LONG BEACH, Calif., January 23, 2025--(BUSINESS WIRE)--Farmers & Merchants Bank of Long Beach ("F&M" or the "Bank") (OTCQX: FMBL) today reported financial results for the fourth quarter and full year ended December 31, 2024.
"Profitable operations were achieved for both the fourth quarter and full 2024 year, demonstrating the Bank’s financial strength, resilience to the challenging external banking environment, and dedication to prudent financial management," said W. Henry Walker, Chief Executive Officer of F&M Bank. "At year-end, the Bank’s balance sheet remained strong, with all capital ratios far exceeding regulatory requirements.
"During the fourth quarter, the Board and management team took decisive action to enhance F&M’s future operating performance by selling low-yielding fixed-rate securities and deploying the proceeds into higher-earnings securities. Despite a one-time impact on 2024 earnings, the sale is expected to facilitate growth in net interest margin (NIM), return on assets (ROA), and net income."
Daniel Walker, F&M’s Executive Chairman, added, "The decision to reposition F&M’s balance sheet, in addition to enhancing future operating performance, will benefit all of our stakeholders, including better aligning the Bank to meet the increasing lending needs of new and existing clients throughout the region."
Operating Results
For the fourth quarter of 2024, total interest and dividend income amounted to $108.9 million versus $108.0 million in the fourth quarter of 2023. Total interest and dividend income for the year ended December 31, 2024, increased to $439.8 million from $415.5 million for the year ended December 31, 2023.
Total interest expense for the fourth quarter of 2024 was $46.5 million, compared with $45.7 million in the fourth quarter of 2023. Interest expense for the year ended December 31, 2024, was $202.6 million, versus $152.5 million last year.
Net interest income before provision for credit losses for both the fourth quarter of 2024 and fourth quarter of 2023 remained unchanged at $62.3 million. Net interest income before provision for credit losses for the year ended December 31, 2024, was $237.2 million, compared with $263.1 million for the year ended December 31, 2023.
F&M’s net interest margin was 2.14% for the 2024 fourth quarter, versus 2.08% in the fourth quarter of 2023. Net interest margin was 2.00% for the full 2024 year, compared with 2.21% in 2023.
For the fourth quarter of 2024, the Bank recorded a provision for credit losses of $600 thousand, compared to no net provision for credit losses for the fourth quarter of 2023. The Bank recorded a recapture of provision for credit losses of $6.6 million for the 2024 year, compared with a $3.6 million recapture of provision for credit losses for the same period in 2023.
Total non-interest income was $(3.8) million for the fourth quarter of 2024, compared with non-interest income of $4.2 million in the fourth quarter of 2023. The fourth quarter decrease in non-interest income was primarily due to the Bank’s investment securities portfolio repositioning in December 2024.
The Bank sold $136 million of qualified held-to-maturity securities and $65 million of available-for-sale securities consisting of lower-yielding securities resulting in a pre-tax loss of $10.1 million. The securities sold had an average yield of 2.24%. The Bank deployed the net proceeds into $200 million of higher-yielding short-term securities with an average yield of 4.31%. F&M anticipates that the transaction will be accretive to earnings, net interest margin and return on assets in future periods. For the year ended December 31, 2024, total non-interest income increased to $19.6 million from $16.4 million in 2023.
Total non-interest expense for the fourth quarter of 2024 was $51.5 million, compared with $49.8 million for the fourth quarter of 2023. Non-interest expense for the year ended December 31, 2024, was $200.0 million, compared with $201.2 million for the year ended December 31, 2023.
Fourth quarter 2024 net income was $4.0 million, or $32.18 per diluted share, compared with $12.8 million, or $101.61 per diluted share for the 2023 fourth quarter. The Bank’s full year 2024 net income was $44.9 million, or $358.63 per diluted share, compared with $70.0 million, or $553.79 per diluted share, last year.
Balance Sheet
Gross loans were $6.47 billion as of December 31, 2024, compared with $6.76 billion at December 31, 2023. The Bank’s allowance for loan losses totaled $96.6 million, or 1.50% of loans held-for-investment at December 31, 2024, compared with $97.9 million, or 1.45% of loans held-for-investment, at December 31, 2023.
The Bank’s total deposits rose to $8.77 billion at December 31, 2024, from $8.67 billion at December 31, 2023. Noninterest-bearing deposits represented 33.2% of total deposits at December 31, 2024, and December 31, 2023.
Securities sold under repurchase agreements increased to $991.9 million at December 31, 2024, from $909.4 million at December 31, 2023. Borrowings were $500.0 million at December 31, 2024, a decrease of $500.0 million from $1.0 billion at December 31, 2023.
Total assets at December 31, 2024, were $11.69 billion, compared with $12.04 billion at December 31, 2023. Total stockholders’ equity was $1.37 billion at December 31, 2024, up from $1.35 billion at December 31, 2023.
Capital
Capital ratios are the foundation of safety in all banks, and F&M continues to exceed most national and regional banks in this area, as well as exceeding regulatory capital requirements to meet the definition of a "well-capitalized" financial institution. The Bank’s total risk-based capital ratio was 18.77%; its tier 1 risk-based capital ratio was 17.52%, with a common equity tier 1 capital ratio of 17.52%, and a tier 1 leverage ratio of 11.42%, as of December 31, 2024. 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
During the twelve months ended December 31, 2024, the Bank repurchased 3,066 shares of its common stock for $15.4 million on the open market at an average repurchase price of $5,017.85 per share. Under the stock purchase program, the Bank may purchase shares of its common stock 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 purchases at any time and anticipates that any such repurchases will be funded from existing cash and cash equivalents or future cash flow. The stock repurchase program does not obligate the Bank to repurchase any specific number of shares in any particular period.
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.
Safe Harbor Statement
This press release contains forward-looking statements, including, but not limited to, improved operating performance, and improvements in NIM, ROA and net income, that are subject to various risks and uncertainties. Such statements that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursuant," "target," "continue," and similar expressions are intended to identify such forward-looking statements. Factors that could cause actual results to differ materially from management's expectations include fluctuation in market rates of interest, loan and deposit pricing, adverse changes in national and economic conditions, including conditions in the Bank’s specific market areas, among others. Forward-looking statements are made as of the date of this press release, and the Bank does not intend to update such statements except as required by law.
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,
2024
2023
2024
2023
Interest and dividend income:
Loans
$
75,021
$
76,432
$
300,274
$
299,723
Investment securities
19,034
20,895
79,653
87,511
Investments in FHLB and FRB stock
459
443
1,914
1,672
Interest-bearing deposits in financial institutions
14,341
10,199
57,914
26,615
Total interest and dividend income
108,855
107,969
439,755
415,521
Interest expense:
Deposits
30,439
24,978
119,006
81,556
Securities sold under repurchase agreements
8,735
9,287
37,611
31,499
Borrowings
7,375
11,414
45,942
39,398
Total interest expense
46,549
45,679
202,559
152,453
Net interest income before provision for credit losses
62,306
62,290
237,196
263,068
Provision for credit losses
Loans
600
1,100
(2,500
)
(700
)
Investment securities
-
-
-
100
Reserve for unfunded loan commitments
-
(1,100
)
(4,100
)
(3,000
)
Total provision for credit losses
600
-
(6,600
)
(3,600
)
Net interest income after provision for credit losses
61,706
62,290
243,796
266,668
Non-interest income:
Service charges on deposit accounts
1,971
1,818
7,541
6,971
Other real estate owned income
1,318
-
1,318
-
Loss on sale of securities
(10,141
)
-
(10,141
)
-
Card income
187
315
852
1,272
Other income
2,886
2,018
20,000
8,204
Total non-interest income
(3,779
)
4,151
19,570
16,447
Non-interest expense:
Salaries and employee benefits
31,878
26,881
123,306
120,419
FDIC and other insurance expense
2,093
3,249
10,110
9,172
Occupancy expense
3,979
4,071
15,835
15,712
Software and equipment expense
4,475
4,471
17,662
16,025
Other real estate owned expense
38
-
370
-
Professional and legal services
1,800
2,524
10,595
8,121
Marketing expense
1,871
1,485
4,728
7,730
Other expense
5,411
7,080
17,364
24,004
Total non-interest expense
51,545
49,761
199,970
201,183
Income before income tax expense
6,382
16,680
63,396
81,932
Income tax expense
2,386
3,832
18,518
11,925
Net income
$
3,996
$
12,848
$
44,878
$
70,007
Basic earnings per common share
$
32.46
$
104.34
$
365.52
$
568.23
Diluted earnings per common share
$
32.18
$
101.61
$
358.63
$
553.79
Basic weighted-average shares outstanding
123,121
123,135
122,778
123,202
Diluted weighted-average shares outstanding
124,178
126,446
125,138
126,413
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
Dec. 31, 2024
Dec. 31, 2023
Assets
Cash and due from banks:
Noninterest-bearing balances
$
72,319
$
74,595
Interest-bearing balances
976,039
548,874
Total cash and due from banks
1,048,358
623,469
Securities available-for-sale, at fair value
281,219
115,883
Securities held-to-maturity, at amortized cost
3,687,417
4,301,060
Loans held for sale
1,132
-
Gross loans
6,467,991
6,756,207
Unamortized deferred loan fees, net
(8,811
)
(11,469
)
Allowance for credit losses on loans
(96,585
)
(97,900
)
Loans, net
6,362,595
6,646,838
Investments in FHLB and FRB stock, at cost
22,472
22,798
Bank premises and equipment, net
118,474
125,929
Deferred tax assets, net
42,427
45,723
Other assets
125,975
154,154
Total assets
$
11,690,069
$
12,035,854
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits
$
2,908,598
$
2,880,315
Interest-bearing demand deposits
2,047,524
2,069,275
Savings and money market savings
2,784,678
2,661,312
Time deposits
1,028,793
1,059,166
Total deposits
8,769,593
8,670,068
Securities sold under repurchase agreements
991,869
909,376
Borrowings
500,000
1,000,000
Other liabilities
59,724
104,965
Total liabilities
10,321,186
10,684,409
Stockholders' Equity:
Common Stock, par value $20; authorized 250,000 shares;
122,728 and 123,135 shares issued and outstanding at
December 31, 2024 and December 31, 2023, respectively
