Farmers & Merchants Bank of Long Beach Reports 2012 Fourth-Quarter and Full-Year Results

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Farmers & Merchants Bank of Long Beach Reports 2012 Fourth-Quarter and Full-Year Results

-- Year-Over-Year Net Income Rises 7% to $63.4 Million --


LONG BEACH, Calif.--(BUSINESS WIRE)-- Farmers & Merchants Bank of Long Beach (OTCBB: FMBL) today announced financial results for the fourth quarter and full year ended December 31, 2012.

"We achieved solid financial results for 2012, including another year of record earnings, despite an increasingly challenging regulatory and interest rate environment," said Henry Walker, president of Farmers & Merchants Bank of Long Beach. "We also made several key hires during the year, including a new chief credit officer, chief auditor, chief information officer and supporting staff, which will further enhance our position of strength as we enter 2013."

Income Statement

For the 2012 fourth quarter, total interest income was $40.4 million, compared with $43.3 million in the fourth quarter of 2011. Total interest income for the year ended December 31, 2012 was $171.1 million, compared with $178.6 million reported for 2011.

Interest expense for the 2012 fourth quarter fell to $1.6 million from $2.0 million in the same quarter of 2011. Interest expense for the full 2012 year declined to $7.0 million from $9.5 million in 2011. The Bank's overall cost of funds continued to reflect the low interest rate environment and the impact of non-interest bearing deposits.

The Bank's net interest income for the 2012 fourth quarter was $38.8 million, compared with net interest income of $41.3 million for the same quarter of 2011. Net interest income for 2012 was $164.1 million, versus $169.2 million in 2011. Farmers & Merchant's net interest margin was 3.65% for the year ended December 31, 2012, compared with 4.08% in the previous year.

The Bank did not have a provision for loan losses in the fourth quarter of 2012 or for the year ended December 31, 2012, reflecting stabilization of the asset quality of the Bank's loan portfolio. Provision for loan losses in the fourth quarter of 2011 totaled $5.5 million and was $14.2 for the full 2011 year. The Bank's allowance for loan losses as a percentage of loans outstanding was 2.85% at December 31, 2012, compared with 2.80% at December 31, 2011.

Non-interest income was $3.9 million for the 2012 fourth quarter, compared with $4.0 million in the 2011 fourth quarter. Non-interest income for the full 2012 year totaled $15.9 million, versus $13.9 million for 2011.

Non-interest expense for the 2012 fourth quarter was $24.1 million, compared with $19.9 million for the same period last year. Non-interest expense for the year ended December 31, 2012 was $87.8 million, compared with $78.4 million last year.

The Bank's net income for the 2012 fourth quarter was $13.2 million, or $101.12 per diluted share, compared with $13.8 million, or $105.30 per diluted share, in the 2011 fourth quarter. The Bank's net income for 2012 rose to $63.4 million, or $484.14 per diluted share, from $59.1 million, or $451.53 per diluted share, for 2011.

Balance Sheet

At December 31, 2012, net loans totaled $1.93 billion, compared with $2.03 billion at December 31, 2011. The Bank's deposits grew to $3.69 billion at the end of 2012, from $3.39 billion at December 31, 2011. Non-interest bearing deposits represented 40.0% of total deposits at December 31, 2012, versus 37.2% of total deposits at December 31, 2011. Total assets increased to $4.99 billion at the close of 2012 from $4.66 billion at December 31, 2011.

At December 31, 2012, Farmers & Merchants Bank remained "well-capitalized" under all regulatory categories, with a total risk-based capital ratio of 29.61%, a Tier 1 risk-based capital ratio of 28.35%, and a Tier 1 leverage ratio of 14.24%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 6.00% and 5.00%, respectively.

"We continued to build on the asset quality of our loan portfolio and experienced solid deposit growth in 2012 - two characteristics that reflect Farmers & Merchants' commitment to the long-term success of the Bank," said Daniel Walker, chief executive officer and chairman of the board. "Additionally, we believe the strategic investments we made in 2012, in both personnel and technology enhancements, will help continue to distinguish Farmers & Merchants Bank as one of the strongest banks in the region."

About Farmers & Merchants Bank of Long Beach

Farmers & Merchants Bank of Long Beach provides personal and business banking services through 21 offices in Los Angeles and Orange Counties. Founded in 1907 by C.J. Walker, the Bank specializes in commercial and small business banking along with business loan programs.

FARMERS & MERCHANTS BANK OF LONG BEACH
Income Statements (Unaudited)
(In Thousands)
       
Three Months Ended Dec. 31,Twelve Months Ended Dec. 31,
 2012 2011  2012 2011
 
Interest income:
 
Loans$26,060$28,667$112,157$115,395
Securities held-to-maturity11,67811,30347,11248,734
Securities available-for-sale2,4063,11810,79413,980
Deposits with banks 287 224  1,051 497
 
Total interest income 40,431 43,312  171,114 178,606
 
Interest expense:
 
Deposits1,3281,7095,8407,920
Securities sold under agreement to repurchase 293 294  1,147 1,535
 
Total interest expense 1,621 2,003  6,987 9,455
 
Net interest income38,81041,309164,127169,151
 
Provision for loan losses - 5,450  - 14,200
 
Net interest income after provision for loan losses 38,810 35,859  164,127 154,951
 
Non-interest income:
 
Service charges on deposit accounts1,1361,4814,5985,114
Gains on sale of securities30371345174
Merchant bankcard fees3763541,7101,257
Escrow fees227220858924
Other income 1,867 1,888  8,366 6,436
 
Total non-interest income 3,909 4,014  15,877 13,905
 
Non-interest expense:
 
Salaries and employee benefits13,0129,85048,27141,814
FDIC and other insurance expense1,6671,6436,4794,671
Occupancy expense1,3681,3745,4875,501
Equipment expense1,7181,3225,8005,435
Other real estate owned expense,net7401,0811,6793,441
Amortization of investments in LIC1,8662,5417,7623,894
Legal and professional fees9531,3212,8823,896
Marketing and promotional expense1,0671,0963,6743,934
Other expense 1,669 (364) 5,727 5,842
 
Total non-interest expense 24,060 19,864  87,761 78,428
 
Income before income tax expense18,65920,00992,24390,428
 
Income tax expense 5,420 6,223  28,856 31,310
 
Net income$13,239$13,786 $63,387$59,118
 
Basic and diluted earnings per common share$101.12$105.30 $484.14$451.53
 
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In Thousands)
     
Dec. 31, 2012Dec. 31, 2011
Assets
 
Cash and due from banks:
Noninterest-bearing balances$60,914$57,394
Interest-bearing balances253,087278,525
Securities held-to-maturity1,942,0851,564,841
Securities available for sale630,055548,289
Gross loans1,990,1462,087,388
Less allowance for loan losses(56,700)(58,463)
Less unamortized deferred loan fees, net (364) (418)
Net loans 1,933,082  2,028,507 
Other real estate owned, net17,69623,036
Investments in low-income communities (LIC)35,80443,566
Bank premises and equipment, net60,50455,155
Accrued interest receivable18,54216,464
Net deferred tax assets28,30228,583
Other assets 8,890  14,985 
 
Total assets$4,988,961 $4,659,345 
 
Liabilities and stockholders' equity
 
Liabilities:
 
Deposits:
Demand, non-interest bearing$1,474,215$1,263,162
Demand, interest bearing346,991300,984
Savings and money market savings1,011,029909,794
Time deposits 853,631  919,538 
 
Total deposits3,685,8663,393,478
 
Securities sold under agreements to repurchase551,293555,992
Other liabilities 34,543  39,659 
 
Total liabilities 4,271,702  3,989,129 
 
Stockholders' Equity:
 
Common Stock, par value $20; authorized
250,000 shares; issued and outstanding
130,928 shares2,6192,619
Surplus12,04412,044
Retained earnings695,169646,708
Accumulated other comprehensive income7,427  8,845 
Total stockholders' equity  Read Full Story

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