FMBL Farmers and Merchants Bank (QX)

Farmers & Merchants Bank of Long Beach (OTCBB: FMBL) today reported financial results for the first quarter ended March 31, 2013.

“Farmers & Merchants achieved a new milestone in the first quarter, with the Bank’s total assets surpassing the $5 billion mark for the first time,” said Henry Walker, president of Farmers & Merchants Bank of Long Beach. “This achievement demonstrates the Bank’s vitality during a challenging environment for our industry. Steady and stable growth is a Farmers & Merchants hallmark that has long attracted customers to the Bank.”

Income Statement

For the three months ended March 31, 2013, interest income was $39.6 million, compared with $46.3 million in the first quarter of 2012; the decrease reflects the very competitive pricing environment for loans. Interest expense for the 2013 first quarter declined to $1.5 million from $1.8 million in the first quarter of 2012, primarily related to the continuance of the low interest rate environment.

Net interest income for the 2013 first quarter was $38.1 million, compared with $44.4 million for the first quarter of 2012. Farmers & Merchants’ net interest margin was 3.32% for the 2013 first quarter, compared with 4.07% in the 2012 first quarter.

The Bank did not have a provision for loan losses in the first quarter of 2013, nor in the same period a year ago, reflecting the asset quality of the Bank’s loan portfolio. The Bank’s allowance for loan losses as a percentage of loans outstanding was 2.50% at March 31, 2013, compared with 2.86% at March 31, 2012.

Non-interest income was $9.7 million for the 2013 first quarter, which included a one-time gain of $3.6 million from the sale of a closed branch building in North Long Beach. Non-interest income was $6.4 million for the first quarter a year ago.

Net income for the 2013 first quarter totaled $16.7 million, or $127.78 per diluted share, compared with net income of $18.5 million, or $141.48 per diluted share, for the 2012 first quarter.

Balance Sheet

At March 31, 2013, net loans increased to $1.97 billion from $1.93 billion at December 31, 2012. The Bank’s deposits totaled $3.74 billion at the end of the 2013 first quarter, compared with $3.69 billion at December 31, 2012. Non-interest bearing deposits represented 39.4% of total deposits at March 31, 2013, versus 40.0% of total deposits at December 31, 2012. Total assets increased to $5.07 billion at the close of the 2013 first quarter from $4.99 billion at December 31, 2012.

At March 31, 2013, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 29.80%, a Tier 1 risk-based capital ratio of 28.54%, and a Tier 1 leverage ratio of 14.44%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 6.00% and 5.00%, respectively.

“We made strategic investments in people during the first quarter to further enhance our lending and marketing activities, while continuing to maintain the fundamentals that support a healthy balance sheet,” said Daniel Walker, chief executive officer and chairman of the board. “To continue down the path of reaching new audiences, we enhanced the breadth of our marketing team, naming Adam Michaelson as Chief Marketing Officer. Adam’s marketing acumen and experience in the financial services industry are well positioned for F&M, and we welcome him to the team.”

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, Except Per Share Data)         Three Months Ended March 31, 2013 2012   Interest income:   Loans $ 25,559 $ 31,410 Securities available-for-sale 2,240 3,015 Securities held-to-maturity 11,629 11,634 Deposits with banks 207   219   Total interest income 39,635   46,278   Interest expense:   Deposits 1,261 1,567 Securities sold under repurchase agreements 273   268   Total interest expense 1,534   1,835   Net interest income 38,101 44,443   Provision for loan losses -   -   Net int. income after provision for loan losses 38,101   44,443   Non-interest income:   Service charges on deposit accounts 1,154 1,199 Gain on sale of securities 536 42 Merchant bankcard income 2,174 1,628 Other income 5,788   3,509   Total non-interest income 9,652   6,378   Non-interest expense:   Salaries and employee benefits 13,340 11,761 FDIC and other insurance expense 1,692 1,570 Occupancy expense 1,320 1,378 Equipment expense 1,435 1,337 Other real estate owned expense,net (1,127 ) 1,296 Amortization of public welfare investments 2,020 2,201 Merchant bankcard expense 1,721 1,107 Legal and professional services 748 464 Marketing expense 607 630 Other expense 1,429   1,395   Total non-interest expense 23,185   23,139   Income before income tax expense 24,568 27,682   Income tax expense 7,839   9,159   Net income $ 16,729   $ 18,523   Basic and diluted earnings per common share $ 127.78   $ 141.48         FARMERS & MERCHANTS BANK OF LONG BEACH Balance Sheets (Unaudited) (In Thousands, Except Share and Per Share Data)           Mar. 31, 2013 Dec. 31, 2012   Assets   Cash and due from banks: Noninterest-bearing balances $ 56,606 $ 60,914 Interest-bearing balances 276,830 253,087 Securities available-for-sale 569,261 630,055 Securities held-to-maturity 2,039,883 1,942,085 Gross loans 2,018,905 1,984,440 Less allowance for loan losses (50,465) (50,994) Less unamortized deferred loan fees, net (280) (364) Net loans 1,968,160 1,933,082 Other real estate owned, net 18,886 17,696 Public welfare investments 33,784 35,804 Bank premises and equipment, net 61,105 60,504 Deferred tax assets 24,068 26,060 Other assets 22,825 29,674   Total assets $ 5,071,408 $ 4,988,961     Liabilities and stockholders' equity   Liabilities:   Deposits: Demand, non-interest bearing $ 1,473,535 $ 1,474,215 Demand, interest bearing 357,654 346,991 Savings and money market savings 1,059,356 1,011,029 Time deposits 848,001 853,631   Total deposits 3,738,546 3,685,866   Securities sold under repurchase agreements 574,470 551,293 Other liabilities 28,233 34,543   Total liabilities 4,341,249 4,271,702   Stockholders' Equity:   Common Stock, par value $20; authorized 250,000 shares; issued and outstanding 130,928 shares 2,619 2,619 Additional paid-in capital 12,044 12,044 Retained earnings 709,018 695,169 Accumulated other comprehensive income 6,478 7,427   Total stockholders' equity 730,159 717,259   Total liabilities and stockholders' equity $ 5,071,408 $ 4,988,961