Exchange Bank Announces Second Quarter Earnings

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Jul 22, 2015, 05:40 ET

SANTA ROSA, Calif., July 22, 2015 /PRNewswire/ -- Today Exchange Bank (OTC:EXSR) announced results for the second quarter of 2015 with a profit after tax of $5.63 million, compared to $4.54 million in the second quarter of 2014. This represents an increase of $1.09 million or 24% over the same period a year ago. "Our earnings for the second quarter were strong as the underlying core earnings of the Bank reflect the continued improvement in Sonoma County's economy", stated Gary Hartwick, President and CEO.

This quarter's profitability was influenced by a number of nonrecurring events which impacted both revenue and expense. As a result of the significant improvement in our credit quality and the recovery of loans previously charged off, $2.5 million in provision for loan losses was reversed during the second quarter. The Bank's level of reserves to support future loan losses remains strong in comparison to industry standards and is supported by the continued improvement in asset quality. Offsetting this unexpected revenue, the Bank recognized a number of nonrecurring expenses totaling approximately $1.3MM relating to retirement benefits and the reduction of outstanding debt, which over the longer-term should both strengthen the balance sheet and increase the Bank's earnings potential. The difference between nonrecurring income and expense of $1.2MM is reduced by approximately $.5MM after the effect of income taxes, providing a net positive adjustment of approximately $.7MM to the Bank's net earnings for the quarter. Normalized core earnings for the bank after removing all nonrecurring events would have been approximately $4.9MM, an increase of approximately 6% over the $4.54MM earned in the second quarter of 2014. "We are proud of the Bank's continued level of profitability, notwithstanding the impact on the Bank's second quarter earnings of several large nonrecurring events", stated Mr. Hartwick.

The core earnings of the Bank, absent the non-recurring elements of income and expense, are driven primarily by continued growth in loans and investments which were funded by a ten percent growth in deposits. This asset growth led to an increase in net interest income of approximately $1.5 million during the second quarter of 2015, a 9% increase over the similar quarter in 2014. The Bank continued to witness meaningful growth in both loans and deposits during the 12 months ending June 30, 2015. Loans grew by approximately $41 million and investment securities by $69 million, funded by growth in deposits of approximately $153 million over totals reported as of June 30, 2014. "The Bank is grateful for the confidence our community has demonstrated in the Bank by its patronage and we intend to reward that confidence by continuing to invest our resources in the financing needs of consumers and small business which fuel the economic prosperity of the communities we serve", stated Mr. Hartwick.

Exchange Bank paid a quarterly cash dividend of $0.55 per share on common stock outstanding to shareholders on June 19, 2015. 51% of the cash dividend goes to the Doyle Trust which funds the Doyle Scholarships at the Santa Rosa Junior College.

FORWARD-LOOKING INFORMATION:

The following appears in accordance with the Private Securities Litigation Reform Act of 1995:

This press release may contain forward-looking statements about the Company, including descriptions of plans or objectives of its management for future operations, products or services, and forecasts of its revenues, earnings or other measures of economic performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may."

Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors — many of which are beyond the Company's control — could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date forward-looking statements are made.

EXCHANGE BANK

Condensed Consolidated Statements
(Unaudited)

June 30, 2015

CONDENSED STATEMENT OF CONDITION

	2015	2014
	in thousands
ASSETS

Cash and due from banks	$ 122,324	$ 76,278

Interest-bearing deposits in other financial institutions	63,000	39,000

Investment Securities available for sale	475,070	430,427

Total investment securities	475,070	430,427

Loans
Real estate	800,610	787,974
Consumer	96,957	91,902
Commercial	316,143	292,559

	1,213,710	1,172,435
Less allowance for loan losses	37,512	37,395

Net loans	1,176,198	1,135,040

Bank premises and equipment	16,312	16,055
Other assets	69,747	66,353

	$ 1,922,651	$ 1,763,153

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
Non Interest Bearing Demand	$ 648,014	$ 562,308
Interest Bearing
Transaction	279,143	237,921
Money market	229,472	221,772
Savings	356,745	319,088
Time	215,709	235,020

Total Deposits	1,729,083	1,576,109

Other borrowings	8,000	24,000
Other liabilities	16,914	7,532

Total liabilities	1,753,997	1,607,641

Stockholders' equity	168,654	155,512

	$ 1,922,651	$ 1,763,153

EXCHANGE BANK

Condensed Consolidated Statements
(Unaudited)
June 30, 2015

STATEMENT OF INCOME
(in thousands)
	2015	2014		2015	2014
	Quarter ended June 30,			Six months ended June 30,

Interest Income
Interest and fees on loans	$ 14,978	13,963		$ 29,589	27,746
Interest on investments securities	2,775	2,263		5,153	4,476
Interest on cash equivalents	-	-		-	-

Total interest income	17,753	16,226		34,742	32,222

Interest expense
Interest on deposits	255	389		560	780
Other interest expense	382	205		562	409

Total interest expense	637	594		1,122	1,189

Net interest income	17,116	15,632		33,620	31,033

Provision (recapture) for losses on loans	(2,500)	-		(2,900)	-

Net interest income after provision for losses on loans	19,616	15,632		36,520	31,033

Non interest income	5,020	5,434		10,621	10,635

Non interest expense
Salary and benefit costs	8,652	7,409		16,395	15,388
Other expenses	6,565	6,280		12,854	12,392

	15,217	13,689		29,249	27,780

Income before income taxes	9,419	7,377		17,892	13,888

Provision for income taxes	3,784	2,834		7,123	5,282

Net income	$ 5,635	4,543		$ 10,769	8,606

			In dollars
Basic/diluted earnings per common share¹	$ 3.29	$ 2.65		$ 6.28	$ 4.94
Simple earnings per share²	$ 3.29	$ 2.65		$ 6.28	$ 5.02


¹								Earnings per share is computed by dividing net income, less preferred stock dividends, by the weighted averaged number of shares outstanding during the year.

²								Simple earnings per share is computed by dividing net income by the weighted average of shares outstanding during the year.


Total average shares outstanding for both 2015 and 2014 was 1,714,344

The consolidated financial statements include the accounts of the Bank and its wholly owned subsidiaries. Certain intercompany accounts and transactions have been eliminated.