Farmers & Merchants Bank of Long Beach Announces Preliminary Court Approval of Litigation Settlement.

LONG BEACH, Calif. -- Farmers & Merchants Bank of Long Beach (OTCBB:FMBL) today announced that the Superior Court of the State of California for the County of Orange (the "Court") has preliminarily approved a proposed settlement of the class action and derivative lawsuit brought by shareholder Marcus D. Walker against certain present and former officers and/or directors of the Bank and the Bank as nominal defendant (the "Settlement"). The proposed Settlement is intended to fully, finally and forever resolve the lawsuit and provides for a complete release of the Bank and the other defendants from any claims that were or could have been asserted in the litigation.

The proposed Settlement also provides that, after it becomes effective and subject to certain conditions, the Bank will commit to make certain distributions to its shareholders. As part of this commitment, the Bank would commence a tender offer (the "Tender Offer") after the effective date of the proposed Settlement whereby the Bank would offer to purchase up to 14,720 shares of its common stock at a price of $7,300 per share. If the proposed Tender Offer does not proceed or close for any reason other than as a result of the termination of the Settlement, then the Bank would instead commit to make distributions to its shareholders in the aggregate amount of $86,000,000 (including the amounts required to be used by the Bank to repurchase shares from Marcus D. Walker and his related and affiliated parties pursuant to the Standstill Agreement described below). These alternate proposed distributions could take the form of share repurchases, dividends or other distributions, and, subject to all necessary regulatory and corporate approvals, would be made from time to time, but ultimately no later than the date that is three years following the last day of the calendar quarter during which the effective date of the Settlement occurs.

In addition, plaintiff Marcus D. Walker, members of his immediate family, and certain of his related and affiliated parties have entered into a Standstill Agreement whereby they have agreed to sell to the Bank, after the effective date of the proposed Settlement, all of their 5,827 shares of the Bank's common stock at the same per share price that would be offered to the Bank's shareholders in the proposed Tender Offer described above. Marcus D. Walker, members of his immediate family, and his related and affiliated parties also agreed in the Standstill Agreement to never again purchase any of the Bank's securities or seek to influence the management of the Bank in any way. Marcus D. Walker has also agreed to bear all of his attorneys' fees and costs incurred in the filing, prosecution, and settlement of the lawsuit, and to waive any claim to recover attorneys' fees and costs from the Bank, its shareholders and the other defendants.

Effectiveness of the proposed Settlement is subject to various conditions, including, but not limited to, the Court granting its final approval of the Settlement and entering a judgment dismissing the litigation with prejudice and the Bank obtaining all necessary approvals with respect to the proposed Settlement and each of its elements. While the Bank recently obtained regulatory approvals for the contemplated share repurchases, such approvals require that the share repurchases also be approved by the affirmative vote of at least two-thirds of the Bank's outstanding shares of common stock. A proposal seeking such approval will be submitted to the Bank's shareholders at the Bank's upcoming 2007 annual meeting of shareholders (the "2007 Annual Meeting"). The 2007 Annual Meeting is currently scheduled to be held on December 6, 2007.

Additional Information

The information in this press release is only a summary of the basic terms of the proposed Settlement and statements herein about the terms and conditions of the proposed Settlement are not complete. A Notice of Pendency and Settlement of Class and Derivative Action (the "Notice Regarding Settlement") containing additional information about the terms and conditions of the proposed Settlement and the rights of class members will soon be mailed to the Bank's shareholders. A final settlement hearing is scheduled before the Honorable Judge Ronald L. Bauer in Department CX-103 of the Superior Court of California for the County of Orange, located at 751 West Santa Ana Boulevard, Santa Ana, California 92701 at 1:30 PM on December 17, 2007. The hearing may be continued by the Court without further notice. For more information regarding the precise terms and conditions of the proposed Settlement and the transactions contemplated thereby, interested persons are referred to the Notice Regarding Settlement and to the Stipulation of Settlement ("Stipulation") (and exhibits thereto) copies of which are on file with the Court at the address set forth in the previous sentence.

A Notice of Annual Meeting of Shareholders and Proxy Statement (the "Proxy Statement") containing additional information about the proposal to approve the share repurchases contemplated by the proposed Settlement which will be considered at the 2007 Annual Meeting will soon be mailed to the Bank's shareholders entitled to notice of, and to vote at, the 2007 Annual Meeting. Interested persons are urged to read the Proxy Statement when it becomes available as it will contain important information about the Bank and the proposal to approve the contemplated share repurchases. When it becomes available, a copy of the Proxy Statement will be posted at the Bank's website (http://www.fmb.com). In addition, shareholders may obtain a copy of the Proxy Statement, when it becomes available, and a copy of the Notice Regarding Settlement and the Stipulation (and exhibits thereto) by writing Daniel K. Walker, Executive Vice President, at Farmers & Merchants Bank of Long Beach, 302 Pine Avenue, Long Beach, CA 90802.

This press release is not an offer to buy or the solicitation of an offer to sell any shares of the Bank's common stock. A solicitation of offers to buy the Bank's common stock will only be made, if and when, a separate offer to purchase and related materials are sent by the Bank to its shareholders at the time of the commencement of the proposed Tender Offer, which commencement would only occur after the effective date of the Stipulation. Shareholders should read those materials carefully, if and when they become available, as they will contain important information about the relevant terms and conditions of the proposed offer. If the proposed Tender Offer is commenced and is oversubscribed at the time the offer expires, then a proration procedure will be invoked. If the proposed Tender Offer is commenced, the Bank will issue a separate press release announcing the commencement at the appropriate time.

About Farmers & Merchants Bank of Long Beach

Founded in Long Beach in 1907 by C.J. Walker, Farmers & Merchants Bank of Long Beach has 22 branches in L.A. and Orange counties. The Bank specializes in commercial and small business banking along with business loan programs up to $35 million.

The Bank is one of the strongest banks in the country measured by a variety of industry measurements. Farmers and Merchants Bank of Long Beach is a California state chartered bank with deposits insured by the Federal Deposit Insurance Corporation ("FDIC") and, as a result, files quarterly call reports with the FDIC. To obtain more financial information about the Bank, please visit the FDIC's website at www.fdic.gov. Proceed to the "Industry Analysis" tab, then select "Bank Data & Statistics." Continue to "Call & Thrift Financial Reports," then to "Call Report and Thrift Financial Report (TFR) Data." This will bring you to a searchable database. Once at this database, enter: Institution Name: Farmers and Merchants Bank of Long Beach; City: Long Beach; and State: California. Readers are urged to obtain such additional information.

Information contained in this press release about the proposed Settlement, the Stipulation and the transactions and other matters contemplated thereby, other than historical information, should be considered forward-looking statements. These forward-looking statements and the transactions contemplated by the Stipulation, including the proposed Tender Offer and the proposed purchase of shares of Bank stock under the Standstill Agreement, are subject to risks, uncertainties and assumptions, some of which cannot be predicted or quantified. These risks and uncertainties include, without limitation, the fact that the effectiveness of the proposed Settlement is subject to conditions, including the Bank obtaining the requisite shareholder approval for the share repurchases contemplated by the Settlement and the Court granting its final approval of the Settlement and entering a judgment dismissing the litigation with prejudice. If the Court's judgment is appealed, such appeal could take a significant amount of time to resolve which would have the effect of delaying the effectiveness of the proposed Settlement and the transactions contemplated thereby or could possibly result in changes to the proposed Settlement and such proposed transactions. In addition, the Stipulation may not become effective and the proposed Tender Offer may not be commenced if there is an Occurrence of a Material Adverse Event, as set forth in the Stipulation. Should one or more of these risks or uncertainties materialize, or should any of the Bank's underlying assumptions with regard to any forward looking statements prove incorrect, actual results may vary materially from those anticipated, estimated or expected. In addition, other risks, uncertainties and factors may emerge from time to time, and it is not possible for the Bank to predict all such risks, uncertainties and factors. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, the Bank does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on any forward-looking statements.