Farmers & Merchants Bank of Long Beach Reports 2024 Third Quarter Results

Rhea-AI Summary

Farmers & Merchants Bank of Long Beach (OTCQX: FMBL) reported its 2024 third quarter results. The bank achieved profitable operations with a strong balance sheet and capital ratios exceeding regulatory requirements. Key financial highlights include:

- Total interest and dividend income rose to $113.6 million for Q3 2024
- Net interest income before provision for credit losses was $60.4 million
- Net income for Q3 2024 was $14.3 million, or $115.17 per diluted share
- Gross loans stood at $6.46 billion as of September 30, 2024
- Total deposits were $8.77 billion at the end of Q3 2024
- Total assets were $12.02 billion as of September 30, 2024

The bank's performance was impacted by higher deposit costs and pressure from low-yielding securities in the HTM portfolio. However, F&M maintains a stable loan portfolio and strong liquidity position.

Positive

• Profitable operations achieved in Q3 2024
• Strong balance sheet with capital ratios exceeding regulatory requirements
• Total interest and dividend income increased to $113.6 million in Q3 2024, up from $107.9 million in Q3 2023
• Recapture of provision for credit losses of $3.7 million in Q3 2024
• Non-interest income rose to $4.5 million in Q3 2024 from $4.1 million in Q3 2023
• Total deposits increased to $8.77 billion at September 30, 2024, from $8.67 billion at December 31, 2023
• Total stockholders' equity grew to $1.37 billion at September 30, 2024, from $1.35 billion at December 31, 2023

Negative

• Net interest income before provision for credit losses decreased to $60.4 million in Q3 2024 from $64.9 million in Q3 2023
• Net interest margin declined to 2.02% in Q3 2024 from 2.14% in Q3 2023
• Net income decreased to $14.3 million in Q3 2024 from $17.4 million in Q3 2023
• Gross loans decreased to $6.46 billion at September 30, 2024, from $6.76 billion at December 31, 2023
• Earnings impacted by higher deposit costs and pressure from low-yielding securities in HTM portfolio

LONG BEACH, Calif.--(BUSINESS WIRE)-- Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQX: FMBL) today reported financial results for the third quarter ended September 30, 2024.

“F&M achieved profitable operations for the third quarter ended September 30, 2024, and our balance sheet remained strong, with capital ratios far exceeding all regulatory requirements,” said W. Henry Walker, Chief Executive Officer. “As has been the case throughout F&M’s 117-year history, our solid capital and liquidity levels, along with prudent risk management strategies, position the Bank well for the long-term. Throughout the challenging external economic environment, we maintained a stable, conservative loan portfolio, strong liquidity, and always with the first priority of serving our clients well and safeguarding deposits,” he added.

Daniel Walker, F&M’s Executive Chairman of the Board, said, “Earnings for the third quarter, as expected, were again impacted by higher deposit costs, pressure from low-yielding securities in our HTM (Held-to-Maturity) portfolio, and tepid demand for loans in the higher interest rate environment. Looking ahead, the Federal Reserve’s 50 BPS interest rate cut in September, with additional rate cuts anticipated, signals a positive sign for the economy, for the banking sector, and for all of F&M’s stakeholders.”

Operating Results

For the third quarter of 2024, total interest and dividend income rose to $113.6 million from $107.9 million for the third quarter of 2023. Total interest and dividend income for the nine months ended September 30, 2024 increased to $330.9 million from $307.6 million reported for the nine months ended September 30, 2023.

Total interest expense for the third quarter of 2024 was $53.2 million, compared with $43.0 million in the third quarter of 2023. Interest expense for the nine months ended September 30, 2024 was $156.0 million, compared to $106.8 million reported for the same period in 2023.

Net interest income before provision for credit losses for the third quarter of 2024 was $60.4 million versus $64.9 million for the third quarter of 2023. Net interest income for the nine months ended September 30, 2024 was $174.9 million, compared with $200.8 million for the nine months ended September 30, 2023.

F&M’s net interest margin was 2.02% for the third quarter of 2024, versus 2.14% in the third quarter of 2023. Net interest margin was 1.95% for the nine months ended September 30, 2024, compared with 2.25% for the same period in 2023.

The Bank recorded a recapture of provision for credit losses of $3.7 million in the third quarter of 2024 compared with a $3.6 million recapture of provision for credit losses for the third quarter of 2023. For the nine months ended September 30, 2024, the Bank recorded a $7.2 million recapture of provision for credit losses, compared with a $3.6 million recapture of provision for credit losses for the nine months ended September 30, 2023.

Non-interest income was $4.5 million for the third quarter of 2024, compared with $4.1 million in the third quarter of 2023. For the nine months ended September 30, 2024, total non-interest income was $23.3 million, compared with $12.3 million for the same period in 2023.

Total non-interest expense for the third quarter of 2024 was $48.6 million, compared with $52.3 million in the third quarter of 2023. Non-interest expense for the nine months ended September 30, 2024 was $148.4 million, compared with $151.4 million for the nine months ended September 30, 2023.

Net income for the third quarter of 2024 was $14.3 million, or $115.17 per diluted share, compared with $17.4 million, or $137.57 per diluted share, for the third quarter of 2023. Net income for the nine months ended September 30, 2024 was $40.9 million, or $325.64 per diluted share, compared with $57.2 million, or $452.11 per diluted share, for the nine months ended September 30, 2023.

Balance Sheet

Gross loans were $6.46 billion as of September 30, 2024, compared with $6.76 billion at December 31, 2023. The Bank’s allowance for loan losses totaled $95.9 million, or 1.49% of loans held-for-investment at September 30, 2024, compared with $97.9 million, or 1.45% of loans held-for-investment at December 31, 2023.

The Bank’s total deposits were $8.77 billion at September 30, 2024, compared with $8.67 billion at December 31, 2023. Noninterest-bearing deposits represented 32.8% of total deposits at September 30, 2024, versus 33.2% of total deposits at December 31, 2023. Securities sold under repurchase agreements decreased to $877.4 million at September 30, 2024, from $909.4 million at December 31, 2023. Borrowings were $900 million as of September 30, 2024 and $1.0 billion at December 31, 2023.

Total assets were $12.02 billion as of September 30, 2024 compared with $12.04 billion at December 31, 2023. Total stockholders’ equity was $1.37 billion at September 30, 2024 compared with $1.35 billion at December 31, 2023.

Capital

Capital ratios are the foundation of safety in all banks, and F&M continues to exceed national banks and peer banks in this area. All of Farmers & Merchants Bank’s capital ratios exceeded regulatory capital requirements to meet the definition of a “well-capitalized” financial institution. The Bank’s total risk-based capital ratio was 18.65%; its tier 1 risk-based capital ratio was 17.40%, with a common equity tier 1 capital ratio of 17.40%, and a tier 1 leverage ratio of 11.20%, as of September 30, 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 nine months ended September 30, 2024, the Bank repurchased 2,573 shares of its common stock on the open market at an average repurchase price of $4,874.05 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.

FARMERS & MERCHANTS BANK OF LONG BEACH
Income Statements (Unaudited)
(In thousands, except per share data)
		Three Months Ended September 30,								Nine Months Ended September 30,
			2024				2023				2024				2023
Interest and dividend income:
Loans		$	75,743			$	76,184			$	225,253			$	223,291
Investment securities			20,545				21,458				60,619				66,616
Investments in FHLB and FRB stock			456				415				1,455				1,229
Interest-bearing deposits in financial institutions			16,857				9,859				43,573				16,416
Total interest and dividend income			113,601				107,916				330,900				307,552
Interest expense:
Deposits			31,789				23,009				88,567				56,578
Securities sold under repurchase agreements			9,783				8,918				28,876				22,212
Borrowings			11,677				11,103				38,567				27,984
Total interest expense			53,249				43,030				156,010				106,774
Net interest income before provision for credit losses			60,352				64,886				174,890				200,778
Provision for credit losses
Loans			(1,600	)			(1,800	)			(3,100	)			(1,800	)
Investment securities			-				-				-				100
Reserve for unfunded loan commitments			(2,100	)			(1,800	)			(4,100	)			(1,900	)
Total provision for credit losses			(3,700	)			(3,600	)			(7,200	)			(3,600	)
Net interest income after provision for credit losses			64,052				68,486				182,090				204,378
Non-interest income:
Service charges on deposit accounts			1,884				1,799				5,570				5,153
Card income			226				357				665				957
Other income			2,432				1,919				17,114				6,186
Total non-interest income			4,542				4,075				23,349				12,296
Non-interest expense:
Salaries and employee benefits			29,677				30,831				91,428				93,538
FDIC and other insurance expense			2,506				2,319				8,017				5,923
Occupancy expense			4,057				4,103				11,856				11,641
Software and equipment expense			4,456				3,891				13,187				11,554
Other real estate owned expense			83				-				332				-
Professional and legal services			3,198				2,113				8,795				5,597
Marketing expense			900				2,694				2,857				6,245
Other expense			3,713				6,357				11,953				16,924
Total non-interest expense			48,590				52,308				148,425				151,422
Income before income tax expense			20,004				20,253				57,014				65,252
Income tax expense			5,658				2,866				16,132				8,093
Net income		$	14,346			$	17,387			$	40,882			$	57,159
Basic earnings per common share		$	115.98			$	141.11			$	333.03			$	463.86
Diluted earnings per common share		$	115.17			$	137.57			$	325.64			$	452.11
Basic weighted-average shares outstanding			123,696				123,216				122,757				123,224
Diluted weighted-average shares outstanding			124,563				126,389				125,545				126,428

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
	Sep. 30, 2024				Dec. 31, 2023
Assets
Cash and due from banks:
Noninterest-bearing balances	$	78,460			$	74,595
Interest-bearing balances		1,075,886				548,874
Total cash and due from banks		1,154,346				623,469
Securities available-for-sale, at fair value		257,906				115,883
Securities held-to-maturity, at amortized cost		3,923,032				4,301,060
Loans held for sale		766				-
Gross loans		6,463,026				6,756,207
Allowance for loan losses		(95,916	)			(97,900	)
Unamortized deferred loan fees, net		(8,637	)			(11,469	)
Loans, net		6,358,473				6,646,838
Other real estate owned, net		2,929				-
Investments in FHLB and FRB stock, at cost		22,570				22,798
Bank premises and equipment, net		120,528				125,929
Deferred tax assets, net		42,000				45,723
Other assets		134,515				154,154
Total assets	$	12,017,065			$	12,035,854
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits	$	2,880,846			$	2,880,315
Interest-bearing demand deposits		2,142,551				2,069,275
Savings and money market savings		2,694,866				2,661,312
Time deposits		1,053,531				1,059,166
Total deposits		8,771,794				8,670,068
Securities sold under repurchase agreements		877,404				909,376
Borrowings		900,000				1,000,000
Other liabilities		97,234				104,965
Total liabilities		10,646,432				10,684,409
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000 shares;
123,501 and 123,135 shares issued and outstanding at
September 30, 2024 and December 31, 2023, respectively		2,470				2,463
Additional paid-in capital		171,594				184,483
Retained earnings		1,200,517				1,169,759
Accumulated other comprehensive loss		(3,948	)			(5,260	)
Total stockholders' equity		1,370,633				1,351,445
Total liabilities and stockholders' equity	$	12,017,065			$	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 Farmers & Merchants Bank's (FMBL) net income for Q3 2024?

Farmers & Merchants Bank (FMBL) reported a net income of $14.3 million, or $115.17 per diluted share, for the third quarter of 2024.

How did FMBL's total deposits change in Q3 2024 compared to the end of 2023?

FMBL's total deposits increased to $8.77 billion at September 30, 2024, compared with $8.67 billion at December 31, 2023.

What was FMBL's net interest margin for Q3 2024?

FMBL's net interest margin was 2.02% for the third quarter of 2024, compared to 2.14% in the third quarter of 2023.

How many shares did FMBL repurchase during the first nine months of 2024?

During the nine months ended September 30, 2024, FMBL repurchased 2,573 shares of its common stock at an average price of $4,874.05 per share.

What was FMBL's total risk-based capital ratio as of September 30, 2024?

FMBL's total risk-based capital ratio was 18.65% as of September 30, 2024, exceeding the regulatory requirement for a 'well-capitalized' financial institution.