Farmers & Merchants Bank of Long Beach Reports 2024 Fourth Quarter and Full Year Results

Rhea-AI Summary

Farmers & Merchants Bank of Long Beach (FMBL) reported its Q4 and full-year 2024 financial results. The bank demonstrated financial strength despite challenging conditions, with all capital ratios exceeding regulatory requirements. During Q4, management sold $201 million of low-yielding securities and reinvested in higher-earning securities to enhance future performance.

Key financial highlights include: Q4 2024 net income of $4.0 million ($32.18 per diluted share), compared to $12.8 million in Q4 2023. Full-year 2024 net income was $44.9 million ($358.63 per diluted share), down from $70.0 million in 2023. Total assets reached $11.69 billion, with deposits rising to $8.77 billion. The bank's loan portfolio stood at $6.47 billion with a 1.50% allowance for loan losses.

The bank's capital position remains strong with a total risk-based capital ratio of 18.77%. During 2024, FMBL repurchased 3,066 shares for $15.4 million at an average price of $5,017.85 per share.

Positive

• Strong capital ratios well above regulatory requirements (18.77% total risk-based capital ratio vs 10% requirement)
• Deposits increased to $8.77 billion from $8.67 billion YoY
• Strategic portfolio repositioning improving yield from 2.24% to 4.31%
• Reduced borrowings by $500 million to $500 million

Negative

• Net income decreased to $44.9M in 2024 from $70.0M in 2023
• Q4 net income fell to $4.0M from $12.8M YoY
• Net interest margin declined to 2.00% in 2024 from 2.21% in 2023
• Gross loans decreased to $6.47B from $6.76B YoY
• $10.1M pre-tax loss from securities portfolio repositioning

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, 2024.

“Profitable operations were achieved for both the fourth quarter and full 2024 year, demonstrating the Bank’s financial strength, resilience to the challenging external banking environment, and dedication to prudent financial management,” said W. Henry Walker, Chief Executive Officer of F&M Bank. “At year-end, the Bank’s balance sheet remained strong, with all capital ratios far exceeding regulatory requirements.

“During the fourth quarter, the Board and management team took decisive action to enhance F&M’s future operating performance by selling low-yielding fixed-rate securities and deploying the proceeds into higher-earnings securities. Despite a one-time impact on 2024 earnings, the sale is expected to facilitate growth in net interest margin (NIM), return on assets (ROA), and net income.”

Daniel Walker, F&M’s Executive Chairman, added, “The decision to reposition F&M’s balance sheet, in addition to enhancing future operating performance, will benefit all of our stakeholders, including better aligning the Bank to meet the increasing lending needs of new and existing clients throughout the region.”

Operating Results

For the fourth quarter of 2024, total interest and dividend income amounted to $108.9 million versus $108.0 million in the fourth quarter of 2023. Total interest and dividend income for the year ended December 31, 2024, increased to $439.8 million from $415.5 million for the year ended December 31, 2023.

Total interest expense for the fourth quarter of 2024 was $46.5 million, compared with $45.7 million in the fourth quarter of 2023. Interest expense for the year ended December 31, 2024, was $202.6 million, versus $152.5 million last year.

Net interest income before provision for credit losses for both the fourth quarter of 2024 and fourth quarter of 2023 remained unchanged at $62.3 million. Net interest income before provision for credit losses for the year ended December 31, 2024, was $237.2 million, compared with $263.1 million for the year ended December 31, 2023.

F&M’s net interest margin was 2.14% for the 2024 fourth quarter, versus 2.08% in the fourth quarter of 2023. Net interest margin was 2.00% for the full 2024 year, compared with 2.21% in 2023.

For the fourth quarter of 2024, the Bank recorded a provision for credit losses of $600 thousand, compared to no net provision for credit losses for the fourth quarter of 2023. The Bank recorded a recapture of provision for credit losses of $6.6 million for the 2024 year, compared with a $3.6 million recapture of provision for credit losses for the same period in 2023.

Total non-interest income was $(3.8) million for the fourth quarter of 2024, compared with non-interest income of $4.2 million in the fourth quarter of 2023. The fourth quarter decrease in non-interest income was primarily due to the Bank’s investment securities portfolio repositioning in December 2024.

The Bank sold $136 million of qualified held-to-maturity securities and $65 million of available-for-sale securities consisting of lower-yielding securities resulting in a pre-tax loss of $10.1 million. The securities sold had an average yield of 2.24%. The Bank deployed the net proceeds into $200 million of higher-yielding short-term securities with an average yield of 4.31%. F&M anticipates that the transaction will be accretive to earnings, net interest margin and return on assets in future periods. For the year ended December 31, 2024, total non-interest income increased to $19.6 million from $16.4 million in 2023.

Total non-interest expense for the fourth quarter of 2024 was $51.5 million, compared with $49.8 million for the fourth quarter of 2023. Non-interest expense for the year ended December 31, 2024, was $200.0 million, compared with $201.2 million for the year ended December 31, 2023.

Fourth quarter 2024 net income was $4.0 million, or $32.18 per diluted share, compared with $12.8 million, or $101.61 per diluted share for the 2023 fourth quarter. The Bank’s full year 2024 net income was $44.9 million, or $358.63 per diluted share, compared with $70.0 million, or $553.79 per diluted share, last year.

Balance Sheet

Gross loans were $6.47 billion as of December 31, 2024, compared with $6.76 billion at December 31, 2023. The Bank’s allowance for loan losses totaled $96.6 million, or 1.50% of loans held-for-investment at December 31, 2024, compared with $97.9 million, or 1.45% of loans held-for-investment, at December 31, 2023.

The Bank’s total deposits rose to $8.77 billion at December 31, 2024, from $8.67 billion at December 31, 2023. Noninterest-bearing deposits represented 33.2% of total deposits at December 31, 2024, and December 31, 2023.

Securities sold under repurchase agreements increased to $991.9 million at December 31, 2024, from $909.4 million at December 31, 2023. Borrowings were $500.0 million at December 31, 2024, a decrease of $500.0 million from $1.0 billion at December 31, 2023.

Total assets at December 31, 2024, were $11.69 billion, compared with $12.04 billion at December 31, 2023. Total stockholders’ equity was $1.37 billion at December 31, 2024, up from $1.35 billion at December 31, 2023.

Capital

Capital ratios are the foundation of safety in all banks, and F&M continues to exceed most national and regional banks in this area, as well as exceeding regulatory capital requirements to meet the definition of a “well-capitalized” financial institution. The Bank’s total risk-based capital ratio was 18.77%; its tier 1 risk-based capital ratio was 17.52%, with a common equity tier 1 capital ratio of 17.52%, and a tier 1 leverage ratio of 11.42%, as of December 31, 2024. The minimum ratios for capital adequacy for a “well-capitalized” bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

Stock Repurchase Program

During the twelve months ended December 31, 2024, the Bank repurchased 3,066 shares of its common stock for $15.4 million on the open market at an average repurchase price of $5,017.85 per share. Under the stock purchase program, the Bank may purchase shares of its common stock through various means, including open market transactions and privately negotiated transactions, in each case, subject to applicable requirements and laws. To the extent the Bank repurchases shares, the number of shares repurchased and the timing of any repurchases will depend on a number of factors, including, but not limited to, stock price, trading volume, regulatory requirements, general business conditions and other factors. The Bank may choose to modify, suspend or discontinue such proposed purchases at any time and anticipates that any such repurchases will be funded from existing cash and cash equivalents or future cash flow. The stock repurchase program does not obligate the Bank to repurchase any specific number of shares in any particular period.

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 27 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.

Safe Harbor Statement

This press release contains forward-looking statements, including, but not limited to, improved operating performance, and improvements in NIM, ROA and net income, that are subject to various risks and uncertainties. Such statements that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursuant," "target," "continue," and similar expressions are intended to identify such forward-looking statements. Factors that could cause actual results to differ materially from management's expectations include fluctuation in market rates of interest, loan and deposit pricing, adverse changes in national and economic conditions, including conditions in the Bank’s specific market areas, among others. Forward-looking statements are made as of the date of this press release, and the Bank does not intend to update such statements except as required by law.

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,
		2024				2023				2024				2023
Interest and dividend income:
Loans		$	75,021			$	76,432			$	300,274			$	299,723
Investment securities			19,034				20,895				79,653				87,511
Investments in FHLB and FRB stock			459				443				1,914				1,672
Interest-bearing deposits in financial institutions			14,341				10,199				57,914				26,615
Total interest and dividend income			108,855				107,969				439,755				415,521
Interest expense:
Deposits			30,439				24,978				119,006				81,556
Securities sold under repurchase agreements			8,735				9,287				37,611				31,499
Borrowings			7,375				11,414				45,942				39,398
Total interest expense			46,549				45,679				202,559				152,453
Net interest income before provision for credit losses			62,306				62,290				237,196				263,068
Provision for credit losses
Loans			600				1,100				(2,500	)			(700	)
Investment securities			-				-				-				100
Reserve for unfunded loan commitments			-				(1,100	)			(4,100	)			(3,000	)
Total provision for credit losses			600				-				(6,600	)			(3,600	)
Net interest income after provision for credit losses			61,706				62,290				243,796				266,668
Non-interest income:
Service charges on deposit accounts			1,971				1,818				7,541				6,971
Other real estate owned income			1,318				-				1,318				-
Loss on sale of securities			(10,141	)			-				(10,141	)			-
Card income			187				315				852				1,272
Other income			2,886				2,018				20,000				8,204
Total non-interest income			(3,779	)			4,151				19,570				16,447
Non-interest expense:
Salaries and employee benefits			31,878				26,881				123,306				120,419
FDIC and other insurance expense			2,093				3,249				10,110				9,172
Occupancy expense			3,979				4,071				15,835				15,712
Software and equipment expense			4,475				4,471				17,662				16,025
Other real estate owned expense			38				-				370				-
Professional and legal services			1,800				2,524				10,595				8,121
Marketing expense			1,871				1,485				4,728				7,730
Other expense			5,411				7,080				17,364				24,004
Total non-interest expense			51,545				49,761				199,970				201,183
Income before income tax expense			6,382				16,680				63,396				81,932
Income tax expense			2,386				3,832				18,518				11,925
Net income		$	3,996			$	12,848			$	44,878			$	70,007
Basic earnings per common share		$	32.46			$	104.34			$	365.52			$	568.23
Diluted earnings per common share		$	32.18			$	101.61			$	358.63			$	553.79
Basic weighted-average shares outstanding			123,121				123,135				122,778				123,202
Diluted weighted-average shares outstanding			124,178				126,446				125,138				126,413

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
	Dec. 31, 2024				Dec. 31, 2023
Assets
Cash and due from banks:
Noninterest-bearing balances	$	72,319			$	74,595
Interest-bearing balances		976,039				548,874
Total cash and due from banks		1,048,358				623,469
Securities available-for-sale, at fair value		281,219				115,883
Securities held-to-maturity, at amortized cost		3,687,417				4,301,060
Loans held for sale		1,132				-
Gross loans		6,467,991				6,756,207
Unamortized deferred loan fees, net		(8,811	)			(11,469	)
Allowance for credit losses on loans		(96,585	)			(97,900	)
Loans, net		6,362,595				6,646,838
Investments in FHLB and FRB stock, at cost		22,472				22,798
Bank premises and equipment, net		118,474				125,929
Deferred tax assets, net		42,427				45,723
Other assets		125,975				154,154
Total assets	$	11,690,069			$	12,035,854
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits	$	2,908,598			$	2,880,315
Interest-bearing demand deposits		2,047,524				2,069,275
Savings and money market savings		2,784,678				2,661,312
Time deposits		1,028,793				1,059,166
Total deposits		8,769,593				8,670,068
Securities sold under repurchase agreements		991,869				909,376
Borrowings		500,000				1,000,000
Other liabilities		59,724				104,965
Total liabilities		10,321,186				10,684,409
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000 shares;
122,728 and 123,135 shares issued and outstanding at
December 31, 2024 and December 31, 2023, respectively		2,455				2,463
Additional paid-in capital		169,136				184,483
Retained earnings		1,199,221				1,169,759
Accumulated other comprehensive loss		(1,929	)			(5,260	)
Total stockholders' equity		1,368,883				1,351,445
Total liabilities and stockholders' equity	$	11,690,069			$	12,035,854

 

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Kevin Tiber

President

562-499-4829

Roger Pondel

PondelWilkinson Inc.

Investor Relations

310-279-5980

investor@pondel.com

Source: Farmers & Merchants Bank of Long Beach

FAQ

What was FMBL's net income for full-year 2024?

FMBL reported a net income of $44.9 million ($358.63 per diluted share) for the full year 2024.

How much did FMBL's deposits grow in 2024?

FMBL's total deposits increased to $8.77 billion at December 31, 2024, from $8.67 billion at December 31, 2023.

What was the impact of FMBL's securities portfolio repositioning in Q4 2024?

The repositioning resulted in a $10.1 million pre-tax loss but improved yield from 2.24% to 4.31% on reinvested funds.

How many shares did FMBL repurchase in 2024?

FMBL repurchased 3,066 shares for $15.4 million at an average price of $5,017.85 per share during 2024.

What was FMBL's capital ratio at the end of 2024?

FMBL's total risk-based capital ratio was 18.77% as of December 31, 2024, well above the 10% requirement for 'well-capitalized' status.