Farmers & Merchants Bank of Long Beach Reports 2019 Second-Quarter Results

Farmers & Merchants Bank of Long Beach (OTCQB: FMBL) today reported financial results for the second quarter and six-months ended June 30, 2019.

"We continued to generate solid net interest income in the second quarter, as well as steady deposit growth from existing customers," said Henry Walker, president of Farmers & Merchants Bank of Long Beach. "We intend to maintain our prudent lending philosophy heading into the second half of the year, in addition to prioritizing the safety of our depositors, demonstrated by our strong capital ratios."

Income Statement

For the three months ended June 30, 2019, total interest and dividend income rose to $70.2 million from $63.7 million in the second quarter of 2018. Interest and dividend income for the first half of 2019 increased to $138.5 million from $125.4 million reported for the first half of 2018.

Interest expense for the 2019 second quarter was $8.4 million, compared with $5.3 million in the second quarter of 2018. Interest expense for the first half of 2019 was $15.8 million, versus $9.6 million reported for the corresponding period last year.

Net interest income for the 2019 second quarter advanced to $61.8 million from $58.5 million for the second quarter of 2018. Net interest income for the first half of 2019 increased to $122.7 million from $115.8 million for the six months ended June 30, 2018.

Net interest margin was 3.45% for the 2019 second quarter, versus 3.39% in the 2018 second quarter. Net interest margin was 3.47% for the first half of 2019, compared with 3.38% for the same period in 2018.

The Bank did not have a provision for loan losses in the second quarter of 2019, nor in the same period a year ago. The Bank's provision for loan losses was $250,000 in the first half of 2019, while the Bank did not have a provision for loan losses in the first half of 2018. The Bank's allowance for loan losses as a percentage of loans outstanding was 1.44% at June 30, 2019, compared with 1.47% at December 31, 2018.

Non-interest income was $4.8 million for the 2019 second quarter, essentially in line with the same period a year ago. In the first half of 2019, non-interest income was $9.4 million, compared with $8.9 million for the six months ended June 30, 2018.

Non-interest expense for the 2019 second quarter was $39.6 million, compared with $33.4 million for the same period last year. Non-interest expense for the first half of 2019 was $77.5 million, compared with $65.9 million for the first half of 2018.

Net income for the 2019 second quarter was $21.7 million, or $167.35 per diluted share, compared with $21.8 million, or $166.43 per diluted share, for the 2018 second quarter. Net income for the first half of 2019 rose to $44.1 million, or $338.27 per diluted share, from $42.8 million, or $327.08 per diluted share, for the six months ended June 30, 2018.

Balance Sheet

At June 30, 2019, net loans increased to $4.29 billion from $4.19 billion at December 31, 2018. The Bank's deposits rose to $5.73 billion at the end of the 2019 second quarter from $5.58 billion at December 31, 2018. Non-interest-bearing deposits represented 37.7% of total deposits at June 30, 2019, versus 37.6% of total deposits at December 31, 2018. Total assets increased to $7.53 billion at the close of the 2019 second quarter from $7.31 billion at December 31, 2018.

At June 30, 2019, Farmers & Merchants Bank remained "well-capitalized" under all regulatory categories, with a total risk-based capital ratio of 19.88%, a tier 1 risk-based capital ratio of 18.66%, a common equity tier 1 capital ratio of 18.66%, and a tier 1 leverage ratio of 13.98%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

"We repurchased additional shares during the second quarter, which reflects our confidence in the Bank's financial performance and commitment to delivering value for our shareholders," said Daniel Walker, chief executive officer and chairman of the board. "As California's Strongest since 1907, we also maintain our conviction in a strong balance sheet, particularly amid continued volatility in the market."

As previously disclosed, in October 2018, F&M's board of directors authorized the Bank to repurchase up to $20.0 million of its common stock prior to December 31, 2019. In the first quarter of 2019, the Bank repurchased 750 shares of its common stock for approximately $6.1 million at a weighted average price of $8,061.83 per share. During the second quarter of 2019, Farmers & Merchants Bank repurchased 1,412 shares of its common stock for approximately $11.6 million at a weighted average price of $8,237.07 per share.

As of June 30, 2019, the Bank had approximately $2.3 million of authorization remaining for additional share repurchases. To the extent the Bank repurchases any additional shares, the number of shares repurchased and the timing of such 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 any potential share repurchases at any time.

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 25 branches across Orange County, Long Beach, the South Bay and Santa Barbara, as well as through robust Online and Mobile Banking platforms. The Bank offers commercial and small business banking, business loan programs, home loans, and 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.