CORRECTING and REPLACING Farmers & Merchants Bank of Long Beach Reports 2023 Fourth-Quarter and Full-Year Results

Published

Board of Directors Authorizes New $10 Million Stock Repurchase Program

LONG BEACH, Calif.--(BUSINESS WIRE)-- In the Income Statements table of release dated Jan. 25, 2024, the header over the first two columns should read: Three Months Ended December 31, (instead of Twelve Months Ended December 31,).

The updated release reads:

FARMERS & MERCHANTS BANK OF LONG BEACH REPORTS 2023 FOURTH-QUARTER AND FULL-YEAR RESULTS

Board of Directors Authorizes New $10 Million Stock Repurchase Program

Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQX: FMBL) today reported financial results for the fourth quarter and the full year ended December 31, 2023. F&M also announced that its Board of Directors has authorized a new $10 million stock repurchase program.

“Now in our 117th year since F&M was founded, we ended 2023 with profitable operations for the full year and fourth quarter, along with a strong balance sheet and capital ratios that far exceed regulatory requirements,” said Henry Walker, Chief Executive Officer. “Despite the challenges that continue to impact the banking industry nationwide, we remain steadfastly focused on our foremost priority goal of safeguarding our clients’ deposits and operating the Bank to create long-term value for all stakeholders.

“We enter 2024 with some of the same external pressures that our industry faced last year, including the high cost of funds and increased regulatory expense, which in turn, impact net interest margin and earnings performance. Nevertheless, we will stay true to our core of maintaining stringent underwriting standards and a stellar loan portfolio that is withstanding the test of a volatile real estate market. Finishing the year with net charge-offs of 0.01% and an allocation for credit losses for loans ratio of 1.45% speak to the quality and safety for which F&M is known.”

Daniel Walker, F&M’s Executive Chairman, said, “We were pleased and proud that our Board of Directors declared a total of $127 per share in dividends by the Bank in 2023, which has paid consecutive dividends every quarter for more than a century. During the year, we strengthened our management infrastructure and grew our regional team with executive promotions and talented new hires. While all banks continue to face some headwinds in the near term, F&M remains a safe and sound island of security for our clients and the markets we serve,” Walker added.

Operating Results

For the fourth quarter of 2023, total interest and dividend income rose to $108.0 million from $95.9 million in the fourth quarter of 2022. Total interest and dividend income for the year ended December 31, 2023, increased to $415.5 million compared with $340.3 million reported for the year 2022.

Total interest expense for the fourth quarter of 2023 was $45.7 million, compared with $18.6 million in the fourth quarter of 2022. Interest expense for the year ended 2023 was $152.5 million, versus $31.2 million reported for the same period in 2022.

Net interest income before provision for credit losses for the fourth quarter of 2023 was $62.3 million versus $77.3 million for the fourth quarter of 2022. Net interest income before provision for credit losses for the year 2023 was $263.1 million, compared with $309.0 million for the year 2022.

F&M’s net interest margin was 2.08% for the fourth quarter of 2023, versus 2.40% in the fourth quarter of 2022. Net interest margin was 2.21% for the year ended of 2023, compared with 2.73% for the same period in 2022.

For the fourth quarter of 2023 and 2022, the Bank did not record a net provision for credit losses. The Bank recorded a recapture of provision for credit losses of $3.6 million for the year 2023, compared to a $3.5 million provision for credit losses for the same period in 2022.

Non-interest income was $4.2 million for the fourth quarter of 2023, compared with $4.2 million in the fourth quarter of 2022. For year 2023, non-interest income was $16.4 million, compared with $18.5 million for the same period in 2022.

Total noninterest expense for the fourth quarter of 2023 was $49.8 million, compared to $50.6 million for the fourth quarter of 2022. Non-interest expense for the year ended December 31, 2023 was $201.2 million, compared with $188.8 million for the year ended December 31, 2022.

Fourth quarter 2023 net income was $12.8 million, or $101.61 per diluted share, compared with $25.4 million, or $200.86 per diluted share, for the fourth quarter of 2022. The Bank’s full year 2023 net income was $70.0 million, or $553.79 per diluted share, compared with $109.0 million, or $855.56 per diluted share, for the same period last year.

Balance Sheet

At December 31, 2023, gross loans amounted to $6.76 billion, approximately equal to that at December 31, 2022, of $6.77 billion. The Bank’s allowance for loan losses totaled $97.9 million, or 1.45% of loans held-for-investment at December 31, 2023, compared with $76.5 million, or 1.13% of loans held-for-investment, at December 31, 2022.

The Bank’s total deposits were $8.67 billion at December 31, 2023, compared with $9.14 billion at December 31, 2022.

Noninterest-bearing deposits represented 33.2% of total deposits at December 31, 2023, versus 36.7% of total deposits at December 31, 2022.

Total assets were $12.04 billion as of December 31, 2023, compared with $12.05 billion at December 31, 2022.

Capital

Total stockholders’ equity was $1.35 billion at December 31, 2023. 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 17.51%; its tier 1 risk-based capital ratio was 16.26%, with a common equity tier 1 capital ratio of 16.26%, and a tier 1 leverage ratio of 11.01%, as of December 31, 2023. 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

Reflecting the Board of Directors’ confidence in the Bank’s long-term outlook, F&M also announced today that the Board has authorized a new stock repurchase program, authorizing the Bank to repurchase of up to $10 million of the Bank’s common stock from time to time through December 31, 2024.

Under the new stock repurchase program, the Bank may purchase shares of its common stock from time to time 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 repurchases at any time and anticipates that any such repurchases will be funded from existing cash and cash equivalents or future cash flow. The new stock repurchase program does not obligate the Bank to repurchase any specific number of shares in any particular period.

During 2023, the Bank repurchased 93 shares of its common stock on the open market at an average repurchase price of $5,125.78 per share, pursuant to the stock repurchase program announced in January 2022, which expired December 31, 2023.

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 December 31,

Twelve Months Ended December 31,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 
Interest and dividend income:
Loans

$

76,432

 

$

70,869

$

299,723

 

$

246,818

Investment securities

 

20,895

 

 

23,236

 

 

87,511

 

 

87,601

 

Investments in FHLB and FRB stock

 

443

 

 

389

 

 

1,672

 

 

1,226

 

Interest-bearing deposits in financial institutions

 

10,199

 

 

1,406

 

 

26,615

 

 

4,628

 

Total interest and dividend income

 

107,969

 

 

95,900

 

 

415,521

 

 

340,273

 

 
Interest expense:
Deposits

 

24,978

 

 

8,448

 

 

81,556

 

 

15,732

 

Securities sold under repurchase agreements

 

9,287

 

 

4,739

 

 

31,499

 

 

8,762

 

Borrowings

 

11,414

 

 

5,423

 

 

39,398

 

 

6,740

 

Total interest expense

 

45,679

 

 

18,610

 

 

152,453

 

 

31,234

 

 
Net interest income before provision for credit losses

 

62,290

 

 

77,290

 

 

263,068

 

 

309,039

 

 
Provision for credit losses
Loans

 

1,100

 

 

-

 

 

(700

)

 

3,500

 

Investment securities

 

-

 

 

-

 

 

100

 

 

-

 

Reserve for unfunded loan commitments

 

(1,100

)

 

-

 

 

(3,000

)

 

-

 

Total provision for credit losses

 

-

 

 

-

 

 

(3,600

)

 

3,500

 

 
Net interest income after provision for credit losses

 

62,290

 

 

77,290

 

 

266,668

 

 

305,539

 

 
Non-interest income:
Service charges on deposit accounts

 

1,818

 

 

1,719

 

 

6,971

 

 

6,451

 

Card income

 

315

 

 

242

 

 

1,272

 

 

2,543

 

Other income

 

2,018

 

 

2,194

 

 

8,204

 

 

9,536

 

Total non-interest income

 

4,151

 

 

4,155

 

 

16,447

 

 

18,530

 

 
Non-interest expense:
Salaries and employee benefits

 

26,881

 

 

31,841

 

 

120,419

 

 

119,978

 

FDIC and other insurance expense

 

3,249

 

 

1,237

 

 

9,172

 

 

4,306

 

Occupancy expense

 

4,071

 

 

3,923

 

 

15,712

 

 

15,354

 

Software and equipment expense

 

4,471

 

 

3,738

 

 

16,025

 

 

15,060

 

Professional and legal services

 

2,524

 

 

2,064

 

 

8,121

 

 

7,612

 

Marketing expense

 

1,485

 

 

1,672

 

 

7,730

 

 

6,886

 

Other expense

 

7,080

 

 

6,136

 

 

24,004

 

 

19,602

 

Total non-interest expense

 

49,761

 

 

50,611

 

 

201,183

 

 

188,798

 

 
Income before income tax expense

 

16,680

 

 

30,834

 

 

81,932

 

 

135,271

 

 
Income tax expense

 

3,832

 

 

5,390

 

 

11,925

 

 

26,269

 

 
Net income

$

12,848

 

$

25,444

 

$

70,007

 

$

109,002

 

 
Basic earnings per common share

$

104.34

 

$

206.12

 

$

568.23

 

$

876.17

 

Diluted earnings per common share

$

101.61

 

$

200.86

 

$

553.79

 

$

855.56

 

Basic weighted-average shares outstanding

 

123,135

 

 

123,442

 

 

123,202

 

 

124,407

 

Diluted weighted-average shares outstanding

 

126,446

 

 

126,672

 

 

126,413

 

 

127,404

 

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
 

Dec. 31, 2023

Dec. 31, 2022

 
Assets
Cash and due from banks:
Noninterest-bearing balances

$

74,595

 

$

75,489

 

Interest-bearing balances

 

548,874

 

 

67,369

 

Total cash and due from banks

 

623,469

 

 

142,858

 

Securities available-for-sale, at fair value

 

115,883

 

 

123,919

 

Securities held-to-maturity, at amortized cost

 

4,301,060

 

 

4,789,522

 

Gross loans

 

6,756,207

 

 

6,765,391

 

Allowance for loan losses

 

(97,900

)

 

(76,503

)

Unamortized deferred loan fees, net

 

(11,469

)

 

(14,429

)

Loans, net

 

6,646,838

 

 

6,674,459

 

Investments in FHLB and FRB stock, at cost

 

22,798

 

 

27,088

 

Bank premises and equipment, net

 

125,929

 

 

118,228

 

Deferred tax assets, net

 

45,723

 

 

31,538

 

Other assets

 

154,154

 

 

147,132

 

Total assets

$

12,035,854

 

$

12,054,744

 

 
Liabilities and Stockholders' Equity
 
Liabilities:
Deposits:
Noninterest-bearing demand deposits

$

2,880,315

 

$

3,355,298

 

Interest-bearing demand deposits

 

2,069,275

 

 

2,212,509

 

Savings and money market savings

 

2,661,312

 

 

2,668,334

 

Time deposits

 

1,059,166

 

 

906,355

 

Total deposits

 

8,670,068

 

 

9,142,496

 

Securities sold under repurchase agreements

 

909,376

 

 

785,912

 

Borrowings

 

1,000,000

 

 

700,000

 

Other liabilities

 

104,965

 

 

113,254

 

Total liabilities

 

10,684,409

 

 

10,741,662

 

 
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000 shares; 123,135 and 123,228 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

 

2,463

 

 

2,465

 

Additional paid-in capital

 

184,483

 

 

177,433

 

Retained earnings

 

1,169,759

 

 

1,140,897

 

Accumulated other comprehensive loss

 

(5,260

)

 

(7,713

)

Total stockholders' equity

 

1,351,445

 

 

1,313,082

 

Total liabilities and stockholders' equity

$

12,035,854

 

$

12,054,744

 

 

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

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