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, 2012.

“Farmers & Merchants’ first-quarter results reflect a strong start for 2012, as we achieved solid profitability and continued to grow the Bank’s deposit base,” said Henry Walker, chief executive officer of Farmers & Merchants Bank of Long Beach. “During the quarter, we also continued to enhance the Bank’s technology and auditing teams with the naming of industry veteran Ken Nagel as chief information officer and tenured accounting executive Frank Coleman as chief auditor.”

Income Statement

For the three months ended March 31, 2012, interest income rose to $46.3 million from $45.3 million in the first quarter of 2011. Interest expense for the 2012 first quarter declined to $1.8 million from $2.6 million in the first quarter of 2011, primarily related to the prolonged low interest rate environment.

Net interest income for the 2012 first quarter rose 4.10% to $44.4 million from $42.7 million for the first quarter of 2011. Farmers & Merchants’ net interest margin was 4.07% for the 2012 first quarter, compared with 4.29% in the 2011 first quarter.

Primarily due to a decrease in gross loans for the period ended March 31, 2012, the Bank did not establish a provision for loan losses in the first quarter of 2012, compared with a provision for loan losses of $700,000 reported in the first quarter of 2011. The Bank’s allowance for loan losses as a percentage of loans outstanding was 2.86% at March 31, 2012, compared with 2.75% at March 31, 2011.

Non-interest income was $5.2 million for the 2012 first quarter, versus $3.3 million for the first quarter a year ago, principally related to the gain realized from the resolution and conclusion of a lending relationship.

Non-interest expense for the 2012 first quarter was $21.9 million, compared with $21.3 million for the same period last year.

Net income for the 2012 first quarter totaled $18.5 million, or $141.48 per diluted share, compared with net income of $15.3 million, or $117.18 per diluted share, for the 2011 first quarter.

Balance Sheet

At March 31, 2012, net loans decreased to $1.97 billion from $2.03 billion at December 31, 2011. The Bank’s deposits totaled $3.53 billion at the end of the 2012 first quarter, compared with $3.39 billion at December 31, 2011. Non-interest bearing deposits represented 37.9% of total deposits at March 31, 2012, versus 37.2% of total deposits at December 31, 2011. Total assets increased to $4.77 billion at the close of the 2012 first quarter from $4.70 billion at December 31, 2011.

At March 31, 2012, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 29.00%, a Tier 1 risk-based capital ratio of 27.73%, and a Tier 1 leverage ratio of 14.45%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 6.00% and 5.00%, respectively.

“Farmers & Merchants’ first-quarter results reflect the Bank’s ability to adapt and succeed in times of economic uncertainty,” said Daniel Walker, president and chairman of the board. “Despite a heightened regulatory environment, the Bank’s sound fundamentals and steadfast commitment to personalized service remained central to our performance.”

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)   Three Months Ended March 31, 2012 2011   Interest income:   Loans $ 31,410 $ 29,399 Securities held-to-maturity 11,634 12,420 Securities available-for-sale 3,015 3,381 Deposits with banks 219 60   Total interest income 46,278 45,260   Interest expense:   Deposits 1,567 2,133 Securities sold under agreement to repurchase 268 435   Total interest expense 1,835 2,568   Net interest income 44,443 42,692   Provision for loan losses - 700   Net int. income after provision for loan losses 44,443 41,992   Non-interest income:   Service charges on deposit accounts 1,199 1,171 Gains on sale of securities 42 7 Merchant bankcard fees 421 264 Escrow fees 166 205 Other income 3,343 1,642   Total non-interest income 5,171 3,289   Non-interest expense:   Salaries and employee benefits 11,761 10,690 FDIC and other insurance expense 1,570 1,118 Occupancy expense 1,378 1,258 Equipment expense 1,337 1,315 Other real estate owned expense,net 1,296 1,492 Amortization of investments in low-income communities 2,201 451 Legal and professional fees 464 751 Marketing and promotional expense 686 805 Other expenses 1,239 3,377   Total non-interest expense 21,932 21,257   Income before income tax expense 27,682 24,024   Income tax expense 9,159 8,682   Net income $ 18,523 $ 15,342   Basic and diluted earnings per common share $ 141.48 $ 117.18                           FARMERS & MERCHANTS BANK OF LONG BEACH Balance Sheets (Unaudited) (In Thousands)   Mar. 31, 2012 Dec. 31, 2011   Assets   Cash and due from banks:

Non-interest-bearing balances

$ 54,343 $ 57,394 Interest-bearing balances 377,812 278,525 Investment securities 2,189,675 2,113,130 Gross loans 2,032,631 2,087,388 Less allowance for loan losses (58,128 ) (58,463 ) Less unamortized deferred loan fees, net (428 ) (418 ) Net loans 1,974,075   2,028,507   Other real estate owned 19,795 23,036 Investments in low-income communities 41,366 43,566 Bank premises and equipment 55,052 55,155 Accrued interest receivable 16,232 16,464 Deferred tax asset 28,573 28,583 Other assets 12,490   14,985     Total assets $ 4,769,413   $ 4,659,345       Liabilities and stockholders' equity   Liabilities:   Deposits: Demand, non-interest bearing $ 1,338,382 $ 1,263,162 Demand, interest bearing 321,741 300,984 Savings and money market savings 963,370 909,794 Time deposits 910,108   919,538     Total deposits 3,533,601 3,393,478   Securities sold under agreements to repurchase 502,919 555,992 Other liabilities 47,112   39,659     Total liabilities 4,083,632   3,989,129     Stockholders' Equity:  

Common Stock, par value $20; authorized 250,000 shares; issued and outstanding 130,928 shares

2,619 2,619 Surplus 12,044 12,044 Retained earnings 662,481 646,708 Other comprehensive income 8,637   8,845     Total stockholders' equity 685,781   670,216     Total liabilities and stockholders' equity $ 4,769,413   $ 4,659,345