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Farmers & Merchants Bank of Long Beach Reports Fourth-Quarter and Year End 2008 Results

^{Published on 2009-01-29 15:29:58, Last Modified on 2009-01-29 15:32:25 - Market Wire}
 

LONG BEACH, Calif.--([ BUSINESS WIRE ])--Farmers & Merchants Bank of Long Beach (OTCBB:FMBL) today reported financial results for the fourth quarter and year ended December 31, 2008.

"Net loans increased 27%, and total deposits rose 33% during 2008, a testament to the solid fundamentals of our bank at a time when customers are seeking stability and safety," said Henry Walker, chief executive officer. "Our capital level remains strong as we continue to attract new customers and build upon relationships that are entering their fifth generation after more than a century of banking experience in Southern California."

Income Statement

For the 2008 fourth quarter, interest income was $46.8 million, compared with $47.1 million in the fourth quarter of 2007. Interest income for the year ended December 31, 2008 was $182.3 million, compared with $183.3 million reported for the same period in 2007.

Interest expense for the 2008 fourth quarter declined to $7.5 million from $12.6 million in the same quarter of 2007 principally due to lower interest rates on deposits. Interest expense for the year totaled $35.5 million, compared with $47.8 million for the same period in 2007.

The Bank's net interest income for the 2008 fourth quarter rose 13.8% to $39.3 million from $34.5 million in the same quarter of 2007, and increased to $146.8 million for the full-year 2008 from $135.5 million in 2007.

The Bank's provision for loan losses rose to $23.7 million in the fourth quarter of 2008 from $2.5 million in the fourth quarter of 2007. Provision for loan losses totaled $53.0 million in 2008 versus $6.4 million for 2007. The Bank's allowance for loan losses as a percentage of loans outstanding was 2.69% at December 31, 2008, compared with 1.75% at December 31, 2007.

"While the increase in loan loss provision affected our 2008 earnings, during these times of economic uncertainty, we continue to take prudent steps to ensure sound financial health," Walker added.

Non-interest income rose 15.2% to $3.3 million for the 2008 fourth quarter compared with $2.8 million in the 2007 fourth quarter primarily related to increased service fees from account analysis services. Non-interest income for the full 2008 year totaled $14.3 million, compared with $12.3 million for 2007.

Non-interest expense for the 2008 fourth quarter was $14.8 million compared with $15.2 million for the same period last year. Non-interest expense for the year ended December 31, 2008 was $61.5 million, compared with $58.1 million during the same period in 2007. Reflecting the Bank's focus on controlling operating costs, Farmers and Merchants' overhead efficiency ratio was 37.59%, better than the industry's average.

The Bank's net income for the 2008 fourth quarter totaled $2.9 million, or $22.39 per diluted share, compared with net income of $12.3 million, or $81.11 per diluted share, in the 2007 fourth quarter. The decrease in net income primarily stemmed from an increase in the provision for loan losses. The Bank's net income for 2008 was $29.7 million, or $218.97 per diluted share, compared with $51.2 million, or $337.97 per diluted share, for 2007.

Balance Sheet

At December 31, 2008, net loans increased 27.3% to $1.95 billion from $1.53 billion at December 31, 2007. The Bank's deposits grew 33% to $2.68 billion at the end of 2008, compared with $2.01 billion at December 31, 2007. Non-interest bearing deposits represented 30.3% of total deposits at December 31, 2008, versus 35.0% of total deposits at December 31, 2007. Total assets increased to $3.64 billion at the close of 2008 from $3.20 billion at December 31, 2007.

At December 31, 2008, Farmers & Merchants Bank remained "well-capitalized" under all regulatory categories, with a total risk-based capital ratio of 26.04%, a Tier 1 risk-based capital ratio of 24.78%, and a Tier 1 leverage ratio of 15.22%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 6.00% and 5.00%, respectively.

"Farmers & Merchants Bank's healthy balance sheet is a reflection of our discipline and continuing commitment to our depositors, borrowers and shareholders who look to the strength of our Bank, especially in this challenging economy," said Daniel Walker, president and chairman of the board. "We successfully avoided the subprime mortgage debacle and maintained assets at record levels. We remain confident that our robust balance sheet will serve Farmers & Merchants well in the year ahead."

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.