FMBL Farmers and Merchants Bank (QX)

-- Net Loans Grew 23% in Year-Over-Year Comparison --

Farmers & Merchants Bank of Long Beach (OTCBB: FMBL) today reported financial results for the fourth quarter and full year ended December 31, 2014.

“F&M’s strong financial performance in 2014 is a result of an expanded lending team that continues to establish relationships with the community we serve,” said Henry Walker, president of Farmers & Merchants Bank. “As the economy shows further signs of improvement, the Bank is in a position of strength for sustainable growth.”

Income Statement

For the 2014 fourth quarter, total interest income was $49.8 million, compared with $43.5 million in the fourth quarter of 2013. Total interest income for the year ended December 31, 2014 was $184.9 million, compared with $163.2 million reported for 2013.

Interest expense for the 2014 fourth quarter was $1.8 million, compared with $1.6 million in the same period a year ago. Interest expense for the full 2014 year was $6.9 million versus $6.2 million in 2013.

Farmers & Merchants’ net interest income for the 2014 fourth quarter was $48.0 million, compared with net interest income of $41.9 million for the fourth quarter in 2013. Net interest income for 2014 was $178.0 million, versus $157.0 million in 2013.

Farmers & Merchant’s net interest margin was 3.50% for the year ended December 31, 2014, compared with 3.30% in the previous year.

The Bank did not have a provision for loan losses in 2014, nor in 2013, amid continued strength in its loan portfolio. The Bank’s allowance for loan losses as a percentage of loans outstanding was 1.69% at December 31, 2014, compared with 2.09% at December 31, 2013.

Non-interest income was $7.3 million for the 2014 fourth quarter, compared with $7.2 million in the 2013 fourth quarter. Non-interest income for the full 2014 year totaled $32.0 million, versus $37.8 million for 2013.

Non-interest expense for the 2014 fourth quarter was $32.2 million, compared with $27.2 million for the same period last year. Non-interest expense for the year ended December 31, 2014 was $119.4 million, compared with $104.3 million last year.

The Bank’s net income for the 2014 fourth quarter was $15.8 million, or $120.94 per diluted share, compared with $15.0 million, or $114.41 per diluted share, in the 2013 fourth quarter. The Bank’s net income for 2014 was $62.4 million, or $476.67 per diluted share, compared with $62.2 million, or $474.80 per diluted share, for 2013.

Balance Sheet

At December 31, 2014, net loans totaled $2.96 billion, compared with $2.40 billion at December 31, 2013. The Bank’s deposits grew to $4.20 billion at the end of 2014, from $3.83 billion at December 31, 2013. Non-interest bearing deposits represented 37.3% of total deposits at December 31, 2014, versus 38.5% of total deposits at December 31, 2013. Total assets increased to $5.58 billion at the close of 2014 from $5.21 billion at December 31, 2013.

At December 31, 2014, Farmers & Merchants Bank remained “well-capitalized” under all regulatory categories, with a total risk-based capital ratio of 23.59%, a Tier 1 risk-based capital ratio of 22.34%, and a Tier 1 leverage ratio of 14.35%. The minimum ratios for capital adequacy for a well-capitalized bank are 10.00%, 6.00% and 5.00%, respectively.

“F&M maintained its robust financial health in 2014, as well as enhanced its infrastructure to continue the Bank’s leadership position throughout the regions we serve,” said Daniel Walker, chief executive officer and chairman of the board. “As we enter 2015, F&M’s healthy balance sheet and sound fundamentals provide an excellent platform for introducing the Bank’s unparalleled service to new clients.”

About Farmers & Merchants Bank

Founded in Long Beach in 1907 by C.J. Walker, Farmers & Merchants Bank has 23 branches in Los Angeles and Orange Counties. The Bank specializes in commercial and small business banking along with business loan programs. Farmers & Merchants Bank of Long Beach is a California state chartered bank with deposits insured by the Federal Deposit Insurance Corporation (Member FDIC) and an Equal Housing Lender. For more information about F&M, please visit www.fmb.com.

FARMERS & MERCHANTS BANK OF LONG BEACH Income Statements (Unaudited) (In thousands except per share data)       Three Months Ended Dec. 31, Twelve Months Ended Dec. 31, 2014 2013   2014   2013   Interest and dividend income:   Loans $ 35,281 $ 28,351 $ 128,254 $ 105,163 Securities available-for-sale 982 1,778 5,148 8,067 Securities held-to-maturity 12,490 13,323 49,864 49,441 Investments in FHLB and FRB stock 956 7 1,290 26 Deposits with banks 63 31 313 488   Total interest and dividend income 49,772 43,490 184,869 163,185   Interest expense:   Deposits 1,491 1,296 5,744 5,049 Securities sold under repurchase agreements 267 274 1,140 1,113 Other borrowings 29 3 34 3   Total interest expense 1,787 1,573 6,918 6,165   Net interest income before provision for loan losses 47,985 41,917 177,951 157,020   Provision for loan losses - - - -   Net interest income after provision for loan losses 47,985 41,917 177,951 157,020   Non-interest income:   Service charges on deposit accounts 1,098 1,151 4,570 4,554 Gains on sale of securities 689 261 1,114 1,308 Other real estate owned income 827 482 1,583 3,757 Merchant bankcard income 2,281 2,348 9,365 9,358 Other income 2,361 2,944 15,385 18,810   Total non-interest income 7,256 7,186 32,017 37,788   Non-interest expense:   Salaries and employee benefits 17,093 15,726 64,492 55,986 FDIC and other insurance expense 782 123 3,087 4,825 Occupancy expense 2,077 1,952 8,043 6,987 Software and equipment expense 2,143 1,434 7,057 6,026 Other real estate owned expense 703 285 3,207 528 Amortization of public welfare investments 2,117 2,021 8,468 8,082 Merchant bankcard expense 1,814 1,929 7,386 7,493 Legal and professional services 1,151 885 3,709 3,604 Marketing expense 1,925 772 6,333 3,706 Other expense 2,399 2,119 7,644 7,025 2,922 2,922 Total non-interest expense 32,204 27,246 119,426 104,262   Income before income tax expense 23,037 21,857 90,542 90,546   Income tax expense 7,202 6,878 28,133 28,382   Net income $ 15,835 $ 14,979 $ 62,409 $ 62,164   Basic and diluted earnings per common share $ 120.94 $ 114.41 $ 476.67 $ 474.80   FARMERS & MERCHANTS BANK OF LONG BEACH Balance Sheets (Unaudited) (In thousands except share and per share data)   Dec. 31, 2014 Dec. 31, 2013   Assets   Cash and due from banks: Noninterest-bearing balances $ 55,322 $ 65,261 Interest-bearing balances 137,826 20,755 Securities available-for-sale 215,223 427,942 Securities held-to-maturity 2,008,064 2,145,289 Loans held for sale 1,751 465 Gross loans 3,009,945 2,454,302 Less allowance for loan losses (50,804 ) (51,251 ) Less unamortized deferred loan fees, net (2,991 ) (1,704 ) Net loans 2,956,150   2,401,347   Other real estate owned, net 3,406 14,502 Investments in FHLB and FRB stock 28,440 440 Public welfare investments 45,457 27,722 Bank premises and equipment, net 85,002 66,212 Net deferred tax assets 23,296 23,512 Other assets 20,788   21,139     Total assets $ 5,580,725   $ 5,214,586       Liabilities and Stockholders' Equity   Liabilities:   Deposits: Demand, non-interest bearing $ 1,567,046 $ 1,475,888 Demand, interest bearing 552,432 413,291 Savings and money market savings 1,228,584 1,080,774 Time deposits 852,211   861,489     Total deposits 4,200,273 3,831,442   Securities sold under repurchase agreements 546,758 595,991 Other liabilities 27,133   27,986     Total liabilities 4,774,164   4,455,419     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 112,044 12,044 Retained earnings 689,892 742,408 Accumulated other comprehensive income 2,006   2,096     Total stockholders' equity 806,561   759,167     Total liabilities and stockholders' equity $ 5,580,725   $ 5,214,586  

Farmers & Merchants Bank of Long BeachJohn HinrichsExecutive Vice President562-437-0011, ext. 5035orPondelWilkinson Inc.Evan PondelInvestor Relations310-279-5980investor@pondel.com