,571
Additional paid-in capital		90,516			95,446
Retained earnings		1,047,949			983,867
Accumulated other comprehensive income		2,845			996
Total stockholders' equity		1,143,842			1,082,880
Total liabilities and stockholders' equity	$	9,871,778		$	7,605,569

 

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FAQ

What were the major financial results for Farmers & Merchants Bank in 2020?

Farmers & Merchants Bank reported total deposits of $7.62 billion, net loans of $5.33 billion, and total assets of $9.87 billion for 2020.

How did the net income of Farmers & Merchants Bank change in 2020?

The net income for 2020 decreased to $79.8 million, compared to $85.6 million in 2019.

What was the provision for loan losses for Farmers & Merchants Bank in Q4 2020?

The Bank recorded a $2 million provision for loan losses in Q4 2020, compared to none in Q4 2019.

How did the interest income of Farmers & Merchants Bank perform in 2020?

Total interest and dividend income increased to $286.3 million for 2020, up from $280.5 million in 2019.

What is the stock symbol for Farmers & Merchants Bank?

The stock symbol for Farmers & Merchants Bank is FMBL.