Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the fourth quarter and full year ended December 31, 2016.
“F&M achieved steady loan and deposit growth, in addition to strong profitability in a year characterized by low interest rates and a highly competitive environment,” said Henry Walker, president of Farmers & Merchants Bank. “As the Bank enters its 110th year, Farmers and Merchants continues to distinguish itself in the marketplace by investing in relationships and providing stellar service to the communities we serve.”
Income Statement
For the 2016 fourth quarter, total interest and dividend income was $56.4 million, compared with $53.3 million in the fourth quarter of 2015. Total interest and dividend income for the year ended December 31, 2016 was $222.8 million, compared with $206.2 million reported for 2015.
Interest expense for the 2016 fourth quarter was $2.8 million, compared with $2.1 million in the same period a year ago. Interest expense for the full 2016 year was $10.3 million versus $7.6 million in 2015.
Farmers & Merchants’ net interest income for the 2016 fourth quarter was $53.6 million, compared with net interest income of $51.1 million for the fourth quarter in 2015. Net interest income for 2016 was $212.5 million, versus $198.6 million in 2015.
Net interest margin for the fourth quarter 2016 was 3.41%, compared with net interest margin of 3.54% for the same period in 2015. Farmers & Merchants’ net interest margin was 3.51% for the year ended December 31, 2016, compared with 3.63% in the previous year.
Farmers & Merchants did not record a loan loss provision in the fourth quarter of 2016, nor the year ended December 31, 2016. The Bank had recorded $2.7 million in loan loss provision recapture for the same periods in 2015. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.64% at December 31, 2016, compared with 1.73% at December 31, 2015.
Non-interest income was $6.5 million for the 2016 fourth quarter, compared with $5.7 million in the 2015 fourth quarter. Non-interest income for the full 2016 year totaled $25.3 million, essentially in line with non-interest income for 2015.
Non-interest expense for the 2016 fourth quarter was $45.8 million, compared with $37.8 million for the same period last year. Non-interest expense for the year ended December 31, 2016 was $143.5 million, compared with $132.7 million last year.
The Bank’s net income for the 2016 fourth quarter was $17.7 million, or $135.42 per diluted share, compared with $15.5 million, or $118.07 per diluted share, in the 2015 fourth quarter. The Bank’s net income for 2016 was $71.5 million, or $546.16 per diluted share, compared with $64.9 million, or $496.06 per diluted share, for 2015.
Balance Sheet
At December 31, 2016, net loans totaled $3.40 billion, compared with $3.22 billion at December 31, 2015. The Bank’s deposits grew to $5.12 billion at the end of 2016, from $4.70 billion at December 31, 2015. Non-interest bearing deposits represented 37.7% of total deposits at December 31, 2016, versus 38.9% of total deposits at December 31, 2015. Total assets increased to $6.73 billion at the close of 2016 from $6.15 billion at December 31, 2015.
At December 31, 2016, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 20.85%, a tier 1 risk-based capital ratio of 19.60%, a common equity tier 1 capital ratio of 19.60%, and a tier 1 leverage ratio of 13.62%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.
“Farmers and Merchants’ strong fourth-quarter and year-end results reflect our focus on adhering to core fundamentals that have helped the Bank generate profits consistently and maintain a healthy balance sheet since 1907,” said Daniel Walker, chief executive officer and chairman of the board of Farmers & Merchants Bank. “Whether it is the Bank’s commitment to protecting depositors, investment in technology, or contributing to charitable needs in our community, F&M’s values are integral to its strategy and success.”
About Farmers & Merchants Bank
Founded in Long Beach in 1907 by C.J. Walker, Farmers & Merchants Bank has 24 branches across Orange County, Long Beach and the South Bay. The Bank specializes in 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 Dec. 31, | Twelve Months Ended Dec. 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Interest and dividend income: | ||||||||||||||||
Loans | $ | 40,094 | $ | 38,092 | $ | 161,742 | $ | 149,424 | ||||||||
Investment securities | 14,996 | 14,632 | 57,823 | 53,527 | ||||||||||||
Investments in FHLB and FRB stock | 1,028 | 448 | 2,305 | 2,864 | ||||||||||||
Interest-bearing deposits in financial institutions | 266 | 96 | 963 | 412 | ||||||||||||
Total interest and dividend income | 56,384 | 53,268 | 222,833 | 206,227 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 2,290 | 1,833 | 8,452 | 6,468 | ||||||||||||
Securities sold under repurchase agreements | 477 | 294 | 1,877 | 1,144 | ||||||||||||
Other borrowings | 5 | - | 5 | 6 | ||||||||||||
Total interest expense | 2,772 | 2,127 | 10,334 | 7,618 | ||||||||||||
Net interest income | 53,612 | 51,141 | 212,499 | 198,609 | ||||||||||||
Provision for loan losses | - | (2,700 | ) | - | (2,700 | ) | ||||||||||
Net interest income after provision for loan losses | 53,612 | 53,841 | 212,499 | 201,309 | ||||||||||||
Non-interest income: | ||||||||||||||||
Service charges on deposit accounts | 953 | 998 | 3,930 | 4,035 | ||||||||||||
Other real estate owned income | 10 | 39 | 27 | 1,454 | ||||||||||||
Merchant bankcard income | 2,633 | 2,331 | 10,298 | 9,722 | ||||||||||||
Other income | 2,885 | 2,296 | 11,033 | 10,069 | ||||||||||||
Total non-interest income | 6,481 | 5,664 | 25,288 | 25,280 | ||||||||||||
Non-interest expense: | ||||||||||||||||
Salaries and employee benefits | 20,551 | 20,239 | 77,190 | 74,853 | ||||||||||||
FDIC and other insurance expense | 620 | 841 | 2,963 | 3,238 | ||||||||||||
Occupancy expense | 3,661 | 2,483 | 10,433 | 8,843 | ||||||||||||
Software and equipment expense | 1,928 | 2,097 | 7,337 | 7,353 | ||||||||||||
Other real estate owned expense | (4 | ) | 593 | (62 | ) | 704 | ||||||||||
Merchant bankcard expenses and losses | 2,087 | 1,850 | 8,040 | 8,039 | ||||||||||||
Professional and legal services | 2,009 | 1,633 | 5,649 | 4,602 | ||||||||||||
Marketing expense | 1,800 | 1,020 | 6,396 | 5,504 | ||||||||||||
Other expense | 13,155 | 7,080 | 25,587 | 19,597 | ||||||||||||
Total non-interest expense | 45,807 | 37,836 | 143,533 | 132,733 | ||||||||||||
Income before income tax expense | 14,286 | 21,669 | 94,254 | 93,856 | ||||||||||||
Income tax expense | (3,444 | ) | 6,210 | 22,746 | 28,908 | |||||||||||
Net income | $ | 17,730 | $ | 15,459 | $ | 71,508 | $ | 64,948 | ||||||||
Basic and diluted earnings per common share | $ | 135.42 | $ | 118.07 | $ | 546.16 | $ | 496.06 | ||||||||
FARMERS & MERCHANTS BANK OF LONG BEACH | |||||||
Balance Sheets (Unaudited) | |||||||
(In thousands except share and per share data) | |||||||
Dec. 31, 2016 | Dec. 31, 2015 | ||||||
Assets | |||||||
Cash and due from banks: | |||||||
Noninterest-bearing balances | $ | 63,797 | $ | 64,742 | |||
Interest-bearing balances | 84,918 | 103,278 | |||||
Total cash and due from banks | 148,715 | 168,020 | |||||
Securities available-for-sale, at fair value | 182,320 | 206,649 | |||||
Securities held-to-maturity, at amortized cost | 2,762,877 | 2,363,383 | |||||
Loans held for sale | 6,080 | 3,168 | |||||
Gross loans | 3,466,382 | 3,278,852 | |||||
Allowance for loan losses | (56,867 | ) | (56,670 | ) | |||
Unamortized deferred loan fees, net | (5,314 | ) | (4,139 | ) | |||
Loans, net | 3,404,201 | 3,218,043 | |||||
Other real estate owned, net | 791 | 1,351 | |||||
Investments in FHLB and FRB stock, at cost | 20,690 | 20,690 | |||||
Bank premises and equipment, net | 87,775 | 86,781 | |||||
Deferred tax assets, net | 30,281 | 27,892 | |||||
Other assets | 85,328 | 57,623 | |||||
Total assets | $ | 6,729,058 | $ | 6,153,600 | |||
Liabilities and Stockholders' Equity | |||||||
Liabilities: | |||||||
Deposits: | |||||||
Noninterest-bearing demand deposits | $ | 1,931,931 | $ | 1,824,516 | |||
Interest-bearing demand deposits | 868,380 | 645,125 | |||||
Savings and money market savings | 1,460,669 | 1,376,920 | |||||
Time deposits | 861,977 | 843,405 | |||||
Total deposits | 5,122,957 | 4,689,966 | |||||
Securities sold under repurchase agreements | 540,035 | 572,915 | |||||
Other borrowings | 100,000 | - | |||||
Other liabilities | 55,753 | 35,388 | |||||
Total liabilities | 5,818,745 | 5,298,269 | |||||
Stockholders' Equity: | |||||||
Common Stock, par value $20; authorized 250,000 | |||||||
shares; issued and outstanding 130,928 shares | 2,619 | 2,619 | |||||
Additional paid-in capital | 112,044 | 112,044 | |||||
Retained earnings | 795,187 | 739,259 | |||||
Accumulated other comprehensive income | 463 | 1,409 | |||||
Total stockholders' equity | 910,313 | 855,331 | |||||
Total liabilities and stockholders' equity | $ | 6,729,058 | $ | 6,153,600 | |||
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