Farmers & Merchants Bank of Long Beach Reports 2023 Fourth-Quarter and Full-Year Results
Farmers & Merchants Bank of Long Beach (FMBL) reported financial results for the fourth quarter and full year ended December 31, 2023, including a new $10 million stock repurchase program. The bank's net interest margin and net income declined, while total interest and dividend income increased. The Board of Directors declared a total of $127 per share in dividends in 2023. The bank's gross loans and total deposits remained stable, and its capital ratios exceeded regulatory requirements.
Negative
The bank's net interest margin and net income declined for the fourth quarter of 2023 compared to the same period in 2022, signaling a potential decrease in earnings performance.
Total interest and dividend income for the year 2023 increased, but the net interest income before provision for credit losses declined, indicating a potential impact on earnings performance.
The bank's total deposits decreased from $9.14 billion at December 31, 2022, to $8.67 billion at December 31, 2023, which could affect the bank's ability to lend and generate income from interest.
The decline in non-interest income from $18.5 million in 2022 to $16.4 million in 2023 may indicate reduced fee-based income, impacting overall revenue.
01/25/2024 - 08:05 AM
Board of Directors Authorizes New $10 Million Stock Repurchase Program
LONG BEACH, Calif. --(BUSINESS WIRE)--
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)
Twelve 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
View source version on businesswire.com: https://www.businesswire.com/news/home/20240125553164/en/
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
What is the ticker symbol for Farmers & Merchants Bank of Long Beach?
The ticker symbol for Farmers & Merchants Bank of Long Beach is FMBL.
What were the total interest and dividend income for the year ended December 31, 2023?
The total interest and dividend income for the year ended December 31, 2023, was $415.5 million.
What was the net interest margin for the fourth quarter of 2023?
The net interest margin for the fourth quarter of 2023 was 2.08%.
What is the total risk-based capital ratio for the Bank as of December 31, 2023?
The total risk-based capital ratio for the Bank as of December 31, 2023, was 17.51%.