Farmers & Merchants Bank of Long Beach (OTCBB: FMBL) today reported financial results for the second quarter ended June 30, 2009.
“We continued to build relationships with new customers in the second quarter after experiencing another period of solid deposit growth,” said Henry Walker, chief executive officer. “Maintaining the soundness and stability of Farmers & Merchants Bank is an absolute priority in a region where customers increasingly look to well capitalized banks when it comes to their banking relationships.”
Income Statement
For the 2009 second quarter, interest income increased 7.6% to $48.1 million from $44.7 million in the prior-year comparable period, mostly reflecting growth in the Bank’s loan portfolio. Interest income for the first half of 2009 was $94.7 million compared with $90.1 million reported for the first half of 2008.
Interest expense for the 2009 second quarter declined to $4.7 million from $8.6 million reported for the second quarter of 2008, mostly related to the declining interest rate environment. Interest expense for the first half of 2009 declined to $10.3 million from $19.0 million reported for the first half of 2008.
Net interest income for the 2009 second quarter rose 20.3% to $43.4 million from $36.1 million for the second quarter of 2008, and increased 18.9% to $84.5 million for the first half of 2009 compared with $71.0 million in the six months ended June 30, 2008.
The Bank’s provision for loan losses equaled $10.0 million for the second quarter of 2009, compared with $8.0 million for the preceding first quarter, and $7.8 million for the second quarter of 2008. Provision for loan losses totaled $18.0 million for the first half of 2009 versus $9.7 million for the first half of 2008. The Bank’s allowance for loan losses as a percentage of loans outstanding was 2.75% at June 30, 2009, compared with 2.52% at March 31, 2009.
Non-interest income was $3.3 million for the 2009 second quarter versus $4.3 million in the second quarter a year ago. Non-interest income was $6.1 million for the first half of 2009 compared with $7.5 million for the first half of 2008.
Non-interest expense for the 2009 second quarter was $20.9 million, versus $16.5 million for the same period last year. Non-interest expense for the first half of 2009 was $40.5 million compared with $31.9 million for the first half of 2008. The increase in non-interest expense is principally attributable to increased insurance expenses and costs associated with the foreclosure of certain real estate properties.
The Bank’s net income for the 2009 second quarter totaled $9.1 million, or $69.52 per diluted share, compared with net income of $10.1 million, or $76.40 per diluted share, in the year-ago period. The Bank’s net income for the first half of 2009 was $19.1 million, or $146.16 per diluted share, compared with $22.8 million, or $162.40 per diluted share for the first half of 2008.
Balance Sheet
At June 30, 2009, net loans increased to $1.96 billion from $1.95 billion at December 31, 2008. The Bank’s deposits totaled $2.85 billion at the end of the 2009 second quarter, compared with $2.68 billion at December 31, 2008. Non-interest bearing deposits represented 30.7% of total deposits at June 30, 2009, versus 30.3% of total deposits at December 31, 2008. Total assets increased to $4.00 billion at the close of the 2009 second quarter, compared with $3.64 billion at December 31, 2008.
At June 30, 2009, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 26.51%, a Tier 1 risk-based capital ratio of 25.25%, and a Tier 1 leverage ratio of 14.37%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 6.00% and 5.00%, respectively.
“Safety is a defining characteristic of Farmers & Merchants Bank, and we take a conservative approach to lending to ensure the strength of our balance sheet,” said Daniel Walker, president and chairman of the board. “As the cost of doing business continues to rise, particularly amid the challenging economic environment, we are committed to serving our customers with the same attention to quality that has been a hallmark of our Bank for more than a century.”
About Farmers & Merchants Bank of Long Beach
Farmers & Merchants Bank of Long Beach provides personal and business banking services through 22 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 Balance Sheets (unaudited) | ||||||||
June 30, 2009 | Dec. 31, 2008 | |||||||
Assets | ||||||||
Cash and due from banks: | ||||||||
Noninterest-bearing balances | $ | 56,324,440 | $ | 59,028,599 | ||||
Interest-bearing balances | 181,676,328 | 150,668,294 | ||||||
Investment securities | 1,678,106,810 | 1,386,358,588 | ||||||
Gross loans | 2,020,004,637 | 2,000,951,253 | ||||||
Allowance for loan losses | (55,568,996 | ) | (53,794,344 | ) | ||||
Net loans | 1,964,435,641 | 1,947,156,909 | ||||||
Bank premises and equipment | 53,980,851 | 55,531,620 | ||||||
Other real estate owned | 26,329,616 | - | ||||||
Accrued interest receivable | 15,935,463 | 14,853,715 | ||||||
Other assets | 26,170,877 | 23,674,204 | ||||||
Total assets | $ | 4,002,960,026 | $ | 3,637,271,929 | ||||
Liabilities and stockholders' equity | ||||||||
Liabilities: | ||||||||
Deposits: | ||||||||
Demand, non-interest bearing | $ | 875,280,305 | $ | 809,671,161 | ||||
Demand, interest bearing | 229,893,756 | 225,485,095 | ||||||
Savings and money market savings | 601,393,073 | 507,521,371 | ||||||
Time deposits | 1,139,886,124 | 1,133,141,414 | ||||||
Total deposits | 2,846,453,258 | 2,675,819,041 | ||||||
Securities sold under agreements to repurchase | 569,943,027 | 393,201,735 | ||||||
Accrued interest payable and other liabilities | 12,305,714 | 7,329,241 | ||||||
Total liabilities | 3,428,701,999 | 3,076,350,017 | ||||||
Stockholders' Equity: | ||||||||
Common Stock, par value $20; authorized 250,000 | ||||||||
shares; issued and outstanding 130,928 shares | 2,618,560 | 2,618,560 | ||||||
Surplus | 12,043,783 | 12,043,783 | ||||||
Retained earnings | 550,312,612 | 536,674,669 | ||||||
Other comprehensive income | 9,283,072 | 9,584,900 | ||||||
Total stockholders' equity | 574,258,027 | 560,921,912 | ||||||
Total liabilities and stockholders' equity | $ | 4,002,960,026 | $ | 3,637,271,929 | ||||
FARMERS & MERCHANTS BANK OF LONG BEACH Income Statements (unaudited) | ||||||||||||||||
Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Interest income: | ||||||||||||||||
Loans | $ | 31,084,621 | $ | 28,301,766 | $ | 61,113,006 | $ | 55,944,824 | ||||||||
Securities held to maturity | 12,361,099 | 10,940,622 | 23,991,058 | 22,478,981 | ||||||||||||
Securities available for sale | 4,551,498 | 5,133,382 | 9,441,273 | 10,403,438 | ||||||||||||
Federal funds sold | - | 310,723 | - | 1,230,570 | ||||||||||||
Deposits with banks | 96,259 | - | 190,943 | - | ||||||||||||
Total interest income | 48,093,477 | 44,686,493 | 94,736,280 | 90,057,813 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 4,052,936 | 6,646,195 | 8,990,764 | 13,876,916 | ||||||||||||
Federal funds purchased | - | 4,437 | - | 9,660 | ||||||||||||
Securities sold under agreement to repurchase | 621,183 | 1,935,936 | 1,281,629 | 5,137,504 | ||||||||||||
Total interest expense | 4,674,119 | 8,586,568 | 10,272,393 | 19,024,080 | ||||||||||||
Net interest income | 43,419,358 | 36,099,925 | 84,463,887 | 71,033,733 | ||||||||||||
Provision for loan losses | 10,000,000 | 7,782,820 | 18,000,000 | 9,737,734 | ||||||||||||
Net interest income after provision for loan losses | 33,419,358 | 28,317,105 | 66,463,887 | 61,295,999 | ||||||||||||
Non-interest income: | ||||||||||||||||
Service charges on deposit accounts | 1,448,502 | 1,484,005 | 2,959,697 | 2,867,071 | ||||||||||||
Merchant bankcard fees | 284,637 | 355,147 | 562,025 | 707,770 | ||||||||||||
Escrow fees | 158,081 | 388,282 | 292,625 | 656,323 | ||||||||||||
Other | 1,439,821 | 2,113,849 | 2,330,726 | 3,301,176 | ||||||||||||
Total non-interest income | 3,331,041 | 4,341,283 | 6,145,073 | 7,532,340 | ||||||||||||
Non-interest expense: | ||||||||||||||||
Salaries and employee benefits | 9,841,193 | 10,350,348 | 20,123,063 | 20,753,363 | ||||||||||||
FDIC and other insurance expense | 2,146,811 | 158,455 | 3,988,078 | 319,301 | ||||||||||||
Occupancy expense | 1,467,206 | 1,350,807 | 2,892,855 | 2,636,196 | ||||||||||||
Equipment expense | 1,237,412 | 1,121,284 | 2,499,218 | 2,010,729 | ||||||||||||
Other real estate owned expense, net | 3,465,821 | - | 5,415,230 | - | ||||||||||||
Legal and professional fees | 514,284 | 961,480 | 1,079,473 | 1,324,252 | ||||||||||||
Marketing and promotional expense | 386,454 | 566,117 | 1,012,495 | 1,369,590 | ||||||||||||
Printing and supplies | 234,482 | 260,659 | 501,320 | 546,602 | ||||||||||||
Postage and delivery | 308,313 | 304,982 | 674,745 | 634,578 | ||||||||||||
Other | 1,276,291 | 1,456,892 | 2,273,280 | 2,345,447 | ||||||||||||
Total non-interest expense | 20,878,267 | 16,531,024 | 40,459,757 | 31,940,058 | ||||||||||||
Income before income tax expense | 15,872,132 | 16,127,364 | 32,149,203 | 36,888,281 | ||||||||||||
Income tax expense: | 6,769,627 | 6,051,220 | 13,012,284 | 14,054,721 | ||||||||||||
Net income | $ | 9,102,505 | $ | 10,076,144 | $ | 19,136,919 | $ | 22,833,560 | ||||||||
Basic earnings per common share | $ | 69.52 | $ | 76.40 | $ | 146.16 | $ | 162.40 | ||||||||
Diluted earnings per common share | $ | 69.52 | $ | 76.40 | $ | 146.16 | $ | 162.40 | ||||||||
Contacts:
Farmers & Merchants Bank of Long Beach
John Hinrichs, Executive
Vice President
562-437-0011, ext. 5035
or
PondelWilkinson
Inc.
Corporate and Investor Relations
Evan Pondel, 310-279-5980
investor@pondel.com