LONG BEACH, Calif.--(BUSINESS WIRE)--Farmers & Merchants Bank of Long Beach (“F&M” or the “Bank”) (OTCQX: FMBL) today reported financial results for the third quarter and nine-months ended September 30, 2026.
“During the third quarter, we completed an important step toward enhancing long-term earnings power, increasing balance sheet flexibility and supporting future growth, with the strategic repositioning of F&M’s investment securities portfolio,” said W. Henry Walker, Chief Executive Officer. “We were able to replace legacy securities yielding 1.43% with securities and loans at sharply higher current market yields, which will increase net interest margin, improve the Bank’s future profitability and allow us to meet increased client borrowing needs. While the non-recurring loss on sale of securities resulted in a net loss for the 2026 third quarter, the Bank expects to report net income for the full 2026 year."
“On an operating basis, general market conditions remain tight relative to acquiring low-cost deposits, but favorable trends are continuing. The recently announced Federal Reserve increase in interest rates is expected to bode well for us, with both bonds and loans already repricing at higher rates. Moreover, we are investing in technology, including the use of AI, along with attracting new talent and implementing strategies for growth in the years ahead. For the third quarter, F&M’s capital ratios again far exceeded the regulatory capital requirements to meet the definition of a ‘well-capitalized’ financial institution. At F&M, we believe that strong performance starts with getting the fundamentals right. Our team remains focused on operating efficiently, prudently managing risk and maintaining the standards of service and reliability that have long defined our Bank,” Mr. Walker added.
Daniel Walker, F&M’s Executive Chairman of the Board, said, “Our operating performance reflects the strength of a banking model built on trust, personal relationships and a long-term perspective. We are proud of what our team has accomplished and remain committed to serving our customers and communities as we foster the high standards of service and reliability that have long been hallmarks of our Bank and position F&M for continued growth. Proceeding toward the close of 2026, we look forward to celebrating F&M’s 119th anniversary and to the start of 120 years of service, today in Los Angeles, Orange and Santa Barbara Counties.”
Operating Results
For the third quarter of 2026, total interest and dividend income increased to $124.0 million, from $109.1 million in the third quarter of 2025. Total interest and dividend income for the nine months ended September 30, 2026 increased to $351.4 million from $318.9 million reported for the nine months ended September 30, 2025.
Total interest expense for the 2026 third quarter was $35.0 million, compared with $39.9 million in the 2025 third quarter. Interest expense for the nine months ended September 30, 2026 was $104.6 million, compared with $118.6 million a year ago.
Net interest income before provision for credit losses for the 2026 third quarter increased to $89.1 million, from $69.3 million for the 2025 third quarter. Net interest income before provision for credit losses for the nine months ended September 30, 2026 increased to $246.8 million, from $200.3 million for comparable period last year.
F&M’s net interest margin improved to 3.16% for the 2026 third quarter, from 2.47% for the third quarter of 2025. Net interest margin improved to 2.89% for the nine months ended September 30, 2026, from 2.39% for the same period in 2025.
For the 2026 third quarter, the Bank recorded a $2.2 million provision for credit losses, compared with a $1.9 million recapture of provision for credit losses recorded in the third quarter of 2025. For the nine months ended September 30, 2026, the Bank recorded a $500,000 recapture of provision for credit losses, compared with a $600,000 recapture of provision for credit losses for the nine months ended September 30, 2025.
During the 2026 third quarter, F&M recognized a pre-tax loss of $84.0 million, reflecting the sale of securities previously classified as held-to-maturity as part of a balance sheet repositioning. Total non-interest loss was $80.1 million for the third quarter of 2026, compared with total non-interest income of $4.4 million for the same period last year. For the nine months ended September 30, 2026, total non-interest loss was $57.0 million, compared with total non-interest income of $13.2 million for the nine months ended September 30, 2025.
Total non-interest expense for the 2026 third quarter was $57.2 million, compared with $51.3 million for the 2025 third quarter. Non-interest expense for the nine months ended September 30, 2026 was $164.9 million, compared with $148.8 million for the same period last year.
The Bank recorded a net loss of $36.8 million, or a loss of $264.89 per diluted share, for the third quarter of 2026 due to the strategic balance sheet repositioning, compared with net income of $18.1 million, or $147.32 per diluted share, for the same period in 2025. Net income for the nine months ended September 30, 2026 was $20.6 million, or $148.61 per diluted share, compared with $48.8 million, or $396.30 per diluted share, for the nine months ended September 30, 2025.
Balance Sheet
During the third quarter of 2026, the Bank sold approximately $991.9 million of low-yielding municipal bonds that were previously classified as held-to-maturity as part of a strategic balance sheet repositioning. A portion of the proceeds were reinvested in higher-yielding securities and utilized to pay down borrowings, with the remaining funds expected to enhance funding capacity and provide greater balance sheet flexibility.
Gross loans increased to $6.95 billion at September 30, 2026, from $6.08 billion at December 31, 2025. The Bank’s allowance for loan losses totaled $89.1 million at September 30, 2026, compared with $84.0 at December 31, 2025, representing 1.28% and 1.39% of loans held-for-investment at September 30, 2026 and December 31, 2025, respectively.
F&M’s total deposits at September 30, 2026 amounted to $8.89 billion, compared with $8.95 billion at December 31, 2025. Noninterest-bearing deposits represented 34.51% and 34.58% of total deposits at September 30, 2026 and December 31, 2025, respectively.
Securities sold under repurchase agreements increased to $979.2 million at September 30, 2026, from $883.2 million at December 31, 2025. There was no borrowing at September 30, 2026, compared to $300 million at December 31, 2025.
Total assets as of September 30, 2026, were $11.30 billion, compared with $11.80 billion as of December 31, 2025. Total stockholders’ equity was $1.37 billion as of September 30, 2026 and $1.61 billion as of December 31, 2025.
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. As of September 30, 2026, the Bank’s total risk-based capital ratio was 20.86%; tier 1 risk-based capital ratio was 19.64%; common equity tier 1 capital ratio was 17.29%; and tier 1 leverage ratio was 13.60%. The minimum capital adequacy ratios for a “well-capitalized” bank are 10.00%, 8.00%, 6.50% and 5.00%, respectively.
Stock Repurchase Program
During the nine months ended September 30, 2026, the Bank repurchased 1,342 shares of its common stock for $12.0 million on the open market at an average repurchase price of $8,912.86 per share. These repurchases were executed under two sequential stock repurchase programs, each authorizing the repurchase of up to $10 million of the Bank’s shares. The first repurchase program expired on May 9, 2026 with a portion of its authorization unused, and the current program is scheduled to expire on December 31, 2026.
Under the stock repurchase 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 repurchases at any time and anticipates that any such repurchases will be funded from existing cash and cash equivalents or future cash flow. An approved 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
Farmers & Merchants Bank of Long Beach (F&M) provides a distinctive white-glove banking experience through 27 Southern California branches, from San Clemente to Santa Barbara, and through its secure online and mobile banking platforms. Founded in 1907 by C.J. Walker, and today proudly led by the fourth generation of the Walker family, the Bank has devoted more than a century to building trusted relationships, rooted in personal service, integrity, safety and community commitment. Combining the strength and sophistication of a regional institution with the warmth and responsiveness of a community bank, F&M provides a wide range of commercial and consumer banking services designed to help businesses, individuals and families thrive at every stage of growth. With assets exceeding $11 billion, F&M is a California state-chartered bank, with deposits insured by the Federal Deposit Insurance Corporation (FDIC), and is an Equal Housing Lender. Please visit www.fmb.com for more information.
Forward-Looking Statements
In addition to the historical information contained herein, this press release may contain forward-looking statements about Farmers & Merchants Bank of Long Beach, including, but not limited to, expectations of reporting net income for the full 2026 year. Readers should understand that such forward-looking statements are neither promises nor guarantees and are subject to various risks and uncertainties, many of which are beyond the Bank’s control. Such risks and uncertainties could cause actual results and actions to differ materially from those contemplated. Factors that could cause or contribute to such differences include, but are not limited to, credit, market, operational, liquidity and interest rate risks associated with the Bank’s business and operations, changes in interest rates, changes in general business and economic conditions, changes in banking laws and regulations, loan losses, increases in expenses, changes in rates charged on loans and earned on investments, accounting estimates and judgments, changes in rates on deposits, competition effects, the amount of non-interest income earned, as well as other factors. Given these factors, readers should not place undue reliance on any forward-looking statement.
FARMERS & MERCHANTS BANK OF LONG BEACH |
||||||||||||||||
Income Statements (Unaudited) |
||||||||||||||||
(In thousands, except share and per share data) |
||||||||||||||||
QTD |
YTD |
|||||||||||||||
9/30/2026 |
9/30/2025 |
9/30/2026 |
9/30/2025 |
|||||||||||||
| Interest and dividend income: | ||||||||||||||||
| Loans | $ |
86,824 |
$ |
76,868 |
$ |
242,760 |
$ |
227,818 |
||||||||
| Investment securities | 29,316 |
15,661 |
84,468 |
52,272 |
||||||||||||
| Interest-bearing deposits in financial institutions | 6,927 |
16,150 |
21,840 |
37,443 |
||||||||||||
| Investments in FHLB and FRB stock | 978 |
455 |
2,375 |
1,360 |
||||||||||||
| Total interest and dividend income | 124,045 |
109,134 |
351,443 |
318,893 |
||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | 25,963 |
28,631 |
76,033 |
82,975 |
||||||||||||
| Securities sold under repurchase agreements | 7,268 |
8,267 |
20,947 |
24,870 |
||||||||||||
| Borrowings | 1,752 |
2,982 |
7,619 |
10,782 |
||||||||||||
| Total interest expense | 34,983 |
39,880 |
104,599 |
118,627 |
||||||||||||
| Net interest income before provision for credit losses | 89,062 |
69,254 |
246,844 |
200,266 |
||||||||||||
| Provision (recapture) for credit losses | ||||||||||||||||
| Loans | 5,000 |
(3,600 |
) |
3,700 |
(1,500 |
) |
||||||||||
| Investment securities | (300 |
) |
- |
(300 |
) |
- |
||||||||||
| Reserve for unfunded loan commitments | (2,500 |
) |
1,700 |
(3,900 |
) |
900 |
||||||||||
| Total provision (recapture) for credit losses | 2,200 |
(1,900 |
) |
(500 |
) |
(600 |
) |
|||||||||
| Net interest income after provision (recapture) for credit losses | 86,862 |
71,154 |
247,344 |
200,866 |
||||||||||||
| Non-interest (loss) income: | ||||||||||||||||
| Service charges on deposit accounts | 2,151 |
2,024 |
6,222 |
6,061 |
||||||||||||
| Loss on sale of securities | (84,966 |
) |
- |
(84,966 |
) |
- |
||||||||||
| Card income | 283 |
239 |
739 |
735 |
||||||||||||
| Other income | 2,461 |
2,156 |
21,041 |
6,428 |
||||||||||||
| Total non-interest (loss) income | (80,071 |
) |
4,419 |
(56,964 |
) |
13,224 |
||||||||||
| Non-interest expense: | ||||||||||||||||
| Salaries and employee benefits | 37,358 |
32,460 |
107,047 |
94,755 |
||||||||||||
| FDIC and other insurance expense | 1,852 |
2,066 |
5,284 |
6,085 |
||||||||||||
| Occupancy expense | 4,468 |
4,032 |
12,789 |
11,980 |
||||||||||||
| Software and equipment expense | 4,951 |
4,453 |
14,680 |
13,344 |
||||||||||||
| Professional and legal services | 2,475 |
3,362 |
6,941 |
7,866 |
||||||||||||
| Marketing expense | 1,588 |
1,418 |
4,603 |
4,319 |
||||||||||||
| Other expense | 4,493 |
3,556 |
13,589 |
10,442 |
||||||||||||
| Total non-interest expense | 57,185 |
51,347 |
164,933 |
148,791 |
||||||||||||
| (Loss) income before income tax expense | (50,394 |
) |
24,226 |
25,447 |
65,299 |
|||||||||||
| Income tax (benefit) expense | (13,612 |
) |
6,095 |
4,810 |
16,476 |
|||||||||||
| Net (loss) income | $ |
(36,782 |
) |
$ |
18,131 |
$ |
20,637 |
$ |
48,823 |
|||||||
| Basic (loss) earnings per common share | $ |
(268.23 |
) |
$ |
148.46 |
$ |
150.29 |
$ |
399.75 |
|||||||
| Diluted (loss) earnings per common share | $ |
(264.89 |
) |
$ |
147.32 |
$ |
148.61 |
$ |
396.30 |
|||||||
| Basic weighted-average shares outstanding | 120,868 |
122,126 |
121,048 |
122,134 |
||||||||||||
| Diluted weighted-average shares outstanding | 122,392 |
123,071 |
122,416 |
123,198 |
||||||||||||
FARMERS & MERCHANTS BANK OF LONG BEACH |
||||||||
Balance Sheets (Unaudited) |
||||||||
(In thousands, except share and per share data) |
||||||||
Sep. 30, 2026 |
Dec. 31, 2025 |
|||||||
| Assets | ||||||||
| Cash and due from banks: | ||||||||
| Noninterest-bearing balances | $ |
73,273 |
$ |
65,062 |
||||
| Interest-bearing balances | 580,245 |
1,344,503 |
||||||
| Total cash and due from banks | 653,518 |
1,409,565 |
||||||
| Securities available-for-sale, at fair value | 3,391,845 |
839,350 |
||||||
| Securities held-to-maturity, at amortized cost net of allowance for credit losses | - |
3,266,193 |
||||||
| Loans held for sale | - |
1,447 |
||||||
| Gross loans | 6,948,237 |
6,076,581 |
||||||
| Unamortized deferred loan fees, net | (12,829 |
) |
(10,479 |
) |
||||
| Allowance for loan losses | (89,117 |
) |
(84,020 |
) |
||||
| Loans, net | 6,846,291 |
5,982,082 |
||||||
| Investments in FHLB and FRB stock, at cost | 27,723 |
22,262 |
||||||
| Bank premises and equipment, net | 122,490 |
121,894 |
||||||
| Deferred tax assets, net | 140,962 |
39,839 |
||||||
| Other assets | 121,857 |
114,428 |
||||||
| Total assets | $ |
11,304,686 |
$ |
11,797,060 |
||||
| Liabilities and Stockholders' Equity | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing demand deposits | $ |
3,068,595 |
$ |
3,095,295 |
||||
| Interest-bearing demand deposits | 1,662,864 |
1,751,037 |
||||||
| Savings and money market savings | 3,269,609 |
3,084,461 |
||||||
| Time deposits | 891,126 |
1,020,001 |
||||||
| Total deposits | 8,892,194 |
8,950,794 |
||||||
| Securities sold under repurchase agreements | 979,225 |
883,234 |
||||||
| Borrowings | - |
300,000 |
||||||
| Other liabilities | 60,869 |
56,745 |
||||||
| Total liabilities | 9,932,288 |
10,190,773 |
||||||
| Stockholders' Equity: | ||||||||
| Preferred Stock; issued 16,261 shares | 190,884 |
190,884 |
||||||
| Common Stock, par value $20; authorized 250,000 shares; 120,448 and 121,802 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively | 2,409 |
2,436 |
||||||
| Additional paid-in capital | 152,055 |
162,243 |
||||||
| Retained earnings | 1,260,478 |
1,251,367 |
||||||
| Accumulated other comprehensive loss | (233,428 |
) |
(643 |
) |
||||
| Total stockholders' equity | 1,372,398 |
1,606,287 |
||||||
| Total liabilities and stockholders' equity | $ |
11,304,686 |
$ |
11,797,060 |
||||