LODI, Calif. - Farmers & Merchants Bancorp (NASDAQ:MBIN) (OTCQX: FMCB), the parent company of Farmers & Merchants Bank of Central California, has announced the initiation of a new share repurchase program. The program, effective immediately, authorizes the repurchase of up to $55.0 million of the company's shares through December 31, 2026. This move comes as the existing $25.0 million share repurchase program, approved in November 2023, has been terminated.
The company has a long history of repurchasing its shares, having bought back 51,596 shares, or about 6.5% of the outstanding shares, from January 2021 through the week ending Sunday, September 10, 2024. These repurchases were made at market prices through open market transactions, SEC rule-compliant trading plans, and privately negotiated deals.
Kent A. Steinwert, Chairman, President, and CEO, explained the rationale behind the repurchase program: "Our record earnings over the past several years have allowed us to repurchase shares, increase our cash dividend payment per share, and maintain a strong capital position." He highlighted the repurchases as a method for managing capital levels and improving shareholder returns by concentrating ownership and providing liquidity for shareholders.
Farmers & Merchants Bancorp has consistently demonstrated financial strength, with $5.3 billion in assets and a history of safety and stability. The company's regulatory capital ratios as of June 30, 2024, include a tier 1 leverage capital ratio of 10.66%, a common equity tier 1 ratio (CET1) of 13.09%, and a total capital ratio of 14.58%, categorizing it as "well capitalized."
The bank, founded in 1916, operates through 32 locations in California and has received recognition for its financial performance, including being named by Bank Director’s Magazine as the #2 best performing bank in the nation in 2023 and ranking 6th on Forbes Magazine's list of "America's Best Banks" in 2023.
The announcement of the share repurchase program is based on a press release statement from Farmers & Merchants Bancorp. The company has been paying dividends for 89 consecutive years and has increased dividends for 59 consecutive years, earning it a place among the elite "Dividend Kings."
Investors may view this repurchase program as an affirmation of the company's strong capital position and its commitment to enhancing shareholder value.
InvestingPro Insights
Farmers & Merchants Bancorp (FMCB) has not only demonstrated a commitment to its shareholders through steady dividend payments but also through its share repurchase programs. As the company initiates a new $55.0 million repurchase program, here are some insights that may interest investors, as provided by InvestingPro:
InvestingPro Data metrics show that FMCB has a market capitalization of $708.84 million, indicating a solid size within its sector. The company's Price-to-Earnings (P/E) ratio stands at 8.16, which is relatively low, suggesting that the shares could be undervalued compared to future earnings potential. This is further supported by the adjusted P/E ratio for the last twelve months as of Q2 2024, which is slightly lower at 8.06. Additionally, the dividend yield as of the latest data point is 1.83%, reflecting the company's consistent history of dividend payments.
An InvestingPro Tip reveals that FMCB has raised its dividend for 24 consecutive years, signifying a reliable and growing income stream for investors. This is a key consideration for those looking to invest in companies with a stable and progressive dividend policy. Moreover, the company has maintained dividend payments for an impressive 30 consecutive years, underscoring its financial resilience and commitment to shareholder returns.
Another InvestingPro Tip points out that FMCB is trading near its 52-week low, which could present a buying opportunity for value investors seeking entry points into stable companies at potentially discounted prices.
For investors who are looking for more comprehensive analysis and additional tips, InvestingPro offers a wealth of information. Currently, there are 7 more InvestingPro Tips available for FMCB at https://www.investing.com/pro/FMCB, which can provide deeper insights into the company's financial health and stock performance.
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