Exchange Bank Announces Third Quarter Earnings

News provided by

Oct 22, 2015, 05:52 ET

Exchange Bank celebrates 125 year Anniversary - May 1, 2015 - Santa Rosa, CA.

SANTA ROSA, Calif., Oct. 22, 2015 /PRNewswire/ -- Today Exchange Bank (OTC:EXSR) announced results for the third quarter of 2015 with a net profit after tax of $5.14 million, compared to $4.56 million in the third quarter of 2014. This represents an increase of $582 thousand or 13% over the same period a year ago. "The 2015 third quarter earnings for the most part reflect core earnings – that is earnings that are materially free of non‑recurring events. Core earnings represent the expansion of the Bank's net interest income as well as a focus on controlling operating expenses," said Greg Jahn, Executive Vice President and CFO. The Bank's earnings are tied to the continued economic expansion of the communities in which we serve. The growth in net interest income is a result of loan growth of approximately $73 million over the similar period in 2014 funded by deposit growth, which is up approximately $180 million or 11% over the previous 12-months. "Growth in deposits is an indication of the confidence our customers have in Exchange Bank and we remain grateful for the support of our community," stated Gary Hartwick, President and CEO.

The singular element of non‑recurring revenue during the quarter was a recapture of $300 thousand of provision for loan loss. "The reversal of provision for loan loss during the third quarter was the result of the continued improvement in the credit quality of the Bank's loan portfolio and the recovery of loans that had been previously charged off," said Mr. Jahn. 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. The recapture of provision for loan loss of $300K during the third quarter of 2015 was for the most part offset by additional expenses to more conservatively reflect the value of long‑term employee benefit plans. The decline in operating expenses of approximately $500 thousand for the quarter ending September 30, 2015, compared to the similar quarter ending 2014, was a result of lower incentive and employee benefit accruals recorded in 2015.

"The Bank is proud to be a partner in the economic growth and vitality of the communities we serve and we will continue to be responsive to the financing needs of the consumers and small businesses necessary to continue moving economic growth forward," stated Mr. Hartwick.

Exchange Bank paid a quarterly cash dividend of $0.55 per share on common stock outstanding to shareholders on September 18, 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)

September 30, 2015

CONDENSED STATEMENT OF CONDITION

	2015	2014
	in thousands
ASSETS

Cash and due from banks	$ 115,191	$ 69,132

Interest-bearing deposits in other
financial institutions	71,000	48,500

Investment Securities available for sale	488,401	440,561

Total investment securities	488,401	440,561

Loans
Real estate	830,868	767,335
Consumer	102,771	94,250
Commercial	314,362	309,615

	1,248,001	1,171,200
Less allowance for loan losses	37,676	37,573

Net loans	1,210,325	1,133,627

Bank premises and equipment	16,133	16,085
Other assets	69,701	78,192

	$ 1,970,751	$ 1,786,097

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
Non Interest Bearing Demand	$ 664,011	$ 573,238
Interest Bearing
Transaction	291,596	246,545
Money market	234,811	221,041
Savings	368,495	324,003
Time	215,247	227,625

Total Deposits	1,774,160	1,592,452

Other borrowings	8,000	24,000
Other liabilities	14,776	10,366

Total liabilities	1,796,936	1,626,818

Stockholders' equity	173,815	159,279

	$ 1,970,751	$ 1,786,097

EXCHANGE BANK

Condensed Consolidated Statements
(Unaudited)
September 30, 2015

STATEMENT OF INCOME
(in thousands)
	2015	2014	2015	2014
	Quarter ended Sept 30,		Nine months ended Sept 30,

Interest Income
Interest and fees on loans	$ 14,630	14,941	$ 44,219	42,687
Interest on investments securities	2,614	2,282	7,767	6,758
Interest on cash equivalents	-	-	-	-

Total interest income	17,244	17,223	51,986	49,445

Interest expense
Interest on deposits	235	373	795	1,153
Other interest expense	95	209	657	618

Total interest expense	330	582	1,452	1,771

Net interest income	16,914	16,641	50,534	47,674

Provision (recapture) for losses on loans	(300)	-	(3,200)	-

Net interest income after
provision for losses on loans	17,214	16,641	53,734	47,674

Non interest income	5,407	5,482	16,028	16,117

Non interest expense
Salary and benefit costs	7,430	7,702	23,825	23,090
Other expenses	6,713	6,925	19,567	19,317

	14,143	14,627	43,392	42,407

Income before income taxes	8,478	7,496	26,370	21,384

Provision for income taxes	3,341	2,941	10,464	8,223

Net income	$ 5,137	4,555	$ 15,906	13,161

		In dollars
Basic/diluted earnings per common share1	$ 3.00	$ 2.66	$ 9.28	$ 7.60
Simple earnings per share2	$ 3.00	$ 2.66	$ 9.28	$ 7.68


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.