Farmers & Merchants Bank of Long Beach (OTCBB:FMBL) today reported financial results for the third quarter ended September 30, 2012.
“We continued to achieve profitability in the third quarter and nine-month period, while focusing on the long-term strength of the Bank by maintaining the asset quality of our loan portfolio,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “In an increasingly competitive lending environment, we remain committed to forming relationships that are in the best interest of the Bank, shareholders and community we’ve been serving for more than a century.”
For the 2012 third quarter, interest income decreased to $41.5 million from $44.6 million earned in the 2011 third quarter. Interest income for the nine-month period ended September 30, 2012 was $130.7 million, compared with $135.3 million reported for the same period in 2011. These results were impacted by the mix of securities and loans with lower yields available for securities.
Interest expense for the 2012 third quarter declined to $1.7 million from $2.3 million in last year’s third quarter. Interest expense for the nine-month period ended September 30, 2012 declined to $5.4 million from $7.5 million reported for the same period last year. The Bank’s overall cost of funds continues to reflect the low interest rate environment and the impact of non-interest bearing deposits.
Net interest income for the 2012 third quarter decreased to $39.8 million from $42.2 million for the third quarter of 2011, and to $125.3 million for the first nine months of 2012 from $127.8 million for the same period in 2011.
The Bank did not have a provision for loan losses in the third quarter of 2012 or during the first nine months of the year amid improving economic conditions. Provision for loan losses in the third quarter of 2011 totaled $2.0 million and $8.8 million for the first nine months of 2011. The Bank’s allowance for loan losses as a percentage of loans outstanding was 2.91% at September 30, 2012, compared with 2.80% at December 31, 2011.
Non-interest income increased to $3.4 million for the 2012 third quarter from $3.3 million in the third quarter a year ago. Non-interest income was $12.0 million for the nine-month period ended September 30, 2012, compared with $9.9 million for the same period in 2011.
Non-interest expense for the 2012 third quarter was $22.0 million, versus $18.8 million for the same period last year. Non-interest expense for the first nine months of 2012 was $63.7 million, compared with $58.6 million last year.
The Bank's net interest margin was 3.51% for the third quarter ended September 30, 2012 and 3.76% for the first nine months of 2012.
Net income for the 2012 third quarter decreased to $14.9 million, or $113.67 per diluted share, from $16.0 million, or $121.85 per diluted share, in the year-ago period. The Bank’s net income for the first nine months of 2012 rose to $50.1 million, or $383.02 per diluted share, from $45.3 million, or $346.23 per diluted share, for the same period in 2011.
At September 30, 2012, net loans totaled $1.92 billion, compared with $2.03 billion at December 31, 2011. The Bank’s deposits totaled $3.53 billion at the end of the 2012 third quarter, compared with $3.39 billion at December 31, 2011. Non-interest bearing deposits represented 38.0% of total deposits at September 30, 2012, versus 37.2% of total deposits at December 31, 2011. Total assets increased to $4.87 billion at the close of the 2012 third quarter, compared with $4.66 billion at the close of the prior year.
At September 30, 2012, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 29.89%, a Tier 1 risk-based capital ratio of 28.62%, and a Tier 1 leverage ratio of 14.46%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 6.00% and 5.00%, respectively.
“We reported solid year-to-date deposit growth in the third quarter, as the strength and reputation of the Bank continued to resonate with customers amid economic uncertainty,” said Daniel Walker, chief executive officer and chairman of the board. “Additionally, as the Bank moves forward in its 105th year of serving Southern California, we believe the investments we have made in our infrastructure in 2012 position us well for the future.”
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)
|Three Months Ended Sept 30,||Nine Months Ended Sept 30,|
|Deposits with banks||294||162||764||273|
|Total interest income||41,522||44,572||130,683||135,294|
|Securities sold under agreement to repurchase||305||373||854||1,241|
|Total interest expense||1,738||2,344||5,366||7,452|
|Net interest income||39,784||42,228||125,317||127,842|
|Provision for loan losses||-||2,000||-||8,750|
|Net interest income after provision for loan losses||39,784||40,228||125,317||119,092|
|Service charges on deposit accounts||1,110||1,281||3,462||3,633|
|Gains on sale of securities||41||103||42||103|
|Merchant bankcard fees||433||348||1,334||903|
|Total non-interest income||3,370||3,252||11,969||9,891|
|Salaries and employee benefits||11,695||10,925||35,259||31,963|
|FDIC and other insurance expense||1,634||1,208||4,813||3,029|
|Other real estate owned expense, net||401||318||939||2,360|
|Amortization of investments in low-income communities||1,866||450||5,897||1,353|
|Legal and professional fees||883||962||1,929||2,575|
|Marketing and promotional expense||1,374||933||2,607||2,838|
|Total non-interest expense||21,912||18,797||63,702||58,563|
|Income before income tax expense||21,242||24,683||73,584||70,420|
|Income tax expense||6,359||8,729||23,436||25,088|
|Basic and diluted earnings per common share||$||113.67||$||121.85||$||383.02||$||346.23|
FARMERS & MERCHANTS BANK OF LONG BEACH
Balance Sheets (Unaudited)
|Sept. 30, 2012||Dec. 31, 2011|
|Cash and due from banks:|
|Less allowance for loan losses||(57,530||)||(58,463||)|
|Less unamortized deferred loan fees, net||(330||)||(418||)|
|Other real estate owned, net||22,586||23,036|
|Investments in low-income communities||37,669||43,566|
|Bank premises and equipment, net||60,077||55,155|
|Accrued interest receivable||18,161||16,464|
|Net deferred tax assets||28,210||28,583|
|Liabilities and stockholders' equity|
|Demand, non-interest bearing||$||1,341,647||$||1,263,162|
|Demand, interest bearing||314,979||300,984|
|Savings and money market savings||993,621||909,794|
|Securities sold under agreements to repurchase||595,173||555,992|
Common Stock, par value $20; authorized
|Accumulated other comprehensive income||8,630||8,845|
|Total stockholders' equity||711,900||670,216|
|Total liabilities and stockholders' equity||$||4,871,602||$||4,659,345|
Executive Vice President
562-437-0011, ext. 5035
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