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Farmers & Merchants Bank of Long Beach Reports 2021 Fourth-Quarter and Full-Year Results

-Board Authorizes New $20 Million Stock Repurchase Program-

Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQB: FMBL) today reported financial results for the fourth quarter and full year ended December 31, 2021.

“Affirming the loyalty and trust of our growing client base, F&M ended what was another challenging year for our nation and our community in a position of financial strength,” said Henry Walker, president. “The Bank effectively managed through the lingering pandemic and low interest rate environment to successfully assist our clients and finish 2021 with record high total deposits, net loans and total assets.”

Income Statement

For the 2021 fourth quarter, total interest and dividend income rose to $76.0 million, from $71.6 million in the fourth quarter of 2020. Total interest and dividend income for the year ended December 31, 2021, increased to $307.3 million, from $286.3 million reported for 2020.

Interest expense for the 2021 fourth quarter declined to $2.8 million, from $4.4 million in the same period a year ago. Interest expense for 2021 was $12.2 million, versus $24.9 million in 2020.

The Bank’s net interest income before loan loss provision for the 2021 fourth quarter advanced to $73.3 million, from $67.2 million for the 2020 fourth quarter. Net interest income before loan loss provision for 2021 rose to $295.1 million, from $261.4 million in 2020.

Net interest margin for the 2021 fourth quarter was 2.67%, compared with 2.83% for the same period in 2020. F&M’s net interest margin was 2.83% for the year ended December 31, 2021, versus 2.99% in the previous year.

The Bank recorded a $1.0 million recapture of loan loss provision in the fourth quarter of 2021, compared with a $2.0 loan loss provision in the fourth quarter of 2020. For the full 2021 year, there was no loan loss provision, compared to $10.5 million of loan loss provision in 2020. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.34% at December 31, 2021, equal to that at December 31, 2020.

Non-interest income increased to $6.5 million for the 2021 fourth quarter, from $6.0 million for the comparable period last year. Non-interest income for 2021 rose to $22.0 million, from $20.5 million in 2020.

Non-interest expense for the 2021 fourth quarter was $45.2 million, equal to that for the same period last year. Non-interest expense for the year ended December 31, 2021, was $172.6 million, versus $175.2 million last year.

The Bank’s net income for the 2021 fourth quarter increased to $29.0 million, or $226.02 per diluted share, from $21.4 million, or $167.49 per diluted share, for the 2020 fourth quarter. The Bank’s net income for the full year 2021 rose to $115.2 million, or $898.31 per diluted share, from $79.8 million, or $622.74 per diluted share, for 2020.

Balance Sheet

At December 31, 2021, net loans increased to $5.37 billion, from $5.33 billion at December 31, 2020. The Bank’s deposits grew to $9.24 billion at the end of 2021, from $7.62 billion a year ago. Non-interest-bearing deposits represented 38.4% of total deposits at December 31, 2021, versus 37.9% of total deposits at the end of 2020. Total assets advanced to $11.44 billion at the close of 2021 from $9.87 billion at December 31, 2020.

Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories at December 31, 2021, with a total risk-based capital ratio of 18.63%, a tier 1 risk-based capital ratio of 17.54%, a common equity tier 1 capital ratio of 17.54%, and a tier 1 leverage ratio of 10.88%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.

“The Bank performed well in 2021, as we navigated the ongoing dual pressures of the pandemic and general economic environment,” said Daniel Walker, chief executive officer and chairman of the board. “The F&M team showcased our ability to make prudent business decisions and achieve positive outcomes. Moving forward in 2022, empathy and understanding will remain hallmarks that are embedded in all of our client interactions, whether in-person or on a screen.”

Stock Repurchase Program

Reflecting the Board of Directors confidence in the long-term outlook for the Bank, Farmers & Merchants Bank also announced today that the Board has authorized a new $20 million stock repurchase program, authorizing the Bank to repurchase of up to $20 million of the Bank’s common stock from time to time through December 31, 2023.

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, privately negotiated transactions, or otherwise in accordance with 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 2021, the Bank repurchased a total of 989 shares of its common stock at an average price of $8,152.22 per share, pursuant to a prior stock repurchase program that expired December 31, 2021. No shares were repurchased as part of that program during the fourth quarter of 2021.

About Farmers & Merchants Bank

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 its Online and Mobile Banking platforms. The Bank offers commercial and small business banking, business loan programs, home loans, and consumer 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 Bank’s 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,

 

2021

 

2020

 

2021

 

2020

 
Interest and dividend income:
Loans $

58,534

 

$

58,780

$

244,062

$

226,663

Investment securities

16,569

 

12,345

60,444

57,181

Investments in FHLB and FRB stock

347

 

261

1,206

1,040

Interest-bearing deposits in financial institutions

566

 

235

1,578

1,381

Total interest and dividend income

76,016

 

71,621

307,290

286,265

Interest expense:
Deposits

2,068

 

3,119

8,952

17,028

Securities sold under repurchase agreements

697

 

1,291

3,280

7,856

Total interest expense

2,765

 

4,410

12,232

24,884

Net interest income

73,251

 

67,211

295,058

261,381

Provision for loan losses

(1,000

)

2,000

-

10,500

Net interest income after provision for loan losses

74,251

 

65,211

295,058

250,881

Non-interest income:
Service charges on deposit accounts

1,489

 

1,271

5,602

5,193

Card income

1,644

 

1,057

4,007

3,370

Other income

3,330

 

3,711

12,421

11,940

Total non-interest income

6,463

 

6,039

22,030

20,503

Non-interest expense:
Salaries and employee benefits

28,614

 

28,834

111,046

111,485

FDIC and other insurance expense

969

 

756

3,614

2,611

Occupancy expense

3,639

 

3,520

14,004

14,236

Software and equipment expense

3,823

 

4,741

14,254

14,046

Professional and legal services

1,720

 

1,589

6,070

6,009

Marketing expense

1,438

 

966

4,957

5,126

Other expense

4,958

 

4,780

18,618

21,681

Total non-interest expense

45,161

 

45,186

172,563

175,194

Income before income tax expense

35,553

 

26,064

144,525

96,190

Income tax expense

6,575

 

4,700

29,320

16,389

Net income $

28,978

 

$

21,364

$

115,205

$

79,801

Basic earnings per common share $

230.66

 

$

168.12

$

913.60

$

623.42

Diluted earnings per common share $

226.02

 

$

167.49

$

898.31

$

622.74

Basic weighted-average shares outstanding

125,628

 

127,081

126,100

128,006

Diluted weighted-average shares outstanding

128,206

 

127,552

128,246

128,146

FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
 
Dec. 31, 2021 Dec. 31, 2020
 
Assets
Cash and due from banks:
Noninterest-bearing balances $

49,025

 

$

72,109

 

Interest-bearing balances

1,252,646

 

939,566

 

Total cash and due from banks

1,301,671

 

1,011,675

 

Securities available-for-sale, at fair value

139,947

 

137,373

 

Securities held-to-maturity, at amortized cost

4,366,821

 

3,131,213

 

Loans held for sale

9,430

 

22,893

 

Gross loans

5,453,279

 

5,414,814

 

Allowance for loan losses

(72,880

)

(72,267

)

Unamortized deferred loan fees, net

(8,650

)

(15,747

)

Loans, net

5,371,749

 

5,326,800

 

Other real estate owned, net

966

 

966

 

Investments in FHLB and FRB stock, at cost

20,031

 

20,257

 

Bank premises and equipment, net

115,827

 

103,615

 

Deferred tax assets, net

27,939

 

26,489

 

Other assets

83,879

 

90,497

 

Total assets $

11,438,260

 

$

9,871,778

 

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

3,552,248

 

$

2,889,012

 

Interest-bearing demand deposits

2,187,998

 

1,788,133

 

Savings and money market savings

2,755,862

 

2,129,755

 

Time deposits

745,382

 

810,726

 

Total deposits

9,241,490

 

7,617,626

 

Securities sold under repurchase agreements

916,672

 

1,062,348

 

Other liabilities

38,536

 

47,962

 

Total liabilities

10,196,698

 

8,727,936

 

 
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000
125,628 and 126,617 shares issued and outstanding
at December 31, 2021 and 2020, respectively

2,513

 

2,532

 

Additional paid-in capital

89,972

 

90,516

 

Retained earnings

1,147,661

 

1,047,949

 

Accumulated other comprehensive income

1,416

 

2,845

 

Total stockholders' equity

1,241,562

 

1,143,842

 

Total liabilities and stockholders' equity $

11,438,260

 

$

9,871,778

 

 

Contacts

John Hinrichs

Executive Vice President

562-437-0011, ext. 5035

Roger Pondel

PondelWilkinson Inc.

Investor Relations

310-279-5965

investor@pondel.com

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